The same reason why property rights generally do not apply in the digital realm is the same reason why any discussion of “social justice” within the same is ludicrous. Where there is no scarcity, there is no injustice…

The Principal-Agent Problem

This appears to be a breakthrough in the textbook principal-agent problem. The textbook tells us that it should be the principal, in the case, the Israeli Lobby, which should bear the Asymmetric information costs of monitoring the conflict of interest on the part of it’s agent, in this case the American Political Parties.

However, in our real world example, we see the actual agency costs being borne by the agency and not the principal.

Imagine a principal hiring an agency for a stock broker, and the manager of agency keeping the principal up to date on how the personal habits/views of the agent assigned account executive might potentially negatively impact the principal.

Another example of how the Public Choice model of government agency wrecks the textbook.

Of course it’s comical to view the DoubleThink of government agency in action. We have an Israeli Lobby holding a public forum for the purpose of debunking charges of the Democrats that Republicans want to cut aid to Israel. And the the Israeli Lobby ostensibly excludes Ron Paul because he is accused of being too much like Barack Obama, the one, of course, who–as leader of the Democrats– is orchestrating the Democratic attack against Republicans in terms of accusations/warnings of aid cutting to Israel.

To me, the obvious Principal-Agent Problem is “representative democracy;” specifically, voting as a means of securing agency. The problem is particularly compounded when we factor Jesus’ Eschatological intent into the equation.

History, if there is going to be one that survives, will mock us; Zeus only had lightning bolts. Jesus had hydrogen bombs…

The Pink Police State

Although I have often used the term “Pink Police State,” I didn’t coin the term. Credit goes to James Poulos who actually credits Marilyn Manson for the inspiration. Poulos dug back to the “Dope Show” from Manson’s late 1990s “Mechanical Animals” to throw pointed bombs at Reason’s “Libertarian Moment” thesis a few years ago. Even though Matt & Nick’s book is “new,” the thesis is old staleness in the pages of Reason Magazine.

Poulos railed against a “cultural libertarianism that is snowballing while the snowball of political libertarianism rolls deeper into hell.”

I couldn’t help but think of Poulos after hearing Michelle Bachmann recently address the Sarah Palin rivalry to the media by retorting “the media would love to see two girls come together and have a lesbian mud wrestling fight, but I’m not going to give it to them.”

Brad DeLong Fails the Nozick Turing Test

Contra Brad DeLong, it’s fairly simple to demonstrate how DeLong himself readily fails his own Nozick Turing Test . DeLong’s problem is that he is composing a test of the Lockean Proviso from Locke’s Second Treatise. Anyone remotely familiar with Nozick should know that he considered Locke’s Second Treatise a deficient foundation for the “Lockean State.” In specific, Nozick recast the Lockean Proviso along the lines of:

“no one be left worse off by the appropriation than if the thing remained in common use”

In other words, Nozick added a constraint condition on “enough and as good left in common for others,” that determines the justice of expropriation of land from the commons. Nozick specifically gave an example of denying a Robinson Crusoe’s property rights claim of trespass against any future shipwrecked individuals on the basis that Robinson Crusoe’s claim violated the reformulated “Lockean Proviso.”

DeLong’s “1st Step” in his test “biases” the test:

1) Nobody is allowed to make utilitarian or consequentialist arguments. Nobody.

Although Nozick “constraint condition” would technically be a type of “Pareto condition” and not a utilitarian or consequentialist constraint, it is clear that the 1st Step is a rule that is meant to prevent one from making the Nozick argument. Since no “Nozick believer” would ever propose or follow such a rule, it is clear that the person who composed the rule either (1) does not understand Nozick or is (2) attempting to enforce a strawman argument(arguing Locke and not Nozick). Hence, anyone who obeys the rule gives away their bias. Put another way, DeLong’s Turing Test is a “biased test” and anyone who follows the test reveals their bias. So DeLong fails here…

DeLong’s contention: “I would maintain that only liberals can successfully explain Nozickian political philosophy” is belied, in this instance, by the fact that DeLong fails(either intentionally or unintentionally) to distinguish between Nozick and Locke regarding the “Lockean Proviso.”

