Saturday 13 June, 2020

Saturday 13 June

Quote of the Day

Some on the left drew a strange consolation from Trump’s hostility to foreign wars, as if it meant he could be a tactical ally against American imperialism. They failed to see that he wanted to wage war at home: his furious inauguration speech with its talk of ‘American carnage’ was a declaration of war on urban racial liberalism, especially as represented by New York, the city that had rejected him.


 

The West’s ‘China problem’

I started the day reading Peter Oborne’s piece on whether China will replace Islam as the West’s new enemy — and then got sucked into the rabbit-hole of whether we are sliding into a new Cold War, with China playing the role that the Soviet Union played in the old days. This is all about geopolitics, of course, about which I know little. But if you write about digital technology, as I do, this emerging Cold War is a perennial puzzle that pops up everywhere. For example, in:

  • the discussions about whether Huawei kit should be allowed in Western 5G networks;
  • whether we should be concerned about becoming addicted to Zoom, a company with a sizeable chunk of its workforce and infrastructure based in China;
  • what to make of China’s increasing technological assertiveness at the ITU over changing the centrals protocols of the TCP/IP-based Internet we use today
  • anxieties in (mostly-US companies and the US government) about the inbuilt advantages an authoritarian regime has in fostering the development of ‘AI’ (aka machine-learning) technology, the essential feedstock for which is unlimited volumes of user data — as compared with the way our liberal reservations about privacy and civil rights hobbles our tech giants.
  • the strange and enduring legacy of old Cold War attitudes in the Western military-industrial complex which continually obsesses about Russia rather than China.

This last factor is particularly weird. In the immediate post-war period, we lived in a genuinely bi-polar world, with competition between two different economic and ideological systems — the Soviet, centrally-planned one, and the Western liberal capitalist one.

As it happens, we in the West greatly over-estimated the capacity of the Soviet system, perhaps because it seemed to be very good at some things — nuclear weapons development and space science in particular. In part we owe the Internet to the fright the US received when in 1957 the USSR launched Sputnik, the first earth-orbiting satellite. This, among other things, led to the establishment of the Advanced Research Projects Agency (ARPA) in the Pentagon, which was the organisation that conceived and funded Arpanet, the precursor of today’s Internet.

Nevertheless, it remained true that the bi-polar world into which I was born was based on an ongoing contest between two socio-economic systems which could be — and were often — seen as genuine alternatives.

This bi-polar world evaporated in 1989 when the Berlin Wall came down and two years later the USSR imploded, leaving the Western model apparently triumphant. This was the moment that coincided with the publication of Francis Fukuyama’s ‘End of History’ essay, which argued that the post-1917 ideological competition about the best way to organise society had been decisively resolved with liberal democracy as the winning candidate. This was an overly-simplistic reading of Fukuyama, but what was indisputable was that, post-1989, we moved into a uni-polar world, with the US as the reigning hyper power, able to do exactly as it pleased. Which it did, including launching a disastrous war in Iraq on a pretext, and further destabilising the Middle East as a consequence.

But even before 1989, things were beginning to change elsewhere in the world. In 1978, in particular, as Laurie Macfarlane points out,

Deng Xiaoping became China’s new paramount leader, after outmanoeuvring Mao’s chosen successor, Hua Guofeng. Deng oversaw the country’s historic ‘Reform and Opening-up’ process, which increased the role of market incentives and opened up the Chinese economy to global trade. In the decades since, China’s economic transformation has been nothing short of astonishing.

In 1981, 88% of the Chinese population lived in extreme poverty. In the four decades since, nearly a billion people have been lifted out of poverty, leaving the figure at less than 2%. Over the same time period, the size of China’s economy increased from $195 billion – around the same size as the Spanish economy – to nearly $14 trillion today. By some measures, China’s economy has overtaken the US and is now the largest in the world. China is also home to the second largest number of Fortune 500 companies in the world, and more billionaires than Europe.

So even as the old bi-polar world was dying, a new alternative system was being born. I don’t think that Deng had many geopolitical ambitions, but his successors certainly had. And have.

China’s astonishing economic transformation has been engineered by a distinctive economic model which they call “socialism with Chinese characteristics”, combining strategic state ownership and planning with market-oriented incentives and a one-party political system to create a unique economic model that while poorly understood in the West is found interesting and perhaps attractive by a significant number of non-aligned countries.

