internet

For those of you highly skeptical of my prediction that the internet will cause the nation state as we know it to be unable to tax fairly incomes or transactions in goods and services and so cease to exist in its current form , here's a slightly different angle on it at Reason...

It seems to have finally dawned on the US government that whatever laws and regulations they pass, they will not be able to ban offshore internet gambling:

In other news this week about the internet and real life colliding, we also had Second Life being cited in a divorce case in the UK and a Japanese woman sued for murdering her husband's online persona.

Which are you going to be - more restrictions, ultimately futile; or building new mutual institutions to help deliver public goods in an era of a reduced ability to collect tax?

The End is Nigh
Originally uploaded by Martin~

Or, why I am really a "geo-mutualist" and why I think you should be too!

The revolution has begun. In fact it's been building for at least twenty years. When history looks back it will not probably be able to identify a particular date, but it could do worse than choose Christmas Day 1990, the day a humble academic computing geek communicated with his server in something nobody had really heard of called "hyper text". Finally there was something useful to do with the "internet" that would eventually draw in users from well outside of the ivory towers and military research facilities that developed it. Users in every corner of the world; users of every age and race; users of every background.

And what will history say about this revolution? Will it be seen as a great leap in human freedoms, capable of finally fulfilling Cobden's vision that "peace will come to earth when the people have more to do with each other and governments less"? Or perhaps that it heralded an era of unprecedented interference in our lives by governments?

Actually, I think it is a one way bet; that eventually it will be a revolution in human freedoms, in co-operation and in innovation. Such are the players in this brave new world; hackers working to bust the Great Firewall of China and liberate a fifth of the world's population for example; Kenyans being the first to be able to make payments quickly and simply by mobile phone; privacy technologists working to keep us one level of information security ahead of the law; game players investing ever more realistic virtual worlds; their individuality and very lack of co-ordination in many cases makes it inevitable.

What politicians can do, however, is either to make the transition long and painful, or to smooth its passage for the "good of mankind" so to speak. We can choose to stick by the state and try and keep it working just as its citizens are less and less tied to it, which will inevitably lead to more and more monitoring and restrictions; or we can choose to look at how to build alternative civic institutions and mechanisms to fulfill our needs in an era when the state has much less power to intervene at least without the force that is endemic in state action becoming more and more obvious to the point of rebellion against it.

So what is the great weapon of mass destruction that is going to bring low the state as we know it? Why, tax, of course. I'll let you into a little secret: in order to function a state needs to be able to tax: in order to tax it needs to have the ability to track transactions or peoples' wealth and changes therein. And from the taxpayer's point of view, there is every incentive to try to minimize their tax liability. Up until now, or very recently, it has been only the global super-rich who have had the means and sufficient incentive to take advantage of loopholes and allowances that enable them to choose the lowest tax jurisdiction in which to crystalize out their tax liability.

But thanks to the global and interpersonal nature of this most recent communications revolution we are on the cusp of mechanisms being easily available to the big majority of people that will enable us to minimize our "financial footsteps". When most of us only ever relate to the majority of our money through pixels on a screen or numbers on a bank statement - a small minority of trade now relies on real metal or crinkly coloured paper currency - what does it matter what those pixels are called; pounds, dollars, euro, yen? What about a completely new, essentially fictitious currency perhaps, like the "Linden Dollars" of "Second Life"?

Add e-Bay and Tesco to Second Life for example and one could imagine a world in which most of your financial transactions are conducted entirely in cyberspace, in virtual worlds that know no territorial boundaries or tax regimes (or at least that could be relocated into a sympathetic tax jurisdiction quickly if necessary), but with delivery of goods and services in the physical world. That's not to say giants like Tesco and e-Bay would necessarily be best, or would necessarily even survive the upheaval.

Those widespread international (and local) interpersonal (and business-to-business) mechanisms for sophisticated modern-day barter are now within reach and threaten the very raison d'etre of many of our longest standing institutions - banking and currency, transnational corporations built in an era when intermediaries were necessary to trade with far off lands, and ultimately the basis on which the state is founded - its monopoly of taxation. At the same time we can form non-geographic communities of genuinely voluntary co-operation in which we can build trust relationships, quasi-legal ways of dealing with disputes and so on that make trade possible with people a few short years ago we would have never had a hope of even communicating with.

So, which side are you going to be on - freedom and co-operation or ever more intrusion, regulation and restriction? And how long have we got?

