Innovation and Demosclerosis

A common trope among certain observers of China is that “China doesn’t innovate”. They copy, and act as a parts and assembly supplier to Western innovation. This isn’t even false, or unreasonable. China is a developing economy and they have a lot of catching up to do in terms of technology and business methods. Why should they reinvent the wheel when they can just learn how to use the wheels the OECD nations have already invented?

But this situation should not be confused with the idea that the Chinese are not an innovative people. Historically they have a long record of innovation, often inventing things (such as paper, the printing press, and gun powder) hundreds of years before the West had them. Culturally their disdain for the merchant class and centralized government prevented these innovations from being widely adopted, but the innovation was certainly there.

Further, we in the rich west have gotten complacent in some of our fields. Computers and IT are very innovative, but what about education or air travel? What about infrastructure? In 2008 the US Congress passed the Passenger Rail Investment and Improvement Act of 2008, requiring passenger rail plans to be developed by States. In California that mandate didn’t even result in a plan to build high-speed rail until 2013, and construction of just Phase 1 (connecting L.A. and San Francisco) isn’t expected to be complete until 2029. Meanwhile during roughly the same time period (2007-Present), China has gone from zero miles of high-speed rail to 10,000 miles of working track. That’s more high-speed rail than the rest of the world combined.

Now high-profile infrastructure projects like this always beg the question of whether we should build them, of if they’re worth the money, but that’s not the discussion today. The point is, both the USA and China have already decided they should, but only China did. There are reasons for that related to their comparatively lower labor costs and undeveloped rural countryside, but let’s not make excuses for ourselves. The West has hundreds of years’ head start in development, and all the laws and regulations we’ve collected as a result thereof seem to be holding us back more than they are pushing us forward.

This finally leads me to the real topic of this post (I’m terrible at getting to the point quickly), which is the Broad Sustainable Group of China. Broad Group (for short) has been around for a while now, primarily in the HVAC and air quality business. They make industrial-strength HVAC units, the ones that manage air temperature and humidity for major office buildings, very large apartment buildings, and sports complexes. They’re state of the art, managed in real time from a control center in Broad Town, a company town in Hunan, China of, well, Chinese scale and proportion (that is to say, large).

But what Broad Group is catching attention for these days is building really big buildings, really quickly. In fact, they aren’t built so much as assembled. They’re manufactured in a central factory and then flat-packed and shipped by truck to their destination, like Ikea furniture. All the wires, pipes, lighting, air ducts, etc. are built into the module back at the factory, so the assembly process on site consists of lifting the pieces into place using a construction crane and bolting them together.

The first building I’m aware of that Broad Group has built using their new was during the 2008 Beijing Olympics. They built a pavilion there in a single day, but I cannot find a video of that now. Since then they have assembled a 15-story hotel in two days, a 17-story building in two days, a 25-story building in 17 days, a 30-story building in 15 days, and a 57-story building in 19 days. There have been others, but not all of them have been captured on video.

All this construction is leading up to Broad Group’s desire to build Sky City One, a 200-story tower (838-meters, or 2,749 ft, tall) that will be the tallest building in the world when complete. And they want to assemble it in 90 days. That assembly time doesn’t include the time spent at the factory building and assembling the modules, which would be a process of six months to a year, but for comparison the Burj Khalifa in Dubai took five years to build from start to finish.

Now before you start freaking out about safety or quality, take a look at this video of Broad Group simulating one of their buildings being shaken by a Richter Scale 10 earthquake. This seems to be a safe design, and in the six years they’ve been building them I haven’t heard of any of them falling down, burning, or experiencing some other catastrophe. They seems to be taking this side of things seriously.

The Broad Group’s methods convey other benefits besides speedy construction. For one thing, building this way is much safer for the workers, as most of the work is done in the controlled environment of a factory, with industrial robots lending assistance, and not in chaotic construction sites. There’s a lot less waste, clean-up is easier, and basically all the same benefits we saw moving to factory production of our cars, machines, and tools. And most importantly, it’s CHEAPER, which is something I’m sure anyone who’s bought an apartment in Manhattan could appreciate. Building more and better things for less is the sina qua non of economic growth.

This is an innovation that could have happened anywhere in the developed nations. This isn’t cutting edge science, and the engineering is easily within our grasp. But we don’t do things this way. Why? No doubt some architect will tell you a story about how we value our individuality too much, but all the Toyota Camry’s I see driving around belie that hogwash. The truth is that we don’t build things this way because we have forgotten that innovation is something that should happen in every industry, not just “technology” companies like Google and Microsoft. We have allowed the laws around permits and site inspections and zoning to calcify around how buildings were constructed at a certain time in our history, and there progress stopped. Meanwhile in China, without that legacy, innovation marched on. China, in this one field, is now more advanced than the West, as they made a step of progress we could have made – should have made – forty years ago or more.

