Recommended podcasts:

• “Cuba’s New Now,” KERA Think (Nov. 8, 2012). Fascinating interview by the amazing KERA Think host, Krys Boyd: “What has changed in Cuba since Fidel Castro ostensibly stepped away from power and are the changes happening fast enough for the Cuban people? We’ll talk this hour with National Geographic Magazine contributor Cynthia Gorney, whose story “Cuba’s New Now” appears in the current issue of the magazine.”
• “Joshua Rauh on Public Pensions,” EconTalk. Chilling discussion of the looming public pension crisis, with host Russ Roberts: “Joshua Rauh, Professor of Finance at Stanford University’s Graduate School of Business and a senior fellow at Stanford University’s Hoover Institution, talks with EconTalk host Russ Roberts about the unfunded liabilities from state employee pensions. The publicly stated shortfall in revenue relative to promised pensions is about $1 trillion. Rauh estimates the number to be over $4 trillion. Rauh explains why that number is more realistic, how the problem grew in recent years, and how the fiscal situation might be fixed moving forward. He also discusses some of the political and legal choices that we are likely to face going forward as states face strained budgets from promises made in the past to retired workers.” My guess? States and localities will end up declaring bankruptcy to modify their pension obligations.
• “Chris Anderson on 3D Printing and the Maker Movement,” Surprisingly Free. “Chris Anderson, former Wired magazine editor-in-chief and author of Makers: The New Industrial Revolution, describes what he calls the maker movement. According to Anderson, modern technologies, such as 3D printing and open source design, are democratizing manufacturing. The same disruption that digital technologies brought to information goods like music, movies and publishing will soon make its way to the world of physical goods, he says.” A good discussion of IP implications of 3D printing begins around 14:00.
• My recent Libertopia talk, Intellectual Nonsense: Fallacious Arguments for IP.
• My interview, “Silver for the People Interview: Stephan Kinsella—Copyright Laws Cost the U.S. $Billions in Economic Growth” (at Libertopia, San Diego, Oct. 12, 2012).

Economist Robert Gordon recently uploaded an NBER working paper regarding US economic growth that Mark DeWeaver recently passed to me.  Gordon makes the case that there are a number of headwinds (six by his count) that will prevent the US from growing more than one percent over the foreseeable future.

While I am bearish in some respects, I do not find any of the headwinds presented convincing.  In fact as I explain below, I find most of them simply non-issues and that other unmentioned policies to be much larger culprits in stymieing economic growth.

At the beginning, Gordon notes that this paper is an exercise in what-ifs.  Key to his point is, what-if the financial crisis did not occur after 2007 — what is the best-in-case growth trajectory for the US sans the financial correction?

With that said, if Gordon is going to do a little hand waving regarding “what if the 2007-8 financial crisis didn’t happen” I am sure there are a number of other economists who could pen some papers on “what if the federal budget was $0 in the past five years?”  or if there “had been no war in Iraq or Afghanistan” — I suspect they would come to some alternative conclusions as well.

Another “what if scenario” that springs to mind — what are some trend lines for economic growth numbers if individual savings accounts were not taxed, interest wasn’t taxed, withdrawal of funds were not taxed, etc.  In Japan, individuals can open up multiple savings accounts in Japan Post and the first $13,000 are purportedly tax free.

At any rate, there is an unlimited amount of “what-ifs” that can be imagined.  Let us discuss Gordon’s specifics.  His six headwinds are as follows:  demographic, education, inequality, globalization, energy and debt reversal.  More on these later.

Seen and unseen

I think his 4th point on p.2 is a bit short-sighted as it only looks at what is happening right now in terms of some “seen” technological transformations, yet there is a lot of “unseen” productivity gains behind closed doors such as robotic automation of factories that is allowing manufacturing firms to save on labor costs.  The NY Times had a good piece on this a couple weeks ago — “New Wave of Adept Robots is Changing Global Industry” — which goes into detail regarding new robots that help load and unload parcels as well; and will be a disruptive innovation for those firms (like FedEx and UPS) that rely on large pools of human physical labor.

Another not-so-obvious advancement occurs in the pharmacy as robots replace pharmacists (Salon had a detailed piece on this last year) and in the oil fields, where Zigbee powered devices (a low-powered radio) allows oil pump managers to remotely survey their oil fields without having to drive out to each individual oil field.  While Gordon does mention automated automobiles later on (e.g., the Google driveless car), he also ignores the possibilities of emerging technologies like 3D printers which can decentralize manufacturing and of course 4G smartphones and all of the Swiss-army knife innovations it has cobbled together saving time and space — the average smartphone user today has access to more knowledge than any king or president in the past.  To his credit Gordon attempts to address the smartphone angle specifically later on, but I will explain what he misses below as well.

What are you bearish about?

I think there are more than six headwinds that the US and other developed countries are running into, unfunded entitlement programs are at the top of that list — yet is barely mentioned by Gordon.  At the same time I do not see much of a problem with a “demographic dividend” in the US as he does (p.2) because skilled, youthful immigrants are and will continue to flock to the US and fill in many of those gaps for decades to come.  The same cannot be said for other developed economics like Japan or Germany.

