Once upon a time, America embraced nuclear power as the future of energy. Today it accounts for a mere 18 percent of the nation's electricity generation, while fossil fuels remain dominant at 60 percent. Why did nuclear fail to take off?
From 1967 to 1972, the nuclear sector experienced significant growth, and 48 new nuclear plants were built. But in March 1979, a meltdown at Pennsylvania's Three Mile Island nuclear power plant, which resulted in no casualties and no lingering environmental damage, spooked the entire nation and empowered anti-nuclear activists.
"After Three Mile Island, what was considered to be in the best interest of the public was just reducing risk to as low as possible," says Adam Stein, director of the Nuclear Energy Innovation Program at the Breakthrough Institute. "It resulted in a huge volume of regulations that anybody who wanted to build a new reactor had to know. It made the learning curve much steeper to even attempt to innovate in the industry."
After the incident, the momentum behind nuclear reactor construction tapered off and no new reactors were built for the next two decades. Nowadays, the landscape remains unchanged: The federal government makes permitting arduous, while many states impose severe restrictions on new plant construction and force operational ones to shut down prematurely.
For example, take Indian Point Energy Center, the largest nuclear plant in New York State. In 2007, anti-nuclear activists targeted the plant, which provided a quarter of downstate New York's electricity. Their cause gained significant traction with the support of New York state attorney general—and future governor—Andrew Cuomo, who believed the nuclear plant was "risky."
Cuomo promised to usher in a new era of clean energy for New Yorkers. His moves against Indian Point garnered support from fellow Green New Deal advocates, including Senator Bernie Sanders (I-Vt.) and Rep. Alexandria Ocasio-Cortez (D–N.Y.), as well as environmental groups.
The plant eventually closed in April 2021, but there was "a gulf between intentions and results," explains writer Eric Dawson, co-founder of Nuclear New York, a group fighting to protect the industry. The closure of Indian Point increased New York's carbon emissions. State utilities had to make up for the loss of energy by burning more natural gas, resulting in a 9 percent increase in energy-related CO2 emissions. At the same time, the state's energy prices also increased.
This outcome isn't unique to New York. Germany also opted to phase out nuclear power, betting on wind instead. Electricity from windmills increased, but so did the country's reliance on coal. In 2023, Germany emitted almost eight times the carbon per kilowatt-hour than neighboring France, which still gets the majority of its electricity from nuclear and less than 1 percent from coal.
According to Dawson, nuclear power is "the most scalable, reliable, efficient, land-conserving, material-sparing, zero-emission source of energy ever created." Wind and solar aren't as reliable because they depend on intermittent weather. They also require much more land than nuclear plants, which use about 1 percent of what solar farms need and 0.3 percent of what wind farms require to yield the same amount of energy.
The economics of nuclear power are undoubtedly challenging, but its advocates say that's primarily because of its thorny politics. The headache of building a new power plant is vividly exemplified by Georgia's Plant Vogtle. The first U.S. reactor built from scratch since 1974, the project turned into a nightmare scenario: It took almost 17 years from when the first permit was filed for construction to begin, it cost more than $28 billion, and it bankrupted the developer in the process.
Nuclear regulation is "based on politics and fear-mongering and a lack of understanding," explains Indian Point's vice president, Frank Spagnuolo. If they aren't shut down, he says, power plants such as Indian Point could safely continue to provide clean energy for decades.
Despite the opposition, there remains some hope for the future of nuclear energy. Companies are actively developing next-generation nuclear technologies, such as small modular reactors and molten salt-cooled reactors, to minimize the risks associated with nuclear meltdowns and explosions. And some former nuclear opponents have become advocates, acknowledging it as a vital source of clean energy. The converts include the Environmental Defense Fund, the Natural Resources Defense Council, and even Rep. Ocasio-Cortez. The Biden administration has also demonstrated support for nuclear power, with the Department of Energy projecting a tripling of nuclear energy production in America by 2050.
Anti-nuclear activists, environmentalists, and politicians have crippled the only truly viable form of clean energy. But the long nuclear power winter might finally be coming to an end in America.
Photo Credits: Louis Lanzano/Polaris/Newscom; Erik McGregor/Pacific Press/Newscom; JB NICHOLAS/Splash News/Newscom; Erik Mcgregor/ZUMA Press/Newscom; Erik Thomas/NY Post/MEGA/Newscom/DBNYC/Newscom; Pool/ABACA/Newscom; Jon G. Fuller/VWPics/Newscom; imageBROKER/J. Ehrlich/Newscom; */Kyodo/Newscom; RICHARD B. LEVINE/Newscom; FRANCES M. ROBERTS/Newscom; Bill Clark/CQ Roll Call/Newscom; MOURAD ALLILI/SIPA/Newscom; Pacific Press/Sipa USA/Newscom; Paul Hennessy/SOPA Images/Sipa/Newscom; Michael Siluk/UCG/Universal Images Group/Newscom; Joe Sohm/Visions of America/Joseph Sohm/Universal Images Group/Newscom; KEVIN DIETSCH/UPI/Newscom; ROGER L. WOLLENBERG/UPI/Newscom; Utrecht Robin/ZUMAPRESS/Newscom; Dick Darrell/Toronto Star/ZUMA Press/Newscom; St Petersburg Times/ZUMAPRESS/Newscom; Ron Adar, M10s/ZUMAPRESS/Newscom; Reginald Mathalone/ZUMAPRESS/Newscom; Hans Pennink/ZUMAPRESS/Newscom; Paul Hennessy/ZUMAPRESS/Newscom; Antti Yrjonen/ZUMA Press/Newscom; Brittany Murray/ZUMA Press/Newscom; Meghan McCarthy/ZUMA Press/Newscom; Dan Herrick/ZUMAPRESS/Newscom; Nuclear Regulatory Commission, CC BY 2.0 DEED, via Wikimedia Commons; Library of Congress/Bernard Gotfryd; Jmnbqb, CC BY-SA 4.0 DEED, via Wikimedia Commons; Truzguiladh, CC BY-SA 2.5 DEED, via Wikimedia Commons; Georgia Power; Edibobb, CC BY 3.0 DEED, via Wikimedia Commons; Michael Barera, CC BY-SA 4.0 DEED, via Wikimedia Commons; Ken Lund, CC BY-SA 2.0 DEED, via Wikimedia Commons; Z22, CC BY-SA 3.0 DEED, via Wikimedia Commons; Ron Sachs—CNP for NY Post/CNP/Polaris/Newscom
Music: "The Edge" by Theatre of Delays via Artlist; "Digital Abyss" by Stephen Keech via Artlist; "Expand" by Theatre of Delays via Artlist; "Monomer" by Leroy Wild via Artlist; "Behind the City" by Ziv Moran via Artlist; "No Decides" by Or Chausha via Artlist; "Pulse" by Theatre of Delays via Artlist; "Each and Every" by Crosstown Traffic via Artlist; "Upon Dragon Wings" by Rob Cawley via Artlist; "Silent Bloom" by SLPSTRM via Artlist; "Sad Snow" by Yehezkel Raz via Artlist; "First Try" by Neon Ridge via Artlist; "Still Need Syndrome" by Yarin Primak via Artlist; "Night Shift" by Curtis Cole via Artlist; "Elastic Clock" by Jozeque via Artlist
The post The Political Sabotage of Nuclear Power appeared first on Reason.com.
]]>Quitting is massively underrated, says Annie Duke, an author, doctor of psychology, and former professional poker player who holds a bracelet from the 2004 World Series of Poker.
Her latest book is Quit: The Power of Knowing When To Walk Away. Using examples ranging from Muhammad Ali's refusal to retire from boxing earlier in his career to the over-budget, much-delayed California high-speed rail project to catastrophic American wars in Vietnam, Afghanistan, and Iraq, she makes the case that blind commitment to grit and stick-to-it-iveness routinely leads us down the wrong path is our careers, politics, and personal lives.
She talks about misleading mental tics like the sunk-cost fallacy, the cult of identity, and the endowment effect, and how to understand and reverse them in our personal lives, our work, and our politics. She earned her Ph.D. in cognitive psychology from the University of Pennsylvania, getting her degree in 2023 after taking a 30-year break from academia. We talk about how her experience of knowing when to quit in poker—and higher education—informed her high regard for knowing when to head for the exits.
(To see a Reason interview about Duke's previous book Thinking in Bets, go here).
The post Why We Need To Quit More in Politics, Work, and Life appeared first on Reason.com.
]]>Behind the scenes of a traditional bathhouse in Brooklyn, something extraordinary is taking place: The pools, heated to 104 degrees, are not warmed by conventional means but by computers mining for bitcoin.
A profit-seeking drive for energy efficiency has caused bitcoin miners to pop up in unexpected places, such as Jason Goodman's New York bathhouse, where the cost of heating his pools is about the same as it was before he plugged in the bitcoin miners, but now with the bonus of earning bitcoin.
Goodman credits traditional bathhouses for helping him through a tough time when he first moved to New York City. He started Bathhouse in 2019 because he wanted to re-create the life-changing experiences he underwent for the "hardcore sauna-heads, for those who are trying to optimize their performance, longevity, and overall health."
And then he had a cutting-edge idea of how to make it better.
"It kind of clicked in my mind," Goodman adds. "Bitcoin mining is really important. Bitcoin mining produces heat as a byproduct. I buy energy to create heat. That's interesting."
Instead of cooling the mining computers with fans, Goodman submerges them in a specially engineered fluid that doesn't conduct electric current but, instead, absorbs the heat that the computers produce. A heat exchanger then transfers it into hot water that moves directly into the pools. "I was able to make hot water very easily," Goodman explains.
Bitcoin mining wasn't designed for heating hot tubs. It was designed to facilitate a new type of digital money with a supply that no single entity can alter or control. A central bank cannot create new ones—they can only be mined by computers scattered around the world running the bitcoin protocol, and there will only ever be 21 million bitcoin. These computers compete to solve a cryptographic puzzle that the protocol makes just hard enough to ensure it's solved roughly every 10 minutes. Solve the puzzle, unlock a block of transactions to be validated and added to the blockchain, and earn bitcoin.
The more computing power someone has, the better their chances of earning bitcoin. But more computing power means using more energy.
"Bitcoin miners are in a relentless, unquenchable search across the globe for the cheapest possible energy," explains Alex Gladstein, chief strategy officer at the Human Rights Foundation and author of Check Your Financial Privilege.
"Be energy neutral and earn bitcoin. That was what we wanted to prove to ourselves," Goodman tells Reason. "A dream scenario would be that every hotel, every major residential building, every major office building starts converting their boiler system or their heating system or their hot water system over to a system…like we're using and have a massively distributed hard-to-control mining network."
For bitcoiners, keeping the process distributed and hard to control is the whole point. As Caitlin Long, founder of bitcoin-focused Custodia Bank, explains, the main purpose of bitcoin is to have an honest ledger where people can store value that cannot be manipulated.
Bitcoin mining ties the world's first decentralized digital currency to the physical world. But bitcoin remains borderless, seeking to exploit inefficiency wherever it can, whether that's a Brooklyn bathhouse, an unmarked warehouse in Venezuela, or the small rural town of Washington, Georgia.
Mayor Bill DeGolian of Washington welcomed CleanSpark, one of America's largest bitcoin miners, to his town because it allowed the miner to buy energy at a bulk discount.
"They're buying a lot of power from the city. And that's what helps the city…with what we're selling to CleanSpark, the amount of power they buy per month from us is more than all of our other commercial and residential customers combined," DeGolian said.
At its Norcross operation, an 87,000-square-foot facility on the outskirts of Atlanta, CleanSpark is using the same immersion cooling technique that Goodman uses in his bathhouse to cool 4,300 bitcoin miners. The technique allows the company to spend less money to power the A.C. needed to cool the giant rooms where they keep the computers.
"We're removing that environmental factor where ambient temperature goes up and down and we constantly fight the environmental curve," Bradley Audiss, senior director of operations at CleanSpark in Norcross, tells Reason. "Immersion is very much a flat line as compared to air cooled that has the fluctuations which are primarily tied to hot temperatures."
For some, bitcoin is the real Green New Deal. According to Gladstein, bitcoin subsidizes renewable energy because "the projects are made profitable by the ability to monetize that energy right away….So rather than monetizing [public] debt [by printing money], we can have the market kind of power this process."
But critics still consider the energy that is going to mining to be a complete waste. Some countries have banned bitcoin mining, and the Biden administration wants to tax it heavily. Even Goodman felt the backlash when he announced he was heating the bathhouse with bitcoin mining.
Bitcoiners say the ability of miners to sponge up and then release energy at a moment's notice makes the grid more reliable, which is why utilities partner with them. Take Texas bitcoin miner Marshall Long. His mining company's partnership with Texas' grid manager helped avert a summer blackout.
"What makes miners particularly good is because I'm not only a large user, I'm a granular user. So I don't have to turn off my entire load at once," Long said. "I can just turn off one miner or 200 miners or 2,000 miners in order to respond to certain things that are going on in the grid throughout the day."
"We're starting to see with…bulletproof scientific evidence that…bitcoin miners are actually helping and not hurting," Long added.
Miners aren't shutting down during peak hours out of altruism but because of market incentives. CleanSpark, for example, monitors energy prices on a minute-by-minute basis and shuts down the moment its operation starts to become unprofitable, freeing up power for the rest of the grid.
Even in places like Venezuela, where bitcoin mining boomed thanks to the government subsidizing energy to near-zero cost, bitcoin is forcing energy innovation. Miners are taking responsibility for fixing power lines that the government fails to maintain.
"We take care of the electrical infrastructure so that it is not damaged," explained a major Venezuelan bitcoin miner who fled to Miami and asked to remain anonymous. "For example, if we see that we have a voltage problem or an electrical factor in the area that affects us and can affect the community or the area where we are, we will try to improve it as much as possible, because if we do not improve it, our miners will not work well."
Bitcoin is too decentralized and too enriching for even the most powerful governments to stop at this point. The choice America faces isn't whether to allow mining to exist or not, but whether to welcome it here in a vibrant market economy where it can bootstrap new energy sources and its byproducts can create economic value.
Music by "Isolated" by Theevs via Artlist; "Vuelta al Sol" by Tomas Novoa via Artlist; "Density Wave" by Aviad Zinemanas via Artlist; "Better on the Other Side" by Flint via Artlist; "Outrun" by WEARETHEGOOD via Artlist; "Full Access" by Jimmy Svensson via Artlist; "Timelines" by Charlie Ryan via Artlist; "Light Reflection" by Luke Melville via Artlist; "Beer House" by Alex Grohl via Artlist; "Secret Weapon" by Evgeny Bardyuzha via Artlist; "Left Unturned" by Jamie Bathgate via Artlist
The post The Future of Energy? Brooklyn's Bitcoin-Heated Bathhouse appeared first on Reason.com.
]]>What does Cody Wilson—the founder of Defense Distributed, the company responsible for the world's first 3D-printed gun—really want? And how close is he to achieving it? That's the subject of filmmaker Jessica Solce's new feature documentary Death Athletic: A Dissident Architecture. Solce followed Wilson for seven years as he grew the world's most famous DIY gun company, prevented multiple lawsuits from shutting it down, faced his own personal legal troubles around a sex case, and established himself as the leading voice and practitioner of crypto-anarchism.
Watch the video above, and a condensed transcript is below.
Reason: What first got you interested in Cody Wilson?
Jessica Solce: I wanted to explore the mischief. I wanted to explore the motivations, the ideals, the ethics, and morals, which is something that nobody had really tapped into, and see where the film would go but not not really knowing how long that would take. I mean, unconsciously, I knew that this was going to be a long journey, but I don't think anyone consciously sets them up for such a long journey because that's a difficult pill to swallow.
But I wanted to create something that was, you could say, a historical moment… So that turned into an obsession of watching the story unravel.
Reason: You mentioned some of the mischief. That's really one of the defining characteristics of Cody's persona: a mischievous prankster. So what is the role of trolling for Cody Wilson in achieving his political objectives?
Solce: Perhaps at the beginning of his career, we could say he was more, I think, a literal troll filled with mischief and uncertainty of where things would go. But that…turned into trolling bigger marks, right? And learning the power of the symbolic, turning that into something that was real…in the court system that had a very strong ability to kind of change not only law, but change the principles of how things were going to be described and organized as First Amendment and Second Amendment issues.
So, yeah, trolling is I think is still…a strong part of what Cody does. But he doesn't do it effortlessly or without forethought or without knowing where he's going with it. There's meat behind what he's doing.
Reason: I want to talk a little bit about what those objectives are, what lights you shine on that with this documentary. There's one part where he talks about himself in Silicon Valley terms as a "disruptor." He rose to fame as the 3D-printed gun guy. But this clearly is not just about making guns because guns are fun and cool or hunting or even just self-defense. What is your larger understanding of Cody's objectives?
Solce: It's technopolitics in action. It's what most people don't understand or report on. It's really forcing processes of democratic solutions on two stages where most people have huge debates and issues. So specifically the gun, it's releasing it on the Internet. Once it's there, as we all know, it can't be taken off. It's kind of like the democratic distribution of information.
And from there, the statement becomes one of not just anarchy, but of who gets to control. So it's a demonstration of the inability of governments in this digital age to actually have utility and their idea of controlling and surveilling everything. We see this in all digital technologies from computers to bitcoin to anything in the crypto space.
Reason: The term that you've used a couple times: technopolitics. What you mean by that is that there are these technical realities, and at some point, the state has a technical advantage, and at other points you can suppress or undermine that technical advantage? Is there anything else that you want to add to the understanding of technopolitics?
Solce: Sure. I think technopolitics is also the idea that technology is outpacing politics. There is technology that can be critical and force politics. It forces politics that are kind of aged and ancient and not caught up in this time frame of the digital world to catch up. And in doing so, it slows the pace of control and surveillance.
Reason: There's another part of the documentary that reminds me of what you're talking about right now, where Cody talks about the gun as a way to express your political will, as an alternative way to vote.
Solce: What I've probably come to realize far more is that the threat of guns is actually more, quote-unquote, "dangerous" to governments than the actual having of them, because they're everywhere in the U.S. The fact that we have these debates and conversations of just taking little parts off of guns and everything when there are like hundreds of millions and lots of people know how to make these little pieces that they're trying to outlaw… So I think definitely what changed over these last ten years regarding the politics of guns was how ineffective [gun control laws] actually are and how they don't really reflect a large majority of the people they're trying to govern, if you will.
Reason: I know that behind the Defense Distributed headquarters, they've got a little plaque that has "gun control" emblazoned on it. So that's their idea: Gun control is dead… Guns are so tied to American political culture. But of course, they have political use outside of our borders. And you had a whole segment that was devoted to that idea.
Solce: This film is important in kind of locking in the historical moment because there's still so many people that I speak to that still think Cody sold physical guns.
A lot of things Cody was doing at the beginning were, you know, performance art in a way. They were symbolic. They were they were to really get people riled up and understand that we are entering a new era of digital performance, if you will.
There was a lot of other creators, engineers, makers that started putting their creations online in a far more visible fashion.
And even though it's still a pretty niche environment, it definitely has exploded with different groups and different kind of known figures and YouTube channels. And we'll see how long those channels stay up.
Reason: In the middle of your making this documentary, Cody was busted for sex with an underage girl on an adults-only app. What was that experience like from a documentary director's perspective?
Solce: It was it was very rough and trying. It's a strange moment when you work with and are allowed into someone's life for such an extensive period of time and you're building trust and something horrible happens and you have to figure out where you yourself stand, what information that you can gather, and also needing to do your job and get things on film and trying to figure out, specifically for me because I'm always creating in the terms of I'm not putting myself into this film. It's not about my opinions. It's about really trying to capture as unadulterated a moment as possible. So, not feeling like a vulture. It was a very intense moment.
Reason: What was your point of view on that?
Solce: If Cody had been searching out, specifically, a minor, Cody will be in jail right now. Period.… It was obvious that there were lies.
And you can have, as a person, issues with prostitution. You can have issues with the idea of sugar babies. You can have issues with, you know, extreme differences of ages, etc. But if the intent was not to, you know, search out a minor and it was proved, then, you know, at one point people have to take responsibility for what is happening.
And I personally and definitely believe that if the situation was different, and if the young lady did not have such an extensive history, [prosecutors] would have pushed harder.
This was not, I think, the clean-cut case that maybe the government officials were hoping for.
Reason: I notice there are several points where Cody talks about the mental and physical toll that constant battles with the government have taken.
As somebody who spent a lot of time with him, what do you think motivates him on a personal level to take on that kind of burden?
Solce: I mean, I think that's just part of who he is. I think he loves a challenge.
In 2015, the Ghost Gunner had come out. He's tasting the first moments of his payment services dropping him, of losing money. He's getting legal issues, credit cards, banks. It's coming at him from all angles.
But there's definitely a part of him that, although the challenge is hyper-destructive to your cortisol levels at minimum, he loves it. At the same time, I think people that live this kind of life of really challenging any kind of government or control or building new things, they have to, I think, actually like it.
Reason: He talks about this doomed historical figure, James Fannin [a soldier who was massacred during the Texas Revolution]. It's a pretty hair-raising bit to me because it makes me seriously wonder, does Cody want to be a martyr? What do you think?
Solce: I do absolutely think he wants to be remembered. But he doesn't want to be a martyr. He wants to be the winner. So two very, very different things. But I think that moment in that film, he's definitely in a place where he realizes that all his work might end up being just him being scalped, if you will.
Reason: I have interviewed Cody several times, and it's always fascinating, but he can come across as fairly, I think, enigmatic. He sometimes speaks in riddles or highly theoretical terms. You spend so much time with them. You met his parents. What are your impressions of him as a real person?
Solce: He is that person. Cody is constantly reading and absorbing. He's he's thinking in terms of philosophy and history. It is his jam. This is his motivation. He loves all these parallels that can be created in today's society versus past fights, past wars, past ideas. So Cody, I think, actually correctly represents himself when he speaks in these high philosophical terms.
Reason: And why do you think that that type of personality has been able to drive this project forward so successfully?
Solce: He's extremely charismatic and doesn't shy away from a challenge. Anyone creating something in this space not only has to be smart, that definitely helps, but they have to understand the game and then they have to understand how to play it. They have to both be entertaining and quote-unquote, "correct" in the form of your motivations and possibly the law, which he does.
So the majority of things are instigation to the law, and that's why he keeps being in the main frame. It's constantly being on top of what is happening in the moment, like GAT GPT [a customized AI chatbot recently released by Defense Distributed], and also skidding across everything that's in between legal and non-legal. So he understands the terms of how to get a message into the mainstream.
And this is all very centered to who he is as a person. So I think that's why it's so successful. And to have anyone follow you, especially from the beginning, and not even just follow, but work with you or get behind these like kind of intense and possibly very dangerous principles that could get you in trouble, you have to have a level of, I guess, charismatic integrity.
And you can dislike Cody, but from the very beginning, he has not changed the principles that have motivated him. And that is what I hope the film also captures, but in far more in depth than what anyone else has seen.
This interview has been condensed and edited for style and clarity.
Photo Credit: CHUCK KENNEDY/MCT/Newscom; Defense Distributed.
Music Credit: "That Sound," by Oliver Michael via Artlist.
The post The 'Technopolitics' of Cody Wilson appeared first on Reason.com.
]]>"The United Nations is a massive club for dictators," says Thor Halvorssen, the founder and CEO of the Human Rights Foundation (HRF), a nonprofit founded in 2005. "The rich, powerful, and corrupt get together in Davos. Well, some of the world's bravest people get together at the Oslo Freedom Forum."
On October 3, 2022, the HRF convened the Oslo Freedom Forum, a one-day conference at Manhattan's Town Hall, bringing together political activists from around the world to call attention to rising authoritarianism in China, Iran, Russia, Venezuela, and other countries.
There were no wonkish policy panels or PowerPoint slides cluttered with data and footnotes. The conference featured instead a series of TED Talk–style speeches, delivered without notes and designed to forge an emotional connection between the audience and the presenters.
Among the speakers: Anna Kwok, who worked as an anonymous online organizer during Hong Kong's pro-democracy protests of 2019, which took place as China consolidated power over the once-free city; Oleksandra Matviichuk, a Ukrainian human rights activist and lawyer based in Kyiv; Leopoldo López, a Venezuelan human rights activist who spent five years in prison after organizing massive protests against the government in 2014; and Masih Alinejad, an exiled Iranian journalist and activist who helped bring attention to protests against mandatory hijab laws in her home country even before the murder of Mahsa Amini drew international outrage.
HRF's chairman, former World Chess Champion and arch-critic of Vladimir Putin, Garry Kasparov, also addressed the gathering, telling the audience that Ukraine "is not just a battlefield but a frontline of the total war against freedom and tyranny."
Reason spent the day backstage talking to the participants and organizers about the Human Rights Foundation's mission of building a united community to counter rising authoritarianism around the globe. The speakers argued for a range of actions from free nations to expand human rights, ranging from heightened diplomatic pressure to increased military aid to sanction regimes that would cut countries such as China and Saudi Arabia off from the global economy.
"People say, 'You oppose dictatorships, you are a neocon, you want to go to war with these dictatorships,'" says HRF's Halvorssen. "I'm not asking for boots on the ground, I'm not asking for an invasion of any country. The problems of Venezuela will be solved by Venezuelans. The problems of Russia will be solved by Russians. What we should do is at least encourage them." He continues, "What always occurs, there comes a point when the men holding guns at the people decide, 'I'm not going to do this anymore.'"
Produced by Jim Epstein and Nick Gillespie; narrated by Gillespie; written and shot by Epstein; edited by Danielle Thompson; post-production assistance by John Osterhoudt; audio post-production by Ian Keyser.
Photos: Cao Sanchez/Polaris/Newscom; Yury Martyanov/Kommersant Photo / Polaris/Newscom; Kommersant Photo Agency/Kommersant/Newscom; Katherine Li/ZUMAPRESS/Newscom; Katherine Li/ZUMAPRESS/Newscom; Human Rights Foundation; Human Rights Foundation; Polaris/Newscom; Lan Hongguang / Xinhua News Agency/Newscom; UPPA/ZUMApress/Newscom; Abaca Press/Balkis Press/Abaca/Sipa USA/Newscom; HO/Newscom; LONG WEI/FEATURECHINA/Newscom; TOM WALKER/UPI/Newscom; Ernesto Mastrascusa/EFE/Newscom; CRISTIAN HERNANDEZ / Xinhua News Agency/Newscom; MIGUEL GUTIERREZ/EFE/Newscom; Boris Vergara / Xinhua News Agency/Newscom; Ukraine Presidency/SIPA/Newscom; MIGUEL GUTIERREZ/EFE/Newscom; Valentin Yegorshin/TASS/Newscom; Genin-Hahn-Marechal/ABACA/Newscom; Abaca Press/SalamPix/Abaca/Sipa USA/Newscom; Farnood/SIPA/Newscom; Stringer/ZUMAPRESS/Newscom; Jaap Arriens/Sipa USA/Newscom; Social Media/ZUMA press/Newscom; Rouzbeh Fouladi/ZUMA Press/Newscom; PRESIDENT.IR/UPI/Newscom; Panoramic/ZUMA Press/Newscom; April Brady/Project on Middle East Democracy, CC by 2.0, via Flickr; Depo Photos/ZUMA Press/Newscom; Saudi press Agency/UPI/Newscom; Abaca Press/Balkis Press/Abaca/Sipa USA/Newscom; State Department/Sipa USA/Newscom; Rayner Pena/dpa/picture-alliance/Newscom; Pavel Golovkin/Pool/ZUMA Press/Newscom
Footage: Hong Kong footage by Edwin Lee
Music: "Seeking Truth" by The David Roy Collective via Artlist; "Passion" by ANBR via Artlist; "Take Up Your Cross" by The David Roy Collective via Artlist; "Come Back Home" by Ardie Son via Artlist; "A Perfect Storm" by Ardie Son via Artlist; "Intrepid" by Brianna Tam via Artlist; "The New World" by Ardie Son via Artlist; "A Tender Heart" by The David Roy Collective via Artlist
The post 'The U.N. Is a Massive Club for Dictators' appeared first on Reason.com.
]]>Things Are Never So Bad That They Can't Get Worse: Inside the Collapse of Venezuela, by William Neuman, St. Martin's Press, 352 pages, $22.08
The Bolivarian Cable Train was an elevated railroad planned for a poor neighborhood in Caracas, Venezuela. It ended up running for only three-fifths of a mile and connecting to nothing.
By 2012, four years into the project, the government had spent about $440 million on it and the project was only partly finished. But the country's socialist leader, Hugo Chávez, decided that he wanted to take a ride on live television. The contractors told his handlers the train wasn't ready yet; the cable, motors, and machinery had not even been installed.
"No European engineer is going to tell the people of Venezuela what can or cannot be done," Chávez's lackey replied. So the government paid an extra million dollars for a temporary setup that might fool the TV audience. An ebullient Chávez (seemingly oblivious that the fragile, makeshift operation nearly sent him hurtling down the track during the broadcast) boasted that "this is the work of a socialist government so that the people will live better every day."
Today the train runs intermittently, the Brazilian company overseeing its construction has pleaded guilty to corruption in 12 countries, Chávez has died from cancer, and Venezuela, after more than two decades under the control of Chávez and his successor, Nicolás Maduro, has been transformed from a constitutional democracy into a brutal dictatorship. The whole cable train saga is vividly recounted in Things Are Never So Bad That They Can't Get Worse, a new book by former New York Times reporter William Neuman.
The book gives voice to a woman named Hilda Solórzano, providing a snapshot of what life is like for the Venezuelan poor. Her son's teeth turned black and fell out from lack of calcium. Her uncle and brother were murdered. Her 10-year-old daughter was kidnapped, tortured, killed, and tossed in a garbage dump. After Solórzano started a successful baking business, a relative stole the money she needed for ingredients. She lives in the same Caracas slum where the government spent around half a billion dollars on the Bolivarian Cable Train.
Neuman also introduces us to bookstore manager José Chacón, the "Last Chavista," who can't afford the mayonnaise, beef, and tomatoes he once loved. He skips meals and drops 15 pounds. But Chacón is unswayed. He reveres Chávez and is grateful that the socialist state taught him "to eat healthier." Someday, after everyone has fled the country, Neuman writes, "you'll see Chacón, sitting atop the great pile of rubble and ash, holding firm, chewing on the last lentil."
These are powerful depictions of human beings coping with daily existence in a disintegrating society. But when it comes to explaining why this oil-rich nation experienced one of the largest economic contractions in modern world history, the book is a muddle.
Neuman won't accept Chávez's word that he was a socialist. Although the Venezuelan leader used that word relentlessly to describe his policies after 2005, Neuman insists it was just a marketing ploy. "Chávez was neither a Marxist nor in any real sense, despite the rhetoric, a socialist," he writes. It was "showcialismo."
Was it? One classic definition of socialism is government control of the means of production. Chávez nationalized banks, oil companies, telecommunications, millions of acres of farmland, supermarkets, stores, the cement industry, a glass container maker, a gold-mining outfit, the steel industry, a fertilizer company, a shipping company, the electricity industry, vacation homes, and more. He imposed capital controls that put the government in charge of all foreign trade, turning Venezuela into a command-and-control economy—aside from its burgeoning black market, another typical feature of socialist societies.
In industry after industry, nationalization led to deterioration, abandonment, and collapse. In 2008, Chávez boasted that he would transform the steel giant Sidor into a "socialist company owned by the socialist state and the socialist workers." By 2019, at the Sidor plant in Guayana City, "everything was stained with rust," Neuman writes. "In all that great expanse, nothing moved." The book is filled with similar accounts.
So it was dumbfounding to read on page 82 that "Chávez made no serious effort to dismantle the market economy." The book claims he was merely continuing longstanding Venezuelan policies but painting them "a different color." Neuman is a journalist who tells powerful stories and then misinterprets his own material.
Chávez was not the first Venezuelan president to nationalize companies, fix the exchange rate, or impose price controls. But he pursued these policies on a much larger scale than his predecessors. Chávez also gutted property rights, destroyed the currency, dismantled the judiciary, corrupted the military, and undermined the separation of powers. One lesson of his reign is that when it comes to building sustainable prosperity, institutions matter more than possessing the world's largest oil reserves.
Neuman's analysis gets ridiculous in the post-2013 era, after oil profits (which plummeted because of a collapse in production and the end of the price boom) could no longer paper over the hollowed-out economy. That, Neuman writes, meant the state was "reduced to the absolute minimum." Services disappeared and crime ran rampant, which in his view shows us what happens when "private initiative can flourish, unencumbered." But "private initiative" depends on the rule of law. In 2019, the Fraser Institute's Human Freedom Index ranked Venezuela 163 out of 165 countries in the category of "Legal System and Property Rights."
