A Picture is Worth a Thousand Arguments

Regarding the I,Spy argument I made back in 2012:

http://arstechnica.com/tech-policy/2014/05/photos-of-an-nsa-upgrade-factory-show-cisco-router-getting-implant/

Quod Erat Demonstrandum

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The State is its Own Agency

That the NSA has now commenced with overt pressure campaigns to countermand any legislative effort to curtail its vast surveillance enterprise cements an obvious liberal dilemma regarding the agency of the State. Make no mistake, totalitarian spying exemplifies an agency whose ends are in competition with the ends of its own citizens. This is a fatal violation of the liberal paradigm out in the open, staring you right in the face.

The germane question which moves to the fore of consideration hence pertains to the extent of government surveillance. Is it indeed totalitarian? If we were to constrain the scope of consideration strictly to the NSA itself, then the answer would probably be no. It’s modus operandi does not follow the traditional taxonomy of the textbook totalitarian spymaster. However, thanks to the documentation leaked by Edward Snowden, what we have now is confirmation of the cypherpunk dystopian model, which in a real sense, is much worse, for it portends a sustainable template of planetary social control. The NSA in and of itself is one thing. However, in the larger context of its coerced “strategic partnerships” with the top US internet & software companies–as means to facilitate/execute the data collection requirements–what we end up with is quite another: the equivalent of a libcap library on every one of your network devices persistently cataloging your “matrix” in the well-connected social graph, built and maintained under the “legal auspices” of a three-hop dragnet.

In light of the Snowden revelations, the NSA has embarked on the aforementioned pressure and information campaign to countermand the PR damage. Just yesterday, the NSA released two documents that purport to dispel the notion of it being an agency of totalitarian collection. Having just read them , I can say that the 1.6% statistic of “touched traffic” and 0.025% statistic of “reviewed traffic”, on a daily basis, are highly misleading. The first hoodwink is to point out that out of the exabyte daily traffic volume, roughly 60%-70% is ip video traffic1, which shrinks our “basketball court” down to the size of a racquetball court. The second hoodwink is to infer the sampling follows a pattern of independent random trials–in the classic stats model, proving or disproving a hypothesis drawn from such a random sample–instead of what it actually is: the accumulation of a graph-based document store enabling a traversable, retrospective query system. The whole thing is just plain subterfuge.

By now, it should be apparent that I consider the cypherpunks to be the most relevant social scientists of our day. In no small part because they are at the forefront of the battle-lines of 21st century political economy. Assange, for one, has been singularly confirmed on a number of points. In particular, the US reaction of “Insider Threat” has to count as spectacular confirmation of his thesis of “conspiracy and networks.” The kernel of differentiated political and economic jurisdiction that always lurked beneath the rationale of wikileaks now seems obvious in light of what is required for secure and autonomous cloud computing platforms going forward2. Assange’s contention that legal and regulatory entities were engaging in data-laundering–that is, ex post manufacturing legal reconstructions of “evidence” gathered from the NSA dragnet spying enterprise–has since been confirmed by Reuters with respect to two agencies: the DEA and the IRS.

In contrast, the “liberal” political and academic establishment are dinosaurs. No better example of this than this piece at “Bleeding Heart Libertarians,” The United States is not a Police State. The entire piece is a confirmation of my (quite prescient, as it turns out) old post, Free Market Fairness: A bridge to nowhere. Fernando Teson’s entire argument boils down to the position that truth should never stand in the way of mainstream recognition. Of course, as I pointed out in that earlier post, the “respectable libertarian formulation,” in the form of the chicago school, had held sway for thirty years in the domain of finance and “regulatory reform” leading to nothing but banking oligarchy and a permanent severance of political freedom from capitalism. As I pointed out at the end, all it would take would be a minority dissident faction to blow that entire thesis to smithereens and force the “bleeding hearts” to side with what everyone and their brother–outside of polite academic company–knew to be tyranny and oppression. I’m not surprised “Edward Snowden” doesn’t appear in any post on that site, outside one inclusion in an obscure link.

