The Pebble and the Avalanche

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Current Revolutions in Business and Technology

by Dr. Moshe Yudkowsky,

author of The Pebble and The Avalanche: How Taking Things Apart Creates Revolutions


Tue, 2010-Dec-21, 12:58

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Net Neutrality: The FCC's Life Preserver

During Britain's war against Napoleon in the 1800's, with France poised to invade England, the British military established an important job. A watchman would stand, looking out across the English Channel, and if the French fleet were to approach his job was to ring an alarm bell.

This job was abolished in 1945.

Nothing is quite as resilient to time and changing circumstances as a government agency. No matter if the original mission vanishes: the agency will attempt to find a new mission. For example, now that all of rural American has electicity, did you ever wonder what happened to the Federal agency in charge of "promoting" rural electrification? Hint: it's now part of a larger organization proving equally redundant services.

Today's hearing by the US Federal Communications Commission (FCC) may seem to be about "net neutrality," but the subtext is about the FCC itself. The FCC's predecessor organization came into existence almost a hundred years ago to reglate what was then thought to be a scarce resource, the radio spectrum; the FCC also regulates telecommunications.

Pity the poor FCC. Just maybe the idea of radio spectrum allocation made sense back then; regulating the AT&T telecommunications near-monopoly never did. And today, with — at my last count — over seven hundred long-distance companies in the US, the monopoly days are over and FCC control makes even less sense. As more telecommunications migrates to the Internet, we've got all the telecommunications we can possibly want and ten times more besides. The FCC, which regulates scarcity, is drowning in abundance with no reasonable mission.

Hence the lastest go-round with "net neutrality." By seizing control of Internet operations — by dictating how traffic will flow, what prices will be charged, who gets to use the Internet and how — the FCC will have a new, more powerful, and vastly longer-lived empire. Forget Google, Verizon, and the rest; they're pawns in the FCC's institutional chess game. Bureaucrats will expand their empires and, when retirement beckons, escape into the private sector to consult on how to live with the regulations they themselves promulgated.

As for the collaborators in this FCC power grab: If you can afford the paperwork and the lawyers, if you know how to play the regulatory game, then you can support "net neutrality" rules no matter what they are and game the system to hobble your competitors. The rest of us, who don't have the time or money to file endless forms with the FCC, who don't have the resources to fight back against bureaucratic interference, who won't be able to evade censorship: we're the ones who will suffer as abundance turns to scarcity and opportunity turns to dust.

Thu, 2010-Jul-08, 05:08

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US Cyber Command

I personally find any product or service to be less believable when the prefix "cyber" is applied; as someone who works in high technology, to me the term smacks of decades-old terminology and attitudes, used by ignorant marketing executives who are ignorant of technology but desparately want to sound modern and up to date. The US "Cyber Command" falls into the category of distrusted services.

I've just seen this thoroughly unbelievable assertion in the Wall Street Journal:

Intelligence officials have met with utilities' CEOs and those discussions convinced them of the gravity of the threat against U.S. infrastructure, an industry specialist said, but the CEOs concluded they needed better threat information and guidance on what to do in the event of a major cyber attack.
Frankly, I find it very hard indeed to believe — given the Obama Administration's blundering, dithering, and outright obstructionism in the Gulf oil spill — that any CEO would look to this administration, or any other government agency, for instructions on how to respond to a security attack. That is, of course, unless the authorities require them to do so...

Tue, 2010-May-04, 10:35

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Greek Bailout

The slow collapse of Greece's economy continues: despite a promised bailout, creditors are reluctant to trust Greece. As Mark Steyn puts it, Greece has decided that many citizens will begin work at age 25 and retire at age 50. This works until you've consumed all your capital resources, and then the bill comes due.

I've seen two broad approaches to this crisis. Evans=Pritchard believes that the European Monetary Union &mash; which, to paraphrase him, this crisis demonstrates is not really a union but merely a currency price-fixing scheme — should step in to rescue Greece and others to prevent contigation. The Wall Street Journal, as always, believes strongly in bankruptcy to avoid moral hazard.