Neuman sees nothing necessarily wrong with nationalizing industries; he just thinks Chávez did a bad job of it. "You can make an argument that certain industries or certain types of companies might be better under public control," he writes. But "you ought to make an effort to run them well—to invest in them and to hire competent administrators."
This argument reminds me of comedian John Oliver's 2018 claim that Venezuela's collapse is best understood as a case of "epic mismanagement," not socialism. It is certainly true that Chávez and his cronies mismanaged the businesses they seized. The country operated as a "mafia state," a concept developed by the Venezuelan journalist Moisés Naím. Writing recently in The Wall Street Journal, Naím observed that the country's socialism often served "as little more than a narrative that the powerful used to cover up their plunder of public assets." But that is true of many socialist regimes. Indeed, it is what we should expect of them.
In his 1944 book The Road to Serfdom, F. A. Hayek argued that the transition to government ownership of the means of production will invariably be spearheaded by the worst types of people. Only a "skillful demagogue," Hayek wrote, can bring the "gullible" together around "hatred of an enemy"—the United States, in Venezuela's case—and then show the "ruthlessness required" to centralize an entire economy. For the apparatchiks, "the readiness to do bad things becomes a path to promotion and power."
Neuman's claim that nationalization might make companies "better" also fails to recognize that when governments steal from citizens, they scare off capital. "Investment in Venezuela has disappeared," said Marcel Granier, the CEO of Radio Caracas Televisión (RCTV), in 2007. "Nobody is going to invest in a country where they're threatened with expropriation." Granier made those remarks during RCTV's final broadcast before Chávez forced the station off the airwaves.
Speaking of RCTV: At one point in the book, Neuman travels to a café in Berlin for an interview with former RCTV producer Andrés Izarra. Izarra, who used to serve as Chávez's minister of communications, is depicted as a pained ex-official "trying to make sense" of everything he went through.
Neuman does not inform his readers that Izarra is one of Chavismo's great villains—an ideologue who spent more than a decade excusing government crimes. He was central to the propaganda campaign defending the shutdown of RCTV on the grounds that the network had supported a coup attempt in 2002. In 2008, he defended Chávez's decision to expel Human Rights Watch from the country, accusing the organization of being a cover for planned U.S. interference. In 2010, he broke into uproarious and dismissive laughter during a CNN discussion of Venezuela's exploding murder rate. That same year, he tweeted: "Franklin Brito smells like formaldehyde." Brito was a martyred farmer who had died in a hunger strike after the Venezuelan government expropriated his land.
Izarra eventually fled Venezuela and now lives comfortably with his family in Germany. Hilda Solórzano remains stuck in a violent slum, worried about her next meal.
Socialism in Venezuela caused millions of personal tragedies, and I'm glad that Neuman brings many of them to life so vividly. But paying tribute to the victims should also mean being clear-eyed about the cause of their suffering. Otherwise, such catastrophes are apt to be repeated.
The post Former <em>New York Times</em> Reporter Denies in New Book That Hugo Chávez Was a Socialist appeared first on Reason.com.
]]>COVID-19 was disastrous for Latin America, not only because of a death rate eight times higher than in the world at large but also because the pandemic created the preconditions for a resurgence of left-wing populism that poses a threat to personal freedom and economic well-being throughout the region.
In Colombia, Gustavo Petro became the leading presidential candidate, with proposals to raise taxes, seize private land, expand entitlements, and kneecap the oil and gas industries. In Peru, the new socialist President Pedro Castillo was elected with the promise of weakening property rights and rewriting the constitution to allow for a dramatic expansion of state power. In Argentina, President Alberto Fernández has responded to rapid inflation and a shrinking economy by imposing price controls, raising taxes, and growing the regulatory state. And in Chile—although the upcoming presidential runoff will help to set the nation's political course in the coming years—after the pandemic, voters opted to redraft the nation's constitution, which could enshrine into law more government intervention in the economy while weakening private property rights.
"It's very worrisome because Chile is a country that had opted for the rule of law, a secure legal system, and economic freedoms," says Antonella Marty, a 29-year-old Argentine libertarian, the Atlas Network's Associate Director at the Center for Latin America, and the author of four books about the region. "And it has fallen victim, once again, like every country in Latin America, to these terrible ideas related to big government."
In an interview with Reason, Marty discussed the bad ideas that have caused so much poverty and instability in the region, including a tendency to view political leaders as messianic figures; the belief that the rich are rich because the poor are poor; and that the key to prosperity is protectionism.
Produced by Jim Epstein; motion graphics by Isaac Reese; graphic design by Nathalie Walker; translation assistance by María Jose Inojosa Salina.
Photos: Omar Martínez/dpa/picture-alliance/Newscom; PPI/ZUMA Press/Newscom; Vanessa Rubilar / SOPA Images/Si/Newscom; Santiago Botero/ZUMAPRESS/Newscom; SOPA Images/Pablo Rojas Madariaga / SOPA Ima/Newscom; Camilo Erasso/Newscom; Miyer Juana/Newscom; NUCLEO-FOTOGRAFIA > ANTHONY NINO/El Comercio de PERU/Newscom; Carlos Garcia Granthon/ZUMAPRESS/Newscom; Stringer/EFE/Newscom; MatÃAs Baglietto/ZUMAPRESS/Newscom; Claudio Santisteban/ZUMA Press/Newscom; Vanessa Rubilar/ZUMAPRESS/Newscom; Claudio Abarca Sandoval/ZUMAPRESS/Newscom; Claudio Abarca Sandoval/ZUMAPRESS/Newscom; Matias Basualdo/ZUMAPRESS/Newscom; Matias Basualdo/ZUMAPRESS/Newscom; Sven Simon/picture alliance / SvenSimon/Newscom; Circa Images Glasshouse Images/Newscom; Sandrine Huet / Le Pictorium/ZUMA Press/Newscom; Keith Levit/Newscom; Us Coast Guard/ZUMA Press/Newscom; ENRIQUE DE LA OSA/REUTERS/Newscom; IVAN CA AS Notimex/Newscom; LENIN NOLLY/EFE/Newscom; CLAUDIA DAUT/REUTERS/Newscom; JOSE MIGUEL GOMEZ/REUTERS/Newscom
The post How Leftist 'Saviors' Ruined Latin America appeared first on Reason.com.
]]>When Aleidy Andara was 16 weeks pregnant with twin boys, she discovered during a routine ultrasound that she had a rare disorder causing an imbalance in the distribution of nutrients and oxygen between the fetuses. If she were to give birth in a Mexican hospital, the babies' chances of survival were low.
Andara and her husband, Javier Bracho, had fled Venezuela in 2019, after being detained, beaten, and tortured for participating in protests against the Maduro regime, and they had been living in Mexico for almost a year. They were seeking political asylum from the U.S., but as part of the "Remain in Mexico" program created by the Trump administration, they were required to wait outside the country while their cases were considered.
On August 11, 2020, desperate for Andara to be treated at a U.S. hospital, the couple hired a coyote to take them across the Rio Grande on an inflatable boat. They were picked up by border patrol, and Andara's plea was granted. On September 10, she gave birth to Noah and Nathan at a hospital in Indianapolis, Indiana. Noah required two heart surgeries and was in the hospital for four months. Bracho, who had been sent back to Mexico, wasn't able to be by his wife's side and didn't meet his sons until they were half a year old.
Andara and Bracho say that their entire ordeal could have been avoided if they hadn't hired a Miami-based immigration attorney named Rolando Vazquez.
Vazquez refers to himself as the "Angel of the Border," and boasts that he's never lost an asylum case—even though asylum cases have become extremely difficult to win in recent years. His Instagram account, where Vazquez seems to find most of his business, features emotional videos of clients expressing their gratitude for all that he's done for them. With his cherubic face and gentle manner, Vazquez often appears in the videos, looking on with earnest humility.
Vazquez, who is of Mexican descent, has alluded to the fact that one day he plans to run for political office. His wife, Sabina Conteras came from Venezuela, and she has helped him find a niche working with immigrants who've been threatened, tortured, and imprisoned by the sham democracy led by Nicolás Maduro.
"He's one of the best in South Florida," Vazquez's attorney, Robert Harris, told Reason. "And I believe he's number one in the representation in immigration court of Venezuelans. Number one!"
Andara and Bracho are now part of a community of Vazquez's ex-clients who are organizing to get him disbarred. They've come together in two WhatsApp groups, with about 60 total members, to commiserate about Vazquez's alleged misdeeds and prepare formal complaints to submit to the Florida Bar. The two groups also have a handful of volunteers who are helping with Spanish to English translation.
Over the past few weeks, they've submitted 15 complaints, and they're planning to introduce 10 more this week. The Florida Bar currently has six open cases against Vazquez, according to a spokesperson, all of which have advanced to the second stage in its review process. The complaints aren't publicly available, but several former clients shared their submissions with Reason, which include copies of email and text correspondences. They allege that Vazquez and his staff "scammed" them by doing little or nothing to advance the cases he was paid to take on and that he didn't answer or return their calls. Several ex-clients are also accusing Contreras, who serves as the firm's office manager and senior paralegal, of verbally abusing them and demanding additional payment, even though the terms of their original contracts hadn't been fulfilled.
"These are claims by customers who didn't receive a good result" so they "attack a lawyer for his confidence or his professionalism because they wanted their case to go better," attorney Brian Barakat, told Reason. Barakat, who is representing Vazquez in his dealings with the Florida Bar, says that he has reviewed two of the claims so far, both of which were rejected. "I fully expect all of the claims to be dismissed," Barakat said.
In testimony that Andara submitted to the Bar, she described her experience working with Vazquez as "awful and traumatic" asking "kindly" for "justice to be made."She alleges that Vazquez missed a crucial hearing that took place over the phone, which led to a two-month postponement. In the meantime, the immigration courts closed down because of COVID-19, putting Andara, Bracho, and tens of thousands of other asylum claimants in limbo. After Andara became pregnant and needed emergency medical attention, she says that Vazquez declined to help her gain permission to enter the United States.
According to emails that the couple shared with Reason, Andara and Bracho paid Vazquez $4,000 to represent them, but after the twins were born, Sabina Contreras demanded $750 more to continue representing Andara, and an additional $2,500 to continue representing Bracho, on the grounds that their decision to cross the border had changed the terms of their cases. According to Andara's testimony submitted to the Florida Bar, Contreras was "verbally abusive…to the point that she even told me in that call that she wished [for] my babies' death."
"You act as if the additional work required by your illegal entry will be done for free," Contreras wrote in an email Andara shared with Reason. "I'll remind you again that the judge and lawyer for ICE are being informed of all your lies and malicious accusations," she wrote. When she told Contreras she would find a different lawyer, Andara says that Contreras attempted to charge them thousands more to drop their case and to return their paperwork.
U.S. immigration law has long been rife with attorneys who take money from clients and then do little to advance their cases.
"It's very easy to make a lot of money losing asylum cases for $10,000 each and never really face any consequences," says immigration attorney Brian Hoffman, who's the executive director of the nonprofit Ohio Center for Strategic Immigration Litigation & Outreach. "This problem has been extremely severe and endemic for as long as I can remember."
Quality legal representation is expensive because litigating an immigration case requires navigating a mountain of red tape and the rules are constantly changing, so immigrants like Andara become easy targets for discount practitioners who promise big but never deliver.
Vazquez and Contreras declined our interview request, but they did connect us with Harris, another one of their attorneys, who maintained that the charges against his clients are fabricated. "To the extent that people are saying that Mr. Vasquez and people associated with this firm are, quote, 'abandoning them or scamming them,' I think is beyond the pale," Harris said.
"Sometimes these people are very belligerent and they just don't understand," said Harris, "particularly when they come from countries like Venezuela, Ecuador, and the like. And many times they don't understand the processes here in the United States, and when they don't get the results that they were looking for, they demand that the money be paid back."
Several of Vazquez's accusers say they were too frightened to speak out until the investigative journalist Patricia Poleo, a winner of the prestigious King of Spain Journalism Award, and a Venezuelan political asylee herself, set out to expose him. Over the past month, she has been sharing video testimony from Vazquez's former clients on her nightly show, Agárrate.
On November 10, Vazquez sued Poleo in Miami Civil Court, along with four of his former clients who appeared on her show. The lawsuit denies all of the allegations, and asserts that by attacking Vazquez, Poleo engaged in "unfair business practices" by trying to destroy his law practice to benefit other immigration lawyers who advertise on her show. "Poleo kept secret from the consumers her financial interest to destroy Plaintiffs," the complaint states, "so that she can get clients and divert them to her business partners."
Harris told Reason that his client is planning to amend the complaint to also charge Poleo with defamation. "I'm a First Amendment guy, I get it," Harris told Reason. "But she's going beyond."
In a since-deleted Instagram video (which Poleo captured and has been running on her nightly political show), Vazquez and Contreras hurled insults at Poleo. "You're not a person of God—you're a bitch," Contreras shouted.
Vazquez claims to be a prominent opponent of the Venezuelan government. "The Chavistas hate me because I won't help them," he said. "Patricia is a closeted Chavista," shouted Contreras, "and it pains her that Rolando is helping the detained by rescuing them from the claws of the Maduro regime." The lawsuit also asserts that Poleo's animus towards Vazquez is driven by her "hatred" of his political views.
It's a surprising claim to make about Patricia Poleo, who was exposing Hugo Chávez's efforts to undermine Venezuela's constitutional democracy back when he was still a darling of the left. In 2004, as editorial director of the newspaper El Nuevo País, Poleo was accused of "instigating rebellion" for sharing a video that demonstrated that Cubans had infiltrated the Venezuelan National Guard, which is one of several instances in which her reporting embarrassed the socialist government. The same year, her investigation of the suspicious killing of a Venezuelan prosecutor led the secret police to search her residence and call her before a military court. In 2005, when the government issued a warrant for her arrest in that case, Poleo escaped to the U.S. while hidden away on a boat and was granted asylum. The Venezuelan government responded by putting out a notice for her to be detained and extradited through INTERPOL, and Poleo was arrested in 2010 at an airport in Peru and held for several hours. The matter was dropped when the agency accepted that the attempt to prosecute Poleo was politically motivated.
The Chávez and Maduro regimes for years have used bogus defamation lawsuits, among other tactics, to silence journalists and shutter newspapers critical of the government. In 2004, Poleo herself was sued for defamation by Jesse Chacón, Minister of Interior and Justice under Chávez, for embarrassing him in the pages of El Nuevo País. She was stripped of her political rights, including her right to vote, and was sentenced to a six-month term in prison, though she didn't end up serving any time.
After relocating to Miami, Poleo continued her hard-nosed reporting on the Venezuelan government and its network of corruption. In 2015, she published a story in the Doral News alleging that the Miami businessman Gianfranco Rondón served as the "bag man" for Diosdado Cabello, the second most powerful political figure in Venezuela, who is wanted by the U.S. Department of State on allegations of "corrupt and violent narco-terrorism." After the story appeared, Rondon sued Poleo and her boss at the paper, Gianfranco Napolitano, for defamation and racketeering, accusing Napolitano of trying to extort him for $5 million in exchange for dropping the story. The charges were dismissed.
In a recent Instagram live video, Poleo mocked Vazquez's lawsuit and warmly greeted her fans, while taking enthusiastic bites of a ham and cheese sandwich. She assured her audience that if she was willing to risk her freedom by speaking truth to the Chávez regime, she wasn't about to be silenced by a Miami immigration attorney. "There isn't a judge in the U.S. who will demand that I stay silent because the First Amendment is freedom of speech," she said while smiling and waving the legal complaint in her hand.
Barakat, Vazquez's attorney before the Florida Bar, claimed in an interview with Reason that Poleo is trying to "extort" Vazquez, but when pressed, said that he has no evidence of her receiving or requesting payment from Vazquez or anyone else. He pointed to Rondón's defamation and racketeering suit, claiming that it shows "a pattern of somebody who deliberately attempts to ruin the reputation of people that she targets in an effort to either benefit herself or benefit others."
When I asked Poleo about the allegation of "extortion," she said she would respond publicly on her show that evening. In her opening monologue, Poleo reflected back on the Gianfranco Rondón lawsuit cited by Barakat. Her reporting, she said, led the FBI to freeze his assets, and Rondón fled to Russia. "My 'pattern' of behavior is denouncing thieves, criminals, corrupt actors, and Chavistas," Poleo said, "and I do it with dignity and a lot of pride."
Vazquez and her attorneys have no substantive response to the allegations, she said, so their only defense is to attack her. "I haven't made a single dollar from this," in contrast to Barakat, "who is being paid with money that [Vazquez and Contreras] took from immigrants."
Barakat also told Reason that Vazquez's ex-clients are being manipulated by Poleo. "Whether they believe the facts are true or whether they're making them up," he told Reason, "I'm suggesting that they're all being coached by Ms. Poleo."
Those ex-clients have congregated on WhatsApp, where they message each other at all hours of the night, strategize, share alleged horror stories, and offer encouragement and emotional support. One of the groups is called Desenmascarando a Rolando, which means "unmasking Rolando," and its members have taken to referring to the self-described "Angel of the Border" as "The Devil of the Border," or Robando, which means "robbing" and is a play on his first name, "Rolando." Poleo, who is an active member of the group, said she makes no secret of the fact that she's assisting in the effort to get Vazquez disbarred. "I will advise them, I will support them, I will help them, because on top of being a journalist, I'm a Venezuelan," she told her audience.
If the allegations against Vazquez are true, how does he obtain the glowing video testimonies that populate his Instagram feed?
The case of Neleidy Aguilar may provide a clue. She appeared in a video that Vazquez shared on his feed testifying that he's "a very good lawyer and very accomplished…I recommend him to the entire world!"
That video was captured during Aguilar's initial consultation with Vazquez on July 31, 2020, in Orlando. Aguilar says that although she hadn't worked with him yet, she agreed to record an endorsement because their dealings had been positive up to that point. "I said what I really believed to be true at that moment," she told Reason.
Aguilar had been forced to flee Venezuela when she and her husband, Leonardo González, acted as whistleblowers in exposing a corrupt judge. The local police responded by kidnapping and beating them. Aguilar, who was pregnant at the time, says she suffered a placental detachment from being punched in the stomach. González nearly died from his injuries.
Upon entering the U.S., González was taken to the Eden Detention Center in Texas and held for 7 months, while Aguilar and her 10-year-old son, Sebastian, were allowed into the country. A severe asthmatic, González nearly died from lack of medical attention, and he missed the birth of their baby girl, Paula.
Aguilar alleges that Vazquez did nothing to advance her case. He never registered with the court as her attorney and never submitted her petition for asylum. "Mrs. Neleidy, I told you that your case is not a priority, and you are not allowed to call," Contreras told her over the phone, according to the complaint that Aguilar filed with the Florida Bar. "If you call again I will charge you $300."
She hired a different lawyer.
Another alleged victim is Annia Marquez, who also appeared in an Instagram video endorsing Vazquez. She later appeared on Poleo's show speaking out against him. Marquez is one of the four former clients who Vazquez is suing for defamation.
Marquez fled Venezuela because of political persecution—she was in hiding from the secret police for more than a year. When she arrived in the U.S., Marquez was taken to Eloy Detention Center in Arizona, where she spent 10 months incarcerated. She says she was held in a 7-by-10-foot cell, with one 20-minute break per day. She received one meal daily, consisting of a ham sandwich and peanut butter cookie, although she says she rarely felt hungry because she was overcome with anxiety.
Marquez says that she would have been released from detention much earlier if Vazquez, who her sister found on Instagram, hadn't failed to appear at three of her hearings in a row, leading the judge in her case to issue a series of monthlong postponements. The attorney Harris told Reason: "I think that [Mr. Vazquez] showed up at all the hearings that he had to show up for." (Marquez shared court records with Reason that support her account.)
Vazquez did show up at the fourth hearing, and Marquez had to pay his travel expenses amounting to about $6,000, which included a first-class plane ticket, she says.
After Marquez was granted asylum and moved to Miami, Contreras and Vazquez invited her to come work for them, and she accepted.
"When one leaves a detention center like that, they're very vulnerable," Marquez told Reason, explaining why she would accept a job for someone who she accuses of so badly mishandling her case. Shortly after starting the job, they asked her to record a video for social media recommending their services.
"I felt like I couldn't say no," Marquez said. She alleged that during her month and a half working in Vazquez's law office, she saw him commit malpractice in more than 20 cases. She is planning to submit testimony of what she witnessed to the Florida Bar.
Today Marquez works for a shipping company in Miami and is paying back the money she borrowed from her godfather to pay Vazquez. Her three kids, ages 7, 17, and 19, have been living alone in Venezuela since her mother died of COVID-19 two months ago.
Geraldine Mora is another of Vazquez's alleged victims who has appeared on Poleo's show. She is the subject of a feature-length documentary produced by Reason, which I'm co-directing in collaboration with the independent filmmaker Claudia Murray, that chronicles the economic and political collapse of Venezuela.
Mora fled the country after her father, Carlos, was imprisoned and tortured by the Maduro regime. Mora, her husband, Brian, and son, David, became Vazquez's clients while applying for political asylum and living on the Mexican border.
Vazquez charged Mora $6,000, with a $2,500 down payment followed by monthly installments paid out over 10 months. At the beginning of February 2020, two days before Mora's first scheduled hearing in Texas, the family's first monthly installment of $350 was three days past due because they were struggling to come up with the money.
Mora's mother, Nelsy Núñez, alleges that Contreras called her to demand that she pay the remaining $3,500 within two hours or Vazquez wouldn't show up at the upcoming hearing and wouldn't submit her asylum application to the court. I was in Miami filming with the Mora family as they navigated this crisis, capturing a tearful interview with Núñez in a Miami parking lot as the family considered what to do.
Barakat declined to comment on the specifics of Mora's case, but told Reason that "unlike what Ms. Poleo says in her reporting, you don't have to work if you're not paid."
Hoffman, who has no direct knowledge of Vazquez's handling of the Mora case, told Reason that demanding payment in exchange for submitting documentation violates an attorney's basic rules of conduct. If you're going to withdraw your services, you're required "to do it with enough time in advance so that the client can make other arrangements."
"Saying, 'I'm not going to do this unless you pay me right now,' to me that sounds like extortion," Hoffman says.
Mora and Conteras worked out an arrangement, but Vazquez didn't show up at the February 3 hearing regardless, according to Mora, and the judge told her that there was no record of her paperwork and no registered attorney on file. She also alleges that Vazquez went long stretches without returning her calls, while Contreras continued to verbally harass her.
Meanwhile, Vazquez dropped her case. Núñez says that on top of the $6,000 legal fee, the family spent $2,800 to get documents supporting their case translated and notarized at Contreras' request. With the exception of one form that was returned, Mora says his office still has all of the original documents and is ignoring the family's pleas to return them. (Reason has reviewed text messages that support this claim.)
Vazquez' $6,000 fee was a heavy burden for the Mora family, but considering the obstacles involved in winning, it's a small amount of money.
"The U.S. government has created an asylum system where it's almost impossible to win," Hoffman told Reason. "So if you really want to take on an asylum case and litigate it well, [often] the person who's applying for asylum just doesn't have the financial resources to pay for that amount of time."
Of the 71,071 asylum claims assigned to the "Remain in Mexico" program, 32,234 applications have been denied, 25,684 are still pending, and just 740 individuals, or one percent of applicants, have been granted asylum or asylum-like protection in the U.S. And just 10 percent were represented by attorneys during their proceedings.
Hoffman, whose work is funded by charitable donations, cited the case of one asylum applicant from El Salvador who he's representing. "We've probably gotten a quarter of a million dollars worth of free legal work over the last four years with this guy, and the case still is probably going to go on for two more years."
On Thanksgiving, members of the WhatsApp group "Unmasking Rolando" shared pictures of their turkeys, and Poleo published a special episode of her show featuring members of this "new family that I acquired at the end of the year—a family of immigrants who have been through moments that are terrible, tragic, and very difficult."
Several ex-Vazquez clients submitted videos expressing what they're grateful for, including Annia Marquez, who said she was thankful to the U.S. "for opening its doors for me, allowing me to develop as a person, to live in freedom, so as to not feel persecuted." With Noah and Nathan on their laps, Aleidy Andara and Javier Bracho expressed their thanks "to this beautiful country" that "gave us a quality of life for our sons, for the opportunity not to be persecuted, and to grow as a family."
And Poleo herself expressed thanks to "the United States—for giving me the freedom to have an independent platform in which I'm able to give a voice to these immigrants."
Translation assistance by María Jose Inojosa Salina.
The post Venezuelan Immigrants and the Lawyer Who Let Them Down appeared first on Reason.com.
]]>"Blackstone is one of the largest landlords in [the] world," tweeted the New York tenant advocacy group Housing Justice for All in May. "We know they're rich enough to #CancelRent, and we're going to make them."
And then there's Chao Huai Gao, an immigrant from Zhengzhou, China. He owns a modest two-story house in Queens and isn't rich enough to forgo rental income. He tells Reason that the emotional distress of having an occupant who isn't paying rent and who he can't evict has him contemplating "jumping off of a building."
Gao came to the U.S. in 1999, working in New York restaurants and nail salons and doing interior renovation. "I haven't taken a day off since I came to America," he says. In 2017, he and his wife, who is a caretaker, made a down payment on a house as an investment property, supplementing their savings with a loan from their family in China. To cover their mortgage, they rented out both floors and moved into a cheap studio apartment nearby with their two young daughters.
In March 2020, the college students sharing the second-floor apartment gave notice that they were moving out. After the apartment was vacated, a neighbor alerted Gao that he noticed that the lights were on at night. Soon after, Gao discovered that one of his former tenants had given her keys to a friend who had moved in without permission.
Gao has never met the squatter now living in his house and is afraid to contact this person out of fear that he'll be sued for harassment. The squatter, who is a dropout from an elite private university, has never offered to pay rent. (Reason was unable to reach him for comment, so we're not including his name in this story.)
Under New York state law, because the squatter has been in the apartment for more than 30 days, retaking possession will require a court order—but Gao can't obtain a court order, because New York's housing courts have been mostly closed during the pandemic. Gao tells Reason that he's in a state of personal crisis, hemorrhaging money, and consumed with worry about losing his home.
Gao is part of an association of about 200 Chinese immigrant landlords in New York City with tenants who have stopped paying rent. They're speaking out about the impact of the government's decision to temporarily halt evictions—a policy championed by the #CancelRent movement. On September 4, 2020, the Centers for Disease Control and Prevention (CDC) issued a national eviction moratorium that is currently set to expire at the end of March. New York is one of many states that has also passed a series of administrative orders and temporary laws halting evictions on top of the CDC order.
Although technically these measures are intended to help tenants directly impacted by the pandemic, in practice they've brought New York's eviction proceedings to a complete halt. From mid-March through the end of November, in a typical year, there would have been about 14,000 evictions in New York City. In 2020, over this same period, there were just 2. New York now has a backlog of 200,000 eviction cases that pre-date COVID-19.
"The pandemic is proving…that we need to advocate vigorously for projects and policy proposals that get us closer to a universal right to housing," says Cea Weaver, the campaign coordinator for Housing Justice For All. "We need to sort of think about the role that exclusion and profit, which are the sort of characteristics of the private property market, have played and think about different systems and structures that we could put into place that would help more people be housed." Weaver, who's a rising star in New York political circles—she was recently nominated to join the city's powerful planning commission—describes the relationship between landlords and tenants as "exploitative."
But denying landlords legal recourse to enforce their contracts is more likely to exacerbate housing shortages. In New York, the moratorium is reminiscent of policies of the 1960s and '70s that also undermined private contracts between landlords and tenants, driving owners to abandon their buildings and leave entire neighborhoods for dead.
One problem with the eviction moratorium is that, in practice, it doesn't only impact those in need. It is making widespread abuse possible, in which tenants with the means to pay their rent are taking advantage of the situation to live in their apartments at no cost.
Take Won, a Chinese immigrant landlord who asked that we only use her last name. She owns a two-family house in Queens and works as a home health aide caring for an elderly couple. Her husband is a waiter at a restaurant in Manhattan's Chinatown, though he's barely been able to work since the pandemic began. Won says her tenant owes her more than $80,000 in back rent. "I just want the government to open the court," she tells Reason.
Won says that if her tenants were unemployed or financially distressed, she would be willing to work with them. "These people, no money, I can help. Pay later," she says. "But these people, no. The people have money."
Reason wasn't able to reach Won's tenants for comment, so we're not using their names in this story. But we did find that the father in the family is currently employed in the construction industry, and that the tenants are renting a second apartment in a house in Queens Village, where they've also stopped paying rent and owe $12,000 to the couple that owns the house, who are also Chinese immigrants.
Many of the working-class landlords in Gao's group say they're in danger of losing everything. The government has backed them into a situation in which they have no choice but to maintain their buildings at a loss.
One Chinese immigrant landlord, who works as a hairstylist and asked to remain anonymous, tells Reason that she used money that her mother had saved, over the course of 20 years working seven days a week in a nail salon, to make a down payment on a house in Queens in 2016. She fears that all of that hard work will now go to benefit her tenant, who has stopped paying rent and who she says is mentally unstable. "We just want to take back the house we bought ourselves. Is that wrong?" she tells Reason through an interpreter.
This group has come together, mostly in WeChat groups, where they commiserate and strategize. At a protest in October, a few hundred landlords—most of them immigrants—huddled under umbrellas outside New York City Hall, holding signs and chanting, "Fair laws for landlords!"
According to Michael Wang, a Chinese immigrant and businessman who organized the recent protests, foreign-born New Yorkers are more likely to buy property for cultural reasons. "We think it's relatively less risky to put money into property," he tells Reason through an interpreter. "Investing in property is a relatively less risky and easier investment for people who just came to the U.S. with limited English." For Gao and many immigrant landlords, owning property turned out not to be an easy investment after all.
Gao says his squatter is getting away with "robbery." Weaver calls that statement "deeply misleading." Weaver, who the real estate magazine The Real Deal dubbed the "tenant movement's giant killer" for her behind-the-scenes role in the passage of a 2019 state law strengthening New York's rent regulation laws, says the eviction moratorium is just a "pause" because it doesn't mean that "the landlord can never collect the rent."
In practice, though, collecting rent money will be extraordinarily difficult after the moratorium is lifted. The case backlog in housing court could mean that landlords will wait years for their cases to be heard, and recovering large sums of money is difficult under the best of circumstances. Nativ Winiarsky, a New York attorney specializing in landlord-tenant litigation, tells Reason in an email that he sees "little chance that landlords will be able to fully recover the significant arrears that will have accumulated."
"Those are part of the costs of being a landlord," Weaver responds.
Owners say that having almost no legal recourse when their tenants don't pay their rent was not part of the deal when investing in real estate. Landlord groups around the country have sued on the grounds that halting the judicial process that allows them to retake their property violates their due process rights, and that the national moratorium is an unconstitutional expansion of federal power.
One Chinese immigrant landlord, who asked to remain anonymous, reports that she worked as a housekeeper at a hotel that recently closed down. She says her tenant stopped paying rent over the summer and was demanding a $12,000 cash payment to move out.
"I worked in the United States for a whole 29 years. I worked to the point that my waist needs surgery. I can't even sell my house." she tells Reason through an interpreter. "Now my waist hurts so much. I'm jobless….I really can't sleep at night. I really don't know how to live anymore."
The media has predicted a huge "wave of evictions" (see here, here, here, and here) nationally if the moratoria are lifted. In New York, tenant activists dragged furniture into the streets at a protest in October to dramatize the potential impact.
But the soaring rental vacancy rate has made landlords more willing than ever to communicate with their tenants and offer rent reductions. Winiarsky says that the "large majority" of his "clients are doing everything they can to work with their tenants" because they recognize that "everyone is hurting." Winiarsky says his office is "inundated right now drafting deferment and rent reduction agreements."
In New York, before the pandemic, only about 1 in 10 eviction filings ended in a city marshall or sheriff physically removing a tenant from a dwelling. But because there existed a process through which landlords could enforce their contracts and get tenants who weren't paying their rent to come to the negotiating table or move out, they had legal recourse.
Some tenants may be purposely targeting immigrant landlords because they may deem them less equipped to navigate New York housing law, but they're not the only ones who are being taken advantage of. Sharon Redhead, who owns a building in Brooklyn, told the New York Daily News that some of her tenants who are out of work have kept up with their rent, while others with jobs "aren't paying any rent at all." Clarence Hamer, according to the Daily News, is the owner of a two-family home with a tenant who isn't paying rent but is subletting rooms at a profit.
The New York Post told the story of 88-year-old Harlem landlord David Howson, who suffers from Alzheimer's disease and has a tenant who hasn't paid rent since 2016. "We are completely destitute," Howson's daughter told the Post.