But all is not lost. Here’s the good news: China has shown it can be done. This is as good a time as any to reflect on the laws we have, and reconsider our approach. Rather than specifying how we build, and send in site inspectors to shut down construction now and then (which is costly), we ought to focus on the results we want (especially around safety and environmental health) and then let innovation bloom again to find better, cheaper, faster ways of meeting those needs. This is how the developed West can ensure that the future happens here too, and not just in China.

Freedom, but from what?

Nicholas Eberstadt reports from The American Enterprise Institute on the continuing trend away from traditional marriage and two-parent families, and even family itself. We all know about the rise of single-parent households, but now we learn:

In Belgium … the likelihood of a first marriage for a woman of reproductive age is now down to 40%, and the likelihood of divorce is over 50%. This means that in Belgium the odds of getting married and staying married are under one in five. A number of other European countries have similar or even lower odds.

Europe has also seen a surge in “child-free” adults—voluntary childlessness. The proportion of childless 40-something women is one in five for Sweden and Switzerland, and one in four for Italy. In Berlin and in the German city-state of Hamburg, it’s nearly one in three, and rising swiftly. Europe’s most rapidly growing family type is the one-person household: the home not only child-free, but partner- and relative-free as well. In Western Europe, nearly one home in three (32%) is already a one-person unit, while in autonomy-prizing Denmark the number exceeds 45%.

Emphasis added.

I am reminded of this post by David about an old lady who hadn’t heard from her children in 46 years. She was alone in her dotage. That is truly sad, but at least David was around. Someone’s child was there. But what if no one has any children? Will anyone be there to even turn the lights off? Europe seems to be dying, and rather than try to fix the issue they’re just making the death a bit easier. It surely can be no coincidence that the lands with the highest rates of childlessness are also embracing assisted suicide. If there’s nothing to live for, and no future you’re fighting for, why bother with all the pain and trouble?

Back to Nicholas, he recognizes a problem with the Europe’s lack of families, but misses the larger point:

Yet in infancy and childhood and then again much later, in feebleness or senescence, people need more from others. Whatever else we may be, we are all manifestly inconvenient at the start and end of life. Thus the recasting of the family puts it on a collision course with the inescapable inconvenience of the human condition itself—portending outcomes and risks we have scarcely begun to consider.

On the contrary, I would say that Europe has considered it and found a solution more to their liking. They want freedom, but of a particular kind. They want freedom from the messy obligations to other individuals. They’re fine with taxes and tightly regulated economies, because freedom from government isn’t a European desire. The government, however imperfect, it appropriately distant and dispassionate in its actions. It leaves the ordinary European alone on a day-to-day basis to read their books, go for bike rides in the park, and sip a beer (either alone or with a friend for the day, as the mood strikes). There is no obligation deeper than to pay taxes, and the dole is available when that is too burdensome, and then assisted suicide is available when even breathing has become inconvenient. Truly, Western Europe is the most free society that has ever been created – no obligations of any sort, not even to live.

Back in the 19th century the masses of Europe who left their homes for America were greeted by a welcoming bronze gaze overlooking Manhattan’s harbor. Well Europeans to this day are still abandoning Europe in droves, but to a land far harder to come back from than America. Do they imagine who is there to greet them? The ancient Greeks believed that Hades had to abduct Persephone in order to have a queen in the underworld, but today’s seem to believe in a more welcoming embrace.

Not like the brazen giant of Greek fame,
With conquering limbs astride from land to land;
Here at our sea-washed, sunset gates shall stand
A mighty woman with a torch, whose flame
Is the imprisoned lightning, and her name
Mother of Exiles. From her beacon-hand
Glows world-wide welcome; her mild eyes command
The air-bridged harbor that twin cities frame.

“Keep, ancient lands, your storied pomp!” cries she
With silent lips. “Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!

Freedom, she promises. Freedom from life’s burdens. Just put that burden down.

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Kings, pawns, and riflemen

Edmond: We are kings or pawns, a man once said.
Luigi: Who told you this?
Edmond: Napolean Bonaparte.
Luigi: Bonaparte? [laughs] Oh, Zatarra, the stories you tell.