I'll go for the disaggregated solution: let Greece go bankrupt. Not only will this prevent problems for other currencies, but it's probably the only way to reform Greece's finances. At this point Greece can opt for capitalism or even more extreme socialism — and if the people do opt for deeper socialism, their situation is hopeless regardless and there's no point in spending any money on them.

Wed, 2010-Apr-21, 09:19

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On the European Financial Crisis

The most interesting blog to read on the European financial crisis is by Ambrose Evans-Pritchard; his writing is so succinct and to the point that I have to read each word carefully.

The financial crisis interests me a great deal. Clearly, the economies of nations are no longer disaggregated one from the other, and a problem in one country can spread across the world. I wonder if they can be disaggregated, and if so, how that can be achieved while retaining the benefits of free trade.

Fri, 2010-Apr-09, 09:03

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Greek Banking Crisis

The Greek banking crisis continues to spread to other members of the European Monetary Union. The Euro continues to drop, and other countries in the EMU with wild spending habits have seen their creditworthiness reevaluated.

A single currency can be considered as running counter to the principles of disaggregation, or considered as a standard. That is, like nuts and bolts, the currency inter-operates among states — a laudable goal and frankly quite a boost to inter-European commerce. The problem comes when countries ignore the standards for the currency: Greece and other EMU countries engaged in wildly prolific expenditures. When a manufacturing firm ignores the standards for nuts and bolts, their products don't work. But when someone ignores currency standards as part of a larger system, it's like a nurse in a hospital ignoring rules about sanitation: the contigation spreads everywhere regardless of the actions of others.

The only question now is how bad the Euro will crash. And whether the US will learn any lessons from this about Obamaspend.

Fri, 2010-Apr-02, 12:03

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Seize the Network

Two US Senators outline plans for "cyberwar" security. I admit that the term "cyberwar" is so hokey that it makes me cringe every time I type it.

If you think their plan sounds reasonable, think about just how much government the Senators' plan implies. Innovation on the Internet comes when people are free to improvise and extend Internet services at will. Now imagine a world when a new service, such as Twitter, must pass government review before it can operate — so that the service can be audited for security risks. Now imagine what blog and newspaper web sites would have said about the security risks of potential-competitor Twitter, or what AT&T would have said about Skype's voice services. The Senators' plan will bring innovation and competition on the Internet to a screeching halt. (This topic is covered in my book, where I discuss the triumph of the upstart Internet over its heavily-supported but licensed and regulated rival, the X.25 network.)

Reading between the lines of the Senators' essay I see plans to license and regulate every corporate (and perhaps even private) connection to the Internet in the name of security; after all, a single insecure connection can be an entry point for "cyberterrorists" who will wage "cyberattacks" in a "cyberwar" against our "cyberdefenses" (cringe). The plan will also inevitably lead to vast new regulatory powers over Internet Service Providers (ISPs). Expect to see government-mandated licensing requirements for network engineers — after all, who but a licensed engineer can touch a connection that will be "audited" by some other regulatory body? I see hints of definitive mandates to require ISPs to somehow stop file sharing ("intellectual property rights"). And, and surely as water flows downhill, I expect additional taxes on Internet connections to support all this bureaucracy.

I have to wonder just how much traction this plan has: every lawyer, lobbyist, regulator, auditor, and certification-granting agency has a vested interest in the bill. The innovators and start-ups, who are vulnerable, simply do not have as much money.

Tue, 2010-Mar-16, 09:21

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I Really Don't Think This Nigeria Story is Funny

Several years ago we had visitors at my house for Sabbath lunch; a man was here in the US with his family, and he was an outstanding gentleman whose company and family I enjoyed. He was here in the US to learn new skills, which he eventually took back to Nigeria to improve the health and general welfare of his fellow citizens.

Compare and contrast this with the recent story of how Nigeria's telecom business was almost sold to apparent scammers. Here's the description of the winning bidder (which by the way appears word-for-word in the Wall Street Journal print edition):

The company's listed location in Abuja, Nigeria's capital, is a one-room office in a dilapidated building. A secretary who answered the door said Minerva employees rarely make appearances in the office, and that the only Minerva employee in the country was a man the secretary knew simply as "Chief."

I realize it's easy to laugh at this, especially after suffering through years of spam (and actual physical mail) sent from Nigerian con artists. But when I think of someone who uprooted himself and his family, and worked so hard to improve life in Nigeria, suddenly it's not funny any longer.