I think there are a number of other headwinds that Gordon doesn’t mention, like healthcare.  If you nationalize it, you not only shift the burden of compensation from one party to another but the capital allocation process is no longer rationed via organic prices but via arbitrary fiat.  Now while I doubt this will immediately result in every hospital turning into a VA like Born on the Fourth of July — it certainly is not going to help anyone in the long-run (except lobbyists and SIGs) as you cannot build hospitals instantaneously by decree and/or train doctors overnight.  Medical resources are scarce and allocating access to them in a centrally planned fashion will apriori lead to planned chaos.

While on p.2 and later on p. 10 he makes a good point about physical transportation speeds reaching a limit in 1958, he misses the fact that starting in the ’60s humanity actually went from sub-Mach 1 to the speed-of-light via fiber optics and lasers.  In fact, a lot of business communication can now be done via telepresence (like telemedicine) and interactive conference calls — saving untold amounts of time that would have otherwise been spent traveling and saved monies that can now be spent on other productive activities.  In fact,  Gordon merely mentions it in passing: the continually evolving internet.  How much productivity has been gained because you no longer have to spend time in a car to get to the Post Office, stand in line at the Post Office with a stack of documents that needs to be sent from one city to another — whereas many of those same documents today can simply be signed, scanned and emailed?  In fact, the productivity gains by internet-based communication is one of the reasons which has decimated the government-managed Post Office, forcing it to the brink of bankruptcy.

Chartism and trend lines

Gordon’s charts (specifically those on p. 6) are very interesting but more illustrative than prescriptive.   However, I don’t see him taking this into account: various agencies (e.g., a government) that malinvest and misallocate capital more than an economy can produce.  Or rather, productivity in an economy can be hampered by inefficient capital allocation.  At some point capital consumption can be so great, cannibalization can take place and if the capital needed to maintain the physical plants runs out, you can run into the productivity vs consumption wall the Soviets did.  I would like to see the 70 years of growth and decline in the Soviet Union — if it is possible to actually measure it — and plot it using the same assumptions that Gordon has.

Despite my criticism I really did enjoy his descriptive overview of the dreary life people lived (such as the manure on p.8) prior to the inventions of the modern world we now live with — especially with in-door plumbing and safe electricity.

And speaking of horse manure and streets, one of the unsung saviors of urban planning in the early 20th century was the automobile because it freed the horrifically disgusting streets of London and New York from diseases, death and decay (Gordon describes some of it, but these two pieces go into more detail).  In fact, last year NYC set a new record low for the safest roads in terms of commuter deaths per year — the safest the city has had in a century thanks to the automobile.

On p. 12 he points to the jocular 1987 quote that “We can see computers everywhere except in the productivity statistics.”  The problem with this is that it would be akin to saying in 1917 “We can see automobiles everywhere except in the productivity statistics.”  It was stated too early.  Instead we are now in an era Kevin Ashton (and subsequently Steve Jobs) called “an Internet of things.”  There are roughly as many always-on, net-connected gadgets today as there are humans.  By 2020 the amount of net-connected gadgets will have more than doubled.  And while it is certainly too early to predict what will happen next, Charles Stross recently put together an interesting hypothetical for what 2032 will look like — although the bear in me disagrees.

What is broken and unequal about it?

In terms of education as a headwind (p. 17) Gordon claims that the education system in the US has a number of unequal aspects that hinder productivity and ultimately creates two-classes of citizens.  Unfortunately he does not cite sources for this and as an aside, if the US education system is so broken as he laments, why would say, affluent Chinese people want to matriculate to it?  Suckers?  For example, a large portion of my current students here in China try hard to get placed and accepted into US grad schools (see a tangential story here).  The older ones want their children to go to US high schools.   In fact, this chart beautifully depicts where affluent Chinese send (“export”) their children for education.

I’m not saying that the numerous US school systems are not “broken” or “disjointed” I just don’t see any objective criteria for what Gordon claims is a huge impending quagmire.  Or perhaps, maybe the school systems here in China are “brokener!”  Brokenest even!  And then we devolve into hyperbole.  With all of this said, I think the move towards free online programs like Khan Academy and Udacity will enable a new generation of self-taught innovators to disrupt the marketplace.  A significant portion of IT and engineers are already self-taught and contribute substantially to aggregate productivity.  I do not see this trend (or the immigration trend) declining and thus disagree with Gordon.

His point 4 on page 17 is a bit short-sighted too.  Sure low-skill, low-end manufacturing jobs have moved from the US to other countries (yet Gordon leaves out the concept of global labor arbitrage — the Brits could have and surely did complain 200 years ago when lowly Americans were “stealing” manufacturing jobs), but as the Chinese lament, high-skilled jobs are not moving to China.

To quote a recent WSJ report, these desirable jobs remain in the developed world:

“High-end jobs that should have been produced by industrialization, including research, marketing and accounting etc., have been left in the West,” said Chen Yuyu, associate professor at Peking University’s Guanghua School of Management. Referencing the trade name of Hon Hai Precision Industry Co.,the Taiwan-based company that makes gadgets for Apple Inc. and others in Chinese factories, he said, “We only have assembly lines in Foxconns.”

Solving the problem is complex, involving a gradual overhaul of China’s education system as well as efforts to add more service-sector jobs. China’s Ministry of Education in 2010 unveiled new guidelines pressing universities to shift away from their traditional focus on increasing enrollment. It is also experimenting with giving faculty greater say over curriculum and school operations, though universities remain tightly controlled by the Communist Party.

