Brazil, 1984

Danilo Gentili, one of Brazil’s most famous and popular comedians, was convicted and sentenced to seven months of prison time for defaming Maria do Rosário, a Brazilian federal congresswoman with a suggestion that she was a whore in a YouTube video. I wrote about Maria do Rosário before here.

Danilo has been literally on the Worker’s Party blacklist for many years because of his political remarks against it. His “crime” this time, according to the official sentence, was to offend a congressperson. The same kind of defamation against a “normal” citizen would not lead him to jail. Here is what happened: in his twitter account, Danilo criticized Maria do Rosário, saying that she was a hypocrite. The reason was because José de Abreu, a Brazilian actor famous for supporting the Worker’s Party, spit on the face of a woman in a restaurant after she criticized his political positions. Abreu did that shortly after Jean Wyllys, a former Brazil congressman, spit on Jair Bolsonaro. Maria do Rosário, who always presents herself as a feminist, defended José de Abreu. Danilo commented in the case in his twiter account saying that Maria do Rosário was a hypocrite. The congresswoman sent Danilo an official congress letter asking him to delete his twits. The comedian answered putting the letter inside his paints and then sending it back, an action he recorded on video and uploaded to YouTube.

In a similar case, not too long ago, Supreme Court judge Enrique Ricardo Lewandowski threatened with jail an airplane passenger who, turning to him, said he was ashamed of the Supreme Court. Lewandowski is often perceived as defending the Worker’s Party and its interests.

Why do I so frequently write in English about Brazil? In part because I want a broader audience who doesn’t know Portuguese to know what is going on there. As far as I know, for quite some time people outside Germany or the USSR thought that they were doing pretty well. Little did they know. Also because I want to offer a counterpoint to the (more often than not) leftist media that calls Bolsonaro a far-right racist, misogynist. Finally, because I hope that people from outside who read this might engage with the cause of freedom in Brazil. George Soros and others are engaging with the cause of slavery. They count on you not caring about it.

As I wrote before, Brazilian democracy is under threat. And it is not because of Jair Bolsonaro.

Nightcap

  1. That time Russians explored the world via flotilla Yelena Furman, Los Angeles Review of Books
  2. The origins of globalisation can be found in the deep past Daniel Lord Smail, History Today
  3. What it’s like to be a lawyer for the New York Times Preet Bharara, New York Times
  4. Capitalists, not socialists, pose the greatest threat to capitalism Randall Holcombe, the Hill

Blockchain Distributed Governance

Blockchain-Funds

This is a cross-post from the blog of the Centre for the Study of Governance & Society at King’s College London.

Over the last two decades online services have transformed from a product of a multitude of enterprises to being dominated by a handful of corporate-owned platforms such as Apple, Microsoft, Facebook, Google and Amazon. They specialize in connecting media producers to users. These are often mutual interactions with users both producing and consuming content. These platforms play an increasing role governing commercial exchange, as well as civil discussion, with plausibly pernicious implications for liberal democracy. As I propose in a recent paper ‘Markets for Rules’, blockchains offer a promising solution to this danger by helping to displace corporate ownership in favor of common platforms sustained by users themselves.

Corporate concentration has produced enormous efficiencies and innovations, improving user experiences and boosting investment in hardware and infrastructure. But it has also had several bad consequences. These enterprises face extremely low marginal costs and network effects whereby additional users add value to an existing user-base. Some of these effects are explained by these platforms’ business models of collecting personal data to target advertising more effectively at customers. The more interactions on a single platform users have with each other, the more useful the data for advertisers. The result is overwhelming returns to scale and a winner-takes-all competition for profits.

This has troubling implications for economic inequality, especially if we end up with a handful of corporations taking a bite out of every conceivable transaction. Of greater concern is the way owners exert control over who can join and what people are allowed to do on their platforms. Content producers can be demonetized or banned, effectively denying them access to a user-base or revenue. Online sellers can find themselves frozen out of a platform payment system without legal remedies. Controversial or unpopular producers survive at the whim of executives or, at best, a patchily enforced official policy.

This reliance on private governance is a problem for consumers, producers and ultimately citizens. But it is also a challenge for executives who find themselves mediating acrimonious personal disputes and political debate. With all the data in the world, they struggle to judge consistently what belongs on their platforms. The fact that these corporations have ended up functioning as unofficial censors and wielders of sanctions has led some commentators to propose regulating these platforms as public utilities or, more radically, nationalizing them so that access to them is decided democratically. These solutions have their own perils because any centralized system of monopoly control, whatever the underlying democratic credentials, can produce authoritarian outcomes. Liberal democracies up until now have been sustained by an independent civil society constituted by overlapping and competing spheres of governance, not the monopoly of either democratic or corporate government.

The prosecution of the CEO and founders of Backpage, who failed to exclude sex workers from their platform, illustrates the reliance of these private enterprises on government support on controversial policy issues even in relatively free societies. The combination of privately-developed data-collecting networks with over-arching state control is arguably reaching a nadir in China which is rolling out an unaccountable surveillance system of ‘social credit’ that can identify political dissidents and automatically exclude them from significant spheres of civil society.

