December 2003 - cypherpunks-legacy

Re: Anguilla - A DataHaven?
by tcmay＠got.net 17 Dec '03

17 Dec '03

Vince Cate has written several things in the past couple of days about the situation in Anguilla; actually, I think we've learned more about the operation of his service in the last few days than we have in the past year or so. Some instructive points, and some worries. This message contains: * discussion of the situation Vince describes * what I surmise to be some of the behind the scenes realpolitik * the role of physical vs. cyberspace data havens Rather than respond point by point to one of Vince's messages, I'll first make a few general points, free-form: 1. As I have said, I admire what Vince has done. Evolutionary learning can't happen without experiments and tests, so his experiment is important. 2. If Vince ends up moving in a direction different from that of operating a traditional (!) data haven, I will not be very surprised. Were I in his position, I might well do the same thing. (Lots of reasons, issues....)\ 3. Vince seems to be a in a somewhat precarious position, awaiting renewal of a one-year work permit. In any country, this is a shaky basis for continuing a project. I certainly don't know what his relationship is to the local authorities, but I sure know I'd feel constrained if I were up for renewal like this. (Consider how the U.S. refuses to renew visas for "undesirables," including writers whose writings the establishment dislikes, AIDS activists, anarchists (!!!), etc.) 4. The small size of Anguilla--I surmise and feel--works against operating the kind of "data haven" many of us feel could exist. Given that data havens will have all sorts of unusual, undesirable, and subversive materials, this "small community" will probably react unfavorably to any publicity generated. (And it's in the nature of some of these customers to "advertise" themselves flamboyantly--unlike Swiss banking--so as to generate customers...this pretty much guarantees that there will be stories like "Anguilla--New Source for Neo-Nazi Material!") 5. In the U.S., there are 250 million people, extensive support networks for protecting free speech (much as we like to focus on the suppression cases), and a legal system that really does make it pretty hard for a bureaucrat or even the President to pick up a phone and have a business he doesn't like shut down. I surmise, given the size of Anguilla and the non-constitutional basis of its government, etc., that it _might_ be a lot easier for a bureaucrat or the Governor-General, or whomever, to seriously disrupt any business by a few phone calls. I don't know this for a fact, but I suspect it to be true. (The closest I've been to Anguilla is the Bahamas, and it is reported to be seriously corrupt. I can't imagine a data haven surviving there if the Ruling Families decided they didn't like it.) 6. So, what does this mean? It means, I believe, that small Carribbean islands are likely to be poor choices for data havens. The more "civilized" they are, ironically, the poorer a choice they are. (Think: pirate islands, where "anything goes," so long as the right payoffs are made.) 7. Multidimensionality. With banking havens, there is basically only a single degree of freedom to consider, at least insofar as deciding which policies to consider. That is, over a period of many decades a banking industry arises in some country (Switzerland, Austria, Lichtenstein, etc.), with bankers, vaults, protocols for deposit and withdrawal, etc. And with lots of fees to lubricate the whole system, provided payoffs to various officials and royals, etc. Contrast this with a small data haven (a new industry) in a small country, with operating margins that are razor-thin (given the pricing structure Vince announced, I doubt Taxbomber and other customers were paying enough to ensure a flow of payoffs to the Ruling Families of Anguilla and the various officials that need to look the other way). 8. That is, how will a data haven handle situations where diverse "threats" and "abominations" are traced to the haven? Bomb information, pornography, child porn, trade secrets, pyramid schemes, and so on? (Vince can of course say to each of these: "Not what I want," but he may find that such ad hoc declarations chase away most of his business...) 