Frankly, the boogeyman of North Korea is tiresome as the singleton measuring stick of totalitarianism. For starters, the inquisitive person might ask just how long North Korea would last if not for China and the US directly and indirectly propping it up(which should trigger a deeper discussion of the taxonomy to begin with when considering States that prop up even worse monsters). However, the better question might be why the persistent singleton casting of 21st century totalitarianism in the mold of mid-20th century soviet model when that model–in terms of having any sphere of international influence–died out two decades ago?

In the recent book, “Cypherpunks: Freedom & The Future Of The Internet,” Andy Muller-Maguhn specifically outlines the stated intent of our 21st century spooks: the use of secrecy as a means to gain control of social processes. This presents a countervailing agency problem more along the lines of a “squishy totalitarianism,” but this is more than sufficient to eviscerate the liberal paradigm. In fact, it acquires a particular sinister aura because it appears quite apparent that most are quite comfortable persisting the liberal mythology within its confines. The industries of “social justice” and “the invisible hand of market social coordination” will continue to spit out oblivious drivel because after all, they are “industries.”

As I have noted on previous occasions, the planned order or surveillance introduces a potentially glaring incentive-incompatibility agency problem into market exchange. One that makes mincemeat of any position that uses the existence of markets as an immediate counterfactual to any claim of systems of social control. If we cast “spontaneous order” as a type of “social graph” and then analytically run it against the “planned order of surveillance” that exists to anatomize it, we obtain a “second-order dynamic” between the social graph and its surveillance that illuminates the distinction between laissez-faire and capitalism in a far greater clarity than the dinosaur methods of 20th century classical liberalism still mired in the roots of the socialist calculation debates.

Frankly, to avoid serious methodological error, one should start from the assumption of “the State as its own Agency.” Everything else flows from there…

1 As I pointed out in this old post, Technology is not Freedom, ip video has its own extensive surveillance regime.

2 Ideological preferences aside, the cloud, in any rent-seeking context, is where the internet goes because it is simply a much more efficient computing platform.

Technology is not Freedom

“Copyright bots” are a new “innovation” in data-analytics. The reliability of the data recognition(the content signature) by these distributed platforms, however, is still quite faulty. Wired recently published some of the embarrassing false positives generating by these platform censors which resulted in termination outages on high-profile content providers. Content that has recently been blocked included Michelle Obama’s speech on Youtube, NASA’s broadcast of the Curiosity Rover on Youtube and the Hugo Awards on UStream.

The more interesting point of the story was buried a bit: all major content platform providers are embedding these spy platforms into their infrastructure. This is not an actual legal requirement but it is following a law of political economy.

I browsed over to the website of one of the major players in this field. The tagline of the website reads: “Powering the Internet Video Economy.” The home page splash presentation trumpets the company’s partnership with Hollywood, Professional Sports, and China. I looked at its application platform, a platform, of course that’s patent pending(patenting the enforcement of patents and copyrights). The jargon reads “Rights Management, Content Filtering and Monetization, Business Analytics, Automatic Content Recognition, Search Recommendations.” In plain terms this means they are spying on you to both restrict access to unauthorized access to content and to monetize your viewing habits for “authorized content.” Frankly, why wouldn’t a censoring platform with access to your viewing habits take advantage of it to monetize your preferences to “legitimate” content providers. Its called Capitalism, right?

Content Identification and Data Signature Analysis is an “industry” in its infancy. There is plenty of innovation to be had in the pursuit of economic rents in this sector of political economy. But I would cite as an easy example of how technological innovation is not necessarily going to improve your life and make you more free. In fact, as in this case, its likely to make you substantially less free. This was a point I tried to make in my recent two-part “Internet Freedom” posts. And as I noted, the business of data analytics was at the heart of Peter Thiel’s recent critique of Google CEO Eric Schmidt.