It doesn’t look much like ’socialism’ to anyone who studies the tech sector, because the private sector accounts for the overwhelming majority of output, employment and investment in China; and there is — as Macfarlane points out, little sign of democratic workers’ control. But it’s a powerful and effective system, and — to date — it appears to be working. Which is more than could ever be said for the Soviet system.

So here we are in a bi-polar world again. But it’s nothing like its predecessor. In the old Cold War, for example, European democracies were resolutely anti-Soviet (even if they didn’t always pay their mandatory 2% of GDP into the NATO budget). But now, with China as the opposite ‘pole’ to the US, they’re much more ambivalent. As are many global companies. China’s role as the workshop of the world, and also as the fastest growing and potentially most profitable market, means that outright hostility to the new superpower looks like a self-defeating policy.

This doesn’t bother Trump, whose most desperate need is to find an enemy he can blame for the unfolding disaster of the pandemic that has occurred on his watch. And it isn’t just Trump, as Peter Oborne says:

China is being presented as the new existential enemy, just as Islam was 20 years ago. And by the very same people. The same newspaper columnists, the same think tanks, the same political parties and the same intelligence agencies.

After Huntington’s famous essay that led the charge against Muslims – or what they often call radical Islam – now they have turned their attention to the Far East.

US President Donald Trump, the world’s Muslim-basher-in-chief, has now started to attack China, rather as Bush, his Republican predecessor, attacked Iraq in 2003 and the “axis of evil” 20 years ago. During his campaign in 2016 he accused China of “raping” the US economy.

However, since the outbreak of Covid-19, Trump’s attacks have gained speed and traction. He has accused China of covering up the virus and lying about its death toll.

Leaving aside Trump, who thinks only in transactional terms and doesn’t seem to have any strategic sense, the impression one gets from the US foreign policy establishment is of hegemonic unease. The feeling that it would be disastrous if the US lost its position as the global leader in digital technology is palpable. And it’s ruthlessly exploited by the tech companies — as we saw when the Facebook boss ‘testified’ to Congress and hinted that not hampering (i.e. regulating) the tech giants is a way of ensuring the continuance of US technological hegemony.

So is American hegemony really in doubt? Writing in 2018, Adam Tooze was sceptical:

As of today, two years into the Trump presidency, it is a gross exaggeration to talk of an end to the American world order. The two pillars of its global power – military and financial – are still firmly in place. What has ended is any claim on the part of American democracy to provide a political model. This is certainly a historic break. Trump closes the chapter begun by Woodrow Wilson in the First World War, with his claim that American democracy articulated the deepest feelings of liberal humanity. A hundred years later, Trump has for ever personified the sleaziness, cynicism and sheer stupidity that dominates much of American political life. What we are facing is a radical disjunction between the continuity of basic structures of power and their political legitimation.

If America’s president mounted on a golf buggy is a suitably ludicrous emblem of our current moment, the danger is that it suggests far too pastoral a scenario: American power trundling to retirement across manicured lawns. That is not our reality. Imagine instead the president and his buggy careening around the five-acre flight deck of a $13 billion, Ford-class, nuclear-powered aircraft carrier engaged in ‘dynamic force deployment’ to the South China Sea. That better captures the surreal revival of great-power politics that hangs over the present. Whether this turns out to be a violent and futile rearguard action, or a new chapter in the age of American world power, remains to be seen.

And if you felt that this post was TL;DR. (Too long, don’t read) I perfectly understand. E.M. Forster once observed that there are two kinds of writer: those who know what they think and write it; and those who find out what they think by trying to write it. I belong mostly in the latter category.


Quarantine diary — Day 84

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Wednesday 25 March, 2020

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Why America is so bad at Covid-19.

It’s our attitude, there are never consequences for Americans. That’s for other people. We have wars and tax cuts at the same time. We don’t see the coffins of our returning dead. Nothing happens to us. We can’t imagine things not being normal. The generation that grew up during World War II, who experienced the Holocaust, the advent of nuclear weapons, that generation is gone now. Everyone alive today, not just boomers, have been spoiled. We’re all coming awake now from a life-long trance. For the first time in our lives, we have to deal with the mortality of our country. Don’t cry for America. It’s time to grow up, again. Couldn’t have a more perfect person as president. It’s easy to see he is our past. Now how do we move beyond that?

Dave Winer


The Real Pandemic Danger Is Social Collapse

Branko Milanovic: “As the Global Economy Comes Apart, Societies May, Too”.

