No, a myriad of new silk roads will not rise up to replace the old one

The State’s war on Dark Net marketplaces will result in previously trusted marketplaces being replaced by riskier and less trustworthy ones. Honest people operating on a reasonable risk/reward calculation will increasingly abstain from using them. The likely consequence is that the confidence level of DarkNet c-to-b transactions will begin to resemble that of traditional c-to-b transactions, with the additional negative repercussions of being more riskier to the buyer than the traditional c-to-b model.

By now, I’m sure anyone reading this post is aware of the sentence handed down to Ross Ulbricht(aka,”Dread Pirate Roberts”). The purpose of this post is not to extend a commentary on the barbaric character of the sentence.1 That will be for another time. Instead, I want to counter the conventional postscript that concludes virtually every postmortem of the drug war.

“Just another example of an irrational,failed drug war. Take one down, fifteen will rise up to take its place…”

Nope. Not the case. Particularly, in this instance.

First, we should accurately report the full sentence Ulbricht received. It was life imprisonment and a 185 million dollar fine. The State rolled up money laundering charges in the conviction, in no small part because the United States government now “recognizes” bitcoin as a legitimate medium of exchange.2The financial penalty of bitcoin money laundering appears to be the total transactional value that can be pieced together through a forensic analysis of the public blockchain.

Secondly, public court documents and testimony regarding the fed purchases of product from the original silk road marketplace indicate an abnormal level of reliability in a c-to-b(consumer to business, or, if you prefer, user to dealer) drug transaction. Documents indicate you had about a 95% level of confidence that you were actually getting what you thought you were buying. Trust me, that level of confidence is not the norm in traditional c-to-b drug transactions. That’s the real story. The “reduction in violence” argument is not. Frankly, if you made the argument, it is a good indication that your only knowledge of the drug trade comes from watching tv/movies and reading state media sources.

Unfortunately, the effect of barbaric sentencing and draconian money laundering penalties will serve to introduce quite a bit of fraud into Dark Net drug marketplaces. Yes, knock one down, and perhaps fifteen will rise up to take its place. But the level of confidence of a c-to-b transaction confidence will begin to approach the traditional level and indeed may even fall below what you can expect on “the street.” In addition, the confidence level of “dealing with a narc,” on either side of the ledger(consumer or supplier), begins to exceed what you can expect “on the street.” So while there will be replacements, they won’t be exactly the same version as the previous ones.

Frankly, anyone who engages in a repeated pattern of buying or selling on Dark Net sites can only expect to be busted. You may as well just send out an email to the pigs for all intent and purposes. This is opposed to the traditional model where only the dealer following a repeated pattern faces a probable certainty of being prosecuted.

Bitcoin has its uses, but in terms of buying contraband, you are better off sticking to the old-fashioned human p2p network of your reasonably trusted inner/outer circle.

Unfortunately, that conclusion doesn’t exactly make for a “failed war on drugs,” now does it?

1 I’ve read many characterizations that described it as “tragic.” Its not tragic. Its barbaric.

2 Another demonstration why the dipshit “libertarians” at George Mason University campaigning for a “bitcoin regulatory regime” are mortal enemies of libertarianism. The argument that a “regulatory regime” carves out a “legitimate space” in a space that would otherwise be treated wholly as “criminal” actually introduces a far more punitive criminal sanction regime.”Legitimacy” allows the feds to wield the weapon of “money laundering.” And the blockchain is not anonymous. It is only pseudo-anonymous. The crime of operating a website can now carry the financial penalty of any applicable transactional value of the duly recorded transactions in the public blockchain.

Political Science

Political science is not moralizing. It is not liturgical recitation from sunday school scripture. Nor is it mere statistical interpolation of voting patterns to predict elections. Predicting elections may be a type of science but there may be a more fundamental science to be had if the outcome repeatedly proves irrelevant to the policies enacted or enforced.

Political science, like all sciences, applies a specific methodology(the scientific method) to explain and predict rational patterns within a specific domain of study. In this case, the specific domain of study is the organization and exercise of political power. There may be some that try to divine a type of justice that animates such an organization of power, but such musings preponderate on the side of prescription(“the ought”) and not description(“the is”). Hence, they are the stuff of political church, not science.

In a previous post,The FBI pwns you, I gave an assessment of an observed phenomenon of state security organs defeating network layer obfuscation. The official explanation claimed only innocuous investigative exploitation of “criminal stupidity.” I, however, offered a competing explanation: the FBI was resorting to application layer exploits to thwart network(IP layer) anonymity. I then advanced a prediction: the FBI and other organs of state security are seeking to bundle application layer exploits under an extended legalized wiretapping regime.