Fine, you say. Just don’t watch your content online. No one is forcing you to log on to Google to watch content. But it won’t end there. Currently, all major online content providers are busy integrating content spyware into their infrastructure and platforms. But the same law of political economy driving this will steer a “spy regulatory platform” to the network provider layer, too.

Although it is not a major news or blogosphere focus, the “cybersecurity” executive order publicly contemplated by Barack Obama is quietly moving through The Firm’s channels for executive implementation. A legislative reinforcement will follow eventually. The law of political economy–rent-seeking– predicts the legislative addendum/follow-up to a CEO decree because of competing players(rent-seeking agency) fighting over the specific compliance (rules) regime of the contest.

The broad structure of the contest is defined by the top-level rule:

immunity from liability with respect to network traffic in exchange for compliance

Obama’s CEO Executive Decree will “legally” establish the broad stroke of the top level rule. Namely:

(i) the rule that network providers are, Ab initio, liable for the content payload of traffic over their network infrastructure(more specifically, liable for not filtering/blocking/counteracting “illegal/bad” traffic)

(ii) ex tempore immunity from all liability by following/implementing the rules of the compliance regime

The political economic competition in any “CyberSecurity Act” will be over the compliance rules for ex tempore immunity. Of course, any such “Bill” will be presented as ostensibly resolving the regulatory and legal burdens of network providers interfacing/info sharing with the extensive federal agency framework regarding “cyber attacks.” Every critical piece of infrastructure is plugged into the “public network” so we need a uniform, efficient regulatory framework to deal with the realities of the 21st century. It will even be presented with a “libertarian spin,” a pro-business slant, “reducing the regulatory burdens” on business.

Of course, the current reality of the 21st century is that the primary government agency responsible for coordinating cyber attacks is the United States government. The only agency actually capable of crippling the public network is the United States government.

The other pertinent reality of the 21st century is the inevitability of cloud computing. By “cloud computing,” I mean every computer resource imaginable delivered as a service. These resources include software, storage, platform, infrastructure, security and data. All tied together by a stack of interoperable APIs. It is in this environment where the contest over data analytics will play out. And you really can’t defect from this. More precisely, I would equate any attempt at defection as a “retreat to the woods.” Sans going “Jeremiah Johnson,” you will not be able to escape the data analytics of the cloud.

The ubiquity of cloud computing is inevitable because the internet is a small network. The cloud is much more efficient. A “free market” over a small network almost certainly delivers a cloud computing platform. Simply because that’s where the economic rents are. However, the data-analytics regime over the cloud is going to follow the structure of the rent-seeking contest. According to contest structure I outlined above, the contest will follow a rent-seeking compliance of the panopticon.

Obey the panopticon or starve. That’s not freedom…

Cyberpunks Talk Libertarian Class Theory

After finishing up my most recent post, “Regulating the Panopticon,” I became aware of this fascinating 3 hour interview discussion featuring Julian Assange, Jacob Appelbaum, Andy Müller-Maguhn and Jeremie Zimmermann on Russia Today. This special 3 hour episode of Assange’s “The World Tomorrow” was dubbed “The Cypherpunks.”

Now if you haven’t already guessed, I am quite sympathetic to the hacker movement. Indeed, I would say I much greater sympathy for that movement than for the general libertarian movement which I find to be largely incoherent, inextricably conservative and obsessed with fighting old turf wars(e.g., Keynes vs Hayek, a topic which has long outlived its general relevance)1. In particular, I am often flummoxed by the contentions of the leading luminaries of this movement that deny the US is a police state. To boot, we are additionally informed that we are living in a time of unprecedented freedom, justified usually by appeals to technological advances.

Now I would suggest that one’s failure of discernment regarding the status of the United States is a good indication of one posing no challenge to the status quo. If one were actually challenging it, one would probably have a different perspective on the matter. The gathered cyberpunks are actually challenging it. So you will find they have a bit of different opinion regarding the police state practices of the United States government. To wit, from my understanding, Jeremie Zimmermann was interrogated by the FBI when he entered the United States after sitting for this interview in London.

