Re: CryptoAnarchy: What's wrong with this picture?

Sandy Sandfort wrote:
> Income tax is the Godzilla of taxes.  It is THE TAX when it comes
> to the US.  (Perhaps VAT has a similar status elsewhere, but both,
> as pointed out, are subject to crypto-anarchistic subversion.)
> 
> > ...taxes existed, and governments sustained themselves perfectly
> > well, long before these systems arose.
> 
> But at nowhere near the voracious levels of modern states.

This is a point I hadn't considered.  If the govt doesn't know where
most of the money is, they can't "harvest" it nearly as efficiently.
Although they will almost certainly try to extract as much as possible
from the poor, you can't get blood from a stone.  Hence the size of
current governments will undoubtedly have to shrink.

Most other arguments put forth so far in this thread, about how people
"won't stand for" certain government behaviors and so forth, I don't
find convincing.  Modern military technologies, especially in the
U.S., make the prospects of a sucessful popular uprising dubious.

When you cut off someone's air supply, even the nicest, gentlest
person will go into an unrestrained, murderous frenzy.  I expect
something similar will happen to even the most "civilized" governments
within the next few years, as popular crypto begins to cut off their
money supply.  As I see it, only those relatively few citizens who can
afford to flee will dare to resist.

Which brings us to the "flight of capital" issue.  Will nations be
able to compete freely for the loyalty of the rich?  Or will the most
powerful nations form effective coalitions, and perhaps simply bomb
"rogue" nations into the stone age?

The more I contemplate my "simple" question of yesterday, the more I
find myself getting into deep waters which I feel ill-equipped to
navigate.  I rapidly run up against such imponderable questions as,
"What is government?"  and "What is wealth, really?"  Only one thing
is certain: We live in interesting times!

At any rate, I thank everyone for their thoughtful responses.

					---  mkj

On Sun, 28 Apr 1996 mkj@october.segno.com wrote:

[...]

> Most other arguments put forth so far in this thread, about how people
> "won't stand for" certain government behaviors and so forth, I don't
> find convincing.  Modern military technologies, especially in the
> U.S., make the prospects of a sucessful popular uprising dubious.

C.f., Chechnya, Afghanistan, Vietnam, Columbia.  See Also Generally,
various and numerous publications on the successes of low and medium
intensity conflict campaigns against modern armies.

(Note that I don't think it will come to this in the United States, but
your assumption is a faulty one).

---
My preferred and soon to be permanent e-mail address:unicorn@schloss.li
"In fact, had Bancroft not existed,       potestas scientiae in usu est
Franklin might have had to invent him."    in nihilum nil posse reverti
00B9289C28DC0E55  E16D5378B81E1C96 - Finger for Current Key Information
Opp. Counsel: For all your expert testimony needs: jimbell@pacifier.com

One of these days I'm going to learn the art of succint writing.

On Sun, 28 Apr 1996 mkj@october.segno.com wrote:

> Which brings us to the "flight of capital" issue.  Will nations be
> able to compete freely for the loyalty of the rich?  Or will the most
> powerful nations form effective coalitions, and perhaps simply bomb
> "rogue" nations into the stone age?

I don't think the rich are really the issue. From what Sandy, Black 
Unicorn and others write, it looks like those of the rich who are 
self-employed already play these shell games to a certain extent and a 
certain amount competition and thumb-screwing already happens.

What is interesting is how it applies to the middle-class, where most of 
the tax-base is. 

Imagine a world where for cost reasons most offices are VR constructs (a 
la Snow Crash and all the others) run over the net. Assume that for 
privacy reasons, nobody in their right minds goes without crypto
since any cracker could literally be recording their whole lives.
(And assume that this gets built into all the software or the users scream
murder as hard as we did when Netscape's CEO looked like he was waffling 
on GAK.)

Assume that some enterprising jurisdictions find some *reliable* means of 
automating entity creation and use of all the offshore services (creation of 
companies, trusts, doing financial transactions...) and offer a standard API
to these services, making the whole game a commodity and as easy to 
access as downloading Netscape. 

Assume that somehow secure pseudonymous financial markets can be created. 
(Big if, but also big profits) Also assume very low transaction fees as 
a result.