Weaver says tenants taking advantage of the eviction moratorium not to pay their rent are "aberrations," and she cites recent census survey data showing that renters are more financially distressed than those who own their own homes. Newspapers have recounted the stories of many tenants in crisis, such as Diba Gaye, whose wife recently died of heart disease and who lost his job stocking groceries. "I don't want to lose my house too," he told The New York Times. There's also Halima Abdul-Wahhab, who says that she and her two children are at risk of homelessness. "I'm at a job where I don't make that much, but I just try to maintain as much as I can," she said. "Rent is not the only thing that has to be paid every month."
But these individuals can be helped through the direct aid that the government has been providing since the early days of the pandemic in the form of interest-free loans, stimulus checks, and a substantial increase in unemployment benefits. Cities and states have also spent billions on rent relief programs.
These programs bring their own problems and tradeoffs, and those funded through philanthropy have proven more effective than government-financed ones. But if tenants are receiving the aid they need, owners should still be able to turn to the courts if they don't pay their rent.
Weaver says this approach fails to help populations that are hard to reach with direct aid, such as undocumented immigrants. Her organization helped to draft a proposed state law under which the government would cover missing rent, no matter the reason tenants hadn't paid, and with strings attached for landlords who accept the money, such as a provision requiring that they freeze rents for a period of 5 years. She said this approach would "help to get the money out the fastest."
But there's another reason Weaver and her political allies want to make landlords dependent on federal subsidies. Emergency policies enacted in times of crisis are prone to becoming permanent, which some members of the #CancelRent movement say is the goal.
Weaver would like to see the entire real estate industry restructured in a model akin to public housing—but for rich people too.
"In public housing, people are paying 30 percent of their income," Weaver told Reason. "What I am envisioning is a world in which housing is owned by a collective and people are paying 30 percent of their income in order to live in their housing. If your income is zero, you pay zero. If your income is $500,000 a year, you're paying 30 percent of that."
When asked how the federal government could afford such a program, Weaver told Reason that it could "print" the money.
"America is beautiful," Gao, the Queens landlord with a squatter in his second-floor apartment, tells Reason. "But [when] nobody pay[s] rent, [it] is not beautiful."
When Gao, and other immigrant landlords, decided to come to the United States to create a better life, this is not the American dream they thought they were buying into.
Photo Credits: Erik McGregor/Sipa USA/Newscom; Erik McGregor/Sipa USA/Newscom; Erik McGregor/Sipa USA/Newscom; Brian Branch Price/ZUMA Press/Newscom; Erik McGregor/Sipa USA/Newscom; Brian Branch Price/ZUMA Press/Newscom; Erik McGregor/Sipa USA/Newscom; Erik McGregor/Sipa USA/Newscom; Erik McGregor/Sipa USA/Newscom; Erik McGregor/Sipa USA/Newscom; Erik McGregor/Sipa USA/Newscom; Brian Branch Price/ZUMA Press/Newscom; Brian Branch Price/ZUMA Press/Newscom; Brian Branch Price/ZUMA Press/Newscom; 1354732 © Jimmy Lopes | Dreamstime.com;ID 3180810 © Photo168 | Dreamstime.com; SMXRF/starmaxinc.com/Newscom; Erik McGregor/Sipa USA/Newscom; Erik McGregor/Sipa USA/Newscom
Footage Credit: Damian Bartolacci/Pond5
Music Credits: "January," by Kai Engel, Attribution-NonCommercial 4.0 International (CC BY-NC 4.0).
Written and produced by Jim Epstein; graphics by Isaac Reese; translation by Shuang Li; audio post-production by Ian Keyser
The post The Victims of the Eviction Moratorium appeared first on Reason.com.
]]>"Information is entering through the pores" of Cuban society, journalist Yoani Sánchez tells Reason, a process that is causing the official narrative of the country's dictatorship "to rupture."
Sánchez, the founder of 14ymedio, Cuba's first independent digital media outlet, gained international acclaim in the mid-2000s for her vivid accounts of life under a communist dictatorship—and for her courage in flouting government censorship. "When I started my blog," she tells Reason, "it was like an exorcism of something that was inside of me."
"[U]nder the nose of a regime that has never tolerated dissent, Sánchez has practiced what paper-bound journalists in her country cannot: freedom of speech," noted Time magazine in 2008, listing her as one of the 100 most influential people in the world that year. "The pieces she has been clandestinely sending out from Internet cafés—while posing as a tourist—are often funny, elegantly written and poignant."
The 45-year-old writer and podcaster, who built her first computer in 1994, is also an avid technologist. In her speeches and public appearances, Sánchez often reflects on how the personal computer, the internet, USB flash drives, and Twitter and other digital platforms have empowered the Cuban people.
Sánchez sat down with Reason in February of 2020 in Guatemala City at a conference organized by the Reason Foundation, the organization that publishes this website. Shortly after she returned to Cuba, the government closed the borders because of the COVID-19 pandemic, which has led to an increase in the harassment and imprisonment of political dissidents.
Interview by Jim Epstein. Camera by Pablo Gordillo. Motion graphics by Lex Villena.
Music Credits: Cobalt 2 by Tom Quick, Feel It by Stoic
Photo Credits: Desmond Boylan/Reuters/Newscom, 2004 Fred Ward Black Star Newscom, ID 8881376© Fotogotrek Dreamstime.com, ID 7823781© Neiromobile Dreamstime.com, ID 59252838© Andrey Anishchenko Dreamstime, ID 61647460© Kiosea39 Dreamstime.com, ID 116754717© Jaroslav Šimček Dreamstime.com, ID 122874465© Blue Ring Education Pte Ltd Dreamstime.com, ID 111200266© Adamico Dreamstime.com, ID 159605085© Sabelskaya Dreamstime, Lenin Nolly/Notimex/Newscom, Joachim Kampe, Nadia Isakova World Pictures Photoshot Newscom, Photo 116971118 © Dmitry Naumov dreamstime.com, Photo 116790652 © Filindmitriy86 Dreamstime.com, Photo 87873264 © Olexii Biriukov Dreamstime.com, Photo 49809788 © Alanpoulson Dreamstime.com, Walter Bibikow DanitaDelimont Danita Delimont, ID 144775597© Siarhei Nosyreu Dreamstime.com, ID 149385350© Gustavo Munoz Dreamstime.com, ID 137146791© Fondue Dreamstime.com, ID 101953047© Lapandr Dreamstime.com, ID 142267475© Ilkin Guliyev Dreamstime.com, ID 101848367© Vadymvdrobot Dreamstime.com, LHCU
The post The Fracturing of Communist Cuba's Propaganda Machine appeared first on Reason.com.
]]>"It's that time of year again" doesn't land quite right this year. It is, in fact, that time of year again—the time for religious festivals and giving thanks, for peppermint candy and evergreen needles, for wassailing and hall-decking, and for the sounds of Mariah Carey's Christmas renditions playing on repeat. (In the spirit of honesty, I admit I am known to play a certain Carey holiday classic on loop in the Reason offices no matter the time of year, but I digress.)
It's also the time for gift-giving!
But this year, is, uh, a bit different. The COVID-19 pandemic has wreaked havoc on 2020, and I'm sure I'm not the only one who hopes we never again have a time of year like this one. This is my grown-up Christmas list.
Yet the world keeps on turning in these unorthodox times, and you still have to find a way to get that shopping done—even if you're in, say, California, as I am, where stay-at-home restrictions have made patronizing your favorite businesses a bit difficult. Take heart! The Reason team has you covered with a slew of creative and personality-driven suggestions to make your present-hunting a bit easier in these trying times.
I would be remiss if I didn't recommend A Glorious Liberty: Frederick Douglass and the Fight for an Antislavery Constitution, a new book by Reason's own Damon Root about the man who, perhaps more than anyone, insisted that the U.S. live up to its founding principles. "Root and Douglass, like root beer and ice cream, are an irresistible American combination," writes The Washington Post's George Will in a review. Yum.
Also at the very top of everyone's lists should be Ten Global Trends Every Smart Person Should Know: And Many Others You Will Find Interesting by Reason's Ron Bailey and the Cato Institute's Marian Tupy. It makes a highly compelling case that the world is, in fact, getting better, which, according to the data, will surprise the vast majority of America. (Shocking!) Don't just take their word for it, though—they've brought the receipts. The poverty rate? It's plummeted. Life expectancy? It's more than doubled over the last century. Natural resources? There's more of them, and they cost less. After the year we've all had, we could use some good news. This book is good news.
And for any number of miscellaneous ideas, check out the weekly recommendations from The Reason Roundtable, our flagship podcast where editors sign off with their favorite cultural items of the moment, whether it be a novel, a video game, a cocktail-infused newsletter, or, in last week's case, Reason magazine itself. (We sell yearly gift subscriptions for less than $20, which is well worth the cost of converting a friend!)
As for a personal recommendation, I love to give experiences—Celine Dion tickets, a trip to the ballet, a bird-watching cruise, oh my!—but those are likely moot for the next several months. The birds will have to wait. So might I suggest you do one better and donate an experience in the name of that friend or family member who has a soft spot for criminal justice reform? There's the Pawsitive Change Prison Program courtesy of Marley's Mutts Dog Rescue, a group that hopes to reduce recidivism by teaching inmates how to train at-risk shelter pups over a rigorous 14-week curriculum. For the more religious giftee, you can send your dollars to a number of initiatives at Prison Fellowship; my favorite is the Prison Fellowship Academy, which employs a personalized approach to tackling the root cause of an inmate's criminal past so that they'll avoid a criminal future. And if you're looking for a family bonding activity, pick out some prison pen pals and send some holiday cheer via snail mail.
Now, without further ado, here are your Reason writers' and editors' carefully honed and versatile picks for spreading some holiday cheer. Glad tidings! —Billy Binion, Assistant Editor
For the budding scientist (or the hardheaded science denier):
What is science? A serviceable definition can be summed up as follows: It is the pursuit of knowledge and understanding of the natural and social world using a systematic, evidence-based methodology.
Scottish psychologist Stuart Ritchie persuasively and urgently makes that case in Science Fictions: How Fraud, Bias, Negligence, and Hype Undermine the Search for Truth: "Science, the discipline in which we should find the harshest skepticism, the most pin-point rationality, and the hardest-headed empiricism," he writes, "has become home to a dizzying array of incompetence, delusion, lies, and self-deception. In the process, the central purpose of science—to find our way ever closer to truth—is being undermined."
That might sound familiar right about now as we navigate a pandemic where swaths of people disagree on the facts. Fortunately, Ritchie outlines the necessary steps to take in order to restore trust in science by, among other things, encouraging replication, applying anti-plagiarism algorithms, requiring open access to all data, and reducing the incentives to overhype findings. —Ron Bailey, Science Correspondent
For the picky (yet practical!) coffee snob:
Getting through 2020 has required a lot of caffeine, but it's also changed how I've prioritized the coffee-making experience. Side trips to the office coffeemaker or the café down the block have been limited. Using a pour-over kit or French press might be nice for that first cup, but there's no way I'm going through that whole process five or six times before 3 p.m.
And yet efficiently making a large enough volume of coffee to last all day presents other problems. How do you keep it warm without being left with burnt dregs, the unavoidable result of a glass carafe sitting on a warming plate for hours?
The Hamilton Beach BrewStation has been the answer for me. It makes 12 cups at a time—enough to keep even the most hardened addict set for a few hours—and has an internal reservoir with a built-in heating element to limit burning. The last cup won't taste exactly like the first sip, but then again, nothing ever does.
And it costs less than what you used to spend on Starbucks in a couple of weeks. Once the BrewStation pays for itself, use the savings to order up some bags of fresh beans from a local coffee shop (or someplace halfway across the country), get out your Reason mug, and offer cheers to the globe-spanning supply chains that make it all possible. —Eric Boehm, Reporter
For the seasoned gamer:
Euphoria is just one emotion you'll feel when playing this ultra-complex, post-apocalyptic-themed, worker-placement board game from Stonemaier Games.
Between two to six players compete to "build a better dystopia" by collecting resources and artifacts in a Brave New World-like landscape, all while trying to keep their workers' morale high and their intelligence low (lest they get dissatisfied with their station in this totalitarian future).
The gameplay itself resembles other worker-placement games like Settlers of Catan, though it comes with a lot more rules, pieces, and ways to win. That occasionally frustrating level of detail creates a steep learning curve for beginners, but also a tremendous amount of replay value for veteran players trying to find the optimal path to victory.
Euphoria's strategic depth and bizarre—yet charming!—artwork help justify the higher-than-average list price, making it the perfect gift for that special board game nerd in your life. —Christian Britschgi, Associate Editor
For the fashionable libertarian:
I bought one of these
scarves at the Free State Project's Liberty Forum last February and have had so many people ask where I got it. It's a really nice weight and texture and has held up well with washing. Plus, it can double as a face covering, with some libertarian flair, in a pinch!"No one will step on THIS snake while you wear it," reads the product description. Can confirm. —Elizabeth Nolan Brown, Senior Editor
For the self-care queen (or king):
Libertarians, it's time to take a break. It's been a hard year for everyone and it looks like the discourse will only get worse. So after reading some Reason stories for the day, treat yourself or someone you love to the gift of self-care.
Start with a blessed bar of soap from Monastery Creations. This ain't your momma's bar of soap! It's actually your sister's. Well, a Catholic sister's, created entirely by the Benedictine Sisters of Perpetual Adoration. I personally recommend the sage meadow bar, which has worked wonders for my face. Each batch is made with a few drops of holy water and a prayer—something we all could use a little of after this unsettling year.
Pair with this ginger/orange/eucalyptus candle from Reason icon Lauren Krisai, who's been an important criminal justice reform advocate over the years.
And lastly, listen to queen Blue Ivy Carter narrate Matthew Cherry's "Hair Love" in the background, a book which I may or may not be recommending because the main character shares a name with another Reason writer who also cares a lot about criminal justice reform. (That would be me.) —Zuri Davis, Assistant Editor
For the baby crypto bro:
"How do I invest in bitcoin?"
That's a question that more people than ever will be asking the libertarians in their lives this holiday season, thanks to the recent stunning price surge and bullish chatter on CNBC and elsewhere. The simple answer: Open an account on Coinbase or the Cash App, or buy some on PayPal, which recently started allowing U.S. customers to purchase cryptocurrencies inside their accounts. These platforms are like any other exchange or financial account: Send them money, and they'll purchase and take care of your bitcoins for you.
That's the easy way to do it, but it doesn't take advantage of one of bitcoin's game-changing attributes. Satoshi Nakamoto created the first digital asset without third-party intermediaries. That means you can physically hold possession of your own bitcoins, so governments will have a harder time confiscating them. If you think that's wildly implausible, remember that in 1933 President Franklin D. Roosevelt signed an executive order making it illegal for Americans to own gold. It wasn't repealed until 1974. So this holiday season, encourage the budding bitcoin enthusiasts in your life to use Nakamoto's invention the way it was intended. Gift them "hardware wallets," which are basically flash drives with all sorts of advanced security features built in to keep cryptocurrency from being lost or stolen.
How will they get bitcoins onto the device? They'll be able to connect their hardware wallets to a computer to transact with other users or cryptocurrency exchanges. It's like having your own digital gold vault doubling as a full-service bank that conveniently slips into a pocket or a desk drawer.
There are a handful of reputable brands, including Trezor, which sells the entry-level "model one" for $55. Many people also swear by the elegant Ledger Nano S, which retails for $59. Buy only direct from the companies to make it less likely that the built-in software has been tampered with by hackers. Being your own bank is terrifying and exhilarating. Help your friends and family join the monetary revolution! —Jim Epstein, Executive Editor of Reason TV
For the boomer who still enjoys a little Reefer Madness:
This year, why not give the gift of a safe, increasingly legal way to get a little distance from reality? Thanks to at least some form of legalization or decriminalization in every state, there has never been a better time to make and share edibles with your loved ones.
I particularly recommend pot brownies for your boomer friends and relatives, who likely have residual nostalgia for THC in baked-goods form, but may not have the wherewithal to acquire their own supply in the current grey market. Remember that while many states have legalized it, cannabis has yet to be legalized at the federal level, so be cautious about interstate shipping. If you're looking to buy close to your recipient, try Where's Weed. But everyone loves a homemade gift, so consider making your own according to my well-tested official Reason recipe. Feel free to hit me up on Twitter if you have questions or just need help with the math. —Katherine Mangu-Ward, Editor in Chief
For the self-reliant problem-solver (with a resilient stomach):
For many years, I relied on chemical clog-busting gels to fix a slow bathtub drain, knowing full well that such products are bad for the environment and corrosive on pipes. But when Drano failed me earlier this year, I took some inspiration from desert DIYer and Reason Contributing Editor J.D. Tuccille, and I set about finding a more sustainable and hands-on approach.
My local hardware store sold me a short metal snake that had a claw on the end and a spring-loaded trigger on the other. This device is very cool, but proved impossible to get through the cross grate caulked into the floor of my bathtub. As a renter, I didn't feel comfortable disassembling anything I couldn't put back together with a screwdriver. I also didn't like the idea of asking my landlords to pay a plumber for a hairball problem.
So I asked myself: What would J.D. do?
I went back to researching, and that's when I discovered the Annie Sullivan of plumbing products: a flexible plastic strand with teeth and a pull tab. No matter how small your tub drain, this plastic thing can get through it. No matter how thick the hairball lurking in your pipes, this plastic thing will grab it and pull it out. A pack of them on Amazon costs less than $10, and each one can be used several times apiece.
My advice? Snake the drain after a shower. The hairball will be wet and slimy and easier to pull out in one giant, satisfying mass. —Mike Riggs, Deputy Managing Editor
For the friend who still uses a filing cabinet (and who really should stop doing that):
The reMarkable 2 is part of that class of luxury object that does very little—but does it very well. It's a black and white tablet that can't play music and won't let you surf the internet. Instead, it offers a digital replacement for paper that looks and feels almost like the real thing. Take notes by hand and the software will convert your words to text and email them to the destination of your choice. Sketch out ideas during a brainstorming session and then use the reMarkable desktop app to refer back to the results. Read and mark up (grayscale) documents and save them in the cloud, freeing up coveted office storage space that might otherwise be filled by notebooks and three-ring binders. A Chrome browser extension even lets you convert web articles to PDF and transfer them to your device for offline consumption.
Billed as the thinnest tablet on the market, the reMarkable 2 features an eye-friendly (and energy-efficient) E Ink display—the kind made famous by old-school Kindles. Its user interface is simple and relatively intuitive. And its pressure sensitivity allows the stylus to impressively mimic the experience of writing or drawing with a real pen or marker. There's no question that $399 feels steep for a device that won't even let you check Facebook. But the lack of distractions is part of the selling proposition: By cutting out everything that's not essential, the reMarkable suggests, it can bring focus and pleasure back to the tasks of reading, writing, and thinking. —Stephanie Slade, Managing Editor
For the bar-hopper who can no longer hop to bars:
Bitters are an essential part of many classic cocktails, including the Old Fashioned, the first cocktail in the American tradition. A boozy infusion of herbs, roots, and spices, bitters are generally used in tiny drops, as a kind of cocktail flavoring. They're the bartender's spice rack.
Sadly, the cocktail bitters that were used in early drinks were lost by Prohibition. Today they exist only as replicas, like The Bitter Truth's Bogart's Bitters, a historical recreation of the brand first mentioned in Jerry Thomas's seminal 1862 cocktail book, extra booze you've been buying in 2020. —Peter Suderman, Features Editor
For the modern John Wayne:
Who doesn't like a .22 caliber gun? They're handy plinkers, capable of clearing varmints out of the garden, and of putting small game in the pot. They don't cost a lot to feed and can be handled by pretty much anybody who cares to develop shooting and survival skills. And the caliber is available in everything from classic revolvers, to single-shot youth rifles, to semiautomatics that can be tricked out in ways that make coastal politicians suffer heart palpitations.
But sometimes you want to blast bunnies in the backyard without getting the neighbors all hot and bothered. That's where the .22 air rifle comes in—a punchier bigger brother to the classic .177 caliber. After years of pumping an ancient Benjamin air pistol to knock down rabbits—which conveniently rely on "make more rabbits" as their survival strategy—I recently purchased a break-action air rifle.
My choice was the Stoeger S4000-E, a single-shot weapon powered by a gas piston that compresses when you open the action (with a fair exertion of strength) to insert the pellet. Unlike firearms, pneumatics can be fitted with sound suppressors without regulatory muss and fuss, and this Stoeger has one integrated. The result is a remarkably quiet shooter that can knock down pests and small game without raising eyebrows.
Like many air guns, the Stoeger is finicky about pellets. But at a time when even .22 long rifle ammo can be pricey and difficult to find, pellets remain abundant and inexpensive for even the better brands. The trigger is a bit mushy no matter how you adjust it, so feel free to go up-market if your budget allows (the Diana 34 is well-regarded). But for me the price vs. quality point is right and I have no complaints so far. In most jurisdictions, pneumatic weapons are unregulated or subject to light regulation relative to firearms, so chances are you'll be able to ship this directly to the recipient with little or no hassle. —J.D. Tuccille, Contributing Editor
For the nostalgic Middle-earth vagabond:
There is a persuasive argument to be made that, like the Beatles catalog, there really are no nourishing crumbs left from the never-ending lembas cake that is J.R.R. Tolkien and his signature Hobbit/Lord of the Rings stories.
Besides the books themselves, plus the lovingly realized and controversially expanded Peter Jackson film adaptations, and even the wince-inducing Led Zeppelin lyrics, there's plenty more for completists to scratch their itches with—the lousy 1978 animated movie, the probably-shoulda-stayed-unpublished Silmarillion, the mercifully shorter Leonard Nimoy song. There was a young-J.R.R.-in-love biopic as recently as last year, as many video games as Gandalf has nicknames, and, oh yeah, the sprawling Amazon TV series is back in production this month.
Yet in this age of ephemeral, cloud-based media-on-demand, there's a hole near the center of the Middle-earth content mill that can be filled only with a fairly significant chunk of change…and shelf space. It's well-known that Tolkien was a top linguist and unbeatable world-maker—writing book-length backstories, inventing whole languages, and drawing and redrawing meticulous maps. But the diminutive writer was also one hell of a visual artist, painting and sketching often in vivid purples and pinks the Lonely Mountain, the mines of Moria, the bucolic valley of Rivendell.
Most of Tolkien's submitted artworks, alas, were rejected by his publishers for reasons of cost, and so tens of millions of us first and most lastingly encountered his startlingly thorough vision through dog-eared paperbacks with smashed-up words and the odd hand-drawn map of Mirkwood. An immersive literary experience, to be sure, but less than what could have been.
Two special editions of the source material started the process of redressing that oversight. The 50th anniversary hardcover edition of The Hobbit from 1987, currently retailing at $125, has a handsome gold cover with some authorial rune work, plus some fine black-and-white drawings, more maps, and rich color renderings of Hobbiton and the dragon Smaug. The 50th anniversary hardcover of The Lord of the Rings from 2004 (just $70.49!) similarly includes some fold-out maps, color paintings, and gilded packaging.
More recently, and more competitively priced, is the 2015 collection The Art of the Lord of the Rings, which showcases most of Tolkien's visual output in one volume. But my main recommendation is tied to the 2019 Morgan Library & Museum exhibition that first opened my eyes to the philologist's surprisingly good paintings. Tolkien: Maker of Middle-earth, by Catherine McIlwaine, is only $57.27, the largest repository of Tolkienia ever assembled, and—I can testify!—a crowd-pleaser for the LoTR fanatic in your household. —Matt Welch, Editor at Large
For the wanderlust-ridden globetrotter catching the first flight post-pandemic:
I am a glutton for coffee-table books, with their glossy pages and their strange specificity—long-haired surf stars of the early aughts? Vogue magazine covers? Cabin porn? Pantone colors over the last hundred years? I'll take them all, gladly swimming through stacks of them whenever fancy house parties exist again and I can enter other people's living rooms with happy abandon. But none stands out so much as the recent release Xi'an Famous Foods: The Cuisine of Western China, from New York's Favorite Noodle Shop, which is best categorized as a mix of the two most glorious mediums: cookbook and coffee-table book.
If you've never been to one of Xi'an Famous Foods' dozen or so locations in New York City, make haste and remedy that. But since the pandemic has rendered travel much more difficult, you can also live vicariously through this book, and even take a stab at some of their recipes and techniques from the privacy of your own kitchen.
If you're an eating enthusiast, but not much of a cook yourself, you'll benefit from the guide to NYC's various Chinatowns (Flushing in Queens, Sunset Park in Brooklyn, and the classic one in Manhattan). If you're a drinker, you'll appreciate the green tea/Hennessy cocktail recipe that purports to help you "lose your karaoke stage fright" in a hurry—something we might all need help with after a year of being boring shut-ins. And if you're just, well, a libertarian, you'll appreciate Jason Wang's family's immigration story from Xi'an—a "dry, dusty city in northwestern China," heavily influenced by the flavors of the Middle East, full of charcoal smoke and "rough, ragged street noodles swimming in bright red chili"—to Michigan, then Connecticut, then finally Queens.
Wang tells the story of his dad, David Shi, laboring for years, working in restaurants all over the Eastern Seaboard before finally opening up the first Xi'an location in a 200-square-foot basement stall in a shopping mall in Flushing. Shi logged 20-hour days, the simple street fare gained a massive following, and eventually the food-world documentarian Anthony Bourdain came in with a film crew, helping to propel the restaurant to a place of well-deserved prominence.
The operation has expanded in the years since, and has even put out meal kits so customers can try their hand at reproducing Xi'an's famous hand-ripped noodles and spicy cumin lamb at home. In a world that's looked especially bleak for restaurateurs over the last year, put your dollars toward helping some really great labors of love survive, and subtly make the case to skeptics on your gift list that immigration makes America tastier and more entrepreneurial (among other perks) while you're at it. —Liz Wolfe, Staff Editor
The post The Ultimate 2020 Libertarian Gift Guide appeared first on Reason.com.
]]>This is the final installment in Reason's four-part documentary series, "Cypherpunks Write Code." Watch Part 1, Part 2, and Part 3.
"The fall of the Berlin Wall was important to me," said Zooko Wilcox, who was 15 in 1989. It seemed like "the end of history"—a reference to the political scientist Francis Fukuyama's influential 1989 essay—and a time when "national borders would cease being the walls of prisons," he recalled. When Wilcox discovered the internet a few years later, he saw it as "part of this pattern where borders and distance stop being barriers to people."
Wilcox, who today is the founder and CEO of a company that oversees the development of the cryptocurrency Zcash, was an early participant in the "cypherpunks email list." The list, which launched in 1992, became a gathering place for a global community interested in using cryptography to allow individuals to communicate and transact on the internet privately and without interference from a central authority. The cypherpunk movement more broadly would go on to influence WikiLeaks (Julian Assange was a participant on the email list), BitTorrent, Tor, and bitcoin, among other freedom-oriented technologies and initiatives.
Wilcox dropped out of college to work at David Chaum's startup DigiCash, an attempt to build a privacy-preserving payment network on the internet based on a series of groundbreaking papers that the legendary cryptography had published in the 1980s.
"Because of the cypherpunks and because of the science papers of David Chaum," Wilcox told Reason, "economic freedom" seemed inevitable. Humans will "no longer [be] constrained by national borders and distance from cooperating and sharing resources and helping each other."
Three decades later, we're a long way from realizing the economic freedom and online privacy that Wilcox and other early cypherpunks anticipated, but since the invention of bitcoin and the launch of the cryptocurrency industry, a new generation of cypherpunks has emerged who are convinced that it's now possible to make good on the movement's original vision.
There was also a divide within the original cypherpunk community over whether cryptographic tools would lead to more individual freedom, free trade, and the spread of democracy, or the collapse of government altogether. The cypherpunk movement's most influential figure was the physicist and intellectual provocateur Tim May, who coined the phrase "crypto anarchy." He saw the fall of the Berlin Wall as evidence that the societal institutions we take for granted could collapse in short order, just as they had in the Middle Ages. (May passed away in 2018 at the age of 66.)
"We saw the little principalities, the monarchies, the religious, the papal states—we saw those collapse probably as a result of … printing," May told Reason,
May penned a one-page summary explaining how cryptography would upend society titled "The Crypto Anarchist Manifesto."
"So I just sat down at my little Macintosh and loosely patterned this after the Communist Manifesto," he told Reason. "Just as the technology of printing altered and reduced the power of medieval guilds and the social power structure," he wrote, "so too will cryptologic methods fundamentally alter the nature of corporations and of government interference in economic transactions."
The idea that excited May and many other cypherpunks, according to the novelist and writer Paul Rosenberg, author of the Free–Man's Perspective newsletter, was that "we can be protected from anything without—from the observers, from the watchers, from the imposers of the past upon the future that we're trying to create."
May was skeptical of the idea that humanity was witnessing "an unabashed victory of economic and political liberalism," as Fukuyama wrote in his famous essay (later expanded into a book)—or that it was possible to overcome tyranny through collective action. He embraced a technology-based theory of historic change that was summed up by the movement's tagline, "cypherpunks write code," a line from the mathematician Eric Hughes' 1993 essay, "A Cypherpunk's Manifesto."
"What Eric meant by 'cypherpunks write code' was, 'Don't be one of those guys who goes to a Libertarian Party conference and sits about getting somebody elected to the Los Gatos City Council,'" May told Reason. "That way lies madness."
"Whereas the interesting things that had happened had been technological changes, the telephone, copy machine, the VCR."
"The thing I really got interested in is that you don't just go and ask the regulator, 'Oh, we need more privacy online.' We go fix it," said the cryptographer Adam Back, an influential participant on the cypherpunks list, whose system Hashcash was later incorporated into the design of bitcoin. "Arguing and complaining and lobbying and politics have nominal effects, and what changes the world is technology adoption and society moving, shifting its viewpoints."
For crypto-anarchists like May, writing code meant building systems for anonymous transactions on the internet that made the arbitrary divisions of the political world irrelevant. "National borders are just speed bumps on the information superhighway," he quipped.
Online cryptographic networks would be structured like a geodesic dome, a form hailed by the counter-cultural technologists of the 1970s for being in harmony with nature and highly resistant to external attack. "Networks with no owners with many interconnecting nodes," May told Reason, and it "would be basically unstoppable." In a geodesic market, "economics will no longer be the handmaiden of politics," the cypherpunk writer Robert Hettinga wrote in a 1998 essay.
"This idea of a many-to-many connection was clearly going to happen," May told Reason. But it was much easier to build a functional network for cooperation and trade when you can rely on a central authority to enforce the rules. Jim McCoy, a software developer and early cypherpunk, who was the co-founder of the peer-to-peer file-sharing network Mojo Nation (where Wilcox and the inventor of BitTorrent, Bram Cohen, worked as software engineers), recalls that there were many discussions on the cypherpunks email list centered around the challenges of building decentralized economic systems.
"How could we use this weird crypto technique to solve this strange, esoteric little problem that in the real world you just solve because, 'Oh, I know what your social security number is,' or you have to have your government-issued ID…"
The economist David D. Friedman, author of The Machinery of Freedom: Guide to a Radical Capitalism, originally published in 1973, told Reason that May "stole" some of his ideas about "the ways in which people might provide the equivalent of what government does in a decentralized fashion," and "then I stole them back!"
A function of government that was particularly hard to replicate using cryptography was the issuance of money. The cypherpunks attempted to build a borderless, internet currency system as anonymous as cash, and that, like gold, held its value without the backing of a central bank.
"Gold makes very good money because nobody can manufacture more of it very readily, to put it mildly," said cryptographer Whitfield Diffie, famous for co-discoverering the concept on which all modern encryption is based. "Whereas bits are perfectly copyable, turning bits into good money is quite difficult."
"Tim May and many others considered electronic cash to be the holy grail because it completed the picture," said Back.
A private and decentralized monetary system, May argued, was a key component in constructing a new borderless world where the activities and assets of individuals would be resistant to government control and confiscation. "You don't physically meet the person if you don't even know what continent they're on [and] you can't coerce them," May said.
But there was another group within the cypherpunk movement that rejected May's vision of cordoning off a new world in cyberspace. Dubbed the "High-Tech Hayekians" by the economist Don Lavoie, this group included the computer scientists E. Dean Tribble, Mark S. Miller, Chip Morningstar, and the entrepreneur and economist Phil Salin. (For more on this faction of the movement, watch Part 1 of Reason's documentary series on the cypherpunks.)
They were focused on designing secure computing systems based on economic insights, particularly those of the Austrian-born Nobel Prize winner Friedrich Hayek. Instead of building a new virtual world shielded from government interference, the High-Tech Hayekians sought to use technology to demolish walls and divisions within the existing world. They imagined that introducing new tools for human coordination would gradually erode the government's ability to impinge on our freedoms.
"We did lots and lots of fantasizing about how the world could be different, but we saw this as emerging from inside the world," Miller told Reason.
Cryptography was a tool for porting economic concepts and legal structures onto the internet, but the aim was to foster new forms of peer-to-peer commerce and knowledge sharing. And the High-Tech Hayekians believed that even imperfect systems can transform society gradually from within.
