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.

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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.

Former East German Stasi Now More Liberal Than The Chicago School?

“You know, for us, this would have been a dream come true.”

Former Lieutenant Colonel in The East German Stasi, referring to the NSA Spying Apparatus

From a simple, straightforward, technical legal standpoint, there’s absolutely no question that Snowden violated the law.

Why I think he deserves punishment? …Well, the fact is, Snowden’s just an ordinary guy with absolutely no expertise in public policy, in the law, in national security. He’s a techie. He made the decision on his own, without any authorization, without any approval by the American people, to reveal classified information about which he had absolutely no expertise in terms of the danger to the nation, the value of the information to national security.

Geoffrey Stone, Chicago Law School

McClatchy recently published an interesting interview with Wolfgang Schmidt, a former East German Stasi officer, where Schmidt, in between waxing a certain admiration for current NSA surveillance capability, issued an obvious warning:

“It is the height of naiveté to think that once collected this information won’t be used. This is the nature of secret government organizations. The only way to protect the people’s privacy is not to allow the government to collect their information in the first place.”

To me, this qualifies our former east german officer as more liberal, or least more cognizant of a liberal methodology, than our esteemed scholars of official classical liberal orthodoxy represented by the Chicago School here in the United States. To wit, this recent drivel penned by Richard Epstein. Recall the likes of Peter Boettke once proclaimed Richard Epstein the sharpest libertarian thinker alive. At the time, I responded with this, which more or less summarized a case why if that were so, then we were accordingly fucked. Now Epstein himself labors to conclusively demonstrate the point.

Now to Geoffrey Stone. Stone uttered the above prefatory quote in a debate with Chris Hedges on Democracy Now. Stone’s position more or less is that Snowden’s actions were prima facie criminal and Snowden lacked sufficient qualification to determine if his actions would actually serve the public interest. This, of course, is an attack on both Snowden’s actions and motives. The easy rejoinder to Stone need not appeal to any higher moral principle but simply unravel the loosely tied knot of Stone’s own sheer hypocrisy. The prima facie criminality argument fails the “second-blush” inspection test because there is a de facto “prescriptive custom” in place that every day excuses leaking of classified information if such leakage is deemed to be in the “national interest.” Since Stone has never publicly called for a criminal crackdown on this prescriptive custom, a custom that more or less overrides the de jure letter of the written code, he, at the very least, implicitly accepts it. So, Stone’s prima facie criminality argument is a dishonest one.

The second part of Stone’s case is really the crux of his argument: Snowden is not qualified to determine if his actions served the public interest, hence he should be punished. However, I would contend that the construction of the argument begs an illiberal premise that renders any conclusion irrelevant to the liberal mind. I simply reject the premise that Stone or his like-minded colleagues are the arbiters of “public interest.” To accept that premise would be to concede a more generalized argument that the you and I are not qualified to know what our own interests are. This putrid argument from authority is particularly laughable in this particular case given that Stone is a technological ignoramus who–on this matter– carries all the authority of a certified clown(apologies to Penn Jillette).

Frankly, the question of “national interest” is an impossible one to answer. Like “social justice,” it’s a fake abstraction. What is answerable, however, is what is not in the public interest. In an earlier interview, Stone asserted we had to accept “total surveillance” to avoid the likelihood of a worse alternative of permanent martial law. I would counter that a system of governance that offered a choice between total surveillance and martial law is one that serves only the interests of the few and not worth protecting.

Stone and Epstein are professionally linked as collaborative editors of this early 1990s volume, The Bill of Rights in the Modern State. A contemporaneous edition of that volume would now arbitrate a consensus of “be happy with what you’re granted, it could get–indeed it is likely to get–much worse.” A consensus predicated on argument from secret authority, reassurances of procedural technicalities as sufficient protections and dismissal of dissent on the grounds of loony endangerment to national security. Call this what you may, but it ain’t liberalism.

Frankly, I’m not surprised by the descent of these two pillars of “the Chicago School” into outright authoritarianism, or squishy totalitarianism, if you prefer. For some time it has been evident that Milton Friedman’s aphorism of Capitalism to Freedom was not only flawed but fatally severed. What remains standing is political economy as an instrument of social control. If Jeremy Bentham is credited as the first designer of the panopticon, Richard Epstein and the Chicago School are only fulfilling the tradition that they inherit from.

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.

Julian Assange’s Call to Cryptographic Arms

Cryptome reviews Cypherpunks: Freedom and the Future of the Internet” here. The book essentially is a written compendium of an earlier RT Cyberpunk series that featured Assange, Jacob Appelbaum, Andy Müller-Maguhn and Jérémie Zimmermann, one that I had commented on previously.