Recently, from Boing Boing FBI secretly seeking legal power to hack any computer, anywhere:

But under the proposed amendment, a judge can issue a warrant that would allow the FBI to hack into any computer, no matter where it is located. The change is designed specifically to help federal investigators carry out surveillance on computers that have been “anonymized” – that is, their location has been hidden using tools such as Tor.

The amendment inserts a clause that would allow a judge to issue warrants to gain “remote access” to computers “located within or outside that district” (emphasis added) in cases in which the “district where the media or information is located has been concealed through technological means”. The expanded powers to stray across district boundaries would apply to any criminal investigation, not just to terrorist cases as at present.

Were the amendment to be granted by the regulatory committee, the FBI would have the green light to unleash its capabilities – known as “network investigative techniques” – on computers across America and beyond. The techniques involve clandestinely installing malicious software, or malware, onto a computer that in turn allows federal agents effectively to control the machine, downloading all its digital contents, switching its camera or microphone on or off, and even taking over other computers in its network

Note, I also offered a corollary to the prediction: the extended wiretapping regime would effectively allow unfalsifiable data laundering from the NSA’s three-hop graphical dragnet. If the “wiretap” failed, the likes of the FBI could make a request up the “corporate intelligence ladder” to the NSA for the mother of all wiretaps: the 3-hop graphical dragnet. The information gleaned from that data could be “reversed-engineered” to fall within the “legal wiretap.” Once the network devices are seized, it is trivial to ex post facto plant a “vulnerability profile” that would “launder” the evidence collection. From a forensics standpoint, it would be difficult to falsify such after-the-fact subterfuge. The only circumvention of this totalitarian “law enforcement technique” would be to have redundant snapshots of the devices in question outside the jurisdiction of any one intervening authority. If the FBI could seize the device but couldn’t get all the redundant snapshots, then a comparative forensic analysis could take place that would expose the subterfuge.

Now, in these two little posts of mine we have seen an actual example of political science. An observed phenomenon: an explanation of the phenomenon, a prediction, a confirmation of the prediction, a prediction corollary that demonstrates the importance of jurisdictional differentiation to stymie the totalitarian pattern of exercised political power.

Of course, for my statement to be a scientific statement, the statement itself has to be subject to falsification. But who is going to falsify it? The political scientists? Let me know when you actually find one…1

1 Death of the Liberal Paradigm

FBI Resolves Question of Totalitarian State

No one is beyond the reach of the FBI. We will find you.

FBI statement on the arrest of radical libertarian, Dread Pirate Roberts

Periodically, the question of the US as a totalitarian police state is taken up by respectable company that unfailingly use the open consideration of the question itself as immediate evidence to the contrary. Indeed, those who may argue the point are often dismissed as undesirable rift-raft endangering libertarian respectability among the people who count.

But I think the FBI perhaps has finally put this debate to rest. They obviously view themselves as having totalitarian power and authority to the point of openly bragging about it. Given the current context of NSA revelations, this type of braggadocio illustrates a state apparatus quite comfortable with a perceived reality that either no one cares or there is not a god damned thing they can do about it if they do.

So, as they say, straight from the horses mouth.

Next question…

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.

Is the DOJ Essentially Now a Data Laundering Operation?

In a recent interview with Democracy Now, Julian Assange(starting at around the 29:00 mark) made a particularly salient observation regarding the current DOJ surveillance ignominy involving the AP and Fox News: the NSA already had the data. The DOJ “investigation” was not an investigation per se, but rather a “data laundering operation” to “cleanse” the data for possible legal use in court proceedings. Assange prefaced his remarks with “do not be deceived,” and I would spot a high probability that he is correct in this instance with the only qualification being that he will be absolutely right within the very near future.

Interestingly, Assange proceeded to spell out the political economy of data analytics, detailing how the NSA is involved in a massive graphical analysis of node connections(nodes would be you and me) to map out the “social network”(the links or edges that connect all of us). Of course, this very thing was the basis of my earlier critique of his “Call to Cryptographic Arms,” noting that encryption can’t reliably shield the connectedness of your own little(or perhaps not so little) matrix in the well-connected graph1.

In any event, Assange labeled the NSA the “dirty team” and the DOJ the “clean team.” In the totalitarian surveillance world of the well-connected graph, this shifts the DOJ’s role to be that of the State’s data launderer. In the 21st century political economy, the so-called liberal “rule of law” rests on the foundation of a data laundering operation.

Two words: The Firm. And the lines are further blurred between the Ministry of Truth and The Department of Justice.

1 Benjamin Tucker is noted for his four monopolies. The 21st century political economy will introduce a fifth one: data analytics. And this will be the mother of all monopolies. Tucker’s observation regarding money–a free market in banking is one of humanity’s greatest civilizers while a monopoly in the same is one of its greatest enslavers–can be multiplied by orders of magnitude both ways in regards to data analytics.