These remarks were made by Steve Newcomb on a friend's retreat's mailing list during late December, 2013. Remarks by others are paraphrased and not attributed out of respect for the privacy of the discussions on the list. Such paraphrased remarks appear in italics-and-quotes "(paraphrased contribution)". (If anyone wants their contributions to be quoted verbatim and/or attributed, please send me your request: srn coolheads com. Be sure to say exactly how you want me to make the attribution.)
In the context of a discussion about Bitcoin, the opposite-of-Bitcoin question: "What if every transaction were public?"
... "Changes in currency offer interesting opportunities"...
I still think that it would be good to have money that remembers its trading history. I've mentioned the idea here before.
At the 2004 Retreat near Toronto, when I suggested a similarly radical "let's balance the transparency accounts" idea, a co-retreater tearfully and compellingly objected, and she recounted a dreadful personal invasion-of-privacy experience. Everyone sympathized, including I myself. I could see that it wasn't the right time to talk about it.
But individual privacy is dead. No amount of denial can get past the Snowden revelations, or their revelation of the ongoing lies, childish word-games, and special-privilege-salvaging marketing ploys that now emanate from our largest public and private institutions. Technology, like the knowledge on which it's based, is irresistible. We need to make peace with that fact, because the other options are terrible. In any case, grief over a loss ends best when the loss is finally accepted, and as a society we're definitely not there yet.
I see signs that ordinary people are slowly adapting to the loss of personal privacy, but it looks to me as though their institutions, and the people who benefit from maintaining the secrecy of our largest institutions, are adapting glacially, at best. A positive-feedback situation obtains, in which power still continues to concentrate in the hands of fewer and fewer. The U.S. Constitution's balance of powers is also well-and-truly gone; technology is at least one of the key reasons. The Executive Branch is reduced to saying, "Just trust us,", and in almost the same breath, it lies again about what it's really doing.
Sooner or later, "adapt or die" will apply, and later will be less orderly than sooner.
If units of currency could know their own histories, and could be queried either before or after acceptance, institutional privacy would be more on a par with individual privacy. Civilization could adapt much, much faster, because it would see itself more clearly. Ultimately, widespread liberty might be maintainable at a level that only our largest institutions can enjoy today.
I don't think it requires any new technology. It requires a public banking system that may go a step or two beyond Ellen Brown's thoughtful (and I think excellent) proposals.
" ... My commercial computer system has a back door that admits the software vendor to all my secrets! ... "
Your experience reminds me of the ploy being suggested by the President's panel on reigning in the NSA, namely that the telephone metadata be allowed to stay in private hands.
Jon Stewart can't improve on that drollery.
The private sector is where all the data already are, anyway, and there's no public accountability there. By public and private law, a corporation's job is to make a profit. Microsoft is only trying to make a profit, and its shareholders are depending on its efforts.
The addressable problem is not the loss of privacy; that's GONE. I grieve over the loss, but that's how it is. It's not coming back.
The *addressable* problem is the imbalance of power -- the one-way quality of the looking glass. They can see everybody. Nobody can see them seeing everybody.
So the problem is literally classic. As classic as ancient Greece. Too much power in too few hands means a moribund state. To continue the concentration, secrecy is essential. First of all: take away the secrecy. We don't need secrecy in order to live. In order to live, we need to overcome it.
"an expression of outrage at a private-sector betrayal of individual privacy:" https://gist.github.com/0xabad1dea/8101758
"The system vendor can foil its own encryption of your disk drive, so don't break any laws."
That's not the problem I'm worried about.
The problem I'm worried about is that operations done under the color of law are increasingly lawless, secret, and unaccountable. In a lawless environment, there is no "right side of the law". There's only intimidation, winkings, noddings, and, ultimately, tyranny.
Look what happened to Chelsea (nee Bradley) Manning. Look what hasn't happened to the perps of the war crimes he exposed.