Some of these technologies fall into the category of "overestimated penetration at 2 years, underestimated at 10 years." I think the state will be lucky if it has another decade of relatively easily collected taxes based on productivity, sales and incomes. If people want the state to be able to function beyond that, without increasingly authoritarian intrusion into our economic lives, we need to be looking now at how to make it pay its way through user fees for any value for money services we want it to provide. And as soon as it does of course it must also open itself to competition - else it's a monopoly again whose only rationale is to use its discretionary power to rip off the very people who both fund and use its services.

Unsurprisingly any of the various forms of land value tax will do to start with and would be especially beneficial implemented soon, near the bottom of the crash in land values currently underway. The present situation in financial markets offers an ideal opportunity for new means of trading without the sort of money so invidiously inflated and deflated by the banking cartels. Again, these alternatives could operate either on a local scale or in an international, or non-geographic trading community. Land has the singular benefit of being immoveable. You can't virtualize land as easily as you can income - for we all still need to have a base somewhere.

There's another major reason for helping this process away from the power of and dependency on nation states rather than fighting it - the state is expensive. The sort of redistributive measures required to ensure that everyone gets a fair crack at opportunity - the level playing field - are getting more and more expensive. Our interventions into the affordable housing market for example, in the form of subsidy, will continue to rise when land values rise, subsidizing the already-haves in the name of assisting the have-nots. Far better to try to ensure the fairest of level playing fields for all than trying to play uphill on a steepening playing field.

So, when you find me criticizing the state and its acolytes, it's less about what has gone on in times past - I would say times of missed opportunity for sure - but more on how we will be able to live in future, a future I think is pretty inevitable, in which the very idea of a state with the power to tax fairly will be severely compromised. The elephant in the room needs to be dealt with, and dealt with soon. Will it be freedom, or more desperate attempts to maintain the ailing state structures? You choose!

Hat tip to Matt Wardman (also posted on Liberal Conspiracy ) for highlighting this CiF piece by Richard Reeves of Demos wondering whether the internet might be killing off the rationale for think tanks. I'm not so sure. If anything the web has made such organizations more visible. Their ideas, more readily available to as many of us who can be bothered to read them, expose the poverty of policy discussion within the established political parties. For those of us who are somewhat tired of the choice between the behemoths that are our mainstream political parties who produce manifestos attempting to cover every area of life and with which, when it comes time to vote, we probably only agree with parts and have to hold our noses over their other policies, the think-tanks offer a more focussed discourse.

However, Reeves does have something of a point; in many cases the higher profile think-tanks are the ones as closely connected as charity law will allow to the political parties. The CiF article quotes a Facebook piece by Jim Knight MP where he says that think-tanks are "ultimately very elitist top-down institutions populated with very bright people who politicians sometimes seem to sub-contract their thinking to." Now, aside from the fact that I'd probably rather have "very bright people" making policy than generally self-important electoral spin driven politicians with psychopathic power seeking traits, this does undermine the independence from electoral considerations that think-tanks ought to be able to enjoy.

I am a great fan of the concept of the "Overton Window" which is a strategy of policy development mostly used by US right wing think-tanks but which can be applied by any. What happens is you take a spectrum of views on some issue and you will find opinions and thinking that is "way out there", unthinkable, at one end of the Overton Window and ideas that are actually policy being implemented at the other end of the window. To start shifting policy in a particular direction you "push" that window. You start looking at even more moon-bat ideas that make the previously unthinkable seem a little less scary. You do that again and again and the original mad idea becomes acceptable, then mainstream, then actual policy that gets implemented.

The Wikipedia entry on the Overton Window describes the steps as "Unthinkable" → "Radical" → "Acceptable" → "Sensible" → "Popular" → "Policy".

Think tanks occupy a part of this space. Previously I suspect they have prided themselves in thinking the unthinkable or at least the radical. It is true that in the UK they have tended to be less aggressive, and have perhaps seen themselves less working the Overton Window than "planting seeds" for development and further discussion and eventually policy drops out the bottom of the electoral parties (often literally I suspect!). But the point is that if they are not seen as linked to a party they can work the Overton Window more effectively because their lack of a party identity means nobody in electoral politics has to get all defensive about them.

Now, it may be that the think-tanks are moving away from really radical thinking and are becoming the "policy sub-contractors" Jim Knight writes about, maybe now occupying the "sensible" part of the spectrum. Those with party links are probably trying to move the discussion from "Sensible" to "Popular" so that "their" electoral party can then work up "Policy". And this is where the other internet players - bloggers especially perhaps - can fill a gap. Not only may we not have formal party links (and in any case as individuals we can always disagree with our chosen parties' ideas on issues with some impunity) but we also don't have to have any "responsibility" to anyone for our thoughts. People can ignore us. Even in our own parties. We can therefore indulge in flights of fancy that even the think-tanks, who have to raise the money to pay their way for example, could not contemplate. If there are enough of us out here spouting similar "Unthinkable" or "Radical" ideas then a think-tank may pick it up and develop them a bit more into "Acceptable" or "Sensible".

