December 2003 - cypherpunks-legacy

Louis Freeh calls for communication crackdown
by nobody＠neva.org 17 Dec '03

17 Dec '03

-----BEGIN PGP SIGNED MESSAGE----- Robert Hettinga wrote that David Kaufman wrote that Reuters wrote: >``It could take a $30 million supercomputer a year to figure out the >simplest encrypted message without this feature,'' Freeh said. ``And >that message might be 'we have the victim and will kill him in an >hour'.'' This seems like a good time to try out The Cypherpunk War Cry: Shine Shine!! Bakayarou!! Aho!! Manuke!! Anpontan!! (Hope it means something bad!) Jonathan Wienke correctly pointed out the absurdity of Freeh's example. But, there are two ways Louis and his supporters can wriggle out of this point. One is that the friends and relatives of the kidnap victime are sometimes tempted to conceal the crime as they may believe that a quiet negotiation and ransom payment will be more likely to secure the hostage's release than involving the authorities. (In many countries it is illegal to do this.) However, if the all knowing and all seeing secret police agency can intercept all communications they will be able to find out and interfere with plans to make ransom payments and jail the friends of the victim. That might be a little rough on the trophy, it is true, but it will be said that this will generally discourage other kidnappings in the future. The second is that encryption makes remailers possible. Remailers make it possible for kidnappers to untraceably send messages. What Louis and his supporters are neglecting is that kidnappers are already able to do this without encryption. The unabomber, while not a kidnapper, is an especially good example. For the at least a decade he was communicating with the FBI itself on a regular basis without facing any consequences. Monty Cantsin Editor in Chief Smile Magazine http://www.neoism.org/squares/smile_index.html http://www.neoism.org/squares/cantsin_10.htm -----BEGIN PGP SIGNATURE----- Version: 2.6.2 iQEVAwUBNFbKiJaWtjSmRH/5AQFNngf+Jly6DbqAU2JFPsF2gghY4tXHmp8XkVx3 t7F2IlBterhE99wxEbs+B6Nm4e0MvOCoTNbKly+XJi4If/3llFbcqBEisiib511N eX7ttczuV+ne5I2yNmt0M5vPwqRG/iaOSvwyDNbKQw72Y19PsMhZLfTp1WXYcYTC y/FcQa7JZKcf0/17kvVTgOq20XB4qxfPVMI6j7L4Dh7qRKl7Ph9CENaUq/uJtbBq NSDgsK64KFktTrERtnisJJA6RtDO+ZKUPU93vyoRuttST34EUDOcUq0QP566BAlw OKfi28+12AJtEqSUD2MEh0EgwLkKWUIkDNUp8yXzgI7BZeSSeoPbDg== =FPRq -----END PGP SIGNATURE-----

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Private Health Care [On topic, please read.]
by Mix 17 Dec '03

17 Dec '03

-----BEGIN PGP SIGNED MESSAGE----- Michael Sims wrote: [Ed. note: Declan wrote?:] > >>The free market approach won't keep medical records private. > > > In other words, the reason a "free market" approach may not work > > right now is because the market isn't free. > Declan, every part of the "health-care market" that people are > complaining about, the parts of it that routinely and for fiscal > reasons violate people's privacy, are completely and utterly > dollar-driven and do not result from big nasty government making any > laws. This greatly underestimates the influence and involvement of the government. The medical profession uses the government to keep out competitors and keep their prices high. In many areas, the majority of the money spent on legislative campaigns is provided by various professional medical organizations. The flip side is that the medical profession will have a powerful incentive to remain in the good graces of the established political powers, whatever they may be. That means no weird experiments in protecting people's privacy. Doctors are also terribly vulnerable to liability suits. As patients, we are unable to agree to waive most liability. This makes it harder to walk into a doctor's office with a sheaf of bills and ask for service. The doctor has a strong incentive to have everything documented and ship shape because to do otherwise would make him or her look poorly in court. This may also endanger the doctor's liability insurance policy. And, because the medical market is tightly controlled, it is not possible to legally enter the market as an outsider. IMNSHO, I should be able to consult my drug dealer about ailments and their proper medication. The fact is, many people have much greater rapport with their drug dealers than with their doctors and there is often greater concern by the drug dealer for his client's welfare, at least in terms of obvious problems such as pain. Similar things can be said for health insurance companies. They are very greatly constrained in the types of policies they can offer and the sorts of agreements they can make with their customers. You could imagine an anonymous policy which opens with a medical exam which is repeated every so often for couple of years before taking effect. After, say, two years of good health, full coverage on the policy kicks in. Ironically, some states have rules very much like this, minus the anonymity. After a certain number of years all illnesses are covered regardless of whether the customer had the illness previously and lied about it on their application. (Some states even forbid life insurance issuers from excluding suicide for coverage for long term customers! Not only does this raise the price of life insurance, but in certain instances it compels people to kill themselves "for the good of their family". ) Given this legal environment, you would expect some company some where to try to corner the market on anonymous health insurance. There are a few reasons why this does not happen. One is the extreme discretionary power of insurance commissioners. This power is probably even greater than in most industries because the insurance industry is, absurdly, widely hated. No insurance company is going to rock the boat. Insurance regulation also creates a barrier to entry. Many states limit the amount of profit an insurance company can make. These limits are often very low and do not justify new entrants or new and interesting product offerings. Finally, in practice very few people choose their own insurance. The purchase decision is made indirectly by the company they work for. The feedback between what the user of insurance wants and what he or she gets is attenuated by this structure. This structure is required by law in many places because employers are required to provide "free" health insurance to their employees. The federal tax code strongly encourages companies to provide health insurance as it is a benefit which is not taxed as income. There is more to be said on this topic, I am sure. Monty Cantsin Editor in Chief Smile Magazine http://www.neoism.org/squares/smile_index.html http://www.neoism.org/squares/cantsin_10.htm -----BEGIN PGP SIGNATURE----- Version: 2.6.2 iQEVAwUBNFbSfZaWtjSmRH/5AQHP0Af/SiXKivk8zzUlvKgcYw3AFaHx2nad1ezl E/i7mYi887mx5bMhaHKQfcD2l7oXKM/tkU3ym9PXOdngMxdVvZj96XxazDpQMW8o MIhEIwMPlwQsoNylyD0+UraWCX9X/SsyFchTJqlodmn9QH7OrtLtOcnX+ibMB/Wl 3WkvHAIZeEQaSjMYhbEqEZA/N7ojz6WFsY3jQWRmsFbAKmwn0tr+3ncbuzxZP0h+ 6Bq97xnS+17wRPX1hVp04qq+gtgmnDzEmCI1wDqUrGGJXmDHiTYNurOy1mcNUU+L RaguGy69kSBNqOzLen4sV0xL+w2nw8iMVWTQ0Xg1Zo6QgLnAIv+k8w== =DdvV -----END PGP SIGNATURE-----

