Techno-Libertarian Hell

Someone (I thought it was @johnrobb, but I can’t find it) tweeted a while ago that, since any normal person can cause a much higher  value of damage than they can ever create as gain, there is vast growth potential in extortion.

I didn’t see it worked out from tweet-length to a full explanation, but the implications are of huge importance.

The assumption itself is obvious enough. Destruction is easier than creation. A person who, by working full-time, can create value of $X a year, can surely, if they put their mind to it, destroy value of $10X without getting caught. Vandalism is easy. Sabotage is easy.

If you add to that fact two additional factors: anonymous communication and untraceable payment, the results are potentially catastrophic. A person who can make $X a year by productive activity can surely make $3X by demanding payment in exchange for not doing $10X worth of damage. All they need to do is make the threat, and collect the money.

That happens to a relatively limited extent today, because it is difficult to receive extortion payments without getting caught. Therefore, crime prevention activity need only be exerted towards preventing forms of damage from which the criminal can directly extract profit (mainly theft), and to the forms of vandalism that people carry out out of simple stupidity, usually under the influence of alcohol.

Anonymous communication we now have: it is reasonably practical to send someone an untraceable threat. Untraceable payment is another matter, but it is a realistic prospect if bitcoin or the like achieve what some hope they will.

The thinking of the anonymous-payment proponents generally focuses on the implications for tax and trade restrictions—essentially that taxation or prohibition of voluntary exchanges will become impossible, which the techno-libertarians see as desirable. But the question of  extortion becomes fundamental, not something that can be easily worked around.

I can think of only two ways of dealing with extortion given the premises of untraceable communication and payment. The first is a totalitarian level of surveillance to detect the actual destructive activity. From a libertarian point of view, this is surely a cure worse than the disease of taxation and prohibition that untraceable payments are hoped to evade. On the other hand, while one set of technological advances are enhancing virtual privacy via encryption, other technological advances are at the same time limiting physical privacy via surveillance. Think of drones, etc. The most acute  techno-libertarians might be assuming that physical privacy is doomed anyway.

The other possible escape would be to create strong norms against payment of extortion demands. If the extortionists are not paid off, then they will do some damage but it will not be a profitable activity, and it will decline to a very low level. It is not clear whether such norms can be established and socially enforced.

In conclusion, I don’t think a state can permit untraceable payment if it wants to remain at peace. If extortion is unchecked, that has the effect of reducing capital accumulated to the point that everything of value can be defended against malicious destruction, which is probably an order of magnitude less than what we have now.

At present, untraceable payment is still a bit tricky; we have bitcoin, but bitcoin is not untraceable; all transactions are public, and while you can launder your proceeds through multiple anonymous accounts, the more you try to extract the harder it is to cover your tracks.

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