Sobering essay in Foreign Affairs. Sample:

The world faces the prospect of a profound shift: a return to natural—which is to say, self-sufficient—economy. That shift is the very opposite of globalization. While globalization entails a division of labor among disparate economies, a return to natural economy means that nations would move toward self-sufficiency. That movement is not inevitable. If national governments can control or overcome the current crisis within the next six months or a year, the world would likely return to the path of globalization, even if some of the assumptions that undergirded it (for example, very taut production chains with just-in-time deliveries) might have to be revised.

But if the crisis continues, globalization could unravel. The longer the crisis lasts, and the longer obstacles to the free flow of people, goods, and capital are in place, the more that state of affairs will come to seem normal. Special interests will form to sustain it, and the continuing fear of another epidemic may motivate calls for national self-sufficiency. In this sense, economic interests and legitimate health worries could dovetail. Even a seemingly small requirement—for instance, that everyone who enters a country needs to present, in addition to a passport and a visa, a health certificate—would constitute an obstacle to the return to the old globalized way, given how many millions of people would normally travel.

If de-globalisation does indeed start to happen, then that will produce — in Arnold Kling’s terms — “losers and bigger losers (it won’t produce many winners)”. What matters in a de-globalised world is how self-sufficient you are. Kling cites Peter Zeihan’s view that the U.S. is one of the few countries that produces enough food and energy for itself. China, on the other hand, needs to import both. That would lead one to predict that China will be in the “bigger loser” category.

Hmmmm…


Quarantine FM

My son Pete is a talented podcast producer. He’s currently hunkered down on his narrow boat in London and had the idea of creating something that would provide pleasure to people stuck in the self-isolation zone. This is the first episode. Subscribe using whatever you use to catch podcasts.


The last global crisis didn’t change the world. But this one could

Typically insightful essay by the incomparable Will Davies. He addresses a question that has always puzzled me, namely why the 2008 banking crisis didn’t provoke a radical rethink of how we run our societies. It did, of course, eventually produce a populist backlash against the ‘austerity’ imposed on ordinary citizens in order to ensure that banks would be rescued while no bankers went to gaol. But in most ways, the system continued as it had before, except with slightly better financed banks (outside of Italy, perhaps). So in that sense the 2008 cataclysm wasn’t a real crisis — i.e. an event that leads to structural and ideological change.

“The decade that shapes our contemporary imagination of crises”, he writes,

is the 1970s, which exemplified the way a historic rupture can set an economy and a society on a new path. This period marked the collapse of the postwar system of fixed exchange rates, capital controls and wage policies, which were perceived to have led to uncontrollable inflation. It also created the conditions in which the new right of Margaret Thatcher and Ronald Reagan could ride to the rescue, offering a novel medicine of tax cuts, interest rate hikes and attacks on organised labour.

Oddly, the 1970s inspired a vision of crisis as a wide-ranging shift in ideology, which has retained its hold over much of the left ever since.

For over 40 years after Thatcher first took office, many people on the left have waited impatiently for a successor to the 1970s, in the hope that a similar ideological transition might occur in reverse. But despite considerable upheaval and social pain, the global financial crisis of 2008 failed to provoke a fundamental shift in policy orthodoxy. In fact, after the initial burst of public spending that rescued the banks, the free-market Thatcherite worldview became even more dominant in Britain and the eurozone. The political upheavals of 2016 took aim at the status quo, but with little sense of a coherent alternative to it. But both these crises now appear as mere forerunners to the big one that emerged in Wuhan at the close of last year.

So the question now is whether COVID-19 is really a pivotal moment? Davies thinks that it might be.

Great essay. Worth reading in full.


Herd immunity redux

Remember the ‘herd immunity’ strategy for dealing with Coronavirus? That’s the strategy that was kyboshed by the Imperial College model. Well now a modelling team at Oxford is suggesting that the virus may already have infected far more people in the UK than scientists had previously estimated — perhaps as much as half the population — according to a report in yesterday’s Financial Times.

If the results are confirmed, they imply that fewer than one in a thousand of those infected with Covid-19 become ill enough to need hospital treatment, said Sunetra Gupta, professor of theoretical epidemiology, who led the study. The vast majority develop very mild symptoms or none at all.

The research, observes the FT,

presents a very different view of the epidemic to the modelling at Imperial College London, which has strongly influenced government policy. “I am surprised that there has been such unqualified acceptance of the Imperial model,” said Prof Gupta.

(Experts in the conventions of academic warfare will be able to decode that genteel observation.)