Moving along, on p.17 I don’t see a huge push for a carbon tax at the moment.  And while I am not a huge fan of environmental government-based regulation, I don’t see much regulation “uncertainty” in this area — especially since CO2 levels in the US are now at a 20 year low — what can US environmentalists rally around at this point?  Perhaps my own geographical location in Shanghai distorts my view but this is one fight China and India continue to win at places like the WEF and G20 and as a consequence, I don’t think US policy makers will be able to push this through as easily.  Thus I don’t see the US moving in Europe’s carbon tax direction any time soon as Gordon predicts.

Of all his claims, I am most puzzled on p. 20 where he states:

The “revival of American manufacturing” is heralded in the media without recognition that this is part of an ongoing process that erodes the number of high-paying middle-class jobs available to those without a college education.

He is referring to union jobs — or many others that require occupational licensing.  I do not see labor arbitrage as having a negative effect that he does.  It will be negative to those union workers, but because labor costs decrease in those industries and thus the total cost of finished goods decrease, it means consumers will have more money to spend on other economic activities.  Opportunity costs from the diminishing”union tax” have the potential to free up capital that can be allocated elsewhere.

As I mentioned at the beginning, on p. 14 Gordon directly discusses the contribution of smartphones, noting that:

[T]he smartphone replaced the garden-variety “dumb” cellphone with functions that in part replaced desktop and laptop computers; and the iPad provided further competition with traditional personal computers. These innovations were enthusiastically adopted, but they provided new opportunities for consumption on the job and in leisure hours rather than a continuation of the historical tradition of replacing human labor with machines.

The problem with this specifically is that he does not distinguish between the seen and unseen.  You cannot see the opportunity costs in an alternative 2012 world that does not have smartphones.  While a smartphone today may not be very useful for editing and rendering wireframes,  they are incredible time savers and organizational tools.  Imagine all of the round-trips saved going back and forth to your home now that you can access your email anywhere you are or all of those wrong turns that no longer take place due to GPS.  These smartphones have become a just-in-time, jack-of-all-trade in a box.  I would argue that one of the reasons that the current global recession the developed world has experienced over the past 5 years seems to be relatively muted (that the riots in Athens are fortunately so far the exception to the rule) is that technological productivity has managed to keep apace of aggregate malinvestment and unproductive assets.

Unfortunately Gordon doesn’t measure this.

El fin

Overall I think he raises some interesting points but I am not convinced by his six headwinds for a bearish case — I have many other reasons to be bearish (which I made in that tech/debt piece a few months ago).  And I think it is a cheap shot to claim that Canada and Sweden will not face their own problems — “free” health care sounds great until whoever pays for it runs out of money and/or you misallocate capital so poorly that hospitals are no longer properly maintained and/or you don’t have the ability to meet the demand of subsidized visits.

Lastly, I do not think that that private investment and private entrepreneurs always make great decisions and/or profitable ventures — 56% of startups fail within the first 5 years.  And while I think it would be hyperbole to suggest that these entrepreneurs failed because of government intervention (there are plenty of incompetent pointy-haired bosses in the private marketplace) — to ignore the effects government intervention on the marketplace and economic growth as a whole would be myopic.

A recent Volokh post on Blackmail discusses the perennial question of when speech becomes constitutionally unprotected blackmail. The idea here is that there is a ”tension” between blackmail law and free speech rights. And even though we know blackmail law suppresses free speech, most people are in favor of it anyway. Volokh calls this dilemma “one of the thorniest conceptual questions in all of jurisprudence” and summaries what is “sometimes called the Blackmail Paradox”. The blackmail paradox observes that A is generally free to publish embarrassing information about B, or to keep quiet about it; and A is free to ask B for money to do or refrain from doing something within A’s rights. Yet

if I ask you for money or a service in exchange for my not revealing embarrassing information about you, then that’s a crime.

What’s the explanation? Legal scholars have debated this for decades, and to my knowledge have not come up with a perfectly satisfactory answer.

I disagree with Volokh. The answer is simple: blackmail law is incompatible with individual rights and should not exist, as argued by Walter Block and Murray N. Rothbard. The paradox only arises when you try to justify free speech and a law that undermines it. Yes, there is a “tension” between such law and free speech; it should be resolved not by finding the right “balance,” but by rejecting the unlibertarian law altogether.

Intellectual property, in its various forms—including patent and trademark, but most especially copyright—also limits, chills, and suppresses freedom of speech and of the press. And thus in these cases too, mainstreamers and statists, who think we “must” have these laws, but who recognize the tension between them and civil liberties, fall back on the confused and utterly unprincipled “we must find a balance” approach. As Ayn Rand might say, you don’t want to find a balance between nutritious food and poison.

As noted, trademark and even patent, and ohter types of IP such as publicity rights, undermine freedom of speech. But the most pernicious in this respect is copyright, which threatens not only freedom of the press and freedom of speech, but Internet freedom itself. In the name of copyright, books are censored and suppressed and chilled. As noted, this is a vivid illustration of a situation where libertarians and classical liberals are forced to try to adopt a “balance” between fake, positive-law rights and libertarian rights. Once an artificial, non-libertarian right is enshrined in law, it necessarily invades the turf of real, negative rights, much like printing more money dilutes the value of existing money by way of inflation.

