Public key encryption, income tax and government

[Perry E. Metzger]

Carl Ellison says:
> Mr. Bennett is clearly a victim of the popular impression that privacy is
> somehow new.  Anything which can be done with public key encryption can be
> done already with private communications (whispers, notes which are mailed
> and destroyed, secret mail drops, couriers, secret-key encryption, ...).
> 
> All the hype over cryptoanarchy is overblown.  We are capable of anarchy,
> income tax evasion and secret bank accounts today.  Look around you.  How
> much of that do you see in your own life?  What makes you think that you'll
> see any more of it in 10 years?

Currently, if you wish to sit down in a Cafe with a friend of yours
and hand over $10,000 for the original copy of Vince Foster's diary,
say, and you want privacy, you would either have to carry cash (which
is difficult to put into and take out of banks without machinations,
especially given current reporting requirements), or one of you would
have to trust the other with a foreign bank check which would have to
be deposited by mail (a long and tedious and unsafe proceedure), or
you could both sit down with your HP100s or Psions or what have you
and exchange digicash right on the table and relay the deposit right
to your bank in the Bahamas. Yes, all the methods exist already -- but
they are inconvenient to use. I could probably have rigged hundreds of
messengers and teams of horses so that I could live atop a mountain
and still run a worldwide business one two hundred years ago. In
principle, nothing that I can do now couldn't be done then. In
practice, transaction costs and delays would have made such a life
impractical -- whereas now a mogul has fax machines, phones,
computers, etc.

Cryptography and the nets will not make offshore banking different in
any way other than convenience -- but never underestimate the powerful
impact convenience can have. I could potentially carry out a near
"normal" lifestyle while still keeping all my money offshore -- this
is a new and potent developement, and one which governments will fight
very hard. Look for ever more agressive work by the IRS to pressure
bank havens to breech secrecy.

Perry