Potemkin Economies: System D and Stealth Inflation

The black and gray market is one poised for rapid growth. Recently, horsemeat was found in hamburgers in the UK instead of beef. This has far larger implications than ruined fast food. This was due to the authentic product being too expensive for the supplier to handle. This is a type of “stealth inflation,” a substitute of lower quality goods instead of the advertised content. A recent Supreme Court case in the US threatens to gut what remains of consumer protections and the ability to sue for violations of them. Given the massive money printing in the US, UK, EU, and other economies, stealth inflation is sure to rise as the currency wars expand. 

System D, the globalized black market, rushes to fill the gap. From anonymous currencies like Bitcoin to shady distributors, the alternative networked economy may soon replace the economy that political and financial talking heads dwell within. Like the Potemkin villages of the Soviet Union, the economic “growth” benefits a few connected individuals at the expense of the many. As Charles Stross writes, worldwide democracy is malfunctioning, as politicians race to defend the illusion of the prior status quo at all costs. 

Those costs increasingly include everything that made those nations free and pleasant places to live in the first place. Civil liberties, developed infrastructure, and other quality of life metrics increasingly circle the drain. The political elites and business elites escape trial with impunity. Faith in governments and economies decreases as do the natural resources that fuel the status quo too many people take for granted. The entire socio-political structure resembles a decaying bridge with heavy trucks driven across it. The wrong one will set into motion a costly cascade of economic and political failures. 

As Alvin Toffler wrote in "The Third Wave," the dominant political and economic machinery of the Second Wave (industrial, bureaucratic nation-states) increasingly fails and falters. The reason many corporate and political elites grasp for power is not out of confidence in the future but desperation. Ironically, the desperate measures they use may easily accelerate the negative trends instead of fixing them, such as silencing and prosecuting whistleblowers instead of dealing with corruption. This allows the tumor of corruption to grow unchecked, and capture or compromise the rest of the "checks and balances" against it. This is why bureaucracies may be vulnerable to "regulatory capture," especially at the highest levels. This is by no means limited to "socialism," as private companies may have books cooked by a corrupt executive seeking to cover up numbers seem better than they actually are. 

The answer lies not in returning to feudalism (whether corporate socialism or "First Wave" agrarian feudalism), but in a "Third Wave" society. The Third Wave (Information Revolution) could create all manner of new systems. Cyberdemocracy, semi-direct democracy (perhaps some fusion of the Swiss and Icelandic models), or perhaps even a distributed polity in the style of "The Diamond Age" may prove viable. 

One possible vector for infiltrating an existing political entity is a form of "auto-immune disease," turning its political and economic machinery against it. Imagine a non-profit corporation, or a corporation serving as a "host" for related subsidiaries, sharing a new organizational structure (workplace democracy with company catered dorms/lodging/etc.).  New industries (including ones to make it self sufficient) could easily bud off and spread. It could offer social capital, technical capital (in the form of education and training), and perhaps legal or political capital (assuming lawyers could be hired). Of course, keeping such a structure from becoming a cult of some sort is another challenge. Of course, some religious and cultural enclaves (especially close-knit ones from various diasporas) could be a good example or place to start from. 

Such alternative polities are a topic for later, however. The bottom line is that despite its best efforts, the Second Wave institutions and status quo are their own worst enemies. New institutions are arising, and often employ swarming tactics against their slower foes. A Second Wave enemy may act like a great white shark, while a Third Wave enemy may act like a school of piranhas. Time will tell how long the Second Wave system takes to fail past, or if it drags the world ecology down with it. As the illusion falls away, the world's Potemkin economies will be revealed for the frauds that they are.  

Relevant Technologies

Some weapons technologies reaching maturity (especially the laser injections). Get to it, mad scientists.

Boiling Frogs

A popular analogy for the public in many formerly-democratic states is a frog in a pot of boiling water. If the pot is heated too fast, the frog jumps out. But if the temperature is gradually raised, the frog will remain unaware as it is cooked alive. A wise evil overlord, therefore, does not start off with obvious displays of power. They start off maintaining the status quo, and gradually introducing more insidious bills, laws, and extra-legal practices. Ideally, their predecessor(s) may have started these programs, so continuing them is expected of them. 

This is nothing historically novel. One hallmark of such practices, however, is they often occur in states rapidly centralizing power. Such centralization is often a desperate, last-ditch maneuver. The Roman Emperors gradually assumed more and more power, until the Empire collapsed on its own weight. It appears that the US government is hell-bent on repeating this, independently of the legal justifications (or lack therefore of) for each program. The drone assassination program is a perfect example of one, as detailed elsewhere. 

Take, for instance, the contempt of public wishes by politicians. Last year, CISPA was a “cybersecurity” bill that gutted online privacy (amongst other things). An internet outcry caused it to be dropped. Recently, the President has issued an executive order that essentially does the same thing. The icing on the cake is that CISPA has been regurgitated, copied word-for-word from its original incarnation. Worse than that, this comes as the government clamps down on the few rights that are left. 