Even the courts recognize that copyright (and defamation) laws are incompatible with free speech and the First Amendment. This is actually an argument that these and related laws are unconstitutional. After all, federal legislation on trademark and defamation (libel)is not even authorized in the Constitution. So such laws are doubly unconstitutional: they are not authorized, and are hus ultra vires, and they are incompatible with the First Amendment. Copyright law, by contrast, is authorized in the Constitution. However, the Copyright Act is clearly incompatible with the First Amendendment. What is one to do, in the case of such a conflict? Well in this case, the First Amendment was ratified in 1791, two years after the Constitution and its copyright clause (1789). Therefore, to the extent of any conflict, the later-ratified provision takes precedence. In other words, the First Amendment makes copyright uconstitutional. Not that the courts see it that way, of course. But still.

The point is: libertarians and others who believe in civil liberties, Internet freedom, freedom of speech and of hte press, should oppose positive state laws that are inconsistent with theese rights, including blackmail, defamation, trademark, and copyright law.

Addendum: Another “tension” in federal law is that between antitrust and trademark law. The former purports to oppose monopolies, while the latter grants them. See Pro-IP Libertarians Upset about FTC Poaching Patent Turf; State Antitrust (anti-monopoly) law versus state IP (pro-monopoly) law. In this case, both IP and antitrust law need to go: IP law, because it forms monopolies that antitrust law claims to oppose; antitrust law, because it focuses on private companies, which cannot form true monopolies, and ignores the real monopolies formed by the state itself.

[C4SIF]

I was interviewed a couple weeks ago by Redmond Weissenberger, Director of the Ludwig von Mises Institute of Canada. We had a long-ranging discussion on the issue of net neutrality, and we touched on other issues as well including various ways the state impinges on Internet freedom, such as in the name of IP (SOPA, ACTA), child pornography, terrorism, online gambling, and so on.

For background on some of the issues discussed, see my posts Net Neutrality Developments; Kinsella on This Week in Law discussing IP, Net Neutrality; Against Net Neutrality.

[C4SIF]

It is the tendency of the state to compile as much information as possible about its subjects, but to persecute individuals who collect and divulge information about its agents and the way they operate. The state and its supporters want to keep tabs on you, but angrily (and violently) protest when you try to keep track of state actors. In the news today we saw two examples of this:

• WikiLeaks has fallen victim to a major distributed denial of service attack for which the regime apologists at Anti-Leaks have taken responsibility (though there is speculation about this being a state-sponsored action). The attack, now more than a week in duration, coincides with the whistle-blower site’s recent release of the lastest dump of documents gleaned from the Stratfor intelligence leak. Recently released documents detail a privately administered domestic intelligence-gathering operation called TrapWire. According to PC Magazine and Russia Today, the leaks reveal that the TrapWire program is designed to compile information on targets across the United States from a network of surveillance cameras, incorporating vehicle locations and behavioral data in order to detect patterns that may signal that someone is involved in undesirable activity. The companies behind TrapWire, Abraxas and Stratfor, are reportedly chock full of former U.S. intelligence officials still serving their former masters.

• Adam Mueller (a.k.a. “Ademo Freeman“), a liberty activist in New Hampshire and founder of CopBlock, was convicted of multiple counts of felony wiretapping for his efforts relating to the publicizing of  a video-recorded attack by police officer Darren Murphy on a West High School student in Manchester. Mueller recorded conversations with the Manchester Police Department and school officials about the incident, and was charged under New Hampshire’s wiretapping statutes. This article at Pixiq about Mueller’s prosecution does a good job of explaining the “two-party consent” wiretapping laws in New Hampshire that provide the legal basis for Mueller’s persecution, as well as outlining Mueller’s unsuccessful pro se defense strategy. (Mueller was successful in another police recording case in Massachusetts last year.)

When should an entrepreneur or firm consume capital instead of accumulate it?  Earlier this week Google executive chairman Eric Schmidt debated techno-guru-investor Peter Thiel regarding innovation and finance — and never once used the word capital.

Reason – among many other sites – is covering this story and published Thiel’s following comment:

I’m Libertarian, I think [technological stagnation is] because the government has outlawed technology…I think we’ve basically outlawed everything having to do with the world of stuff, and the only thing you’re allowed to do is in the world of bits. And that’s why we’ve had a lot of progress in computers and finance. Those were the two areas where there was enormous innovation in the last 40 years. It looks like finance is in the process of getting outlawed….

[Google]has 30, 40, 50 billion in cash. It has no idea how to invest that money in technology effectively. So, it prefers getting zero percent interest from Mr. Bernanke, effectively the cash sort of gets burned away over time through inflation, because there are no ideas that Google has how to spend money….

if we’re living in an accelerating technological world, and you have zero percent interest rates in the background, you should be able to invest all of your money in things that will return it many times over, and the fact that you’re out of ideas, maybe it’s a political problem, the government has outlawed things. But, it still is a problem….

the intellectually honest thing to do would be to say that Google is no longer a technology company, that it’s basically ‑‑ it’s a search engine. The search technology was developed a decade ago. It’s a bet that there will be no one else who will come up with a better search technology. So, you invest in Google, because you’re betting against technological innovation in search. And it’s like a bank that generates enormous cash flows every year, but you can’t issue a dividend, because the day you take that $30 billion and send it back to people you’re admitting that you’re no longer a technology company. That’s why Microsoft can’t return its money. That’s why all these companies are building up hordes of cash, because they don’t know what to do with it, but they don’t want to admit they’re no longer tech companies.

Brian Doherty of Reason asks readers if there was a way to poke holes into Thiel’s position.

The problem is, on one hand Thiel is accidentally right.  Though in fairness it is not Google’s fault for the Federal Reserve’s low-interest rate policies (LIRP) and QE policies.