9. In summary, I applaud Vince's experiment. But I wouldn't call it a data haven, based on what I've seen. Maybe a tax haven, but even this I have yet to see much evidence for (Vince is not free to disclose who his customers are, of course, so we are somewhat isolated.). I will say that if the only goal is to avoid sales tax and/or income taxes, operating out of Anguilla may not be ideal. After all, suppose there's a dispute (a la Taxbomber): is one supposed to fly to Anguilla, hire local attorneys, and sue in the local courts? The tens of thousands of dollars this would cost would likely swamp any tax savings.....depends on a lot of factors, but I think you all see the point. Well, I've written enough. Vince asked me a few specific questions, so I'll briefly answer: >Tim, we would all be very happy if you were to locate a country that could >be the site of the ideal datahaven, and finance a couple cypherpunks to >setup there. It would be a big help to our cause. Could you do this? Yes and no. Yes, if a good business opportunity presented itself, with reasonable payback, good ideological basis, and without too many entanglements (e.g., having to fly to Country A to check on my investment too often). No, in that there is no "liquid market" in such investment opportunities. That is, I can't just say "Send me your plans and how much money you want." I might consider partly funding a venture by people well-known to me, but, so far, no such possibilities have presented themselves. >In the mean time, people may have to exist in cyberspace (like >www.taxbomber.com) without having a totally secure physical location. >This is not the end of the world, or really even that painful. If done >right you could be down for only an hour - just long enough for >nameservers to change. Taxbomber is now setup to do it very fast next >time, if the need ever comes. Tim, I think you have even advocated this >approach, not stressing the physical location, just the cyberspace >location. No? Yes, I agree. I actually wrote my "Crypto Anarchist Manifesto" in mid-1988, just a month or so before reading Sterling's "Islands in the Net," which was focussed on physical data havens (he may've been the one to coin the term, actually). My thinking was already heavily influenced by Vinge's "True Names," and Chaum's work on untraceable digital cash (1985) was well-known to me (for reasons I've written about elsewhere), so I tended to view data havens as not being tied to physical communities where the local potentates could revoke work permits, visas, travel permits, business licenses, etc. The Anguilla Experiment is certainly not changing this opinion. (And Stephenson's "Snow Crash." in 1992, further popularized this vision of cyberspace havens....I can't say he devised any new forms that some of us hadn't already been thinking about, but he sure did make it a more vivid vision through his evocative fiction.) What the form of these "cyberspace data havens" might take is unclear. Several pieces of technology are missing, just as they were missing four years ago when one of the early list members contacted me to tell me how easy it would be to set up a data haven with computers. (It wasn't easy then, and it ain't easy now. The pieces that are missing are the reifications of protocols we talk about a lot....mere encryption and authentication are only the starting points, and look at how hard it's been just to get _them_ deployed.) --Tim May Boycott "Big Brother Inside" software! We got computers, we're tapping phone lines, we know that that ain't allowed. ---------:---------:---------:---------:---------:---------:---------:---- Timothy C. May | Crypto Anarchy: encryption, digital money, tcmay(a)got.net 408-728-0152 | anonymous networks, digital pseudonyms, zero W.A.S.T.E.: Corralitos, CA | knowledge, reputations, information markets, Licensed Ontologist | black markets, collapse of governments. "National borders aren't even speed bumps on the information superhighway."

