A Good Start

But it’s only a start. The Trump administration is working with companies including Microsoft, Dell, and AT&T to develop 5G software in an attempt to break Huawei’s current dominance of the 5G market and to supplant it.

The plan would build on efforts by some US telecom and technology companies to agree on common engineering standards that would allow 5G software developers to run code atop machines that come from nearly any hardware manufacturer.

Software isn’t the only source or solution, though; we need to push hardware development, too. It’s too easy to bury malware in hardware’s ROM/PROM/EPROM chips; Huawei’s hardware will need to be excised as well.

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.

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.

Trade Dispute

Deutsche Welle is worried about President Donald Trump reignit[ing a] trade battle with Europe.

US President Donald Trump vowed on Wednesday to make good on threats to impose high tariffs on European cars if the bloc doesn’t agree to a long-delayed trade deal with Washington.

The US leader said that the tariffs, which would Germany’s car industry especially hard, could amount to 25%.

This is a misplaced emphasis. The EU has been dealing in bad faith with us, if not openly prosecuting its trade war against us, for some time. The latest example is the EU’s plan to impose a “digital tax” on our tech companies. The EU claims that its new tax would be imposed globally, on all international tech companies, but the largest are American, and the EU tax is explicitly structured to go after ours.

The longer-standing bad faith includes the question of automobile tariffs.  Trump, years ago, offered a no-tariff on cars trade regime as part of a no tariffs at all trade regime between the EU and the US. The German auto industry immediately agreed with the no auto tariffs offer and tried to get the German government to go along with it and work to get EU agreement.  Then-EU President Jean-Claude Juncker agreed to take discuss the no auto tariff question, but then…silence.

The EU (and Germany) have completely ignored the offer of eliminating tariffs on some or all of EU-US trade.

Trump isn’t reigniting anything; he’s just responding to the EU’s trade war.

Tariffs and Fairness

In a Wall Street Journal article centered on the way tariffs involved in the People’s Republic of China/US trade “dispute” and the simmering EU/US trade dispute impact a Scottish town, Alistair MacDonald posed a question.

Is it fair for the US, in its pursuit of trade concessions, to hurt smaller businesses that make iconic products in nations such as Scotland?

The question is a non sequitur.  The correction is, “Is it fair to single out particular subgroups for special treatment when addressing the rest of the group or the group as a whole?”

No, of course not.

Or MacDonald’s question is not a non sequitur (other than the business about iconic products, which is irrelevant in any case): the group that, at this stage, should be being addressed is the group known as Great Britain. In that light, it would be both fair and politically sound to exempt Scottish industries from tariffs applied in response to EU trade abuses. Scotland, after all, is first a part of Great Britain, and only through Great Britain a part of the EU.