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<<Vitamin B>>(October 28, 1997) The Power of Ecobabble
by Robert Hettinga 17 Dec '03

17 Dec '03

--- begin forwarded text X-Lotus-FromDomain: ILGW @ BIONOMICS@INTERLIANT @ OUTBOUND From: "VitaminB"<VitaminB(a)bionomics.org> To: "DAILY DOSE"<DAILY_DOSE(a)maxager.com> Date: Tue, 28 Oct 1997 17:37:57 -0800 Subject: <<Vitamin B>>(October 28, 1997) The Power of Ecobabble Mime-Version: 1.0 X-MIME-Autoconverted: from quoted-printable to 8bit by pop.sneaker.net id VAA29180 Vitamin B: Your Daily Dose of Bionomics October 28, 1997 The Power of Ecobabble Paul Krugman is, without doubt, a well known economist. With a professorship at MIT and a publication list long enough to impress Stephen King, those Nobel guys in Sweden are really the only ones he hasn't impressed. In other words, just the kind of successful, mainstream economist who wouldn't give Bionomics the time of day. Until last week, that is. We don't know why, but out of the blue, Paul Krugman chose to devote his entire _Slate_ column to an analysis of Bionomics (much like a shark will analyze a tuna). Maybe he was wondering why he, a clear expert in the field of evolutionary economics, wasn't invited to speak at our conference (Nov 13-15 in San Francisco plug plug plug). Maybe he actually doesn't think that language and metaphors matter to our mental maps of the economy. Or, maybe he got asked just one too many times, "So, Prof. Krugman, what do you think of _Bionomics_, and this guy Rothschild? He's been talking about biology and economics since 1990." In any case, we're genuinely pleased to see he's spending so much time thinking about Bionomics -- you simply can't write this forcefully about something off-the-cuff. For those who haven't read it yet, the article is included below: The Power of Biobabble Pseudo-economics meets pseudo-evolution. By Paul Krugman The invitation came, rather disappointingly, by conventional mail. Still, it sounded enticing: "The Cato Institute and the Bionomics Institute invite you to Now What? Living With Perpetual Evolution, the fifth annual Bionomics Conference." Leading the list of speakers for the Nov. 13-15 conference was Gregory Benford, one of my favorite science-fiction writers. And at the top of the card was a stirring quotation from Bionomics Institute founder Michael Rothschild: ?Like a deep-sea volcano bursting to the surface, spewing out vast new lands soon to be inhabited by a complex ecosystem, the Web is creating a virtual landscape that will soon be occupied by an awesome array of economic organisms. ... It's evolution at warp speed. Strap yourself in.? The Cato Institute is a libertarian think tank noted mostly for its adamant opposition to government regulation. But what on earth (or in cyberspace) is bionomics--and why is Cato (and _Forbes ASAP_, which is a co-sponsor of the conference) promoting it? Although you have to look at Rothschild's 1990 book, _Bionomics: Economy as Ecosystem_, to get the full flavor, the essential tenets of the movement are spelled out on the Bionomics Institute home page, which offers a primer called "Bionomics 101." The primer explains: [A]ll traditional schools of economics are based on the concepts of classical physics, while bionomics is based on the principles of evolutionary biology. ... [O]rthodox economics describes the "economy as a machine." ... Instead, bionomics says that an economy is like an "evolving ecosystem." A modern market economy is like a tropical rainforest. Sounds good, doesn't it? Bionomics has won converts not only at the Cato Institute but also among a wide variety of influential people ranging from Newt Gingrich to Clyde Prestowitz. (Fortune has described it as "a policymakers' version of The Celestine Prophecy.") And Rothschild is certainly a bright, energetic fellow. There are, however, two big weaknesses in his thinking: He doesn't know much about economics, and he doesn't know much about evolution. When I say that Rothschild doesn't know much about economics, I don't mean that conventional economics is right and his ideas are wrong--although where they differ that is generally true. I mean that his description of what conventional economics is all about bears no relation to what actual economists believe or say. Take, for starters, his assertion that "orthodox economics describes the 'economy as a machine.' " You might presume from his use of quotation marks that this is something an actual economist said, or at least that it was the sort of thing that economists routinely say. But no economist I know thinks of the economy as being anything like a machine--or believes, as Rothschild asserts a bit later, that because the economy is like a machine, it is possible to make precise predictions. (In fact, it was economists who came up with the famed "random walk" hypothesis about stock prices, which says that they are inherently unpredictable.) It gets better. Rothschild tells us, "I know this is hard for non-economists to believe, but orthodox economics essentially ignores technological change." That is even harder for economists to believe. In fact, I don't know how I'm going to break the news to the guy in the next office. You see, poor Bob Solow is under the impression that he got the Nobel Prize for his work on technological change, in particular for his demonstration that technology, not capital accumulation, historically has been the main driving force in economic growth. On a different subject, it's going to be a shock to environmental economists--who have spent decades arguing that one good way to control pollution is to create a market in emission permits--to learn that this is an idea unique to bionomics and totally at odds with orthodox economic thinking. And I'm not feeling too good myself: Rothschild insists that conventional economics depends on the assumption of diminishing returns and that, as a result, economists have completely ignored the possibility of increasing returns. Does this mean I have to give back that medal the American Economic Association gave