From: Duncan Frissell <frissell@panix.com>
Date: Mon, 21 Mar 94 13:44:04 PST
To: CYPHERPUNKS@toad.com
Subject: Coming Police State
Message-ID: <199403212143.AA25938@panix.com>
MIME-Version: 1.0
Content-Type: text/plain


A late response to:

THE COMING POLICE STATE -- by Tim May

>the National Information Infrastructure, the NII, has the
>potential for further concentrating and regulating the presently
>anarchic networks. Driver's licenses for the information highway?
>Learner's permits?  Revoked licenses for "hurtful speech" and other
>thoughtcrimes? 

I don't think this centralization is likely.  Since all of the
future network plans call for the continued existence of private
networks (now exempt from the DTI proposal) and what we can call
"telephone" service (POTS), and since bandwidth will be so cheap,
and since the operators will continue to want revenue, anyone who
likes will be able to maintain a "private" network of any size. 
Any future digital version of POTS can be used to set up temporary
networks to link anyone to anyone (just a conference call). 

One can imagine that cheap bandwidth will make it possible (if
necessary) to set up networks that work (over fiber) like frequency
hopping and spread spectrum radio work today.  Since all fiber
networks are virtual anyway, how hard will it be to generate a
group of data streams that are meaningless unless they are combined
in exactly the right way and unreadable without key material even
if an opponent manages to combine them.  Stego possibilities here.

>-- Digital Telephony II for easy access to _all_ communications
>channels. If this becomes law, expect all equipment makers to add
>wiretapping capabilities. All operating system makers may have to add tap
>points to allow government access (so much for "secure operating 
>systems," such as Norm Hardy and others are working on).

Except for operating systems developed in other countries and data
streams that pass through other countries.  Even if the OECD cuts a
deal there are hundreds of countries and the DTI is not supposed to
apply to private networks in any case.  Also note that the "new"
"improved" DTI calls for the Federales to *pay* for the DTI
hardware (and software?).  This was a sop to industry.  If they
aren't careful, they could end up paying for a lot of junk.  What
is the upper bound of all the hardware/software in the known
universe that is arguably included under DTI? 

>-- Clipper and its Big Brethren for easy access to the contents of
>files. The State will use its power to enforce standards, control 
>exports, and punish corporations so as to ensure competitors do not 
>arise.

"IBM will use its power to enforce standards..."  Not as easy as it
used to be.  Say, wasn't the (then) Bureau of Standards supposed to
release its updated replacement standard for DES in September, 1990
or something. Whatever happened to that deadline.  Standards change
so fast now and will change faster in the future that it is hard
enough for entrepreneurial firms to keep up.

>-- The likely criminalization (via civil forfeiture, a la the Drug War) 
>of unapproved crypto alternatives. 

That will be a rough one politically.  They drew back a bloody stump
the last time they floated DTI.  H.R. 6 on national teacher
certification standards disappeared under a wave of net-generated
attacks by home schoolers.

Has legal problems as well.  It took many years to get anti drug
legislation in place.  They don't have too many years available. 
How much enforcement activity can we expect.  Federal prosecutions
cost 50K+ each.  With absolutely no showing of damage (from casual
crypto "users") normal prosecutorial cost/benefit calculations
would suggest not much activity. Particularly since they have
gotten burned when taking us on (Steve Jackson Games).  

>Steven Levy will be at the Saturday meeting, preparing both an article on
>these issues, and a book for future publication (being an optimist, even 
>I don't believe he'll be barred from publishing such a book). 

This hasn't been tried since The Progressive and The Secret of the
Hydrogen Bomb.  No risk.  Likewise, no risk from speech codes.  The
federal courts have overturned all that are unconnected with
employment. 

>- Private networks, like Little Garden, offer greater robustness against
>intrusions by regulatory authorities. The more of these ad hoc, anarchic
>nets, the less chance the State will have of (somehow) nationalizing or
>otherwise taking control of them. Especially if nodes are outside the 
>U.S.

Anyone have info on private network activity?

>- Several of us have expressed some serious interest in leaving the U.S.,
>for various reasons. I am one of these folks. Many issues here, but
>creating more offshore locales for Cypherpunks activity, with good
>connections to other Nets, lots of encryption, etc., will be helpful.