"The overall arc of world history is toward rule of law, toward less corruptible systems," Miller told Reason. "If the emergence of the world of crypto commerce creates systems that are vastly less corruptible, but under a whole mix of different mechanisms and governance regimes such that they're not always everywhere incorruptible, I think that's fine."
"There's a lot of power in providing people tools such that they can successfully start to act more like you would like them to," Tribble told Reason. "As opposed to, 'You've got to come over here where it's really hard edge encrypted and it works exactly the way we want.' No, no, let's raise people's levels incrementally, and that's an improvement in the world."
For many cypherpunks, the darker side of crypto anarchy was epitomized by the writings of the chemist and electrical engineer Jim Bell, a participant on the email list, who in his multi-part essay, "Assassination Politics," compared aggression by the state to that of "muggers, rapists, robbers, and murderers," and posited a cryptographically protected marketplace in which anonymous individuals could, in effect, pay to have government employees killed with the goal of destroying the state.
In 1997, Bell was arrested and went to prison for, among other things, dropping a stink bomb on a government building. May distanced himself from Bell's writings and activities while maintaining that marketplaces for assassination like the one Bell had described, might be both inevitable and desirable.
"Can evil be done with this technology? Not just the internet, but especially the crypto part of it? Yes," May told Reason. "Deal with it." According to May, Phil Zimmermann, the creator of the encrypted messaging system Pretty Good Privacy (PGP) once told him that "he sometimes regretted ever introducing PGP to the world because it could be used by Al Qaeda or the Taliban or whatnot. I say, so what? I'm not morally responsible. It would have happened whether we had existed or not."
"People want to do what they want to do," he continued. "I mean, they want free shit. They want freedom to do things. Even if they say that it should be regulated, they'll often make the conscious decision to copy music, copy videotapes they want to see."
"BlackNet is a negative consequence," Tribble, a member of the High Tech Hayekians, told Reason, "[and] I'm not interested in creating that. When you build technology to solve problems … there are consequences that we try to think ahead of … that's responsible development. And we certainly engaged in that. And talking with Tim May and putting on that 'What if I was a black hat' kind of thing was certainly a useful foil for working through those kinds of ideas, but that's absolutely not what cypherpunks were."
Thirty years after its launch, how well does the cypherpunk movement's vision of the future comport with reality? Over the next quarter-century, the internet would make possible an explosion of individual freedom and information sharing, just as Salin had predicted in 1991. But it would also grow into a surveillance apparatus that bore out the dystopian vision of journalist David Burnham and his 1983 book, The Rise of the Computer State.
"Facebook collects information that the East German Stasi would have killed for," said McCoy, who (after Mojo Nation failed) went on to work at the social media giant from 2011 to 2016. "I think that most people are quite happy to hand people all of the information about them online in return for a few pics of your high school friends, kids, or whatever."
By the mid-2000s, it seemed the cypherpunk movement had mostly failed. Then came the global financial crisis followed by massive bailouts by central banks. On October 31, 2008, a pseudonymous inventor named Satoshi Nakamoto shared a white paper describing a peer-to-peer non-governmental monetary system, pulling together technical and philosophical concepts developed on the cypherpunks' email list. Thanks to bitcoin, within a few years, the movement was reborn with a new generation committed to enhancing personal freedom and privacy with cryptographic tools.
"It's like discovering an oasis when you're lost in the desert," Wilcox told Reason. "It's bitcoin that is single-handedly responsible for the current wave of cypherpunk activity."
"It's always messier than visionaries can anticipate because reality is bigger than any one head," said Miller. "We're still on the road in the quest to build architectures that amplify human freedoms and protect us from the dynamics in the other direction."
Written, shot, edited, narrated, and graphics by Jim Epstein; opening and closing graphics and peer-to-peer computer graphics by Lex Villena; audio production by Ian Keyser; archival research by Regan Taylor; feature image by Lex Villena
Music: "Daemones" by Kai Engel used under Creative Commons
Photos: playing with Amiga 1000 by Blake Patterson, Creative Commons, Attribution 2.0 Generic; people climbing the Berlin Wall at Brandenburg Gate, imageBROKER/Jürgen Schwarz/Newscom; people from East and West Berlin climbing on the wall, imageBROKER/Norbert Michalke/Newscom; demonstrator pounds away at the Berlin Wall, STR/REUTERS/Newscom; Regan and Gorbachev, Steve Gottlieb Stock Connection Worldwide/Newscom; people climbing the Berlin Wall, imageBROKER/Jürgen Schwarz/Newscom; Berlin Wall, Getty Archives; David Chaum, Associated Press; East German border guards seen through a gap, AP Images; Francis Fukuyama, John Troha BlackStar Photos/Newscom; Prague 1989, Abaca/Newscom / CreditAbaca/Newscom; Buckminster Fuller and the geodesic dome, C. Y. Yu/SCMP/Newscom; IRS agent, David Royal/ZUMAPRESS/Newscom; chiselling pieces off the wall, imageBROKER/Norbert Michalke/Newscom; Mark Zuckerberg, THIEL CHRISTIAN/SIPA/Newscom; Brin, Page, and Schmidt, Minneapolis Star Tribune/ZUMAPRESS/Newscom; Jeff Bezos, Lisa Qui ones BlackStar Photos/Newscom; Snowden protests, BONESS/IPON/SIPA CreditBONESS/IPON/SIPA/Newscom and David Von Blohn CreditDavid Von Blohn/ZUMA Press/Newscom; Mark Zuckerberg, CHRISTIAN/SIPA CreditTHIEL CHRISTIAN/SIPA/Newscom; George W. Bush, Chuck Kennedy/MCT/Newscom; End the Fed 1, Mehdi Taamallah/Newscom; End the Fed, hardtopeel, Creative Commons, Attribution-ShareAlike 2.0 Generic; End the Fed!!!, Martha Heinemann Bixby, Attribution-NonCommercial 2.0 Generic; End the Fed, Mehdi Taamallah/Newscom; Bitcoin conferences, Aleksandr Zykov, Creative Commons, Attribution 2.0 Generic; Institute of Cryptoanarchy, Michal Dolezal/ZUMA Press/Newscom; John Gilmore at Burning Man 2005, Creative Commons, Attribution 2.0 Generic.
The post Bitcoin and the End of History appeared first on Reason.com.
]]>This is the third installment in Reason's four-part documentary series titled "Cypherpunks Write Code." Watch the complete series here.
In 1977, a team of cryptographers at MIT made an astonishing discovery: a mathematical system for encrypting secret messages so powerful that it had the potential to make government spying effectively impossible.
Before the MIT team could publish a description of how this system worked, the National Security Agency (NSA) made it known that doing so could be considered a federal crime. The 1976 Arms Export Control Act (AECA) made it illegal to distribute munitions in other countries without a license, including cryptography. The penalty for violating AECA was up to 10 years in prison or a fine of up to one million dollars.
It was the beginning of the "crypto wars"—the legal and public relations battle between the intelligence community and privacy activists over the rights of citizens to use end-to-end encryption. Many of those who were involved in the crypto wars were associated with the "cypherpunk movement," a community of hackers, hobbyists, and computer scientists, which the mathematician Eric Hughes once described as "cryptography activists."
The crypto wars continue to this day: On October 11, 2020, U.S. Attorney General William P. Barr issued a joint statement with officials from six other countries that implored tech companies not to use strong end-to-end encryption in their products so that law enforcement agencies can access the communications of their customers.
The government's stance traces back to World War II, when Allied code-breakers helped secure victory by deciphering secret messages sent by the Axis powers. "And that is the origin of the regulations that said, 'This is munition, this is an item of war,'" civil liberties activist John Gilmore told Reason. "And the problem was that they didn't really take freedom of speech, freedom of inquiry, academic freedom, into account in that."
In 1977, the Institute of Electrical and Electronics Engineers, which was planning to hold a conference on cryptography at Cornell University, received a letter from an NSA employee posing as a concerned citizen, who wrote that the U.S. government considered these mathematical systems "modern weapons technologies" and that distributing them was a federal crime. The letter caused widespread alarm in the cryptography community.
In 1977, the computer scientist Mark S. Miller was a 20-year-old student at Yale. Like many future cypherpunks, he read about the breakthrough at MIT in Martin Gardner's "Mathematical Games" column published in Scientific American. The article laid out the astounding details of what"RSA," as it was called after its co-discoverers, Ron Rivest, Adi Shamir, and Leonard Adleman, made possible. Gardner omitted the technical details, but he offered his readers the opportunity to mail in a self-addressed stamped envelope to get a full description. The authors received 7,000 requests for the memo but didn't end up distributing the paper because of the NSA's threats.
"I decided quite literally that they are going to classify this over my dead body," Miller recalls. He traveled to MIT and got his hands on the unpublished paper describing how RSA worked. Then he went to "a variety of different copy shops, so I wasn't making lots of copies in any one place" and mailed them anonymously "to home and hobbyist computer organizations and magazines all across the country."
"I gave copies of the paper to some select friends of mine," Miller told Reason, "and I told them, 'if I disappear, make sure this gets out.'"
The following year, the RSA paper was published in Communications of the A.C.M. "And the world has been on a different course ever since it got published," says Miller.
But the crypto wars were just getting started. By the early 1990s, after the launch of the commercial internet and the web, RSA and public-key cryptography were no longer a rarified topic; they were privacy salvation. Internet users could use RSA to fully disguise their online activities from government spies. This sent the intelligence community once again scrambling to stop the dissemination of this powerful tool.
In 1991, a software developer named Phil Zimmermann released the first relatively easy-to-use, messaging system with end-to-end encryption, which was called Pretty Good Privacy, or PGP. So the U.S. Justice Department launched a three-year criminal investigation of Zimmermann on the grounds that by making his software accessible outside the country, he could be guilty of exporting weapons.
The NSA made the public case that Zimmermann's software would be used by child molesters and criminals. "PGP, they say, is out there to protect freedom fighters in Latvia," Stewart A. Baker, the NSA's general counsel, remarked during a panel discussion at the 1994 Conference on Computers, Freedom, and Privacy. "But the fact is, the only use that has come to the attention of law enforcement agencies is a guy who was using PGP so the police could not tell what little boys he had seduced over the 'net."
"Child pornographers, terrorists, money launderers, take your pick—these are the people who will be invoked as the bringers of death and destruction," Tim May, a former Intel physicist and co-founder of the cypherpunk movement, told Reason. "It's true" that these individuals would make use of end-to-end encryption, May conceded, "but all technologies have had bad effects. Telephones led to extortion, death threats, bomb threats, kidnapping cases. Uncontrolled publishing of books could allow satanic books to appear."
In his 1994 essay "The Cyphernomicon," May referred to terrorists, pedophiles, drug dealers, and money launderers as "The Four Horsemen of the Infocalypse." This fearmongering was the government's main playbook for how "privacy and anonymity [could] be attacked."
The cypherpunks argued that although PGP was encryption software, it was protected by the First Amendment because under the hood it was just a written series of instructions to be carried out by a machine.
The economist and entrepreneur Phil Salin was one of the first to argue this point in an influential 1991 essay titled "Freedom of Speech in Software." Salin wrote that "[r]estraint on freedom of expression of software writers is anathema in a free society and a violation of the First Amendment."
"Encryption can't be controlled whether or not it's powerful or has impacts on the government because it's free speech," says Gilmore, a co-founder of both the cypherpunk movement and the Electronic Frontier Foundation. In the 1990s, he risked going to jail in his campaign to force the government to acknowledge that regulating encryption violated the First Amendment.
"We basically had a community of a thousand people scattered around who were all trying different ideas on how to get around the government to get encryption to the masses," Gilmore recalls.
The Clinton administration noted in a 1995 background congressional briefing that "Americans have no constitutional right to choose their own method of encryption" and pushed for legislation that would require companies to build in a mechanism for law enforcement agencies to break in.
"We're in favor of strong encryption, robust encryption," then FBI Director
Louis J. Freeh said at a May 11, 1995, Senate hearing. "We just want to make sure we have a trap door and a key under some judge's authority where we can get there if somebody is planning a crime."
The cypherpunks looked for ways to undercut the government's case by pointing out the similarities between encryption software and other forms of protected speech. While under federal investigation for making his software available for download outside the U.S., to prove a point Zimmermann convinced MIT press to mirror his action in the analog world, by printing out the PGP source code, adding a binding, and shipping it to European bookstores.
"MIT was at that time like three times as old as NSA, and it's at least as large a player in the national security community," says the cryptographer Whitfield Diffie, who co-discovered the concept of public-key cryptography on which RSA is based. 'It's one thing to try to go and step on little Phil Zimmermann; it's quite another thing to go after MIT."
"The government knew if they went to court to suppress the publication of a book from a university that they would lose and they would lose in a hurry," Gilmore recalls.
"There were people who actually got encryption code tattooed on their bodies and then started asking, 'Can I go to a foreign country?,'" Gilmore says. "We printed up T-shirts that had encryption code on them and submitted them to the government office of munitions control…'Can we publish this T-shirt?' Ultimately, they never answered that query because they realized to say 'no' would be to invite a lawsuit they would lose and so the best answer was no answer at all."
In 1996, the Justice Department announced that it wouldn't pursue criminal charges against Phil Zimmermann and major legal victories came in two separate federal court decisions, which found that encryption is protected by the First Amendment.
"The crypto wars is still ongoing," says Gilmore. "What we won in the first rounds was the right to publish it and the right to put it in mass-market software, but what we didn't actually do is deploy it in mass-market software. Now there are major companies building serious encryption into their products, and we're getting a lot of pushback from the government about this."
In the early 90s, at the same time that Gilmore was fighting his legal battle for freedom of speech in software, the cypherpunks were exploring cryptography's potential in the context of collapsing political borders and the rise of liberal democracy. Part four in Reason's series, "Cypherpunks Write Code," will look at how those dreams turned to disillusionment, and the rebirth of the cypherpunk movement after the invention of bitcoin.
Written, shot, edited, narrated, and graphics by Jim Epstein; opening and closing graphics and Mark S. Miller/RSA graphics by Lex Villena; audio production by Ian Keyser; archival research by Regan Taylor; feature image by Lex Villena.
Music: "Crossing the Threshold—Ghostpocalypse" and "Darkest Child" by Kevin MacLeod is licensed under a Creative Commons Attribution license; "High Flight" by Michele Nobler licensed from Artlist; "modum" by Kai Engel used under Creative Commons.
Photos: Photo 44356598 © Konstantin Kamenetskiy—Dreamstime.com; Photo 55458936 © Jelena Ivanovic—Dreamstime.com; Photo 21952682 © Martin Haas—Dreamstime.com; Photo 143489196 © Chalermpon Poungpeth—Dreamstime.com; ID 118842101 © Andrey Golubtsov | Dreamstime.com; Freeh and Clinton, Mark Reinstein/ZUMA Press/Newscom; Freeh and Clinton, Ron Sachs—CNP/Newscom; WhatsApp Founders, Peter DaSilva/Polaris/Newscom; Bill Barr and Trump: CNP/AdMedia/Newscom; MIT, DEWITT/SIPA/Newscom; John Gilmore photos by Quinn Norton, Attribution-NonCommercial-ShareAlike 2.0 Generic; Bill Clinton in Oval Office, Robert McNeely/SIPA/Newscom; Bill Clinton, White House/SIPA/Newscom; Louis J. Freeh and Bill Clinton, Ron Sachs—CNP/Newscom; James Comey, KEVIN DIETSCH/UPI/Newscom; Bobby Inmann, Dennis Brack / DanitaDelimont.com "Danita Delimont Photography"/Newscom; John Gilmore, Paul Kitagaki Jr./ZUMA Press/Newscom; Berlin Wall, Associated Press.
The post When Encryption Was a Crime: The 1990s Battle for Free Speech in Software appeared first on Reason.com.
]]>Katie Haun has one of bitcoin's most improbable conversion stories. As an attorney at the U.S. Department of Justice, she prosecuted the two corrupt federal agents working the Silk Road case and created the federal government's first cryptocurrency task force. "I'm the prosecutor who helped put some of the earliest bitcoin criminals in jail," she boasted in a 2018 speech.
But while learning about bitcoin as a crime fighter, it dawned on her "how profoundly this technology could change how we do all sorts of things." Haun is now a general partner at the venture capital fund Andreessen Horowitz, or a16z, where she co-leads its crypto funds with over $350 million raised since 2018. The firm is betting on blockchain as a new computing platform that will, among other things, create a decentralized financial system and fulfill the web's original promise as an open network controlled by its users.
Blockchain computing "feels like the early days of the internet, web 2.0, or smartphones all over again," according to a16z's crypto thesis. Haun also sits on the board of the nonprofit organization overseeing Facebook's cryptocurrency project Libra. At a 2019 congressional hearing, David Marcus, head of the company's blockchain group, assured lawmakers, "Let me be clear and unambiguous: Facebook will not offer the Libra digital currency until we have fully addressed regulators' concerns and received appropriate approvals."
In their embrace of regulation, Haun and Marcus are at one extreme of the cryptocurrency community; on the other end, are the so-called bitcoin maximalists who have a name for projects like Libra: "shitcoin."
"I would not be interested in bitcoin if governments didn't want to ban it," the software developer Pierre Rochard tweeted in 2017.
In a December 2019 essay titled "Cryptocurrency Is Most Useful for Breaking Laws and Social Constructs, Open Money Initiative Founder Jill Carlson wrote that cryptocurrency wasn't designed to solve "mainstream problems." It's a tool used by "freedom fighters and terrorists, by journalists and dissidents, by scammers and black market dealers," by "sex workers" or people "procuring drugs on the internet"—the type of person Katie Haun once worked to put in jail. Bitcoin maximalists, like Rochard, believe that governments will eventually attempt to ban bitcoin because it's destined to replace fiat money, which will, among other things, eliminate their power to print money to finance the welfare-warfare state.
The divide over whether this technology is a tool for changing society by working within the system or by disrupting it from the outside predates the invention of bitcoin by a few decades. It traces back to a 1987 debate between the physicist Timothy C. May and the economist and entrepreneur Phil Salin, two early internet visionaries, whose difference of opinion laid the groundwork for the "cypherpunk" movement—a community of computer scientists, mathematicians, hackers, and avid science fiction readers whose work and writings influenced the creation of bitcoin, WikiLeaks, Tor, BitTorrent, and more. (Reason recently published a four-part documentary series on the cypherpunk movement.)
The bitcoin maximalists often use the "shitcoin" moniker to refer to cryptocurrency projects that are outright scams, technologically flawed, or cheap imitations of Satoshi Nakamoto's invention, when in reality the world only needs one currency. Bitcoin, they maintain, is best understood as sound money, and Silicon Valley's infatuation with "blockchain technology" is "a great example of 'cargo cult science,'" as the economist Saifedean Ammous wrote in The Bitcoin Standard: The Decentralized Alternative to Central Banking.
But the community's divide is also partly rooted in a disagreement over whether cryptocurrency is essentially a technology of resistance that derives value from being impervious to government interference and control, or whether it's a tool for transforming society from within, in which case government regulation won't sink the entire enterprise. A careful look at the debate that started with May and Salin in the 1980s helps us understand the best arguments of both sides.
BlackNet: 'A Technological Means of Undermining all Governments'
In 1987, before the launch of the World Wide Web, May and Salin were part of a small community of West Coast science fiction–obsessed technologists mulling the implications of a decentralized, global information network running on personal computers. It was clear to May and Salin that the internet would remake the world, but they disagreed on what kind of software would serve as the linchpin.
Salin saw technology as a way to gradually drive down the transaction costs that impede human activity, making it feasible to interact in ways that would otherwise be prohibitively expensive. "I'm interested in how to lower costs," Salin told Reason in 1984. "The Austrian [School of Economics] insight is that any industry run as a planned economy for any time should be fertile ground for an entrepreneur."
In 1986, he started the American Information Exchange, or AMIX, one of the first e-commerce startups. Salin, whose intellectual hero was the Austrian economist Friedrich Hayek, envisioned AMIX as a global marketplace for the buying and selling of local expertise that would enhance human cooperation and gradually replace central planning.
In a 1991 essay, Salin envisioned a "fluid, transaction-oriented market system, with two-way feedback" that could result in "crowding out monolithic, mostly government bureaucracies." The same language could be applied to many projects in the modern cryptocurrency space. Facebook's Libra, for example, promises to use blockchain technology to move money around the world in a manner that's "as easy and cost-effective" as "sending a message or sharing a photo." The project's backers maintain that enabling "frictionless payments" for the 1.7 billion people around the world without access to banking will do wonders for alleviating poverty. Those frictions are mostly created by government regulation; what's implicit in Facebook's pitch is that those rules will be gradually crowded out, though not overthrown.
After being introduced to Salin by his friend Chip Morningstar, a computer scientist, in December 1987, May drove out to Redwood City, California to meet Salin and hear his pitch for AMIX. He grasped the idea immediately, but it bored him. "People aren't going to be selling meaningless stuff, like surfboard recommendations," May recalled telling Salin.
May didn't think AMIX was a scam, like many modern cryptocurrency ventures that earn that descriptor shitcoin. But he was interested in upending society and didn't see how AMIX would have much of an impact.
May suggested to Salin that he reconceive of the project as an anonymous platform for selling company trade secrets, "such as plans for that B-1 Bomber or a process for a technology." In a thought experiment, May later called his idea "BlackNet," writing in a pretend advertisement for the service that it would turn "nation-states, export laws, patent laws, national security considerations and the like" into "relics of the pre-cyberspace era."
In a series of personal notes following his meeting with Salin, which May shared with Reason prior to his death in 2018, he mused that BlackNet was a "technological means of undermining all governments." Though some might say that "'it won't be allowed to happen' technology would 'probably make it inevitable,'" he wrote.
May's ideas about BlackNet evolved over the years. In 1986, a friend had given him a photocopy of Vernor Vinge's 1981 novella True Names, in which hackers inhabit a virtual world called the "Other Plane" where the government can't decipher their real identities. It had a big impact on May, who melded the "Other Plane" with "Galt's Gulch" from Ayn Rand's Atlas Shrugged, which was a safe haven for rational and productive people protected from government coercion and taxation by an invisible shield. Instead of the Colorado mountains, May's cyberspace Galt's Gulch would exist on the internet, with cryptography providing protective cover.
"Just as the technology of printing altered and reduced the power of medieval guilds and the social power structure," May wrote in his 1988 manifesto, "so too will cryptologic methods fundamentally alter the nature of corporations and of government interference in economic transactions."
Bitcoin isn't BlackNet or a Galt's Gulch in Cyberspace—it's a decentralized form of non-governmental money. But it's designed to be impervious to outside tampering so that the government can't destroy it or undermine its value, and is roughly in keeping with May's vision of an unstoppable technology. "The nature of sound money…lies precisely in the fact that no human is able to control it," Ammous wrote in The Bitcoin Standard. Bitcoin "exist[s] orthogonally to the law; there is virtually nothing that any government authority can do to affect or alter [its] operation."
The American Information Exchange: Exploiting the 'Grey Areas'
The computer scientist E. Dean Tribble, who worked with Salin at AMIX, calls May "the shock jock" of the cypherpunk movement. "BlackNet is not a goal," he says. "BlackNet is a negative consequence."
Morningstar, the pioneering computer scientist who Salin hired to oversee the building of AMIX, recalls his boss's skepticism of May's ideas about escaping "the strictures and dysfunction of the mainstream-governed world." The establishment "has had a long history of confronting new challenges and somehow having its way."
Salin died of cancer in 1991 at age 41. His friend and colleague Mark S. Miller, a computer scientist, would flesh out the case that technology impacts society by gradually transforming it from within. Miller drew an analogy to a genetic takeover in biology, in which an alternate way of doing things slowly takes the place of an existing paradigm.
Projects like AMIX, which was centrally controlled by a company, didn't need to be completely "incorruptible" to have an impact because of all the grey areas where regulation doesn't apply. Permissionless innovation pushes society in the direction of more freedom and decentralization. For example, "when people started doing credit card transactions over the internet, nobody knew if it was legal," Miller tells Reason, "but they just started doing it."
Miller doesn't consider Libra to be a worthless project despite Marcus' commitment to cooperate with regulators. Once it starts operating, Miller says, there could still be experimentation happening "at the margins." There could also be gateways to "trading between Libra and something permissionless," which would help expand the cryptocurrency space.
Miller's writings have often focused on how rules baked into computer code could replace aspects of the legal system. Along with K. Eric Drexler, the father of nanotechnology, he co-authored a series of papers applying economic insights to software design, which influenced the work of the computer scientist, legal scholar, and early cypherpunk Nick Szabo.
It was Szabo who coined the term "smart contracts"—self-executing arrangements written in code, and a common feature in today's cryptocurrency projects. Szabo analogized his concept to a vending machine: A buyer drops in a coin and a machine provides the candy bar. "The fundamental logic here is automating 'if-this-then-that' on a self-executing basis with finality," Szabo wrote. He also offered the example of a smart contract for auto repossession: "If the owner fails to make payments, the smart contract invokes the lien protocol, which returns control of the car keys to the bank."
A divide in the community over the definition of a smart contract also relates back to Salin's debate with May. Do smart contracts have to be shielded from third-party interference to be worthy of the name? What if a government regulator has the power to stick a hand into the metaphorical vending machine to stop the candy bar from dropping into the slot? Does that undermine the purpose of smart contracts?
Miller and Morningstar consider AMIX to be "possibly the first smart-contracting system ever created" because it used software to mediate transactions between two parties. Deals on AMIX combined a written component, like a traditional contract, and a self-executing component: once a buyer and seller agreed on a price for a service, payment would be carried out by software. If there was a dispute, it would be resolved by humans.
AMIX software ran on a central server, meaning the company or a government regulator could theoretically interfere with the execution of a sale. According to Morningstar and Miller, the potential for interference doesn't undermine the purpose of the smart contract.
"A smart contract that trusts a third party removes the killer feature of trustlessness," wrote Jimmy Song, a bitcoin maximalist and influential figure in the space, in his 2018 essay, "The Truth About Smart Contracts."
Song applies his critique to a popular crypto business model, which Miller has also written about: using smart contracts to trade physical assets, such as land. Countries like Sweden and Georgia have explored operating a land registry that uses blockchains and smart contracts. Szabo explored this idea in a 1998 paper that predated blockchains and bitcoin titled "Secure Property Titles with Owner Authority."
Physical assets are traded with smart contracts through what's called tokenization. A property is assigned a digital tag with a corresponding private key. A seller uses that key to transfer ownership to the buyer, much like a bitcoin transaction. The record of ownership is encoded into a blockchain, which is a type of shared public database, so all parties know that it hasn't been corrupted.
"There is an intractable problem in linking a digital to a physical asset whether it be fruit, cars or houses," Song wrote. It "suffers from the same trust problem as normal contracts" because "physical assets are regulated by the jurisdiction you happen to be in."
So if a judge refuses to honor that tokenized transaction, or a conqueror shows up at the door with an army, the smart contract will have accomplished nothing. "Ownership of the token cannot have dependencies outside of the smart contracting platform," wrote Song, who sees smart contracts as useful only in systems like bitcoin, where the digital token itself holds value.
Miller offered a rebuttal to this argument in a lecture titled, "Computer Security as the Future of Law" in 1997, predating Song's article by 21 years. He laid out a vision for a gradual takeover of the existing law by smart contracts. We live in a world where different systems of rules are layered on top of each other, he explained. When Bobby Fischer and Boris Spassky played chess, they had to abide by the rules of the board, dictating, for example, that bishops can only move diagonally. They were simultaneously governed by another set of rules because the two men were "biological creatures…embedded in physics." A Macintosh operating system is another example of a system that imposes a set of rules spelled out in software embedded in another set of rules—i.e., legal strictures, physics, and biology.
The rules on these different layers impact each other. For example, the physical world and the legal world have distinct sets of rules, but in legal disputes "physical possession has extraordinary influence in the actual outcome of the dispute, even if abstractly the law would have it otherwise." If an object that belongs to you is in another person's house, taking them to court to get possession of that object is rarely worth the hassle.
AMIX integrated computer-mediated contracts and human negotiated contracts. It's true that humans, including government regulators, could override a transaction on AMIX, but for practical reasons that was unlikely to occur very often. Therefore, smart contracts on AMIX would have fulfilled their purpose in the vast majority of cases by reducing transaction costs with computer-mediated contracting.
Miller elaborated on this idea in a discussion of land registries in "The Digital Path: Smart Contracts and the Third World," a 2003 paper that he co-wrote with Marc Stiegler. It acknowledges that a smart contracting system, "unlike government-based title transfer," won't be "backed by a coercive enforcement apparatus," but the authors proposed various add ons to make it more likely that participants will "treat these titles as legitimate claims," including a community rating system, and video contracting—an idea first proposed by Szabo—in which a conversation is recorded testifying to the validity of the arrangement in question.
These tools don't guarantee that governments will honor and enforce smart contracts, but there's also a high cost to ignoring them. Szabo summed up this idea best in his 1998 paper: "While thugs can still take physical property by force, the continued existence of correct ownership records will remain a thorn in the side of usurping claimants."
Miller, Morningtar, and Tribble, who were involved with AMIX in the 1980s, have come together once again to try and make good on Salin's vision. Miller and Tribble co-founded a startup called Agoric, which seeks to build a secure smart-contracting system that could serve as the backbone of a more decentralized internet, luring some high-level computer scientists away from comfortable jobs at the biggest software companies in Silicon Valley.
May passed away suddenly in 2018 at age 66. In the months leading up to his death, he was feeling disgusted with the proliferation of cryptocurrency conferences and regulated blockchain ventures. "I think Satoshi would barf," he told CoinDesk. "Attempts to be 'regulatory-friendly' will likely kill the main uses for cryptocurrencies, which are NOT just 'another form of PayPal or Visa.'"
In May's view, society still faced a "fork in the road…freedom vs. permissioned and centralized systems." There are no grey areas.
The post How Will Bitcoin Lead to More Freedom? appeared first on Reason.com.
]]>"Large bureaucracies, with the power that the computer gives them, become more powerful," said New York Times reporter David Burnham in a 1983 C-Span interview about his book The Rise of the Computer State. "They are escaping the checks and balances of representative democracy."
Burnham warned that the integration of computers into every aspect of daily life could lead to a "level of automated surveillance unknown in any previous age." For society to change course, Burham argued, citizens would need to rise up through the democratic process and demand new legal protections to safeguard their privacy.
"There are ways to deal with it," Burnham told C-SPAN. "We have done it. And all I hope is that we're on our toes enough and alert enough to see them and go after them."
"This is just political jawboning," retorted Timothy C. May to the idea that politics could keep the computer state in check.
May, a former Intel physicist, believed that putting faith in representative democracy was naive and that only technology could save us from the Orwellian state. He became a co-founder of the cypherpunk movement, which came together in the early 1990s around the idea that a recent breakthrough in the field of cryptography was the key innovation for combatting tyranny.
The second part in Reason's four-part documentary series on this movement, "Cypherpunks Write Code," looks at the political implications of this breakthrough in cryptography. (Part one is here and part three is here and part four is here.)
The cypherpunks saw cryptography as comparable to the crossbow, which had enabled individuals to go up against medieval armies, as mathemetician Chuck Hammill argued in a 1987 paper presented to the Future of Freedom Conference.
"I certainly do not disparage the concept of political action," Hammill wrote, but "for
a fraction of the investment in time, money and effort I might expend in trying to convince the state to abolish wiretapping and all forms of censorship—I can teach every libertarian who's interested how to use cryptography to abolish them unilaterally."
Hammil's paper, "From Crossbows To Cryptography: Techno-Thwarting The State," was the first item posted to the cypherpunks' widely read email list.
"The mathematics which makes this principle possible," as Hammill put it, was public-key cryptography, an astonishing breakthrough. It was developed by the Stanford cryptographers Whitfield Diffie and Martin E. Hellmann, who first explained the concept in a November 1976 paper published in IEEE Transactions on Information Theory. The following year, a team of researchers at MIT developed the first working public-key system, known as RSA.
Many cypherpunks first learned about this discovery from the August 1977 issue of Scientific American, in which the "Mathematical Games" columnist Martin Gardner described a "new kind of cipher that would take millions of years to break."
As Gardner told his readers, a discovery had been made that would "revolutionize the entire field of secret communication."
Another way of thinking about public-key cryptography is that it replicated the privacy protections of the analog world in cyberspace. "If you look at 1791, at the moment of the Bill of Rights," says Diffie, "impenetrably private conversations dominated." What the framers didn't foresee is that private communication would happen via computers sending messages across the world that could easily be intercepted. "Public-key cryptography gives you a mechanism whereby you can recover this ability to have an impenetrably private conversation between two people."
Sending a secret message used to involve translating words through a secret code that government agents or other spies could potentially crack. Anyone sending and receiving messages also had to have a copy of the secret key or translation device, just like the decipher rings that schoolchildren started collecting in the 1930s.