Judging by my stats, my previous 2 posts were traffic failures. Well, perhaps I’m just a bad writer, but the underlying message is important. So to save you from having to digest the verbosity, the summary would be: the internet provides the regime change mechanism for a political competition in technology: a rent-seeking game in data analytics. Data analytics is the last remaining frontier where competition is not outlawed. A political economy in data analytics results in the Panopticon.2 I would encourage you to watch the above linked Assange episode. It greatly expands on this theme. So my writing may be boring. But you will not find that episode boring. Trust me.

Some Show Observations
Julian Assange is a doctrinaire liberal/libertarian but the others are not. Nonetheless, all four participants agreed that political reform was impossible and pointless. The consensus among the four was that the only means to combat the problem of the surveillance State is alternative institutions in economics, currency, etc. I find this interesting because it sort of illuminates an ongoing debate regarding the need/value of libertarian education. I would contend that libertarianism doesn’t have an educational problem. Rather, it has an empirical problem of revolution. American libertarianism will likely educate you into incoherence. But those who are actively involved in challenging the status quo, those who have no particularly affinity for the “capitalism” of american libertarianism, can see the problem quite clearly.

Toward the end, a bit of disagreement broke out regarding the ultimate foundation of freedom. Assange took the position that it ultimately rests with Free Trade. The others were not quite in agreement. But I would take Assange’s position. I ascribe to a method of libertarian class theory. Often, I think this method is misrepresented as the productive vs the unproductive or the taxpayers vs the tax eaters. That is the wrong way to think of it. It is simply Free Trade vs Political Economy. The economic life of Laissez Faire vs the economic life under the compliant auspices of the Polis. So I have to go with “free trade.” Free Speech is not the ultimate foundation of freedom in the observable sense of what the State can and cannot tolerate. It can tolerate “free speech.” It cannot tolerate “free trade.”

One particular observation from the cyberpunks might shed a little bit of light on this recent David Gordon criticism of left libertarianism. Gordon states that there is no midpoint between capitalism and socialism. By this he means economics is merely a duel world between capitalism and socialism. Monopoly status or legal monopoly pricing advantage is socialism. Everything else is capitalism. States Gordon:

As Mises again and again insisted, there is no third system intermediate between capitalism and socialism. The fact that a business has gotten to its position through government aid does not by itself change the way it sets prices. Neither is it the case that large firms operate by setting monopolistic or oligopolistic prices rather than competitive ones. (Of course, if government regulations set prices, or give a business the legal power to set prices, that is another matter altogether.) It is also not the case that wage determination rests on bargaining power: as Mises and Rothbard see matters, zones of indeterminacy are mythical.

To me, Gordon’s statement is why I would defect from capitalism as so defined. More specifically, it illuminates the difference Laissez Faire and Capitalism. I would contend that Mises/Gordon position is the wrong duel world. The political economy of prices, whether they are set by the Walrasian auctioneer or by competing firms, is not the illuminating question. The better question is who is the agency that sets the markets, not the prices. That is the Laissez Faire duel world. Gordon’s method really can’t explain why you would even have political competition. Since (1) political competition rarely results in monopoly price setting and (2) political competition without the advantage of monopoly has no bearing on competitive price setting (3) you really can’t explain political competition by the simple socialist-capitalist dualism model regarding a price-setter.

To return to the cyberpunks, it was pointed out that Russia had tried to bargain, but failed, to get Mastercard/Visa to process Russian credit card transactions in Russia. Why? Because all credit card transactions, including all global transactions, processed by Mastercard/Visa are immediately surveilled by the NSA. Within X number of minutes, every credit transaction by Putin and other members of the Russian political class is known and tracked by the US intelligence agencies(thus perhaps explaining why RT is the most libertarian oriented network broadcasting in the United States).

