As regular readers will be aware, Tim May and I have been sparring with each other about the risks of various control strategies that the world's governments may deploy. I thought it might be helpful to make one of his fears concrete so that we can analyze it. I trust that I am not putting words in Tim's mouth. The major concern is the same one mentioned in the Book of Revelations: "REV 13:16 And he causeth all, both small and great, rich and poor, free and bond, to receive a mark in their right hand, or in their foreheads: REV 13:17 And that no man might buy or sell, save he that had the mark, or the name of the beast, or the number of his name." So the Feds deploy a card (smart or dumb) that has to be used for most transactions and lets them track everything we do. Tourists are brought into the system through the use of temporary cards (or the machine-readable strip on their passports which already includes a space for a national ID number.) How is this most likely to come about? I consider force majeure to be unlikely. It would be rough to get Congress to impose a burden like this on businesses (who would have to completely wire themselves) in a formal vote. It is not necessary to do this in any case since they know they can't snag everyone into the system. They just want to capture most of the transaction data. If they can do it administratively without involving Congress in controversy, they will use that approach. Clipper and the Post Office agitprop on the US Card give us a possible scenario. The P.O., desperate to find a reason to exist as its core business drains away to the wires and private carriers, would like to become the primary digital signature authorizers for the U.S. It claims to be able to put millions of "US Cards" in the hands of happy shoppers within months of the go-ahead. (Assuming they use FedEx for the actual *shipments* of course). The recently attempted "Clipper maneuver" of game strategy (government preemption by standard setting rather than by direct application of force) shows us how the US Card system might be actually deployed. The government adopts the standard it likes and tries to make it the de facto standard by requiring it for most official business. An instant market is thereby created. No congressional action required. Similarly, the government might try to preempt the market for digital signature and commercial encryption technology by deciding to make anyone who wants to use a digital signature system in dealings with the government use the Post Office or some such agency as the signature authenticator. Thus bids, purchasing, benefits, and taxes could all require your "US Card" registered at your local post office. The government would then hope that commercial users who would need to use the government's system for tax filings anyway would also use it for its ordinary dealings with the public. Then if a health care bill drafting you into a "universal coverage" army is ever passed, the "US Card" also becomes the Health Security Card you will have to show to get a job in the US. Thus, all sorts of authentication transactions would pass through the powerful and efficient post office data network and the ex-countercultural/born-again control freaks Inside the Beltway could get their jollies tracking your employment and purchases. What's the big hole in this frightening scenario? Ask yourself one question. Why is the Post Office looking around for some useful work these days? Didn't they have a monopoly guaranteed by the Federal Government for more than 100 years? If they couldn't make a go of it with a pure coercive monopoly during a time of slower commercial activity, what makes them think that they can compete *without* a genuine coercive monopoly in a time of constant change. Governments have proved over and over again that they can go broke running "guaranteed" money spinners like state lotteries and such. They don't stand a chance in a marketplace that will break the hearts of the brightest people this planet has ever produced. What has recent history established? Governments are weaker. Why didn't the Amin mandate Clipper? No political ability to do so. Why are banks and telecoms being deregulated in nearly every country on earth (in spite of propaganda about "risks" and "public needs"? Why have exchange controls (a common feature of life a generation ago) become impossible almost everywhere on earth? Is it "free market ideology" that has triumphed or did the *reality* of markets rather than the *idea* of markets hit governments on the head. To those who romanticize the power of the State in the modern world I ask, why doesn't Clinton impose wage and price controls, exchange controls, tariffs, and a full-blown industrial policy? Why doesn't he nationalize the steel industry, guarantee jobs for all, confiscate all estates above $100,000, impose 95% income taxes on those making more than $40,000/year, and all of the other proposals that were popular earlier in this century? I doubt that he is restrained because of his deep commitment to human liberty. He doesn't do it because he can't. Markets wouldn't put up with it. His government would be destroyed (by capital flight.) In this connection, I invite everyone to read the excellent profile of Japan in last week's Economist. It discusses the current and growing Japanese commitment to deregulation and what is driving it. That issue is a keeper anyway because of an article on commerce on the Internet and (as has been mentioned before) the use of the word "anarcho-capitalism" in an article comparing Thailand and Singapore. Assuming that the government were to attempt to establish a Post Office mediated digital authentication system, there is no guarantee that it would work. Foreign users would presumably use foreign systems to authenticate their transactions. Some of these systems might be run by privatized foreign PTTs or by others. Note that since banks and credit agencies will still have to approve the transactions anyway (to make sure you've got the dough), they may decide to use other systems for signature authentication. It would not really cost them any more. Since information is cheap, setting up a system to use several authentication systems is almost as easy as setting up a system to use one. (Particularly since you have to do it anyway.) It is difficult to imagine the P.O. being able to compete in the cutthroat world of credit processing. Recall that even today, there are companies that pick up and deliver your mail to the P.O. to speed the process along. Similarly, expediters may interpose themselves between the customer and the P.O. to speed authentication in the even that the P.O. network is slow or inefficient (likely). Here again, Clipper gives us some hints as to how the attempted market cornering might work out in practice: The Admin is currently floating stories about perhaps withdrawing Clipper in favor of "wider discussions" with the industry. Clipper is already painfully obsolete and it isn't even shipping in quantity. Inefficient government monopolies create marvelous profit opportunities for markets to arbitrage the gap between cost and price. In a highly efficient networked world, it will be very difficult for governments to compete. DCF Why Pizza Hut should hire *me* as their spokesman: "Why does Pizza Hut oppose mandatory, employer-paid health insurance in the US even though we are forced to pay it in Japan and Germany? We support the principle of cultural diversity under which different societies experiment with different methods of social organization. Germany and Japan have chosen one road, we have chosen another. Pizza Hut would not voluntarily impose on our US customers the burden of the very high food costs that the agricultural policies of Germany and Japan impose on their citizens. Similarly, we would not choose to impose on our US employees the burden of bureaucratically designed employment contracts. Pizza Hut supports the right of our customers to enjoy the least expensive and best pizza on earth and the right of our employees to bargain with us collectively and individually concerning the conditions of their employment."