Is there a way that blockchains can help navigate around the centralising and authoritarian impetus of technology-facilitated governance? Blockchains emerged from two pre-existing technologies – public ledgers and asymmetric cryptography – to produce a way of sharing data across a network that is resistant to manipulation by unauthorized actors. Initially conceived as offering alternatives to state-backed currencies, blockchains are now used to build decentralized autonomous organizations (DAOs) and dapps (decentralized apps). They can supply similar functions as corporate platforms but without an overall owner.

These systems are sustained by rewarding network participants with tokens (through completing intensive computing processes called mining). Tokens are convertible into ordinary currency, albeit currently at volatile rates. The entrepreneurs that build these platforms typically reward themselves and investors a large stake in those tokens but once the network is launched, they do not have control over how it is utilized. The rules of each network are self-enforcing. These rules can be changed, either through the original (or new) developers launching a rule-set that others may choose to switch over to (a fork). Alternatively, the rule-sets might contain provision for amendment. Such amendment schemes are, of course, open to manipulation as is the case for all political processes. Nevertheless, what these schemes offer is a way of interacting and exchanging at large distances without an overarching ruler. Instead, conduct is permitted on the basis of fixed rules enforced mechanically by people’s decisions to participate in the system. One way of looking at these schemes is that they have decentralized properties of communal norms, combined with the possibility of more deliberate design and experimentation of more formal rules and institutions. I call this common government.

The implications of this new technology and kind of governance might turn out to be very far-reaching, approaching that of the development of the Internet itself or even the printing press. But what could it mean for familiar Internet platforms in the medium-term? First, participating in mutual platforms might better align the incentives of users and platform designers. Right now, platform owners rely on squeezing as much data out of users as possible in order to sell it on to advertisers and to sell additional services. Mutual platforms, without responsibilities to shareholders, can experiment with different funding models. Individual users might elect to sell access to their profile to advertisers but the data itself can be made more secure as it will be a property of an encrypted network rather than a profile stored in a central private database. Privacy can be better assured than private management with public regulation.

Second, the networks can be more robust both to natural and political perturbations. Under decentralized protocols, ordinary users help store and serve content to each other. With the addition of blockchains, these users can be compensated for making their idle computer resources available for network use. This means that data doesn’t have to travel so far as is currently the case from host to user and the network as a whole can better cope with outages from particular nodes without data loss. Without a central controller, there is no particular agent that a government can coerce or punish for allowing specific interactions over a platform. Governments would then face the more difficult choice of permitting or prohibiting Internet communications altogether. It is thus more robust against arbitrary government censorship and manipulation of trade.

The relationship between users on a platform is mutual. The relationship between users and platform owners, however, is presently hierarchical – a private dynamic that government agencies can exploit. What blockchains may eventually permit is the provision of relatively efficient networks reliant neither on a single public agency nor private owner.

Learn more about Nick’s work here.

Britain’s Pornographer and Puritan Coalition

D1dm1BuWkAAYreQ

Brexit isn’t the only ridiculous thing happening in the United Kingdom. In April, the British government is rolling out statutory adult verification for pornography websites and content platforms. This requires all adult content providers to have proof of age or identity for all their users, whether a passport or a credit card (or more ludicrously a ‘porn pass’ that Brits wishing to browse anonymously will have to buy from local newsagents). The government plans to require internet service providers to block pornography websites that are not in compliance with adult verification once the system is in place. For those with university institutional access, Pandora Blake has written a timely explanation and critique published in Porn Studies: ‘Age verification for online porn: more harm than good?’.

Technical challenges with rolling out the system have led the dominant pornography search platform owner, MindGeek, to develop proprietary solution, AgeID, in cooperation with regulators. This cooperation between the dominant commercial pornography platform supplier and a Conservative government publicly intent on restricting access to pornography might appear surprising. However, it can be explained by a particular pattern of regulatory capture identified in public choice theory as a Bootlegger and Baptist coalition. Bruce Yandle observed that throughout the 20th century, evangelical Christians in the United States agitated for local restrictions on the sale of alcohol with the avowed aim of reducing consumption but with the secondary effect of increasing demand for alcohol for illegal bootleggers. Hence both interest groups, apparently opposed in moral principle came to benefit in practice. We now have a classic British case study. In this case, MindGeek is not acting as a literal bootlegger. It intends to be fully legally compliant with the filtering regime. However, the law will block all non-compliant competitors without a comparable verification system. They can gain a competitive advantage with a proprietary technical solution to the barrier introduced by the government.

