How Bitcoin Adoption Can Address Out-migration from Emerging Markets to Low-Skilled Jobs in the US, Europe and the Middle East

How Bitcoin Adoption Can Address Out-migration from Emerging Markets to Low-Skilled Jobs in the US, Europe and the Middle East

It is a common observation that people living in frontier and emerging markets migrate to first world countries in search of better opportunities. However, the majority of these people find themselves working in menial jobs despite having skills and competencies that qualify them for higher paying jobs.

Before I jump into the business model that is fueling this trend, it’s important to note that there is still a high supply of low-skill job opportunities all over the world. Household organizations and premises are in constant need of cleaners, clerks, drivers, gardeners, cooks, maids and many other low-skilled service workers.

This implies that the need to perform the same task in a different geographical location has more to do with compensation or the compensation system than with the availability of the job opportunity.

Gresham’s law states that bad money drives out good money. According to Gresham’s observation in the 16th century, if coins containing different metals have the same legal value, coins made of the cheaper metal will be used for payment, while those made of the more expensive metal will be hoarded or exported, and will therefore tend to disappear from circulation.

When the currencies of the developed world are compared to those of the frontier and emerging economies, it is clear that the frontier economies have higher inflation, the emerging economies have average inflation, and the developed world has relatively lower inflation. This increases the perception that first world currencies, such as the US dollar, are good money, while third world currencies are considered bad money.

So, if a conscious worker has to choose between being paid in US dollars or Kenyan shillings, they would prefer the US dollar, because keeping the currency over time would retain more value against the Kenyan shilling.

When multinationals do business in frontier and emerging markets, they quickly convert their cash to US dollars, euros or British pounds. That is, they want to hold currencies that they consider stable or good money. This trend leads to higher inflation in frontier and emerging economies, making jobs in these regions unattractive because most employers are unable to match wages to inflation over time.

The significant difference in exchange rates over time results in the advantage of forex, where people and businesses in frontier and emerging markets invest in the first world and then convert the profits into their home currency at favorable rates. . In addition to investing in the developed world, they prefer to work in the developed world because their salaries have higher purchasing power when converted into local currencies.

Note that the exchange gain is sometimes felt on the book but rarely on the purchasing power. In other words, someone living in a frontier economy can invest in the United States and recoup their investment at a better exchange rate. However, the converted money will not buy more products since the rate moves in the same direction as consumer prices. The advantage is comparative since the other investors who have chosen to invest locally bear the weight of inflation.

The big question is how can we solve the problem of people migrating to the developed world because their economy has bad money?

According to John F. Nash Jr., this problem can be solved by adopting an asymptotically ideal money system that has a uniform standard of value no matter where you are. This would allow large institutions to lend and invest in frontier and emerging markets without the risk of currency devaluation, thereby creating equal pay jobs or perhaps similar pay jobs, thereby reducing the need to migrate to a world developed.

To date, there is no single currency that can be called the ideal currency because the world is so divided into different jurisdictions and fiat currencies. However, unlike fiat currencies, bitcoin
BTC
seems to have characteristics that could lead to an international monetary standard as it cannot be politically corrupted and can be easily adopted worldwide without supply manipulation (devaluation).

According to Simon Butler in his article “The Philosophy of Bitcoin and the Question of Money”, economic relations in the information age should be based on freedom, choice and voluntary adoption, and bitcoin is an ideal currency that could offer this freedom and possibly solve the problem of emigration.

If the world adopted a bitcoin standard, further global integration of people and systems would lead to a labor standard in which there is no significant gain from doing the same low-skilled work in a different location. Because there would be no good and bad money (at the hyperbitcoinization level of bitcoin adoption), investors would be able to find opportunities in developing countries without the added risk of devaluation of the currency.

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