Thu, 2010-Mar-11, 10:27

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Health Care and Unintended Consequences

TechCruch writes about the unintended consequences of industrial policy — how they've introduced financial instability in the past decade or more.

Given that Obamacare will aggregate one-sixth of the US economy under his control, I have to wonder what the boom/bust cycles to anticipate. My guess will be that in addition to some mild financial cycles (the trend will be relentlessly downward for the private sector taxes will spiral), we'll see industrial cycles: in hospital patient capacity, number of health care workers, drug availability, and even in healthcare studies enrollment.

Tue, 2010-Mar-09, 07:56

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Proper Answers to Census Questions

Yesterday I received a letter from the Census Bureau that informed me of next week's arrival of the census form. I always fill it out the same way: I give the government all the information to which the government is entitled, namely a count of the individuals living in my home. The rest of the information, including their names and ages, is none of the government's business.

This year the census form includes questions about race, as it always does — there's quite a few this time around, and I'm always bemused by the arcane process that selects the ethnicity to measure. But I do wonder: how does government-mandated disaggregation into racial groups affect governance and society? While it's very easy indeed to come up with negative consequences, I draw a complete blank when I try to think of an instance when officially-mandated racial disaggregation resulted a positive innovation.

Mon, 2010-Mar-01, 09:18

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Assassination In Dubai

My friend Bruce Schneier asked me to chime in on the question of the assassination of Mahmoud al-Mabhouh, a Hamas terrorist, in Dubai. I started writing this on that day; put it aside for long while; and while the information is just as relevant, I think that I'll just give up and post what I've written so far.

One of the most important things to do when you read a police report or press release is to keep an open mind, and this adage applies double in the politically-charged atmosphere of the Middle East. I have a long list of basic questions about the assassination; I'll post a few here as samples.

Was there an assassination?

The Dubai police claim that Mahmoud al-Mabhouh died of asphyxiation, and the coroner noted that this determination was the "hardest of his career" and took ten days to discover. Asphyxiation generally leaves quite noticeable forensic evidence, which make me wonder not only why it took so long to discover that this was an assassination and not natural causes, but also whether or not it was an assassination at all.

Some people may recall that when Yassir Arafat finally died, of a disease that seems to have been HIV/AIDS, a good portion of the Arab press claimed that the Israelis had poisoned him. The Dubai press doesn't seem to suffer from this sort of problem, but it's a question worth keep in mind.

I'll proceed through the rest of this post on the assumption that Mahmoud al-Mabhouh actually did die of asphyxiation by person or persons unknown. Furthermore, since Mahmoud al-Mabhouh was a terrorist, I will use the words "assassination" or "execution" to describe this presumed extra-legal death.

Did a Team Do This?

A quick glance at the video released by the Dubai police shows a group of travelers; I haven't made the time to look at the entire thing. Without the narrative the Dubai Media Office supplied ("teams," "sophisticated communication devices"),for the most part we have nothing but boring video of ordinary travelers, to the point that I don't have the patience to sit through all the video that's been released.

For the remainder of this essay I'll assume, arguendo, that the Dubai police have constructed but not released to the public more convincing evidence.

How Much Did This Cost?

The Dubai police orginally claimed that 17 persons participated in this operation and they keep adding more people to the roster of suspects every day. Round-trip airfares are about $600 per person between Austria and Dubai; figure that each person took another 2 round-trip tickets to cover their costs. The hotel costs are about $150 per night, per diem costs to maintain a cover as a tourist are perhaps up to $200 per day.

The "retail" cost of a blank, stolen British passport is about $3,500 (American passports are worth less, Canadian passports more).

Total out of pocket costs for the "observable" part of the operation are therefore in the range of $300,000. Of course the actual costs (especially if it was a government operation) were many times that amount, but the scope of the operation is well within the reach of anyone with a lot of money and a grudge.

What Kind of People Did This?

According to Dubai police, a team of seventeen thirty-odd people carried out the assassination. That's a lot of people, which tells us something about who they are: they are either government employees, a terrorist organization, or members of a religious group.