Public-key cryptography made decoding devices unnecessary and figuring out the pattern effectively impossible. The big breakthrough was an easy-to-solve mathematical formula that you could funnel words into just as easily as dropping them through a trapdoor. But if you flipped the problem around and tried to pull the message out the other side, the formula was almost impossible to solve, such that in 1977 a supercomputer trying random numbers would need 40 quadrillion years to surface the answer.
But the person who set up the mathematical formula, or trap door, held the answer to the problem, or secret code, making it possible for that person to retrieve the original message.
Diffie compares the whole system to the most ubiquitous trapdoor system for sending messages. "Anyone can throw a letter in a mailbox," he says, "but only the mailman, who has a key, can take it out.'
Anyone in the world could set up one of these equations, serving as the mailman of his or her very own impenetrable virtual letterbox. And because that individual could prove ownership of the mailbox by opening it with the only known key, public-key cryptography also made it possible to set up a provable identity on the internet completely disconnected from any real-world personal information.
In Future Imperfect (2008), economist David Friedman argued that "strong encryption functions as a virtual Second Amendment."
"One way of reading the Second Amendment was that it was a way of making sure that if the government tried to suppress the people, the people would win," Friedman says.
"In the modern world, the weapons that the army has differ by a lot more than they did in the 18th century. But I also think if you look at what politics are like nowadays, the real wars between the government and the population are information wars, not physical wars. Encryption means they can't arrest you. They can't blackmail your key people. They can't do anything of the things governments might do to make sure that public information is what they wanted."
Meanwhile, in the late 1970s, the U.S. intelligence community started doing everything in its power to keep this new tool out of the hands of the general public.
Part three in this series will look at the U.S. government's effort to halt the widespread use of public-key cryptography with threats of criminal prosecution, and the legal and public relations battle waged by John Gilmore, a founding member of the cypherpunk movement, for free speech rights in software.
Written, shot, edited, narrated, and graphics by Jim Epstein; opening and closing graphics by Lex Villena; audio production by Ian Keyser; archival research by Regan Taylor.
Music: "Sunset" by Kai Engel, Creative Commons Attribution 4.0 International; "Prelude in C" by Kevin MacLeod, Creative Commons Attribution license.
Photos: Whitfield Diffie, Chuck Painter/Stanford News Service; NSA headquarters, Dod/ZUMA Press/Newscom; The Land Of The Free by Coco Curranski, Creative Commons Attribution 2.0 Generic.
Footage: "Panama Patrol," 1939, directed by Charles Lamont; "Superman: Showdown," Archive.org, Creative Commons Attribution-Share Alike 3.0; "Atom Bomb Effects" by U.S. Army, Prelinger Collection, Archive.org
The post Cryptography vs. Big Brother: How Math Became a Weapon Against Tyranny appeared first on Reason.com.
]]>This is the first installment in Reason's four-part documentary series titled "Cypherpunks Write Code." Watch part two and part three and part four.
In the early 1990s, a group of mathematicians, misfits, hackers, and hobbyists calling themselves "the cypherpunks" came together around a shared belief that the internet would either demolish society's artificial walls or lay the groundwork for an Orwellian state. They saw cryptography as a weapon against central planning and surveillance in this new virtual world.
The philosophical and technical ideas explored on the cypherpunks' widely read email list, which launched in 1992, influenced the creation of bitcoin, WikiLeaks, Tor, BitTorrent, and the Silk Road. The cypherpunks anticipated the promise and the peril that lay ahead when the internet went mainstream, including new threats to privacy and the possibility of building virtual platforms for communication and trade that would be impervious to government regulators.
The first episode in Reason's new documentary series on the cypherpunks looks at a clash of ideas over how the internet could lead to a more free society, which was a precursor to the formation of the cypherpunk movement. It took place between the economist and entrepreneur Phil Salin, and the former Intel physicist Timothy C. May, who became known as the father of "crypto anarchy." (Salin died of cancer in 1991 at the age of 41, and May passed away in 2018 at the age of 66.)
Salin was part of a community of young computer scientists in Silicon Valley, who the George Mason University economist Don Lavoie dubbed the "High Tech Hayekians" because of their efforts to blend the insights of Austrian economist Friedrich Hayek with computer science. The group included the pioneering technologists Mark S. Miller, Chip Morningstar, and E. Dean Tribble; Salin's wife and business partner Gayle Pergamit; the software developer and science fiction writer Marc Stiegler; K. Eric Drexler, who is best known for his pioneering work in nanotechnology; and Christine Peterson, who later co-founded the Foresight Institute with Drexler.
Salin believed that personal computers linked up in a global communication network would make it possible to build a borderless, frictionless, global marketplace that would improve human coordination in the economy. May thought this would have negligible impact, positing instead a new world in cyberspace similar to what the science fiction writer Vernor Vinge had described in his novella True Names: an "other plane" completely shielded from government surveillance and control.
When May met Salin in 1987, it was before the release of the World Wide Web, but home computer hobbyists were already getting online in limited ways. Users could dial into servers through their phone lines to post to message boards, check their horoscopes, read the news, or go shopping.
While the e-commerce services from this period, such as CompuServe's "Electronic Mall," were basically digital versions of the old mail-order catalog, in a prescient 1991 essay published in Esther Dyson's influential tech-industry newsletter, Salin foresaw how the internet would change the world by 1995, 2000, and beyond. The static roles of store and shopper, seller and buyer, author and reader—systems defined by their "one-way information flows"—would be replaced by new forms of media, he argued, enabling "two-way information flows."
"The ability to buy or obtain exactly the information you need, when you want it, in the form you want it, is about to explode at a speed unmatched since the invention of printing," Salin predicted.
But Salin was more than just a theorist. In the mid-1980s, he founded a dialup e-commerce startup called the American Information Exchange (AMIX). Users could buy or sell advice about the real estate market, writing software, or what companies to invest in.
Though it was similar in ways to services that would launch a decade later, AMIX was more than just an idea before its time. What set it apart was its grounding in political philosophy and its lofty goal of elevating individual decision making over central planning. Salin envisioned AMIX as a tool for improving human coordination that could lead to new levels of local knowledge sharing. It would help reduce transaction costs in the economy and serve as an alternative to central planning.
A "fluid, transaction-oriented market system, with two-way feedback," Salin wrote in Dyson's newsletter, would result in "crowding out monolithic, mostly government bureaucracies."
AMIX's chief architect was the pioneering software engineer Chip Morningstar, who had come from a stint at George Lucas' production studio, where he oversaw the creation of the video game Habitat, one of the first virtual online communities.
After joining AMIX, Morningstar co-authored an essay about building Habitat, which echoed the Austrian economist Ludwig von Mises' famous claim that socialism is "impossible" with the assertion that, when building a world in software, "detailed central planning is impossible; don't even try."
"The world is just more complicated, people are more complicated, you can't know what all their goals are," Morningstar told Reason in a recent video interview. "What you can do is put them into an environment where certain things are possible."
In December 1987, Morningstar decided to introduce May, who he had befriended through a science fiction fan club, to Salin.
"Chip said there's this guy out in Santa Cruz that you ought to talk to," May recalled.
As a scientist at Intel, May had solved an issue affecting the reliability of the company's memory chips called the alpha particle problem. Rich on stock options, he had retired early, spending his days at the beach reading science fiction novels, thinking about how networked personal computers could turn some of their futuristic scenarios into reality.
"So I met with Phil…and he described how AMIX would work. And I said, 'people aren't going to be selling meaningless stuff, like surfboard recommendations.'"
In May's view, an online information marketplace like AMIX would only have a major societal impact as a tool for undermining state power by shattering social and legal norms. He had a different vision of a virtual marketplace for any and all goods and services, which he dubbed "BlackNet," or a "technological means of undermining all governments." He suggested to Salin that he reconceive of AMIX as an anonymous platform for selling company trade secrets, "such as plans for that B-1 Bomber or a process for a technology."
On AMIX, user activity was out in the open, but BlackNet would be impervious to government tracking and surveillance. Many people's "first response" would be to say that BlackNet "won't be allowed to happen," May noted at the time. "Perhaps" but technology would "probably make it inevitable."
This debate sparked May's interest in cryptography and cryptocurrency and would lead him to co-found the cypherpunks. Salin had an objection that May couldn't answer: There would be no way for sellers to get paid. The only anonymous form of payment was cash, and you couldn't shove cash through a computer screen. "I admitted to Phil that the big problem was untraceable payments," May recalled. But it "seemed like a solvable problem." He remembered reading something on the topic.
A couple of days after his meeting with Salin, May dug out his copy of the October 1985 issue of Communications of the ACM. The cover story was by the computer scientist David Chaum and titled, "Security Without Identification: Transaction Systems to Make Big Brother Obsolete," which described a method for sending relatively anonymous payments using cryptography, which he would later attempt to commercialize through an early online startup called DigiCash.
That such a thing was possible "was an epiphany." May recalled. "It was like standing on top of the mountain and seeing what's out there."
In 1988, AMIX was acquired by the software giant AutoDesk. A growing scene of young technologists came together around Salin and the High-Tech Hayekians, all working toward a common vision of enhancing human freedom through networked personal computing.
"It was a hothouse of ideas," recalls Miller.
AutoDesk eventually abandoned AMIX, and Tim Berners-Lee's World Wide Web became publicly available the same year Salin died. But Salin's intellectual contributions and conflict with May had laid the groundwork for what would come next for the cypherpunks: the long effort to build a self-sovereign and anonymous form of digital money and the embrace of a branch of mathematics called cryptography, which they viewed as the key to personal liberation on the internet.
Written, shot, edited, narrated, and graphics by Jim Epstein; opening and closing graphics by Lex Villena; additional graphics assistance from Isaac Reese; audio production by Ian Keyser; archival research by Regan Taylor
Music: "Moving on" by Jay Denton, licensed through Artlist; "High Flight" by Michele Nobler, licensed through Artlist; "Machinery" by Kai Engel, Creative Commons — Attribution-NonCommercial 4.0 International
Photos: Hugh Daniel at the Ottawa Linux Symposium, Paul Wouters/Creative Commons Attribution-Share Alike 3.0; John Gilmore, Paul Kitagaki Jr./ZUMA Press/Newscom; John Gilmore at Burning Man 2005, Creative Commons — Attribution 2.0 Generic License; Whitfield Diffie, Chuck Painter/Stanford News Service; David D. Friedman, Gage Skidmore, Creative Commons Attribution-Share Alike 3.0; Cody Wilson, Jay Janner/TNS/Newscom; Ross Ulbricht, freeross.net; Julian Assange, Dominic Lipinski/ZUMA Press/Newscom; London Protester, Tal Cohen/Photoshot/Newscom; Louis J. Freeh and Bill Clinton, Ron Sachs—CNP/Newscom; Bill Gates, Staff/Mirrorpix/Newscom; David Chaum, AP PHOTO/DUSAN VRANIC.
The post Before the Web: The 1980s Dream of a Free and Borderless Virtual World appeared first on Reason.com.
]]>Venezuelan immigrants start lining up at a storage facility in the Miami neighborhood of Doral every Friday afternoon. After they complete a survey, a team of volunteers guides them through a series of storage units, where they can select from toys, sheets, electronics, holiday decorations, clothes, and other household items.
"This is your new house in this country—it's the beginning of your future, and that's why you have to give a touch of love," says human rights activist and Venezuelan expatriate Patricia Andrade, who started the nonprofit that oversees this operation in 2016.
Andrade pays most of the expenses—including rent on the storage units—for Raíces Venezolanas, or "Venezuelan Roots," herself.
"When I come to this place and I meet the families," she says, "I know I'm doing the right thing."
Produced by Claudia Murray and Jim Epstein. Audio post-production by Ian Keyser. Subtitles by María José Inojosa Salina. Thumbnail by Lex Villena.
Music: "Abakua" and "I Feel Sad" by Scanglobe used under an Attribution-Noncommercial-Share Alike Creative Commons License; "Sadie" by Adam Henry Garcia used under an Attribution-NonCommercial-NoDerivatives Creative Commons License.
The post Venezuelans Fleeing Socialism Find Community at a Miami Storage Facility appeared first on Reason.com.
]]>At the 2000 Republican National Convention, the country got one of its first glimpses of a new type of public charter school. The claim was that with enough rigor, devotion, and "no excuses" discipline, such schools could close the achievement gap between poor minorities and their wealthy white counterparts. The shining example was the Knowledge Is Power Program, or KIPP. Skeptics pointed out that the families showing up at KIPP and other no-excuses charters were self-selected.
In 2006, a combative former New York City council member named Eva Moskowitz co-founded a new charter school network with the same approach. Success Academy was KIPP on steroids, trouncing many public schools in wealthy neighborhoods on the annual state exams.
Enter the education writer and former public school teacher Robert Pondiscio, who spent a year embedded at a Success Academy in an effort to figure out just how these schools do it. In his widely praised new book, How The Other Half Learns, Pondiscio reports that the critics were right: Not only is the very act of applying to the lottery self-selecting, but Success Academy makes such rigorous demands on parents that it disproportionately retains only the most highly motivated families.
The result is that an applicant's chances of winning a seat at a Success school in its annual high stakes lottery aren't as competitive as many had claimed. Pondiscio found that there are about six applicants for every spot. However, because so many families drop out, the chances of getting offered a spot are actually closer to 50 percent.
But for those that make the commitment, the impact is absolutely transformative. And he argues that these kids deserve the same access to excellent public schools that upper-middle-class parents finagle for their children, even if it means leaving the rest of their communities behind.
Reason's Nick Gillespie sat down with Pondiscio to discuss why he believes motivated families deserve the opportunity to exit their traditional district public schools—which a New York Times reviewer called "a morally disturbing conclusion" to his "unsparingly honest book"—and his challenge to both supporters and detractors of the school reform movement.
Produced, shot, and written by Jim Epstein; interview edited by Ian Keyser; additional camera by Kevin Alexander; archival research by Regan Taylor.
Photos:
Parent at Success Academy Rally
Johnny Milano/Polaris/Newscom
Eva Moskowitz
Credit: RICHARD B. LEVINE/Newscom
Eva Moskowitz
Bryan Smith/ZUMA Press/Newscom
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]]>Satoshi Nakamoto is the pseudonym of a mysterious software developer who released a white paper describing a new peer-to-peer currency called bitcoin on an obscure mailing list in 2008, then disappeared two years later.
David Marcus is a Facebook executive who was grilled in two congressional hearings this week about a new digital currency project called "Libra," which the social media giant is billing as a less volatile version of bitcoin that can be monitored and controlled by governments.
"We are fully committed to working with regulators, here and around the world," Marcus said on Tuesday before the Senate Committee on Banking, Housing and Urban Affairs. "And let me be clear and unambiguous: Facebook will not offer the Libra digital currency until we have fully addressed regulators' concerns and received appropriate approvals."
The hearings were a useful reminder that one of the many reasons that bitcoin is a revolutionary technology with profound political consequences, and Facebook's Libra is a payment network with some interesting properties, is that Congress can never make Satoshi Nakamoto appear on national television to be grilled by lawmakers.
Written and narrated by Jim Epstein; Graphics by Austin Bragg and Meredith Bragg.
Alexandria Ocasio-Cortez Photo Credit: Stefani Reynolds—CNP / MEGA / Newscom
David Marcus Photo Credit: Bill Clark/CQ Roll Call/Newscom
The post Facebook's Libra Yields Before Congress. Bitcoin Can Never Be Controlled. appeared first on Reason.com.
]]>Bitcoin has the capacity to undermine government control of money because you can freely exchange it with anyone in the world, meaning that no government or government-regulated entity has the capacity to interfere with its use. Because its supply is fixed at 21 million units, it also can't be watered down by inflation.
Facebook's new "Libra" coin, which was announced today, is both an interesting project to improve global payments and a useful reminder that Silicon Valley can't ever compete with bitcoin's mission of reclaiming control of money from the state.
The social networking giant is launching Libra in partnership with MasterCard, PayPal, eBay, Uber, Lyft, and several other tech heavyweights. Facebook claims that it has the potential to become the first "internet of money" with the capacity to modernize the way value moves around the world and to help provide financial services to the 1.7 billion adults without banking services. In the tradition of bitcoin's pseudonymous creator Satoshi Nakamoto, the company released a "white paper" this morning that lays out the basic details. Given its dismal record with customer privacy, Facebook has wisely created a new nonprofit entity based in Switzerland to oversee the project.
All the hype should be tempered by the existence of an internet graveyard filled with attempts to bring payments into the online age, which date back to the launch of the web (FirstVirtual, Cybercoin, Millicent, Digicash, Internet Dollar, Pay2See, MicroMint, Cybercent, Flooz, Beenz, CyberCash, BitPass, Peppercoin, etc.). But Libra is a genuinely interesting project because it will bootstrap on a much larger network than the failed ventures that came before it. Facebook's WhatsApp alone has 1.5 billion active users in 180 countries.
Libra is best understood as PayPal 2.0, and yet the white paper invites specious comparisons to bitcoin, noting that "existing blockchain systems have yet to reach mainstream adoption." Bitcoin launched a decade ago, yet its developers are still working out fundamental engineering problems, such as how to scale the technology to service billions of transactions a day. Libra, in contrast, will launch out of the gate with the capacity to "scale to billions of accounts," with "high transaction throughput, low latency, and an efficient, high-capacity storage system."
The difference is that bitcoin is a decentralized technology that nobody controls, which creates enormous engineering challenges in security and scalability that are being solved using complex cryptography. This is a decades-long project. Libra's engineering hurdles are comparatively simple because its a centralized payment system run by a bunch of big companies. The white paper uses bitcoin buzzwords like "blockchain," which should be understood as marketing hype. Libra is fundamentally a top-down system that runs using a database, which will never change.
Why is bitcoin's decentralization worth all that extra time and effort? Because governments can't stop it. So sex workers and porn stars use it when they're denied bank accounts, drug users use it to buy banned substances through an online bazaar, it enables Venezuelans to circumvent capital controls for buying food and medicine from abroad, and Brazilians can use it to get around import taxes that run as high as 60 percent.
Libra, on the other hand, will be controlled by a handful of big companies that will have no choice but to comply with government dictates, and the white paper makes it clear that the nonprofit running the project will collaborate with regulators.
Bitcoin is also resistant to government inflation, with a supply that's capped at 21 million units. Libra will function like a central bank, with its value propped up by a basket of "bank deposits and short-term government securities" held in reserve. In Venezuela, where the government-issued bolivar is losing value at a rate of about 1 million percent per year, users could hypothetically store their money in the Libra. And in the short-term, the Libra will likely be less volatile than bitcoin, which is currently valued at less than half of its December 2017 high. (Though it has also risen 154 percent in dollar terms so far in 2019.)
The problem is that in Venezuela (like in China, Iran, and India), Bitcoin is used despite government opposition. Why would the Maduro regime tolerate a competing currency run by a bunch of U.S. companies? Keeping the Libra out of Venezuela will be much easier than quashing bitcoin, which is designed for the purpose of resisting government censorship.
In short, Facebook's Libra has the potential to disrupt payment processing companies and other financial services. Bitcoin has the potential to disrupt central banking, the surveillance state, and government power around the globe.
The post Facebook's Libra 'Cryptocurrency' Aims to Disrupt Payments. Bitcoin Aims to Disrupt Government Power. appeared first on Reason.com.
]]>On the morning of March 14, 2016, in a tiny office in Rio de Janeiro, a libertarian businessman named Winston Ling met with Jair Bolsonaro, a right-wing congressman running a longshot campaign to be president of Brazil. Some of Ling's closest associates had pleaded with him not to sit down with Bolsonaro, who was infamous for public comments praising torture and dictatorship and denigrating women and minorities. Just associating with him, they feared, would tarnish Brazil's libertarian movement, which was drawing new followers at an astounding pace and winning mainstream recognition.
Three years later, Bolsonaro is president. Ludwig von Mises scholars, free market think tankers, and even anarcho-capitalists now occupy top-level positions in his administration, where they hope to slash the government bureaucracy of the nation ranked as the absolute worst by the World Economic Forum in the category of "burden of government regulation"—a country that goes beyond regulating the number of hours that workers spend on the job to micromanaging the size and make of the punch clocks used to record their arrivals and departures. "I'm losing all my guys to government," says Hélio Beltrão, founder and president of the Brazilian Mises Institute, with a grin.
But other prominent libertarians are outraged over their former comrades' willingness to ally themselves with a politician The Intercept has called "the most extreme and repellent face of a resurgent, evangelical-driven right-wing attempt to drag the country backwards by decades."
Bolsonaro is not a libertarian; in many ways he is sharply un-libertarian. He has been working to make it easier for police to kill civilians with impunity. He has repeatedly praised the military dictatorship that ruled Brazil from 1964 to 1985. He has flatly declared himself "in favor of torture." And in 2002 he said, "If I see two men kissing in the street, I will hit them."
"It shows that their commitment to individual liberty is actually not that strong," says Joel Pinheiro da Fonseca, a libertarian columnist at Folha de S.Paulo, Brazil's largest newspaper. They want "a more authoritarian style of government that can bring about their economic policies more easily."
Ling argues that the country didn't have time to entertain fantasies of a truly principled free market politician rising to power. In 2016, when he met with Bolsonaro, the leftist Workers Party had controlled the presidency for 13 years. Brazil's unemployment rate was approaching 12 percent, and the economy had contracted by more than 3 percent the prior year. "For me this was life or death," he says. "I truly believed if someone else were elected president, Brazil would go down."
The beginning of Bolsonaro's presidency has been chaotic. The free marketeers have made some significant progress in cutting red tape but must also contend with powerful special interests that want to maintain the status quo. Concern is growing that their participation in Bolsonaro's administration will damage the libertarian movement and help the Workers Party win back credibility. If Bolsonaro fails to meaningfully liberalize the economy, says Pedro Ferreira, a co-founder of the libertarian Free Brazil Movement, "we're going to be in a lot of trouble."
Jair Bolsonaro is best understood as "Trump without the success in business," says Paulo Roberto de Almeida, a Brazilian political scientist, career diplomat, and prominent pro-market intellectual. "He's a populist, nationalist, xenophobe, [and] misogynist."
A former Army captain with an undistinguished military career, Bolsonaro served 27 years in the National Congress before he was elected president, passing just two minor bills during his entire tenure.
He was best known for his incendiary public comments. In a 2011 interview, he told Playboy that he would be "incapable of loving a homosexual son," preferring that a gay child "die in an accident." In 2016, he said the "biggest mistake" of the dictatorship that used to rule Brazil "was to torture and not to kill." In March, he asked the nation's armed forces to commemorate the 55th anniversary of that coup.
In his first months in office, Bolsonaro's most substantive policy proposal has been a draconian anti-crime package that includes more lenient treatment of police officers who kill while on duty.
Police shootings have been shockingly rampant in the country for a while. In 2017, law enforcement killed 5,144 civilians, or 14 people per day. In March 2018, two former Rio de Janeiro police officers were arrested on charges of murdering Marielle Franco, an openly gay city council member, by shooting her in the head with a submachine gun. According to Human Rights Watch, extrajudicial executions by cops are common. In 2003, Bolsonaro said that "as long as the state does not have the courage to adopt the death penalty, those death squads, in my opinion, are very welcome."
Yet Bolsonaro also has an uncanny ability to connect with voters, which is what drew Winston Ling's attention. "Every time he came to a city, there was a huge number of people at the airport," the businessman recalls.
The 63-year-old Ling is a founding figure in Brazil's libertarian movement—or movimento liberal, since the Portuguese word liberal has retained its classical meaning—who helped establish two prominent think tanks in the 1980s. He and his siblings co-own a handful of companies started by their Chinese immigrant father, who made a fortune in the soybean and petrochemical industries.
At their initial meeting in 2016, Ling gave Bolsonaro a half-hour tutorial on the Austrian school of free market economics and left him with two books, Frédéric Bastiat's The Law and Mises' Economic Policy: Thoughts for Today and Tomorrow. (He chose those two, he recalls, because they're "thin and easy to read"—and "politicians don't read.") He also offered to help Bolsonaro assemble a "council" of free market economists to join his campaign.
Bolsonaro accepted the offer, so Ling flew home to Shanghai and started working through his Rolodex. "Nobody wanted to meet him," Ling recalls, because of Bolsonaro's reputation as a populist firebrand and a homophobe. Then Ling got in touch with Paulo Guedes, who was "immediately very enthusiastic."
A respected economist who earned a Ph.D. in 1978 from the University of Chicago, Guedes has spent most of his career in finance. On November 13, 2017, he and Bolsonaro had a five-hour meeting at a Sheraton Hotel in Rio. Guedes set the ground rules: He would consider working with Bolsonaro only if given "carte blanche" over economic affairs. After winning the presidency in October 2018, Bolsonaro made Guedes "super minister," putting him in charge of a new Ministry of Economy that consolidated the government's departments of finance, planning, industry, and commerce. Guedes then appointed a group of young libertarians to high-level roles within the new department.
Guedes' brief experience in politics 30 years ago may have discouraged him from working with candidates who are more like-minded but have little chance of electoral success. In 1989, he helped craft the economic platform of Guilherme Afif Domingos, who ran for president on the Liberal Party ticket. They put forward a proposal that Brazil privatize every state-owned company and then use the revenue to wipe out the federal debt. Domingos came in sixth. "And so Brazil became a paradise for rent seekers and hell for entrepreneurs," Guedes later told Piauí magazine.
Guedes' openness to working with Bolsonaro may also derive in part from the efforts of the "Chicago boys," a group of free market economists (trained at Guedes' alma mater) who had helped guide Chile's economy under the dictator Augusto Pinochet beginning in the 1970s. Guedes had no direct involvement with this cohort, but he held a teaching job at the University of Chile in the early '80s, and he has expressed admiration for its economic impact. Thanks to the Chicago boys, Pinochet lifted price controls, slashed red tape, sold off state-owned companies, eased occupational licensing rules, and launched a quasi-private pension system.
The Chicago boys' agenda was derailed in 1982, when an ill-advised fixed exchange rate produced an economic crisis, but in the long run their reforms worked as intended. After the restoration of a democratic government in 1989, Chileans voted to continue their program of market liberalism. Three decades of spectacular growth followed. From 1987 to 2017, Chile's gross domestic product (GDP) grew ninefold and its poverty rate declined from 11.7 percent to 0.7 percent.
Of course, Pinochet also overthrew a democratically elected president, censored the press, murdered an estimated 3,200 citizens, and tortured many more. He was willing to back many of the reformers' ideas about economic liberty, but he violated other liberties in abhorrent ways.
Guedes' defenders argue that there's a fundamental difference between his work with Bolsonaro and the morally dubious alliance struck by the Chicago boys. Bolsonaro is "working within the democratic institutions of Brazil," says Diogo Costa, a political scientist with a high-level position at the Ministry of Economy who has worked at the libertarian Cato Institute and Atlas Economic Research Foundation. "I don't think [Guedes] would agree to sign on to a project that violated more fundamental principles."
Some fear, on the other hand, that Bolsonaro will gradually erode those democratic institutions. His administration "is engaged in a constant war against every single institution that could serve as an opposition to his power," says Fonseca, the libertarian Folha de S.Paulo columnist.
Pedro Menezes, a 25-year-old libertarian who writes for Gazeta do Povo and InfoMoney, has compared Bolsonaro to Hugo Chávez, the late socialist leader of Venezuela, who dismantled institutional constraints on his power after being elected. Menezes is particularly troubled by Bolsonaro's suggestion that he would consider packing the supreme court and lowering its mandatory retirement age, enabling him to appoint more justices.
Menezes decided to distance himself from his country's libertarian movement after attending an October 22, 2016 event in São Paulo that was organized by the free market Leadership Training Institute. Bolsonaro, a longshot candidate at the time, was invited on stage to join in a dialogue with a group of prominent libertarians. A large contingent of his supporters showed up, baiting the audience with chants of "Ustra! Ustra! Ustra!"—a reference to the notorious Carlos Alberto Brilhante Ustra, an army colonel who had arrested and tortured dissidents during the military regime.
Bolsonaro made outrageous comments during the event, according to Menezes, but his co-panelists treated him respectfully anyway. "I was so pissed I left in the middle," he says. "It was this transformational moment for me."
Other libertarian-leaning groups have kept their distance from Brazil's new president. Partido Novo, a political party founded in 2011, backed the more orthodox libertarian candidate João Amoêdo in the 2018 election. And the young political movement Livres, which used to be part of the Social Liberal Party (PSL), broke off in January 2018, when Bolsonaro took over the larger group.
In an essay explaining his vote to separate from the PSL, the political scientist Costa wrote that "when populism enters through the window, freedom goes out the door." But after Bolsonaro won the election and Costa was offered his position in the Ministry of Economy, he took it. "If I had to work [directly] under people who didn't share my vision and values and were committed to a different agenda," he says, "I wouldn't have" accepted.
Brazil's most influential libertarian organization is the Free Brazil Movement, which helped organize massive street protests in 2015 calling for the impeachment of Workers Party President Dilma Rousseff. (She was removed from office on August 31, 2016.) The group initially resisted supporting Bolsonaro in the 2018 election and tried to "build up more reasonable people," says Ferreira, the organization's co-founder. But Brazilians "wanted the more extreme option." After debating the issue internally, the group allied itself with Bolsonaro toward the end of his campaign.
It was a "dire" situation, Ferreira argues, because if Bolsonaro had lost, the Workers Party would have regained the presidency. And so the group launched what it called the "Patriotic Journey," sending its key representative to Brazil's northeast region to convince voters that Workers Party policies would damage their way of life.
The movement's charismatic spokesman, 23-year-old Kim Kataguiri, was elected to Congress in 2018, becoming the second youngest Brazilian currently serving. One of his first actions was to organize a 48-member "free market caucus" to support Guedes' agenda. But now that Bolsonaro is in office, Kataguiri and his group have started criticizing the president when he violates their principles. In April, after Bolsonaro threatened to cancel a planned hike in gas prices to appease the truck drivers union, Free Brazil Movement co-founder Renan Santos compared him to former left-wing President Rousseff and called him "a truck driver's bitch" on Twitter.
Bolsonaro's inner circle has embraced the one aspect of libertarianism that overlaps with its own ethos: opposition to socialism. But the critique is articulated in the language of a paranoid right-wing nationalism. In August 2018, Eduardo Bolsonaro, the president's son, met with former Donald Trump adviser Steve Bannon in New York City, announcing on Twitter that they were joining forces to fight "against cultural Marxism." After his father was elected, Eduardo became the South American representative of Bannon's "The Movement," a project to promote populism and a nationalist agenda. "The greatest Brazilian philosopher alive," according to Eduardo, is Olavo de Carvalho, a pipe-smoking septuagenarian who lectures on YouTube about the alleged dangers of globalism, feminism, and Islam, and who once claimed that Pepsi is sweetened with the cells of aborted fetuses.
Carvalho, who lives in Virginia, attended a dinner party at Bannon's house in Washington, D.C., in January. His host expressed concern that "the face of Chicago"—meaning Guedes—could derail the nationalist agenda in Brazil. Carvalho reportedly denied that this would happen. When Bolsonaro made a trip to Washington, D.C., in March to meet with Trump, he attended a dinner at the Brazilian embassy and was seated between Bannon and Carvalho.
Bolsonaro's foreign affairs minister (a position comparable to the American secretary of state) is Ernesto Araújo, a Carvalho disciple who believes the current administration will reverse the spiritual corruption caused by "a left-wing agenda" that includes "gender ideology" and "the taking over of the Catholic Church by Marxist ideology (with its attendant promotion of birth control)." Bolsonaro's first education minister was a Carvalho recommendation, Ricardo Vélez Rodríguez, who proposed an Orwellian rewrite of school textbooks, mandating that they refer to Brazil's military dictatorship as a "democratic regime of force." After a disastrous three months, Bolsonaro replaced him with another Carvalho recommendation, conspiracy theorist Abraham Weintraub, who has suggested that the introduction of crack cocaine in Brazil was a left-wing plot.
But the biggest threat to Paulo Guedes' free market agenda, according to the political scientist Almeida, might not be Carvalho or Araújo or Bannon. It's the "industrialists of São Paulo" and the "agriculturalists of Mato Grosso"—crony capitalists with an economic stake in protectionism and regulation, who will wield influence in Congress to resist his policies. "I'm not sure how long Paulo Guedes will [tolerate] the defeats he'll endure in this government," Almeida says.
Bolsonaro is already demonstrating an unwillingness to risk political capital on meaningful reforms that hurt entrenched interests. But there's cause for optimism that the new radicals in Brasília (the nation's capital city) can cut red tape in significant ways. In April, the president signed a sweeping bill to reduce the regulatory burden on businesses. It exempts companies engaged in "low-risk" activities from licensing requirements, mandates that the government establish deadlines for responding to permit requests, and loosens the rules around initial public offerings, among other things. As a provisional decree, it went into immediate effect, but it will be invalidated if Congress doesn't confirm it within 120 days.
