Underestimating long-term consequences of cryptoanarchy

[Adam Back]

Interesting discussion.

I'm thinking another inflection point which could tip the balance
would be some travel technology breakthrough -- 100x faster, 100x
cheaper (relative to individual wealth -- which itself increasing in
real terms over time as productivity improves due to automation,
efficiency, process improvement etc).  If you could shrink the world
so that people can basically commute from anywhere to anywhere for a
cost significantly less than the difference in tax rates between tax
havens such as Bahamas (0% income tax) compared with western direct
and investment tax rates of 40-60% and beyond marginal rates.

- This is mostly why I was disappointed to see the plans to scrap
concorde -- it was expensive in real terms due to current fuel and
current salaries as set by current economic climate; however with a
cruise speed of mach 2.0 it was 2.4x as fast as typical passenger
jets.  (Originally planned for mach 2.5 - mach 3.0, but material
science wasn't up to the task when concorde's were built in the 70s).

But scrapping them seems like a step backwards.  So there were
merchant bankers and celebrities jetting backwards and forwards from
new york on it.  But what wealthy are doing today can be what everyone
is doing some years on when things have become cheaper relatively
speaking.

- The other aspect of travel speed -- the crappy depature and arrival
procedures -- have gotten significantly worse since WTC terror attack.
The current political climate is as a result a poorer one for business
as it has basically increased the cost of travel (in convenience).

- So what about other travel: magnetic levitation trains, mag lev
trains in vacuum tubes, nuclear powered transport (with design margin
to amply cope with safety issues); and further out maybe
teleportation.


- The other issue is how governments would react to transportation
advances -- maybe just change tax laws so you get charged the max of
countries you work or reside in.


- Another potential and probably more likely to happen medium term
technology could be improvements in display technology making
telepresence more functional.  3d projective displays able to project
into free-space for example allowing basically free-form tele-presence.

It would be harder for governments to attempt to tax remote workers,
but they might try it anyway by passing the tax burden on to the
employers -- forcing them to collect local taxes against remote
workers.

Crypto-anarchy has interface problems also, it just allows you to be a
virtual remote worker because your location is no longer discernable.
Still governments may try to force local companies to pass the tax
burden on.

India is an interesting example of remote workers -- many US companies
are apparently moving jobs wholesale to India to try to reduce costs
in the face of poor economy.

Another corporate trend to avoid US taxation is where companies move
their notional headquarters off-shore so that they are not taxed on
international sales.

Either way the fact that companies are doing this suggests that
currently companies themselves are ahead of individuals in mobility to
avoid taxation.  This same principle should allow for example remote
workers, or virtual remote workers to work for the notional off-short
company.  Virtual identities with documentation demonstrating domicile
in Bahamas or other tax-havens should even allow a virtual worker to
work for a company under government imposed obligations to employ
virtual remote workers in the US.

Adam

On Sat, May 03, 2003 at 10:32:02AM -0700, Tim May wrote:
> [...]
> These technological changes are obvious: metal-working, writing, 
> weaponry, plumbing, the printing press, the steam engine, 
> interchangeable parts, electrification, and all of the various 
> technologies of the 20th century, including the telephone, television, 
> birth control pills, and so on.
> 
> The printing press is one of my favorite examples, as it illustrates 
> how the "triad" of technology, law, and culture (similar to Larry 
> Lessig's triad...I think we developed these ideas independently, but I 
> haven't chased down who wrote what first) is "tipped" by major changes. 
> The Church and State, circa pre-Gutenberg, "owned" certain types of 
> knowledge, blessed by the medieval guilds: silversmithing, 
> leathermaking, etc. The royal patents were conferred based on 
> kickbacks, tithing, family connections, etc. Those who violated the 
> patents of the guilds faced various kinds of punishment, I suppose up 
> to and including death. Sort of like the Mafia stopping independent 
> producers of porn from producing movies (a friend in LA had this happen 
> to him).
> 
> Now the "lawyers" of that age might have argued in courts (such as they 
> were) that the power of the guilds should be broken, that greater 
> economic prosperity would result from breaking the guilds.
> 
> But little changed.
> 
> Then came printing (movable type). While the first books printed were 
> the obvious ones: hymnals, bibles, and other religious tracts, the 
> printers began to print "how to" books. Not consciously "Toolmaking for 
> Dummies" books, and not consciously "How to Undermine the Power of the 
> State by Building Your Own Waterwheel," these books were nonetheless 
> early how-to guides. Booklets on technology, on minerals, on all sorts 
> of things a farmer might want to know. For the first time, knowing how 
> to read was a useful skill.
> 
> Perhaps someone predicted the long-term implications of what this 
> spread of knowledge would mean. (Maybe Nostradamus was influenced this 
> way...I haven't looked for evidence.)
> 
> Someone trying to set a timetable for the sweeping changes would likely 
> have not gotten it right.
> 
> As someone wise once said, we tend to overestimate the short-term 
> consequences and underestimate the long-term consequences.
> 
> In the case of printing, the result over the following century or two 
> was a rise in literacy rates (in the common languages, and this is when 
> German, French, and English, for example, largely solidified into their 
> current forms, viz. the Luther Bible, the King James Version, etc.). 
> And the Protestant Reformation was built on printed words and on the 
> people's ability to directly read the religious texts.
> 
> A technology undermined the state and the church.
> 
> This was repeated several more times, with samizdats undermining the 
> power of the state in the USSR, with cassette tapes circulating in 
> Shah-led Iran, with videotapes widely available even where banned in 
> Islamic nations.
> 
> And e-mail, of course. E-mails to and from the dissidents in Beijing. 
> Repeated around the world.
> 
> Strong crypto, of course, offers the opportunity for a complete 
> bypassing of controls (more than just ciphers are needed, of course, as 
> stego must be strong, as remailers must be compensated, and so on).
> 
> Will the effects be that corner grocery stores are converted into 
> cryptoanarchist data havens? Of course not.
> 
> People will continue to buy and sell goods in their physical world, and 
> this will continue to be a nexus of control and taxation. (Just as 
> taxing land became more important after taxing knowledge, via the no 
> longer all-powerful guilds, became less important. Land remained a 
> nexus of control and taxation, as it does today. My property taxes 
> attest to that, and will not be going down in my lifetime!)
> 
> So, what changes may happen? Will enough tax evasion happen via 
> cryptoanarchy to make the people fed up and thus give rise to a 
> "tipping point"? (As the Reformation arguably was, with enough people 
> fed up with the selling of indulgences and having the ability to read 
> the religious words themselves.)
> 
> And so on. I could ask about a dozen speculations of what might happen.
> 
> But the point is not to predict some withering away of the state. The 
> point is that unfettered communication, with the already-extant ability 
> to use all sorts of alternative financial instruments (offshore 
> accounts, PayPal, E-gold, etc.), is already producing interesting 
> changes in the way the world works.