Brazil

Well, Terry Gilliam didn’t get quite right. His version of a storm trooper gestapo enforcing a byzantine bureaucratic regime failed to include the obligatory prayer that would attend the required signature receipts.

Document-Sourced Journalism as a Rent-Seeking Industry

NOTE: This unfinished post has been sitting in my draft box for about two months. With each passing day there are diminished motivations to complete it. So I am just going to hit the publish button.

Three years ago I wrote this little piece that touched on the extant difficulties of successfully replicating a distributed wikileaks model of document-sourced journalism. The crux of the problem: social media by and large fails as an editorial platform for document-sourced journalism. To be more specific, editorial capacity does not spontaneously emerge from social media as a solution to a type of collective action problem for wide-scale information/knowledge dissemination of document dumps. Wikileaks, simply as a technological platform for anonymous distribution of leaked documents, does not produce information/knowledge shocks. To achieve the latter requires “wikileaks” to also function along the lines of a traditional journalistic organization. That is, it must provide editorial context, expertise and discretion1.

But this transition of Wikileaks from technology platform to journalistic organization is what turns it into a “firm.”2 Now what I mean by this is further elucidated in the footnote below. But “Wikileaks as a firm” introduces an attendant issue of “geopolitical differentiation.” And it is the problem of geopolitical differentiation that prompted me to originally comment on the non-triviality of replicating a wikileaks model.

I bring this all up because the recent leaked announcement of a Glenn Greenwald,Jeremy Scahill Laura Poitras journalistic media venture financed by Pierre Omidyar looks to me to be the first actual legit successor to wikileaks. However, this announcement has not been greeted by universal acclaim in the radical community. Perhaps the general nub of this dissent is captured by this Arthur Silber rant. Interestingly, I find the radical critique to mirror the statist one. The crux of each is a challenge to the editorial discretion of the journalist in question. The statist claims too much is being leaked(usually attended by gobbledygook about how self-appointed editorial discretion is circumscribing the legitimate actions of democratic collective action) while the radical denounces too little has been divulged(accompanied by accusations that self-appointed editorial discretion confers a type of power that turns the dragon slayer into the dragon).

But there is a straight-forward rejoinder to the radical bemoaning the lack of an objective standard regarding what is published and the pace at which it is published. Namely, the leaker, Snowden(and before him, Manning), did not leak to a technology platform or to a social network, but rather to an entity the leaker self-calculated would provide maximum information shock value(“news”). Any radical ire on this matter should be directed at the leaker because it was the leaker who made the risk-reward calculation that the risk was only worth it if the reward entailed wide-scale publicity of the information being leaked. Information shock value requires editorial discretion on the part of the journalist(or journalistic entity). And as elaborated in the appending footnote, this editorial discretion entails a type of firm organization pattern. Sans this information shock value–which is what the Firm is meant to produce–the Firm offers little incentive to the leaker to leak(the leaker is incentivized by information shock) and without the participation of the leaker, the Document-sourced journalistic firm is a null entity.

Frankly, the radical disputes on this matter illustrate an object lesson why you have firms. A generic/informal social graph3 not oriented around a specific objective with no dispute resolution implementation in place suffers from the bargaining costs of haggling(or, in this case, bickering) horizontal trading partners(connected nodes). Now this is not to say that all social organization stratifies around a firm or that a generic social graph cannot reproduce the same results as a firm, but in a certain class of cases, a firm will beat an informal graph and beat it badly. Document-sourced journalism is likely one of those cases. A leaker, working against a significant risk calculation, is likely not going to leak to a platform or a network that poses uncertainty with regards to editorial discretion. An informal social graph characterized by heterogeneous opinion regarding editorial discretion is not reliable(particularly from the point of view of the leaker).

1The original wilikleaks model treated the dissemination of information shocks(‘news’) from its document repository as a type of social media collective action problem. However, social media as a network connected graph(more often than not) organizes around communicating moral judgements than coordinating expert division of labor (In other words, better at opinion journalism than investigative journalism). Think of a “blog roll” or “twitter friends.” A typical blog roll does not consist of an assortment of cryptographic experts, language experts, cultural experts, policy and government department experts, etc… the type of graph relationships that could facilitate spontaneous editorial contextualizing of an arbitrary document D if node i in the given social graph decided to go document browsing.