Many of the Ministry of Economy's initiatives don't require congressional approval. For example: Attorney André Ramos, a self-described anarcho-capitalist who now directs the Department of Business Registry and Integration, has helped craft a proposal to make it easier to register a company in Brazil, further streamlining a process that was already improved dramatically by a digital government initiative predating Bolsonaro. In 2018, according to the World Bank, it took an average of 20.5 days to start a new business in the country—way down from 82.5 days the prior year. But there's a long distance to go: In Chile, it takes just six days.
In a speech this year at the World Economic Forum in Davos, Switzerland, Bolsonaro set the goal of moving Brazil into the top 50 in the World Bank's Ease of Doing Business Index over the next four years. (Its current ranking is 109 out of 190.) Fulfilling that mandate falls largely to Paulo Uebel, the Ministry of Economy's 40-year-old "special secretary of debureaucratization, management, and digital government," who oversees a staff of 1,200.
Uebel, who has held leadership positions at several libertarian think tanks, says his goal is to "simplify the lives of Brazilians" and to make the government stop "micromanaging the life of the entrepreneur." He's starting with the small stuff. If reformers go up against powerful special interests right away, Uebel says, "we're probably going to lose."
Kataguiri, now in Congress, agrees. "We'll be able to approve some reforms, but these groups are very powerful," he says. He expects "small and medium" successes, but nothing of the magnitude that "us [classical] liberals would like."
As an example of the sort of changes his team is starting with, Uebel says he wants to eliminate the rules governing the size and functionality of the punch clocks that private sector employers are required to use when tracking workers' hours. "Only two or three companies in Brazil provide this kind of punch clock," Uebel says, and they lack political clout. More significant reforms, such as eliminating controls on workers' hours—i.e., the restrictions that require a punch clock in the first place—would require a constitutional amendment that is highly unlikely to pass right now.
Uebel also plans to revise "over a thousand" federal procedures that currently require face-to-face meetings with government bureaucrats, allowing Brazilians to take care of more things online.
So what happens to the thousands of federal employees who would be replaced by websites if Uebel gets his way? They'll remain on the payroll, because the authority to cut superfluous staff would require changing the constitution. Still, Uebel says he can thin the ranks through attrition.
Theoretically, the constitution does give the government authority to fire federal workers for poor performance, but Congress must first establish a legal framework for doing so. The Ministry of Economy will be working with lawmakers to craft such a bill, according to Wagner Lenhart, an attorney—and co-author of a book about Mises—who is now the "secretary of people management." But legislation of this sort is sure to face enormous opposition from labor unions. Lenhart and Costa, who now heads Brazil's Federal School of Public Administration, will also be pushing to substitute automatic promotion of government employees with a merit-based system.
During the campaign, Bolsonaro deferred to Guedes on most questions related to economic policy. "In truth, I know nothing about the economy," the president confessed to one reporter. "This is the difference between [Bolsonaro] and Trump," says Ling. "The guy who thinks he knows everything will never be a libertarian."
But a few months into his presidency, Bolsonaro is already overruling Guedes for political expediency. Tariffs in Brazil average 8.6 percent, or 17 times the Chilean rate; in the World Bank's 2019 Doing Business survey, Brazil ranked 106 out of 190 on trade across borders. Brazil's president has the authority to slash tariffs without congressional approval, and in February his administration announced an agreement with Mexico that liberalized the trade in light commercial automobiles. But Bolsonaro has also raised tariffs on powdered milk, announcing on Twitter that "everyone has won, in particular, the consumers of Brazil."
Even before he was elected, Bolsonaro was citing the need for "responsible trade" and sympathizing with the "difficulties" that Brazilian companies face. Broad tariff reductions seem unlikely.
Guedes' first major priority is to restructure Brazil's fiscally insolvent pension system, which, because of an aging population, is projected to consume a staggering 26 percent of GDP by 2050. Standard & Poor's downgraded Brazil's credit rating last year based on its failure to pass pension reform: The system allows beneficiaries to retire at an average age of 58 and favors the better-off. The bottom 40 percent of the population gets just 18 percent of the paid benefits.
Guedes and Kataguiri are pushing for a unified system similar to Chile's sistema previsional, which would replace the current intergenerational Ponzi scheme with an arrangement in which workers contribute to private savings accounts. The government would still provide a baseline benefit for those who are too poor to contribute, and current beneficiaries would be grandfathered into the old system.
But will it pass? The negotiations underway in Congress have been chaotic, and in April, Kataguiri was losing faith. "My outlook for the future," he told The New York Times, is that "we won't approve the pension reform, we will slip into a recession, and the government will be left hemorrhaging."
Kataguiri's souring outlook reflects the Free Brazil Movement's shifting stance toward Bolsonaro. Ferreira, the group's co-founder, reflects on simpler times when the Workers Party was in power and the group could be purely oppositional, explaining to its followers that "left-wing ideas were responsible for the [economic] crisis." Now that the group is publicly associated with the president, it will be a public relations crisis for libertarians if his policies fail. "The left wing is going to come back at us," says Ferreira. They could respond by pointing out that Bolsonaro isn't really representative of their views, "but that's really hard convincing to do."
If Guedes succeeds more broadly, it could bring reductions in poverty and strong overall growth analogous to what the Chicago boys engineered in Chile. But it will come at a cost. The alliance that began three years ago on the initiative of Winston Ling, desperate to save Brazil from its worst economic crisis in modern history, was instrumental in electing a populist president who is doing significant damage to civil liberties. Brazil needs economic freedom, but it needs human rights too.
The post Libertarians Forged an Alliance With Brazilian President Jair Bolsonaro. Was It a Deal With the Devil? appeared first on Reason.com.
]]>Bob Luddy is the founder and owner of CaptiveAire, the world's largest commercial kitchen ventilation manufacturer, with $500 million in 2018 revenues, zero debt, 1,300 employees, and factories in seven states. His latest venture is a non-profit college that seeks to slash typical costs and improve quality, offering an alternative to the wasteful practices of higher ed.
"Industries fall into group think," Luddy told Reason. "Anybody in their right mind would go to a college and say, 'why do you need all these buildings?'"
Thales College, which is launching this fall in the Raleigh, North Carolina area, isn't Luddy's first education venture. He started a charter school in 1998, and a Catholic school in 2001. The charter, Franklin Academy, is the third largest in North Carolina, with four applicants vying for every one kindergarten spot. But, in Luddy's view, charters have limited potential for disruption because state regulators won't consent to radical approaches.
So in 2007 he launched Thales Academy, a network of K-12 private schools affordable for working-class families. (Watch "Libertarian Builds Low Cost Schools for the Masses.") Thales keeps costs down by cutting out virtually all administrative employees and nonessentials. Its seven locations (soon to be eight) with over 3,000 students don't have auditoriums because they're expensive to heat and cool. And they don't have sports teams, which Luddy considers distractions. Annual tuition is $5,300 for elementary school, and $6,000 for junior high and high school.
Luddy's latest project brings his brand of cost cutting and innovation to higher education. Students will pay $10,667 annually for a degree that will take just three years, since classes will run 45 weeks per year rather than the conventional 30, appealing to students and families unwilling to take on crushing debt. The school's strategy for keeping costs down will mirror CaptiveAire's: cut out non-essentials, aggressively integrate new technologies, and otherwise seek every opportunity to break with widely accepted practices that are useless or wasteful.
Thales will be a teaching college, where the faculty doesn't face pressure to publish or perish. Lectures will be offered online, so that students can watch (and rewatch) at home. Since online learning can't replicate the value of one-on-one mentoring, each student will get at least an hour per week alone with a professor.
Prospective students will need to score higher than the 60th percentile on the SAT or ACT. Thales will function as a commuter school, limiting the applicant pool, but the school may consider serving out of towners in the future. Some applicants, however, will be turned off by the offering of a single program with no electives, a Bachelor of Liberal Arts, with set courses offered in Western literature, ethics, math, logic, economics, and finance.
Luddy's decision to offer a fixed curriculum grew out of his experiences hiring talent at CaptiveAire. What "some of these graduates of engineering programs don't know is shocking," he says. The best employees, in his view, learn on the job and through their own initiative. "One of the top three engineers in our company never went to engineering school," Luddy says. His focus is on creating self-starters.
Thales College won't seek accreditation because doing so would be a "hindrance," says Dr. Timothy Hall, who will serve as the school's director of operations and academics. Accrediting institutions require that colleges have research libraries and a certain number of Ph.D.s on their faculty, according to Hall. Luddy sees college research libraries as a waste of money in the online age, and Hall says that the school will hire the best teachers, whether they have doctorate degrees or not.
Lack of accreditation means students won't be eligible for federal loans, and if they decide to transfer schools, other accredited institutions may decline to honor the credits they've accrued. Hall says that won't be a problem. "We're confident they'll be able to transfer credits," he says, because other institutions generally ask for syllabi to evaluate the quality of another school's courses. Hall's "not sure" if not being accredited will disqualify Thales alums from admission to some graduate programs, but anticipates that most will go right into the workforce. This is a school "for entrepreneurs."
Thales College will accept 45 students in its inaugural class, with ambitious expansion plans if the model is successful. In Luddy's view, ending all federal subsidies would be the fastest and most effective way to upend higher education. But that's unlikely to happen anytime soon. Societal change comes not through advocacy, but via "exit:" Create alternatives and people will vote with their wallets.
Watch our story on Luddy's K-12 network of private schools, Thales Academy:
The post Private College for $11,000 a Year? Libertarian Businessman Creates an Alternative to Higher Ed Waste appeared first on Reason.com.
]]>If New York City moves ahead with a proposal to landmark the home of the Strand Book Store, it would be putting a "bureaucratic noose" around the business, says owner Nancy Bass Wyden. "The Strand survived through my dad and grandfather's very hard work," Wyden says, and now the city wants to "take a piece of it."
Opened by her grandfather, Benjamin Bass, in 1927, the Strand is New York City's last great bookstore—a four-story literary emporium crammed with 18 miles of merchandise stuffed into towering bookcases arranged along narrow passageways. It's the last survivor of the world-famous Booksellers Row, a commercial district comprised of about 40 secondhand dealers along Fourth Avenue below Union Square.
On December 4, 2018, the New York City Landmarks Preservation Commission held a public hearing on a proposal to designate the building that's home to the Strand as a historic site. If the structure is landmarked, Wyden would need to get permission from the city before renovating the interior or altering the facade.
"It would be very difficult to be commercially nimble if we're landmarked," Wyden tells Reason. "We'd have to get approvals through a whole committee and bureaucracy that do not know how to run a bookstore."
Wyden's outrage derives in part from her family's decades of struggle to keep the business alive.
The Strand survived, she says, because of "my grandfather and my dad's very hard work and their passion…Both worked most of their lives six days a week" and they "hardly took vacations."
Why can 11 unelected individuals of the Landmarks Commission curtail Wyden's property rights? Signed into law in 1965, New York's Landmarks Act was challenged as unconstitutional 13 years later by the owner of Grand Central Terminal, which sued the city for preventing it from building a skyscraper on top of the train station.
The U.S. Supreme Court upheld the law in a 6–3 decision, setting a precedent that in the dissenting opinion of Justice William Rehnquist undermined constitutional protections. As Rehnquist wrote, the city had "in a literal sense, 'taken' substantial property rights" from the company without offering just compensation, as required by the Fifth Amendment.
Since that ruling, the number of landmarked properties in New York has more than doubled to about 36,000, encompassing more than a quarter of all the buildings in Manhattan.
Wyden (who is married to Oregon Sen. Ron Wyden) has a big platform, as the owner of a literary landmark in the media capital of the world; The New York Times, The Guardian, Fortune, and the New York Post have all written about her fight with the Landmarks Commission. "I think that there are other business owners like me that ended up just kind of getting trapped in this situation without much of a voice," Wyden says.
In her simple message to the city—"leave me alone"—Wyden is unwittingly echoing the line of retired public school librarian Ella Suydam, owner of a Brooklyn farmhouse built by her Dutch ancestor, which the city first tried to landmark in 1980. "Who the hell are you to tell me what I can do with my house," Suydam told the Commission in 1980, intimidating its members into backing off.
The city waited until 1989, when Suydam was dead, to landmark the house.
Most building owners are less successful in their dealings with the Landmarks Commission. When the city proposed designating Manhattan's former meatpacking district—a neighborhood comprised of 104 buildings—one property-owning family opposed the plan, testifying at a March 13, 2003, public hearing.
"If the buildings become part of a landmark district, this will essentially eliminate new construction," said Richard Meilman, whose grandfather, a Russian-born butcher, had purchased multiple properties in the area in the 1940s.
The Landmarks Commission designated the properties later that year.
Wyden is committed to preserving the Strand. "I want to continue the Strand forever," she says. "That's my legacy and my goal in life." She just objects to the loss of control.
"Our family's been a great steward to the building," Wyden tells Reason. "Two years ago there was a massive sewer fire. It blew out two stories of our windows and rocked the foundation. We restored the windows to the prior look and we restored the pillars to the way they originally had been even before we bought the building."
The Landmarks Commission will vote on designating Wyden's building next month. She's not optimistic.
"I've been told that nobody wins with Landmarks, but I want to fight them because it's just so wrong, and so unjust, and so unfair, and we can't let them keep running over everybody in their way."
Written, shot, and edited by Jim Epstein. Hosted by Nick Gillespie. Additional camera by Kevin Alexander.
Music: Eubie Blake, "Charleston Rag" and "Chevy Chase"; Johnny Otis his Drums & his Orchestra, "Harlem Nocturne"; The Charlie Shavers Quintet, "Dizzy's Dilemma"; Sharkey & His Kings of Dixieland, "Peculiar Rag." Source: The Great 78 Project, Archive.org.
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]]>Tim May, co-founder of the influential Cypherpunks mailing list and a significant influence on both bitcoin and WikiLeaks, passed away last week at his home in Corralitos, California. The news was announced Saturday on a Facebook post written by his friend Lucky Green.
In his influential 1988 essay, "The Crypto Anarchist Manifesto," May predicted that advances in computer technology would eventually allow "individuals and groups to communicate and interact with each other" anonymously and without government intrusion. "These developments will alter completely the nature of government regulation [and] the ability to tax and control economic interactions," he wrote.
A deeply private person, May's aversion to outside intrusions defined his philosophical outlook. "'Leave me alone,'" he wrote, is "at the root of libertarianism more so than formal theories about the nature of man."
"My political philosophy is keep your hands off my stuff….Out of my files, out of my office, off what I eat, drink, and smoke," he once told journalist Andy Greenberg.
Born in 1951, May grew up in in a suburb of San Diego before his family moved to Washington, D.C., when his father, a naval officer, was transferred there. At the age of 12, he joined a local gun club at the urging of his father and would become a lifelong collector. May was a loner, a science prodigy, and a voracious consumer of science fiction. In the summer of 1967, when entering his junior year in high school, he picked up a copy of Ayn Rand's Atlas Shrugged. "It just spoke to me," he said in a 2017 unpublished video interview with Reason, which is being incorporated into a documentary. "I read it nonstop for three days, and to the disdain of my teachers in school, I would write articles about the Anti-Trust Act and the evils of the Sherman Act."
May went to college at U.C.–Santa Barbara, took graduate physics classes, and got a job at Intel. He solved a crucial issue plaguing the functioning of memory chips, publishing his findings in a 1979 paper, and then retired in 1986 at the age of 34, cashing in his stock options. He would never have to work again.
In 1987, May's friend Chip Morningstar introduced him to the economist and entrepreneur Phil Salin—a meeting that would lead May to formulate the concept of crypto anarchy.
Salin was building the American Information Exchange, or AMiX, the first online marketplace for buying and selling information. "It was clear he was a strong libertarian of the Hayek sort," May recalled. "We all shared the same views." But Salin's vision of an e-commerce platform that would reduce transaction costs, facilitate cross-border trade, and make localized expertise more widely available didn't resonate with May's anarchism.
"People aren't going to be selling meaningless stuff like surfboard recommendations," he told Salin. May recalled suggesting that instead it could serve as "a high-tech version of Bradley Manning or Edward Snowden," paraphrasing himself.* "Or someone who can exfiltrate bomber plans for that B-1 Bomber." May later fleshed out his idea, calling "BlackNet," where "nation-states, export laws, patent laws, national security considerations and the like [are considered] relics of the pre-cyberspace era."
He also perceived a crucial flaw: BlackNet couldn't function without a non-governmental digital currency. "I admitted to Phil the big problem was untraceable payments," he recalled. "They can be tracked when they send their Visa information." The next day, May dug up a copy of the October 1985 copy of Communications of the ACM featuring a cover story by cryptographer David Chaum, titled "Security Without Identification: Transaction Systems to Make Big Brother Obsolete."
"It was an epiphany," May recalled. "It was like standing on top of the mountain and seeing that this is out there."
Chaum's work applied the tools of cryptography—mathematical techniques for sending secret messages—to real-world problems. His 1985 article sketched out a new digital currency system that used cryptography to hide a purchaser's identity. May saw Chaum's scheme as deeply flawed, but came away convinced that a decentralized, non-governmental digital money system was possible. Chaum's work also led him to focus on the political implications of public-key cryptography, a system first described in a 1976 paper that allowed perfect strangers to exchange secret messages and establish provable, pseudonymous identities.
May became convinced that public-key cryptography combined with networked computing would break apart social power structures. It would create a virtual space that May compared to "Galt's Gulch," the fictional Colorado community in Atlas Shrugged where Rand's heroes go to escape government intrusion and establish a capitalist paradise.
In September of 1988, May sat down at his Macintosh Plus "for an hour and a half" to bang out an essay loosely patterned after The Communist Manifesto. He titled it "The Crypto Anarchist Manifesto." Running 497 words, it was his most influential piece of writing.
"Just as the technology of printing altered and reduced the power of medieval guilds and the social power structure," he wrote, "so too will cryptologic methods fundamentally alter the nature of corporations and of government interference in economic transactions."
In September 1992, May and his friends Eric Hughes and Hugh Daniel came up with the idea of setting up an online mailing list to discuss their ideas. Within a few days of its launch, a hundred people had signed up for the Cypherpunks mailing list. (The group's name was coined by Hughes' girlfriend as a play on the "cyberpunk" genre of fiction.) By 1997, it averaged 30 messages daily with about 2,000 subscribers. May was its most prolific contributor.
May and Hughes, along with free speech activist John Gilmore, wore masks on the cover of the second issue of Wired magazine accompanying a profile by journalist Steven Levy, who described the Cypherpunks as "more a gathering of those who share a predilection for codes, a passion for privacy, and the gumption to do something about it."
The Cypherpunks list, which died down* shortly after September 11, 2001 ("a lot of people got cold feet about talking about this stuff"), was deeply influential at a time when the U.S. government was fighting to keep public-key cryptography out of the hands of the public. WikiLeaks founder Julian Assange was an active reader and participant on the list, contributing his first posts in 1995 under the name "Proff."
Assange's 2012 book Cypherpunks: Freedom and the Future of the Internet restated May's theory in grandiose terms, describing how "a strange property of the physical universe that we live in" (cryptography) made it possible to create "new lands barred to those who control physical reality."
Did bitcoin's pseudonymous creator, Satoshi Nakamoto, contribute to the Cypherpunks list under a different name? There's no way of knowing, but the core components of his invention incubated in its voluminous, technical correspondence. From the outset of their project, May and his fellow travelers were focused on creating an internet-based cryptographic currency shielded from government interference—completing the technical challenge Chaum had only begun to solve.
The British cryptographer Adam Back first proposed HashCash on the list, a system for creating digital scarcity (known as "proof of work") that was later cited in Nakamoto's white paper. Nick Szabo—the creator of "Bit Gold," who coined the phrase "smart contracts"—discussed his ideas on the list. Wei Dai, who Nakamoto contacted while formulating bitcoin, proposed his digital cash system, "b-money," on the list, citing May as a major influence.
Another major contributor was computer scientist Hal Finney, who died in 2014. Finney came up with the idea of using Back's technology to create an e-money; along with, Nakamoto he was the most important figure in bitcoin's early days.
May himself brought the attention of his fellow cypherpunks to a digital timestamping system developed by Stuart Haber and W. Scott Stornetta, a primitive version of what would become known as a blockchain. "I can see these connections that are not fully formed," May recalled. "I can just tell something is going to be important."
After the Cypherpunks list died down,* May's influence faded—until Nakamoto's 2008 bombshell. Bitcoin and cryptocurrency spawned a new generation of techno-libertarians self-identifying as Cypherpunks. May's writings started recirculating, and the movement found a new home: Parallel Polis, a three-story building in Prague, home to the Institute of Cryptoanarchy, which puts on an annual Hacker's Conference to advance the ideas of May and his fellow travelers.
May recently expressed disgust with the current state of the cryptocurrency community, citing its overpriced conferences and the advent of "bitcoin exchanges that have draconian rules about KYC, AML, passports, freezes on accounts and laws about reporting 'suspicious activity' to the local secret police."
"I think Satoshi would barf," he told CoinDesk in his last published interview. In my last exchange with May in November, he told me that he was done granting interviews with reporters, feeling burned out on the space. He preferred to spend his time playing with his new MIDI keyboard.
Did May's prediction of crypto anarchy turn out wrong, or is it too early to tell? In 2017, he was optimistic that many of the changes he foresaw in the late 1980s were beginning to take shape, speaking of a fork in the road—the world was moving toward either Leviathan or an "anarchic-type system." There would be no in-between.
More recently, he quoted the epitaph found on Ancient Roman gravestones: "I was not. I was. I am not. I don't care."
Rest in peace, Tim May.
[*] This post has been altered to clarify that May was paraphrasing his 1987 conversation with Phil Salin, as Manning and Snowden were not yet on the scene. It was also corrected to reflect that the Cypherpunks list wasn't dissolved after 9/11—it lost readers and influence. And it was corrected to indicate May's correct age at the time of death. He was born on December 21, 1951, making him 66 at time of death, not 67, as originally written.
The post Tim May, Father of 'Crypto Anarchy,' Is Dead at 66 appeared first on Reason.com.
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]]>On March 4, 2015, a group of union leaders, activists, and elected officials were arrested for blocking traffic during a protest in front of a Vegas Auto Spa, a small car wash in Park Slope, Brooklyn. Chanting "No contract, no peace!" and "Si se puede!," they had come in support of striking workers, who had walked out demanding a union contract after allegedly being subjected to dismal working conditions.
For David Mertz, the New York City director and a vice president at the Retail, Wholesale and Department Store Union (RWDSU), it was an inspirational moment in an ambitious six-year campaign to unionize the city's car washes industry.
"These workers were willing to stand out there during one of the coldest winters…literally in decades to fight for their rights and for basic human dignity," says Mertz, who was also arrested that day. "You have the ability to make change by coming together, and when you do that sometimes you find that you've got some friends on your side."
In the past six years, the car wash industry, which employs low-skilled, mostly immigrant workers, has also been the target of lawsuits for alleged underpayment of wages, including a handful of cases spearheaded by the New York State Attorney General's office. Working conditions in the industry were also cited as a raison d'être in the successful campaign to raise the state minimum wage to $15 per hour, which takes full effect at New York City car washes in January of 2019.
As Reason chronicled in a feature story in our July 2016 issue, the real world impact of the unionization drive, the lawsuits, and the $15 minimum wage has been mainly to push car washes to automate and to close down.
Two years later, there are more unintended consequences. The $15 minimum wage is fostering a growing black market—workers increasingly have no choice but to ply their trade out of illegal vans parked on the street, because the minimum wage has made it illegal for anyone to hire them at the market rate.
The minimum wage is also cartelizing the industry: Businesses that have chosen to automate are benefiting from the $15 wage floor because outlawing cheap labor makes it harder for new competitors to undercut them on price and service.
As a sequel to the 2016 article, this video takes an in-depth look at the real world consequences that result when politicians interfere with a complex industry they don't understand, enabled by media coverage that rarely questions the overly simplistic tale of exploited workers in need of protection.
A Failed Unionization Drive
"The car wash campaign serves as a model for what might be possible," RWDSU President Stuart Applebaum shouted from the podium during a December 2014 speech at the UNI Global Union in Cape Town, South Africa.
"The genesis of this campaign came out of a realization that you had an industry which was just a breeding ground for terrible conditions for workers," says RWDSU's Mertz. "We heard reports of workers working 60 or 70 hours a week."
The truth is that from the very beginning, nothing about the car wash campaign has gone as planned. After six years, organizers have unionized 11 businesses, or about four percent of the city's registered car washes. Two of them have since closed down, and the union withdrew at three more because of a lack of support from the workers. There are just six unionized shops remaining, or about two percent of the city's registered car washes.
And that number may continue falling.
"They just come and collect their fees, but I don't see an economic benefit from the union," says Ervin Par, a 37-year-old immigrant from Guatemala, who was speaking in Spanish. Par has been cleaning cars professionally for 10 years. He currently works at Main Street Car Wash in Queens, one of the city's six remaining unionized shops. Organizers have held two strikes at this location in the past few years, and in 2013 The New York Times covered allegations of worker mistreatment here.
Now, with the union contract expiring, Main Street could become the fourth car wash where the workers pressure RWDSU to withdraw, which would bring the total of unionized shops down to just five. "Among my colleagues, there's a majority that doesn't want the union," says Par.
Par shrugs off the idea that the workers at Main Street need union protection. "Protection from whom? If I don't like working here, I'll go find a job at a different place. There are many places to work where the pay the same. They don't pay more. They pay the same."
RWDSU's Mertz told Reason that he "doesn't have all the facts" on Main Street Car Wash "at this particular moment," adding that "we represent the workers there and we certainly hope that we'll be able to continue to do that."
The $15 Minimum Drives Automation
With the unionization drive floundering, RWDSU and its partners in the car wash campaign—the non-profit labor groups Make the Road New York and New York Communities for Change—shifted their focus to getting the city and state to mandate change. The union wrote and passed a local licensing bill known as the "Car Wash Accountability Act," including a provision designed to incentivize unionization, which was later struck down in federal court.
The most significant intervention championed by the union was an increase in the minimum wage to $15 per hour. This is upending the industry, but not in the way activists intended.
"We've heard over the years from employers repeatedly that anytime that we've made changes within the industry," says Mertz, "either they'd all automate, or the industry would suffer massive shutdowns. We haven't seen that happen to date."
Yet that's exactly what's happening.
Reason captured footage at a car wash in Queens that recently installed a new arch for hosing down vehicles, which will replace about four workers. (The owner granted us access on the grounds that we conceal the name and location of the business because he's worried about political reprecussions.)
Typical of New York's older car washes, this one was designed at a time when manual labor cost less than installing and maintaining machinery.
"Labor was cheap—real cheap," says Amir Malki, a second generation car wash builder. When he started in the industry in the 1980s, operators all over the city were actually dismantling machinery because rag, hose, and brush wielding men did a better job for less.
New fully automated car washes are also opening up, such as a state of the art facility near at 147th Avenue Plaza near JFK airport, with electronic gates, a self-serve vacuum, and a single manager on site making sure everything is running smoothly.
Car wash owners are choosing to automate even though it entails substantial risk. Take Best Auto Spa, located at 810 Pennsylvania Avenue in Brooklyn. Known as one of the city's premier handwashes, it draws clients who care deeply about the appearance of their cars and are willing to pay more for the human touch.
The $15 minimum wage means that this business model is no longer viable. So the owner of Best Auto Spa, who asked not to be named because he's worried about the political repercussions, is transforming his business from the equivalent of an artisanal bistro to just another fast food joint. Two years ago, he installed $200,000 worth of equipment, which allowed him to lay off eight workers.
Now he's facing another policy change that would further increase his labor costs. Employers are currently allowed to attribute a portion of the tips earned by their workers towards meeting the minimum wage requirement. New York State is seriously considering a proposal to eliminate the so-called tip credit. If that happens, come January, the owner says he'll have no choice but to give all these employees a pink slip and go fully automated.
Labor Lawsuits Lead to Closures
Not every car wash owner is willing to take on the risk and expense of automation, and there's another option: Exit the business and relinquish their land for more profitable uses. That's also happening at many New York car washes, such as Woodside Car Wash at 69-02 Queens Blvd., and Cambria Car Wash at 208-15 Linden Blvd., also in Queens. A couple years ago, Cambria converted to a pharmacy and a Dunkin' Donuts because, the owner says, labor costs were rising.
Several car washes have closed after their owners were sued for paying off the books, such as Harlem Hand Wash at 2600 Adam Clayton Powell Jr. Blvd, J.V. Car Wash at 4778 Broadway, and NYC Auto Spa at 70-65 Queens Blvd. At each of these locations, dozens of low-wage jobs disappeared.
The Minimum Wage Protects Incumbent Businesses
Another unintended consequences is that for business owners who choose to stick it out and automate, the $15 minimum wage actually protects them from competition by making it harder for new car washes to open up.
"Solely from being a businessman, the increase in the minimum wage makes my business so much easier—the best thing that could happen to me and I think to the industry," says Jack Belinsky, the manager of a new car wash in Queens. (Belinsky is also the vice president of the Association of Car Wash Owners.)
The car wash that Belinsky manages—the owner asked that we not publish the name or address of the business because he's concerned about political repercussions—opened last year at the site of yet another labor-heavy operation that closed following a wage and hour lawsuit. The new owner converted it to a fully automated exterior-only car wash, meaning customers are left to vacuum the interiors of their own vehicles.
"We used to do the same thing with 25 people, and now I'm doing it with two," says Belinsky.
By making cheap labor illegal, the $15 minimum wage made it possible for Belinsky to downgrade his service. "Before if I go exterior, my competition would say, 'ah, he went exterior and I'm still full-service so I'll take all his customers,'" Belinsky says. "That never gave me a chance to go exterior. Now everybody is forced to go exterior because of this crazy law and the minimum wage $15 per hour. It evened out the field."
The Industry Moves Underground
"These workers have few options and little power, RWDSU President Stuart Applebaum said in his December 2014 speech. "They live in the shadows."
The irony is that progressives have pushed the car wash workers further into the shadows.
The $15 minimum wage amounts to government prohibition of low-wage work. And yet just making something illegal won't stop able-bodied men with few alternatives from meeting a market demand for their services.
Since many legitimate car washes can no longer hire them, workers are going to the streets, where it's all cash, no tax, no unions, no workers comp, no insurance, and certainly no wage floors.
"The economy has led us to this situation to have to work washing cars in the street," says Fausto, an illegal car wash worker who asked that we only use his first name. He's part of a three-man operation washing cars on the curb out of a van for about $15 a pop.
"The customers prefer us," he says, "because when they come with bird droppings, or whatever, we clean it up. The machine can't do that.
Fausto has lived in the U.S. for 19 years, and still sends a portion of his earnings back to the Dominican Republic to help support his wife and children.
"Every week or 15 days, I send $100 for food and other expenses," he says. "I cover their necessities from here."
A Devil's Bargain
Legitimate car washes—left with no choice but to lay off workers who provide hand washes prized by customers, to install expensive machines, and to plaster their walls with operating licenses—are clamoring for the government to enforce the law and shut down the illegal operators.
"How can I compete with these guys when they're paying cash," car wash owner Stuart Markowitz said in 2015 testimony at City Hall, imploring Mayor Bill de Blasio (D), who was in attendance, to work with him to shut down the "bad operators."
"'We worry for the workers, look at the laws we made,' says Belinsky, mimicking a politician. "But if those rules are not enforced, those laws are toothless—they only hurt the good guys."
David Mertz concurs, telling Reason that the legitimate owners have a right "to be furious."
"You can also make the argument that you should allow some people to skirt the law, to skirt the regulations that are meant to protect workers in an effort to give people work opportunities," Mertz said. "That's a devil's bargain."
Or maybe the real devil's bargain is championing a set of policies that sound good at a rally, but that in the real world jeopardize the livelihoods of the working poor.
Which brings us back to Vegas Auto Spa, the Brooklyn car wash that progressive activists made an example of back in 2015. Shortly after the car wash unionized, the owner started planning his exit strategy. Two years later, he found a buyer, who kept it running for one more year. Today Vegas Auto Spa is shuttered, and the ripple effects of the entire movement have been to destabilize an industry, pushing the men and women who worked in it even deeper into the shadows.
Written, shot, edited, and narrated by Jim Epstein.