But Prof Gupta was reluctant to criticise the government for shutting down the country to suppress viral spread, because the accuracy of the Oxford model has not yet been confirmed and, even if it is correct, social distancing will still reduce the number of people becoming seriously ill and relieve severe pressure on the NHS during the peak of the epidemic.

Let the war of the models begin. We will only know the truth when the UK has a large-scale programme for testing in the population at large. At the moment we’re still flying blind.


Quarantine diary — Day 4

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Monday 27 January, 2020

Does it make sense to confine Huawei to the ‘non-core’ part of a 5G network?

This seems to be the UK’s fallback position to avoid antagonising the Chinese state (though it won’t mollify the Americans). Bruce Schneier has some interesting things to say about this. Sample:

The 5G security problems are threefold. First, the standards are simply too complex to implement securely. This is true for all software, but the 5G protocols offer particular difficulties. Because of how it is designed, the system blurs the wireless portion of the network connecting phones with base stations and the core portion that routes data around the world. Additionally, much of the network is virtualized, meaning that it will rely on software running on dynamically configurable hardware. This design dramatically increases the points vulnerable to attack, as does the expected massive increase in both things connected to the network and the data flying about it.

Second, there’s so much backward compatibility built into the 5G network that older vulnerabilities remain. 5G is an evolution of the decade-old 4G network, and most networks will mix generations. Without the ability to do a clean break from 4G to 5G, it will simply be impossible to improve security in some areas. Attackers may be able to force 5G systems to use more vulnerable 4G protocols, for example, and 5G networks will inherit many existing problems.

Third, the 5G standards committees missed many opportunities to improve security. Many of the new security features in 5G are optional, and network operators can choose not to implement them. The same happened with 4G; operators even ignored security features defined as mandatory in the standard because implementing them was expensive. But even worse, for 5G, development, performance, cost, and time to market were all prioritized over security, which was treated as an afterthought.

Schneier’s view is that “It’s really too late to secure 5G networks”. 5G security, he says,

is just one of the many areas in which near-term corporate profits prevailed against broader social good. In a capitalist free market economy, the only solution is to regulate companies, and the United States has not shown any serious appetite for that.

What’s more, U.S. intelligence agencies like the NSA rely on inadvertent insecurities for their worldwide data collection efforts, and law enforcement agencies like the FBI have even tried to introduce new ones to make their own data collection efforts easier. Again, near-term self-interest has so far triumphed over society’s long-term best interests.

And of course there’s also the fact that there have probably always been US-friendly backdoors in Cisco kit, as this report from the FT the other day suggests.


Sajit Javid and the ‘quiet hegemon‘ he’s clearly never heard about

Javid, who is currently Chancellor of the Exchequer, was grandstanding the other week about how the liberated UK would break free of EU red tape. In an interview with the Financial Times he warned UK manufacturers that “there will not be alignment” with the EU after Brexit and insisted that firms must “adjust” to new regulations.

Not surprisingly, this caused alarm in many business sectors whose prosperity depends on adhering to EU regulations. And so Javid — possibly under instruction from Number 10 — started to row back, saying that the government will only use the freedom to diverge if it thinks the change is worthwhile, and after the pros and cons have weighed up.

The Chancellor has form in shooting his mouth off. I remember that he spoke at the launch of the previous government’s White Paper on online harms. He was then Home Secretary (aka Minister of the Interior) and his speech was less about online harms and more about how he was the tough guy who would stamp out this kind of harm. In effect, it was part of his campaign to replace Theresa May, then on her last legs as Premier.

I viewed his Financial Times interview through the same lens. He’s like Boris Johnson during May’s tenure, perpetually in campaigning mode. There are however, some harsh realities about regulatory divergence that suggest he could be riding for a fall. Today, for example, the CEO of Volvo is reported (by the FT) as saying that certifying his company’s cars for the UK market would not be worth the cost if UK rules diverged significantly from the EU’s. The result, UK consumers would have a smaller range of Volvos to choose from. And there’s an interesting new book out — The Brussels Effect: How the European Union Rules the World by Ann Bradford, an academic study detailing how, in a world increasingly driven by standards, EU standards have quietly become global standards. (Think GDPR.)

In that way, the EU has become a “quiet hegemon” of which it seems the Westminster bubble is blissfully unaware.

Hong Kong: only two possible end-games

Roger Cohen, in today’s NYT:

The most significant, perhaps the only, foreign policy achievement of the Trump administration has been to get behind the Hong Kong protesters while pressuring Xi on trade and keeping channels open to the Chinese leader. This American pressure, which has made Trump popular in Hong Kong, must not relent.

