July 18th, 2018


Welcome to 1984

Niall Ferguson

By Niall Ferguson

Published May 17, 2016

In "Notes from Underground,’’ Dostoevsky fired a broadside against all the Victorian do-gooders who dreamt of a perfectly rational society. "You seem certain that man himself will give up erring of his own free will," he fulminated. He foresaw a ghastly future in which "all human acts will be listed in something like logarithm tables . . . and transferred to a timetable . . . [that] will carry detailed calculations and exact forecasts of everything to come." In such a world, his utilitarian contemporaries believed, there would be no wrongdoing. It would have been planned, legislated, and regulated out of existence.

We are nearly there. Or so it seems.

Yes, I know. Corruption is impure. Crime is a felony. And illegal immigration is against the law. Altogether: Sin is wicked! So I should have cheered the international anticorruption summit held in London last week. I should be a paid-up supporter of the campaign to close down tax havens. And I should be glad to see the end of the 500-euro bill.

Yet every one of these steps toward a more perfect world makes me feel Dostoevsky’s disquiet.

Now, I do not condone corruption, tax evasion, or organized crime. Nevertheless, I am deeply suspicious of the concerted effort to address all these problems in ways that markedly increase the power of states — and not just any states, but specifically the world’s big states — at the expense of both small states and the individual. What makes me especially wary is that today, unlike in Dostoevsky’s time, the technology exists to give those big states, along with a few private companies, just the kind of control he dreaded.

Consider some recent encroachments on liberty. The British government announced that it will set up a publicly accessible register of beneficial owners (the individuals behind shell companies). In addition, offshore shell companies and other foreign entities that buy or own British property will henceforth be obliged to declare their owners in the new register. No doubt these measures will flush out or deter some villains. But there are perfectly legitimate reasons for a foreign national to want to own a property in Britain without having his or her name made public. Suppose you were an apostate from Islam threatened with death by jihadists, for example.

Or consider the phasing out of the 500-euro bill, fondly known in the underworld as the "bin Laden." I have little doubt that when someone elects to transfer one million dollars by putting the equivalent in "bin Ladens" into a small bag and handing it to someone else, both parties are up to no good. Yet getting rid of bin Ladens is the thin end of a monetary wedge.

My good friend Ken Rogoff is one of a number of economists who want to get rid of banknotes altogether. They argue that cash is an anachronism, heavily used in the black and gray economy, and easily replaced in an age of credit cards and electronic payments. But their motive is not just to shut down the Mafia (not to mention the long-established middle-class crime of paying the dry cleaner in cash). It is also to increase the power of government. Without cash, no payment can be made without being recorded and potentially coming under official scrutiny. Without cash, central banks can much more easily impose negative interest rates, without fearing that bank customers may withdraw their money and stuff it in mattresses rather than pay what is just another stealth tax on savings.

The state wants data. What you earn. What you spend. But what the state knows about you is just a fraction of what Facebook knows about you. The reason Mark Zuckerberg is a billionaire is that, as you blithely share your likes and dislikes with family and friends, you tell Facebook almost everything there is to know. Advertisers will pay Facebook vast sums for that information. But do you really think advertisers are the only people who want Facebook’s data? (Fact: Facebook was one of the Internet companies that participated in the US National Security Agency’s PRISM surveillance program.)

Last week we also learned that Facebook is no impartial aggregator of data. Far from leaving it to an algorithm to determine which news stories are "trending," Facebook employs human editors who, according to a report on the Gizmodo website, "routinely suppressed news stories of interest to conservative readers." Among the trending stories buried by Facebook was one about former Internal Revenue Service official Lois Lerner. That’s right, the one who was accused by Republicans of using her powers to go after conservative organizations.

We thought it was Big Brother we had to worry about. It turned out to be Big Data.

"Man," Dostoevsky wrote, generally "prefers to act in the way he feels like acting and not in the way his reason and interest tell him. . . . A man can wish upon himself, in full awareness, something harmful, stupid, and even completely idiotic . . . in order to establish his right to wish for the most idiotic things." That is pretty much how I feel — like taking a bag full of 500-euro notes and flying to Panama for a week of unmonitored, offline misbehavior.

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