Free choice means mixed results

Success or Failure?This past week the bitcoin exchange Mt Gox went offline and eventually declared bankruptcy.

Massive media attention followed worldwide. And comments.

Though not all media coverage was accurate or informative, most refrained from direct editorial. Comments on the other hand, such as those here, were less restrained. While some were analytical, many were along the lines of “I told you” – especially in the US media.

In a free market choices have consequences. Some choices turn out to be good (i.e. utility-enhancing), others less so. This is normal and is the process which creates wealth.

In a controlled “market” by contrast, choices are restricted – and of course results are, as well. In Socialism v2.0, typically the idea is to provide (limited) choice between very similar “options”, in combination with security and predictability. At least that’s how it’s marketed.

If in a certain sector of society free choices are severely curtailed – as is the case for investment and money in the United States – then many people will tend to forget the fact that free choice comes at a price. In such a case, they may well react with shock when witnessing the consequences of bad choices. Why? For the simple and understandable reason that they have little experience with the upside offered by good ones.

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One Response to Free choice means mixed results

  1. traveller says:

    good points – but it would be more accurate to refer to the “official” choices in USA being limited, which is the same everywhere pretty much, especially China, however China culture is much more used to risk/reward ratio and frequently step outside the system, unlike their mostly meek USA counterparts. The other point is that there is a huge disconnect here – the told-ya-so articles all miss the point – MtGox is not and never was a bank – it is a currency exchange service – just like at the airport window, and typical users only hand over the currency they wan to convert for a few seconds. It is the failure of their own internal coins that is is at issue, not bitcoin, and that point is not touched on. Most MtGox users use the service for a number of seconds, meaning almost no risk.

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