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new type2.list/pubring.mix
by John Perry 17 Dec '03

17 Dec '03

-----BEGIN PGP SIGNED MESSAGE----- Hello Everyone, There is an updated type2.list/pubring.mix combination available for the mixmaster remailer software. You can get it via WWW from www.jpunix.com or by anonymous FTP from ftp.jpunix.com. Of note is the addition of the squirrel remailer. Welcome aboard! - -- John Perry - perry(a)alpha.jpunix.com - PGP-encrypted e-mail welcome! WWW - http://www.jpunix.com PGP 2.62 key for perry(a)jpunix.com is on the keyservers. -----BEGIN PGP SIGNATURE----- Version: 2.6.2 iQCVAwUBMhGxS1OTpEThrthvAQERXgP9FQJK5byJ2bXPIy1jwzZSBt6qNgMRCXph rqDRijUxehiSpmis5mq3gTtH/CcA7wAqkxLfO9izE3sC4HqWCd7B5D7KLZx9VPNG kZvUfQrZjzubLtz4ly0DtEDtnbKTEFLZ1tJL1ZUnZgsKTLEmeEIsXDc6r5zaGC0F E/U+SBe2oOg= =gYJD -----END PGP SIGNATURE-----

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Re- PGP
by Bjorn E. Andersson 17 Dec '03

17 Dec '03

Sorry for the noise, I did a Cc by mistake. Bjorn A.

