THE INTERNET AND ECONOMICS

JULIAN: I want to look at three basic freedoms. When I interviewed the head of Hezbollah, Hassan Nasrallah…

JACOB: Where’s that fucking drone strike? What’s that up there?

JULIAN: Well, he has his own kind of house arrest as well because he can’t leave his secret location.

JACOB: I’m not sure that I would make that comparison. Please don’t make that comparison.

JULIAN: There’s a question whether Hezbollah has the ingredients of a state—has it actually become a state? This is something that is mentioned in the US embassy cables, that Hezbollah has developed its own fiber optic network in south Lebanon.⁸³ So, it has the three primary ingredients of a state—it has control over armed force within a particular region, it has a communications infrastructure that it has control over, and it has a financial infrastructure that it has control over. And we can also think about this as three basic liberties. The liberty of freedom of movement, physical freedom of movement—your ability to travel from one place to another, to not have armed force deployed against you. We can think about the liberty of freedom of thought, and freedom of communication, which is inherently wrapped up in freedom of thought—if there’s a threat against you for speaking publicly, the only way to safeguard your right to communicate is to communicate privately. And finally, the freedom of economic interaction, which is also coupled, like the freedom of communication, to the privacy of economic interaction. So let’s speak about these ideas that have been brewing in the cypherpunks since the 1990s of trying to provide this very important third freedom, which is the freedom of economic interaction.

JÉRÉMIE: But why would you need only three freedoms? In my European Charter for Fundamental Rights there are more.

JULIAN: Privacy becomes important either from a communitarian perspective, which is you need privacy in order to communicate freely and to think freely, or you need it for your economic interaction in some way. So I think there are more derivative freedoms but these—the first three that I said—are the fundamental freedoms from which other freedoms derive.

JÉRÉMIE: Well, there is a legal definition to fundamental freedom.

JULIAN: But I’ve read the EU Charter and I can tell you that it’s an absolute dog’s breakfast of consensus.

JÉRÉMIE: Yes, OK, and the lobbies managed to put intellectual property in the EU Charter.

JULIAN: All sorts of crazy, crazy things.

ANDY: I do think there is a point that we can agree on, which is that the money system, the economic infrastructure to interchange money, totally sucks at the moment. And even anybody who just has an eBay account will wildly agree with that, because what Paypal is doing, what Visa and MasterCard are doing, is actually putting people in a de facto monopoly situation. There was this very interesting thing from the WikiLeaks cables also, that said that the Russian government tried to negotiate a way that Visa and MasterCard payments from Russian citizens within Russia would have to be processed in Russia, and Visa and MasterCard actually refused it.⁸⁴

JULIAN: Yes the power of the US embassy and Visa combined was enough to prevent even Russia from coming up with its own domestic payment card system within Russia.

ANDY: Meaning that even payments from Russian citizens within Russian-to-Russian shops will be processed through American data centers. So the US government will have jurisdictional control, or at least insight.

JULIAN: Yes, so when Putin goes out to buy a Coke, thirty seconds later it is known in Washington DC.

ANDY: And that, of course, is a very unsatisfying situation, independent of whether I like the US or not. This is just a very dangerous thing to have a central place where all payments are stored, because it invites all kinds of usage of that data.

JACOB: One of the fundamental things the cypherpunks recognized is that the architecture actually defines the political situation, so if you have a centralized architecture, even if the best people in the world are in control of it, it attracts assholes and those assholes do things with their power that the original designers would not do. And it’s important to know that that goes for money.

JULIAN: Like oil wells in Saudi Arabia as well, the curse of oil.

JACOB: No matter where we look we can see, especially with financial systems, that effectively even if the people have the best of intentions, it doesn’t matter. The architecture is the truth. It’s the truth of the internet with regard to communications. The so-called lawful intercept systems, which is just a nice way of saying spying on people…

JULIAN: It’s a euphemism, lawful interception.

JACOB: Absolutely, like lawful murder.

ANDY: Or lawful torture.