Introducing identity verification systems has high fixed costs and low marginal costs. It is costly to develop or implement but easy to scale once integrated. The larger the pornography enterprise, the more easily these costs can be absorbed without the risk that it will not be worthwhile to serve the British market. For many smaller international pornography websites, without in-house legal advice or technical expertise, it might prove uneconomical to serve British users directly. So MindGeek’s platforms could become the least-cost legal gatekeeper between small enterprises producing pornographic content and the British public. The government is raising transaction costs to accessing pornography in a way that impacts larger and smaller platforms asymmetrically and favors one dominant platform in particular.

Both the premise of this policy and its likely impact on the market for pornography is unpromising. At its most benign, this could be a characterized as a ‘nudge’ against the consumption of pornography and reducing access of inappropriate content to minors. But these limited benefits have costs for both producers and consumers. On the consumption side, it increases risks to data security and privacy because it will plausibly tie records of pornographic access to verified identities, with a clear likelihood of being to infer an individual’s sexuality from private browsing. This could represent a particular vulnerability for LGBTQ identifying individuals who live in communities where there is still stigma attached to minority sexual orientations.

On the supplier side, it takes what already appears to be a market with strong tendencies towards a winner-takes-all model, and then augments it so that a dominant platform has a legally enforceable competitive advantage over potential rivals in the market. Ultimately, it threatens to further strengthen the bargaining position of a single corporate pornography platform against the sex workers who supply their content.

Nightcap

  1. Free speech for me but not for thee Michael Koplow, Ottomans & Zionists
  2. Religious freedom in the Islamic world Daniel Philpott, Volokh Conspiracy
  3. Religious and other freedoms James Robinson, Cato Unbound
  4. Why we need analytical Marxism Chris Dillow Stumbling & Mumbling

Obscenity law liberalised

2014 Protest outside parliament for sexual expression. Photo by BeeMarsh BeePhoto
December 2014 Protest outside parliament against sex censorship. Photo by BeeMarsh BeePhoto

This is a cross-post from my contribution to the Adam Smith Institute blog.

Last week the Crown Prosecution Service published updated guidance for prosecutions under the Obscene Publications Act (1959). Legal campaigning has brought about a big change: the liberal tests of harm, consent and legality of real acts are now key parts of their working definition of obscenity. The CPS explain:

… conduct will not likely fall to be prosecuted under the Act provided that:

  • It is consensual (focusing on full and freely exercised consent, and also where the provision of consent is made clear where such consent may not be easily determined from the material itself); and
  • No serious harm is caused
  • It is not otherwise inextricably linked with other criminality (so as to encourage emulation or fuelling interest or normalisation of criminality); and
  • The likely audience is not under 18 (having particular regard to where measures have been taken to ensure that the audience is not under 18) or otherwise vulnerable (as a result of their physical or mental health, the circumstances in which they may come to view the material, the circumstances which may cause the subject matter to have a particular impact or resonance or any other relevant circumstance).

Continue reading

Bad guys and bad thinking

AOC made waves with her recent “lightning round” during a hearing on a new campaign finance behemoth lumbering through the House, HR 1. Her basic point was that under our current campaign finance regime, it’s “super legal” to be a “pretty bad guy.”

I wrote recently that much campaign finance rhetoric resembles a religious canon. If so, then AOC is vying for the position of high priestess. I can’t review all the many flaws in her five-minute fable, but I’ll briefly canvas her commitment to orthodoxy.

First, she asks the hearing panel whether there is anything stopping a “bad guy” from being entirely funded by corporate PACs. The panel answered that no law prevents that. But surely common sense does. Running on a campaign solely funded by corporate PACs would be a titanically stupid campaign strategy. First off, thanks to disclosure laws and the realities of a media-rich society, all constituents would know that the candidate was running solely off corporate PACs. Why any candidate would intentionally sell themselves as a corporate lackey is beyond me.

Not only would this look bad, but it would also come at a huge financial cost. Congressional campaigns are mostly funded by individual contributions, not corporate PAC money, so basically a candidate would be refusing a huge amount of loot in order to broadcast themselves as the Peter Pettigrew of electoral candidates. I’m not convinced this is a looming threat to our democracy. Why should we regulate a non-existent problem?

Of course, she also trotted out important theological terms such as “dark money.” She seems to think campaigns are directly funded by dark money. Not so–any contribution over $200 faces extensive disclosure requirements. Dark money usually refers to independent political expenditures, which still face a variety of disclosure requirements and make up a surprisingly small amount of total political expenditures. Again, she is swiping at phantasms.

A larger issue is that even if her claims are true, HR 1 and most other campaign finance laws are hugely overbroad. The overwhelming majority of political spending occurs with no eye toward extracting favors from a candidate. Yet HR 1 would impose huge burdens on all groups speaking in the political arena. The better route to catch “bad guys” is to enforce criminal laws that prohibit bribery. Will you catch every instance of quid pro quo corruption? Almost certainly not. But since when was this a controversial price to pay for a free society? We’ve long ago decided that it’s best to have less than perfect enforcement in order to preserve individual liberty.

The collateral damage that HR 1 would impose on legitimate, non-corrupt speech is tremendous. I’m not confident AOC is fretting over the real “bad guy.”