The result of this might be that the netshore economy might actually 
have lower overhead and an easier interface to its users than the 
physical world version. If people's easiest intro to economics and the 
job market is such a simple anarchy and the place where they get most 
of their entertainment, education and generally spend most of their lives 
is such an impossible to regulate environment, what do you think this 
bodes for state control? Or people's desire for it? There is no teacher 
like experience. 

Many of us have found it safer to use a pseudonym, sometimes even to save 
ourselves from occasional embarassment when saying stupid things 
(nevermind privacy from altavista and whowhere). I think it is natural 
for people to want such things, especially in a VR environment when 
anyone can watch you. I assume that in this the cypherpunks, roleplayers, 
MUD players, political writers and BBSers are not radical but merely 
slightly ahead of the curve. It is also not a coincidence that 
pseudonymity keeps getting reinvented in new environments. Basic human need.

These games have all been possible for quite some time in the offshore 
market and seem far more developped. I've read that there are as many 
registered corporations in the Cayman Islands as there are inhabitants. 
It might actually be less of a hassle to conduct your business as a 
corporation than as a individual. Even here in high-tax Canada there are 
nifty tax benefits (I'm told). Foreign jurisdictions might also be easier 
to deal with as a corporation (do you *really* want the Chinese government
to know that you're doing business with their people? Do you want to get 
on Saudi Arabia's blacklist?)

How do you think most people will act when they learn that just by 
putting on their glasses they could enter a tax-free jurisdiction with 
perfect privacy? THIS meme does travel.

Now many here think that unless we get chaumian ecash Real Soon Now, none 
of this will happen. I submit that there will be far more demand for it 
in the years to come than right now. Anonymous ecash is still several years
ahead of its mass-market time. I don't see how in the absence of GAK or 
any other mandated ID scheme that it will be any easier to stop it (maybe 
you do). And market share? How can VISA and Microsoft compete against 
something that lets you save on taxes (why compete *against* it when you 
can be part of it?). Marketing this is a no-brainer.

The only extra expense I can see is that if you're large enough, you might
need more accountants to help with your double-booking. (Though maybe you
could fire them all if the system is done right)

Finally, how will you regulate disputes? Last week we had just this problem.
Now imagine how these things will be resolved when real money is involved 
and force cannot be applied. Arbitration is already "in" in the real world...
It's much faster than the average court. What do you think will happen 
when enough people get exposed to that? Arbitration negotiators 
(lawyers) might be quite cheaper than real lawyers, after all there's 
less rules to learn (probably standardized and commoditized) and a global 
market of them (competition!). Markets can also be set up for 
transferable lawsuits with greater ease...

In sum we're talking about the age of the global small business. As 
long as you're in the service industry, and you don't deal with physical 
goods, even if a only few of these things happen, life will be interesting.


Ps. Micheal Froomkin disagrees with this. How for example will you escape
having your house seized, how will you convince a large institution like
his university to pay you as a longterm contractor...?

I may be unrealistic, but judging from what is happening to university 
funding in this country, the increased number of for-credit university 
courses done by video or TV (Carleton U does 'em), the increased demand 
for knowledge workers and the increase in small specialty colleges, I'd
say he might dean of the www.law.anguila.edu online law school sooner 
than he thinks. And as for his house, getting "payment" from your "employer"
(trust fund/company) only for your expenses is already quite possible and 
(so it's been said around here) seemingly legal (IANAL!) He might even 
rent it from some odd offshore real estate company (himself).
The only difference compared to now is that it might eventually become alot 
easier.

Thinking of setting up your own universities, folks?

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
                          SANDY SANDFORT
 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

C'punks,

On Sun, 28 Apr 1996 s1113645@tesla.cc.uottawa.ca wrote:

> I don't think the rich are really the issue. From what Sandy, Black 
> Unicorn and others write, it looks like those of the rich who are 
> self-employed already play these shell games to a certain extent and a 
> certain amount competition and thumb-screwing already happens.
> 
> What is interesting is how it applies to the middle-class, where most of 
> the tax-base is.  

[He/She then goes on to write a very well thought out analysis of 
the ramifications of crypto-anarchy.]

It used to be that only the rich owned cars, went on cruises or
flew in airplanes.  Now almost every person of moderate or even
modest means can do all three.  The same tread can also be seen
in the use of offshore techniques.