Perhaps now then it is the blogger that is on the far end of the Overton Window. That and things like the "Global Ideas Bank". Which, to me, is exactly how it should be. Ideas have to originate somewhere. Individuals now have a mechanism, via the internet, for publicizing our ideas, however outlandish, and I'm sure we all hope that one day party policy will spring spontaneously from one of our "good" ideas. But at the very least, we can hope that someone, perhaps a think-tank, will pick up on what's being said out here in the vastness of cyberspace and develop some of those ideas.

Actually, I'd like to see the think-tanks replace the political parties - how's that for "unthinkable"? Break down the behemoths into more specific policy area groups whose ideas we the voters can vote for directly. No more would the unreconstructed socialist have to hold their nose and vote for the amorphous electoral blob spanning neo-liberal eocnomics and authoritarian imperialism that is New Labour.  Nor the radical liberal the squidgy semi-left Lib Dems.  No longer the social conservative for the policy free New Con Party.  There would be something that really represented our opinions on different issues for which to vote and only once in parliament would they coalesce into functioning groupings of roughly like-minded groups. 

I might choose to vote for IEA economic policies, for Progressive Vision 's health policies, Liberty 's justice policies and so on. As I said, if an "elite" is going to claim the ability to rule over us "top-down", I'd probably rather it was the "very bright" elite of Jim Knight's comment rather than the populist psychopathic politicians. For the moment though, I guess we have to accept that for the vast majority of the voting public they currently seem to need those policies all packaged up into broad ranging manifestos and sound-bites they can vote for.

I have frequent run-ins with a particular individual who, like me, calls himself libertarian. He takes the view that libertarians have to be able to compromise to get libertarian ideas heard, and indeed they are launching such a compromise "lobby group" within the Lib Dems at the forthcoming conference (Liberal Vision - at the conference fringe, Monday 15th September, 1pm at the Marriott Highcliff Hotel). But to me that misses the point. It is the party itself, when adopting policy, that has to make the compromise along the spectrum of opinions put forward in the preceding debate on an issue. If the radicals themselves "water down" their message before the party hears it, it will not impact on that compromise. So for me, I'd far rather remain at the far end of the Overton Window and hope that my unadulterated , radical and sometimes even unthinkable ideas get taken into account when the debate is held and the compromise based on it.

Following on the theme from my post this morning about how we could protect data about us held by agencies of the state by using a sort of a personal key and PIN like your bank's call centre has to validate with you before they can access your data, my mind wandered onto other uses for such a key.

It has been a recurring theme in this blog that the internet in particular and modern communications in general represent a great threat to the balance of power between states (and incidentally also global "intermediary" corporations) and their citizens. I say threat, but it's only a threat if you are in a position of power in a state or corporation seeking to continue to exert control over your citizens. Indeed, for the individual, it is the greatest potential opportunity, and the vehicle by which Richard Cobden's quote at the top of this blog's front page may become reality: "Peace will come to earth when the people have more to do with each other and governments less."

Many of our institutions - governments, trans-national corporations, even currency - evolved to deal with issues of trust between people who would likely never have personal contact with each other in ever more remote markets. When trading, you've got to be able to trust that you will be paid for example - one person's "IOU" is not as good a guarantee as piece of paper endorsed collectively by an entire state - a national currency.

But we have an ever increasing range of other innovations to help us trust each other; developments that are increasing quickly with the advance of the internet. We can access our credit files, we can buy digital certificates that help give others confidence to trade with us over the web because they guarantee we are who we say we are and so on. So why not shift these into the "real world".

Why do we actually need, say, a passport to travel across borders, issued by a nation state, when we could have just as secure a guarantee of who we are through some kind of personal digital certificate from an organization bearing the risk, with strong encryption embedded in it? The British government keeps trying to sweeten its totalitarian ID card scheme by telling us, amongst other things, that it will make proving our identity to others in all sorts of transactions much easier. But in fact the history of government involvement in protecting the source data of those identities is appalling, and, as the technology gets more pervasive it seems to be getting worse.

How much confidence can you have in a government issued identity mechanism when so much data has gone missing already? Those identities are, thanks to state incompetence, all but worthless. Of course that's why, partly at least, they want to take biometric data. But in computer security it is generally accepted that being able to produce "something you have" (say a credit card or internet digital certificate) and "something you know" - a password, PIN, or private digital encryption key is far better than ony one or other of these pieces of information on its own. So far as I can see the ID card system, or the passport, with or without a national identity register, does not fulfill both of these - only the former. It is inherently weaker than the commercially available alternatives.