Mike Bloomberg, who has said Xi “is not a dictator,” and Joe Biden, who has said China “is not competition for us,” should take another look. Universal suffrage for Hong Kong is the only endgame I can see to the “one country, two systems” impasse, short of the People’s Liberation Army marching into the city and all hell breaking loose.

China’s abuse of human rights is possibly the only thing that the fractured US Congress agrees about. And Trump reluctantly signed the Bill.

Back to the future

The FTC is suing Qualcomm, the chip maker, in the first major monopoly case since the Microsoft one all those years ago. In his weekly newsletter, Matt Stoller provides a useful historical comparison to put the case in its context:

Qualcomm is a very important corporation, but one you may not have heard of because it doesn’t do consumer oriented work. The company makes critical components for cell phones, the stuff you don’t see but that goes into the guts of telecom systems. Its technology connects phones to cell networks, and it makes its money by selling chips and by licensing its patents to device makers.

The story of how Qualcomm monopolizes is pretty simple. The corporation does what Bill Gates did to computer manufacturers and what John D. Rockefeller did to railroads, as I wrote a few weeks ago. Rockefeller’s oil was critical to railroads, and Gates’s operating system software was critical to computer makers. Both of them thus forced their dependents to give them a fee not just for every Rockefeller barrel of oil or Microsoft OS license, but a fee for every one of their competitors’ as well. They taxed their competition and made it impossible to compete.

Qualcomm does this as well. As its competitor Intel explained, Qualcomm “refuses to sell [phone makers] any chipsets unless those manufacturers also purchase separate patent licenses that require them to pay exorbitant royalties for every handset they sell, regardless of whether the handset contains a Qualcomm chipset.” In other words, it’s the Gates/Rockefeller playbook. Find an essential chokehold, and use it to control the industry.

Qualcomm uses a few other anti-competitive tactics. It refused to license its patents – essentially standard and necessary for the industry – to competitors. And it cut exclusive deal arrangements with customers to box anyone else out of the market. (You can read the rest of Intel’s amicus brief if you want to hear expensive lawyers accurately whine about being treated unfairly.)

The strange thing is, though, that important sectors of the US government are trying to intervene in the case, effectively opposing the FTC. Their argument is that the suit undermines national security.

The DOJ argument is basically saying, yeah, Qualcomm does all that stuff, but Judge Gorsuch said it’s all legal and efficient, and we don’t want to dissuade the liberty to abuse patents and market power. Two other officials, one at the Department of Defense and another at the Department of Energy, also weighed in. Ellen Lord, a former defense contractor and the Under Secretary of Defense for Acquisition and Sustainment for the DOD, argued that Qualcomm’s position as a monopolist enables it to support national security and help China. A Department of Energy official Max Everett basically said the same thing.

The national security argument is BS, says Stoller, but not for the reason you’d think. He quotes an excerpt from a WSJ OpEd by Michael Chertoff, a former senior Cabinet officer in previous US administrations.

In the technology race against China, the U.S. should prefer to let competition drive innovation rather than support exclusive national champions. Apart from the economic inefficiency, a single-source national champion creates an unacceptable risk to American security—artificially concentrating vulnerability in a single point. The government’s argument in support of Qualcomm isn’t prudent, and if courts accept it, the result would be a self-inflicted wound to U.S. national interests. We need competition and multiple providers, not a potentially vulnerable technological monoculture.

Underpinning this argument is a prevailing denialism about China in the American Deep State. What happens, Stoller says, is that China either hacks US corporations to steal their intellectual property, or acquires it legally when they try to do business in China. So: China innovates at speed by topping up its own (substantial) native ingenuity with the ideas and wisdom of its US competitors, while those same competitors are locked out by monopolisation and patent restrictions from exploiting that same, locally-developed intellectual property in their own country.

End result: China races ahead. Madness on stilts.

Global risks 2035 update

From the Atlantic Council. Headlines are:

  • The unipolar world of the 1990s, when the United States was the world’s sole superpower, is definitively over and will no longer be a realistic option for any president.
  • An absolute United States’ decline is not inevitable, but an open conflict with China increases those risks considerably.
  • A deep economic reversal in China could trigger a widespread economic meltdown that leads to a worst-case scenario of slower growth and a return to protectionism and political destabilization.

No real surprises, really.

Full report (pdf) here