JACOB: You’ve heard about the lawful drone strikes on American citizens by the US president, Obama? When he killed Anwar al-Awlaki’s sixteen-year-old son in Yemen that was lawful murder, or targeted killing as they put it.⁸⁵ So-called lawful intercept is the same thing—you just put lawful in front of everything and then all of a sudden because the state does it, it is legitimate. But in fact it’s the architecture of the state that allows them to do that at all, it’s the architecture of the laws and the architecture of the technology, just as it’s the architecture of financial systems.

What the cypherpunks wanted to do was to create systems that allow us to compensate each other in a truly free way where it is not possible to interfere. Like Chaumian currencies, which are electronic currencies designed according to the specifications of David Chaum, the originator of eCash (a fully anonymous electronic currency), although you could argue that they are more centralized than is necessary. The idea is to be able to create anonymous currencies, as opposed to Visa/MasterCard, which is a tracking currency. While built around a central authority, Chaumian currencies use cryptographic protocols invented by David Chaum in order to ensure anonymous transactions.⁸⁶

JULIAN: So, basically electronic cash but without, say, serial numbers on the cash.

JACOB: Or serial numbers that allow you to establish that it is valid currency but don’t allow you to know that Julian paid Andy, or what the amount was necessarily.

JÉRÉMIE: It’s recreating cash in the digital world, actually.

JULIAN: Creating an electronic currency is a big deal precisely because control over the medium of exchange is one of the three ingredients of a state, as I was saying with regard to Hezbollah. If you take away the state’s monopoly over the means of economic interaction, then you take away one of the three principal ingredients of the state. In the model of the state as a mafia, where the state is a protection racket, the state shakes people down for money in every possible way. Controlling currency flows is important for revenue-raising by the state, but it is also important for simply controlling what people do—incentivizing one thing, disincentivizing another thing, completely banning a certain activity, or an organization, or interactions between organizations. So, for example, with the extraordinary financial blockade against WikiLeaks, it’s not the free market that has decided to blockade WikiLeaks, because it’s not a free market—government regulation has made particular financial players kings and doesn’t allow other market entrants. Economic freedom has been impinged by an elite group that is able to influence both regulation and the principles involved in these banks.⁸⁷

ANDY: Sad to say, this is the unsolved problem of the electronic world right now. Two credit companies, both with a US based electronic infrastructure for clearance—meaning access to the data in the US jurisdiction—control most of the credit card payments of the planet. Companies like Paypal, which is also governed under US jurisdiction, apply US policies, be it blocking the sale of Cuban cigars from German online retailers or the blockade of payments to WikiLeaks in non-US jurisdictions. This means the US government has access to data and the option to impose payment controls on worldwide payments. While American citizens might argue that this is the best democracy money can buy, for European citizens this is just priceless.

JULIAN: In our traditional world we have had to a degree freedom of movement, not so great in some cases.

JACOB: Are you sure, Julian? I feel like your freedom of movement is a classic example of how free we really are.

JULIAN: Well no, the UK has announced it’s going to put 100,000 people per year in my condition.⁸⁸ So I think that is collateral to a degree.

JACOB: This is the reason why the founders of my country shot people from Britain. There’s a reason we shot the British. And it still exists today! The tyranny exists.

JÉRÉMIE: Let’s not get personal.

ANDY: What your country, the US, is currently doing is privatizing prisons and negotiating contracts that guarantee a 90 per cent filling rate to the private companies running these former US government prisons.⁸⁹ Well, what is that? That is capitalism as absurd as it can get.

JULIAN: There are more people in US prisons than there were in the Soviet Union.

JACOB: This is this fallacy where, because I object to something that is wrong you can suggest that I am part of something that is equally wrong. I’m not suggesting that the United States is perfect. I think the United States is actually pretty great in a lot of ways, but specifically with regard to the Founding Fathers’ rhetoric.

JULIAN: The Founding Fathers’ rhetoric is in clear dissolution in the past ten years.

JACOB: We must not forget that a lot of perception about the Founding Father’s rhetoric is mythology and we should be cautious about idolizing them. So, yes, of course. All I mean to say by my comment about British tyranny and the situation that Julian finds himself in is that this is actually a cultural thing. This is where society comes in and where society is very important, and it’s very difficult for the technology to supplant that. And financial issues are the most dangerous thing to be working on. There is a reason why the person that created another electronic currency, Bitcoin, did so anonymously. You do not want to be the person that invents the first really successful electronic currency.⁹⁰

JULIAN: The guys who did e-gold ended up being prosecuted in the US.⁹¹

JACOB: It’s so incredibly frustrating.