me for my work on increasing returns and international trade? Well, all this is more or less the usual. Whenever a manifesto about economics contains a sentence that begins, "Orthodox economics assumes that ..." it almost always completes that sentence with something strange and unfamiliar. In just the last two years, I've learned that I believe that gross domestic product is the sole measure of economic welfare, that growth at more than 2.5 percent always causes inflation, and that sudden speculative attacks on currencies can't happen. I've also learned that the Nobel Memorial Prize in Economic Sciences keeps going to supply-siders--or should that be Marxists? What is surprising, however, is that a man who proposes to replace what he imagines to be the mechanistic worldview of conventional economics with a new view based on evolutionary biology should know so little about the discipline that supposedly inspires him. Rothschild's lack of familiarity with evolutionary theory may not be obvious to uninformed readers--his book bristles with ostentatious footnotes and seemingly learned references. It happens, however, that I am an evolution groupie. I started as a fan of great popularizers like Richard Dawkins and Steven Pinker, and I have since graduated not only to hero worship of the leading evolutionary theorists but also to reading textbooks and even journal articles. And so when I picked up a copy of Bionomics, the first thing I did was check out the author's treatment of my heroes and of what I knew to have been the important developments in evolutionary theory since Darwin. His record was perfect: Not one of the right people was mentioned, not one of the key developments discussed. The bionomics version of what evolutionary theory is about has as little to do with the real thing as its version of what economics is about does. What the bionomics guys apparently think evolution is about is constant, breathless change--strap yourself in!--change so rapid that everything is unpredictable, that the rules themselves are constantly changing. Rothschild seems, in particular, to view evolutionary thinking as the antithesis of "equilibrium economics." Apparently nobody told him that equilibrium thinking--the idea that in order to understand how individuals interact, it is often useful to ask what would happen if each individual was doing the best he or she could given what everyone else is doing--is almost as prevalent in evolutionary theory as it is in economics. In fact, the really funny thing is that for the most part the bionomics program has already been implemented: Economics already is very similar to evolutionary theory, and vice versa. However, neither field looks anything like bionomics. OK, enough already. The really interesting question is why the Cato Institute and other free-market conservatives should be willing to squander their intellectual credibility by associating their names with this sort of thing. After all, conventional economics already has lots of nice things to say about free markets. Why not stick with Adam Smith? Part of the answer, I suspect, is sociological. Traditional conservative causes like the gold standard tend to have a musty, old-fashioned feel. They sound like the sort of thing that appeals mainly to rich old men (and conservative think tanks are, of course, mainly funded by rich old men). Young, vigorous conservatives are therefore always looking for ways to seem more fashion-forward. Some of them parade their knowledge of pop culture, some make a point of being photographed wearing miniskirts, and some go for what we might call the Wired style of economic rhetoric--the continual assertion that things are changing! so fast! that we have to use lots! of exclamation points!!! But there is also a more serious reason that bionomics appeals to the free-market faithful: They find the conventional case for laissez-faire too modest, too conditional, for their tastes. Standard economic theory offers reasons to believe that markets are a good way to organize economic activity. But it does not deify the market system, and it even offers a number of fairly well-defined ways in which markets can fail, or at least could be helped with government intervention. And that, for some conservatives, is just not good enough. Bionomics doesn't actually provide any coherent argument in favor of free markets. In fact, Rothschild's original book seems to hedge its bets: It spends a full chapter ("Japan's Secret Weapon") explaining how government-business cooperation makes the Japanese economy invincible (remember, the book was published in 1990). But what the doctrine lacks in serious argument it makes up for in rhetoric. The economy is an ecosystem, like a tropical rain forest! And what could be worse than trying to control a tropical rain forest from the top down? You wouldn't try to control an ecosystem, wiping out species you didn't like and promoting ones you did, would you? Well, actually, you probably would. I think it's called "agriculture." What do we learn from the willingness of extreme free-market conservatives to associate themselves with crank doctrines like bionomics? I think the main lesson is that their faith in free markets is just that: a faith, which does not rest on either logic or evidence. Belief comes first; then they look for arguments to justify that belief. And they are therefore not too scrupulous about the quality of those arguments, or of those who produce them. Anyway, I guess I won't attend the conference. I would have liked to meet Benford; but I couldn't stand to watch the author of _Great Sky River_ demeaning himself by consorting with such disreputable company. Paul Krugman is a professor of economics at MIT whose books include _The Age of Diminished Expectations_ and _Peddling Prosperity_. --- end forwarded text ----------------- Robert Hettinga (rah(a)shipwright.com) Philodox e$, 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire' The e$ Home Page: http://www.shipwright.com/ Ask me about FC98 in Anguilla!: <http://www.fc98.ai/>

