6-8-13 Hodgepodge

Saturday, June 08, 2013

Why the Surveillance State?

I ran across the following quote from a Mark Steyn piece on Instapundit this morning:

The same bureaucracy that takes the terror threat so seriously that it needs the phone and Internet records of hundreds of millions of law-abiding persons would never dream of doing a little more pre-screening in its immigration system -- by, say, according a graduate of a Yemeni madrassah a little more scrutiny than a Slovene or Fijian.
It is interesting to think about this new addition to the Leviathan state in light of the fact that it is staffed by human beings who admittedly can't process all this allegedly vital information. It plainly isn't achieving its stated purpose, after all -- not that having any of this is the proper business of the government.

Given that this data is wrongfully obtained and is also not suitable for its stated purpose, it is best to consider two things: (1) What is the track record of the Obama administration regarding the use of similar types of information? and (2) What, as Ayn Rand's arch-villain, Ellsworth Toohey might ask,  does this folly accomplish?


Terrorists expect the government to be chasing them, but ordinary citizens should not. Unlike terrorists, we thought we were operating with a reasonable expectation of privacy, and so were not busy covering our tracks. (Why would we?) Now, we all know that if we catch the attention of the Obama regime, they can easily dig up dirt -- or something that they might deem to be dirt -- or that they can make look like dirt. This won't necessarily happen to everyone, all the time, but the goal is to threaten anyone who might want to rock the boat. All we need are a few (more?) prominent examples.

Weekend Reading

"[Government 'scrutiny' of virtual currencies is] the kind of 'scrutiny' that a mobster gives to a rival gang cutting in on his territory." -- Harry Binswanger, in "Don't be Silly, the Entitlement State Won't Allow Bitcoin" at Forbes

"The fatalism spawned by our victim-oriented culture is much more damaging than any disorder." -- Michael Hurd, in "Disorders are not a Free Pass" at The Delaware Coast Press

"If [Chef Robert] Irvine's approach could speak, it would say: 'Think, think, think!'" -- Michael Hurd, in "Food Network's Cognitive Therapist" at The Delaware Wave

My Two Cents

I have always regarded Bitcoin as a sort of virtual "Libertarian island". Binswanger shows here that it will have essentially the same practical result. We can't make an end run around the government. We must change it for the better.


I remember getting partial credit on high school and college math exams for answers that contained such errors. (Perhaps for that reason, I remained prone to them for longer than I should have.)

But the Spanish navy can't so easily blow off the consequences of a misplaced decimal point for the design of its new submarine.



Mark Lindholm said...

Binswanger is wrong about bitcoin. Due to its nature as a distributed heavily encrypted p2p network, the governent cannot shut it down without shutting down the Internet itself. All they can do (and have been doing) is shut down businesses that exchange bitcoin for other currencies. As a bitcoin proponent and miner, I don't even care if they do that. Bitcoin is better underground. I can exchange btc for dollars and vice versa tax-free anytime through a variety of black markets.

I'm not sure how much you've read about bitcoin, but it is well worth spending the 4-8 hours necessary to begin to understand it (its obvious Binswanger has not). It is a creation of singular genius.

Gus Van Horn said...

If it is driven underground, good luck getting recourse for fraud. What will you do if bitcoin is illegal (or effectively illegal) and I cheat you out of yours? Haul me to court?

Government, although widely abused today, has a proper purpose, the protection of individual rights. Even if it can't eradicate bitcoin, it can still leave its users open to having their rights violated, albeit not by itself.

Mark Lindholm said...

You should look at the Silk Road, as an example of how little fraud there can be with bitcoin and no enforcement mechanism. The owner, one Dread Pirate Roberts, uses an escrow system that requires the buyer to finalize the order in order for money to be released to the seller. Buyers who try to scam the system are quickly blacklisted. Sellers who don't deliver have their accounts revoked. All transactions on the Silk Road are 100% illegal. And use of the site is growing at a tremendous rate.

It's really an amazing thing. This Dread Pirate Roberts fellow has become a massive drug lord over the past few years, without ever needing to use violence. He is a revolutionary who is changing the very nature of the drug trade. In addition, because of a buyer review / seller ranking system, the buyer can understand precisely what he is buying in a way that is not possible when using the traditional face-to-face underground economy.

It's not only cocaine, heroin, and the like either. There are plenty of drugs that are FDA restricted for little reason that normal folks would want in their cupboards. Safe and highly effective stimulants like Modafinil. Steroid inhalers to inhibit a bad cough. DDT. Viagra. Etc...

Mark Lindholm said...