Look what happened to the videos of the waterboardings done at the behest of the Bush administration -- videos that were protected by a court order requiring their preservation. Look what hasn't happened to those who destroyed them.
When the lawless behaviors at Abu Ghraib were exposed, the immediate reaction was to forbid cameras there. None of the hapless boobs who were held accountable were ever in responsible positions there.
The DEA has been using lawlessly obtained information, and using "parallel construction" of cases to conceal the sources. The nation's Bar Associations are appalled. But so what?
There will be no end to it until an end to it is put. The urgent question is, "How?"
"Steve, good thinking. The private information of individuals is at least as useful against their interests as it is for their benefit. The threat of damage is large and real, the potential uses for benefit are real, but those purposes are no one's priority. We need to turn things around."
'Bitcoin, the famous peer-to-peer, decentralized electronic currency system, allows users to benefit from pseudonymity, by generating an arbitrary number of aliases (or addresses) to move funds. However, the complete history of all transactions ever performed in the Bitcoin network, called blockchain, is public and replicated on each node. The data contained into the network is difficult to analyze manually, but can yield a high number of relevant information.'
'In this thesis we present a modular framework, BitIodine, which parses the blockchain, clusters addresses that are likely to belong to a same user or group of users, classifies such users and labels them, and finally visualizes complex information extracted from the Bitcoin network.'
Thanks. Wow. If this is valid, there's much more actionable info in the Bitcoin regime than I thought, and yet still much less than I'm looking for.
What I'm imagining is a system that would track every unit of currency from birth. A soldier, for example, could contact the taxpayers who paid his salary. Those specific taxpayers could conceivably send a message to the soldier, or at least know that that's how their money was spent.
Spooky and radical, right? Well, here's my thinking:
Currently* we don't (and, as a purely practical matter, can't) know whether we're acting within the social contract or violating it, so liberty depends not so much on what we do, but rather on our not being caught doing whatever an enforcement agency doesn't want us to do. We've had "rule of men", but with many kinds of fig-leaf excuses for everybody to pay lawyers to defend them with. It's a complex "rule of men" with an inherent positive feedback loop that feeds the rich, oppresses the poor, and leaves the public interest undefended.
In that harsh light, liberty can be seen to have been dependent on privacy. Privacy has been a luxury item, but it has heretofore been affordable for a substantial portion of the population. The complex regime has worked, albeit oppressively for the poor, but now it's no longer workable at all. Under our currently-obsolete privacy-dependent regime, no privacy at all inevitably means no liberty at all. For anybody.
One way to bury the corpse of privacy is to make every economic transaction a public exercise of liberty. If we really want to limit freedom in some way -- which is probably a good and necessary thing -- we should do it only if the limitation applies to everyone without exception.
(*I help to make topic-mapped websites for the IRS about tax law. Almost every day, my nose is rubbed in the obscene mess that is the U.S. tax code. IRS, the unfortunate messenger, is usually blamed for the mess, but the fault lies elsewhere. Hint: The fault is not in our stars, either.)
" Each use of a tax-avoidance scheme needs to be seen publicly in order to maintain a sensible tax policy. The meritorious acquisition of wealth should not be followed by strong incentives to conceal its applications. If the wealthy are to have royal privileges, they should be seen to have them. "
" You must be kidding! "
Well, no, but I think I understand your reaction, because I have the same reaction. The idea I'm proposing is bizarre, no doubt about it.
I have the internal habit of turning everything upside down in my own mind, and seeing how it looks from the strange perspective. I occasionally find treasures that way. It's a lot like turning rocks over; mostly there's nothing of interest, but it's a habit that has served me well.
Now, if I turn our mutual "surely you jest" reaction on its head, I
can ask myself how I would feel if someone suggested that everyone
must participate in an economy that hides from the transactors
everything about their currency's history, but reveals to a few others
-- who are also major transactors for their own accounts -- everything
there is to know about everybody else's transactions, then certainly
" You wrote,
'A soldier, for example, could contact the taxpayers who paid his salary. Those specific taxpayers could conceivably send a message to the soldier, or at least know that that's how their money was spent.'