JULIAN: I want to go back to these three fundamental freedoms: freedom of communication, freedom of movement and freedom of economic interaction. If we look at the transition of our global society onto the internet, when we made that transition the freedom of personal movement is unchanged essentially. The freedom of communication is enhanced tremendously in some ways, in that we can now communicate to many more people; on the other hand it is also tremendously degraded because there is no privacy anymore, and so our communications can be spied on, and are spied on and stored and, as a result, can be used against us. And so that elementary interaction that we have with people physically is degraded.

ANDY: Privacy is available but it comes at a cost.

JULIAN: Our economic interactions have suffered precisely the same consequences. So in a traditional economic interaction, who knows about it? The people who saw you go down to the market. Now, who knows about your economic interaction? If you buy something from your next-door neighbor with your Visa card, which you could have done in a traditional market society almost completely privately, who knows about it now?

JACOB: Everybody.

JULIAN: Everybody knows. They have the data sharing between all the major Western powers, they all know about it and they store it forever.

ANDY: Julian, it’s not wrong what you’re saying, but I’m not sure you can really distinguish between the freedom of communication and the freedom of economic interaction, because the internet as we have it today is the infrastructure for our social, our economic, our cultural, our political, all our interactions.

JACOB: Certainly the freedom of movement.

ANDY: Whatever the communication architecture is, the money is just bits. This is just a usage of the internet. So if the economic system is based on the electronic infrastructure, the architecture of the electronic infrastructure says something about how the money flow is going, how it is being controlled, how it is being centralized and so on. The internet was perhaps not even thought to be the infrastructure for everything in the first days but the economic logic said, “Well, it’s cheaper to do that with the internet.” The banks and credit card companies previously had ATM machines out there with X.25 interfaces, which was a separate network ten or twenty years ago, and now it’s all TCP/IP because it is cheaper.⁹² So the architecture of the technology is becoming a key issue because it affects all the other areas, and that’s what we need to actually rethink, meaning that if we want a decentralized economic way of handling our payments, we need to take the infrastructure in our hands.

JACOB: Bitcoin is essentially an electronic currency.

ANDY: With no inflation.

JACOB: It tends to do it in a decentralized manner, so instead of having the Federal Reserve you have a bunch of people all across the world that together agree on what reality is, and what their current currency is.

JULIAN: And there are some computer programs that help facilitate this.

JACOB: I want to explain it in a non-technical manner. It’s an electronic currency which is more like a commodity than a currency in that people do determine how many euros it is to one Bitcoin. So it’s a little bit like gold in this regard and there’s a cost of the so-called mining of the Bitcoins, where you do a search on a computer to find a Bitcoin, and the idea is that there’s this computational complexity and it’s tied to the value of the thing. So in non-technical terms it’s a way for me to send Julian currency and for Julian to confirm it without Andy really being able to interfere or to stop it. There are some problems, though—it’s not actually an anonymous currency, and this is a really bad thing in my opinion.

JULIAN: Bitcoin is a very interesting hybrid, as the account holders are completely private and you can create an account at will, but the transactions for the entire Bitcoin economy are completely public. And that is how it works; it needs to be that way in order for everyone to agree that a transaction has occurred, that the sending account now has less money and the destination that much more. That’s one of the few ways to run a distributed currency system that doesn’t require a central server, which would be an attractive target for coercive control. It is the distribution that is really innovative in Bitcoin, and the algorithms that permit that distribution, where you do not trust any particular part of, if you like, the Bitcoin banking network. Rather the trust is distributed. And enforcement is not done through law or regulation or auditing, it is done through the cryptographic computational difficulty that each part of the network has to go through to prove that it is doing what it claims. So the enforcement of honest Bitcoin “banking” is built into the architecture of the system. Computation translates into electricity costs for each branch of the Bitcoin bank, so we can assign a cost to commit fraud, in terms of electricity prices. The work needed to commit a fraud is set to be higher in electricity costs than the economic benefit derived from it. It is very innovative, not because these ideas haven’t been explored before (they have been for over twenty years on paper), but because Bitcoin got the balance almost right and added one very innovative idea about how to prove a true global consensus about transactions of the Bitcoin economy, even assuming that many banks were fraudulent and that anyone could start one.

