Worried About Big Brother?

Oh, yes, we should be really, really worried!
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WSJ 11/5/2018
By Andy Kessler

Hardly a week goes by that I don’t run into people who, when I ask how they are doing, tell me they’re worried about authoritarianism. Living in California, my impulse is to ask if they’re worried about the state’s one-party rule. But before I can get that out, the complaints begin: Trump, Facebook, Google, police state. Uh boy. Pot-dispensary paranoia?

This fascist-behind-every-tree thinking isn’t helped by the tech industry. Apple CEO Tim Cook told privacy commissioners in Brussels last month that personal information “is being weaponized against us with military efficiency. Today, that trade has exploded into a data-industrial complex.” Mr. Cook was poking at Facebook and Google and calling for more regulation.

In high Silicon Valley style, former Facebook security executive Alex Stamos took to Twitter to criticize Mr. Cook’s hypocrisy: “Apple uses hardware- rooted [digital rights management] to deny Chinese users the ability to install” virtual private networks. That means iPhone users in China can’t avoid their government’s censorship and surveillance. Fear mongers in the U.S. worry about authoritarianism, but in China it’s real. Anyone caught resisting there gets a mark on his not-so-proverbial permanent record.

In 2014 China began rolling out a Social Credit System, aiming for nationwide implementation by 2020. Like the FICO financial-credit system in the U.S., scores come from hundreds of data sources, but in this case those sources include more than 200 million cameras that monitor citizens’ behavior. Debtors end up on blacklists, unable to take trains or stay in luxury hotels. Some who have refused to join the military have been locked out of universities.

There are also “red lists” of good citizens, who are entitled to perks like skipping lines at ferries and not paying a deposit to rent bikes. Every man, woman and child must adapt to the government’s social pressure—or else. As the Dead Kennedys sang in 1979: “It’s the Suede-Denim secret police / They have come for your uncool niece.”

Is authoritarianism a rational fear in the U.S.? We have all the piece parts. FICO tracks financial credit, though not very well. Loyalty systems from airlines to supermarkets track purchases. Environmentalists often deploy social persuasion, from the LEED energy- efficiency standards to the virtue signaling that surrounds hybrid cars and overpriced organic food.

But these are all private actors. The government has no-fly blacklists and TSA Pre-Check as a travel red list. But as far as anyone can prove, that data is siloed. The Internal Revenue Service isn’t supposed to share data with Immigration and Customs Enforcement. And your phone records? To catch the recent pipe-bomber, the FBI identified his fingerprints but had to get a subpoena before it could triangulate his location from phone records.

Our checks have balances. Facebook, Google and Apple have fixed procedures for handling government data requests. Under the 1986 Stored Communications Act, gaining access to data usually requires a subpoena, court order or search warrant; less than 10% of requests qualify as emergencies under the companies’ criteria. Investigators similarly need subpoenas to access footage from city traffic cameras.

California passed a privacy bill in June patterned on Europe’s General Data Protection Regulation. The cost of compliance will benefit the biggest tech companies by squeezing out competitors, while the new privacy rules will do little to prevent data breaches. Instead, the law will bring government and technology platforms even closer.

How to prevent a social-credit system from coming to the U.S.? First, keep regulators out of the business of setting privacy rules, as they will be tempted to offer rewards to incumbents in exchange for backdoors to users’ information. Second, stop data from mingling among different government agencies.

Finally, in the digital age, data privacy should be understood as a property right. The concept of property rights formed the basis for the runaway success of American capitalism. You, not the state, own your land and your ideas. Congress should pass a law deeming individuals full owners of their digital information, though they would still be free to sell it in slices to Facebook or United Airlines or Safeway.

By contrast, China’s political system—a mongrel of autocratic capitalism and democratic socialism—is not compatible with progress and growth in the long run. Given the choice, ever fewer Chinese entrepreneurs will opt to realize their dreams at home. China’s authoritarian disregard for property rights and privacy is a fuse already lit. Ideas, like capital, flow to where they’re treated well.

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