A couple of generations ago, only multinationals and the super
rich could avail themselves of offshore banks, asset protection
trust, foreign incorporation, etc.  Fifteen years ago, I was 
helping members of the upper middle class do the same think.

Today, virtually anyone on this list can afford these techniques.
Non-US people have been using them for years.  The reason middle
class Americans aren't savvy that yet are ignorance and inertia.  
Everyday, Americans are becoming less parochial (due in part,
ironically, to government hysteria about money laundering) about
such possibilities.  As the Clintons and Doles turn up the tax
and regulatory heat, they will also overcome their inertia.  

Another irony in America is that the lower class seems to be
way ahead of the middle class in keeping more of what they earn.
Do you think ANY waiter/waitress in the U.S. reports all his/her
tips?  Do you really think the neighbor who helped you tune up 
your car last week will pay taxes on what you paid him?  Watch
where the money goes when you pay for an item in a mom and pop 
grocery.  Sometimes it goes in the till, other times, in the 
owner's pocket. 


 S a n d y

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

On Sun, 28 Apr 1996 I wrote:

> One of these days I'm going to learn the art of succint writing.
And fact-checking too. Time to eat words.

> I don't think the rich are really the issue. From what Sandy, Black

Excerpts from internet.cypherpunks: 1-May-96 Re: CryptoAnarchy: What's
w.. by Michael Loomis@andrew.cm 
> "Tax Collector Want to Be for the Welfare State"

I can confirm this. Michael and I have had many an argument about taxes.
I tend to approach the argument from a libertarian perspective.

He, on the other hand, thinks the current tax setup is just about right,
and is a fan of the IRS.

Not kidding,

Declan

On Wed, 1 May 1996, Declan B. McCullagh wrote:

> Excerpts from internet.cypherpunks: 1-May-96 Re: CryptoAnarchy: What's
> w.. by Michael Loomis@andrew.cm 
> > "Tax Collector Want to Be for the Welfare State"
> 
> I can confirm this. Michael and I have had many an argument about taxes.
> I tend to approach the argument from a libertarian perspective.
> 
> He, on the other hand, thinks the current tax setup is just about right,
> and is a fan of the IRS.

I must assume either

1) He is not intimately familiar with the system of U.S. taxation (even if
he is pro-high-tax, calling the current system 'just about right' is
folly).

2) He believes it important to have a confusing and inefficent tax system
for some other reason.

I always tell people who feel tax avoidance is "bad" and that using the
rules to minimize your tax exposure is a bad thing that I can easily
structure their finances such that 90% of their net income goes to the
IRS every year and still not break any rules.

> Not kidding,
> 
> Declan

---
My preferred and soon to be permanent e-mail address:unicorn@schloss.li
"In fact, had Bancroft not existed,       potestas scientiae in usu est
Franklin might have had to invent him."    in nihilum nil posse reverti
00B9289C28DC0E55  E16D5378B81E1C96 - Finger for Current Key Information
Opp. Counsel: For all your expert testimony needs: jimbell@pacifier.com

Excerpts from internet.cypherpunks: 2-May-96 Re: CryptoAnarchy: What's
w.. by Black Unicorn@schloss.li 
> I must assume either
> 
> 1) He is not intimately familiar with the system of U.S. taxation (even if
> he is pro-high-tax, calling the current system 'just about right' is
> folly).

No tax system will ever been perfect, but  income taxation is a good
system of taxation.  Income taxation inevitably requires some accounting
costs, but these costs should be going down with advances in computing
technology and other technology.  The goal should be to minimize these
costs.  I would further suggest it is remarkably childish to think that
a political system will not cause some unfairness in the tax code,
because it is the nature of democracy to generate some unfairness.  As
long as the unfairness is kept within reasonable bounds as in the case
of the 1986 tax reform, I don't see that this unfairness as a killing
objection to income taxation.  Of course, unlike most of the readership
of this list, I believe that democracy is a good thing.

The one concession that I will make is the possibility that crypto
technologies could make income taxation an adventure in unfairness and
ultimately futility.  While, I prefer income taxation, VATs or sales
taxes are an acceptable subsitute and one can certainly run a reasonable
sized government on them.  Outside of crypto-cyber-carrots, I have
strong doubts that crypto of any form or sophistication will be able to
circumvent consumption taxation.  Consumption taxation would, of course,
include a tax on the amount of information coming into your computer.  I
don't think that the government will have any problem determining the
quantity of the information & since it will be encrypted anyway, I don't
see the privacy worries.

