16.13.1. "Why would anyone use black markets?"
+ when the advantages of doing so outweigh the disadvantages
- including the chance of getting caught and the
consequences
- (As the chances decline, this suggests a rise in
punishment severity)
- businesses will tend to shy away from illegal markets,
unless...
+ Anonymous markets for medical products
- to reduce liability, local ethical and religious laws
- Example: Live AIDS vaccine...considered too risky for any
company to introduce, due to inability to get binding
waivers of liability (even for "fully informed" patients
who face likely death)
- markets in body parts...
16.13.2. Crypto anarchy opens up some exciting possibilities for
collusion in financial deals, for insider trading, etc.
- I'm not claiming that this will mean instant riches, as
markets are fairly efficient (*) and "insiders" often don't
do well in the market. (* Some argue that relaxing laws
against insider trading will make for an even fairer
market...I agree with this.)
- What I am claiming is the SEC and FinCEN computers will be
working overtime to try to keep up with the new
possibilities crypto anarchy opens up. Untraceable cash, as
in offshore bank accounts that one can send anonymous
trading instructions to (or for), means insider trading
simply can't be stopped...all that happens is that insiders
see their bank accounts increase (to the extent they win
because of the insider trading...like I said, a debatable
point).
- Price signalling, a la the airline case of a few years back
(which, you won't be surprised to hear, I have no problems
with), will be easier. Untraceable communications, virtual
meetings, etc.
16.13.3. Information Markets
- a la "information brokering," but mediated
cryptographically
- recall the 1981 market in Exocet missile codes (France,
Argentina--later of relevance when an Exocet sank a British
ship)
16.13.4. Black Markets, Informal Economies, Export Laws
+ Transborder data flow, legal issues
+ complex..laws, copyrights, "national sovereignty"
- e.g., Phillipines demanded in-the-clear transmissions
during bank loan renegotiations..and several Latin
American countries forbid encrypted transmissions.
+ Export, Technology Export, Export Control
- Export Control Act
- Office of Munitions (as in "Munitions Act", circa 1918)
+ export of some crypto gear shifted from Dept. of State,
Office of Munitions, to Dept. of Commerce
- Commodity Control List, allows s/w that is freely
available to the public to be exported without
additional paperwork
- Munitions used to be stickier about export (some would
say justifiably paranoid)
- Commodity Jurisdiction request, to see whether product
for export falls under State or Commerce regulations
- Trading with the Enemy Act
- Exocet codes--black market sales of emasculated chips
16.13.5. Smuggling and Black Markets
+ Black Markets in the USSR and Other Former East Bloc
Nations
+ a major issue, because the normal mechanisms for free
markets-property laws, shops, stock markets, hard
currencies, etc.-have not been in place
- in Russia, have never really existed
+ Role of "Mafia"
- various family-related groups (which is how trade
always starts, via contacts and connections and family
loyalty, until corporations and their own structures of
loyalty and trust can evolve)
+ how the Mafia in Russia works
- bribes to "lose" materials, even entire trainloads
- black market currency (dollars favored)
+ This could cause major discontent in Russia
- as the privileged, many of them ex-Communist officials,
are best prepared to make the transition to capitalism
+ those in factory jobs, on pensions, etc., will not
have the disposable income to take advantage of the new
opportunities
- America had the dual advantages of a frontier that
people wanted to move to (Turner, Protestant ethic,
etc.) and a high-growth era (industrialization)
- plus, there was no exposure to other countries at
vastly higher living standards
+ Smuggling in the EEC
+ the dream of tariff-free borders has given way to the
reality of a complex web of laws dictating what is
politically correct and what is not:
- animal growth hormones
- artificial sweeteners are limited after 1-93 to a small
list of approved foods: and the British are finding
that their cherished "prawn cocktail-flavored crisps"
are to be banned (for export to EEC or completely?)
because they're made with saccharin or aspartame
- "European content" in television and movies may limit
American productions...as with Canada, isn't this a
major abridgement of basic freedoms?