Of course, just like every other currency, you have to buy the currency with something else; with work, or Bitcoins are traded for another currency—there are foreign exchange groups that do that. There are some other limitations. It has about a ten minute settlement time—it takes about ten minutes of computational work between handing over currency and the other party being sure that there is a global consensus that the transaction has taken place. It is exactly like cash, so it has all the theft problems that cash has. It has all the benefits as well: once you’ve got it you’re sure that you have been paid, the check can’t be cancelled, the bank can’t retract it. Coercive force relations cut their ties. On the other hand, you have to guard cash well. That is, I think, its biggest problem. But it is quite easy to build additional layers on top, to build escrow services where you store your Bitcoins in a service that is specifically designed to keep them safe and add insurance against theft.

JACOB: Interestingly, if the people that created Bitcoin had made it mandatory to use Tor, so you don’t create an account, you create some cryptographic identifiers, it would have been possible if everything went over Tor as a core design that you did have location anonymity, even if you had long-term identifiers that identified you so you could link your transactions together.

JÉRÉMIE: Without entering into the technical considerations we could agree that Bitcoin has excellent concepts but some flaws. It has a deflationist nature, because money tends to disappear from Bitcoin. So it cannot work in the long run but it sets concepts that can be improved. It is maybe version 0.7 or 0.8 now.

JACOB: This is like David Chaum reinvented.⁹³

ANDY: Bitcoin was the most successful attempt to introduce a digital currency for the last ten years, I would say.

JULIAN: They got the balance almost right. I think Bitcoin will continue. It’s an efficient currency; you can start up an account in ten seconds, and to transfer money there is no overhead other than the cost of an internet connection and a few minutes of electricity. It’s highly competitive compared to almost any other form of currency transfer. I think it will prosper. Look at what happened following several Bitcoin thefts and negative follow-up press in the summer of 2011 that drove the exchange rate down to three dollars US.⁹⁴ Bitcoin has gradually risen back up to twelve dollars. It hasn’t climbed up or bounced back suddenly, it has climbed up in a gradual curve that seems to show a broad demand for the currency. I suspect a lot of the demand is petty drug trading, mail order marijuana and so on.⁹⁵ But Bitcoin has low overheads as a currency. Several ISPs, especially in places that can’t get easy credit-card services, like the former Soviet Union, are starting to use it.

There will be a crackdown if it continues to grow. That will not get rid of Bitcoin, because cryptography prevents any simple attack via coercive force from working, but the sort of foreign exchange services that convert to and from Bitcoin could be targeted much more easily. On the other hand, these exchanges can run anywhere in the world, so there are quite a few jurisdictions one has to work through before there are no more exchanges, and then the black market has its own exchange logic. I think the play that needs to be conducted with Bitcoin is to get it adopted by the ISP and internet service industry for these little games you buy on Facebook and so on, because it is so efficient, and once it is well adopted by a variety of industries they will form a lobby to stop it being banned. That’s a bit like how cryptography was adopted. It used to be classified as arms trading, and some of us as arms traders, but once it was in browsers and used for banking there was a powerful enough lobby to prevent it from being banned—although I concede there are moves afoot again.

JACOB: The problem is that the privacy concerns are wrong. Let’s be honest here. It’s wrong to suggest that the economics of the situation are different with the internet than without the internet. When I came here and I bought British pounds I had to give up my social security number, which is my unique identifier in the United States, I had to give up my name, I had to link it to a bank account, I had to give them the money. They recorded all the serial numbers and then they took all that information and they reported that to the Federal Government. So, that’s the analogue. It’s actually harder to get foreign currencies in the US because we’re so far away from everywhere else. But there’s a historical trend of control with regard to currency and it’s not just in regard to the internet that we see this control. In fact, there are to my understanding ATM machines in banks that record the serial numbers of cash and then track them to do flow analyses on the cash to see where it has been spent and who has done stuff with it.