The metaphor of the boiling frogs is even more appropriate when you consider climate change. The methane clathrates rising from the ocean floor like a Great Old One threaten to deep fry the world and turn the oceans to acidic stew. Whether the world economy, environmental factors, or political structures will collapse first is uncertain. Far more important is to find a way out of the pot.

Historical Supervillainy: The Borgia

When one thinks of the Borgia, the extreme decadence and wealth of Renaissance Italy’s most infamous family springs to mind. Whether they were any more ruthless than many of their peers is a matter for debate, but suffice to say, they fulfill many of the stereotypical criteria for supervillainy. Just consider some of the traditional accounts. 

Rodrigo Borgia (AKA Pope Alexander VI) was the Blofeld of Renaissance Italy. He had a son, Cesare, with more ambition than common sense. His daughter Lucrezia was synonymous with femme fatales for centuries. He employed an advisor renowned for schemes, Machiavelli himself. He employed a mad scientist, Leonardo da Vinci. He led a major religion, the Catholic Church, and had his own elite troops, the Swiss mercenaries (the forerunners of the Swiss Guard). He had his own personal hitman, Micheletto. 

However, there is some controversy over the extent of some of the Borgia deeds. Despite this, there it still influences media today. From novels to videogames to TV series, the legacy of the Borgia lives on. Even firearms have a bit of the Borgia legacy. An amusing bit of Borgia-related trivia is that "Buffalo Bill" Cody named a Springfield rifle after Lucrezia Borgia due to its deadliness. 

Neurohacking: A Brain Caper

As any neuroscientist or psychologist knows, calling the human brain “flawed” would be an understatement. Brains can be distracted easily, reject information they disagree with, and convinced to make rather stupid decisions not in their self-interest. Just Google the term “cognitive bias” for some clear examples. The brain is an impulsive, ad hoc massively parallel system, if we wish to view it as a computer system. 

Like other computers, the brain can be hacked. That is, its vulnerabilities can be exploited for someone else’s motives or curiosity. Eating sweetened foods or watching TV are common “hacks” for the pleasure centers of the brain. However, as neurotechnology advances, they may also be hacked. It is already possible to hack invasive implants (such as pacemakers, cochlear implants, etc.), so hacking a brain implant (especially a wireless one) is not outside the realm of possibility. Personal information could be placed at risk. 

More interestingly, brain-hacking is possible even by non-invasive venues. Even EEG, an older technology, can beused for neural hacking. EEG headsets are becoming commercialized and cheaper (about 200-300 USD). One use for these is brain computer interface (BCI). Brain computer interface (BCI) is a technology which allows an individual’s brain signals to control a computer or prosthetic device. There are applications for medicine (e.g. assisting disabled persons) and for entertainment (e.g. computer and video games). 

Interestingly, a simple EEG-based BCI system was used to unknowingly steal information from participants in a study. The types of information included house locations, bank account and credit card numbers, PINs, and the like. The study had a ~10-40% success rate on its 28 participants. None of them knew they were being hacked. Imagine if hackers disguised such an information-stealing program as a computer game, or embedded such a system with a popular computer game. 

Imagine if the personal data harvested by such an endeavor was encrypted, cached, and stored online for later retrieval. For instance, imagine if any a small amount of cash from compromised bank accounts was converted into an encrypted, online currency (e.g. BitCoin) and then vanishes into the underground economy. Such a process could easily be automated and be implemented at a low cost.

There are possible defenses and countermeasures that could be used. For example, tagging suspicious transactions with online banking could be one. Another could be allowing open access to code to check for any hacks or tweaks of the sort. Some people may have “natural defenses” in the form of forgetfulness and absent-mindedness. Still, the low success rate (<50%) means that in order to be profitable, such a hack would need to target large numbers of people or specifically target wealthy people. Social engineering may also be combined to prevent people from realizing anything is amiss, as well. 

Given that all the technologies for such an endeavor already exist, implementing a prototype system could be a rewarding task. Likewise, imagine if government and private spy agencies began investigating this technology. What could possibly go wrong?

Varangian Arms: Pathfinder

This week, I'd like to propose another idea for Varangian Arms, the Pathfinder. The name comes from a firearm in a fantasyroleplaying game used by a noteworthy non-player character (NPC). The Pathfinder is a double-barreled pistol with two triggers, one for each barrel. It is an over-under design (as opposed to a side by side one), and must utilize as few moving parts as possible.  

-The barrels should be over under rather than side by side.

-Each separate trigger should fire a barrel independently.

-The system should have as few moving parts as possible. (A pair of solenoids may allow for electronic ignition.)

-It should be reloaded by a top break or detachable barrel assembly.