An exchange from one of my favorite movies. In the time of Napolean it was probably true as well, but I don’t think so any more. We now live in a democratic age, where men are much more equal in power than kings and pawns on a chess board. Not fully equal – there will always be some with more influence than others, through their charisma, money, or political acumen – but more equal. At the margin, political equality has improved dramatically. And that’s largely thanks to the mass manufacturing of the gun.

The Colt Manufacturing company once used the slogan “Abe Lincoln may have freed all men, but Sam Colt made them equal”, and as slogans go, it’s an accurate one. The days when a knight in armor and his men at arms could inflict violence at will on unarmed peasants, or when Spartan youths could hunt helots for sport, are long gone. Americans have known this for centuries, which is why gun control laws originally targeted blacks only. A black man with a gun could be employed, but not enslaved.

Some people think that the age of the gun’s equality has come to an end, and that the professionalism, heavy armor, and overwhelming firepower of modern armies make the mere rifle an afterthought. This thinking is wrong. If the wars in Iraq and Afghanistan have taught us anything, it’s that defeating a military and defeating an armed people are two very different things. A military can be defeated by smashing its armor and disrupting its supply chain, but a populace armed with weapons as “weak” as rifles and improvised explosives can only be bargained with, killed off in act of genocide, or retreated from. The Sunni tribes in Iraq taught the Americans this, and in turn the Kurds of Kobane taught it to the Sunnis. Truly, political power flows from the barrel of the lowly gun.

For this reason, we should be cautious when comparing our age to previous times and places. What worked in the past, when the common men could be safely ignored, will not work now. From the American and French Revolutions onward, all successful movements have been mass movements. Technology itself has become democratic, and it’s only getting more so.

Samuel Wilson at Euvoluntary Exchange writes about the problems Defense Distributed is having finding a shipping agent for its Ghost Gunner CNC mill (which really is no different from many other CNC mills on the market, but is marketed for its gun-making skills). It’s really a rather silly problem, which Defense Distributed has created for itself by speaking when they should be quiet. And ultimately, it’s a futile gesture by FedEx (afraid of the ATF and FBI, no doubt) to try to prevent the further democratization of gun ownership. The Ghost Gunner is hardly the only CNC mill that can make guns – they all can. The knowledge for making the gun is in the software that anyone can download to their local CNC machine, not in a particular piece of hardware.

Nonetheless I expect to see this pattern play out in many shapes and forms, as government tries to retain even its weak monopoly on force. As software eats the world, it will also eat into the production of arms and weapons. The drones which Noah Smith thinks means the end of democratic violence are in fact even more democratic than the rifle. A 10-year old girl with a laptop and an X-box controller is more the equal of an adult male in the drone pilot game than the infantryman one. Even kids in wheelchairs can do it. At the margin, equality of violence is still increasing. The Gini of death-dealing is going down. And again the American government knows it, which is why drone control laws are already on the books and targeting the hobbyist market (there’s no firmware-enforced no-fly zone in an Air Force Predator drone, I assure you). But this is just as futile as the Ghost Gunner blockade. Firmware without no-fly restrictions is just a download away.

It’s your BATNA too

As an attorney who spends his days drafting and negotiating contracts (I am not a litigator), one thing I have to keep in mind at all times are my and my counterparty’s BATNAs (Best Alternative To a Negotiated Agreement). I and my counterpart to a negotiation (usually we’re two lawyers) are trying to get the best deal we can for our client, but we are also trying to make sure the other side doesn’t walk away from the table, as the prospect of a deal has become worse for them than no deal at all.

In a sense, I own both BATNAs. I have to, as a matter of professionalism. If my client would prefer a deal, but my counterpart ends up preferring their BATNA, my client loses the deal and gets his own BATNA, even if that makes him worse off. I have to consider that, or I’d be a bad negotiator. I also counsel my clients on this, as a reminder to them to not be too greedy, and instead by creative about finding deals that work for everyone.

That’s why I have zero patience with complaints from Verizon and Comcast about the new Net Neutrality rules promulgated by the FCC. The internet carriers the United States have today had, by global regulatory standards, unprecedented free reign to invest in their networks, manage them for growth, and innovate on services and delivery. A few of them, such as Google Fiber and Chatanooga, TN’s municipal ISP, used it to deliver real value to consumers – but most did not. The majority of American ISP’s wasted that opportunity thoroughly, by taking the maximum amount of profit for the minimum amount of service, while stifling competition at every opportunity. They worked tirelessly to see to it that the people of America preferred their BATNA to a deal. Now the government, as the agent of the people’s will, have chosen that BATNA, and Verizon, Comcast, and the like own that BATNA just as completely as FCC Commissioner Tom Wheeler.