It should be noted that there are additional data points regarding DeLong’s shortcomings as an arbiter of liberal theory. For example, this old post by Brad DeLong equates Smithian Self-Interest with psychopathy. According to DeLong, this astute observation “opens up a gap between the libertarian view and the world.” However, I think the better observation would be to question whether DeLong actually has ever read Smith’s “Theory of Moral Sentiments.”

Odds and Ends…

My little blog, which I started after Freedom Democrats went defunct, has now reached it’s one year anniversary. One thing I have definitely learned the past year is that if you want to implement a “traffic-killing” strategy, post intermittently on the rational choice foundations of libertarian theory. Guaranteed to kill your traffic, unless,I suppose, you happen to be a well-known professor/scholar in the field.

A traffic-generating strategy, on the other hand, has proven to be to post on topics related to your specific areas of expertise and post often. So my “techie” stuff usually does decent traffic and occasionally does explosive traffic. For example, my post on the immixGroup-VeriSign-ICE triage behind the domain seizures, an inner working that I was able figure out, got significant linkage from a number of major tech publications. My Wikileaks Watch posts, for the brief time I was maintaining them, got good hits. In short my niche would be “Applied Cyberpunk,” although this would involve none of the literary or cultural aspects of that genre. Perhaps a more accurate but less chic term would be “Internet Political Economy.”

Still, my “theory” posts, although not widely read, have helped me flesh out my own rational basis for libertarianism, one that has steadily moved toward moral contractarianism, the only framework that I now think can be consistent with Laissez-Faire. This moving to the later Benjamin Tucker position, but instead of “Rational Egoism,” we are substituting Game Theory Rationality.

Lately, many of my “theory” posts have been attacking the premise of “Bleeding Heart Libertarians.” This is not because I don’t share the same moral judgments as BHL, because, in actuality I do. It’s because there really isn’t any rational or social choice basis for distributive justice. So, advocating libertarianism as a basis for distributive justice principle is a dead-end road. Indeed, the libertarian principle has already been demonstrated to lead to cooperative equilibrium.

David Gauthier demonstrated that one shot non-cooperative games where agents play a tit for tat strategy, where cooperation is constrained by (i) minimizing the concession and (ii) the libertarian principle results in the equivalent Kalai-Smorodinsky bargaining solution. The Gauthier ideal non-cooperative game relies on conditions of (a) modest scarcity and (b) relatively equal agents. It ties the libertarian principle to a boundary constraint on non-cooperative games between reciprocal cooperators. In some respects, it’s an ideal analogous to Neoclassical perfect competition.

Moral Contractarianism does two things (1) counters the typical claptrap that equates libertarianism with a morality that underlies a social theory of selfish defectors (2) the libertarian principle as boundary constraint obviates attempts to use it as a foundation for an initial-value principle.

Defining Libertarianism

i) Political Theory: Denies any rational or social choice normative basis for political authority

ii) Social Theory: Libertarian Justice not a moral theory, rather it is a theory of rational moral constraints. Significant but subtle difference.

Addendum: Natural Law + contractarianism incompatible and dangerous. Natural Law=preferred or natural ranking of moral preferences. Contractarianism to enforce a natural or preferred ranking of moral preferences violates the libertarian principle boundary constraint.

Moral contractarianism perhaps may work work great for sentient automata. It may break down for humans under an expanded treatment of evolutionary norms for reciprocal cooperators. A punishment problem potentially arises. A biological problem(implying perhaps the need for Transhumanism?)…

Bitcoin and Moral Judgments

Bitcoin, I think, plays into the moral contractarian framework I’ve outlined above. Libertarianism, as a social theory, is not a theory of moral judgements; rather it is theory of rational moral constraints. That is, we are not concerned with the moral preference ranking of Agent A and Agent B; rather, we are concerned with the moral constraints on A and B as reciprocal cooperators. We do not want a contractarian order that favors/enforces the moral preference rankings of either A or B; otherwise, it violates the libertarian principle boundary constraint.

In reading the Bitcoin forums after the Silk Road and Schumer publicity, there is an obvious divide in moral judgments between the Bitcoin development team and the Bitcoin user base. The former is in favor of integrating Bitcoin into the legal and regulatory environment of the State. This means, for example, that exchange organizations, that convert Bitcoin to State currency would fully comply with reporting the conversion transactions to the authorities. The Bitcoin technical lead,
Gavin Andresen, has expressed opinion that the Bitcoin community should work with law enforcement to aid in the arrest of those who use Bitcoin for illegal drug transactions. This is in sharp contrast to the forum user base, many of whom are of the crypto-anarchist variety.