Photo Credits
Photo of Democratic U.S. presidential candidate Hillary Clinton greets unionized car wash workers at the Hi-Tek Car Wash in the Queens borough of New York City, U.S. April 18, 2016. REUTERS/Mike Segar
Photos of Council Member Carlos Menchacha's arrest. William Alatriste for the New York City Council
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]]>The Bitcoin Standard: The Decentralized Alternative to Central Banking, by Saifedean Ammous, Wiley, 286 pages, $29.95
The Truth Machine: The Blockchain and the Future of Everything, by Michael J. Casey and Paul Vigna, St. Martin's Press, 302 pages, $26.99
If you find it hard to imagine how bitcoins could ever replace dollars as the world's primary medium of exchange, consider the bizarre tale of the donut-shaped "rai" stones on the island of Yap. Weighing up to four metric tons and standing up to 12 feet tall, these rocks couldn't be slipped into a wallet, deposited in a bank, or even moved around without enormous effort.
Yet for centuries they served the Yapese people as an effective form of money, because "the high cost of acquiring new stones" made them hard to debase, writes Saifedean Ammous in The Bitcoin Standard: The Decentralized Alternative to Central Banking. The system lasted until the 1870s, when the Irish-American ship captain David O'Keefe managed to overwhelm the island's economy with a new supply of the giant limestone discs.
It's an artful beginning to a book that makes a case for bitcoin as the best form of money ever conceived, largely because its supply is permanently capped at 21 million units. That hard limit means bitcoin can never be devalued, as were the rai stones of Yap and every other historical currency to varying degrees. Thus, it can facilitate long-term planning and investment by businesses and households.
An economist at the Lebanese American University in Beirut, Ammous earned his Ph.D. in sustainable development from Columbia. Curiously, he worked as a teaching assistant under progressive economist Jeffrey Sachs, who has called bitcoin a waste of time and resources that is destined for collapse. Ammous' résumé also lists as a reference economist Joseph Stiglitz, who has called for the U.S. to "outlaw" bitcoin.
Though written with clarity and wit, The Bitcoin Standard is not the definitive work I had hoped for: a book that thoroughly counters the best arguments of bitcoin's many detractors. It also lapses periodically into odd rants attributing all of society's alleged cultural failings—from "Miley Cyrus's twerks" to "bland, mass-produced junk food"—to government-issued money, as if financing endless wars and fueling the boom-and-bust cycle weren't enough to support his case.
Yet the book's virtues far outweigh its faults. While the best writings on the topic can be forbidding to readers who lack a technical understanding of how bitcoin functions, Ammous has managed to produce a complex analysis that doesn't require any prerequisite knowledge.
The book begins by placing bitcoin in the context of other forms of currency. Though gold is resistant to inflation because it's so costly to mine, its "fatal flaw" compared to bitcoin is that it has to be stored in a physical location, making it vulnerable to government takeover. World War I–era inflation marked the beginning of the end for the gold standard. It was replaced by government-issued currency, which distorted the natural interest rate and turned money into "a plaything of politics," in the words of Ludwig von Mises.
Then came bitcoin. With no physical properties, this decentralized digital money isn't susceptible to state control, and its users don't need permission to spend their holdings. It's also "the hardest money ever invented," Ammous writes, since bitcoin's fixed supply of 21 million units is coded into the software. Previously it "proved impossible to come up with a form of money of which more cannot be created," which makes bitcoin the "first example of absolute scarcity." When the late economist Julian Simon observed that human time is the only truly limited resource, Ammous has quipped, he was only correct because bitcoin hadn't yet been invented.
With gold, a price increase incentivizes miners to excavate more of it. A bitcoin price increase, by contrast, attracts participants (also known as "miners") to contribute additional computing power to the network, indirectly strengthening its security. Ammous sees this as "perhaps the most ingenious aspect" of bitcoin's design.
Here the author parts company with many mainstream macroeconomists, who hold that inflation of the money supply is necessary to prevent the economy from freezing up.
The Cato Institute's George Selgin, a leading figure in the modern "free banking" school, maintains for different reasons that bitcoin's fixed supply makes it ill-suited to becoming the monetary standard. He thinks a growing labor force under a fixed supply of money would be especially problematic: Average compensation would be driven down over time, and workers would find this unacceptable.
There are strong counterarguments to this concern. Why couldn't workers adjust to a world in which their paychecks shrink, so long as their money grows in value even faster? The Bitcoin Standard would be a better book with a detailed rebuttal to free market economists like Selgin. Instead, it dismisses these objections as arising from mainstream confusion and fears.
In the last section, Ammous tackles the topic of "blockchain technology," the distributed ledger that is a core component of bitcoin. To understand the blockchain's purpose, consider the analogy of a banking ledger that's used to tabulate account holders' credits and debits. We entrust banks to keep their own ledgers. The bitcoin blockchain, in contrast, is maintained by the community at large—anyone can download a constantly updated duplicate copy. The file is constructed in a manner that prevents any existing information from being deleted or altered while allowing new data to be added. This system of decentralized recordkeeping enables the bitcoin network to operate without third-party oversight. But since it involves so much duplication and is built to contend with the security vulnerabilities that come with decentralization, it's also wildly inefficient.
It's a common refrain in the cryptocurrency community that this technology will have a bigger impact than bitcoin itself. Ammous calls this "cargo cult science," arguing that bitcoin will always be the only "successful implementation" of the blockchain. Because blockchains are so much more resource-intensive than traditional databases, use cases "need to be compelling enough to justify the extra costs."
In arguing that only bitcoin meets that high bar, Ammous overlooks some worthy projects in their early stages. One promising application is verifying that land title records in countries with insecure property rights are properly maintained and updated. Blockchains may also come to serve as a decentralized white pages—a shared virtual ledger for anchoring our digital identities. The most technically sound project in this space is Blockstack, which is attempting to use the blockchain as the foundation for a new, more open internet where users needn't rely on Facebook, Google, or other centralized platforms to manage their contacts, reputations, and data.
But if Ammous' bar for blockchain success is too high, Michael J. Casey and Paul Vigna have set theirs too low. The Truth Machine: The Blockchain and the Future of Everything sees this new form of database impacting just about every type of business. Casey, a senior advisor at the MIT Media Lab, and Vigna, a Wall Street Journal reporter, open their book by describing a pilot program for tracking food payments in the Jordanian Azraq refugee camp by scanning a refugee's iris and publishing the transactions to a blockchain. But the World Food Program, which runs the camp, has no incentive to falsify its records, so why not use a far less costly and cumbersome centralized database? Or a Google doc?
The authors' silliest claim is that a blockchain could prevent a repeat of the 2015 food-poisoning crisis at Chipotle Mexican Grill by "reasonably verify[ing] that its supplier butchers are appropriately handling the meat." They assert that "the very existence of an all-knowing ledger of activity could compel better behavior." How the existence of a blockchain would lead a well-intentioned butcher to remember to change his plastic gloves or wash his hands after a trip to the bathroom is unclear.
Casey and Vigna also imagine that blockchain technology could have stopped the collapse of Lehman Brothers by making its activities more transparent, because the 2008 financial crisis was essentially a "failure of trust" that entailed "a vast manipulation of ledgers." The authors explain that Lehman tricked regulators by keeping two sets of books, but they don't elaborate on why a decentralized public ledger would prevent chicanery of this sort. They also don't acknowledge that Lehman Brothers' financial records comprise too much data to live on a public blockchain.
As Ammous understands, bitcoin's most radical implications aren't about building a better database. They're about restoring the era of sound money, whether authorities like it or not. The best way to stop the next financial crisis is a new global standard of free market money that governments and banks can't control.
The post Can Bitcoin Become the Global Monetary Standard? appeared first on Reason.com.
]]>When Sam Cygler started AllCar Rent-A-Car in 1979, New York City was home to over 100 mom-and-pop rental car companies. Cygler, who at the time was running an auto repair shop in Brooklyn far from the subway, noticed that his customers often needed loaner vehicles to get to work. So he bought a couple of cars and put them up for rent. The idea took off, eclipsing the repair business altogether. AllCar Rent-A-Car grew to have 12 locations in the Big Apple with a fleet of about 2,000 vehicles.
Chains like Hertz and Avis, with their national reach and corporate partnerships, have long dominated the car rental industry. But New York's low rate of vehicle ownership provided plenty of market opportunities for local operators. By constantly "nipping at the heels of the majors," says Sharon Faulkner, executive director of the American Car Rental Association (ACRA), the independents helped keep overall rates down.
Then, a decade after Cygler got started in the industry, a series of punitive state laws started wiping out New York's mom-and-pop rental car shops. AllCar was able to stay afloat for quite a while, thanks to a couple of lucrative contracts. But when Cygler's son, Gil, finally sold the company to Enterprise in 2015, it was among the very last of a dying breed. Today, the national chains operate virtually unchallenged in the New York market—and it's no wonder that renting an economy vehicle from Avis on a weekend day in Manhattan costs an astonishing $161.
Trouble for the independents started in 1989, when the state passed a law limiting what rental companies could charge for vehicle damage to a mere $100. Customers could total a rental car and pay less than the cost of a steak dinner for two in Midtown Manhattan. Compounding the risk, Albany set the minimum age to rent at just 18 and prohibited companies from requiring that customers hold a personal car insurance policy or even a credit card. According to Faulkner, some 200 operators in the state went out of business shortly after the law went into effect.
Under its so-called "vicarious liability law," New York also exposed rental car companies to the risk of having to insure for unlimited damages when their customers were found negligent. In 1997, Faulkner was running an independent outfit in upstate New York when she got sued because an unauthorized driver—the 15-year-old son of the woman who had actually rented the vehicle—hit a pedestrian.(Faulkner's insurance company settled for an undisclosed sum.) The largest award came in 2003, when Budget was ordered to pay nearly $20 million to an accident victim.
These laws disproportionately hurt independent rental companies. The major operators are large enough to self-insure their vehicles—if someone wrecks a car, they can eat the cost and survive. The mom-and-pop outfits, on the other hand, have to buy policies on the open market. As the number of claims increased (driven in part by rampant customer fraud), insurers started withdrawing from New York altogether to avoid the headaches. Faulkner says many shops went out of business simply because nobody would sell them a policy.
The regulatory environment did improve. In 2002, the state repealed the $100 limit on what customers can be made to pay for vehicle damage, and the 2005 federal highway bill annulled New York's vicarious liability law.
But it was too little, too late. Most of the independents were already gone, and another onerous insurance law continues to scare off new entrants: New York is one of seven "primary" states (in addition to the District of Columbia), meaning that when a driver causes injury, death, or property damage to another person, the rental car company provides the first line of insurance for any claims—even if the customer declined supplemental coverage. In the rest of the country, a driver's personal or corporate insurance policy is the first to pay.
Thus, it's still a challenge for independent rental companies to find insurance vendors willing to cover them. New York's status as a primary state also explains why the car-sharing platform Turo received a cease-and-desist letter from the Department of Financial Services in 2013, forcing it to pull out of the state. Turo (originally "RelayRides") provides its users with liability insurance, but in New York the personal insurance policy of the car's owner by law must be primary, even though personal policies aren't written for this purpose. So if I loan you my car and you hit a pedestrian, my insurer is on the hook just the same as if I had been driving.
By the time he sold to Enterprise in 2015, Gil Cygler says the "writing was on the wall." The company's longtime insurance provider, Hartford, had withdrawn from the market, and it was getting much tougher to procure insurance. New Yorkers looking for a discount vehicle rental now have one option left: hop a train to New Jersey.
The post How New York Strangled Its Mom-and-Pop Rental Car Companies appeared first on Reason.com.
]]>In 2003, Venezuelan President Hugo Chávez pegged the exchange rate of the bolivar to the U.S. dollar at Bs.1,600/$1, which was one of the most disastrous policies of his 14-year tenure. Over the ensuing decade and a half, the government engaged in out-of-control money creation, with the annual inflation rate now running at over 6,000 percent. The 100 bolivar note has become more valuable shredded up and sold as confetti than as a medium of exchange.
Imports of food and medicine have dried up, and many firms only survive because the government allows them to exchange bolivars and dollars at a special discount. Officials have "weaponized" this discretionary power, cutting off companies accused of "waging economic war against the country." Trading money at the official exchange rate, which has risen to Bs.F.80,000/$1*, means depleting its value by a factor of 36, using the black market rate of about Bs.F.2.9 million/$1 as a reference.
Desperate for foreign currency, the government has moved in recent weeks to liberalize one aspect of this policy: the system by which Venezuelans living abroad send money home to their friends and relatives. Vice President Tareck El Aissami announced the move last month as an effort to thwart "organized crime mafias that foster and promote the criminal dollar." He granted three agencies with a combined 124 locations—Italcambio, Zoom Casa de Cambio, and Insular—permission to begin processing remittances through the Western Union and MoneyGram networks.
It's not clear if the government gave the three agencies complete discretion to set their own prices, but on June 12, Zoom Casa de Cambio boosted its exchange rate offering to Bs.F.1.3 million/$1. Within the last few days, it hiked the rate to Bs.F.2.2 million/$1.
Jean Paul Leidenz, a senior economist at the Caracas-based consultancy firm Ecoanalitica, says it's possible the remittance agencies are eyeing the black market rate published by DolarToday, the news site founded by Gustavo Díaz, a Venezuelan-born dissident who also works as a salesman at a Home Depot in Hoover, Alabama. DolarToday listed the exchange rate at 2.2 million bolivars on June 12, but as of today the price has risen to 2.9 million.
Today, most black market trades happen between Venezuelans who hold U.S. bank accounts and execute parallel transfers in the two countries, so the dollars exchanged never enter the country. Liberalizing remittance transfers brings dollars into Venezuela to finance imports, and opens a channel to individuals who aren't lucky enough to hold a foreign bank account.
The three remittance agencies sanctioned by the government are required to sell the dollars they collect for bolivars through the government-run auction program known as the "Sistema de Divisas de Tipo de Cambio Complementario Flotante de Mercado," or DICOM, according to Leidenz.
"It's a positive step, but it's completely insufficient," he says. "The government still only recognizes the Bs.F.80,000/$1 rate for any other use…so the distortions are going to keep happening."
Bitcoin provides another mechanism for circumventing the official exchange rate when moving money into Venezuela. In Reason's January 2017 issue, I profiled a 32-year-old expat living in Brazil, who routinely enlisted a friend to bring cash across the Colombian border to deposit in her parent's bank account, which was both risky and slow. After discovering bitcoin, she was able her to transfer money to her parents fast and hassle free.
*This post has been updated to distinguish between the bolivar (Bs.) and the "bolivar fuerte" (Bs.F.), a new currency introduced in 2008 at the valuation of Bs.1 = Bs.F.1,000.
The post Venezuela Relaxes Rules for Expats Sending Desperately Needed Money Home to Their Families appeared first on Reason.com.
]]>With medical and recreational marijuana legalization spreading across the country, Reason attended the Cannabis World Congress and Business Exposition in New York City to get a sense of where things are headed with commercialized weed and weed-related products.
We encountered retired NFL greats Leonard Marshall and Christian "Nigerian Nightmare" Okoye promoting non-psychoactive CBD oil, which they say has replaced the opioids they once needed to dull their pain; we sampled cold-brewed coffee infused with a marijuana extract that won't get you stoned but still makes for a calmer morning; we learned why candy is the go-to product for edibles; and we talked to Kate Bell, legislative counsel at the Marijuana Policy Project, about going to states where pot is legal to fight for laws that clear away the criminal records of nonviolent drug offenders.
But by far the most vision-inducing part of the conference was keynote speaker Billy Tauzin. He's a former conservative congressman from Louisiana who went on to head up PhRMA, the pharmaceutical industry's massive lobbying group. Now he works for LenitivLabs, a medical cannabis company founded by TV host, multiple sclerosis sufferer, and longtime legalization advocate Montel Williams. Tauzin himself survived a life-threatening bout with cancer and now says he wishes he could have smoked weed to ease his pain.
Christian Okoye Photo Credit: Rob Tringali Sports Chrome/Newscom
Bill Tauzin Photo Credits: Scott J. Ferrell/Congressional Quarterly/Newscom, Tom Williams/Roll Call Photos/Newscom
Marijuana flag Photo Credit: Randall Benton/ZUMAPRESS/Newscom
Trump Signs Right to Try Photo Credit: Chris Kleponis/CNP/AdMedia/Newscom
Cory Gardner Photo Credit: Tom Williams/CQ Roll Call/Newscom
Trump Pointing Photo Credit: Cheriss MayCreditCheriss May/ZUMA Press/Newscom
Music Credits: "Reefer Man" by Cab Calloway, 1932, Public Domain.
Produced by Jim Epstein and Nick Gillespie.
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The post Expect Fully Legal Weed Within 5 Years, Says Former Top Pharma Lobbyist and Congressman Billy Tauzin appeared first on Reason.com.
]]>This article is part of Reason's special Burn After Reading issue, where we offer how-tos, personal stories, and guides for all kinds of activities that can and do happen at the borders of legally permissible behavior. Subscribe Now to get future issues of Reason magazine delivered to your mailbox!
Reason has a new video out today explaining how to put together a homemade handgun using some very simple tools and parts you can buy online.
But you won't find it on our YouTube channel. After the March for Our Lives rally, YouTube announced that it would no longer allow users to post videos that contain "instructions on manufacturing a firearm."
Our video and its accompanying article are part of a package of stories in Reason's "Burn After Reading" issue. It includes a bunch of how-to's, including how to bake pot brownies, how to use bitcoin anonymously, how to pick the lock on handcuffs, and how to hire an escort.
The whole issue is a celebration of free speech and our way of documenting how utterly futile of all kinds of prohibitions can be.
We made a video showing how easy it is to DIY a Glock because we wanted to show how the First Amendment reinforces the Second Amendment. If a bunch of journalists can build a handgun in their kitchen, we can assume it'll be pretty hard to keep guns out of the hands of motivated criminals.
If YouTube prevents us from uploading the video, have they violated our First Amendment rights?
"YouTube of old days was this amazing thing that has become the digital library of Alexandria on the Internet," says Karl Kasarda, the co-host of InRangeTV, a weekly YouTube show about guns. The show used to survive on ad revenue, until YouTube started de-monetizing certain forms of content. Once YouTube made it impossible for Kasarda to make money on its platform, he started posting his content to other places, including PornHub.
Last October Prager University, a conservative video production shop, sued YouTube, saying it had restricted the audience for content and alleging that the company was "unlawfully censoring its educational videos and discriminating against its right to freedom of speech."
But here's the thing: YouTube is a private platform. There is nothing in the First Amendment (or the Second) that requires them to host our gun video. Reason can turn down articles for any cause that we choose. We can do it because we don't like the color of the author's hair, or because we don't like the font she used in her pitch email. We wouldn't be violating a single constitutional right by doing so.
We wish YouTube would run our video. It's awesome. But equally awesome is YouTube's right—our right—not to run content we don't like.
Karl Kasarda is correct that YouTube is the closest thing we have to the Library of Alexandria. It still doesn't mean they have to carry our video.
YouTube is hardly the first to test this principle. In 1972, a teachers union president who was running for state legislature sued The Miami Herald, insisting it run an editorial he had written after he was attacked in its pages. The Supreme Court correctly ruled that ordering a newspaper to print an editorial violates the First Amendment. After all, a newspaper is "more than a passive receptacle."
Prager University argued that YouTube isn't entitled to the same editorial discretion as The Miami Herald because it advertises itself as a "platform for free expression" that's "committed to fostering a community where everyone's voice can be heard." A federal judge, thankfully, dismissed the Prager lawsuit, rejecting the company's argument that YouTube is comparable to a "government entity" and thus must be open-access. A slew of other judges have arrived at the same conclusion.
YouTube deserves the same editorial latitude those judges gave to The Miami Herald in the 1970s and that Reason enjoys today.
And that's one of the things our new gun video is celebrating. If YouTube doesn't want to post it to their site, its loss. We'll just post it to another platform. That's what the free and open internet is all about. So if you want to see our video, you can watch it here at Reason.com—or head over to PornHub and see how to make your very own unregistered firearm.
Edited by Todd Krainin. Narrated by Katherine Mangu-Ward. Written by Jim Epstein and Katherine Mangu-Ward. Cameras by Meredith Bragg.
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The post YouTube Won't Host Our Homemade Gun Video. So We Posted It on PornHub Instead. appeared first on Reason.com.
]]>This article is part of Reason's special Burn After Reading issue, where we offer how-tos, personal stories, and guides for all kinds of activities that can and do happen at the borders of legally permissible behavior. Subscribe Now to get future issues of Reason magazine delivered to your mailbox!
Bitcoin is the first uncensorable digital currency: When it moves between buyers and sellers, there's nothing anyone can do to stop it. The now-shuttered online marketplace Silk Road couldn't have existed before bitcoin, because it's unfathomable that Visa, Mastercard, or PayPal would approve transactions on an e-commerce site for buying and selling illicit drugs.
Bitcoin is often mistakenly described as a "fully anonymous" cryptocurrency. In fact, while global superpowers can't prevent you from spending your bitcoins, that doesn't mean they can't figure out what you bought. More than 100 Silk Road users have gotten into trouble with law enforcement since 2012, and the Snowden leaks revealed that the National Security Agency has worked to uncover the identities of other bitcoin users as well.
Though you don't need to give up your real name to use bitcoin, transaction histories are fully visible in an online ledger called the "blockchain." Skilled digital forensics investigators can link your real identity to a bitcoin address by extracting information from pervasive "web trackers." These are hidden programs installed on your computer that capture information about your browsing and purchasing habits. Trackers, which are used by Facebook, Google, the FBI, and all sorts of malicious actors, can also record an IP address, the numeric code that identifies a home internet network. "Anonymity is misrepresented in popular culture…it's not an absolute," cryptocurrency researcher and security consultant Kristov Atlas writes in his self-published 2014 book Anonymous Bitcoin, a practical guide to concealing your identity. "The question at any given time is not, 'Am I anonymous?' but rather, 'How anonymous am I, and to whom?'"
There's no such thing as perfect anonymity, but a handful of best practices can go a long way toward shielding your transactions from government spies and other malevolents.
Don't keep your bitcoins on a custodial exchange such as Coinbase. These sites store your identity and may share it with law enforcement agencies, making transactions about as private as mailing a personal check with a return address. Instead, set up a bitcoin "wallet"—a software application that enables you to send or receive bitcoins in a peer-to-peer fashion, directly from your own computer. With a wallet, the secret codes required to spend bitcoins aren't stored by a third-party company or somewhere in the cloud. You maintain them yourself.
Atlas recommends running your bitcoin wallet on a cheap, dedicated PC laptop with the open-source Tails Linux operating system, which makes internet use hard to track. Tails Linux is designed to run off an external USB drive. (Since your laptop won't be functional until you have a working operating system, start by downloading Tails Linux on a different computer and saving it to your external drive.) Every time you finish using your dedicated bitcoin laptop, turn it off, unplug it, and disconnect the battery. This creates a fresh, anonymous session for next time that throws off trackers.
Electrum is an excellent bitcoin wallet that comes preinstalled on Tails Linux. Supplement it with a hardware USB device like a TREZOR or a Ledger Nano S, which add additional security layers that make it harder for an attacker to steal your bitcoins. The extra device will also help you detect if malware that compromises your anonymity somehow made it on to your computer. You can set the Electrum wallet to open only if one of these devices has been inserted into your computer and verified with a pin.
Start the buying process with the anonymous Tor internet browser, which comes preinstalled on Tails Linux. (You can download Tor on any computer, but you're less likely to be tracked if you use it on your dedicated bitcoin laptop.) Navigate to LocalBitcoins.com to look for a nearby bitcoin seller. Don't use your real email account to register. You can generate a temporary, anonymous email address using a service like Dispostable.com.
Meet your seller at a coffee shop with a public WiFi network. Bring your laptop, and pay with cash. Once you're there, with a click of the mouse in your bitcoin wallet, you can generate a "receiving address"—an alphanumeric code that's the equivalent of a bank routing and account number—which the seller can enter or scan into his or her wallet to execute the transfer. Arrive in a borrowed vehicle or park far away. Don't give the seller your cellphone number, and don't show him or her pictures of your kids while waiting for your multiple transaction confirmations.
To obfuscate the movement of your funds, use a bitcoin "mixing" service. These are websites that accept your bitcoins and send you back different bitcoins that have no connection to your previous activities. It's like swapping cash for bills with different serial numbers. To make the transaction record harder to follow, mixing services will generally send the "clean" coins back to you in multiple transfers over a staggered time period.
The first step is to use your bitcoin wallet to generate several receiving addresses. (Again, a "receiving address" is the equivalent of a bank account and routing number—but bitcoin allows you to generate a fresh code with every transaction for better security.) Enter your receiving addresses into the mixer's website so it knows where to send your money when the time comes. Next, enter the receiving address of the mixer service into your bitcoin wallet. Execute the transfer.
After the payment is confirmed, the mixing service will send back the clean currency. Some services let you specify the intervals in which the payments will be made.
Bitcoin mixers do have downsides: Their fees can run as high as 3 percent, and they involve a degree of risk. You're trusting that the service won't maintain a record of your activities and that it won't abscond with your funds. But if you care about anonymity, mixers are an important tool for covering your tracks.
Take precautions, like using an established service, and test it with a small amount of currency before risking a large sum. The review site Darknetmarkets.co currently recommends Coinmixer.se, Helix, and Bitcoin Blender. Keep in mind, however, that bitcoin mixers can shut down or be compromised—a service that's reliable today won't necessarily stay that way. With bitcoin, you're in control of your own money. Use that power with care and caution.
Don't forget to check out the rest of Reason's Burn After Reading content.
The post 3 Steps to Buy and Store Bitcoins Anonymously appeared first on Reason.com.
]]>Evgeny "Gene" Freidman, the flamboyant 46-year-old "Taxi King" of New York and a perennial tabloid muse, has been sued for ripping off drivers, spent time last year in a Chicago prison, and once faced criminal charges for slamming his now ex-wife against a wall.
This recently disbarred Russian immigrant, who in 2013 elicited an angry tirade from former Mayor Michael Bloomberg ("I'm going to destroy your fucking industry"), is now cooperating with federal prosecutors in the case against Michael Cohen, President Donald Trump's personal lawyer, as The New York Times reported yesterday. Freidman managed cabs for Cohen—the embattled attorney had at least 34 medallions to his name—and agreed to talk to investigators as part of a deal to downgrade state charges that he skipped out on $5 million owed to the government, which could have sent him to prison for 25 years.
Freidman, once the owner of an estimated 900 medallions, has had financial difficulties since Uber started upending the city's cab industry. New York medallions, valued at over $1 million apiece as recently as 2014, now sell for about $120,000—mostly through bankruptcy and foreclosure sales.
When Reason interviewed Freidman in 2015, a handful of his taxi garages had just filed for bankruptcy protection and he was angling for a city bailout in the form of loan guarantees for medallions. "We want big poppa paying attention to us," he said. "I want the government interested in me and protecting me….It's a scream for help and a scream by a child for attention."
In April of that year, New York City Council Member Ydanis Rodriguez (D–10th District), chair of the Transportation Committee, participated in a private meeting Friedman arranged with bankers, medallion owners, and politicians to build support for a city bailout. "As medallion values continue to drop, Council Member Rodriguez takes steps to stymie further decline," his press aide announced in a statement at the time. At that private meeting, as the New York Post reported, Rodriguez stated that the city needs to "explore the possibility to pay restitution for those who value in that investment."
Freidman made age-old justifications for government support in his inimitably crude fashion, telling Reason that "our industry brings billions of dollars to funding the MTA, to funding schools, to funding policeman, ambulances, firefighters, and so on." He also took pains to depict the taxi industry as a force for civic good, stating that "my best days" started on September 12, 2001, when people wouldn't employ "people of color or different ethnicities, and they all became taxi drivers." During Ramadan, to help his Muslim drivers "feel great" when breaking fast, Freidman says he provided them with "Subway sandwiches with vegetable[s], tuna, cheese, and chips."
For more on Freidman and how Uber destroyed his business, scroll down to watch "Uber and the Great Taxicab Collapse."
Related: Freidman is cooperating in the Cohen case as part of a deal related to charges that he defrauded the Metropolitan Transportation Authority by pocketing a 50-cent surcharge on every taxi ride that's earmarked to subsidize subways and buses. As Nick Gillespie and I recently argued, schemes of this sort violate a central tenet of good transportation policy, which is that every mode of travel should be self-sustaining. Diverting money from drivers to pay for the subway instead of raising fares is the root cause of transit's problems. For more on that topic, watch "How to Fix New York's Totally F*cked Subway System."
The post The 'Taxi King' Cooperating in the Michael Cohen Case Pleaded for a Government Bailout appeared first on Reason.com.
]]>The New York City Subway is the circulatory system for the global capital of finance and media, and today this 114-year-old engineering marvel is coming apart. Stalled trains, signal breakdowns, and constant line closures are complicating the lives of New Yorkers, who ride the trains more than five and a half million times a day.
The MTA, the public agency that runs the subways, is woefully mismanaged, fiscally irresponsible, and politically captured. Thanks to the clout of the Transit Workers Union, subway workers on average make $155,000 in total annual compensation, or more than twice as much as the passengers they serve.
The political response to this crisis has been mainly to devise new ways to collect more money for this troubled operation, such as a new "millionaires tax" or by imposing additional tolls and surcharges on cars.
But a major lesson from the first 114 years of subway history is that giving the MTA more money from outside sources is like bringing an alcoholic to an open bar. The path to real reform and accountability is to make the subway live off its customers once and for all.
"The rider should be paying the full cost with the exception of low income folks, where there's going to be some subsidy," says Baruch Feigenbaum, who's the assistant director of transportation policy at the Reason Foundation, the 501c(3) nonprofit that publishes Reason.com and Reason TV. "That is the most efficient system. It's also the best system for the rider, because if the rider is the one paying the cost, then the transit agency is serving the rider. If Albany is bailing out the transit system, then it's going to be whatever Albany wants."
Lately, "whatever Albany wants" has included budget items big and small that don't have any impact on service and reliability, such as the $5 million that the MTA spent bailing out three ski resorts in upstate New York and the $1.4 billion Fulton Street Transit Center.
And this is a theme that extends all the way back to the system's early days. The subway's troubles are deeply rooted in the decline of the fare as its primary revenue source.
When the subway opened in 1904, it was five cents a ride, which was more than enough to finance operations. But when inflation eroded the value of a nickel, the city refused to permit fare increases. By 1920, 500 other U.S. cities had raised fares on their transit systems. Meanwhile, New York City's populist mayor, John Hylan, campaigned on the preservation of the nickel fare, calling it "as sacred and binding as any contract ever drawn in the history of financial transactions the world over."
The fare did eventually go up, but not enough to keep pace with inflation, and the subway's revenue shortages became an endemic problem.
Decades later, the city and state discovered a new way to plug up the shortfall: forcing drivers to pay for transit.
In 1968, Governor Nelson Rockefeller orchestrated a backroom deal to reallocate revenues from nine major bridges and tunnels to transit. Last year alone, drivers paid $1.1 billion in tolls that were diverted to subways and buses.
The state created more hidden funding streams in the years that followed, and taxes and subsidies now comprise a larger share of the MTA's revenue than fares. These include a special sales, corporate, and payroll tax, plus fees on real estate transfers, car rentals, drivers license renewals, and vehicle registrations. And the state just imposed a brand new surcharge on taxis and ride shares coming into Manhattan, with the money going to the MTA.
These subsidies violate a central tenet of good transportation policy, which is to make each mode of travel self-sustaining.
If fare subsidies were to come to an end, could the subway survive on its customers alone? It could in 1904, when the system opened. And it could in 1982, when the MTA studied the issue, and journalist Peter Samuel wrote about it in Reason.
The key is getting riders directly invested in slashing wasteful spending and reining in wildly inflated salaries by making them feel the horror—not just of signal malfunctions, train rerouting, and line closures—but that they've paid top dollar for the privilege of such dreadful service.
Written, shot, and edited by Jim Epstein. Interview and narration by Nick Gillespie. Interview cameras by Mark McDaniel and Todd Krainin.
"New Baby" and "Subway Song" by Nicola Paone, Public Domain, archive.org.
"Fun in a Bottle", "Fast Talkin," and "C-Funk—Funkorama" by Kevin MacLeod (incompetech.com) Licensed under Creative Commons: By Attribution 3.0 License http://creativecommons.org/licenses/by/3.0/
Photo Credits:
Andrew Cuomo: Michael Brochstein/Sipa USA/Newscom
Save Our Subways Protester: Erik McGregor/Sipa USA/Newscom
Bill de Blasio: Paul Martinka / Splash News/Newscom
Make the Rich Pay: Michael Nigro/Sipa USA/Newscom
Congestion pricing now: Erik McGregor / Pacific Press/Newscom
Sheldon Silver and Cuomo: HANS PENNINK/REUTERS/Newscom
Nelson Rockefeller: Danita Delimont Photography/Newscom
NYC Toolbooth: Susan Pease / DanitaDelimont.com "Danita Delimont Photography"/Newscom
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The post How to Fix New York's Totally F*cked Subway System appeared first on Reason.com.
]]>All government support of higher education should be abolished.
