Foolish Risks

Great Britain has decided to let the People’s Republic of China’s Huawei—which by PRC law must cooperate with the PRC government whenever that government requires it—to play a role in Britain’s development and deployment of its 5G telecommunications network.

Great Britain says Huawei role will be limited, but in a computer network, such limits lie somewhere between chimera and pipe dream.

The Brits say that Huawei, and “high risk vendors” generally, would be excluded from the network “core.”

The Brits say they are

taking steps that would allow it “to mitigate the potential risk posed by the supply chain and to combat the range of threats, whether cybercriminals, or state-sponsored attacks.”

And that

high-risk vendors would be subject to a 35% cap on access to even non-sensitive parts of the network.

Thirty-five per cent. That’s a broad penetration of a network’s “non-sensitive parts,” a network’s periphery.

This is foolish.

Mitigating risks is not the same as preventing them. This isn’t a matter of the Internet going down for a bit, and our not being able to post our blog articles or do a Bing search for this or that. It’s not a matter of losing a cable connection so we can’t watch TV for a few minutes or an hour, nor is it a matter of a temporary drop of cell phone access.  This is a matter of national security, and the difference between mitigation and prevention is critical.

It takes only a single opening in a network’s outlying accesses to enable a nefarious entity to insert malware into the network. Once inserted, that malware can proliferate on its own, even penetrate the core, and then that malware is positioned to allow the entity to engage in cybercrime, cyberespionage, cyber-triggered sabotage of other infrastructure.

Even were the core adequately protected, malware in the periphery still can render the core impotent by isolating it from the periphery—much as biological damage can isolate a body’s core, its brain, from the body.

Authoritarian

Recall the slowed down video of a House Speaker Nancy Pelosi (D, CA) press conference in which the slow-down was done to make Pelosi’s speech seem slurred. It was an obvious, if poor taste, parody of Pelosi’s speaking style and of the incoherence of her anti-Trump position, as viewed by many.

In a The Atlantic interview, Hillary Clinton expressed her outrage over Facebook’s handling of that video.

Google took it off YouTube…so I contacted Facebook. I said, “Why are you guys keeping this up? This is blatantly false. Your competitors have taken it down.” And their response was, “We think our users can make up their own minds.”

Zuckerberg’s view, according to the Atlantic‘s author, is this:

“It’s not about saying, ‘Here’s one view; here’s the other side’,” Zuckerberg had said when I’d asked him to reconcile the apparent contradiction between fact and opinion. “You should decide where you want to be.”

Then Clinton said, in response to the author’s prompting about that,

It’s Trumpian. It’s authoritarian.

It’s true enough that opinion should be clearly discriminated from fact. But underlying Clinton’s (and the author’s) angst is their dismay over people making up our own minds, rather than being told what to think, what to believe, by our Betters.  Not allowing journalistic gatekeepers and filters to control our opinions is somehow authoritarian.

This is highly instructive, and it should be kept in mind this fall as we vote.

Ultrafast Trading Costs

British regulators have studied the “tax” imposed on ordinary traders by ultrafast traders. The latter use high speed computers and powerful algorithms to

“latency arbitrage,” in which ultrafast traders seek to react to fresh, market-moving information more quickly than others can.

The latency is the ultrafast traders’ ability to act on slightly out-of-date prices that are inaccessible to the bulk of us traders because we don’t have those fancy computers running those algorithms. The “tax” metaphor is the difference between those (very—a matter of microseconds) slightly dated prices and the prices available to us in more real time.

The “tax” amounts to some $5 billion gained globally by the ultrafast compared to the rest of us. That seems like a large number, but put it in perspective.

The value of the aggregated global stock markets was around $86 trillion in 2019. The “tax” from the ultrafast’s computing/time advantage amounts to a bit under 0.006%.

That’s not to say the artificial arbitrage shouldn’t be addressed, but it does suggest that the urgency isn’t great. We have time figure out how to level this tiny bump in the playing field without moving, for purely noneconomic reasons, to restrict some traders to the advantage of others.

Big Government vs Free Market

An economist says Apple isn’t paying its fair share of taxes. There is many things about which to criticize Apple, but this isn’t one of them.

Davos lights insist that companies are responsible to and for their employees, their suppliers, and their communities. Indeed. And the way to execute that responsibility is to be responsible first to companies’ owners. That’s what helps companies thrive so they can have, and have more, employees and suppliers—which money rotation funds those local communities.

What is Apple’s “fair share?” This economist declined to say—just that it ought to pay more.

The economist insists, instead,

the first step to being a good corporate citizen is to pay tax….

But how much? There’s that carefully undefined “fair share” bit, again. And: why should a business pay any tax at all? After all, the business might sign the tax payment check, but it’s the business’ customers who pay the tax, in the form of higher prices to cover the tax cost. Again, this is carefully unaddressed.

Instead, the economist and the lights of Davos insist that it’s somehow wrong for businesses to minimizes its costs and that it’s somehow wrong for nations to compete on tax rates in order to draw business investment so their citizens can have jobs and prosper.

This is Big Government ideology.

In a free market environment, though, nations do compete on tax rates for the benefit of their citizens. Businesses do work hard to minimize all costs so as to compete effectively on pricing, which directly benefits their customers and which indirectly benefits their communities from localities up through their nations.

In a free market environment, a good corporate citizen works to compete and so to thrive and so to take care of its employees, its suppliers, and its community.

Political Revenge

Dearly beloved, avenge not yourselves, but rather give place unto wrath: for it is written, Vengeance is mine; I will repay, saith the…Warren.

And so she intends. Progressive-Democratic Party Presidential candidate and Senator Elizabeth Warren (D, MA) has issued her administration transition and “anti-corruption” document. She even intends to establish a “Justice Department Task Force” to put a veneer on her venal program of political vengeance. Ex-President Barack Obama (D) and his Attorney General Eric “Wing Man” Holder were pikers.  So was their kind-of distant ancestor, Joe McCarthy.

She’s already personally threatening Commerce Secretary Wilbur Ross, White House Adviser Kellyanne Conway, and Secretary of Housing and Urban Development Ben Carson. Who knows how far she’ll go with her already out-of-control rage?

Are you now, or have you ever been, a member of the Republican Party?

Warren’s document makes her attitude plain.

This will be no ordinary transition between administrations….

Keep this in mind in November.