The problem facing innovation as a whole – one that I argue at length at Prometheus Unbound – has to do with capital structure.  It is the Federal Reserve’s fault – not Google’s – for manipulating interest rates (no offense LIBOR-gate) and thus creating a poor investment climate, poor incentives to accumulate capital.

If I may quote myself, there is actually a two-front economic war on the development of technological innovation and building a singularity.

National debt is cannibalizing and monopolizing funds that could otherwise be spent by individuals and enterprises on innovative products and services.  This same debt further crowds out private competition and productive endeavors as government agencies continue to promote national taxpayer-financed initiatives.

This phenomenon creates a disincentive to compete with national agencies working on similar projects; after all, how can you convince a VC to privately invest in space flight when nearly a dozen government agencies worldwide already do that — you have to compete against what your taxes provide!.  In addition, skilled human capital is tied up in national programs and they are apriori ducat-for-ducat less productive in government-managed projects than in private endeavors. Imagine the innovations that could come from startups if this human capital was no longer tied up in impractical, unproductive Big Science projects.

The other attack is inadvertently from central banks, whose artificially low-interest rates, and sometimes zero-interest rates (ZIRP), creates a disincentive to save as well as inflationary conditions that drive up the price of commodities, rare-earth minerals, and other materials that are used in the construction of smartphones, telecom gear, computers, fab tools, and robots.  In order to finance capital construction, in order to finance research, in order to finance an enterprise someone has to save.

When interest rates are being systematically suppressed globally this distorts time preference; it will cause planned investment by entrepreneurs to exceed planned savings by consumers.  Or in other words, ZIRP signals to entrepreneurs to consume capital (borrow credit) which ultimately leads to malinvestment in a particular asset class or classes.  As a consequence, because time preference is being distorted, market participants who would otherwise be saving or abstaining — and thus replenishing the stock of capital — take out loans to finance dubious projects that would otherwise not have been undertaken if interest rates were higher.  This leads to an unsustainable boom and inevitably a bust.

The end result, on top of innovation stagnation, is that this environment hinders consumers from being able to purchase high-quality computronium, and higher commodity prices have an unseen effect on manufacturers who are pinched from being able to produce and sell relatively cheap devices into consumer markets.

Another problem with Thiel’s argument is that he, as an outside observer, is claiming to know what is and is not the right amount of war chest a company should and should not have.  Unfortunately, there is no such thing as a “right” amount — it is entirely a decision left for market participants to figure out.  Perhaps tech firms would be better off accumulating $100 billion in capital assets.  Perhaps only $1 billion.  It is impossible to know apriori.

Perhaps Intel’s recent $2.1 billion investment in ASML will ultimately be a poor decision in the long-run.  Maybe if the Federal Reserve and other central banks were not suppressing interest rates and trying to reflate their way out of a recession — interest rates would be much higher.  And thus the decision makers at Intel (e.g., asset managers) would have faced a set of different incentives to work with — maybe they would have done a share repurchase instead.  Or issue a dividend.  Or create a skunkworks subsidiary.

Similarly, if interest rates were 500 basis points higher, firms with relatively large war chests like Google and Microsoft would also have alternative investments to consider.  Consuming capital is not always the most efficient choice — in fact, one could argue that there has been too little capital accumulation going on in the past five years and note enough accumulation — hence massive imbalances that various purging actions (e.g., recessions) are trying to rectify but cannot due to government intervention.

One last quibble: the central planners at national banks and treasury departments are (unintentionally) creating a climate of uncertainty (e.g., bailouts, subsidies, nationalizations) that sends conflicting signals to market participants.  Perhaps tech firms such as Google or Microsoft are holding out for more certain fiscal environments.  (For those interested, as an aside, Ludwig Lachmann made an entire career discussing the role uncertainty played in human action and economic coordination.)

For a thorough discussion regarding the boom-bust cycle, see p. 40 in Interventionism: An Economic Analysis by Ludwig von Mises.

Earlier this week Cory Doctorow linked to a new digital manifesto, yet another foggy declaration of internet freedom.  One of the more dubious points is this proclamation:

Access: Promote universal access to fast and affordable networks.

By declaring this as a (philosophical) positive right, it becomes little more than a euphemism for ‘let us get taxpayers to pony up to pay for net access for everyone.’

A principled manifesto, one that removes all grey areas, taxpayer subsidies, all wiggle room for abuse — can be summed up in 24 words I came up with on the subway tonight:

Deregulate all telecommunication activity, privatize all state-owned telecom assets (publicly auctioned off), legalize telecom competition and private ownership of telecom-related property — at any and all levels, including the last-mile.

There.  Hands off the internet.  If you want to start-up a competing ISP, no government will have legal authority to interfere.  And if that is not good enough, if you want to sound verbose on your twitters, I can think of nothing more direct and explicit than what the Sultan of the fictional country of Kinakuta said in Cryptonomicon:

[T]otal freedom of information. I hereby abdicate all government power over the flow of data across and within my borders. Under no circumstances will any part of this government snoop on information flows, or use its power to in any way restrict such flows.