If we look at those systems and then we look at the internet, they did not improve the privacy as we migrated to the internet—in fact, they kept it as bad as it was to begin with. In this way I think it’s very important to then look at the trends from the world before the internet to see where we’re headed. What we find is that if you have a lot of money you can pay a premium to keep your privacy, and if you don’t have a lot of money you almost certainly have no privacy. And it’s worse with the internet. Something like Bitcoin is a step in the right direction because when combined with an anonymous communications channel, like Tor for example, it allows you to actually send WikiLeaks a Bitcoin over Tor and anyone watching this transaction would see a Tor user sending a Bitcoin and you receiving it. It’s possible to do it—that is much better in some ways than cash.

JULIAN: We all speak about the privacy of communication and the right to publish. That’s something that’s quite easy to understand—it has a long history—and, in fact, journalists love to talk about it because they’re protecting their own interests. But if we compare that value to the value of the privacy and freedom of economic interaction, actually every time the CIA sees an economic interaction they can see that it’s this party from this location to this party in this location, and they have a figure to the value and importance of the interaction. So isn’t the freedom, or privacy, of economic interactions actually more important than the freedom of speech, because economic interactions really underpin the whole structure of society?

JACOB: They’re inherently linked. I think you can tell the difference between the American and European cypherpunks right here because most of the American cypherpunks would say that they are exactly the same. Because in a society which has a free market one would argue that you put your money where your mouth is.

JULIAN: Where you put your money is where you put your power.

JACOB: Exactly. I’m not saying that that is right, that’s almost a Right attitude towards this, which maybe is not what we want. Maybe we want a socially constrained capitalism, for example.

JULIAN: If we just look from a simple intelligence perspective: You’ve got a 10 million dollar intelligence budget. You can spy on people’s email interactions or you can have total surveillance of their economic interactions. Which one would you prefer?

ANDY: Well, these days they will say, “Ok, we’ll just force the payment companies and banks to use the internet, so we have both.” And that’s what they did. So the point is indeed that there is no direct escape here. You can do things like use Tor to protect your communication, you can encrypt your phone calls, you can do secure messaging. With money, it’s a lot more complicated and we have these things called money laundering laws and so on, and they tell us that drug and terrorist organizations are abusing the infrastructure to do evil things.

JACOB: It’s the Horsemen of the Info-pocalypse.

ANDY: Actually, I’d be very interested to have more transparency on surveillance companies and government spending on these issues. The question is what do we buy when we provide total anonymity of only the money system? What would actually happen? I think this might lead here and there to interesting areas where people may get themselves a little more easy and say, “Well, you know, I can raise my voice, I can go to the parliament, but I can also just buy some politicians.”

JÉRÉMIE: You’re describing the US, right?

JACOB: It’s not anonymous.

ANDY: I’m not sure this is limited to the US. In Germany we don’t actually call it corruption, we call it foundations that buy paintings painted by wives of politicians, and so it’s in the art trade or other areas. So we have better names for it. Maybe in France you call it friendship parties and others call it hiring prostitutes.

JÉRÉMIE: In the US it’s particular because the link between the political system and money is so tight. Larry Lessig said, after ten years of working on copyright issues, that he gave up on trying to fix copyright (he didn’t really give up) because he found out that the problem wasn’t politicians’ understanding of what a good copyright policy would be, the problem was that there were just too many links to the industrial actors that were pushing for a bad copyright regime.⁹⁶ So there is a real problem here.

JULIAN: Are you sure it’s a problem, Jérémie? Maybe in fact it is a good attribute that those industries that are productive…

ANDY: I think the devil’s advocate is drinking my whiskey.

JACOB: Let’s see if he can actually finish this sentence without cracking up. Troll us, Master Troll.

JULIAN: Those industries that are productive, that produce wealth for the whole society, use a portion of their money in order to make sure that they continue to be productive, by knocking out random legislation that comes out of political myth-making seeded by hype. And the best way to do that is, in fact, to buy Congressmen, to take the labor of their productive industry and use it to modify the law—so as to keep the productive nature of the industry going.

JACOB: Wait—I’ll get this one. Ready? Ready? Right now, ready? No.