+ this may lead to a new kind of smuggling in "politically
incorrect" items
- could be argued that this is already the case with bans
on drugs, animal skins, ivory, etc. (so tediously
argued by Brin)
- recall Turgut Ozal's refreshing comments about loosening
up on border restrictions
+ as more items are declared bootleg, smuggling will
increase...politically incorrect contraband (fur, ivory,
racist and sexist literature)
+ the point about sexist and racist literature being
contraband is telling: such literature (books, magazines)
may not be formally banned, for that would violate the
First Amendment, but may still be imported anonymously
(smuggled) and distributed as if they were banned (!) for
the reason of avoiding the "damage claims" of people who
claim they were victimized, assaulted, etc. as a result
of the literature!
+ avoidance of prosecution or damage claims for writing,
editing, distributing, or selling "damaging" materials
is yet another reason for anonymous systems to emerge:
those involved in the process will seek to immunize
themselves from the various tort claims that are
clogging the courts
- producers, distributors, directors, writers, and even
actors of x-rated or otherwise "unacceptable"
material may have to have the protection of anonymous
systems
- imagine fiber optics and the proliferation of videos
and talk shows....bluenoses and prosecutors will use
"forum shopping" to block access, to prosecute the
producers, etc.
+ Third World countries may declare "national sovereignty
over genetic resources" and thus block the free export
and use of plant- and animal-derived drugs and other
products
- even when only a single plant is taken
- royalties, taxes, fees, licenses to be paid to local
gene banks
- these gene banks would be the only ones allowed to do
genetic cataloguing
- the problem is of course one of enforcement
+ technology, programs
- scenario: many useful programs are priced for
corporations (as with hotel rooms, airline tickets,
etc.), and price-sensitive consumers will not pay $800
for a program they'll use occasionally to grind out term
papers and church newsletters
+ Scenario: Anonymous organ donor banks
+ e.g., a way to "market" rare blood types, or whatever,
without exposing one's self to forced donation or other
sanctions
- "forced donation" involves the lawsuits filed by the
potential recipient
- at the time of offer, at least...what happens when the
deal is consummated is another domain
- and a way to avoid the growing number of government
stings
+ the abortion and women's rights underground...a hopeful
ally (amidst the generally antiliberty women's movement)
- RU-486, underground abortion clinics (because many
clinics have been firebombed, boycotted out of existence,
cut off from services and supplies)
+ Illegal aliens and immigration
- "The Boxer Barrier" used to seal barriers...Barbara Boxer
wants the military and national guard to control illegal
immigration, so it would be poetic justice indeed if this
program has her name on it
16.13.6. Organized Crime and Cryptoanarchy
+ How and Why
+ wherever money is to be made, some in the underworld will
naturally take an interest
- loan sharking, numbers games, etc.
+ they may get involved in the setup of underground banks,
using CA protocols
- shell games, anonymity
- such Mafia involvement in an underground monetary system
could really spread the techniques
+ but then both sides may be lobbying with the Mafia
- the CA advocates make a deal with the devil
- and the government wants the Mob to help eradicate the
methods
+ Specific Programs
+ False Identities
- in the computerized world of the 90s, even the Mob (who
usually avoid credit cards, social security numbers,
etc.) will have to deal with how easily their movements
can be traced
+ so the Mob will involve itself in false IDs
- as mentioned by Koontz
- Money Laundering, naturally
+ but some in the government see some major freelance
opportunities in CA and begin to use it (this undermines
the control of CA and actually spreads it, because the
government is working at cross purposes)
- analogous to the way the government's use of drug trade
systems spread the techniques
16.13.7. "Digital Escrow" accounts for mutually suspicious parties,
especially in illegal transactions
- drug deals, information brokering, inside information, etc.
+ But why will the escrow entity be trusted?
+ reputations
- their business is being a reliable escrow holder, not
it destroying their reputation for a bribe or a threat
+ anonymity means the escrow company won't know who it's
"burning," should it try to do so
- they never know when they themselves are being tested
by some service
- and potential bribers will not know who to contact,
although mail could be addressed to the escrow company
easily enough
16.13.8. Private companies are often allies of the government with
regards to black markets (or grey markets)
- they see uncontrolled trade as undercutting their monopoly
powers
- a way to limit competition
By Tim May, see README
HTML by Jonathan Rochkind