So Bitcoin provides us with a model of a clash in moral judgments. This is a test of the political economy of Bitcoin. It reinforces the point why moral judgements cannot underlie a libertarian social order. It also demonstrates that Bitcoin is not actually an “agorist construct,” precisely because of the differences in moral judgements. That Bitcoin will still potentially work despite the clashes in moral judgements is an overall point I’ve tried to emphasize. It also goes to show that to be good “Applied Cyberpunk,” one probably has to avail oneself of the rational choice foundations, tedium notwithstanding…

Chuck Schumer’s New War on Bitcoin

New York Senator Chuck Schumer probably occupies a top place in the libertarian axis of evil. A bigot, a religious fanatic, a nanny-state totalitarian and a crook, Schumer epitomizes the libertarian critique against political authority. This is a man who is accustomed to barking orders at a servile populace, a man who counts intimidation and threats to be among his preferred methods of executing governance. So this video and story of Schumer’s outrage over Silk Road and Bitcoin, likely facilitated by a recent Gawker article, is vintage Chuck. Conjure moral outrage, summon the TV cameras, bark orders…

But, unfortunately for Chuck, this ain’t Four Loco. Ordering the Feds to shutdown the website and “seize the domain” was comedic display of Mussolini buffoonery. I suppose it’s sad that no one in the press corp had the technical wherewithal to challenge Schumer’s stupidity, but it’s amusing that Schumer’s aide, the one that set up the TOR client to access the site, didn’t have the cojones to prevent Chuck from looking like a moron. But then again, I suppose it’s probably career suicide to stand between Schumer’s moral outrage and a TV camera.

Silk Road is running as a TOR hidden service on the TOR P2P tunneling network. This means it’s being run from someone’s anonymous box that generally can’t be identified. It can be anywhere in the world. Anyone who downloads the TOR software can setup a hidden service. There’s no “domain name” to seize here and the only way to stop this sort of thing (at least until the “Internet Kill Switch Bill” is enacted) is to ban the TOR protocol outright, which would counter the government’s interests because: (i) it would cast the US in a bad authoritarian light (ii) more importantly, it’s used by US intelligence organs as a secure communications tunneling network with international assets. After all, it was the US government that originally developed it, and it was released into the wild because it’s useless, like any other P2P network, without a robust number of nodes. In particular, here, a TOR network of nodes consisting of just the spies, informants and US bureaucrats would be “stick out like a sore thumb” tunnel; these tunnels need lots of “noise,” that is, lots and lots of other tunnels to be effective. Also, of course, if the software was “classified,” there would be an obvious distribution problem of getting the software into the hands of the intelligence assets, a vulnerability(which could be exploited, because the acquisition method of the software could be compromised and tracked) that, combined with the “stick out like a sore thumb” intelligence-only tunnels, would make TOR useless. And this is why the US government released TOR into the wild.

Chuck hasn’t gotten the memo on TOR yet, but I imagine he will get the intelligence organ “sit down” on that. It’s not TOR that’s the threat, it’s Bitcoin. Schumer called Bitcoin a “money laundering mechanism;” certainly he is ready to take the lead in Senate hearings to foster drafting new legislation that would outlaw any unauthorized crypto-currency. However, the government, particularly the intelligence organs, is a bit ahead of Schumer in that the CIA is sponsoring a presentation by the Bitcoin lead developer.

Hitherto, the problem of crypto-currencies, in terms of being any threat to the State, was the need of a central authority to regulate against fraud. Anyone can define an electronic coin as a ledger/chain of digital signatures. One obvious problem is how to prevent Agent A, who is wishing to transfer ownership of the coin for a good/service, to simultaneously use the same coin to buy something from Agent B and Agent C, that is, more or less simultaneously digitally sign over the coin to Agent B and Agent C. This problem would seem to require a central authority to referee between A’s transaction with B and A’s transaction with C.