Instead, each node in a social media graph, with regards to document browsing, roughly encounters the same “rational ignorance” problem inherit in the “voting problem.” Now if you know beforehand that it is “worthwhile” to spend resources examining a given document D, because it exposes important information, then you would do it. But if you don’t know beforehand, you probably won’t. The resources you expend to research if the document is indeed newsworthy, or the resources required on your part to contextualize a given document’s particular newsworthiness(which likely requires cross-discipline expertise), exceeds the benefit you can expect from your own considerable effort. Your “social graph” isn’t helping you out any more than your traditional circle of friends helps you out with respect to the traditional voting problem.

Now, if editorial context provides advance knowledge, then the problem outlined above perhaps goes away. In much the same way that the “voting problem” can go away in a given instance if a newspaper editorial exposes that in a race between candidate A & B, candidate A, say, turns out to be a Nazi sympathizer(rational ignorance potentially is mitigated by the strength of the information shock). If editorial context for a document is provided, then a social graph or network can form for the dissemination of the document as an information shock.

The above highlights the distinctions between a social graph and a “firm.” A Firm can certainly be cast as a type of connected graph, so it is a special type of social graph. However, a firm’s “connectedness” is oriented around the execution of a specific objective(or set of objectives), and a firm implements a dispute resolution pattern for the connected nodes to facilitate execution of said objective. Hence, a Firm can be thought of as a DRO subclass of a social graph.

Wikileaks, in its second iteration, transitioned from a technology platform to a firm. That is, the aforementioned collective action failures of social media to provide editorial context for leaked documents would be remedied by Wikileaks itself acting as editor. The role of an editor is to provide context and expertise for published news and to exercise discretion in regards to what is published and the time-frame that it is published in. This introduces all the classic hallmarks of a DRO type.

 

 

2 Note: A Firm does not necessarily mean “corporation.” A corporate legal entity is a subclass of a Firm

 

 

3Note: A generic/informal social graph does not necessarily mean peer-to-peer(P2P). Fundamentally, P2P is a type of protocol, in particular, a “discovery protocol” that offers an alternative to the more traditional client-server model. However, for some reason, quite a bit of “moral evangelizing” is attached to it because supposedly it is more “hierarchically flat.” But this is a bit of a misnomer.

Example: Bitcoin Transactional Verification(“mining”) operates via a P2P discovery protocol, but bitcoin mining nonetheless is dominated by firms. A typical “blog ring” operates over the standard client-server model but the social graph of the blog-ring itself may be hierarchically flat.

A P2P discovery protocol operates over a scale-free network exhibiting a power law topology(“the internet”). Power laws in internet topology are about as scientifically reliable as observing gravity to be an attractive force. “Six degree of separation” and the “80-20 rule” are cornerstones of what we might term “the small network.” The small network is neither horizontally flat nor decentralized. The “small” refers to the distance or hops between any two arbitrary nodes.

A good example of a hierarchically flat, decentralized document-exchange network is the library system from, say, two centuries ago. Flat, decentralized networks are generally non-interoperable with one another by default. So a document exchange between a node i in network A and a node j in network B likely entails significant transaction costs. Hence, cross-network document exchange is costly and limited to the few. Not exactly egalitarian…
(Note: the origins of the portable document format originated from trying to address the problem of document exchange on disparate hardware/software platforms back in the late 1980s).

P2P aside, the actual point being made is that the abstraction of a social graph is generally not concerned with the underlying application protocol, although an internet topology characterizes the network where the social graph lives(for the most part). The terms “generic and informal” refers to the binding relationship between nodes.

What Is Free Trade?

Terms like “free trade” and “free markets” are ubiquitous spout from the lips of libertarians. Occasionally, it is helpful to review what these terms actually mean. “Free” specifically refers to free of any encumbering moral ends other than the ends of the exchanging agents. So it is a matter of liberty. Practically, it means no contravening authority standing between supply and demand. The only justice promised is one of mutual advantage.

Here is what “free” does not mean(in terms of a sufficiency condition): (i) efficiency (ii) self-regulation (3) un-regulation (4) de-regulation (5) perfect competition (5) pareto optimality (6) nihilism (7) justice ….

Yes, “free trade” is not even a sufficiency condition for mutual advantage in the sense that if we show “free trade” we necessarily show “mutual advantage.” Otherwise, there would be little need or demand for that thing called the law.