There are no short-cuts here

Most of us who have spent some time online are at least passably familiar with the protocols that allow the Internet to function. HTML and CSS for web pages, SMTP for email, FTP and Bittorrent for files, and so forth. Recently a new protocol has been proposed by Juan Benet called IPFS, which rather grandiosely means InterPlanetary File System.

IPFS can be thought of as using Bittorrent (and a couple other things) to eradicate the distinction between web clients and web servers. Instead of a web client downloading a Wikipedia article from a server owned and operated by Wikipedia, your computer simply asks “Hey, I want this webpage”, and whichever other computer on the network is closest and had the page in cache provides it. Or a swarm of peers on the network each provide parts of it. Web pages, files, and data are all downloaded like a torrent and assembled for viewing and interacting with in the browser.

The above is a very different model from how the client/server model used by the web now, and there are upsides and downsides. One downside is that a publisher loses control of its data as soon as it is released to the IPFS network, just as surely as a musician loses distribution control over a pirated song, and it’s not clear to me how this would would work with websites like Wikipedia that try to stay current through edits. But the upsides include “broken links” being eliminated as long as one peer somewhere on the network has a copy of the file in cache, denial-of-service attacks becoming impossible, and censorship take-downs are very difficult. The internet would be transformed from a transitory web of links to a more permanent archive of data. As long as you know what you want, and someone on the web has it, you can easily get a copy of the original data long after the original publisher has ceased to provide for its existence.

Socially this has upsides and downsides as well. It’s already difficult to remove information from the web once people have it, but data distributed via IPFS would be nearly impossible to remove. That’s probably bad, in situations where someone stole your personal and private information, or spread harmful misinformation. It would also be hard to remedy any cases of libel and slander. And it’s also hard on anyone who makes a living from control over copyrighted works. But the benefits are of course immense, as information will not get lost, web pages won’t die, and maybe Vint Cerf’s concerns will start be mitigated.

Despite these upsides, I suspect that the copyright industries (music, movies, and television in particular) will bring out the heavy guns to fight the deployment of IPFS. The payoffs of IPFS being successful are too asymmetric for it to be otherwise – archival benefits accrue to society, and the loss of control costs accrue to them. In in response to this concern, Juan Benet has given probably the most cogent defense of personal responsibility I have seen from a technology developer:

That’s how the internet works. If people are doing illegal things (like standing up to a totalitarian regime), they take on the risk of repercussion. (We can’t tell a-priori what the information content is reliably).

People shouldn’t accidentally store illegal things they don’t mean to (hence blacklists) but you also don’t want to snuff out freedom of speech of those who understand + are willing to take the risk. The issue is routing access to it is also considered hosting it (dcma takedowns for links on the web).

I think that the best thing is to have the default [Distributed Hash Table] include blacklists that can be updated to handle DMCA requests. Sort of like [the Domain Name System] works today. Definitely something that we’ll have to figure out as time goes on.

Ultimately, it is only our own responsibility to behave virtuously, and distinguish virtue from the law. We cannot rely on technology to a priori know this for us. The world is too messy for that, and ultimately its a judgement call as to whether a particular action should be pursued. Anyone who tells you otherwise is looking for the easy way out and, in their attempts to ban all instances of the illegal, inevitably over-reach and ban much virtue we’d prefer not to live without.

A Farewell to Conspiracies

At common law, a conspiracy is an agreement between two or more people to commit a crime. I would add in many secretive government activities too, such as spying, which are crimes as far as the victims are concerned. We won’t be seeing them very often in the near future. In fact, that future is already here – just not evenly distributed.

Last month a new software program was uploaded to Github called Darkleaks. It’s billed as a decentralized auction for information. What that means in practice is that someone with access to information (such as the Pentagon Papers, a movie script, or the NOC List) can sell that information without meeting the buyer or revealing their identity. The sale is handled entirely online in a trustless manner. And the auction is distributed – it cannot be shut down any more than Bittorrent or Tor can be.

And the first auction is now underway, as I first learned from Andrea Castillo at Mercatus. The Silk Road 2.0 website was shut down by law enforcement, but now one of the administrators of the website (or so they claim to be) has popped up offering server data for sale. Transaction histories, user names, passwords, and source code are for sale. To the extent any of this information can be traced back to real world identities, it offers the possibility of exposing the buyers and sellers that participated in that dark market.

The technical details of how the auction works are interesting, but Andrea explains them well enough. I suggest reading her piece for details on how trust is established between buyer and seller under such unusual circumstances. What’s more interesting to me is how this technical innovation will affect society.

