The
transition from the Industrial Age to the Information Age is resulting in a
sea change between protection and extortion. As the world gets increasingly complex
the result is a diminishing ability to extort while at the same time tools of
protection are getting cheaper and more powerful. The arbitrary walls are
coming down.
SPECIALIZATION
I was
sitting in trial today observing Bill Rounds, co-author with me of How To
Vanish.com, as he was questioning a witness. This particular case is an
example of complex business litigation that has been up and down the
appeallate ladder many times. The subject matter is fairly esoteric and even
worse the law is unsettled. While unrelated to the case, the plaintiff is a
world renown surgeon.
During
questioning by Bill’s opposing counsel a funny scene happened. Bill
stood up and the judge remarked, “Sustained.” The court reporter
stopped and asked, “Was there an objection?” The judge replied,
“No, but Mr. Rounds stood up and the coming objection is
sustained.”
INCREASING
COMPLEXITY
Those
5-8 seconds in the court transcript are but the faintest traces of an
incredibly complex thinking process that the two attorneys and judge
understood and applied which was backed by hundreds of pages of code and
cases. Yet, I am almost sure that neither the surgeon nor the jury even knew
there was a virtual ping-pong match being played.
But
for the attorneys and judge the surgeon’s work is equally
incomprehensible. And the work of engineers, architects, computer scientists,
etc. are equally indecipherable to those outside the circle. Such is the
modern world that is multiplying in complexity.
Everywhere
complexity is increasing from the tadpole in the pond to the manmade computer
operating system. But manmade complexity that is beneficial for humanity takes
work. Bridges do not design and build themselves. As humanity has progressed
so likewise has the economy from hunting and gathering to plows and silos to
railroads, satellites and spaceships.
But
all this time there have been malefactors and nefarious individuals that seek
to destroy and wield violence like a dagger focused on the economy’s
heart seeking coercion instead of consent. After all, the power to destroy
and inflict pain, while immoral, is power nonetheless. A power wielded by
those sadists who enjoy terrorizing innocents.
PROTECTION
AND EXTORTION
The
irony of government is that it attempts to provide protection through
extortion. And like the blackmailer or extortioner the government’s
ability to tax depends on the same vulnerabilities as extortion or the
Godfather’s offer that can not be refused. As the Industrial Age
progressed so likewise the nation-state rose because the assets created were
larger and thus the need for protection was greater. After all, the
capitalists either paid off those who could leverage violence against them
for extortion or paid a military force capable of defending with brute force
any attempted shakedown.
But
the relentless advance
of technology is blunting the sharp edge of violence’s dagger.
Protection is being made easier to provide while extortion is being made more
difficult to carry out profitably.
Why is
this? A basic mathematical law: multiplying
is easier than dividing. A simple example is that 3*3*7*11*13
is much easier to solve than reducing 9,009 to its prime components.
Or
another example would be encryption. I like the open-source Truecrypt
and in June 2003 the US National Security Agency reviewed and analyzed the
design and strength of AES-256 encryption finding it sufficient to protect
classified information up to the Top Secret level.
In
effect, with this free tool I can spend ten
seconds encrypting a text file that can take years of focused
processing power to decrypt. And just for fun perhaps it only reads
“Haha if someone wasted the resources to decrypt this!” But why
transmit sensitive personal or business information without such protections?
After all, recently 30,000 Hotmail passwords were
compromised in a security breach and posted on the Internet. An ounce of
prevention using free encryption software can be worth a pound of cure
repairing a stolen identity.
PROTECTION
IN THE INFORMATION AGE
During
the Industrial Age the leverage violence could exert was much greater and is
being greatly reduced in the Information Age. Thus the scale is tipping in
favor of protection and away from extortion with its attendant allocation of
scarce resources through bureaucracy. The digital infrastructure is allowing
the previously unseen but highly complex range of systems to be perceived;
Facebook is a prime example.
Then
that perception is being harnessed in extremely productive ways through
multiplication; as a result the economy is following economic law and moving
away from inflexible command and control systems towards spontaneous adaptive
mechanisms. But government systems still dragoon resources from higher-value
complex uses to lower-value primitive uses. As Frederic Lane wrote on page
383-384 of Venice, A Maritime Republic:
Every
economic enterprise needs and pays for protection, protection against the
destruction or armed seizure of its capital and the forceful disruption of
its labor. In highly organized societies the production of this utility,
protection, is one of the functions of a special association or enterprise
called government. Indeed, one of the most distinctive characteristics of
government is their attempt to create law and order by using force themselves
and by controlling through various means the use of force by others.
From
machines to microchips, factory to laptop, mass production to small teams or
even the lone entrepreneur the gigantic institutions of the Industrial Age
are being reduced to smaller and smaller parts. As the Information Age advances
the risk of violence decreases because as the scale of an operation declines
so likewise does its potential for sabotage or blackmail and the increased
location independence afforded by the Internet multiplies the inherent safety
an asset or individual enjoys. Despite Sulter’s proclamation at 2:08,
“I want this country to realize that we stand on the edge of oblivion.
… I want everyone to remember *why* they need us!” But we,
humanity, do not need them even if they think they can clean up some oil they
probably spilled.
CONCLUSION
For
those who rely on coercion instead of consent the transition to the
Information Age is being particularly harsh to their immoral business models.
They are now opposing both natural and economic law. The financial elite and
political elite of America and Europe are now beginning to infight. This is
resulting in the
State losing legitimacy in the eyes of the masses.
While
the time frame is likely far into the future, first the European Union will
collapse and later the United States. But this is not uncharted territory but
instead a trend of the nation-state collapsing under its own weight which
started with the Berlin Wall and Russia. To avoid being collateral damage I
elucidated several tips in chapter six of The Great Credit Contraction.
My
next book, which I have co-authored with Bill Rounds, is currently with the
publisher and hopefully will be available within a couple months. It will
magnify the suggestions from chapter six and I think many will find it
tremendously useful. As an old Chinese proverb says, “Of all the
thirty-six ways to get out of trouble, the best way is – leave.”
DISCLOSURES:
Long
physical gold, silver and platinum with no interest in the problematic
SLV, Streettracks Gold ETF Trust Shares or the platinum ETFs.
Trace Mayer
RuntoGold.com
Trace Mayer,
J.D., holds a degree in Accounting from Brigham Young University, a law
degree from California Western School of Law and studies the Austrian school
of economics. He works as an entrepreneur, investor, journalist and monetary
scientist. He is a strong advocate of the freedom of speech, a member of the
Society of Professional Journalists and the San Diego County Bar Association.
He has appeared on ABC, NBC, BNN, many radio shows and presented at many
investment conferences throughout the world.
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