You can't possibly believe that your dollars are individually allocated to specific government expenses. "
I do not, and I see that as a technologically-no-longer-necessary, no-longer-sustainable artifact of a monetary system that (a) grows the power and size of large aggregations of capital, and (b) shrinks the power and size of small aggregations of capital (a positive-feedback loop). The problem has been characterized in many colorful ways; I find Jaron Lanier's characterization (basically, "whoever has the most computers wins") one that I can relate to, although I don't think he gets to the root of the problem, which I claim is the anonymity of the currency unit.
If someone wants to claim that currency units *cannot* have identity, I think I'm prepared to win that argument.
" You seem to be proposing that every use of every dollar should be public information, including such personal expenses as sensitive medical services, political and charitable contributions, sexual expenses, decisions to buy one thing as opposed to another, etc., regardless of your willingness to share such information with anyone, let alone the public.
Please don't include me in your impossible dream! "
I, too, would rather not be included in such a reality, but I'm even more eager to pass on tyranny, which everything I know tells me is the inevitable result of concentrating power. Lord Acton's famous remark applies, and so does Kissinger's equation, knowledge + access == power.
I've come to an unhappy realization: every economic transaction in which I participate is being stored and subjected to analysis, I know not why or how or when or by whom, and my behavior patterns are being monitored by radically-data-driven algorithms that nobody can even explain, really, so as to make me subject to various special analysis treatments, again without my knowledge (etc), with I-cannot-know-what impacts on my life, and, worse, I-know-not-what suppressions of creative disruption on a global scale. The hard thing to accept is that there is no way to prevent this, no matter what the laws are -- that technology has decreed this situation. But there it is, whether I deny it or not. Law cannot function in the absence of access.
Like Pandora's Box, the very same technology also gives hope. The public interest can be crowdsourced by exploiting the very same technology. In particular, currency units can now have identity, and access to their histories can be provided to their owners.
I'd like to see a public debate on the question,
"RESOLVED: Effective intelligence work (national-security work, law-enforcement work, etc.) can only be done in secret by publicly-unaccountable agencies."
I think the answer to that question is "No", and if it's "Yes", we must figure out how it can become "No". Or, we must finally face up to Plato's classic question, "Who will guard the Guardians?" Over the last 2,500 years, there has never been a remotely satisfactory answer, other than freedom of speech, but in a fantastically complex, globalized world, that's no longer sufficient. The reason? Freedom of *access* is now so extremely unbalanced.
Can someone explain why the answer must be "Yes", even if every currency unit has identity?
(My thinking has been heavily influenced by David Brin's work for well over a decade now. What I'm saying is neither new nor original, but after a long period of reflection, and in view of the Snowden revelations, it is impossible for me to remain silent about my growing convictions.)
To protect and infect, part 2. Morbidly fascinating technical details about the digital totalitarianism of the US NSA, reported by a maker of digital security products and journalist for Der Spiegel. An hourlong presentation about the NSA's exploits of the systems and services of named American businesses, including hardware and capability descriptions, and prices. If you don't yet believe you are an owned slave of the American military-industrial complex, you need to see this before you do something stupid. If you already believe it, you should still see a final mind-boggling revelation he makes starting at minute 57.
" How would government function in a transparent society? "
Yeah, well, you have gently put your finger on the hand-waving I'm doing here. When you ask "How will government function?" you point highlight a key underlying assumption of "democracy" that is unproved, to say the least:
* An informed public will act in its own best interests.
It's unproved that an informed *individual* will act in his/her own best interests, too. Indeed, there's plenty of evidence that human individuals and organizations do no such thing. (Greenspan recently made a similar rueful observation about the banks he used to work for.) Nor is it possible to say what "best interests" are, without invoking some pretty dubious (or at least arbitrary) context in which to make such judgments.
