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

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

Before I engage with the economic model driving this trend, it is important to note that there is always a high supply of low-skill job opportunities everywhere in the world. Organizations and domestic premises consistently need cleaners, clerks, drivers, gardeners, cooks, maids and many other workers who offer low-skilled services.

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

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

When the currencies of the developed world are compared to the currencies of frontier and emerging economies, it is clear that the frontier economies have higher inflation, the emerging economies have medium 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 getting paid in US dollars or Kenyan shillings, they will prefer US dollars since holding the currency over time will retain more value compared to Kenyan shillings.

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

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

Please note that the currency gain is sometimes experienced on the books, but rarely in purchasing power. That is, a person living in a border economy can invest in the United States and get back the investment at a better exchange rate. However, the converted money will not buy more products since the exchange rate moves in the same direction as consumer prices. The advantage is comparative since the other investors who chose to invest locally bear the burden of inflation.

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

According to John F. Nash Jr. can this problem be solved by adopting a system of asymptotically ideal money that has a uniform standard of value regardless of where you are. This would enable large institutions to lend and invest in frontier and emerging markets without the risk of currency devaluation, thereby creating equal-paying or perhaps similar-paying jobs and thus reducing the need to emigrate to the developed world.

As of today, there is no single currency that can be called ideal money because the world is so divided into different jurisdictions and fiat currencies. However, unlike fiat currencies, bitcoinBTC
appears to have properties that could lead to an international standard of money because it cannot be politically corrupted and can be easily adopted worldwide without manipulation of supply (devaluation).

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

If the world adopted a bitcoin standard, further global integration of people and systems would lead to a labor standard where there is no significant gain in doing the same low-skilled job elsewhere. Because there would not be 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 currency devaluation.