>(Compiling a kind of "Cyberspace Retirement Places Rated" database is one
>project I am thinking of taking on after I finish the Cypherpunks FAQ.
>Lists of various places, their local laws and policies, tax situation,
>extradition treaties with the main police states, Net connections, etc.
>Maybe even some R&D trips down to the Caymans, Turks and Caicos Islands,
>Belize, etc. Contact me if interested.)

Did you see the Forbes article "Flight Capital" in the Feb 28th
issue?  It covers expatriation as the ultimate tax planning
device.  Note that if your life revolves around the Net, you can
expatriate yourself without even leaving "home."  Most of the
offshore locations currently have lousy network connections (except
Switzerland of course).  The Channel Islands and the Isle of Man
have ISDN.  The Caribbean is spotty.  Hong Kong is pretty good
(telecommunications wise).  Once you expatriate yourself, of
course, you can live in various European countries with good
telcoms as long as you don't spend too much time per year in each
one. 

>Some on this list (sometimes me, too) say "We've already won." Duncan
>Frissell and Sandy Sandfort often point out just how unenforceable the
>existing laws are, how few people comply with the tax laws, and how the
>internationalization of commerce has made national borders into permeable
>membranes. As I like to say, in my .sig, "National borders are just speed
>bumps on the information highway."

Guilty as charged.  Think about it this way:

1)  Suppose no one uses encryption or remailers but just uses
whatever networks are in existence NII or whatever.  (Recall that
lack of funds will prevent the Federales from *paying* for the NII
- "He who doesn't pay the piper has a much harder time calling the
tune.") 

2)  Americans and foreigners and everyone all equidistant from each
other. Cheap one-to-one, one-to-many, and the new category
many-to-many communications. Transaction costs (for info exchange)
dropping towards the limit of $0.  (The Economist estimates the
cost of supplying one transatlantic telephone call at 2
cents/minute with current technology.  AT&T charges me 59
cents/minute on the weekends to London.  Room for deep cuts.) 

3)  Coase in the "Theory of the Firm" says that the only reason we
*have* firms is transaction costs.  With zero transaction costs it
would make more sense for us to buy each other's services on the
spot market.  As transaction costs fall towards the limit of $0,
average firm size will fall dramatically. 

4)  As the number of firms explodes (aided by the cheap creation of 
entities/agents on the nets, the regulatory problem becomes
impossible.  Note -- I can create a trust with a one page
document.  The situs of that trust can be anywhere in any Common
Law jurisdiction.  It need not be registered.  Yet that trust has
almost all the rights of a human being.  It can buy, sell, own,
enter into contracts, sue and be sued, etc.  So can most of the
other sorts of "legal persons" created over the years.  It is
possible that in the very near future there will be more "legal
persons" than there are actual persons on earth. 

5)  Because of cheap communications and information technology,
markets have become very fast moving.  Not just the market for
financial derivatives but even the markets for women's underwear or
for toothpaste.  Government attempts to control these new markets
are like attempting to capture the wind in a bag. 

6)  Future markets linked by "free" comms and consisting of billions
(yes billions!) of individual (uni=cellular) firms/entities/actors
will sweep over regulatory barriers (that in any case apply only in
some nations) as if they are not there.  Think of Steve McQueen and
"The Blob" from the late '50s.  "The Blob" is the market. Try and
hold it back.  It's not in one place either where you can freeze it
with fire extinguishers, it is all over the earth. 

As to the Security State controls.  They can't even control
drive-bys in Brownsville, how can they control billions of
individual people and their trillions (quadrillions) of
transactions.

Even if they get loads of information about us (and foreigners, and
artificial entities) they can only use a little bit of this data. 
They can only carry out a very few investigations and a very few
prosecutions.  Nothing compared to the size of Market Earth.

An expensive, rigid, inefficient hierarchy just won't be able to
compete.  Markets are fed by willing customers/workers who go
out of their way to give them money and labor.  The government has
to collect tribute from people who will go out of their way to
minimize the amount of money/labor given up.  This constrains the
growth curve of coercive entities. 

We ain't peasants bound to the soil any more.

*************
I hope to see many of you at CFP '94.  I'll be in Chicago from
Wednesday night until Saturday night.  Leave me a note at the
message center. 

Duncan Frissell

--
"Schindler's List" shows what happens when the government has
assault rifles and the people don't.



--- WinQwk 2.0b#1165