There’s been a lot of buzz about bitcoin, and other “cryptocurrencies,” lately.  The people who bought bitcoin early apparently have made outlandish amounts of money, and now the word is out — and a number of people have been trading in hopes that they, too, might strike it rich in the trading markets.

BitcoinCalling the trading price of bitcoin volatile is like saying Donald Trump is a tad outspoken.  The price seems to yo-yo back and forth for no evident, real-world rhyme or reason — of course, any real-world event other than people investing in bitcoin or selling bitcoin.  Today, for example, the price of bitcoin fell more than 10 percent.  The linked article has this helpful information:  “Additional market data shows that other cryptocurrencies, including nearly all of the top-20 coins by total capitalization, are down amid the day’s trade. Among the worst performers are IOTA, which is down more than 18% in the past 24 hours, and monero, which has fallen nearly 15% in the same period, according to CoinMarketCap.”  No one seems to have any explanation for why all of the cryptocurrencies took a beating today.

And that’s one reason why I won’t be investing in bitcoin.  For all I know, it might be the next big thing and a crucial part of the coming digital economy.  But, if people can’t provide any reason whatsoever for its price movement, then it sure seems more like outright gambling and less like a true investment.  That, and the fact that I can’t understand precisely what bitcoin is, no matter how many times I read explanations of it, makes bitcoin seem more like a bitcon — a hyperspeculative bubble that has been foisted upon people who hope to make money and who are too embarrassed to admit that they don’t understand what cryptocurrency really is.  And, of course, the late investors in these matters always seem to be the ones who are left holding the bag when the “smart money” exits.

People who are considering getting into bitcoin might do well to remember the tale of the Emperor’s new clothes.

Why A “Windfall”?

If you’ve been following the aftermath of the tax reduction legislation passed by Congress and signed into law by President Trump, you’ve seen stories about how some corporations have reacted to the new law by giving their employees bonuses or cutting their charges to consumers, and other, more critical stories noting that many of the companies are giving their employees one-off bonuses, rather than more permanent raises.

windfall-money-manBut while different articles about the tax cut legislation may make different points about how the tax cut legislation is affecting companies, workers, and the country at large, the coverage does seem to have one curious common theme and descriptive element:  the tax relief provided by the new law is typically said to have produced a “windfall” for companies and individuals alike.

It’s a very interesting choice of words — and one that conveys a deeper message, too.  The Merriam-Webster Dictionary defines “windfall” as “something (such as a tree or fruit) blown down by the wind” or as “an unexpected, unearned, or sudden gain or advantage.” The key underlying concept is that the “windfall” is a lucky gift and an unearned surprise — like an inheritance from your mother’s rich second cousin whom you’d never met.

“Windfall” is a telltale choice of words in this context because tax payments necessarily have been earned by whoever is making them; companies and individuals wouldn’t be paying taxes if they hadn’t sold the products or done the work or made the investments that generated the revenue in the first place.  By calling the proceeds of a tax cut in which individuals and companies pay less a “windfall” for them, you’re really suggesting that the taxpayers aren’t entitled to their own money, the government is — and taxpayers should consider themselves lucky that, for a time at least, they get to keep more of it.

Income earned as the fruit of labor or investment isn’t like fruit blown down from a stranger’s apple tree.  You can argue about whether the tax cut was good economic or social policy, but when taxpayers get to hold on to more of the money they’ve already earned it can’t reasonably be characterized a “windfall” for them.  The fact that so many news articles nevertheless present the issue in that way says a lot about how the news media, at least, views the respective entitlements of taxpayers, and government, to the money taxpayers earn.