Category: Markets

Watching Cronies Fail

A major benefit of providing solutions to government meddling is watching as the government’s cronies fail. Cab drivers in Mexico, as cab drivers in much of the world, are unhappy with ride-sharing services such as Uber and Lyft. Their unhappiness is understandable since they’ve been shielded from competitors by their government for decades. When you haven’t had to compete in a market it can be scary facing competition because it makes you realize that you have to actually provide a superior service if you want to thrive.

On Monday cab drivers in Mexico went on strike to protest Uber. The protest was a plea for the Mexican government to ban Uber. The end result was to give Uber a great dead of publicity and convince a lot of people to try Uber since they couldn’t get around using traditional cabs:

Monday’s protest from Mexican Taxi drivers, against ride-sharing mobile apps such as Uber, has proved a boon for the San Francisco-based company. After offering a protest-edition special with two free 10-dollar rides, downloads of the app rose by 800 percent, Uber Communications Director for Mexico Luis de Uriarte said on Tuesday.

Unlike Uber, the signs of regulated taxis were off in Mexico on May 25, as some 5,000 drivers took to the streets of Mexico City. Chanting “Get out Uber!” union leaders demanded the government impose a ban on the smartphone-based service.

With the hashtags #UberNoPara (Uber doesn’t stop) and #MexicoNoPara (Mexico doesn’t stop), Uber launched a campaign offering two MEX$150 (US$9.8) fares for free between 7:00 a.m. and 9:59 p.m. on Monday. The initiative not only have become a commercial success, it brought PR blowback on the taxi drivers.

Uber and Lyft are providing a solution to a market that has been crippled by government regulations for decades. Many localities put an artificial cap on the number of legal taxi cabs that can operate. Other localities, while not putting an artificial cap in place, require potential taxicab drivers to pay a licensing fee, which adds a barrier to entry. The result has been lackluster taxicab services in much of the world. With ride-sharing services such as Uber and Lyft anybody can act as a taxicab. Suddenly cronies that have been protected from competition are facing the competition of anybody with a vehicle and they’re floundering.

Providing solutions to government create problems weakens its grip by showing how unnecessary it is. While government protected taxicab drivers were refusing to provide services ride-sharing swooped in to save the day. Because of this people are unlikely to accept any prohibition against ride-sharing services.

Market Solutions Versus State Solutions: Global Positioning System

Continuing on my theme of comparing market solutions to state solutions, today I’m going to discuss the Global Positioning System (GPS). For those of you unfamiliar with GPS it’s a network of satellites that provides positional information for navigation purposes. Development started in 1973 by the Department of Defense (DoD) and it became fully operational in 1995. Today anybody who uses a computer navigation system, say their phone or a dedicated GPS receiver, relies on this network.

There are several points to note about GPS. It was originally developed to improve the DoD’s ability to blow up people in foreign countries. Civilians were begrudgingly given access to the network but only through a degraded signal. In 2000 civilians were finally allowed to access a non-degraded GPS signal and that’s when the real innovation began.

The DoD’s exclusive access to the full capabilities of GPS resulted in no notable quality of life improvements for everyday people. Instead the DoD saw GPS as a way of improving its ability to kill people. Even today the state still uses GPS to enhance its own power. The Federal Bureau of Investigations (FBI), for example, uses GPS to perform warrantless surveillance.

Meanwhile the market has been utilizing GPS to improve the lives of everyday people. In 1991 a GPS receiver weighing less than 3 pounds was finally created. Today GPS receivers are so small that they fit in our phones. Using these miniaturized GPS receivers we are able to navigate with our phones. Google and (to a much lesser extent) Apple’s mapping services give consumers free access to constantly updated maps that enable real-time turn-by-turn navigation when coupled with a GPS signal. Market access to GPS gave rise to Geocaching, a game where players use GPS to locate hidden caches. Task management apps allow users to create reminders that will fire off when they enter their home or place of work. Bicycling apps allow cyclists to keep track of where they road, how fast they were going, and how high the hills the ascended were. Phones and other devices can utilize GPS to report their location so they can be easily recovered if stolen. Thanks to the market you can even use GPS to defend yourself against the state. Apps such as Waze will alert you to reported police presence before you’re close enough to be clocked on a radar gun.

Where the state saw a network of navigational satellites only as a means of improving its ability to kill and spy the market saw it as a means of improving our lives in a vast number of ways. Thanks to the market GPS is so integrated into our daily lives that we take it for granted.

Market Solutions Versus State Solutions: Google Edition

Xcel Energy demonstrated the difference between how markets and the state utilize drones. Now Google unwittingly provided another demonstration. When Google created the Play Store it saw it as a service that would improve the lives of their customers by providing a method to easily download Android applications. When the National Security Agency (NSA) saw the Play Store it saw it as a method to infect Android phones so they could be surveilled:

The information about Irritant Horn comes from documents provided by Edward Snowden to The Intercept and CBC. The program, which appears to have been in its early stages in 2011-2012, had NSA analysts use a type of man-in-the-middle attack to implant spyware on Android devices connecting to the Android Market or Samsung’s apps store. Basically, besides the requested app, the targets were served malicious software that allowed spooks to eavesdrop on everything that happened on the device. The NSA even explored using the capability to modify the target device, for propaganda or disinformation purposes.

Google wants to provide Android users with Firefox so they can browse the web. The NSA wants to provide Android users with a modified version of Firefox that reports on their browsing habits and potentially feeds them disinformation.

Whether the NSA was successful in highjacking Google’s service is up in the air. I think the answer to that heavily depends on the security used by the Play Store. If the Play Store uses effective tools to encrypt communications between an Android device and the Play Store as well as digitally sign provided software the likelihood of the NSA being successful is low. This is because a properly secured connection cannot be highjacked and digitally signing the software will alert you if it has been altered. Even if Google cooperated with the NSA the user would be able to tell if the software was modified so long as the developer signed it (that still leaves the possibility of the NSA enlisting the developer but then the problem isn’t the Play Store).

Two lessons should be taken away from this story. First, the market sees services as means to fulfill consumer wants whereas the state sees services as means to exploit them. Second, proper security is important and markets actors should focus on it to protect consumers from the state (and other malicious entities).

Political Solutions Versus Technical Solutions

When discussing pervasive surveillance I focus exclusively on technical solutions. People involved in political activism often ask me why I don’t also involve myself in political solutions. My reason is that I don’t like investing effort into worth that is unlikely to pay off when I can invest it in work that will pay off.

Consider the political solution. Say, in spite of everything we know about the state, Congress decides to ban the National Security Agency (NSA) from spying on American citizens and actually enforces that ban. What then? You’re still vulnerable to spying from the Government Communications Headquarters (GCHQ) as well as the intelligence agency of every other major world government. In addition to that your Internet service provider (ISP) can still spy on you and inject malicious code into websites you visit. Political solutions are also temporary. Once the Congress that voted to prohibit the NSA from spying is replaced with a new Congress that ban could be reversed.

Technical solutions avoid those limitations. When you use security forms of communication that the NSA, GCHQ, and other intelligence agencies can’t crack then they are unable to spy on regardless of where the political winds blow. Furthermore ISPs are unable to surveil your traffic or inject malicious code into websites you visit. Technical solutions fix the holes needed to spy on you and therefore defends you against all surveillance and not only for temporary stretches of time (assuming the secure communication tools continue to be maintained so any discovered vulnerabilities are fixed).

I, like everybody else, only have a limited amount of time. Why would I invest some of that precious time into something that is, at best, temporary and only guards against a select few bad actors when I can focus on something that is more permanent and works against all bad actors? It just doesn’t make sense.