Incidentally Ron Paul, the one libertarian-minded politician in Congress, is also drawing up a more principled manifesto in his new crusade for internet freedom.  Paul agrees that declarations such as the one Doctorow links to are nebulous:

“The revolution is occurring around the world,” [Paul's manifesto] reads. “It is occurring in the private sector, not the public sector. It is occurring despite wrongheaded attempts by governments to micromanage markets through disastrous industrial policy. And it is driven by the Internet, the single greatest catalyst in history for individual liberty and free markets.”
[...]
“Internet collectivists are clever,” [Paul's] manifesto says, accusing their foes of series of Orwellian linguistic twists. “They are masters at hijacking the language of freedom and liberty to disingenuously push for more centralized control. ‘Openness’ means government control of privately owned infrastructure. ‘Net neutrality’ means government acting as arbiter and enforcer of what it deems to be ‘neutral’.”

“This is our revolution — government needs to get out of the way,” [Paul's] manifesto concludes.

While I do not necessarily endorse Paul’s manifesto either (in large part because it is pro-IP), I have argued recently elsewhere that the government (of all levels) is a key culprit standing in the way of technological progress.

Here is to hoping that efforts to further (re)nationalize the tubes will not germinate — remember, it used to be completely owned by government granted monopolies: AT&T and the NSF.  So just say no to a National Broadband Policy.

Be sure to also read “Radio Free Rothbard” (pdf) by BK Marcus, “Against Intellectual Property” (pdf) by Stephan Kinsella and The Great Firewall of Net Neutrality.

From ars technica, a report about a proposal from a couple of Congresscritters who opposed SOPA for a “Digital Bill of Rights,” to help maintain a free and open Internet. The proposal calls for these “rights”:

1. The right to a free and uncensored Internet.
2. The right to an open, unobstructed Internet.
3. The right to equality on the Internet.
4. The right to gather and participate in online activities.
5. The right to create and collaborate on the Internet.
6. The right to freely share their ideas.
7. The right to access the Internet equally, regardless of who they are or where they are.
8. The right to freely associate on the Internet.
9. The right to privacy on the Internet.
10. The right to benefit from what they create.

This has some promise, but it’s both under- and over-inclusive. Under-inclusive in that it doesn’t call for the abolition of copyright, or for a radical reduction in term and penalties. In fact it suggests copyright is some kind of “right” in its call for “The right to benefit from what they create.” But so long as copyright exists, it is impossible to avoid its free-speech and free-press suppressing effects. There will continue to be a “balance” struck between copyright and First Amendment type rights; i.e., free speech will continue to be chilled and suppressed (see my post “Copyright is Unconstitutional”). It is impossible to have “a free and uncensored Internet,” which the new Digital Bill of Rights calls for, so long as there is copyright. You cannot have both free speech, and copyright.

And it is over-inclusive in that it calls for things like “the right to equality on the Internet” and “the right to access the Internet equally, regardless of who they are or where they are.” These and some other proposals are troubling in that they are not clearly limits on government behavior, but potential authorizations to the government to limit private actors. For example these provisions could be used by the state to regulate private companies in the name of “net neutrality” or to provide some kind internet access as a positive welfare right or privilege. (See my posts Net Neutrality Developments and  Internet Access as a Human Right.)

Congress should not be declaring “rights,” since it can then serve as a source of power to the feds to regulate private activity, much as the federalizing of the Bill of Rights by way of the Fourteenth Amendment has served not to limit federal power but to extend it to regulating state laws. Congress should do nothing but limit its own power, since it is the federal government that is itself the biggest threat to Internet and digital freedoms.

A better, simpler, more effective, and less dangerous proposal would read something as follows:

1. Copyright law is hereby abolished [or its term reduce to 5 years and statutory damages eliminated].
2. Congress shall have no power to regulate or tax activity on the Internet, including gambling or commerce.

Here’s the ars technica piece:

 

SOPA opponents unveil “Digital Bill of Rights”

Sen. Wyden and Rep. Issa want to protect digital citizens.

by Nathan Mattise - June 12 2012, 3:07pm CDT

The “Digital Bill of Rights” debuted at the Personal Democracy Forum in New York City on Monday. The document draft comes from Rep. Darrell Issa (R-CA) and Sen. Ron Wyden (D-OR), two key figures in the battle against SOPA.

Issa and Wyden created the Digital Bill of Rights because they were concerned about what seemed like a legal oxymoron: lawmakers trying to regulate the Internet without understanding how individuals use it.

“Government is flying blind, interfering and regulating without understanding even the basics,” Issa wrote on his website, KeepTheWebOpen.com (you can find a draft of the Digital Bill of Rights there). “Where can a digital citizen turn for protection against the powerful?”

At the conference, Wyden likened this project to a digital version of the “Constitutional convention.” It’s a convention that Issa and Wyden hope Internet users will participate in. On Issa’s site, he openly encourages readers to consider the current draft and suggest revisions (at the publication of this post, several individuals have already logged in to take that offer). Currently, the ten key rights are as follows:

1. The right to a free and uncensored Internet.
2. The right to an open, unobstructed Internet.
3. The right to equality on the Internet.
4. The right to gather and participate in online activities.
5. The right to create and collaborate on the Internet.
6. The right to freely share their ideas.
7. The right to access the Internet equally, regardless of who they are or where they are.
8. The right to freely associate on the Internet.
9. The right to privacy on the Internet.
10. The right to benefit from what they create.

Have any edits for Issa and Wyden? Contribute directly (sign-up required) or add them in the comments below.

 

[C4SIF]

While he is already known in libertarian and Objectivist circles as an administrator for the Mises Institute,  ObjectivismOnline and numerous other sites, David Veksler has unveiled his latest project: CryptAByte:

a free online drop box that enables secure (encrypted) message and file sharing over the web using a public-key infrastructure.

