Now, if they wanted to make the argument that after 3-5 more halvings the competitiveness of mining will drop to a level where any G7 nation could run a 51% attack and barely notice, I’d be captivated :)
Individuals who use Bitcoin, though, are, in some absolute sense, no less beholden to their government simply by using Bitcoin. An economy can always be built on top of exchange of physical goods, including but not necessarily limited to banknotes, without the government's consent. But any transaction that needs to go over the Internet can more-or-less only happen at the pleasure of whoever controls the Internet in your area. Which, if you're living somewhere where authoritarianism is a serious concern, is probably the government.
Author here.
> So the government might as well be the arbiter of all transactions
Take a narrow view of what it means to be arbiter of all transactions. You can't freeze or modify balances, and you certainly can't intervene and pretend you didn't. You can merely decree, power of your authority, that transaction A arrived at your server before transaction B did, and you can certify that transaction A complies with the software protocol accepted by law, and you can reject transaction C because it doesn't. That's your mandate, that's it. Everyone can look at the public log and make a fuss if you didn't follow the law to the letter.
In practice, how is this different than relying on mining to avoid double spends?
Sure, in this scenario, government is capable of chosing a more invasive policy, or becoming corrupt, but choses not to. But government could just as well ban electricity use for mining, or accept bribes to permit use of specialized mining equipment, but choses not to. Bitcoin is already completely dependant on arbitrary political decisions- negligably less so than taking the job of implementing narrow arbitration.
Yes, running power stations and manufacturing chips requires the protection of a government; yes, Bitcoin mining depends on the existence of power and chips, and therefore indirectly on a functional government. But I don't see how you get from "Bitcoin mining stops if the government doesn't exist" to "So the government might as well be the arbiter of all transactions."