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Re: National Socio-Economic Security Need for Encryption Technology
by Bart Croughs 17 Dec '03

17 Dec '03

Joel Morgan wrote: >It seems clear that capital investment in tools will contribute to the -productivity- of workers. (Tools here meaning whatever machinery/ infrastructure is used to get work done.) Bart Croughs quotes a number of economists who seem to be saying that when capital investment leads to increased productivity (per worker) this also leads to higher wages. I'm not sure I understand -why- this should necessarily be so. It's my impression that in manufacturing industries, the more mechanized production is, the more workers will get paid. Then again, perhaps a more mechanized industry will pay more because more mechanized industries hire workers with higher skills (albeit fewer workers). It's my impression that when a company makes capital investments which increase productivity, the fruits of this increased worker productivity are shared (to some extent) with the workers. I can imagine a number of reasons why this might be done, but it's not absolutely clear to me that this would be a direct result of market forces.< Increased productivity of workers leads to higher wages for workers because of competition between employers. If a worker produces the worth of $3000 per month for his boss, and his boss is only willing to give him $2000 salary, then there are other employers who would be happy to give this man a job at a higher wage. They still profit if they give him a wage of $2100 instead of $2000. This process goes on until the salary of the worker equals his marginal productivity. Bart Croughs

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Re: National Socio-Economic Security Need for Encryption Technology
by Bart Croughs 17 Dec '03

17 Dec '03

Arun Mehta wrote: >>Bart Croughs wrote: >I don't assume that the *total amount* of capital will be lowered in the US when US capital moves abroad. I assume that the amount of capital in the US will be *relatively lower*. So the wages will be *relatively* lower (lower than when the capital wouldn't have left the US), but not necessarily lower in any absolute sense. I thought this was obvious, but since Arun Mehta also misunderstood me, maybe I should have been more explicit here. > Henry Hazlitt in 'economics in one lesson' (p. 139): "The best way to raise wages, therefore, is to raise marginal labor productivity. This can be done by many methods: by an increase in capital accumulation - i.e. by an increase in the machines with which the workers are aided..." Pardon me, but I'm still confused. When Hazlitt talks about how many machines are employed, surely that's "absolute" capital, not relative. If US capital is invested abroad sensibly, such that it enriches the investors, they have more money to invest in machines at home and thereby increase local productivity (and wages). << If investors use their capital to invest abroad, this capital cannot at the same time be used to invest at home. Only after the investors decide not to invest abroad any more, they can invest it at home. But I was not talking about investors who decide to stop investing abroad and start investing at home. I was talking about investors who decide to invest abroad instead of at home, and the effect of such a decision on the wages in the US. Maybe in the future these investors will have more money, and will decide to stop investing abroad and start investing at home. But in the mean time, all the capital that's invested abroad diminishes the amount of capital invested at home, and so causes the wages at home to be less than they otherwise would have been (but not necessarily less in any absolute sense). Bart Croughs

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Re: National Socio-Economic Security Need for Encr
by Bart Croughs 17 Dec '03