Tim:  Can you tell us a little about the project, what motivated you to make it?

David:  I am a strong believer in the ability of cryptography to empower people to form private, voluntary associations.  Basically, I see crypto-anarchism as the most practical path to agorism.

But my project has more modest goals:  I want to help make encryption ubiquitous, and that requires making it accessible to everyone.  Current secure communication tools like PGP are too difficult for everyone to use.  We need something like HTTPS to provide a foundation for ubiquitous encryption.  CryptAByte is an API as well as a proof of concept platform for secure communications.

Tim:  How long have you been working on it?

David:  About three weeks.

Tim:  What is your ultimate goal with it?

David:  I want to build a platform for private communication. For example, I would love to see someone to build a file sharing or email client on top of my service.

Tim:  Who is CryptAByte for, just whistleblowers?

David:  No, anyone who wants to keep his communication private is welcome to use it.  But it can also be quite useful for whistleblowers and other such scenarios.

Tim:  Can you describe some of the technology behind CryptAByte?

David:  CryptAByte uses public-key encryption just like HTTPS/SSL and OpenPGP/PGP. The algorithms used are RSA for key pairs, AES 256 to encrypt messages and files, and SHA 256 for hashing.  The servers hosting this application support can encrypt 2.1 GB of data per second using the latest Intel CPU’s with AES support built into the chipset.  The service is built with ASP.Net MVC and Sql Server for the backend and jQuery UI for the front end. A RESTfull API is available for third party web and desktop apps to build on the platform.  The full source code will be release when the platform is stable.

Tim:  Is there a role for CryptAByte with crypto-anarchy, or is that an impossibility?

David:  I just want to provide a platform for people to build on.  I will open-source the encryption architecture when the service is mature.  What people do with it is up to them.  It will not start an agorist revolution, but maybe take us a tiny bit in that direction.

Tim:  With a plethora of open-source PGP and anonymizing projects in development around the world, can any government really stop the inertia at this point?

David:  Earlier this week a developer for an encrypted chat application called “Cryptocat” was detained and interrogated at the US border.  Back in 2010 Tor developer Jacob Applebaum was also been detained and questioned.  So yes, even after Phil Zimmerman successfully fended off US Customs 15 years ago, various agencies are still interested in this space.

Tim:  Is there anything else that you would like to say about encryption general?

David:  You don’t have to use my service, but if you’re sending your email, IMs, and files in plain text, you should know that some automated system, whether state-based or corporate is probably archiving your data and indexing it for keywords and you have very little control over how that information will be used.  There are great tools out there to ensure that your life remains private and I encourage everyone to use them.

Tim:  Thanks for your time.  And to illustrate David’s concluding remarks, readers might be interested in a recent piece from Wired detailing the NSA’s new facility in Utah as well as the Washington Post’s expansive exposé published last year: Top Secret America.

David Brin is the author of science fiction novels The Postman, the Uplift series beginning with Sundiver, and others as well as the ever-popular nonfiction work, The Transparent Society: Will Technology Force Us to Choose Between Privacy and Freedom?. He recently sat down with Reason.tv’s Tim Cavanaugh to discuss his recent criticisms of “dogmatic libertarians,” his hobbyhorse of government transparency, and the subject of uplifting dolphins.

I have much to say about Brin’s attacks on “dogmatic libertarians,” by which he means followers of Murray Rothbard and Ayn Rand who worship property too much, but watch the video first and then continue on below for my commentary.

I’ll state right up front that I do not think of Brin as a libertarian, much less as a heretical one (as he describes himself). To the extent that he is right on anything, he’s not telling libertarians anything new. As for the rest, I’ve seen enough on his blog and various social networks to come to the conclusion that he doesn’t understand the actual positions held by principled libertarians (as opposed to the bizarre straw men he’s concocted and attributed to us) and that it’s impossible to carry on a civil, constructive conversation over the internet with him about libertarianism if you disagree with him on the subject. Although he says in the video that he doesn’t want to insult, after he’s already insulted, if you dare to challenge his views about “dogmatic libertarianism,” prepare to be mocked and insulted and misinterpreted and talked past.

Brin says, “The issue should not be government. It should not be unalloyed and unlimited idolatry of personal property,  which is the path that the libertarian movement has gone down.”

I have no idea what he means by “unalloyed and unlimited idolatry of personal property” and I’ve yet to see him give a clear explanation of this magic-talisman phrase he bandies about like a Hammer of Refutation. I can’t imagine what problem he sees in upholding private property rights. He seems to think our “unalloyed and unlimited idolatry” somehow leads to oligarchy, but I’m at a loss as to how it is supposed to do so. I can only assume he thinks it means we must uphold “rights” to even unjustly acquired property, but this is simply not so.

The phrase is also code for “Hey, man, let’s be practical; sometimes one has to make compromises, break a few eggs to make an omelette.” Those who want government solutions to perceived problems hate it when libertarians stand on principle and refuse to budge. It drives them into uncivilized fits of apoplectic, frothing rage.

Brin also seems to think that so-called “dogmatic libertarians” have lost sight of the importance of competition and transparency and whatnot. Uh… No. No, we haven’t. I don’t know where he gets this stuff from. We see private property rights as making fair and creative competition possible in the first place; and we value fair and creative competition greatly, especially those of us who see intellectual property as illegitimate government grants of monopoly privilege that can only be enforced by infringing on the pre-existing rights of others to their physical property.