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Freeh agitating again
by nobody＠REPLAY.COM 17 Dec '03

17 Dec '03

>From Infobeat (http://www.infobeat.com) *** FBI chief calls for computer crime crackdown FBI director Louis Freeh said Tuesday that criminals were moving increasingly into cyberspace and without new laws "drug dealers, arms dealers, terrorists and spies will have immunity like no other". Freeh told the International Association of Chiefs of Police that software manufacturers should be required by law to include a feature that allows police to descramble encrypted communications. Freeh said he supported a cyber surveillance law with these features which passed out of the House Intelligence Committee. For the full text story, see http://www.infobeat.com/stories/cgi/story.cgi?id=5663807-3cc

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digital cash & politics
by Vladimir Z. Nuri 17 Dec '03

17 Dec '03

------- Forwarded Message Date: Thu, 16 Oct 1997 11:40:46 -0500 (CDT) To: believer(a)telepath.com From: believer(a)telepath.com Subject: IP: End of National Markets Forwarded: - ----------- >From the USIA Daily Washington File >http://www.usia.gov/products/washfile.htm > >15 October 1997 > >THE END OF NATIONAL MARKETS (Electronic cash makes regulation difficult) > >by Stephen J. Kobrin > >(Copyright (c) 1997 Carnegie Endowment for International Peace. >Reprinted with permission from FOREIGN POLICY magazine, Summer 1997. >Permission has been obtained covering >republication/translation/abridgment by USIS and the local press >outside the United States.) > >---------------------------- > >Twenty-six years ago, Raymond Vernon's "Sovereignty at Bay" proclaimed >that "concepts such as national sovereignty and national economic >strength appear curiously drained of meaning." > >Other books followed, arguing that sovereignty, the nation-state, and >the national economy were finished -- victims of multinational >enterprises and the internationalization of production. While >sovereign states and national markets have outlasted the chorus of >Cassandras, this time the sky really may be falling. The emergence of >electronic cash and a digitally networked global economy pose direct >threats to the very basis of the territorial state. > >Let us begin with two vignettes. Fact: Smugglers fly Boeing 747s >loaded with illicit drugs into Mexico and then cram the jumbo jets >full of cash -- American bills -- for the return trip. Fiction: Uncle >Enzo, Mafia CEO, pays for intelligence in the digital future of Neal >Stephenson's novel Snow Crash: "He reaches into his pocket and pulls >out a hypercard and hands it toward Hiro. It says 'Twenty-Five Million >Hong Kong Dollars.' Hiro reaches out and takes the card. Somewhere on >earth, two computers swap bursts of electronic noise and the money >gets transferred from the Mafia's account to Hiro's." > >The 747s leaving Mexico are anachronisms, among the last surviving >examples of the physical transfer of large amounts of currency across >national borders. Most money has been electronic for some time. >Virtually all of the trillions of dollars, marks, and yen that make >their way around the world each day take the form of bytes -- chains >of zeros and ones. Only at the very end of its journey is money >transformed into something tangible: credit cards, checks, cash, or >coins. > >Hypercards are here. Mondex, a smart card or electronic purse, can be >"loaded" with electronic money from an automatic teller machine (atm) >or by telephone or personal computer using a card-reading device. >Money is spent either by swiping the card through a retailer's >terminal or over the Internet by using the card reader and a personal >computer. An electronic wallet allows anonymous card-to-card >transfers. > >It is not just the current technology of electronic cash (e-cash) or >even what might be technologically feasible in the future that >presents policymakers with new challenges. Rather, policymakers must >confront directly the implications of this technology -- and, more >generally, the emergence of an electronically networked global economy >-- for economic and political governance. As the U.S. comptroller of >the currency, Eugene Ludwig, has noted, "There is clearly a freight >train coming down the tracks...Just because it hasn't arrived yet >doesn't mean we shouldn't start getting ready." > >ELECTRONIC MONEY > >Many different forms of "electronic money" are under development, but >it is useful to look at three general categories: electronic debit and >credit systems; various forms of smart cards; and true digital money, >which has many of the properties of cash. > >Electronic debit and credit systems already exist. When a consumer >uses an ATM card to pay for merchandise, funds are transferred from >his or her account to the merchant's. Credit cards are used to make >payments over the Internet. Computer software such as Intuit provides >electronic bill payment, and it is but a short step to true electronic >checks --authenticated by a digital signature -- that can be >transmitted to the payee, endorsed, and deposited over the Internet. > >Electronic debit and credit systems represent new, more convenient >means of payment, but not new payment systems. A traditional bank or >credit card transaction lies at the end of every transaction chain. >Smart cards and digital money represent new payment systems with >potentially revolutionary implications. Smart cards are plastic >"credit" cards with an embedded microchip. Many are now used as >telephone or transit payment devices. They can be loaded with currency >from an atm or via a card reader from a telephone or personal >computer, which can then be spent at businesses, vending machines, or >turnstiles that have been equipped with appropriate devices. At this >most basic level, a smart card is simply a debit card that does not >require bank approval for each transaction; clearance takes place each >day and the value resides in third-party accounts. There is no reason, >however, that smart cards have to be limited in this way. > >Banks or other institutions could provide value on smart cards through >loans, payments for services, or products. The immediate transfer of >funds between bank accounts is not necessary; units of value can >circulate from card to card -- and from user to user -- without >debiting or crediting third-party accounts. Assuming confidence in the >creating institution, "money" could be created on smart cards and >could circulate almost indefinitely before redemption. > >Finally, electronic money can take true digital form, existing as >units of value in the form of bytes stored in the memory of personal >computers that may or may not be backed up by reserve accounts of real >money. The money could be downloaded from an