17 Dec '03

Chris Adams wrote: >On 12 Aug 96 19:17:00 -0800, bart.croughs(a)tip.nl wrote: >Now I will explain why the austrian economists are right. Imagine Robinson Crusoe. In the beginning, he catches fish with his bare hands. He has no capital investment, and consequently he is not very productive. His wage will be low (he will not catch much fish). If there is more capital investment - if, for example, he has a fishing rod - he will catch more fish in less time. His productivity is higher. His wage is higher (more fish). If there is still more capital investment - if, for example, he has a boat and fishing nets - he will catch even more fish. His productivity is higher. His wage is higher. Etcetera. So, it's really not difficult to see that the Robin's standard of living depends on the amount of capital available on his island. The same goes for the rest of humanity.< To a limited extent, that holds water. However, how would you explain, say, some of the construction work around here where a huge, expensive piece of equipment is being run by some guy making less than the Cal Trans worker with the flags? Or guys I know who are making low-middle class wages working on a $10,000 computer hooked up to a $1,500,000+ molding machine? Also: lawyers - You're getting charged $200 a billing hour by someone who probably doesn't even use a typewriter (After all, secretaries aren't just for oggling). Although legal references might be somewhat expensive, it doesn't compare to the money gained. Also: computers. I know people who are making an incredible amount on old machines. They might be using a few dollars in software (probably 2-3 hours worth at most) and are working on a cheesy old machine. However, because some of these $6.25/hr typists have been putting useful information into it, it is worth the trouble to pay someone $50/hr to fix it. Neither of them has invested much compared to what they're getting in return.< When economists say that wages depend on the amount of capital invested, they mean on a regional/national level, not on the level of individuals. >Your argument only works with 2 givens: 1) A larger investment will return at least a corresponding increase in productivity.< This tends to be the case. If a larger investment doesn't return a corresponding increase in productivity, the investment will generally not be made. Happily, no one wants to waste his money on investments that are not productive. >and 2) the worker is self-employed - otherwise there are too many factors involved. If #1 is true, *someone* will be making more money, but not necessarily the worker.< Yes, it's the worker who will make more money. Why? As I explained in another post on this subject: "Increased productivity of workers leads to higher wages for workers because of competition between employers. If a worker produces the worth of $3000 per month for his employer, and his employer is only willing to give him a wage of $2000 , then there are other employers who would be happy to give this man a job at a higher wage. They still profit if they give him a wage of $2100 instead of $2000. This process goes on until the salary of the worker equals his marginal productivity." Bart Croughs

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Schlafly on crypto
by Brad Dolan 17 Dec '03

17 Dec '03

Subject: Clinton Is Trying to be Big Brother -- Phyllis Schlafly Column 8/8/96 Clinton Is Trying to be Big Brother August 8, 1996 by Phyllis Schlafly We hope the appropriate government agencies will soon solve the recent terrorist crimes and punish the criminals. But all Americans who care about civil liberties should vigorously resist President Clinton's attempt to use the terrorist attacks as an excuse to carry on his all-out war against the personal privacy of law-abiding Americans. This mind-set was first revealed in the Clinton health care bill, which would have given the government computer access to the medical records of all Americans. Fortunately, that totalitarian takeover of the health care industry was rejected. The Clinton Administration's education legislation now pending in Congress would put personal information about all schoolchildren -- academic, medical, attitudinal, behavioral, and family -- into an expanded Labor Market Information database available to the government, as well as to prospective employers. Now the Clinton Administration is trying to make it illegal for individual Americans to have private conversations with one another. That's the real meaning of its effort to control encryption technology, and it's a direct assault on the First Amendment. It would be downright ridiculous to assert that the First Amendment guarantees our right to speak in public but not in private. It would be just as ridiculous to say that we have freedom to speak in words that the government can understand, but not in words the government can't decipher. Americans have the right to speak to one another in private, behind closed doors, and we should likewise have the right to speak to one another in code and to put our coded messages on computer in a process called encryption. Americans would not tolerate the government opening and reading the letters we send through the mails, and we should not tolerate the government opening and reading our encrypted, or coded, messages sent via computer. Yet, Attorney General Janet Reno, FBI Director Louis Freeh, and Vice President Al Gore are all demanding the authority to read our encrypted messages. In a speech to the Commonwealth Club of California, Reno bluntly stated her demand for "ensuring law enforcement access to encrypted data.'' Reno boasted that there is "a consensus'' that the government should create a system known as "Key Escrow'' (i.e., a supposedly "neutral third party''), to which all Americans should be forced to "entrust'' the keys to their encrypted messages, and to which the government would have access. On the contrary, there is no such consensus. Do you trust Janet Reno with access to your private messages? Do you trust the FBI to keep your files confidential? The Clinton Administration is already doing 30 to 40 percent more federal telephone wiretaps and other electronic surveillance than the last year of the Bush Administration. Those figures don't even include national security wiretaps or the hundreds of extensions granting more time for wiretap orders already issued. FBI Director Freeh wrote the New York Times last November that "There is no intention to expand the number of wiretaps or the extent of wiretapping." Four months later, FBI documents revealed that the FBI does, in fact, plan to increase electronic surveillance 54 percent by 1998 and 130 percent by 2004. On July 12, Al Gore announced that the Administration will continue to push for the adoption of a massive public key infrastructure to give the government access to all encrypted communications. In a blatant bid for a police-state surveillance society, Gore warned about "the dangers of unregulated encryption technology." A neutral panel of the National Research Council was set up to make policy recommendations about encryption. The panel called on the government to abandon its efforts to restrict encryption. The NSC panel concluded that increased use of encryption would enhance our national security, not diminish it. Thirteen out of its 16 members had security clearances with access to secret information, and they saw no national security reason to justify the Clinton policy. The Clinton Administration bases its campaign to control private encryption on the alleged need to fight crime through wiretapping. However, the NSC panel concluded that the ability of the private sector to transfer confidential financial and other data over the information highway without interception is far more important. New technologies have given government awesome power to spy on individuals. The Filegate investigation accidentally uncovered the shocking news that, as soon as Bill Clinton entered the White House in 1993, he secretly spent $400,000 on software to create a highly sophisticated computer database to track detailed political, financial, attitudinal, and personal biographical information on 200,000 people, including members of Congress and the media. Known as WHODB for White House Office Data Base, the system was nicknamed Big Brother. Encryption is a First Amendment issue, not a crime issue. If the Clinton Administration is allowed to control encryption, it would be the biggest expansion of federal power since the passage of the Income Tax Amendment in 1913. EAGLE FORUM -- eagle(a)eagleforum.org PO Box 618 Alton, IL 62002 Phone: 618-462-5415 ---------------------------------------------- Are you on our E-mail list? Tell a friend about us! http://www.eagleforum.org