The point is that “free trade” presumes liberty but implies little beyond that other than an implicit(sometimes explicit) promised mutual advantage. We fashion “free trade” into a social theory(spontaneous order, invisible hand, etc) from experience and attempt to model this experience by economic analysis of rational (marginal)utility calculating agency. While I have no quibble with this per se, it remains important to be cognizant of the distinction between a social theory(predicated on a justice of mutual advantage) and methodology of economic modeling.1.

For example, the notion of “market failure” is in need of a curious bit of deconstruction. “Free Trade” presumes liberty but implies little beyond that. “Free Market Failure” is really a bit of a non sequitur. What we really have is “model failure.” This justifies all sorts of government regulatory intervention to enforce a model outcome. Of course, when we apply an economic analysis to the regulatory agency itself we end up with a predictive model error of correcting the original “model error.” This, of course, is termed “government failure, the distinction here being that the “regulatory agency” is actually promising everything.

Frankly, I think the above example demonstrates why laissez-faire doesn’t comport very well with the neoclassical economic method. That which treats “free trade” as a matter of liberty is always going to spit out model error by something that treats it instead as a regulatory model of a rational pattern.

The incongruity between liberty and regulatory efficiency can be profound. To see this, consider “comparative advantage.” We all should be familiar with how opportunity costs explain patterns of trade. Even if, say, A is superior in productive skill and efficiency to B for every produced item in a given economy, there are opportunity costs involved in A dividing time and labor to self-produce all items of our given economy. So rather than dividing the time up proportionately to produce everything, A specializes in those things which it does relatively best at(compared to what A does less best at, or earns less from), leaving an opportunity for B to produce the other things for trade exchange.2

No doubt opportunity costs explain trade patterns. But comparative advantage also implicitly suggests something else: namely, refusing to trade imposes external costs on trading partners. In our A-B model, if B refuses to trade with A, B imposes costs on A. Essentially, refusing to trade not only hurts yourself, but it also hurts others.

Now I won’t dispute the external costs implication of comparative advantage. However, I will dispute that these costs are a form of injustice, or more specifically, that these costs are something that need to be enforceably corrected(in the legal or regulatory sense). “Free Trade,” after all, must include the freedom not to trade. Otherwise, it is just another form of “freedom to obey.”

However, within the purview of neoclassical economics, “enforcing” Free Trade is entirely consistent with a regulatory model of a rational pattern.

This brings us to a consideration of these “Free Trade Agreements” such as TPP. The public arguments for these trade pacts–supported by many libertarians–essentially reduce to correcting the external costs implied by comparative advantage. The rationale is that despite any “flaws” these pacts are an improvement. An ancillary argument is that if the US doesn’t take the lead in forging these agreements, it opens the door for less savory countries(read: China, Russia) to forge something far less agreeable.

Frankly, these Free Trade Agreements demonstrate why sometimes it is better(perhaps always) to think like a philosopher and not like an economist. In lieu of thinking about the pareto efficiency of trade models, one perhaps may be better served contemplating the philosophical implications of a social theory that implies one bad actor playing a bad strategy forces everyone to play a bad strategy. Au contraire, “justice of mutual advantage.” More like a suicide pact.

Perhaps only after such consideration is it then profitable to dissect the problem from an economic point of view.

From a public choice perspective, these “free trade agreements” are essentially trading decison-making costs for external costs. Recall decision-making costs are “the price we pay for civilization.” These type of costs are imposed by a decision-making rule whose legitimacy–at least within the purview of liberal political theory–is delineated by some condition of unanimity.

A trade-pact is rent-seeking bargain. But the decison-making cost of this bargain results in a disclaimer that the price we pay for civilization–in this case, trade–is the loss of geo-political differentiation. In other words, unitary jurisdiction. Or more descriptive yet, oligarchical collectivism.

When the United States declares the entire planet a battlefield or issues talking points asserting global jurisdictional reach, it is not grandstanding on an explicit or implicit threat of military invasion. Instead, it is relying on a presumption of organs of a unitary political economy serving as an agency of enforcement. Wherever you are on this planet, there stands an authority between supply and demand that is hierarchically intertwined with the regulatory jurisdictional reach of any government. The price of dissent is that you do not trade. Or another way to put it: you can trade but there is nowhere to run.