I guess I hold with Thomas Jefferson's idea (but not his egregiously contrary behavior), that liberty is good, and involuntary slavery is bad. Given my druthers, I'd start answering the question of governance from that position, rather than from the far-more-arguable position of what "best interests" might be, whether people are "correctly" motivated, show "good sense", or anything else that assumes a specific cultural context.
Speaking only for myself, I find the Darwinian insight -- that every class of organism in the natural world must adapt or die -- more compelling than anything else. The adapt-or-die rule also applies to every cultural institution, without exception. The difference between the evolution of human institutions and the prehistoric evolution of natural organisms is that human institutions are adapted by human decisions, as well as by natural processes, and they are also selected for success by human decisions, as well as by natural processes. So human decision-making is important, even if it's not always necessarily decisive, to human life, and to the life of every human being. And that's why, from the perspective of civilization itself, slavery is bad: it interferes with the ability of human institutions to adapt to changing conditions, and/or it interferes with the ability of humans to select for human success. If you don't know the prevailing conditions, you can't adapt to them or select for them. You're shooting in the dark.
If someone hides the relevant facts from you, you're more likely to make the decisions that the hider wants you to make. For want of any less-ugly term, that's tantamount to enslavement, and it's a Bad Thing because it's death: excess net early human deaths at the least, and the decimation or even annihilation of humanity at worst.
Now, you might classify my thinking as Libertarian. I once did, until I actually met Libertarians, some of whom were memorably at a Retreat. I have yet to meet a soi-disant Libertarian who fully espouses the idea that access to all human knowledge is essential to liberty. As I read F.A. Hayek's *Constitution of Liberty* and other works, I feel certain that *he* thought that access to all relevant knowledge prior to any economic decision was essential to an optimally-functioning economy. Nevertheless, Hayek's most famous disciples and the self-described Libertarians in general have behaved quite differently, at least with respect to their own accounts, seeking to control or tax access to relevant information. It's not all that different from the case of Jefferson, who, despite his fatherhood of some of the most important features of institutionalized liberty, notably including religious liberty, was himself a slaveowner and remained a slaveowner to the end. Go figure.
Sorry for the long rant, but I think I'm getting to the answer now.
The proper role of government is to provide a friendly climate for liberty, and the full exercise thereof, with plenty of room for experimentation, knowledge acquisition, the consideration of ideas, and, most of all, the living of human lives, which implies and entails the development of human beings.
One of the key aspects of human life, and the one to which humanity has yet to adapt successfully, is that there are so many other human beings, and such a precious and small planet to share with all of them.
In my view, and perhaps paradoxically, nobody should be excused, immediately upon arrival at adulthood, from temporary enslavement to the public's interest in liberty. It's absurd that we keep hoping for a Platonic Philosopher King to come and be our ruling savior (even though we sometimes, and too rarely, are fortunate enough to have one or two of them). Instead, we need to give every young person the experience of being an actually-governing Guardian, with responsibility for maintaining the public's overriding interest in life, liberty, and the pursuit of happiness (which, at some level of abstraction, is just three different ways of saying exactly the same thing).
And here I really do wave my hands; compared to the radicality of that one requirement, that everybody must be a Guardian, in one way or another, everything else about governance is detail. It makes sense for decision-making authority to rest in the hands of those who will have to live longest with their effects. It makes sense for everyone's prosperity that every new generation be intellectually, morally, and physically equipped to assume responsibility for itself, and for the further adaptation of humanity to a changing reality. They will be responsible anyway, after all. Why not give them every advantage, including the all-important advantage of early and profound experience?