The best insight from the book is that political economy is a sociological force, a shaper, if you will. And we now have a political economy rooted in totalitarian surveillance. Assange occupies the midpoint between the triumphalists and the pessimists, pivoting the tilt of the fulcrum around cryptography. There is an adoption of a more or less laissez-faire method of political economic analysis that approaches something that sees Capitalism not as the end-point fulfillment of human agency(wants and desires) but as contravening force against the very thing itself.

The introduction to the book, the “Call to Cryptographic Arms,” interestingly mirrors the concluding remarks of my previous post, “I,Spy.” The many writers who opine on the role of technology, internet and increasing freedom vis-a-vis the future of civilization are dead wrong. They are wrong because they are not challenging the status quo nor the enemy. As Assange writes: “No description of the world survives first contact with the enemy. And we have met the enemy.”

The cypherpunk perspective sheds immediate and crystal clear light on the current debates regarding capitalism and laissez-faire that are otherwise often obscured by conventional economic and political analytic frameworks(and I include conventional libertarian within these). Can there be just a “little bit of Statism” or is Capitalism a “good” first-order approximation to free human agency? Is the State merely an unfortunate nuisance that nonetheless can be routed around on our way to a technologically driven freer future? No. Assange pin-points the “ground zero” of our current condition: the merger of State and internet. The consequence reveals the ultimate stark divergence between free market and capitalism. Capitalism can rent-seek human agency itself as a threat.

Liberalism gives us the artificial state as a means of securing a human collective choice end, such as property(or primary goods in the more modern incantation), but the security of the thing results in the security apparatus viewing human ends as an existential threat to the security apparatus itself. This paradox is de Jasay’s rational choice incentive incompatibility problem staring you right in the face. Write’s Assange(essentially laying waste to classical liberalism):

First, recall that states are systems through which coercive force flows. Factions within a state may compete for support, leading to democratic surface phenomena, but the underpinnings of states are the systematic application, and avoidance, of violence. Land ownership, property, rents, dividends, taxation, court fines, censorship, copyrights and trademarks are all enforced by the threatened application of state violence.

Most of the time we are not even aware of how close to violence we are, because we all grant concessions to avoid it. Like sailors smelling the breeze, we rarely contemplate how our surface world is propped up from below by darkness.

In the new space of the internet what would be the mediator of coercive force?

Does it even make sense to ask this question? In this otherworldly space, this seemingly platonic realm of ideas and information flow, could there be a notion of coercive force? A force that could modify historical records, tap phones, separate people, transform complexity into rubble, and erect walls, like an occupying army?

The platonic nature of the internet, ideas and information flows, is debased by its physical origins. Its foundations are fiber optic cable lines stretching across the ocean floors, satellites spinning above our heads, computer servers housed in buildings in cities from New York to Nairobi. Like the soldier who slew Archimedes with a mere sword, so too could an armed militia take control of the peak development of Western civilization, our platonic realm.

The new world of the internet, abstracted from the old world of brute atoms, longed for independence. But states and their friends moved to control our new world — by controlling its physical underpinnings. The state, like an army around an oil well, or a customs agent extracting bribes at the border, would soon learn to leverage its control of physical space to gain control over our platonic realm. It would prevent the independence we had dreamed of, and then, squatting on fiber optic lines and around satellite ground stations, it would go on to mass intercept the information flow of our new world — it’s very essence even as every human, economic, and political relationship embraced it. The state would leech into the veins and arteries of our new societies, gobbling up every relationship expressed or communicated, every web page read, every message sent and every thought googled, and then store this knowledge, billions of interceptions a day, undreamed of power, in vast top secret warehouses, forever. It would go on to mine and mine again this treasure, the collective private intellectual output of humanity, with ever more sophisticated search and pattern finding algorithms, enriching the treasure and maximizing the power imbalance between interceptors and the world of interceptees. And then the state would reflect what it had learned back into the physical world, to start wars, to target drones, to manipulate UN committees and trade deals, and to do favors for its vast connected network of industries, insiders and cronies.

The traditional “property rights” of the liberal, democratic capitalist order are the means for a dystopian internet.