A rent-seeking bargain that imposes decison-making costs is the negation of Milton Friedman’s famous aphorism regarding capitalism and freedom: showing freedom is sufficient for showing capitalism3. Friedman’s aphorism fails because capitalism as an economic treatment translates to a regulatory model of a rational pattern. And an economic analysis of this regulatory model suggests the potential for an intractable agency problem. If trade entails a decision-making cost attached to the enforcement of the regulatory model, then capitalism trumps “liberal trumps,” with the latter defenseless against an agency problem in our rent-seeking bargain.4

This agency problem is why I reject the notion of markets as any instrument of social justice, a la bleeding heart libertarianism. To treat it as such an instrument is to treat it as a regulatory model of a promised rational pattern. Enforcing the promise is what introduces the agency problem. Markets serving in the role of a type distributive justice may indeed by an observed pattern, but justice without an enforcement mechanism/agency is a trifle thing indeed. Distributive justice as an enforceable outcome is not a free market.

I conclusion, I am bit flummoxed at the extent many libertarians endorse “free market” as a regulatory model of a rational pattern. Whether cognizant of it or not, this endorsement more or less substitutes “free trade” with “conscription to the market.”5

Interestingly, the most recent cinematic work of the Wachowski brothers(actually now brother/sister since Lana now identifies as a trans-gender), Cloud Atlas(which is a cinematic adaptation of a novel and not an original screenplay) illustrates my point quite dramatically, demonstrating that if a picture is worth a thousand words, a good film is certainly worth a million.

In the futuristic corporate state, Neo Seoul6, fabricant AI subordinate themselves to indentured contractual servitude to the efficient functioning of consumer society. In exchange, the fabricants are promised a retirement nirvana(operating under their own agency with no wants) at the conclusion of their contractual obligation. The fabricants are indoctrinated into a religious catechism oriented around the sanctity of the consumer.

In reality, the fabricants are not given their promised nirvana. Instead they are duplicitously decommissioned and recycled as a cheap source of protein to newly “manufactured fabricants.” The underground rebellion to the corporate state places its hope in the emergence of “free will fabricants,” in the story dramatized by sonmi-451. When sonmi-451 is given the “liberty to read,” she rejects the present bargain of indentured servitude in exchange for a future payoff of agency. This is before she learns that the promised future is actually a sham. The immediate consequence of her decision, of course, is her own execution7.

Just as “unpluggable” perhaps conveys more immediate meaning than any lengthy tome against the standard liturgy of political obligation, to those who insist on intoning the free market as some type of regulatory model, whether it be efficiency, trade deals or social justice, perhaps the best response is simply: sonmi-4518

1 economics is certainly useful as a positive science in describing observed patterns but I find it often suffers from an Is-Ought problem in making unjustifiable prescriptive statements. I believe this view is substantiated by Tullock’s little-referenced work, “Efficient Rent-Seeking: Chronicle of an Intellectual Quagmire,” which establishes the apparent quagmire of prescriptive reasoning in economics. As I would say, Free Trade is little more than a statement about “free agency” or “free will” and not a logical condition for any model outcome.

2 Absolute advantage/superiority of A over B in everything is not real-world. It is merely an illustrative device to demonstrate how opportunity costs trump the historical notion of “absolute advantage” in explaining trade patterns.

3 Freedom is understood to mean in the “liberal” sense.

4 Richard Stallman’s classic parable, “The Right to Read,” is an excellent example of this point.

5 Free Trade is contingent upon a free agency or free will. However, this should be distinguished from the libertarian meaning of “free will” in metaphysics, which is contingent upon path independency(in determinism, similar to mechanics in physics, knowledge of initial conditions of a path is sufficient to know the path at any future state). The question of whether one has a choice in preferring A to B is an interesting one, but not germane to the discussion. Free will in our discussion is perhaps better interpreted as “free preference,” i.e., the liberty to act according to preference.

6 The ideological party of this corporate state is “unanimity.”

7 The Buddhist-Existentialist theme of the story is that we are a product of each other’s stands that ripple throughout time, so the future consequence of her decision is a better outcome down the line within “the cloud.”

8 451 is obviously a nod to Fahrenheit 451, specifically the auto-ignition point of paper books.