Michael Loomis
"La haine de l'autorite' est le fle'au de nos jours."  Joseph de Maistre

On Fri, 3 May 1996, Michael Loomis wrote:

> circumvent consumption taxation.  Consumption taxation would, of course,
> include a tax on the amount of information coming into your computer.  I
> don't think that the government will have any problem determining the
> quantity of the information & since it will be encrypted anyway, I don't
> see the privacy worries.

Traffic analysis (though remailers would help).

And what about mailbombing? If you're mailbombed, does your tax bill
skyrocket?

I think information has to be free (of tax, anyway), because there is no
way to prove the utlility of information.

-rich

>>>>> "Rich" == Rich Graves <llurch@networking.stanford.edu> writes:

> On Fri, 3 May 1996, Michael Loomis wrote:
>> circumvent consumption taxation.  Consumption taxation would, of course,
>> include a tax on the amount of information coming into your computer.  I
>> don't think that the government will have any problem determining the
>> quantity of the information & since it will be encrypted anyway, I don't
>> see the privacy worries.

What a wonderful idea!  Everybody would Win with this.

Rich> Traffic analysis (though remailers would help).

What do you have to hide?

Rich> And what about mailbombing? If you're mailbombed, does your tax bill
Rich> skyrocket?

Of course.  The Government is much wiser at spending your money than
you are.  Since most mailbombing can be source blocked, the funds
raised from a mailbombing can be used on a Federal Training program
for computer administrators because you obviously cannot take care of
yourself.

Sites with mailing lists are not exempt, neither are Usenet sites.
The user fees can be raised to pay the taxes.  Mailing lists shouldn't
be free anyway.  The Usenet Oracle will be taxed too.  It's too
dangerous for a site to be giving out free advice without some kind of
Government Regulation.

Rich> I think information has to be free (of tax, anyway), because there is no
Rich> way to prove the utlility of information.

It doesn't matter.  It's a conspiracy by Netscape and Microsoft.  Since
taxation will be based on volume of information it follows logically
that browsing the web with Lynx or images turned off is income tax
evasion.  (Using gzip for FTP is also tax evasion).  It's your duty as
a law-abiding taxpaying citizen-unit to Pay Your Fair Share, and that
means browsing the Web with Netscape with all the extensions turned
on.

Be patriotic!  Put lots of 100k GIFs on your Home Page to Reduce The
Deficit!  Browse the WWW with Netscape for America!  Don't do it for
yourself, Do It For Your Children;  their future is at stake.

Microsoft is feeling threatened on its own turf by people FTPing free
Unix instead of paying big bucks for broken software.  What's good for
Microsoft is Good For America.  Let's keep American Jobs At Home.  We
can't have some upstart foreigner in Finland putting an honest
American company to shame.  FTP file transfers of Linux must be taxed.

Just to be fair, this tax ought to apply to everyone in the world.
Why should taxpaying American citizens have to pay the US government
to visit Yahoo when people in Europe get to see it for free?  Level
the playing field.

- The Unix Cypherpunk

On Fri, 3 May 1996, Michael Loomis wrote:

> Excerpts from internet.cypherpunks: 2-May-96 Re: CryptoAnarchy: What's
> w.. by Black Unicorn@schloss.li 
> > I must assume either
> > 
> > 1) He is not intimately familiar with the system of U.S. taxation (even if
> > he is pro-high-tax, calling the current system 'just about right' is
> > folly).
> 
> No tax system will ever been perfect, but  income taxation is a good
> system of taxation.

Bear in mind that the current system imposes more than just income tax and
that the United States, unlike most other countries, taxes worldwide
income and compensates with an immensely complicated foreign tax credit
system.

> Income taxation inevitably requires some accounting
> costs, but these costs should be going down with advances in computing
> technology and other technology.  The goal should be to minimize these
> costs.