JULIAN: Why?

JACOB: There are a couple of reasons but for one, there is a feedback loop that is extremely negative. For example, I believe one of the largest political campaign donors in the state of California is the prison guard union, and part of the reason for this is because they like to lobby for stronger laws, not because they care about the rule of law but because there is a job incentive.⁹⁷ So, if you see that these people are lobbying to create more prisons, to jail more people, to have longer sentences, what is it they are effectively doing? What they’re doing is they’re using the benefit that they receive for the labor that was actually beneficial—arguably—in order to expand the monopoly that the state grants to them.

JULIAN: So they’re just using it for wealth transfer from actual productive industries to industries that are not productive?

JACOB: You could sum it up that way.

JULIAN: But maybe that’s just a small component. Every system is abused, perhaps these free-riders that are just involved in wealth transfer are a small element, and in fact the majority of the lobbying, the majority of the influence on Congress does actually come from productive industries making sure that that the laws continue to permit those industries to be productive.

JACOB: But you can measure that very easily because you can look to see which people wish to promote rent-seeking activities, and wish to restrict the freedoms of other people to create a situation in which they themselves could not have risen to be where they are today. When they do those things then you know that something has gone wrong and they’re just protecting what they have, which they’ve essentially created through an exploitation—usually by an appeal to emotion where they say, “Gosh, stop the terrorist, stop the child pornography, stop the money laundering, fight the war on drugs.” Maybe those things are all totally reasonable in the context in which they’re originally presented, and usually they are, because generally speaking we think that those are bad because there is a serious component in each one of them.

ANDY: I’d like to get back to copyright and give you another example—there were serious issues when cars came out. Those who ran companies transporting passengers with horses feared that this would kill their business, which was true, but maybe it also made sense. I was invited to speak to the German movie companies’ association and before my speech there was a professor from a university in Berlin who spoke super politely about the evolution of the human race and the development of culture, saying that copying thoughts and processing them further on is the key thing, just as making movies is about taking themes and expressing them in a dramaturgic way. After his forty minutes the moderator brashly interrupted him and said, “Ok, so after you just said that we should legalize theft, let’s see what the guy from the Chaos Computer Club has to say.” And I was thinking, “Wow, what the fuck? If I’m going to speak out, will they let me out of here alive?” So some industries just have business cases that are not serving evolution. This is selfish, staying on their de-evolutionary drive, making it even more monopolistic. When cassettes came out they also thought that the record industry was going to die. The opposite happened, the record industry exploded. The question is what’s the policy here? What’s the positive way we could formulate these things?

JULIAN: I just wonder whether we couldn’t, in fact, standardize the actual practice in the United States, and formalize it so you do simply buy Senators and buy votes in the Senate.

JÉRÉMIE: No, no, no, no.

ANDY: Let’s assume we have the money.

JULIAN: Yes, and that it is all open and there are buyers and each one goes to an auction.

ANDY: But the weapons industry would still have more money.

JULIAN: No, I think it wouldn’t. I actually think the military-industrial complex would be relatively marginalized because their ability to operate behind closed doors in a system that is not open to general market bidding is in fact higher than other industries.

JACOB: There’s a fundamental inequality in the system.

JÉRÉMIE: From an economic liberal, anti-monopolistic perspective, when you say let’s let the dominant actors decide what the policy will be, I can answer you with the experience of the internet in the last fifteen years, where innovation was so-called bottom up, where new practices emerged out of nothing, where a couple of guys in a garage invented a technology that spread.

JULIAN: For nearly everything, for Apple, for Google, for YouTube, for everything.

JÉRÉMIE: For everything. Everything that happened on the internet just boomed after being unknown a few months or a few years before, so you cannot predict what the next innovation will be and the pace of innovation is so fast that it is much faster than the policy-making process. So when you design a law that has an impact on what the market is today, on what the strength relationship between various companies and actors is, if you strengthen one that is strong already you may stop a new entrant from appearing that would have been more efficient.

JULIAN: The market has got to be regulated to be free.