So, why not replace the need for passports issued by a state with identity mechanisms authenticated by trusted corporate or social organizations for whom financial success or failure rests on people being able to trust the people they certify. So you could have a personal account with Thawte as the primary guarantor, for example, and that certificate could be counter-signed by a certificate from other organizations, such as governments, who want to "mark your card" as one of their citizens, granting you the protections normally written on a passport.

It's not easy to get some of these certification authorities to guarantee your bona fides. You need often as much verification as you do to get a passport with other trusted people verifying who you are and so on. But you would not need to give these data to the poroous security mechanisms of the state which has proved beyond any reasonable doubt that they cannot keep the information secure, nor does it offer the other benefit of a private contract - the ability to sue the ass off them if they damage your reputation or security by losing your data - or the corporate incentive of only being able to make a profit if you actually deliver on what people expect of you.

And you also get a choice of how strong you want the certification to be. If it's only guaranteeing small personal trades for example, you may only need to spend a few pounds and fill in a quick web form, validate your address and you're in business. If you want to travel overseas, or deal in bigger sums, or trade with distant counterparties, you may want stronger levels of guarantee and pay accordingly. It's a global standard pretty well too. So you'd have no problems using it to prove your identity in all sorts of applications - travel, trade, opening a bank account, starting a company, getting insurance, benefits, accessing what little data about you the state actually needs and so on - none of which would need to be on any single central database owned by a bunch of data-incontinents like the government is proving to be with the attendant dangers of losing all your data at once.

So, you see, we no longer even need governments to help us prove who we are. And in fact they appear to be singularly bad at doing so. The threat inherent in this is that the currently all powerful state needs to be able to do this, or it loses control of its citizens. And they are shit scared of that. If we are not mindful, in their lust to maintain that power they will get immensely more authoritarian and intrusive. The time is coming when we will no longer need them. We must do all we can to hasten that day before they get their claws in too deep into these emerging trust mechanisms.

...well, perhaps not quite but this is interesting, if blindingly obvious in a sort of a "why didn't we think of that" way:

I've been writing for a while now about how the globalization of communication (and delivery) technology is set to make it ever harder for states to quantify and collect taxes based on trade and incomes and make it imperative, if they want to have any revenue stream into the future, to switch taxation to more fixed sources like ("economic") land - ground rents, airspace, electromagnetic spectrum and so on, or face the prospect of ever increasingly authoritarian measures to force people to repatriate income and assets for tax purposes.

I hadn't counted on VAT being amongst the first to be threatened, but here it is. It's not going to help buying cakes from Tesco yet because it will only work if it is actually imported, I suspect (no getting away with simply operating from a warehouse in every town that happens to be owned by a Channel Island company I would think).

But people, liberal minded political types especially, need to wake up to this double threat - to recognize that revenue collection will be more difficult in future if based on moveable assets, incomes and trade, and to recognize that addressing that means going one of two ways - the more equitable land tax, or the more authoritarian crackdown on trade and "cross-border" earnings.  The ability to move money and income and so on overseas is moving fast and getting ever easier for the ordinary person - you no longer need to be super-rich to go offshore.  We need to act fast to counteract its effects on future tax revenues.

Thanks to Liberal conspiracy for highlighting protectionist amendments being sneaked into the Telecoms directive which MEPs will decide on tomorrow:

The amendments basically set the scene for forcing ISPs to monitor all their customers' traffic to catch them sharing copyrighted material on the web and to cut customers off if they keep doing it.

Over in the comments on Matt Wardman's blog posting the other day I suggested that this whole surveillance obsession smacks of "we do it because we can". Why should one's electronic communications, voice or data, be any more permissible to be snooped on than any other communication - snail mail, face to face or similar. Just because we can. For a variety of reasons electronic communications leave traces, and traces can always be tracked, but why should they be?

It is true that we need to have a debate about intellectual property and how, or indeed whether, it should be enforced in an era of global instant communication. It appears that the artists tend to be ahead of their production companies in exploring how to use the massive marketing opportunity that is the internet, such as recent experiments in releasing music for free, or on honesty box terms, on the web. But of course it is the media corporations and production companies that are lobbying for this sort of protectionist measure. The debate needs to be held much more widely than that though, and not snuck through where these measures were explicitly removed from the directive last time the European Parliament discussed it.

I have written to Sharon Bowles and Emma Nicholson. I suggest everyone take a look at the details of these amendments and give some thought to writing also to any of their MEPs. It is being debated tomorrow, so act fast!