account, supplied as a >loan or as payment, or bought with a credit card over the Internet. As >long as digital cash can be authenticated and there is confidence in >its continued acceptance, it could circulate indefinitely, allowing >peer-to-peer payments at will. These are big "ifs," but they are well >within the realm of the possible. > >Imagine a world where true e-cash is an everyday reality. Whether all >of the following assumptions are correct or even immediately feasible >is unimportant; some form of e-cash is coming, and we need to begin >the process of thinking about its as-yet-unexplored consequences for >economic and political governance. > >The year is 2005. You have a number of brands of e-cash on your >computer's hard drive: some withdrawn from a bank in Antigua, some >borrowed from Microsoft, and some earned as payment for your services. >You use the digital value units (DVUs) to purchase information from a >Web site, pay bills, or send money to your daughter in graduate >school. Peer-to-peer payments are easy: You can transfer DVUs to any >computer anyplace in the world with a few keystrokes. > >Your e-cash is secure and can be authenticated easily. It is also >anonymous; governments have not been able to mandate a technology that >leaves a clear audit trail. Public-key encryption technology and >digital signatures allow blind transactions; the receiving computer >knows that the DVUs are authentic without knowing the identity of the >payer. Your e-cash can be exchanged any number of times without >leaving a trace of where it has been. It is virtually impossible to >alter the value of your e-cash at either end of the transaction (by >adding a few more zeros to it, for example). > >DVUs are almost infinitely divisible. Given the virtually negligible >transaction cost, it is efficient for you to pay a dollar or two to >see a financial report over the Internet or for your teenager to rent >a popular song for the few minutes during which it is in vogue. >Microtransactions have become the norm. E-cash is issued -- actually >created -- by a large number of institutions, bank and nonbank. >Electronic currencies (e-currencies) have begun to exist on their own; >many are no longer backed by hard currency and have developed value >separately from currencies issued by central banks. DVUs circulate for >long periods of time without being redeemed or deposited. Consumer >confidence in the issuer is crucial; as with electronic commerce >(e-commerce) in general, brand names have become critical. > >The early 21st century is described as a world of competing >e-currencies, a throwback to the 19th-century world of private >currencies. The better known brands of e-cash are highly liquid and >universally accepted. It is a relatively simple matter for you to set >up filters in your electronic purse to screen out e-currencies that >you do not want to accept. > >GOVERNANCE IN THE DIGITAL WORLD > >E-cash and the increasing importance of digital markets pose problems >for central government control over the economy and the behavior of >economic actors; they also render borders around national markets and >nation-states increasingly permeable -- or, perhaps, increasingly >irrelevant. In a world where true e-cash is an everyday reality, the >basic role of government in a liberal market economy and the relevance >of borders and geography will be drastically redefined. > >While at first glance this concern appears to reflect a traditional >break between domestic and international economic issues, in fact the >advent of e-cash raises serious questions about the very idea of >"domestic" and "international" as meaningful and distinct concepts. >The new digital world presents a number of governance issues, >described below. > >-- Can central banks control the rate of growth and the size of the >money supply? Private e-currencies will make it difficult for central >bankers to control -- or even measure or define -- monetary >aggregates. Several forms of money, issued by banks and nonbanks, will >circulate. Many of these monies may be beyond the regulatory reach of >the state. At the extreme, if, as some libertarians imagine, private >currencies dominate, currencies issued by central banks may no longer >matter. > >-- Will there still be official foreign exchange transactions? E-cash >will markedly lower existing barriers to the transfer of funds across >borders. Transactions that have been restricted to money-center banks >will be available to anyone with a computer. Peer-to-peer transfers of >DVUs across national borders do not amount to "official" foreign >exchange transactions. If you have $200 worth of DVUs on your computer >and buy a program from a German vendor, you will probably have to >agree on a mark-to-dollar price. However, transferring the DVUs to >Germany is not an "official" foreign exchange transaction; the DVUs >are simply revalued as marks. In fact, national currencies may lose >meaning with the development of DVUs that have a universally accepted >denomination. Without severe restrictions on individual privacy -- >which are not out of the question -- governments will be hard-pressed >to track, account for, and control the flows of money across borders. > >-- Who will regulate or control financial institutions? The U.S. >Treasury is not sure whether existing regulations, which apply to both >banks and institutions that act like banks (i.e., take deposits), >would apply to all who issue (and create) e-cash. If nonfinancial >institutions do not accept the extensive regulatory controls that >banks take as the norm, can reserve or reporting requirements be >enforced? What about consumer protection in the event of the >insolvency of an issuer of e-cash, a system breakdown, or the loss of >a smart card? > >-- Will national income data still be meaningful? It will be almost >impossible to track transactions when e-cash becomes a widely used >means of payment, online deals across borders become much easier, and >many of the intermediaries that now serve as checkpoints for recording >transactions are eliminated by direct, peer-to-peer payments. The >widespread use of e-cash will render national economic data much less >meaningful. Indeed, the advent of both e-cash and e-commerce raises >fundamental questions about the national market as the basic unit of >account in the international economic system. > >-- How will taxes be collected? Tax evasion will be a serious problem >in an economy where e-cash transactions are the norm. It will be easy >to transfer large sums of money across borders, and tax havens will be >much easier to reach. Encrypted anonymous transactions will make >audits increasingly problematic. Additionally, tax reporting and >compliance relies on institutions and intermediaries. With e-cash and >direct payments, all sorts of