Lets examine the characteristics of this seller, and think about what it means going forward. This person is not authorized by any entity (certainly not the bosses of the Silk Road 2.0 website, or its users) to divulge this information. They simply have access to it, and are willing to trade that access (in the form of an upload) for money. And they are doing it in such a way they can deny they’re the ones providing the access. This auction could be initiated by anyone with the appropriate server access (including unauthorized hackers).

Think of all the organizations in the world that depend on secrecy to function, and use fear and force (whether legal or illegal) to make non-ideological members keep the secrets. Mafia families have accountants and secretaries (and also unreliable family members). Spy agencies and large corporations have many thousands of employees. Even ideological organizations like ISIS or Al Qaeda will have to deal with alienated members looking to get out and make a couple bucks doing it.

Further, the software used to list an auction runs on regular personal computers. Anyone with the technical skill to collect useful information in the first place will have the skill necessary to list an auction. The primary barrier to entry is that only those with decent operational security (using one-time email addresses and such) will be able to use this system with a low risk of getting caught. But with the financial incentive the auction provides, many can acquire these skills.

In essence, there’s no real barrier to auctions such as this from becoming a widespread practice. And there are a number of uses I can foresee immediately. Governments around the world are known to hoard zero-day vulnerabilities in major software (that is, methods of hacking in software systems that aren’t generally known to the security profession). These same governments also create hacking tools. Knowledge of both of these is very commercially valuable and would likely produce “good” auction results. So would lists of spies in foreign jurisdictions.

Criminal organizations depend heavily on their activities remaining secret, or at least keeping law enforcement divided and disorganized. If interested and wealthy members of a society made a practice of buying this information and releasing it to public news agencies (so that political organization could rally to defeat the criminals), this could make it very hard to organize crime. It would also be hard on the politicians and members of the judiciary who may have abetted the criminal organization’s activities.

Corporate whistleblowers will also now have a means of releasing information, making some money, and not losing their jobs. (Unless the whistle-blow causes their corporate employers to be shut down entirely I suppose) This will prove very tempting to many people who might feel their employers are up to no good, and for whom the money is just the kick in the pants they need to ‘do something’.

The list goes on, and readers should feel welcome to add more ideas in the comments.

Andrea makes the argument in her post that “defensive purchasing” of the information might be something that some governments or criminal organizations might engage in, but she misses the point that defensive purchasing will be totally ineffective. There’s nothing that prevents the information from being sold a second time. After all, information can be copied an infinite number of times. The seller doesn’t “lose” his copy when he makes a copy for the buyer. If Monsanto buys an auction that claims to divulge some ugly corporate practice, they’ll make the seller some money and then the seller can just re-auction the same information next week. Defensive purchasing just makes the seller richer while buying the target of the leak no additional security. If a seller is determined to maximize their own income, they’ll keep selling the same information over and over until someone makes it public (making future auctions pointless). And so every auction game ends eventually in total transparency.

The long term effects of this new reality are not certain. On the one hand, criminal and abusive conspiracies will never get very large or old. Each additional person who knows the secret is an increased risk of betrayal, and the knowledge end-game will drive rational actors to betray first and at least make a buck off it. This will reduce crime and also (hopefully) corruption in government.

The “downside” of this change is that all enforceable contracts will have to rely on the public courts, which means that the government will suddenly have a really big advantage in stomping out any sort of activity it doesn’t like. You may think that sounds generally like a good thing, but imagine a government that decided to outlaw things we today consider legal and safe activities (and ones you enjoy). If criminal organizations are so beset by internal betrayals that they cannot function, then even black markets won’t be an option for you. The government, as long as it retains the support of the voters and maintains the monopoly of legitimate police and Courts, will have a lot more power to regulate our lives.

Somehow I don’t think that’s the end result the anarchists that programmed Darkleaks were planning on, but then, they’re good coders, not good political scientists. And this is how I see it playing out.

The Miracle of Comparative Advantage

My co-blogger Boatfloating makes the point that excellence in one field does not necessarily mean that excellence in other fields, and this is a good thing! Who among us is world-class at everything? Certainly not I. I don’t have an NFL physique or Pavarotti’s pipes.

This reminds me of the miracle of comparative advantage and trade. It makes me profoundly grateful to be alive in this era when I think about how we are really no better, in terms of raw human potential, than the ancient men and women that first planted fields in the Fertile Crescent, or crossed the land bridge from Siberia into the North America, and yet we are so much wealthier and live lives of such greater ease than they. Isn’t it amazing that from such crooked timber a society as ours has been fashioned? It’s a miracle is what it is, and we should all be thankful that there are opportunities for us to live better than the Kings of old even with the limits we all have.