They are not mercenaries. Perhaps I'm naive, but I don't believe you can hire such large gangs of well-trained operatives; there simply isn't enough call for such work to keep a gang this size in business. (Of course you can hire gangs this size for small-scale warfare, but not for assassination.) Of course you can hire freelance mercenaries and assemble them into your own team, but that runs into issues of trust.

In an operation this size, any participant faces several security risks from the police. He may be caught, of course; one of his colleagues may be caught and induced to talk; the people running the operation may captured, sloppy, or otherwise compromised and again induced to talk. In turn, this implies that the operatives must have a high degree of trust in each other, which argues against a team this size as a group of mercenaries hired at random. Worse, random mercenaries or even members of a mercenary group will likely find themselves, one day after capture on a different operation, confronting a police officer and in a position to bargain for their freedom by discussing an old operation...

The size of this team argues that the team consisted of government agents, who have patriotic cohesion and the substantial resources of a government to help them; or they are terrorists, who share an ideology and have resources to enforce discipline and perhaps free captured operatives; or they are coreligionists who share a devotion to a cause and some sort of structure to intercede to support captured operatives.

Who Ordered This Operation?

At first the Dubai government refrained from speculating who commited this assassination, which made me respect their professionalism, but apparently that's gone by the wayside. Be that as it may, who would commit this assassination?

As a Middle East terrorist, al-Mabhouh had many enemies:

  • Israel. al-Mabhouh not only committed terrorist attacks in the past; he actively supported the Hamas terrorist organization's infrastructure in Gaza. I have to admit that his public profile does not seem to support a high-cost Israeli attack against al-Mabhouh now — why would the Israelis assassinate someone like al-Mabhouh now? If he is just a middleman for Iranian missle supplies to Gaza, that means he's just another middle manager who can be replaced.

    Aruging against the Israelis is that six of the forged passports used the names of Israeli citizens. There's no reason for Israel to do this, and implicating your own citizens (however briefly) smacks of desparation. Was the operation really so slapdash? Was the selection of Israeli citizens a message? See the next paragraph for further discussion.

    Some of the alleged assassins exited Dubai via Iran, but that does not indicate these were not Israelis. It just indicates that, if these were Israelis, they were confident of their ability to transit Iran on their passports.

  • Fatah. In case you've forgotten, Hamas and Fatah fought a pitched battle for control of Gaza, and Fatah lost. Fatah controls the West Bank, Hamaz controls Gaza, and the only thing preventing a full-scale civil war between the two is the physical separation proivded by Israel and Israeli interdiction of heavy weaponry. I also suspect that Fatah's long-term civic corruption has reached the level that interferes with their abiilty to mount attacks.

    Again, it isn't clear why Fatah would move at this time against al-Mabhouh.

    The use of Israeli identies in the forged passports argues in favor of a Fatah operation. Fatah and criminal gangs operate in Israel, carrying off anything isn't nailed down, including cars. I find it easy enough to believe that Fatah could "steal" identities of Israeli citizens.

  • Anti-Iranian Regimes and Groups. Hamas is Iran's proxy in Gaza, and Iran continues to pressure the Arab world to accept Iran's hegemony. Lebanon is of course the most extreme case, with Iranian troops supporting the Hezbollah terrorist organization. Any Middle East regime, from Saudi Arabia to Pakistan, has a vested interest in the destruction of Iran's proxies.
  • France has a continuing interest in Lebanon, and may have found a reason to assassinate a Hamas operative with ties to Iran, given Iran's malignant presence in Lebanon.
  • If al-Mabhouh was actively involved in some more high-profile but not publically known activity, related to (for example) smuggling weapons of mass destruction to use against European targets, any European country would be a possible sponsor. This might be far-fetched, given the wretched diplomacy of most European countries regarding Iran and Hamas, but I would not be surprised to see a competent French inteligence unit deciding that al-Mabhouh posed a threat to French interests.

The best bet is still the Israelis, who will be more than happy to quietly take credit for this operation.

And so on and so forth. The main point I'm trying to get across is simple: we don't know who did this. We don't know why. The Dubai police have a narrative, and the Israelis certainly have the motive, means, opportunity, and above all the resolution to see this sort of operation through. But so do others.