Accounting costs as a result of income taxation do not bother me.
Accounting costs as a result of a deduction based, multi-tiered,
progressive, and supplimented system of income taxation are silly.  The
income tax system in the United States has been driven since the post war
period by the effort to implement policy through the congress' power to
tax rather then the simple need for funds.  Allowing special interest
groups to drive a system of taxation is hardly fitting the goal of
"minimizing these costs."  The income tax system in the United States thus
fails even your test.

Exercise for the reader:  How many de fact laws are implemented by an
tax which would be unconstitutional to pass directly?

> I would further suggest it is remarkably childish to think that
> a political system will not cause some unfairness in the tax code,
> because it is the nature of democracy to generate some unfairness.

I don't recall ever asserting this.  

> As
> long as the unfairness is kept within reasonable bounds as in the case
> of the 1986 tax reform, I don't see that this unfairness as a killing
> objection to income taxation.

Then the issue that divides us is the definition of fairness.

> Of course, unlike most of the readership
> of this list, I believe that democracy is a good thing.

That's a pretty arrogant (and fairly incorrect) assumption.

[...]

> sized government on them.  Outside of crypto-cyber-carrots, I have
> strong doubts that crypto of any form or sophistication will be able to
> circumvent consumption taxation.

Sorry, I just don't agree with you here.  If black markets exist, even
florish, without crypto, how exactly is it that you think they will not be
easier to run and maintain and shield from discovery in the presence of
encryption?

The amount of resources which would have to be dedicated to tax compliance
enforcement under your scheme would be staggering.  I don't doubt that
taxation (if it comes to this) will go down kicking and screaming, but if
you can think of a way to regulate offshore markets in information futures
without invading the country hosting the exchange (note that there is a
case that even this can be defended against by the market) I'd like to
hear it.

> Consumption taxation would, of course,
> include a tax on the amount of information coming into your computer.  I
> don't think that the government will have any problem determining the
> quantity of the information & since it will be encrypted anyway, I don't
> see the privacy worries.

You don't see the privacy worries in mandating data providers to count
bits and report to a central authority on their findings?

It's clear you're unconvertable.

We should take this discussion (if it continues) to e-mail.

---
My preferred and soon to be permanent e-mail address:unicorn@schloss.li
"In fact, had Bancroft not existed,       potestas scientiae in usu est
Franklin might have had to invent him."    in nihilum nil posse reverti
00B9289C28DC0E55  E16D5378B81E1C96 - Finger for Current Key Information
Opp. Counsel: For all your expert testimony needs: jimbell@pacifier.com

At 7:05 AM  -0400 5/3/96, Michael Loomis wrote:
> No tax system will ever been perfect, but  income taxation is a good
> system of taxation.  Income taxation inevitably requires some accounting
> costs, but these costs should be going down with advances in computing
> technology and other technology.

Cashflow taxation, like the income tax, is a good *industrial* system of
taxation. It operates very well in the hierarchical communications network
of an industrial economy, especially in a world of expensive automated
processors. It favors unsecure transactions on secure, closed networks.
SWIFT (the interbank funds transfer system), NASDAQ (the "over-the-counter"
equity market system), and NIDS (the old National Institutional Delivery
System, where institutional trades were settled), are all just closed
networks, "clubs" as Eric Hughes calls them. Expensive bulletin boards.

However, in a world of ubiquitous, exponentially increasing semiconductor
switches of financial information, all using strong cryptography on
geodesic public networks, you get the virtual end of intercompany
book-entry transaction processing. Instead of swapping book-entries across
secure links, economic entities will eventually trade using anonymous
digital bearer certificates across insecure links, usually in an auction
market of some kind, settling all of their transactions for cash at the
time of the transaction.

It's economics, actually. As Moore's law progresses, the size of a given
economic entity, especially the financial intermediaries responsible for
underwriting and clearing certificates, gets increasingly smaller, until
someday it's an automated bot of some kind. At the same time, the cost of
maintaining a spaghetti-bowl of audit trails between all of those entities
becomes increasingly harder to sustain, and not just in computing
resources. It's also in time value of money. You collect the time value of
your money while it's "in transit": while it's actually sitting in your
bank account waiting to be paid to the other party of a trade. Unpaid
bills, check float, and unrevolved monthly credit card balances are all
good examples of this. As financial entities get smaller, more ubiquitous,
and more competitive, margins shrink and this becomes much more important.
Kind of like gravity and mass. Insignificant at one size, virtually the
only force at the other extreme of the scale. Because it settles instantly,
without any float, cash literally becomes king in this environment.

