Dana Blankenhorn

Bottom Up

The relationship between the Washington press corps and its readers has become as abusive as anything Donald Trump ever drew up. The same is true for the relationship between “Lefty Twitter” and the left.

As usual, it’s a question of business models. You make money by getting clicks. You get clicks by energizing people, by making them angry or scared, preferably both. Straight news doesn’t pay.

That’s why The New York Times, Washington Post, The Hill, Politico, even CNN and MSNBC, have become trolls. If Politico writes a story saying the economy is improving, with numbers attached, no one is going to read it. But if they throw in a “but,” leading with a counter-example – a place where it’s not growing, people who are being left behind – that draws readers. Talk seriously about vaccines and you hear crickets. Write up some anti-vaxxer and its happy days. You’re getting clicks.

Correction?

We’re not seeing a crash, but a correction in real assets.

There is a crash for garbage. Garbage cryptocoins. Garbage stocks. Garbage assets of all types.

Here’s why.

When money costs money, even a little money, things that were bought with free money are worth less. The punch bowl has been taken away. Those who benefitted from the party are throwing a hissy fit.

Inflation, they scream. Crash, they cry.

Uh, no. Markets adjust.

Dealing With China

I have a dog in the China policy fight.

Our 30 year-old son has a job waiting in Taiwan. He just needs a visa. Taiwan is slow-walking it because of COVID. China’s belligerence toward Taiwan means we have worries.

Most of what is being written about America’s China policy is bullshit. It’s Cold Warriors anxious for a fight, Republican apparatchiks looking to take Biden down, human rights activists who see China “getting away with it.”

Here’s what I think. Xi Jinping is in trouble. He pretends to be Mao but he’s not. There is opposition to his policies kept inside an opaque party. Jack Ma is still a party member.

China has huge debts. Property debts, government debts, corporate debts. There’s still room to maneuver because the Yuan trades at 6.45 to the dollar. That’s not a manipulation. If China were manipulating the currency it would trade at 7 to the dollar or more.

China has an energy crisis and an environmental crisis going on at the same time it’s the world’s biggest producer and buyer of solar energy. The floods that overtook the country this summer are a lot like California’s fires and Louisiana’s hurricanes, but they’re happening to 20 times more people.

Who is Xi Jinping?

What kind of man is Xi Jinping? It’s the most important question in the world right now.  

Cold warriors want you to believe that Xi is the reincarnation of Josef Stalin, an absolute dictator bent on world domination. A lot of big investors believe this. That’s why the values of the biggest Chinese companies, the ones I call “Cloud Emperors,” have been cut in half this year.

But China’s policies toward tech aren’t extreme, not by the standards of American liberalism. Let small suppliers choose their markets? Enforce antitrust laws against predatory acquisitions? Raise taxes, so prosperity flows from the middle class out instead of from the top down? Why, yes.

It’s true Bernie Sanders would never give the state a monopoly on personal data. Even Alexandria Ocasio-Cortez wouldn’t dare limit children to an hour of screen time a day. China’s “Great Firewall” runs both ways. Western data can’t get in, and Chinese can’t get their data out. This includes financial data, as the Bitcoin ban makes it harder for capital to flee.

But Xi’s got bigger problems than anyone here imagines.

Despite being the biggest producer of solar panels and electric cars, China is still like the Cuyahoga River in Randy Newman’s song Burn On.  The Evergrande Crisis, $300 billion in unpayable debt that must be wound down, is like the 2008 crisis that nearly took down the U.S. economy.

Young workers are revolting against a work culture called “996” – working 9 to 9 6 days a week. Those are the people whose support Xi is coveting. The people who grew up under a rising tide of prosperity since 1978 are no longer willing to pay the price  while the economic elites have everything all to themselves. If Xi stood in an honest election, I think he’d win.

Xi is in Trouble

Here’s something no one will tell you today.

Xi Jinping is in trouble.

There is an assumption in the West that, because China is run as an authoritarian state, and Xi Jinping is the President of that state, that he can do anything he wants.

I don’t buy it. The country is too big and too complicated for that to be the case.

Xi has been messing with China’s economy for a year now. Everything he does seems to make things worse. Going after the country’s Cloud Emperors – Alibaba, TenCent, and Baidu – made political sense. Most actions are in line with what western trustbusters would like to do with our Cloud Czars – Amazon, Apple, Facebook, Google, and Microsoft. But investors have been losing money.

Westerners don’t understand how much power the Cloud Emperors have. They dominate the entire economy, not just the cloud. Young Chinese are, if anything, more addicted to their phones than we are. They’re overworked, their homes are tiny, many are still living with their parents. The consumerism pushed by the economy, through the Cloud Emperors, has gotten pushback from millions who resent the “996” lifestyle pushed by Alibaba co-founder Jack Ma. The 996 lifestyle means working from 9 to 9, 6 days a week. This is a 72 hour workweek, not counting the time spent commuting or preparing for work. And for what, they ask?

Xi has reacted to this by attacking the phone-based playstyle that makes all this tolerable. Telling China’s kids that they can only be on their phones for an hour each day is what American parents were doing in the 1960s, attacking rock and roll. It’s out of touch.

A Few Words on Afghanistan

I’m not a foreign policy expert. But this much I do know.

The greatest threat to life on Earth is the War of All Against All. 

If the world doesn’t unite against the common enemy of climate change, human life will be impossible on this planet within the lifetime of your grandchildren.

It’s already becoming intolerable. The east sides of our continents are flooding. The west sides are burning. COVID-19 is accelerating the change, pushing people away from mass transit, pushing them into further-off suburbs. We wait hours in our cars for take-out.