The Bitcoin algorithm, from I gather reading the technical whitepaper, solves the problem of transaction verification by incentivizing every node in the Bitcoin network to race for verification of outstanding transactions. In other words, every node is in competition to serve as the clearinghouse for the current existing block of unverified transactions. The verification is done by timestamp. All transactions are broadcast to all nodes, but in a P2P network, Node X’s timestamp for the current unverified transactions may be differ than Node Y’s timestamp for the same. The timestamp verification that wins out, that is the node that wins the clearinghouse game, depends on that node solving a “proof of work concept” that is able to solve a difficult mathematical problem of converting a hash representation of it’s own block into a required leading zero-bit format. The winning node then broadcasts it’s time stamp block to all nodes that readjust accordingly. The winning node is awarded a certain amount of bitcoins which serves as the first transaction in the next block of unverified transactions that will need to be verified.

Bitcoin is able to use competition to resolve the clearinghouse problem(clearinghouse nodes are incentivized by new coin creation). It ingeniously self-corrects for the introduction of cpu power by making the mathematical work of proof problem geometrically more difficult. This allows scalability without monopoly capture, but it does create a division of labor scenario where clearinghouse nodes invest in GPU cycles over CPU cycles(the investment in GPU cycles allows the system to handle the clearinghouse needs of an expanding system). However, the system constraints cap the total coin creation which means that clearinghouse nodes will eventually only compete over transaction fees.

The question concerning Bitcoin is two-fold: (i) can it survive a coordinated hacker attack (ii) can it survive government censorship/banning. We are probably about to find out about (ii). The thing about the US is that it is not a hard censorship regime; it’s a soft censorship regime. An actual honest-to-god crypto currency, however, is it’s worst nightmare. The US government will release something like TOR into the wild, but it would never release something like Bitcoin into the wild.

Conspiracy Theory

I’m not a 9-11 truther but I have become an “Anthrax Truther.” Without doubt, there is a government conspiracy regarding the anthrax attacks that occurred in the immediate aftermath of 9-11. For all the talk about WMD and al-Qaeda implementing a WMD attack, the distribution of high-quality, military-grade anthrax through the US postal system remains the only example of an actual WMD attack. Attempts to pin the attack on stooges/patsies have failed miserably, lending credibility to the speculation of a government cover-up.

The reason that the Obama Admin, at this point, won’t release a photo of the slain Bin Laden is because it wants to avoid an inflamed discussion regarding the fact that this was an “execution” operation. Of course, this strategy is actually backfiring. But there is a larger context that should be considered here. If the “Anthrax attacks” were still a matter of open investigation, you would think that a premium would have been placed on capturing the great al-Qaeda mastermind alive for interrogation. After all, we are repeatedly propagandized that the great existential threat is al-Qaeda + WMD; and, at this point, the only example of such a WMD attack is this anthrax attack that occurred simultaneously with 9-11. The statistical probability that these were random, independent events is minuscule.

The fact that Bin Laden was executed tells us all we need to know about the relative “threat” of al-Qaeda + WMD…

Bin Laden Dead. War on Terror Lives On.

“It was a bright cold day in April, and the clocks were striking thirteen.”

Nineteen Eighty-Four

What is now only be called a “small team of Americans,” likely the CIA, killed Bin Laden in a shootout in Abbottabad, Pakistan. This was no “smokeout” from a Cave. The Bin Laden “residence” is being described as a “compound,” or even a mansion. And apparently, the compound has a Google Map.

When the news began to trickle out, the Georgetown bar set looks to have emptied out of the taverns and marched impromptu to the White House with cheers and theatrics one would associate with the Redskins winning the Superbowl. Ah, but this game has no end. Important commentators reminded us that Bin laden had long ago ceased having any operational capacity with al-Qaeda and now was only a symbolic figure. Concerned government officials announced heightened “terror levels” and warned against the possibility of al-Qaeda retaliatory operations. Meanwhile pundits speculated about revived Obama poll numbers against the backdrop of the growing, gathering crowd chanting “USA!,USA!” in front of the White House.

Perhaps in a day or two, or maybe in a week, when the “euphoria” begins to wane in the press corp, the touchy subject of US-Pakistan relations might come to the fore given that Pakistani government wasn’t informed of this operation until after the fact.

And, of course, not everyone is cheering. And perceptions of just who is the terrorist differ. Former Guantanamo Bay detainee Mamdouh Habib is one of those not cheering. Upon learning the news, he is quoted as saying:

“America is the war on terror, George Bush is the war on Terror….What, you think with Osama bin Laden dying there won’t be war any more?”