All of this is just as well. Strong cryptography makes the point moot.  Not
only do you have internet-level anonymizing protocols, but you also have
the certificate protocols themselves. You can't know who you're doing
business with, anyway.

When you don't have book-entries (cashflows) to tax, you can't tax
book-entries, which means nation-states can't have income, value-added,
sales, excise, import, export, or any other transaction tax, because they
just can't see any of those transactions behind a wall of strong
cryptography.

Fortunately, the nice thing about these certificate-based technologies is
that as they become more prevalent, the need for nation-states to apply
force to guarantee the honesty of the trading parties diminishes. The need
for force doesn't go away; physical security is always necessary, just like
air is. However, it is no longer so necessary to use it to deal with
repudiated trades in a large number of markets, especially those for money
and information.

At the transaction level, the protocol breaks if the requisite conditions
of the transaction aren't met. At the relationship level, if someone
repudiates a trade, they can be shunned. As Moore's law collapses the size
of the trades themselves, the abundance of competing entities in a given
certificate-based market reduces the risk of repudiation point-failure in
that market effectively to zero. Which means, you don't have to pay Uncle
to keep trading partners honest anymore. Which, as we saw before, is a good
thing, because you couldn't find them, anyway. ;-).

Given that the modern nation-state is a hierarchical industrial
organization anyway, -- a literal "force trust", to misapropriate ninteenth
century parlance -- it seems that its inability to finance itself in a
geodesic market seems inevitable. Competitive markets for all the services
it performs will eventually emerge.

We live in interesting times.

Cheers,
Bob Hettinga







-----------------
Robert Hettinga (rah@shipwright.com)
e$, 44 Farquhar Street, Boston, MA 02131 USA
"If they could 'just pass a few more laws',
  we would all be criminals."    --Vinnie Moscaritolo
The e$ Home Page: http://thumper.vmeng.com/pub/rah/

Excerpts from internet.cypherpunks: 28-Apr-96 Re: CryptoAnarchy: What's
w.. by s1113645@tesla.cc.uottaw 
> The result of this might be that the netshore economy might actually 
> have lower overhead and an easier interface to its users than the 
> physical world version. If people's easiest intro to economics and the 
> job market is such a simple anarchy and the place where they get most 
                                           ^^^^^^^^^^^^^^^^^^^^^^^^^^^^
> of their entertainment, education and generally spend most of their lives 
 
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^    
                       
> is such an impossible to regulate environment, what do you think this 
> bodes for state control? Or people's desire for it? 

This explains far more of the rhetoric on this mailing list than
anything I could possibly write:  the young libertarians having lived
their teenage years alone in their bedrooms listening to heavy metal
music or Rush or Sisters of Mercy through headphones in order to not
disturb their fathers and masturbating looking at porno pics and
imagining the chicks think just like Ayn Rand have now reached the adult
stage in which they don't have to use headphones, they can admit they
hate their father, they don't have to pay taxes, and they can spend most
of their lives in front of a computer.

Michael Loomis
"Tax Collector Want to Be for the Welfare State"

Oh god, I'd doomed. I think I am gonna wind up on Mr. Bells side in this 
one. 

Please also note that I am cc:ing this to an individual who is both more 
knowlegable about certain aspects of the following, and interested in 
certain aspects of this.

On Sun, 28 Apr 1996 mkj@october.segno.com wrote:
> Sandy Sandfort wrote:
> > Income tax is the Godzilla of taxes.  It is THE TAX when it comes
> > to the US.  (Perhaps VAT has a similar status elsewhere, but both,
> 
> Most other arguments put forth so far in this thread, about how people
> "won't stand for" certain government behaviors and so forth, I don't
> find convincing.  Modern military technologies, especially in the
> U.S., make the prospects of a sucessful popular uprising dubious.