Afghanistan wasn’t even a war for resources. Afghanistan was purely a war for power over people. For 20 years America was told to believe we could make Afghanistan “free” through military force.

We couldn’t. We can’t. No one can. That’s a job for the Afghans. Liberation is an internal process. You liberate yourself, and only then can you liberate your neighbors.

The Soviet Union tried to occupy Afghanistan for a decade and disappeared. We have now done it for 20 years. Our democracy is more threatened today than it has been since World War II. We could lose it. I would argue we are in the process of losing it.

What disgusts me, more than anything, is how the Washington “press corps” is pretending that we “abandoned” Afghanistan, and Joe Biden has diminished our power in leaving. Abandoned to who? Diminished for what?

When I was starting my reporting career, the very word “Afghanistanism” meant events happening so far away as to be irrelevant. If terrorists based there try to come after us again, we still have the option of killing them. But occupying territory won’t kill them. It only kills us.

China

It’s in to hate China.

Jim Cramer, confusing Karl Marx with Groucho, keeps referring to the government of Xi Jinping as “Communist China.” Its efforts to fight tech monopolies there cost him money in Didi Chuxing, China’s Uber.

China is also a great whipping boy for neocons who want to get their war on after Afghanistan fizzled. They point to its crackdown in Hong Kong and the ongoing genocide in Xinjiang. Those are terrible crimes. But are they that much worse than Shock and Awe, or the ongoing beatings of protestors by our police?

These crimes cost China more than reputation. They cost money. Chinese taxpayers are in deep doo-doo already. The Sinovac vaccine turns out to be garbage. You can see the air, which is not supposed to happen. There are floods of Biblical proportions in brand-new Chinese cities. Economic growth is slowing. The stock market is down, so wealth is down. And you can’t trust the Chinese Internet, which is a bigger spy than even Facebook.

If things were like this in America, we’d be revolting. Critics like to insist that you can’t in China, but it ain’t necessarily so. China can’t match Taiwan’s semiconductor technology, despite buying its engineers with fat bonuses. Its biological technology is nowhere. Its science publications are rife with cheating, which means its papers are rife with lies.

The Cold War in Cyberspace

Computing is a binary process. (Image from an album cover by Trippie Red.)

I knew this when I first came online in 1985. Back then all the modems made noise, all the screens were glass, and all the networks were owned by the phone monopolies.

It was obvious, when I was reporting on the Electronic Networking Association in the late 1980s. Computing made freedom binary. Either you were free, or you weren’t. Netiquette was never more than a suggestion. That’s why the Internet didn’t open to general traffic until 1993. The military had to give up control over its tool.

Since then, we’ve done a lot to model the analog world in the digital one. But the binary nature of networking remains. We’re either free or we’re not free.

Law has acted against this like calculus against a curve, or codecs against sound. Greater or lesser effort is applied against different levels of violation. But computing remains binary. Those who are committed to ignoring the law still have the advantage.

In the analog world, it’s true that the good guys must protect every door and window while the bad guys only need to jimmy open one. But in the digital world, jimmying open one means all the doors and windows are open to anyone who has the tool.  Software now costs nothing to distribute, and networks can’t tell the difference between software that’s stealing your money and software that’s helping you buy an iPad.

Martin Hellman Has Concerns

What do you do if you win one of the big prizes in math or computing and are invited to become a Heidelberg Laureate? 

Some go back to their work, like Yoshua Bengio and mentor the next generation. Others become great men who wear their celebrity like a warm coat, like Vint Cerf, who is also in Heidelberg this week.

Then there is Martin Hellman. He won the Turing Award in 2015, along with Whitfield Diffie (who is also in Heidelberg), for public key cryptography, the Diffie-Hellman key exchange. 

Public key cryptography became controversial as soon as it  s was announced. The National Security Agency tried to suppress the technology under Admiral Bobby Ray Inman, who later saw the problem with weak solutions, said Hellman. Another cryptography war erupted in the 1990s with the “Clipper Chip,” an attempt to give crypto a “backdoor” for cops. Hellman called it  a front door. 

The third cryptography war began only recently, with the FBI putting pressure on Apple and others to get “exceptional access”  to iPhones, and the Trump Administration now trying to ban strong encryption. “It’s in a lull,” Hellman said of the current conflict. “Hopefully it dies.” But attacks are global, with even Australia trying to limit it. “They want to defy gravity to put things in space more cheaply,” he said. Hellman has been arguing this case for decades. 

In the process Hellman has created a second life, as an activist.

Martin Hellman has concerns. He likes freedom, and hates war. He rejects attempts to ban encryption because cops already have plenty of  information on us, like security cameras and license plates that can be automatically read as you drive. “I recognize there are trade offs. The FBI is trying to protect safety. We just  have to point out when they’re wrong.”

World War III, The Internet War

World War III is an Internet war. It has been ongoing for over a decade.

When the conflict was between countries like Pakistan and Ireland, or Ukraine and Russia, we could afford to ignore it.

Then it came to our own shores. November 8, 2016 was this war’s Pearl Harbor.

Yet we still haven’t reacted, because once the enemy is in the tent the media thinks going after them is friendly fire.

There’s nothing friendly about it.

Sure, there are efforts underway at Google and Facebook to boost “real news” and dissuade “fake news.” Yes, there are efforts underway in Congress to control online political spending. Yes, there is the Mueller probe.

But these are nothing. We still see the Internet War as something we can stop with higher firewalls, or bigger budgets.

We can’t.