That's the resolution at tonight's Soho Forum/Reason debate, featuring George Mason University economist Bryan Caplan (arguing the affirmative) and Harvard economist Edward Glaeser. The opening act is comedian Dave Smith, host of the podcast Part of the Problem.
Watch the livestream below (the event starts at 6:30pm ET), and post questions for the participants in the Facebook comments. We'll read a couple of the best at the event.
At the outset of the debate, you can also vote on the resolution. Then you'll have chance to vote again at the end of the debate. The economist who changes the most minds wins.
The post Should All Government Support for Higher Education Be Abolished? Watch the Live Debate. appeared first on Reason.com.
]]>At tonight's Soho Forum, economists George Selgin and Robert Murphy are debating fractional reserve banking.
The proposition: "Fractional reserve banking, whether practiced under a gold standard or in a modern fiat-money system, poses a threat to the stability of market economies." Murphy is arguing the affirmative, and Selgin the negative.
It's an Oxford-style debate, so audience members vote before and after the event, and the contestant who convinces the most people to switch sides wins.
Open the show is libertarian comedian Dave Smith. Watch below, or click on the link and submit a question in the Facebook comments. We'll read aloud a few of the best during the Q&A.
The post Does Fractional Reserve Banking Pose a Threat to the Economy? Watch the Livestream. appeared first on Reason.com.
]]>Mark Zuckerberg is the multi-billionaire founder and CEO of Facebook. This week he testified before Congress, assuring lawmakers that his company will play nice with government regulators.
Richard Hendricks is a character on HBO's sitcom Silicon Valley, the bumbling CEO of the unfortunately named Pied Piper. His memorable moments include evacuating his bowels, vomiting, and then lunging into a glass wall in front of his workers.
One is poised when being grilled by Congress and the other can't deliver a pep talk to his staff without hurling under his desk.
But Hendricks is a better hope for the future of the internet than Zuckerberg. Here's why.
In his testimony, Zuckerberg welcomed regulation—and agreed to help craft it. He's in the same position as late-19th-century railroad tycoons. Contrary to conventional wisdom, these robber barons embraced regulation as a way to raise the barriers to entry for competitors who were eating into their profits and market share.
Still sporting a hoodie, Richard Hendricks is at an earlier stage of his career. He's trying to build a new internet in an effort to outmaneuver Hooli, a fictional amalgamation of Google and Facebook. Richard represents the next wave of innovation—the competitor who, if government stays out of it, will eventually erode Facebook's market share by offering a better product.
Even Richard's approach to disrupting Facebook is more than just TV fantasy. There's a real movement in the tech world to build a new decentralized web that would give users actual control over their own data and create open platforms that aren't controlled by any single all-powerful CEO. One reason to bet on real-life projects such as Blockstack and Ethereum to decentralize the internet is that talented engineers are beating down their doors, because working at Google and Facebook is lucrative but soul killing.
As Facebook and Congress start to write new rules for cyberspace, all of us who believe in free expression and permissionless innovation have a stake in making sure that the future of the internet remains as open as possible.
Written by Jim Epstein and Nick Gillespie, who also narrates. Produced by Todd Krainin.
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The post Mark Zuckerberg vs. <em>Silicon Valley</em>'s Richard Hendricks: Why Facebook 'Welcomes' Regulation appeared first on Reason.com.
]]>The former residents of two square blocks at West 98th and 99th Streets in Manhattan have been holding annual neighborhood reunions since the mid-1950s, when the federal government bulldozed their homes in a "slum clearance project" spearheaded by Robert Moses.
This formerly all-black enclave was home to an A-list of black artists and intellectuals, including singer Billie Holiday, historian Arturo Schomburg, poet James Weldon Johnson, and actor Robert Earl Jones. Bordering Central Park, the community was settled in 1905 in an area with modern housing and easy access to the city's brand new subway.
The founder of the community was an African-American realtor named Philip Payton Jr., also known as "the father of Harlem." His role in the formation of what would later become the cultural capital of black America is well established. Less appreciated is the economic philosophy that guided his life's work.
Payton was an unabashed free-marketeer whose approach, as one headline writer put it, was "to make the color line costly." He believed that property owners participating in racial covenants could be forced to pay a penalty in a competitive marketplace, and that even bigoted landlords might choose "profit over prejudice" when faced with the choice.
"Race prejudice is a luxury, and like all other luxuries, can be made very expensive in New York City," Payton wrote in his company prospectus.
Payton anticipated by more than half a century some of the insights in Gary Becker's The Economics of Discrimination (1957), part of a body of work that earned Becker a Nobel Prize. He observed, as did Payton, that in a market economy, bigots who discriminate against blacks must "either pay or forfeit income for this privilege."
Just as a refusal to hire blacks means that an employer must forgo worthy employees and pay higher salaries, refusal to rent to blacks means that a landlord must forgo worthy tenants and accept less in rent. "The man who exercises discrimination pays a price for doing so," as Milton Friedman wrote in his landmark Capitalism and Freedom (1962).
Payton understood that he could exploit this market reality to buy buildings at a discount, and to sway even bigoted landlords to rent to blacks to maximize their incomes. In a racist society, with fewer options open to them in the housing market, blacks tended to pay higher rents for equivalent properties. Payton recognized he could use this regrettable fact to undermine racial covenants. "The very prejudice which has heretofore worked against us can be turned and used to our profit," he wrote.
Through competition, in theory, race-based price differentials would narrow over time. As Friedman wrote in Capitalism and Freedom, "there is an economic incentive in a free market to separate economic efficiency from other characteristics of the individual."
Born in Westfield, Massachusetts, in 1876, Payton moved to New York City at the age of 23, working briefly as a handyman and barber, before landing a job as a porter at a real estate company. That piqued his interest in the city's booming housing market, and in 1900 he went into business managing "colored tenements."
"All of my friends discouraged me," Payton later recalled. "They tried to convince me that there was no show for a colored man in such a business in New York."
At the time, black New Yorkers were relegated to a handful of overcrowded neighborhoods, with a dilapidated housing stock that typically lacked private bathrooms and hot running water. The tenements of the Tenderloin District, New York's largest black neighborhood at the time, were "human hives, honeycombed with little rooms thick with human beings," in the words of Mary Ovington, a co-founder of the NAACP.
After launching his business in 1900, Payton initially struggled for customers. But in 1902, he attended Booker T. Washington's National Negro Business League conference and began cultivating contacts among the city's black business elites. In 1904, he incorporated the "Afro-American Realty Company" with substantial backing.
"The fight that I am making has got to be made sooner or later and I see no better time than now," he wrote. His goal was to create a world where "a respectable, law-abiding negro will find conditions so changed that he will be able to rent wherever his means will permit him to live."
The origins of the West 99th and 98th Street community date to 1905, when, according to a contemporaneous article in The New York Times, a landlord on West 99th had a dispute with a neighboring property owner and retaliated by placing a sign across her two buildings welcoming "respectable colored families" to apply for tenancy. According to the Times, bigoted whites reacted by exiting the block en mass, leaving landlords desperate to fill their vacant apartments.
Enter Payton, who had written in a 1904 article: "[Why would landlords] keep their apartments empty thereby losing much money in rent, when there is an applicant for it, and no other objection can be raised to him other than that he has a black face?"
With whites fleeing, Payton started buying and leasing buildings on West 99th Street and renting them to blacks. By August of 1905, according to property records, he controlled seven out of 48 buildings on the block. He would continue acquiring more.
"Negroes Filling Up 99th Street Block," declared the headline of an August 14, 1905 article in the Times. The article described a "constant stream of furniture trucks loaded with the household effects of a new colony of colored people who are invading the choice locality is pouring into the street," while an "equally long procession moving in the other direction is carrying away the household goods of the whites from their homes of years."
In 1911, Mary Ovington wrote that the black community on West 99th and 98th Streets "ought not to be spoken of as belonging to the poor….Here are homes where it is possible, with sufficient money, to live in privacy, and with the comforts of steam heat and a private bath."
Payton's greatest symbolic triumph, however, took place uptown on West 135th Street in Harlem, when he went up against the Hudson Realty Company, a real estate outfit controlled by a group of elite white investors. As historian Kevin McGruder has documented, at one point, Hudson Realty's board of directors had included U.S. Ambassador Henry Morgenthau Sr., his older brother Maximilian Morgenthau, and Joseph Bloomingdale, the department store magnate.
The beginnings of black Harlem started forming around the turn of the century on West 135th between Fifth and Lenox Avenues. By early 1904, real estate on the block was expected to jump in value because a station on the city's very first subway line was slated to open on the corner. Hudson Realty saw opportunity; integral to its plan to enhance property values, however, was restoring racial purity on the block.
By April of 1904, the company had amassed a substantial portfolio on West 135th, and acquired four apartment buildings inhabited by blacks. It told all the tenants to move out by May 1.
Once again, Payton saw an opportunity to turn prejudice into profit. His Afro-American Realty Company immediately got title to two buildings a few doors down, and told all the white tenants to move out by the end of the month. Then he invited the dispossessed blacks from up the street to take their place. Hudson Realty offered to buy Payton's company out, but he refused.
So Hudson Reality gave up on its plans for West 135th Street real estate and started selling off its holdings. The original four buildings, where Hudson Realty had ordered the tenants to vacate, ended up in Payton's hands. Within a few years, blacks inhabited almost every building on West 135th.
As Harlem's black community spread west from 135th Street, white property owners, led by an ex-cop named John G. Taylor, organized neighborhood covenants to contain its expansion. But in the hyper-competitive world of Manhattan real estate, they rapidly crumbled under market pressures.
With a smaller supply of suitable apartments available for blacks to rent, landlords could get away with charging them higher rents than whites for similar properties. Payton recognized that this unfortunate effect of residential segregation created an incentive for landlords to break with the covenants in pursuit of higher profits. And he used this as a marketing tool, writing in a 1908 ad for his services, "If that colored tenement of yours is not paying you better than anything else you own, something is wrong."
The covenants unraveled. In 1912, for example, building owner Reginald Schenck told The New York Times that he rented his brownstone on 130th Street to blacks because "I can get more from negroes than from white tenants." The same year, Anna Lieb sold her building on 136th to a black family in violation of the racial covenant on the grounds that she had "a right to sell to any person she saw fit."
In 1913, a widowed landlord on 137th was sued by her next door neighbor for welcoming blacks to her building in violation of the covenant. Before the judge could issue a injunction, the neighbor dropped the case and joined her.
The Afro-American Realty Company was dissolved in 1908, following an ugly legal battle with some of its early backers, who claimed that the original prospectus misrepresented the company's activities. (The plaintiffs eventually recouped their initial investments.)
Payton rebounded, and he continued investing in Harlem real estate up until his death from liver cancer in 1917 at the age of 41. His work was carried on by two of his former employees, John E. Nail and Henry C. Parker, who went on to acquire over 50 apartment buildings, vastly expanding the footprint of black Harlem.
By the 1930s, as Richard Rothstein documents in his recent, groundbreaking history, The Color of Law, the federal government began its sweeping policies to foster housing segregation, including at West 98th and 99th Streets. After years of lobbying by an Upper West Side real estate group, which deemed the black community a source of blight, the two blocks were bulldozed as part of a massive urban renewal project. And rent regulation, which was first imposed in New York City during World War I, began the process of ossifying the city's housing patterns. It's a case study of how government interference in the housing market undermined the penalties that the market imposes on bigots.
More than 100 years since Payton's death, his story is a reminder that housing integration can be achieved by making racists pay a "price for their prejudice" and thereby "making the color line costly."
Video written, produced, and edited by Jim Epstein.
Music: "Jubilee Stomp" by Duke Ellington; "Washboard Wiggles," Tiny Parham And His Musicians; "Liza" and "The Dream" by James P. Johnson; "Babalu" by Jan August; "Serenade" by Herman Chittison Trio; "If I Had You" by Charlie Ventura. Source: archive.org, public domain music.
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The post Philip Payton Jr.: The Crusading Capitalist Who Outwitted New York's Racist Landlords appeared first on Reason.com.
]]>Should the sex offender registry be abolished? Watch a live debate at the Soho Forum between Emily Horowitz, a sociologist at St. Francis College, and Marci Hamilton from the University of Pennsylvania and CHILD USA. Drop questions in the Facebook comments, and we'll read aloud a few of the best at the event.
The post Should the Sex Offender Registry Be Abolished? A Live Debate. appeared first on Reason.com.
]]>"We don't have to endorse Gordon Gekko's view that greed is good anymore than we believe that selfishness is a virtue," says Gene Epstein, former economics editor at Barron's.
"The Christian morality of sacrifice and altruism is wrong," says Yaron Brook, executive chairman of the Ayn Rand Institute.
On January 16, 2018, Brook argued the affirmative in a debate with Epstein over whether selfishness is a virtue. It was an Oxford-style contest, in which the audience votes on the proposition before and after the event, and the side that sways the most people wins. Epstein was victorious, picking up 15.38 percent of the undecideds vs. 9.89 percent for Yaron Brook. Judge Andrew Napolitano, senior judicial analyst at Fox News Channel, moderated.
The event was held by The Soho Forum, Reason Foundation's debate series in New York City. Held every month at the SubCulture Theater in the East Village, it also serves as a gathering place for New York's libertarian community, with free food and a cash bar. Epstein is also the Soho Forum's director and usually moderates.
On February 12, the Soho Forum will host a debate over whether the sex offender registry should be abolished, featuring Emily Horowitz, a sociologist at St. Francis College and author of Protecting Our Kids?: How Sex Offender Laws Are Failing Us (2015), and Marci Hamilton, CEO and academic director at CHILD USA and a resident senior fellow at the University of Pennsylvania. Get tickets ($18, or $10 for students) here.
Reason will also be live streaming the debate on our Facebook page, and the audience at home can both participate in the voting and submit questions to be read aloud at the event.
Video shot and edited by Kevin Alexander. Tease by Todd Krainin.
"Drum Solo For Hospital Ghost" by Lucas Perný used under a Creative Commons license.
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The post Is Selfishness a Virtue? A Debate With Yaron Brook and Gene Epstein. appeared first on Reason.com.
]]>"We don't have to endorse Gordon Gekko's view that greed is good anymore than we believe that selfishness is a virtue," says Gene Epstein, former economics editor at Barron's.
"The Christian morality of sacrifice and altruism is wrong," says Yaron Brook, executive chairman of the Ayn Rand Institute.
On January 16, 2018, Brook argued the affirmative in a debate with Epstein over whether selfishness is a virtue. It was an Oxford-style contest, in which the audience votes on the proposition before and after the event, and the side that sways the most people wins. Epstein was victorious, picking up 15.38 percent of the undecideds vs. 9.89 percent for Yaron Brook. Judge Andrew Napolitano, senior judicial analyst at Fox News Channel, moderated.
The event was held by The Soho Forum, Reason Foundation's debate series in New York City. Held every month at the SubCulture Theater in the East Village, it also serves as a gathering place for New York's libertarian community, with free food and a cash bar. Epstein is also the Soho Forum's director and usually moderates.
On February 12, the Soho Forum will host a debate over whether the sex offender registry should be abolished, featuring Emily Horowitz, a sociologist at St. Francis College and author of Protecting Our Kids?: How Sex Offender Laws Are Failing Us (2015), and Marci Hamilton, CEO and academic director at CHILD USA and a resident senior fellow at the University of Pennsylvania. Get tickets ($18, or $10 for students) here.
Reason will also be live streaming the debate on our Facebook page, and the audience at home can both participate in the voting and submit questions to be read aloud at the event.
Video shot and edited by Kevin Alexander. Tease by Todd Krainin.
"Drum Solo For Hospital Ghost" by Lucas Perný used under a Creative Commons license.
Subscribe to our YouTube channel.
Subscribe to our podcast at iTunes.
The post Is Selfishness a Virtue? A Debate With Yaron Brook and Gene Epstein. appeared first on Reason.com.
]]>New York City is home to some of the world's worst public schools for children with special needs, places that warehouse students in chaotic and unsupportive environments. A growing number of affluent families have successfully sued the city on the grounds that these schools are so bad that taxpayers should pay to send their learning-disabled children to elite private institutions instead. It's a de facto private voucher system that is largely inaccessible to poor families.
What if the city were to provide all families with school choice, so that even disabled kids from poor homes could get an excellent education?
The status quo is the source of enormous inequities: Upper-middle-class parents are able to work the system to get the very best for their kids. But who can blame them?
Faith Retali, who asked that we use a pseudonym in this story to protect the privacy of her family, is a single mother of three boys. She lives in Bay Ridge, Brooklyn. In the third grade, her oldest son was diagnosed with dyslexia, attention deficit disorder, and severe anxiety.
"From second to third grade, he was vomiting every single morning before going to school," she says. The city recommended that she send him to a public school that specializes in serving children with disabilities. When she took a tour, she was horrified.
"You could see the students in the back of the classroom talking, disrupting," she says. "One teacher came out in the hallway and started yelling."
Although she couldn't afford the tuition, she enrolled her son in one of Brooklyn's premier private schools for children with learning disabilities. To cover the annual cost of about $45,000, she sued the city on the grounds that it had failed to provide him with an appropriate public option as required under the 1975 Individuals with Disabilities Education Act.
When her second son also turned out to have learning disabilities, Retali again sued the city to cover private school tuition. Now she's about to do it again for her youngest.
Annual city spending on private school tuition for learning disabled children was $244.1 million last school year, according to data obtained from the New York City Department of Education (NYC DOE) through a Freedom of Information Law request. That's up from $103.6 million in the 2009–2010 school year.
The city spent $55,049 on tuition for each of the 4,435 learning disabled children attending private school on the city's dime last year. That figure is likely to keep going up because settlements between parents and the NYC DOE have become more generous since Democratic Mayor Bill de Blasio took office in 2014.
David Bernstein, a publishing executive who lives on Manhattan's Upper East Side, toured some of the special education programs within the public system after his then-12-year-old daughter started experiencing crippling anxiety.
"These are places where they no longer send kids who are on an academic track," says Bernstein. "And they're no longer on a therapeutic track."
So he and his ex-wife sued. Now his daughter attends a boarding school for kids with emotional and psychological difficulties, and the city covers the entire tuition bill of $138,000 per year.
"I guarantee there are kids sitting in some of these warehouse schools who would benefit from being in the same environment my daughter is in," says Bernstein.
Though it works out well for the minority of parents able to sue, the city simply can't afford to send every learning disabled kid to private school at an average cost of $55,000 per pupil.
"It is draining hundreds of millions of dollars from classrooms that desperately need those resources," says Eric Nadelstern, who served as the second-highest ranking education official under former Mayor Michael Bloomberg, an independent whose administration fought back against families suing for private school tuition.
Though Nadelstern acknowledges that the city's special education offerings are lacking, he says that "diverting resources to a few is not a solution to the problem."
"This is not an option that parents are just happily deciding to do, they're doing it because they really feel their children need this," says attorney Alexandra Hindes, who works at the Law Offices of Neal Rosenberg, a firm that handles about 1,000 cases a year of this sort.
She says that if the system did a better job educating kids with special needs, her clients would gladly send their kids to public schools. But in the 15 years she has worked on this issue, "there haven't been significant changes that would bring parents back to the system."
Although a handful of nonprofits, such as Advocates for Children, can help needy families navigate this process pro bono, suing is out of reach for most parents without resources. "It required the ability to navigate this legal maze of stuff," says Bernstein. It cost money to hire "high-powered" lawyers and consultants. Many families don't even know such suits are an option.
The biggest obstacle is that the process often involves fronting the money for private school tuition while waiting for the lawsuits to be settled or adjudicated. Bernstein had to put up about $40,000 before the city started reimbursing him.
"It had to be borrowed and scraped together from pennies in the couch," says Bernstein. "Most people don't have the ability to raise one-tenth of that amount of money."
Suing school districts to pay for private school for learning disabled kids happens all over the country, and it's a practice that's been affirmed by U.S. Supreme Court decisions in cases originating in Burlington, Massachusetts; Florence, South Carolina; and Forest Grove, Oregon.
But it's a deeply flawed system. How can we provide poor families the same quality services without bankrupting municipalities?
One approach would be simply to give parents the money for private school without requiring that they sue. There are currently 13 states with special education voucher programs, some of which base the amount students receive on the severity of their disability.
Charter schools are another solution. While private vouchers are anathema to New York's progressive political establishment, the city has a robust charter school movement, and there's a push within that sector to better serve learning disabled students.
Democracy Prep Pathways, a charter school program in Harlem that serves 32 middle-school kids with learning disabilities, is part of that effort. The school has a 3-to-1 staff-to-student ratio and a full-time speech and language pathologist. And it serves students at a price point where the city could afford to serve many more learning disabled students—not just those lucky enough to come from families with the wherewithal to sue. Per pupil spending at Democracy Prep Pathways last year was about $33,590, compared to the $55,000 the city spends to send the average learning disabled student to a private school.
"I'm not saying there's no private institution that would be able to deliver what Pathways has delivered, but what I've seen is tremendous," says Richard Charlton, the father of a 12-year-old named Rachel whose learning disabilities stem from the fact that she was born at just 23 weeks. Charlton and his wife, Shakeria, had no idea that they could sue the city for private school tuition.
Whether it's through the real estate market or through hiring top-notch lawyers and consultants, middle-class parents have always managed to get great options for their kids. What the school choice movement is really about is extending that same privilege to everyone else.
Reason is a proud media partner of National School Choice Week, an annual event promoting parents and students' ability to have greater options in K-12 education. Go here to get more information about events and data about how increasing school choice—charters, vouchers, educational savings accounts, and more—is one of the best ways to improve education for all Americans. For a constantly updated list of stories on education, go to Reason's archive page on "school choice."
Written, produced, shot, and edited by Jim Epstein. Production assistance from Ian Keyser.
Photo of Michael Bloomberg, Credit: Bryan Smith/ZUMA Press/Newscom
Photo of Michael Bloomberg, Credit: Edward Reed/Mayoral Photography Office
"Modum," "Silence," "Curtains Are Always Drawn," by Kai Engel. Used under Creative Commons License.
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The post In New York, Rich Disabled Kids Get the City to Send Them to Private School. Poor Disabled Kids Get Screwed. appeared first on Reason.com.
]]>Is selfishness a virtue? The Ayn Rand Institute's Yaron Brook is debating Former Barron's Columnist and former New York Stock Exchange Chief Economist Gene Epstein at a live event moderated by Fox News legal expert Judge Andrew Napolitano. Watch below, and drop questions for the participants in the Facebook comments. A couple of the best will be read aloud at the event.
The post Is Selfishness a Virtue? Watch the Live Debate. appeared first on Reason.com.
]]>The Venezuelan government is developing a legal framework to tax and regulate cryptocurrency mining. As a first step, it's compiling a detailed registry of the country's miners. Carlos Vargas, recently appointed as the first "superintendent of Venezuelan cryptocurrency" by President Nicolás Maduro, announced the plan at a press conference on Tuesday.
"We want to know who they are, we want to know where they are, we want to know what equipment they are using," Vargas said. The government will launch an online registry on December 22, and miners will be required to sign up.
Meanwhile, local police have continued arresting miners.
On December 9, four days before Vargas' announcement, a criminal investigations team from the state of Lara raided a warehouse in the city of Barquisimeto, seizing 21 mining computers and arresting 31-year-old Daniel Andrés Di Bartolomeo Viloria. He was accused of money laundering, illicit enrichment, computer crimes, financing terrorism, exchange fraud, and damage to the national electric system.
"Digital currency is not endorsed by any banking institution in the world nor has it been approved by any country," the police said in an official statement. "The currency is being marketed with legal appearance but in essence it operates in secret."
Proponents of the new registry say it will create a pathway for bitcoin miners to operate with legal protections.
"Miners are working under difficult conditions and formalizing the structure through this registry will help protect them from extortion and harassment," says Angel Salazar, a member of an advisory commission helping the Venezuelan government craft its cryptocurrency regulations. Salazar, a blockchain entrepreneur and the founder of OnixCoin, says he once considered moving to Switzerland because of the risks associated with cryptocurrency in Venezuela.
John Villar, a Caracas-based software developer and the creator of the crypto-based online card game Rarepepe.party, says he's "cautiously optimistic" about the new registry.
"I find it reassuring that the government is getting into the industry," Villar told Reason. "If they do a good job implementing the registry, and are careful to protect miners from the mafia, that would be great. On the other hand, if that information got into the wrong hands, it would be disastrous. But what can the miners do besides flee the country?"
"If I were still in Venezuela, there's no way I would sign up," says David Fernando López Torres, who once ran a medium-sized mining farm in Venezuela but recently relocated to San Francisco.
"If they weren't protecting miners' rights without a registry, how can they trust that they would protect their rights with a registry? First they need to publicize what the registry will be used for, because we can't trust their intentions." López predicts miners will shun the new registry and move further underground.
The bitcoin mining industry is exploding in Venezuela, both on a small scale, with tech-savvy citizens running racks of machines in their homes, and as a covert industry, with thousands of specially-designed computers hidden in warehouses and office buildings. Mining is uniquely profitable in Venezuela because the state heavily subsidizes the cost of electricity.
Bitcoin allows users to import food and medicine through e-commerce sites such as Amazon and Walmart.com, circumventing the capital controls that have made it impossible to purchase foreign goods with Venezuelan bolivars.
Cryptocurrency mining isn't technically illegal in Venezuela, yet local police have been arresting miners since early 2016, charging them with electricity theft, exchange fraud, cybercrime, and financing terrorism. Extortion is rampant. After they're discovered by the police, miners are sometimes asked to pay protection money in exchange for staying out of legal trouble.
The government has shifted its official position on cryptocurrency in recent months. On the December 3 edition of his weekly television show, Sundays with Maduro, the president announced that Venezuela is launching its own cryptocurrency, the Petro, which he plans to use a tool for circumventing the economic sanctions imposed by the U.S.
During the broadcast, Maduro turned the microphone over to Jose Angel Alvarez, a cryptocurrency enthusiast who referred to bitcoin as a "great technological revolution" and showed off a rack of cryptocurrency miners for the cameras.
Maduro said that the "Petro" will be backed by the nation's oil reserves, and he credited "the prophet Hugo Chávez" for originating the idea, citing a 2009 interview with the now-deceased former president in which he suggested that oil-rich countries get together to create a new "petro-money" that would replace the dollar as the global-reserve currency.
Maduro also announced the formation of a new working group of industry professionals, "Observatorio Blockchain," to help figure out how the Petro will work and to formulate cryptocurrency regulatory policies.
A second group of industry professionals and engineers, which doesn't have an official name and doesn't want to be publicly associated with the government, has been holding separate meetings with Venezuelan officials since early September, according to John Villar, who has consulted with the group. One proposal discussed by the group would restrict cryptocurrency mining to the city's industrial zones, where the electricity grid tends to be more robust. Miners may also be asked to start paying a market price for the electricity they use.
On November 27, the group arranged a meeting hosted by the Ministry of People's Power for Basic, Strategic and Socialist Industries, where the discussion centered on how the blockchain, as a public ledger, could help combat government corruption.
For more on bitcoin in Venezuela, read "The Secret, Dangerous World of Venezuelan Bitcoin Mining" from our January 2017 issue.
The post Venezuelan Bitcoin Miners Must Register With the Government appeared first on Reason.com.
]]>Fifteen million able-bodied adults on government welfare would have a better chance at economic betterment if they were taken off welfare.
That's the subject of a debate happening right now at the Soho Forum between Neera Tanden from the Center for American Progress and Tarren Bragdon from the Foundation for Government Accountability. Watch below, and submit questions in the Facebook comments. We'll read aloud a couple of the best during the Q&A session.
The post Watch a Live Debate on the Welfare State's Impact on the Poor appeared first on Reason.com.
]]>Bitcoin is valuable—its price has roughly doubled in the last month—because it's a technically superior form of money that governments and other institutions can't control. Mainstream economists, however, were trained to believe that currencies need to be managed by government-controlled central banks. So this new form of free-market money is proving…hard to grasp.
Alan Greenspan hasn't bothered to learn even the basic facts about bitcoin. On Wednesday, the former Federal Reserve chairman compared it to the "Continental" currency issued at the outset of the Revolutionary War, which ultimately lost all of its value because the government kept printing more of it.
"The amount of fiat currency kept rising," Greenspan said on CNBC, "and it's very difficult to tell to what extent bitcoin is fundamentally different from that, but I will say there are very considerable similarities." When asked if bitcoin will eventually be worthless, Greenspan responded, "It depends on how they handle the issue of the quantity that's being put into the market."
(psst…Chairman Greenspan…the supply of bitcoins is capped at 21 million.) pic.twitter.com/RjDZkvErYl
— Jim Epstein (@jimepstein) December 7, 2017
Wasn't there a CNBC producer on hand who could shout something into the economist's earpiece about how the supply of bitcoin is capped at 21 million, and that about 80 percent of all bitcoins that will ever exist are already in circulation?
The Yale economist Stephen Roach appeared on CNBC on Tuesday to alert us to his view that bitcoin is a "toxic concept" and a "dangerous, speculative bubble." Roach asked rhetorically, "Have you yet to see anybody with a bitcoin in their pocket?"
It's true that bitcoin isn't widely used as a currency (except as a way to circumvent capital controls and high import taxes). But Roach seems unaware of the reasons for that. For one thing, bitcoin is still in an early stage of development. Sending or receiving bitcoin today involves publishing the transaction to a shared public database called a blockchain, which is an extremely limited resource. (There are just 1mb of data available to record bitcoin transcactions roughly every 10 minutes.) Using this data to post a transaction means paying a significant fee, which makes it prohibitive presently to use bitcoins as pocket money. But there's a new technology in development, called the lightning network, that promises to solve this problem by letting users trade bitcoins in a peer-to-peer fashion without publishing to the blockchain. On Wednesday, lightning's developers released the first version of the protocol and did the first test transaction on the bitcoin network.
Roach is right that buying bitcon is "speculation" that the technology will function as promised and gain widescale adoption. But that doesn't make it "toxic."
A partial exception to the mainstream confusion over bitcoin is the Hoover Institution economist John Cochrane, who argues in a recent blog post that it has value because of its "convenience yield"—i.e., it has unique features as money. Like cash, it's hard to detect, so it provides users with a way around "aspirational laws that if enforced would bring the economy to a halt." It also "facilitates ransomware," "laundering money," and "getting money out of China." Overall, bitcoin is a tool to "avoid both the beneficial and destructive attempts of governments to control economic activity and to grab wealth."
That's all true, but Cochrane doesn't mention that bitcoin also provides a way to escape hyperinflation, which is how it's currently being used in Venezuela. Even the U.S. government prints money to finance debt and pay for the welfare-warfare state without raising taxes, thus distorting the natural rate of interest and fueling a ruinous boom-and-bust cycle. Bitcoin offers refuge from these distortions.
Cochrane also characterizes bitcoin as "an electronic version of gold," which is like calling the internet an electronic version of the post office. Part of bitcoin's "convenience yield" is that it's programmable money that's digitally native. In the future, it has the potential to facilitate machine-to-machine payments, permit "streaming money," provide a value layer to the internet, decentralize web services, and allow for the creation of financial contracts that can be executed in code.
The mainstream misunderstanding of this technology reminds me of a conversation I had a couple years ago with a prominent libertarian writer who has spent his career advocating a return to the gold standard. When I asked what he thought of bitcoin, he said "I don't get it" and changed the subject. We need a new generation of experts.
The post Bitcoin Confuses Alan Greenspan appeared first on Reason.com.
]]>"Fifteen million able-bodied adults on government welfare would have a better chance at economic betterment if they were taken off welfare."
That resolution will be debated by Neera Tanden, president of the Center for American Progress, and Tarren Bragdon, president of the Foundation for Government Accountability, on Monday, December 11 at New York City's Subculture Theater. The event is part of the Soho Forum, a monthly Oxford-style debate series that's sponsored by the Reason Foundation. Its mission is to feature "topics of special interest to libertarians" while enhancing "social and professional ties within New York's libertarian community."
Doors open at 5:45 p.m. and the event starts at 6:30. There will be a cash bar and food that's included with admission. Tickets are $18 ($10 for students) and must be purchased in advance. You can bring a friend for free.
For those who can't attend, we'll also be live streaming the event on Reason's Facebook page, where you'll be able to vote for the winner and drop questions for Tanden and Bragdon in the comments. We'll take a couple of the best and read them aloud at the event.
Later, we'll also run the event the event at Reason TV's YouTube Channel and on the Reason Podcast. For past Soho Forums, go here.
The post Would the Poor Be Better Off Without Welfare? A Debate Next Week in New York City. appeared first on Reason.com.
]]>John Stossel joins Nick Gillespie and Matt Welch live at 1 p.m. ET / 10 a.m. PT. Ask us anything! Start posting your questions in the comments. In the meantime, check out the archive of Stossel on Reason videos.
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