	I strongly disagree with this. (Especially within the US) Modern 
Military technology doesn't have a lot to do with it. It is modern 
stratagies and tactics that make things difficult. In a "popular 
uprising" (in quotes because most aren't) an organized armed group will 
devistate(spelling?) a mob, and the technology necessary to do this is at 
least 30 years old. 
	Fine. So change the tactics. Instead of "Rising Up", simply use 
an ages old an respected solution. Take out the leaders. Note, I am _not_ 
suggesting Mr. Bells assination politics, rather, given a violent 
revolution, or the beginings of one, shorten it by taking those who make 
the policies you disagree with.
	The things is, you HAVE to wait until the violence breaks out, 
and you HAVE to do the job quickly, and take out as much of the 
leadership as possible, otherwise your job gets much more dificult. 

	I am digressing.

	My point is not to advocate such actions, only to argue that it 
isn't the TECHNOLOGY that is the problem, rather the strategy.  

> When you cut off someone's air supply, even the nicest, gentlest
> person will go into an unrestrained, murderous frenzy.  I expect
> something similar will happen to even the most "civilized" governments
> within the next few years, as popular crypto begins to cut off their
> money supply.  As I see it, only those relatively few citizens who can
> afford to flee will dare to resist.

	As a suggestion, and using your analogy, wouldn't it be better to 
either a) drug the person you are strangling so they don't notice, or to 
simply break their neck? (I.e. make it so they don't notice they are 
strangling until it is too late, if ever, or to do it so quickly that 
they don't have time to react? In this case I think the second would be 
the most difficult. 

> Which brings us to the "flight of capital" issue.  Will nations be
> able to compete freely for the loyalty of the rich?  Or will the most
> powerful nations form effective coalitions, and perhaps simply bomb
> "rogue" nations into the stone age?

	You might want to take a look at http://lois.kud-fp.si/nsk.
(Note, you must use a graphical browser)

	Has this been discussed before?

	This Nation/State called Neue Slowenische Kunst is issuing
passports to anyone who is a citizen. Citizenship is confered (apparently)
on anyone who is willing to agree to their "constitution". These passports
are being accepted (apparently, tho' I couldn't find the list of counties
that accept them.) I disagree quite strongly with MANY of the rules/laws
that their constituion establishes, but the idea interests me. 

New Slovenia isn't a (at this point my command of the language breaks
down, or maybe there isn't an exact word for it) State. Basically, it is a
Nation without borders, where citizenship is a matter of allegence rather
than geographical location/birth. I don't know a whole lot about it, as
those particular pages are entirely GIFs, and I am not a patient person. 

It got me to thinking (yeah, you probably saw the smoke). The idea that 
citizenship--or whatever it would be called--is based on things other 
than nationality (although NSK is a nationalist organization) is not new, 
but with (Cypherpunk tie in) the ability for people to communicate freely 
across borders, would it be possible set up something similar along 
other lines? 

/* 
Semantic Note: from this point on in this ramble, Nation will be used to
describe a political entity based on philosphical allegance ala NSK, and
State will be used to describe a geographically based political entity
*/

	It would be relatively easy to set up, but recognition/validity
would be a major difficulty (Understatement). Convincing others as to the 
necessity would be damn near impossible tho'. (I am starting to think of 
many many more obsticles. Law enforcement etc) 

	The major advantage would be the impossibility of convention (or 
nuclear) attack. Simply, no land, nothing for a military to take and 
hold. Then agression against this posited nation would either devolve 
into police actions on known "citizens" and/or economic "warfare". 
	Economic warfare would take place against National banks (ala 
a digital cash type system) by States refusing to allow certain National 
banks to convert currency in their jurisdiction. etc.
	
	The intersting possiblity lies in the taxiation realm. As it 
becomes easier and easier to hide income via anonymity, these Nations 
or at least their bank[s] could act as arbiters/agents in taxation, 
paying the states for services rendered based on their population in a 
given state. 
	Another possiblity: Seperation of Powers, the States deal with 
physical matters such as roads, parks etc. operating on Service based 
taxes (gas taxes for roads, entrance fees for Parks etc. VAT to pay for 
police & fire depts) and the Nations take care of economic interests such 
as financial security currency exchange etc. 

	I think I am going to be thinking about this for a while. 

> The more I contemplate my "simple" question of yesterday, the more I
> find myself getting into deep waters which I feel ill-equipped to
> navigate.  I rapidly run up against such imponderable questions as,
> "What is government?"  and "What is wealth, really?"  Only one thing
> is certain: We live in interesting times!

	Are these the deep waters you refer to?