From: "Perry E. Metzger" <perry@imsi.com>
Date: Wed, 3 Aug 94 14:49:20 PDT
To: mpd@netcom.com (Mike Duvos)
Subject: Re: Egalitarianism vs. Strong Cryptography
In-Reply-To: <199408032055.NAA15886@netcom6.netcom.com>
Message-ID: <9408032148.AA13199@snark.imsi.com>
MIME-Version: 1.0
Content-Type: text/plain



Not that I wanted to get in to this, but Mike was begging for it.

Mike Duvos says:
> The theoretical possibility of untraceable cash systems and the
> absence of legal sanctions against those who use them do not
> imply that such systems will become the standard in the future.
> Even in the obnoxious political climate which prevails in this
> country today, strong crypto is in the hands of only a few
> percent of the citizens.  In a society with a "user-friendly"
> government, most people wouldn't even be interested.

Ahem.

If I told you that I could save you tens of thousands of dollars a
year just by using some simple to use software, would you do it? Well,
if you had some simple to use software system that allowed you to
escape from the above ground economy, you could personally save tens
of thousands a year.

> If given a choice between ordering a pizza by clicking ones air
> mouse while tuned to the Pizza Channel, and ordering one via
> Tim's Strong Crypto Pizza Service in order to avoid a small VAT,
> most people will choose the easy way.

1) What makes you think the VAT will be small? Assuming that you have
   to pay for a government the size of the current one, only using
   VATs, you are going to have to take about half the cost of all
   goods and services in accumulated VAT by the time the goods hit the
   consumer. (This is for the obvious reason that the government
   spends half the GDP in the US.)

2) What makes you think it will be inconvenient? I know of two pizza
   places in Manhattan where they very likely don't pay taxes and
   where you can also buy drugs. (No, I'm not going to tell you where
   they are, and no, I don't buy drugs from them. I don't go telling
   the police such things, however.)

The underground economy in the U.S. is huge -- enormous, in fact. Most
of us interact with it every day without even realizing it. As a small
example, the clothing manufacture industry in New York survives on
illegal factories running almost entirely underground. Ever tip a
waiter in cash? Ever pay for a haircut in cash? Ever make a purchase
from a Mom & Pop grocery in cash?

> Again Tim and his friends are free to conduct all their
> transactions via unbreakable protocols of their own construction,
> avoid all taxes, and do business only with others who cooperate.
> As long as the percentage of similarly minded individuals is
> appropriately small, it has no real effect on society and
> probably costs a lot less than an enforcement agency would.

There are tens of millions of people completely evading taxes now, and
the percentage of the population who underreport or patronize services
that underreport aproaches 100%.

> Of course Tim won't be watching HBO or Showtime, shopping with a
> major credit card, or helping his broker churn his account at
> Smith-Barney.  Not my problem.

Tim will likely pay his broker to churn his account in Switzerland and
do just as well. He'll have a credit card from a bank in the Bahamas.
He'll probably do just fine watching HBO and Showtime, too.

Perry