“Libertarians need to be reminded that, across 6,000 years, the greatest enemy of free enterprise, of market enterprise, innovation, creative competition… have always been oligarchs,” says Brin.

No… No, we don’t. But mayhaps you need to be reminded that all forms of government, not just the one labeled oligarchy, are ultimately ruled by oligarchs. It’s in the nature of the state. You know… that organization you said we shouldn’t concern ourselves with. Theory and history show us that it is through the state that oligarchs acquire and exercise their power. Without it, they are impotent. It is the state, always ruled by oligarchs, that has been the greatest enemy of free markets, free enterprise, innovation, and fair and creative competition.

The Pyramid of Oligarchy

In the video, Brin lays out a plan to rein in government growth, corruption, and “abuse.” Here’s a summary: Let’s draft 10,000 average Americans into a pool every year. Excuse Brin’s poor choice of words; this “draft” is one that can be refused without penalty (although an opt-out system is an unnecessary hassle for people and is frowned upon by savvy Netizens). We’ll then do background checks on this pool of candidates to winnow it down to a list 1,000 trustworthy, loyal citizens who can keep their mouths shut. Give them security clearances and arm them with a badge that let’s them get in any door in the United States of America — you read that right, any door. They are tasked with watching the watchmen. There will be penalties for revealing “anything about anything the’ve seen.” Brin suggests a mere month in jail. The idea being that spending a month in jail will be a price worth paying to patriots in order to bring truly heinous acts of government out into the light so that they can be stopped.

What was interviewer Tim Cavanaugh’s response to all this? “Huh. Okay.”

That’s it?

This didn’t immediately strike him as a terrible idea? He didn’t think or, better yet, say: “Gee, this can’t possibly go wrong.” Not a single problem with the proposed system immediately sprang to mind that he could ask Brin to address? Or did Cavanaugh just not want to ask the celebrity any tough questions?

I’ll just toss a few ideas off the top of my head into the ring for consideration:

1. Who is going to administer this new system of citizen-watchmen — the lottery for the draft, the background checks, security clearance decisions, and so on? Oh, that’s right — the government. Despite Brin’s talk about non-governmental, or market, solutions to problems, his proposal is a government solution to a government problem (government failure).  What? You need me to flesh the implications out for you? Okay…
2. It means the creation of a new bureaucracy or ratcheting up an exsiting one. Either way, a WIN for big government and more spending! That’s what we libertarians are fighting for!
3. Who’s to say the penalty won’t be ratcheted up over time like the income tax? Thus decreasing the risk to government officials that their secrets will get out?
4. The selection process couldn’t possibly be rigged or gamed, could it?
5. No citizen-watchman would ever take a bribe to keep quiet,  surely.
6. Or stay mum in the face of threats to himself or his family… right?
7. Brin’s proposed system entails acclimating Americans to increased government surveillance of and deep-probing into their public and private lives. Oh, and revisit #4-6 in light of this. Worse, it might come to be seen as a patriotic duty to accept such scrutiny from the government.
8. Brin says there will be penalties for revealing “anything about anything the’ve seen.” I hope he’s only referring to classified or top secret, not unclassified, information here. Let’s take him charitably and assume he is; how much do you want to bet that this will lead to more and more aspects of government becoming classified so as to have the threat of the penalty for revealing what is seen hanging over the citizen-watchmen’s heads for matters of less and less importance to the “national interest”?
9. The system Brin proposes is likely to make people more complacent about government in the same way and for the same reasons that democracy fools them into believing they’re ultimately in charge and that regulations encourage them to abdicate responsibility for the quality of the goods and services they buy, for their own safety and security and that of their families, and so on. “Hey, man, there’s a system in place to make sure our representives and public servants do what they’re tasked with doing and to weed out corruption and bad secret policies and stuff. They have enough volunteers. I don’t need to waste my valuable  Celebrity Apprentice–watching time ((Bread and circuses! Bread and circuses!)) worrying about it. Did you see what happened last night? Aubrey O’Day is soooo right. She’s the only one with any talent on her team. Nobody else every has a creative.”
10. Brin doesn’t  mention monetary compensation for being a citizen-watchman. Is it likely that as many as 1 in 10 draftees will not only accept being drafted but pass the background checks to qualify for a security clearance? A much larger pool than 10,000 might be needed. And might there not be a selection bias in who chooses to accept the responsibility after being drafted? No potential for abuse there?
11. What if the citizen-watchmen are generally okay with things libertarians would deem heinous? In light of the direction this country has been headed lo the past couple centuries, this isn’t much of a stretch, is it?
12. Brin says that citizen-watchmen will be able to get into any door in the United States. Any door. I hope he means any government door, not really any door.
13. Let’s face it, Brin’s proposal is a pipe dream. The Powers That Be will never let it happen and the American people are not really interested in that level of transparency in their government — not enough to make Brin’s plan a reality, at least. And Brin has the gall to mock and blame “dogmatic libertarians,” the lapel-grabbing (lolwut?) Rothbardian and Randian wing of the movement, for the Libertarian Party failing to make headway (more than 1%) at the polls in presidential elections.
14. Brin’s citizen-watchman program will be funded by taxes, and taxation is theft. Oh, sorry, did I grab your lapels too hard?

I could go on, but what’s the point of continuing to kick a dead horse?

[Prometheus Unbound]