Governance

2009-04-27

As previously hinted, I've been doing some research and experimentation regarding the purchase and use of precious metals, both physical holdings and metal-based digital currencies. The latest services I've checked out include Pecunix, iGolder, The Anglo Far-East Company (AFE), London Gold Exchange (LGE), and Vertoro. One theme that looms large for me as I explore this space is corporate governance. For example, BullionVault describes their governance model in great detail, as do Pecunix and AFE. By contrast, similar services like GoldMoney and Liberty Reserve don't provide as much information on their websites, which leads me to think that they are not as serious about third-party oversight or digital security (in fact there is a huge security problem at the LGE's site, which I reported to them although I have yet to receive a reply -- not a good sign).

This leads me to reflect on the role of governance in human society. Readers of this blog know that I am very libertarian in my political outlook. They might then conclude that I am a libertine, in favor of a dog-eat-dog, Wild West kind of society (though in point of fact dogs don't eat each other and the wild west was far from wild). To the contrary, I think that a free society requires much more serious governance than a more controlled society. The difference is that in a free society individuals and groups need to govern themselves, because people will make decisions about which individuals and groups to engage with based on the self-governance of those individuals and groups. And that demonstrated level of self-governance (call it ethics, integrity, probity, or whatever you like) leads to a reputation for trustworthiness.

As I've blogged before, one of the great challenges of modern life is scalability. In the small-scale societies of epochs past, your reputation was literally worth its weight in gold. But reputation was also public because everyone in a small town could know the moral worth of other people in the vicinity. In the large-scale societies of today, and especially on the Internet, we face the prospect of lowest-common-denominator interactions, where spammers and scammers are the order of the day. The only way I can see to break out of that situation is to build high-trust enclaves on the 'net. My idea for what I call the Sovereign Individuals' Mutual Benevolent Association is one approach to such a high-trust enclave, but I'm sure there are others.

I think the time is coming when strong ethics, high trust, and good reputation will matter a great deal. I intend to be prepared for it.


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