sales taxes, value-added taxes, and >income taxes will be increasingly difficult to collect. More >fundamentally, the question of jurisdiction -- who gets to tax what -- >will become increasingly problematic. Say you are in Philadelphia and >you decide to download music from a computer located outside Dublin >that is run by a firm in Frankfurt. You pay with e-cash deposited in a >Cayman Islands account. In which jurisdiction does the transaction >take place? > >-- Will e-cash and e-commerce widen the gap between the haves and the >have-nots? Participation in the global electronic economy requires >infrastructure and access to a computer. Will e-cash and e-commerce >further marginalize poorer population groups and even entire poor >countries? This widened gap between the haves and the have-nots -- >those with and without access to computers -- could become >increasingly difficult to bridge. > >-- Will the loss of seigniorage be important as governments fight to >balance budgets? Seigniorage originally referred to the revenue or >profit generated due to the difference between the cost of making a >coin and its face value; it also refers to the reduction in government >interest payments when money circulates. The U.S. Treasury estimates >that traditional seigniorage amounted to $773 million in 1994 and that >the reduction in interest payments due to holdings of currency rather >than debt could be as much as $3.5 billion per year. The Bank for >International Settlements reports that the loss of seigniorage for its >11 member states will be more than $17 billion if smart cards >eliminate all bank notes under $25. > >-- Will fraud and criminal activity increase in an e-cash economy? At >the extreme -- and the issue of privacy versus the needs of law >enforcement is unresolved -- transfers of large sums of cash across >borders would be untraceable. There would be no audit trail. Digital >counterfeiters could work from anywhere in the world and spend >currency in any and all places. New financial crimes and forms of >fraud could arise that would be hard to detect, and it would be >extremely difficult to locate the perpetrators. The task of financing >illegal and criminal activity would be easier by orders of magnitude. >E-cash will lower the barriers to entry and reduce the risks of >criminal activity. > >Most of the issues raised in the recent National Research Council >report on cryptography's role in the information society apply >directly to electronic cash. Secure, easily authenticated, and >anonymous e-cash requires strong encryption technology. Anonymous >transactions, however, cannot be restricted to law-abiding citizens. >Encryption makes it as difficult for enforcement authorities to track >criminal activity as it does for criminals to penetrate legitimate >transmissions. Should privacy be complete? Or should law enforcement >authorities and national security agencies be provided access to >e-cash transactions through escrowed encryption, for example? What >about U.S. restrictions on the export of strong encryption technology? >E-cash is global cash; how can governments limit its geographic >spread? Can they even suggest that strong encryption algorithms be >restricted territorially? > >GEOGRAPHIC SPACE VERSUS CYBERSPACE > >A recent U.S. Treasury paper dealing with the tax implications of >electronic commerce argues that new communications technologies have >"effectively eliminated national borders on the information highway." >It is clear from the paper's subsequent discussion, however, that the >more fundamental problem is that electronic commerce may "dissolve the >link between an income-producing activity and a specific location." >The source of taxable income, which plays a major role in determining >liability, is defined geographically in terms of where the economic >activity that produces the income is located. Therein lies the rub: >"Electronic commerce doesn't seem to occur in any physical location >but instead takes place in the nebulous world of 'cyberspace.'" In a >digital economy it will be difficult, or even impossible, to link >income streams with specific geographic locations. > >Digitalization is cutting money and finance loose from its geographic >moorings. The framework of regulation that governs financial >institutions assumes that customers and institutions are linked by >geography -- that spatial proximity matters. E-cash and e-commerce >snap that link. What remains are systems of economic and political >governance that are rooted in geography and are trying nonetheless to >deal with e-cash and markets that exist in cyberspace. The obvious >disconnect here will only worsen over time. > >The geographical rooting of political and economic authority is >relatively recent. Territorial sovereignty, borders, and a clear >distinction between domestic and international spheres are modern >concepts associated with the rise of the nation-state. Territorial >sovereignty implies a world divided into clearly demarcated and >mutually exclusive geographic jurisdictions. It implies a world where >economic and political control arise from control over territory. >The international financial system -- which consists of hundreds of >thousands of computer screens around the globe -- is the first >international electronic marketplace. It will not be the last. E-cash >is one manifestation of a global economy that is constructed in >cyberspace rather than geographic space. The fundamental problems that >e-cash poses for governance result from this disconnect between >electronic markets and political geography. > >The very idea of controlling the money supply, for example, assumes >that geography provides a relevant means of defining the scope of the >market. It assumes that economic borders are effective, that the flow >of money across them can be monitored and controlled, and that the >volume of money within a fixed geographic area is important. All of >those assumptions are increasingly questionable in a digital world >economy. > >Many of our basic tax principles assume that transactions and income >streams can be located precisely within a given national market. That >assumption is problematic when e-cash is spent on a computer network. >It is problematic when many important economic transactions cannot be >located, or may not even take place, in geographic space. > >The increasing irrelevance of geographic jurisdiction in a digital >world economy markedly increases the risks of fraud, money-laundering, >and other financial crimes. Asking where the fraud or money-laundering >took place means asking "Whose jurisdiction applies?" and "Whose law >applies?" We need to learn to deal with crimes that cannot be located >in geographic space, where existing concepts of national jurisdiction >are increasingly irrelevant. > >The term "disintermediation" was first used to describe the >replacement of banks as financial intermediaries by direct lending in >money markets when interest rates rose. It is often used in the world >of e-commerce to describe the elimination of intermediaries by direct >seller-to-buyer transactions over the Internet. Many observers argue >that e-cash is likely to disintermediate banks. Of more fundamental >importance is the possibility that e-cash and e-commerce will >disintermediate the territorial state. > >To be clear, I argue that we face not the end of the state, but rather >the diminished efficacy of political and economic governance that is >rooted in geographic sovereignty and in mutually exclusive territorial >jurisdiction. Questions such as: "Where did the transaction take >place?" "Where did the income stream arise?" " Where is the financial >institution located?" and "Whose law applies?" will lose meaning. >E-cash and e-commerce are symptoms, albeit important ones, of an >increasing asymmetry between economics and politics, between an >electronically integrated world economy and territorial nation-states, >and between cyberspace and geographic space. How this asymmetry will >be resolved and how economic and political relations will be >reconstructed are two of the critical questions of our time. > >WHAT IS TO BE DONE? > >The question asked here is not "What is feasible?" but "What are the >limits of the possible?" Whether the picture presented here is correct >in all -- or even some -- of its details is unimportant. A digital >world economy is emerging. Imagining possible scenarios is necessary >if we are to come to grips with the consequences of this revolution. >The purpose here is to raise problems rather than to solve them and to >imagine possible futures and think about their implications for >economic and political governance. A digital world economy will demand >increasing international cooperation, harmonizing national regulations >and legislation, and strengthening the authority of international >institutions. > >The harmonization of national regulations will help to prevent >institutions, such as those issuing e-cash, from slipping between >national jurisdictions or shopping for the nation with the least >onerous regulations. However, it will not address the basic problem of >the disconnect between geographic jurisdiction and an electronically >integrated global economy. > >If it is impossible to locate transactions geographically -- if the >flows of e-cash are outside of the jurisdictional reach of every >country -- then the harmonization of national regulations will >accomplish little. The basic problem is not one of overlapping or >conflicting jurisdictions; it stems from the lack of meaning of the >very concept of "jurisdiction" in a digitalized global economy. >The erosion of the viability of territorial jurisdiction calls for >strengthened international institutions. It calls for giving >international institutions real authority to measure, to control, and, >perhaps, to tax. The Basle Committee on Banking Supervision -- an >international body of bank regulators who set global standards -- >could perhaps be given the authority to collect information from >financial institutions wherever they are located and formulate and >enforce regulations globally. Interpol, or its equivalent, may have to >be given jurisdiction over financial crimes, regardless of where they >are committed. That does not mean a world government; it does mean a >markedly increased level of international cooperation. > >The questions we must face are whether territorial sovereignty will >continue to be viable as the primary basis for economic and political >governance as we enter the 21st century, and what the implications >will be for the American economy -- and Americans in general -- if we >refuse to cooperate internationally in the face of an increasingly >integrated global economy. > > --------------------- > >ELECTRONIC CASH: A GLOSSARY > >DIGITAL DATA: Information coded into a series of zeros and ones that >can be transmitted and processed electronically. > >DIGITAL SIGNATURE: A code that allows absolute authentication of the >origin and integrity of a document, check, or electronic cash that has >been sent over a computer network. A blind signature allows >authentication without revealing the identity of the sender. > >DISINTERMEDIATION: The substitution of direct transactions for those >that are mediated. The term originated when rising interest rates >caused savings to be withdrawn from banks -- whose interest rates were >capped -- and invested in money market instruments that were the >direct debts of borrowers. Banks were disintermediated. In electronic >commerce, the term refers to the rise of direct buyer-to-seller >relationships over the Internet, disintermediating wholesalers and >retail outlets. > >ELECTRONIC MONEY: Units or tokens of monetary value that take digital >form and are transmitted over electronic networks. Digital Value Units >are the basic units of denomination of electronic money; they may or >may not correspond to units of national currency. > >ENCRYPTION: The coding of information for security purposes, such as >credit card numbers or electronic cash used over the Internet. >Public-key encryption uses a mathematical algorithm comprising a pair >of strings of numbers to encrypt and decrypt the data. For example, >the sender would encrypt the data with the receiver's public key and >the receiver would decrypt with his or her private key. > >INTERNET: A global network of linked networks that allows >communication and the sharing of information among many different >types of computers. The World Wide Web is a graphical system on the >Internet that allows rapid movement between documents and computers >through the use of embedded (hypertext) links. > >SMART CARDS: A plastic card, similar to a credit card, containing a >microchip that can be used to retrieve, store, process, and transmit >digital data like electronic cash or medical information. > ----------------------- > >(Stephen J. Kobrin is the director of the Lauder Institute of >Management and International Studies and the William Wurster professor >of multinational management at the Wharton School of the University of >Pennsylvania. This paper develops themes raised at a discussion of >electronic money at the 1997 annual meeting of the World Economic >Forum in Davos, Switzerland.) ********************************************** To subscribe or unsubscribe, email: majordomo(a)majordomo.pobox.com with the message: subscribe ignition-point email@address or unsubscribe ignition-point email@address ********************************************** http://www.telepath.com/believer ********************************************** ------- End of Forwarded Message