JÉRÉMIE: Of course you have to fight monopolies and you need to have a power that is superior to the power of those companies in order to punish bad behavior—but my point here is that policy has to adapt to society, and not the other way around. We have the impression with the copyright wars that the legislator tries to make the whole of society change to adapt to a framework that is defined by Hollywood, say. “Ok, what you’re doing with your new cultural practice is just morally wrong, so if you don’t want to stop it then we’ll design legal tools to make you stop doing what you think is good.” This is not the way to make good policy. A good policy looks at the world and adapts to it in order to correct what is wrong and to enable what is good. I’m convinced that when you enable the most powerful industrial actors to decide what policy should be, you don’t go that way.

ANDY: I’m just trying to positively get us into thinking what would be a good policy. What you just formulated is at this stage, for me, a little too complicated. I’m trying to simplify a little bit. There is this guy called Heinz von Foerster—the godfather of cybernetics—who once made a set of rules and one of the rules was, “Always act in a way that increases the options.”⁹⁸ So with policies, technology, whatever, always do what gives you more, not less options.

JULIAN: Chess strategy as well.

ANDY: It was mentioned that the increase of privacy on money transactions might have a negative effect, so we need to think, “The money system right now has a specific logic and the question is how do we exclude the money system from taking over other areas?” Because the money system has the ability—unlike the communication sector—to affect and totally limit the options of people in other areas. If you can hire contract killers to do specific things, or if you can buy weapons and engage in a war with other countries, then you’re limiting other people’s option to live, to act. If I put more money in communications then more people have more options. If I put more weapons on the market…

JACOB: No—the more you have the ability to surveil, the more you have control.

ANDY: Which is another good argument for restricting the weapons market, including telecommunication surveillance technology.

JACOB: Sure, you want to restrict my ability to sell that, how do you do that? How do you restrict my ability to transfer wealth?—Also through communications networks. One of the most offensive things about the bailouts in the United States—which were offensive for a whole bunch of reasons to many people—was that they showed that wealth is just a series of bits in a computer system. Some people by begging in a very effective way managed to get many of the bits to be set high, and then what is the question? Is there value in the system if you can just cheat the system and get your bits set high? And everybody else who is struggling to get along isn’t acknowledged as even having bits that are worth flipping in the first place.⁹⁹

ANDY: So what you’re saying is we need a totally different economic system? Because value today is not attached to economic value.

JACOB: No, I’m saying there is an economic value.

ANDY: You can do bad things and generate money with it, and you can generate good things and you will not get a cent.

JACOB: Well no, what I’m saying is you can’t decouple the economy from communication. I’m not talking about whether or not we need a different economic system. I’m not an economist. I’m just going to say that there is some value in the communication systems and in the freedom of those communications, just as there is value in the freedom of actual bartering—I have the right to give you something in exchange for your labor, just as I have the right to explain an idea and you have the right to tell me what you think of my idea. We can’t say that the economic system exists in some kind of vacuum. The communication system is directly tied together with this, and this is part of society.

If we are going to have this reductionist notion of freedom, of the three freedoms Julian mentioned, this is obviously tied to freedom of movement—you cannot even buy a plane ticket now without using a trackable currency, otherwise you’re flagged. If you walk into an airport and you try to buy a ticket on the same day with cash, you’re flagged. You get extra security searches, you cannot fly without identification and if you were to be so unlucky as to buy your plane ticket with a credit card they’ll log everything about you—from your IP address to your browser. I actually have the Freedom of Information Act data for my Immigration and Customs Enforcement records from a couple of years ago, because I thought someday maybe it would be interesting to look at the differences. And sure enough it has Roger Dingledine, who bought me a plane ticket for some work thing, his credit card, his address where he was when he bought it, the browser that he used and everything about that plane ticket was all put together.

JULIAN: And that went to the US government, it wasn’t just kept in the commercial processor?

JACOB: Right. The commercial data was collected, sent to the government and they were tied together. And the thing that I find to be really crazy is that it’s essentially the merging of these three things you’re talking about. It was my right to travel freely, it was my ability to buy that plane ticket or for someone else to purchase that plane ticket, and it was the ability for me effectively to be able to speak—I was going to travel to speak somewhere, and in order to do that I had to make compromises in the other two spheres. And in fact it impacts my ability to speak, especially when I find out later what they have collected and that they’ve put it together.