I very fundamentally believe that the internet in particular is seen as a threat by both governments and corporations who feel they are not able to control it. For me, it is the greatest advance in people communicating with people and eventually needing far less "government" to broker their international relationships or trans-national corporations to broker their trade. But for it to bring about the vast benefits of voluntary co-operation amongst individuals around the world it needs to find its own rules, not have them imposed by those very bodies that are scared of it!

We are living through a period which is seeing some of the most momentous changes in human relations in the shortest time in history. Thirty odd years ago when we lived in Kenya and I was seven it was a big thing living abroad. Just the travel arrangements I remember seem like climbing Everest compared to today's era of mass international travel. Three stops, visas to everywhere, currency controls all over the place, expensive flights. Nowadays my father and stepmother seem to have few qualms about travelling to Durban for long weekends or shopping trips. We hear of people resident in Monaco and working three days a week in London, or people with a regular getaway home in Thailand.

Jon Snow, our university Chancellor, told us in one of his annual lectures once about when Sandy Gall, remember him, was out with the Mujihadeen in Afghanistan fighting the Soviet occupation, he would be given a camera, a notebook, a reel of film and told to come back in three weeks with an interesting story for the evening news. Nowadays we are in instant touch right around the world and news is relayed as it happens. I remember hearing that during Live Aid in 1986 stadia in South Africa and India had their first live international incoming broadcast from the concerts in London and the US and people remarking that it was really the first time they knew there were other people out there thinking about them.

When I worked in a Glasgow based Stock Exchange firm in the mid eighties we still had to book international telephone calls in advance to the US. Now the fight is about roaming charges because so many of us take our phones abroad with us - unimaginable back then!

But more than that, more significant than even that has been the internet. Coupled with urbanization which has seen us reach the point where more than fifty per cent of the world's population lives in cities, it means that given the right equipment that already exists and is enjoyed by many particularly in the more wealthy world, fifty per cent of the world's 6+ billion people could be in personal individual contact with any other anywhere around the world live. It's truly like waking up one morning in human history to find a whole new dimension - imagine living in a two dimensional world and suddenly discovering the third.

This has huge implications, epochal implications for the way we live, work, form alliances, invent, learn, trade, develop our common future and view the institutions that have served us till now. Governments and trans-national corporations have developed as intermediaries, as the contact point between whole nations of people who did not have direct access to each other in other countries as individuals. Even money, national currencies, are intermediaries, temporary stores of value that allow us to separate transactions by time and guarantee the creditworthiness of our counterparties in commerce.

I have a friend who has developed a pet theory of markets:

Market 1.0 - decentralised but disconnected - past - the local market with occasional trips to other local markets

Market 2.0 - centralised but connected - ending now - bigger, say national markets with intermediaries, governments and corporations, trading between these national markets

Market 3.0 - decentralised but connected - future beginning now - consumers and producers are ever more in direct contact with each other, the markets can be global and everyone can participate on the right network.

And this third, facilitated not by governments but by technology, and even sometimes in spite of governments, poses huge challenges. Challenges that can only go two ways - one way lies a massive increase in the power of the individual as opposed to the intermediary, whether governmental or commercial, the other sees those two huge vested interests try to prevent their loss of power or compensate for it with ever more draconian measures to place limits on this super-connectivity. Of course other, new intermediaries will emerge. Instead of being dependent on government to guarantee our ability to trade we may become dependent on a small number of global communications superpowers for granting us access to their networks. But the speed with which new ideas and inventions traverse and emerge from the ether will enable the individual to keep one step ahead of absolute dependency on a single supplier or a single technology.

And it's all eminently affordable. For half of what we spend as a single nation on our NHS each year, every single household in Africa could have a "One Laptop Per Child" type device and the infrastructure to connect to the outside world with it. Skype them altogether and they could be providing secretarial services to the rest of the world or selling their best quality coffee for full price to the small boutique blender who charges premium prices to his increasingly affluent western consumers. Think of the possibilities of four hundred million kids bursting with a will to learn suddenly enjoying all of the knowledge the internet can provide.

So, we have the potential to learn from each other without intervention, to trade with each other and to learn to make decisions about who to trust in trade without paying Nestle or whoever the middleman's cut for doing so. We don't even really need money - everything on eBay could be priced in Paypal Pounds for example and we could trade away without having to convert back into real 'currency' unless we had to buy something in an old fashioned retailer - and even then they'd soon learn to accept Paypals or Tescos or whatever.

Now, you may think this is all a bit far fetched, but I predicted, even if I didn't have the skills to capitalize on it, not only the Amazon bus