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Capital and Taxes
by tcmay＠got.net 17 Dec '03

17 Dec '03

At 10:18 PM 8/13/96, Brad Dolan wrote: >... and while I'm ranting... > >Can somebody explain why: > >1. Good jobs of the future are knowledge jobs which require little >capital investment. > >and > >2. We need a capital gains tax cut to encourage capital investment to >stimulate the growth of good jobs of the future. > >? Sure, as an investor in some small companies and a high-risk startup, I'll give some thoughts on what motivates _me_, and why a capital gains tax cut would help the economy. First of all, let's dispense with any confusion between "capital investment" and anything related to "capital goods" or "capital equipment." The two things are not at all the same. Consider a business that needs (or claims/hopes/plans) $1M in initial seed money to get rolling. Sure, some businesses get started with less, or with nothing, and finance growth out of sales. But a million bucks is not at all uncommon for a startup company that needs some work to be done before sales get started. Note that this million dollars has nothing to do with buying "capital investment," in the sense I think you mean (and in the sense I think Bart Croughs meant). It may all go to salaries for, say, 5 people for a year or two, plus office expenses, some other expenses, etc. Maybe even $50K worth of computers. This a "knowledge-intensive" company with very little needed in capital equipment. How is this money raised, and what calculations does a potential investor make about the risks, rewards, returns on investment, etc.? For one thing, the gains on such an investment over some time period (typically 3-6 years) are _capital gains_. These are now taxed at a marginal rate of 28% Federal plus whatever state and local taxes may apply, Here in California, the effective total marginal tax rate is 38-40%, depending on some factors. (In several industrialized countries the capital gains tax rate is zero, or nearly zero.) But this 38% rate doesn't even tell the whole story. Suppose that I want to make a $100K investment in this company my friends are trying to start. Money has a cost, both in the "rent" that is charged on it, or the "rent" that _could have_ been charged to another for an alternate use, and on something else that's terribly important: taxes must be paid on other assets sold to raise the $100K. For example, if I own shares in Intel, bought many years ago, I have to sell $160,000 worth of Intel stock, send a $60,000 check to Uncle Sam and Uncle Pete, and then send the remaining $100,000 to my friends. If the new investment *doubles*, my $100,000 gain is taxed at 38% and I'm left with a gain of about $62,000. It doesn't take a number theorist to see that I may as well have not even bothered. So long as I just sit on the Intel stock, no taxes are owed. Sounds like a no brainer to me. Yes, taxes will _someday_ have to be paid...but many of us are hoping, praying, and pleading for a cut in the capital gains tax rate...at least a rollback to the 22% rate of yesteryear (and 4% or less in states). This huge "backlog" of unrealized capital gains (aka gains on paper, but not yet taxable) is what is being spoken of when people like Jack Kemp and Steve Forbes speak of "unleashing" the capital gains now tied up due to the high tax rates. (Letting capital flow more easily will also make for a more efficient market. It may be that I would've liquidated much of my Intel holdings had the tax penalty not been so high.) There are many more things I could say, but this is already too long. Just don't think in terms of "capital" as just being "capital equipment." It is really "investment" in all its many forms. "Free the capital--and I don't mean D.C." --Tim May, author of "DOS Capital" Boycott "Big Brother Inside" software! We got computers, we're tapping phone lines, we know that that ain't allowed. ---------:---------:---------:---------:---------:---------:---------:---- Timothy C. May | Crypto Anarchy: encryption, digital money, tcmay(a)got.net 408-728-0152 | anonymous networks, digital pseudonyms, zero W.A.S.T.E.: Corralitos, CA | knowledge, reputations, information markets, Licensed Ontologist | black markets, collapse of governments. "National borders aren't even speed bumps on the information superhighway."

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re: National Socio-Economic Security Need for Encryption Technology
by Arun Mehta 17 Dec '03

17 Dec '03

At 08:33 13/08/96 -0700, James A. Donald wrote: >the fact that an engineer who is subject to the power of the Indian >government is not worth very much, as is demonstrated by the fact >that companies with Indian engineering teams often spend a lot of money >to get their employees out of India. > >Demand for Indian programmers is less than supply not because capital >has somehow failed to flow to India, but because an engineer in India >is not free to produce the value that engineers elsewhere are free >to produce. > Whoa! In economies that are highly de-coupled, incomes and prices can easily find quite different equilibria. Of course, the situation changes when trade increases. If you visited Italy in the mid-'70s, prices were much lower than, say, in Germany. Somewhere in the late '70s and early '80s, prices (and I hope wages too) rose to "international" levels. Why hasn't it happened in India? One reason for sure is that despite all the talk of free trade, free movement of people does not take place. Otherwise, plumbing, gardening, and all kinds of services could have been provided in Western countries by Indians, reducing supply and raising wages in India. It really doesn't have much to do with "the power of the Indian government" (except that I wish they had negotiated better at GATT so that when the free flow of goods was talked about, the flow of services was also treated at par). India has its faults, but it still is a relatively democratic and free country. And yes, capital has "somehow failed to flow to India," and for this the restrictive policies of government are to blame. Arun Mehta Phone +91-11-6841172, 6849103 amehta(a)cpsr.org http://www.cerfnet.com/~amehta/ finger amehta(a)cerfnet.com for public key

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Re: [NOISE] Re: photographed license plates
by Arun Mehta 17 Dec '03

17 Dec '03

At 16:04 13/08/96 -0800, Jim McCoy wrote: >Here in the states the easy challenge to >such a ticket would be "it was not me driving when that photo was taken" and >the burden of proof is on the prosecution to prove that you were the driver. In Germany, as I recall, if you use this argument, the cops require you to thereafter maintain a log of who drives the car when. Arun Mehta Phone +91-11-6841172, 6849103 amehta(a)cpsr.org http://www.cerfnet.com/~amehta/ finger amehta(a)cerfnet.com for public key

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