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Is mixmaster dead?
by Russell Nelson 17 Dec '03

17 Dec '03

Lance hasn't updated his mixmaster page in over a year. Is mixmaster dead? -- -russ <nelson(a)crynwr.com> http://www.crynwr.com/~nelson | Freedom is the Crynwr Software supports freed software | PGPok | primary cause of peace. 521 Pleasant Valley Rd. | +1 315 268 1925 voice | Taxes feed the naked Potsdam, NY 13676-3213 | +1 315 268 9201 FAX | and clothe the hungry.

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6 weeks in jail for carrying vitamins [CNN]
by Jim Choate 17 Dec '03

17 Dec '03

> MAN SPENDS 6 WEEKS IN JAIL AFTER VITAMINS MISTAKEN FOR HEROIN > > October 29, 1997 > Web posted at: 7:21 p.m. EST (0021 GMT) > > NORTH CHARLESTON, South Carolina (AP) -- For six weeks, Malvin > Marshall sat in jail because police thought he was carrying heroin > in his pocket. Police didn't believe him when he said it was mushy > vitamins. > > On Monday, the charges were dropped. Lab tests showed he was > carrying mushy vitamins. [remainder deleted]

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Crypto FTP for NT?
by Evil Erik 17 Dec '03

17 Dec '03

Anyone know of a crypto based FTP for NT? At this point, freeware, shareware, commercial is fine.. We'd prefer not to have to roll our own.. (Yes, I know about F-Secure's SFTP, but that is still a few months off..) Thanks, -=erik.

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PGP 5.5 available outside US
by Jeff A. Hale 17 Dec '03

17 Dec '03

It seems that unknown Cypherpunks have yet again shown their disrespect of US export laws by exporting the latest version of PGP. The Windows version of PGP 5.5 is now available for your downloading pleasure at ftp://ftp.replay.com/pub/crypto/incoming/PGP55.zip PGP 5.5 features superior LDAP keyserver integration, multiple signature categories, and automatic decryption (set Preferences -> Email -> Automatically Decrypt). "You heard the rumors. Now try it yourself." :-) -- Lucky Green <shamrock(a)cypherpunks.to> PGP encrypted email preferred. "Tonga? Where the hell is Tonga? They have Cypherpunks there?"

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[URGENT] Secure checksums
by Anonymous 17 Dec '03

17 Dec '03

Warning: if you fuck Timothy C[unt] May in the ass, a rabid tapeworm might bite your penis. \0/ \0/\ \ / / \0/ \0/ \0/\ \ / /\0/ \0/ Timothy C[unt] May | / /) | (\ | | / /) | (\ \ | / \__/\__/0\__/0\__/0\__/ \__/ \__/\__/0\__/0\__/0\__/\__/ \

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