Now is this an example of capitalism or socialism? Mastercard and Visa do not have the monopoly power as price-setters to set transaction fees, but they do have the bargaining power that every single global banking credit card transaction will be interfaced with US Intelligence. This is oligopoly, but it is not the oligopoly of a price-setter. It is the oligopoly of the market setter. But this has to be considered capitalism according to Gordon.I would suggest that the (radical) Public Choice model of the economic governance of the total firm would be a far more predictive model here. But Gordon is still stuck in the Misean historical context of the Socialist calculation debates(which Mises lost,btw. One of Oskar Lange’s criticism of Mises’ tight compartmentalization between capitalism and socialism roughly followed the same line of argument I’m pointing out now).

1 obviously, any coder knows that the technical community has its own cherished pastime of platform turf wars. But at least this debate can played out in some semblance of an empirical arena: the marketplace.

2 A secondary theme perhaps relates a bit to the current "Spontaneous Orders" series being published by Roderick Long. We define a "Spontaneous Order" in a technical sense of complexity theory as emergent regulatory properties of complex systems. A Spontaneous Order then is a resilient order. The Internet could be defined as an efficient Hayekian Hybrid Constructivist Order derived from a principle of “planned competition.” The degree of efficiency of the Hybrid Haykekian Order introduces a scale-free, small network that follows a power law distribution(at least in the asymptotic limit) that is self-regulating. The tension between constructivism and emergent order is that while the network can regulate itself it nonetheless cannot defend itself particularly well against (external)constructivist intervention. The degree of efficiency of our evolved small network can be expropriated by a power consuming constructivist agency. I believe this argument is sort of similar to the published critique of Part III in that series.

What Would Lysander Spooner Say?

Although I’m not a progressive, I nonetheless still generally enjoy the content published by Counterpunch. Counterpunch, after all, is in my blogroll. However, occasionally they will publish something that I find to be completely bullshit. The last time I made note of such an example involved a ridiculous screed by Pam Martens regarding the Free State project that more or less reduced to advocating police state tactics to get rid of the rift raft in her neighborhood. Now I’ve found another example with this article, Saving the Postal Service (and Union Jobs), that amounts to little more than a PSA from the Post Office.

Subtitled "What Would Ben Franklin Say," the piece is an exercise in the logical fallacy of special pleading that ostensibly makes the argument that monopoly postal rates are the price we pay for funding public union pension plans. Of course, that's not how the argument is actually presented. Instead its the typical clap trap that postal delivery is a public good and austerity measures pursued by the forces of privatization threaten not only public pensions but vital Saturday delivery for little old ladies out in the boondocks who will likely drop dead as a consequence. Besides, we are told, since 1970, the post office has not accepted a nickel of tax-payer monies. And the current postmaster Patrick Donahoe(Wilford Brimley has apparently retired) promises a new era of Gorbachev-esque market reforms for our monopoly provider.

Ordinarily, I probably would have let the article slide without comment except I was struck by the subtitled reference to Franklin, the conservative appeal to tradition–why, the horrors, the “historically significant” Ben Franklin post office on Market St is under siege–and the snide reference to Somalian anarchy. Well, that did it for me. If we are going to appeal to tradition then I would only remind our author, Jack A. Smith, that it was an American anarchist, Lysander Spooner, back in 1844, who demonstratively kicked the Post Office’s collective ass, operating his American Letter Mail Company though a maze of loopholes for 7 years until the Government finally shut it down for good. But by that time, however, Spooner’s company had managed to deliver the mail, without subsidy, for a postage rate of 3 cents. As such, Spooner is the rightful father of the 3 cent stamp. The State shut down Spooner but matched the postal rate–of course, with a tax subsidy. When the direct subsidies ended in 1970, that’s when the postal rates began their current ascent.

So, Mr. Smith, little old ladies in the boondocks would have received their medicines in the mail for 3 cents–without subsidy. Now, truth be told, the Post Office is not really that high on my shit list. Frankly, I appreciate the noise. After all, little old ladies are not the only one who get their drugs through the mail.