If you trade a bag of corn for a bag of rice, and, for simplicity's sake, we assume that all your bags of corn are equally valuable to all the bags of rice you wish to trade them for, then you don't care which of your bags of corn you trade away. But: you still have to select one, somehow. You cannot trade a bag of corn that has no unique identity; you have to select a particular one off your corn-bag shelf in order to exchange it. If currency units have identity, then a similar question applies: which unit(s) to exchange away in any particular transaction? This may be an interesting question, because the new owner will have access to the history of the unit. But unit can still participate in the settlement of any debt, and no doubt your bank will gladly make the selection for you.
Identity is a concept I've played with a very great deal, and I feel pretty certain that I know some things about it. By way of defining some terms for this discussion:
Ultimately, all non-derived (i.e. primitive) identities are, conceptually speaking, 2-tuples, one member of which is some sort of unique identifier (note I do not say it's necessarily a string or serial number, but it could be), and the other member of which is (conceptually) the identified thing, no matter what it is. We in computer-land don't normally think that way, so I now emphasize again: "...no matter what it is". It can be something abstract, such as the value-in-trade of one currency unit.
Normally, and for most economic and cultural purposes, the identified thing can't be a tuple member in any ordinary sense, which means I'm not talking about ordinary, Computer-Sciencey 2-tuples, each of which consists of a pair of values. For example, the Statue of Liberty is not a value in any ordinary sense, and yet it can be endowed with an identity. In the context of the U.S. National Park Service, for example, it might be endowed with an identity: a (conceptual) 2-tuple in which the Statue itself is (conceptually speaking) one member, while the other member (for example) is the acquisition number that the U.S. Park Service assigned to it when it became, for all intents and purposes, the property of the U.S. National Park Service. More diagrammatically, here's a tuple delimited by parentheses:
(  the Statue itself, a large amount of sculpted copper sheets, iron skeletal parts, etc., and  a value that's unique in the context of the tuple. )... the above appearing in a U.S. Park Service context in which it's somehow clear that the second member is an acquisition number.
The same thing can be done with currency units. For purposes of this discussion, let's imagine currency units called "valoons". (A name I pulled out of the air just now. It has funny etymologies, including doubloon, [piece of] eight (see Finnish language), of course the notion of value, and the balloonish, floating quality of all fiat currencies, and their tendency to gradually lose weight.)
We take the position that a valoon is worth a valoon. That's exactly what the Fed says about the U.S. dollar: it's worth a dollar, and no other statement of value is made.
Imagine, now, that the Fed demands that all dollars be traded at its window for valoons, one for one, before a date certain. Afterwards it will not trade in dollars. Valoons are worth just as much as dollars, at least at the start. Afterwards their value floats in the same way that the value of dollars floats. But there's a key difference: dollars don't have identities (at least that's the case for electronic dollars, which account for the overwhelming majority of the dollars in existence). Every valoon has an identity -- a primitive identity assigned to it at its birth by one of the Fed's member banks. The context of that identity is the Fed, but the new Fed has a radically new mission: to track the history of every valoon as it moves from account to account. And: to make the history of every valoon available to its current owner.
I'm sure someone is going to say, "But that's an awful lot of computing and storage", to which I'll probably reply, "But the explosion of available computing and storage is the very nature of the Pandora's Box from which our power-concentration troubles are now emanating. So what's your point?"
[There needs to be] a smallest-possible granule (atom) of currency, and to track the history of each atom. That's already the case with dollars; even millage amounts are rounded to the nearest cent, and the number of cents is the final settlement amount of any debt, public or private, full stop.
I think it's interesting to consider the case where valoons are exchanged for valoons. When dollars are exchanged for dollars, it's often called "money laundering". But valoons have histories that include records of the values for which they were exchanged. In other words, valoon laundering could make the histories of the exchanged valoons more public, not less; their histories could become promiscuously linked.
Back to derived (as opposed to primitive) identity. A valoon is a set of valoon-atoms, each with its own primitive identity and history. The identity of a valoon, then, is "derived" from the identities of its constituent atoms. As is a kilovaloon, a megavaloon, etc.