Another thing to mention about fraud is that bitcoin itself appears to be fraud-proof. It uses a mechanism whereby each person running mining hardware has essentially their own central bank which is encrypting and decrypting transactions. Transactions are accepted when a certain critical mass of miners process and agree on the transaction. In some ways it is a software implementation of a benevolent universe premise. One bad actor cannot fool the system. In order to destroy the system one would need to pay an enormous amount of money to buy control of a huge percentage of the network, at which point, they would be primarily destroying themselves.

Jim May said...

Harry Binswanger puts his finger on a truth: the welfare state could be stopped dead, and damned fast, if people abandoned its fiat currency for a competing one. After all, that's exactly what a hyperinflation is -- a mass abandonment of a currency.

With that at stake -- yes, shutting down the Internet would be an option. It is the Bitcoin equivalent of a bank holiday.

Excluding it from the rule of law would likely be sufficient to kill it, though.

Jim May said...

Regarding the intimidation factor of Leviathan, here's an additional thought:

Are you familiar with the pro-gun truism "if guns are outlawed, only outlaws will have guns"?

I have long held that gun control is extremely important to the Left, because by severely crippling a person's options for self-defense such that all he can do is call 911, expanding the police state becomes much more attractive to him as the only way for him to be safer.

I only recently made the additional connection: for that to work, there must be outlaws **with guns** for him to be scared of. Accordingly, gun control must therefore be somewhat ineffective insofar as keeping guns out of the hands of criminals is concerned, in order to maintain the perception of their necessity. Leviathan **needs** the outlaws to keep the people scared and in line. You want to scale back government -- why, so these guys can run amuck all over your weak, defenseless self?

Outlaws having guns is a gun control feature, not a bug. The same would go for letting the occasional Tsaernev through to keep people scared enough to surrender their liberty.

Gus Van Horn said...


Your "Dread Pirate Roberts" is, in one way, a bit like an absolute monarch who happens to allow lots of freedom and, in another, like a (real) criminal fugitive who will be captured/shut down once the state finds a way (i.e., to shut down or more effectively surveil the Internet.

Also, you can't say that he's a big drug lord AND that all the transactions are 100% legal. We have laws (although we shouldn't) against lots of drugs. This means that the government is both failing to provide the protection to those transactions that it should and will be interested in stopping the transactions. Those are problems whether the participants in this black economy are getting away with it for the moment or not.


Regarding leaving bitcoin outside of rule of law as probably lethal to it, I am curious to learn your thoughts about what Mark says in his last comment.

And, yes. Having more outlaws is a feature in totalitarian schemes. The gang in power needs a way to pretend to be a legitimate government.


Mark Lindholm said...

I'm not sure if something went wrong but my second comment doesn't appear to have posted. I was making a point about bitcoin proving fraud-proof without any government interaction, due to transactions requiring a certain critical mass of verification from the mining/banking pool. It's a kind of software implementation of a benevolent universe premise. You may not be able to trust one person, but you can trust most (particularly when they are all personally invested in the future of bitcoin). And it's worked, given the billion dollar plus capitalization of bitcoin today. The only way to subvert the system is to buy control of 51% of the network, at which point you'd be destroying yourself.

The only way to cheat someone out of bitcoin is by theft of the private key, which is possible for sure. But I'd rather face that possibility than the inevitability of hyperinflation of my dollars.

As for the Silk Road, to clarify, I did say 100% ILLEGAL. I think the Silk Road / Tor network / Bitcoin in conjunction have proven that law enforcement cannot deal with these new systems (they have been trying, but the old paradigm of catch a user and make him give up his dealer no longer works when the user doesn't know who the dealer is). The only way anyone will figure out who the Dread Pirate Roberts is is if he brags about his secret identity to the wrong person, or if he attempts to cash out of his bitcoin in a legal manner.

Jim May said...

Gus: Mark Lindholm did say "100% illegal" regarding the Silk Road.

I find that information rather interesting; it would not be the first time that an outlaw community ended up building its own rule of law and approximating a stable competing society.

In the past, the solution of the existing power has always been the same: physical interdiction, a.k.a. war. They already telegraphed this when they declared Bernard von Nothaus' "Liberty Dollars" as "a form of domestic terrorism" -- and for the reasons I mentioned in my first comment, I can see why they might honestly think so. Crashing the currency and grinding the government to a halt *suddenly* would be like ripping a tumour out of someone's heart; the tumor needs to go, but doing it so crudely and suddenly could kill the patient.

If the Dread Pirate Roberts got big enough, they'll just cry terrorism and take him and/or his servers out directly, by force, as Mr. XKCD himself more-or-less points out here. Computers and Bitcoin haven't changed the basic facts of physical vulnerability.

Gus Van Horn said...

1. My apologies for misreading Mark's first comment and missing his second, which is now posted.

2. I have to agree with Jim's overall assessment: The men with the guns will do whatever they have to, however crudely, to keep power if Bitcoin proves to be enough of a threat to them.