Unfortunately, cryptography is not a sufficient means to overcome the problem. Assange is correct that the laws of physics make encryption easy and decryption hard, but the mathematics of data analytics can circumvent this physical constraint. Data analytics is an exercise in graph analysis, not code cracking. Graph analysis is the process of revealing patterns in the data in order to construct graph objects, which are a collection of vertices and connecting edges. Regrettably, you cannot encrypt data patterns. And as we have learned this week, the US Government is massively engaged in graphical analysis of all internal data communications(which, of course, is what we said they were already doing). This is why, occasionally, we will read about the internal memos that leak out from whatever security agency acronym that those who are not sufficiently connected to the graph can rise to a level of suspicion. The robustness of the data analysis relies on a well-connected graph(the so-called diposition matrix is a special type of graph object that marks its nodes for termination). In this sense, the Cryptome reviewer’s advice to “protect yourself by keeping quiet, offline”(avoiding vanguard’s, however, would be good advice) may not be the best advice. The future of evasion is subterfuging the data pattern, which is why it will only be an available domain for the very few.

Cypherpunks: Freedom and the Future of the Internet would be a recommended prerequisite for reading or re-reading de Jasay’s classic “The State,” which, unfortunately proves to be much more relevant today than when it was originally published.

The Copyright Alert System Now Being Rolled Out at Major ISPs

In the next two months, AT&T, Time Warner, Verizon and Comcast will implement the The Copyright Alert System program developed by The Center for Copyright Information. Of course, The Center for Copyright Information is a RIAA and MPPA front. The monitoring system that will be used will rely on the MarkMonitor service that has been in place for a numbers of years now. The “monitors” will be The Center for Copyright Information, i.e., RIAA and MPAA. Once again, these entities have been monitoring bitTorrent traffic for years. Indeed, a recently presented Security Research Paper concludes that you can expect to be tracked within 3 hours of firing up a torrent client.

The primary change is that in lieu of direct legal action(which can be frictional), the RIAA/MPAA, using the aforementioned ISPs as agents, can now engage in a relatively frictionless enforcement operation. And this is where the data analytics begin to kick in. Large-scale users will still be subject to the same modis operandi legal action but the voluminous data that has been collected over the years by the likes of MarkMonitor will now be used as a queryable data repository against which the new data will be used–according to whatever algorithm employed–to trigger the Copyright Alert Notifications to end users via that user’s ISP(serving an agency role of a Sheriff, more or less).

Evasion tactics? Well forget about things like Tor. Tor works over the tcp protocol(and can’t handle the load of p2p file sharing to begin with). bitTorrent these days works over udp. Sophisticated encryption techniques like mse/pe to me are more about thwarting ISP throttling, but in this case it is not the ISPs who are the monitoring agent. The best evasion technique is to use a udp proxy. But I imagine that a reliable service with tolerable speed is going to cost money which begs the question a bit of why not simply spend the money on a paid download music service. That was basically my decision around 6 years ago when the opportunity costs of evasion(when the monitoring really began to pick up) well exceeded the monthly subscription cost of a paid service.

Of course, the Copyright Alert System is just harbinger of things to come. These types of arrangements up and down the IT stack will increase by orders of magnitude under the formal adoption of whatever “cybersecurity act” that eventually passes(once again, because the basic top-level rules will be enacted via fiat, i.e, executive decision, the subsequent proposal and adoption of a legislative act is an absolute certainty). And this, of course, just exposes the silliness of the “network neutrality debate” because “network traffic” should always be understood to mean “authorized network traffic.” The arbitration between “authorized” and “unauthorized” traffic will be subject to the most relentless data analytics imaginable.

I will also offer a brief comment on unjustified triumphalism that thinks these issues can be magically skirted around. This belief is based on a fundamental mischaracterization of the internet as a horizontal, decentralized type of network. But it is not that. Rather, the internet is a type of scale-free, small network that follows a power law distribution. The network properties of scale-free invariance is much a product of quite a bit of centralized coordination. Simply, it is a mistake to think that technology alone can overcome the problem of political economy. Instead a necessary condition to be able to “route around the damage” is jurisdictional differentiation in political economy. I’ve been harping this point for a couple of years in my posts about Wikileaks. If the jurisdictional differentiation melts away then feel free to proceed straight to the outright pessimism of Evgeny Morozov and Richard Stallman who have given up on the anarchic promise of the internet. The alternative is a platform that turns out to be very well suited for tight control by Corporation and State. The evidence for this latter pessimism is the degree of rent-seeking in data analytics this little platform of ours affords(which makes the actions of State agency very much “rational” and hardly stupid in this space). The game is up when the cyber-security and “data czars” come rolling down the pike.

Finally, The Copyright Alert System is once again immediate evidence of a “Commercialist” anomaly with regard to political economic agency. Methodological individualism is hard pressed to explain ISPs acting as a Sheriff Agency (on behalf of the RIAA/MPAA) against their own customers. The model of The Firm, however, explains it quite well.