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Business Rights Watch
When the federal government demanded his encryption keys, Ladar Levison shut down his private email service, Lavabit, rather than compromise his users’ privacy. Now he’s working on a new approach to email privacy: Dark Mail. The Kickstarter for it funded last week.
Last month, Levison and I sat down over Skype to discuss his battle for privacy and the right to run a business that provides it. Our conversation explored topics from technology to business ethics and politics. In this first video from that interview, we focus on the technology of email privacy.
For further reading:
- Alexander R. Cohen, Lavabit Founder Shrugs, Closes Snowden Email Service
- Alexander R. Cohen, When Government Demanded Lavabit's Keys
- Alexander R. Cohen, Levison: Let's Take Your Email Dark
Amazon Prime Air. Wow. Jeff Bezos, the man behind Amazon.com, announced last night that his company is working on plans to deliver its merchandise by unmanned chopper. From your screen to your door in 30 minutes, by means of awesome new technology.
Imagine: Drones that deliver life-enriching goods. A perfect image of the difference between the power of business and the power of government. And you might see Amazon’s octocopters in the skies over your city within five years—if Bezos’s team can pull it off.
If the team can pull it off—and, says Amazon’s website, if the FAA can make the “necessary regulations.”
Suddenly the story becomes less exciting. Instead of just waiting for its inventors to get the technology ready and then launching its octocopters when they’re built, Amazon is also waiting for permission—and saying it’s “necessary.”
It doesn’t take the FAA’s permission to make things fly safely. That’s done by inventors and the laws of physics, not by regulations. Regulations prohibit things, or sometimes remove prohibitions imposed by other law.
Now, maybe the regulations are “necessary” because without them, civilian drones would be illegal. If that’s the case, though, the impediment to Amazon Prime Air isn’t that the regulations don’t exist, but that laws banning the drones do exist.
Amazon doesn’t say. It just says the regulations are “necessary,” as if it’s the natural order of things that before creating something awesome you have to wait for permission.
But it’s not. If the Amazon team builds suitably reliable, safe, cost-effective drones, and the company can’t deploy them for lack of a regulation, that’s because something in the legal system is getting in the way. Perhaps it's a sound principle to which Amazon wants an exception; I'm guessing it's an unwarranted restriction Amazon needs lifted. Amazon should say what, so that if the technology is ready before the regulation, people can understand why they're not getting Amazon Prime Air.
Nov 27, 2013
Tomorrow is Thanksgiving. Last year at this season, I posted in praise and gratitude to “the virtually omnipresent, almost omniscient entity who is glad to help you with your questions,” and I warned that Google might be less helpful within a year.
Of course, Google is only one of the victims of antitrust law. And antitrust is just one of many ways governments restrict the freedom to produce material values for the support and enjoyment of one’s own life.
In Atlas Shrugged, Ayn Rand reminds us—in the voice of Hank Rearden—that “Thanksgiving was a holiday established by productive people to celebrate the success of their work.” But the next day, Rearden goes on trial for daring to dispose of his own product as he saw fit.
This Thanksgiving, let’s celebrate our successes and the marvelous productive achievements that enrich our lives. Let’s take a moment to thank those whose achievements we enjoy, beginning with ourselves. But let us also pause to acknowledge that productive achievement takes freedom, and that the freedom to produce and trade in pursuit of one’s own happiness is heavily restricted. If we had a freer Thanksgiving, we’d have a happier one.
Since defeating the SEC in court, Mark Cuban and his lawyer Lyle Roberts have publicly criticized the agency on several different grounds. They’ve raised interesting issues—but the most important thing is, they fought in court and they’re still fighting.
The SEC offered to let Cuban settle. It would have cost him $2 million, but that’s only a sixth of what he says he ultimately spent fighting the case—and he could have gone on with his life instead of worrying about a government lawsuit for five years. That would have been the easy option.
Instead, Cuban took the courageous option. He fought. And now that they’ve won, he and Roberts are continuing to fight. Cuban accused the SEC of ignoring the facts and of targeting him because he’s a big name. And Roberts published an op-ed in the Wall Street Journal arguing that the SEC is interpreting insider trading law too broadly and creating too much uncertainty as to what it prohibits.
These are complicated charges. I want to focus on just two points and how they connect.
First: according to Roberts, the SEC has been trying to expand the definition of insider trading in the cases it’s been bringing. One might try to defend the SEC on this point, noting that a lot of the shaping of law takes place through litigation, and arguing that law “found” by courts is often less arbitrary and more reasonable than bright-line rules imposed by regulators. Indeed, as Roberts notes, in this very case the court struck down an SEC regulation.
Second: It would have been cheaper and easier for Cuban to settle—and as Cuban points out, not everyone is in a position to fight. But if you can’t fight in court, or if you just don’t want to, then the government succeeds in making its interpretation of the law stick, no matter how arbitrary that interpretation is. It succeeds in punishing you even if you didn’t break the actual law. And it transforms our country, little by little, from a republic of free citizens who exercise their rights and fight for them, into a state whose subjects know only how to obey and submit.
Mark Cuban had the courage and pride to stand up for himself—and the patriotism to stand up for his country. For that, he should be honored. The applause he received from the Tonight Show audience is heartening. It shows that for all that our government tries to rule by intimidation, at least some Americans do still honor those who stand up to our government.
For further reading:
- Alexander R. Cohen, Government by Intimidation
- Alexander R. Cohen, The Morality of Insider Trading (or see video lecture)
Nov 12, 2013
“(Reuters) - US Airways Group Inc and American Airlines will give low-cost competitors more access to a half dozen key U.S. airports, including New York and Washington, D.C., in exchange for permission to merge and create the world’s largest airline.”
That’s good news for Doug Parker, the man behind the merger, soon to become the CEO of the largest business in his field. And it may be inspiring news for other businessmen: Parker, with airline workers at his side, fought the government legally and politically and, at least for the most part, won. But I quoted that sentence for a reason: one word in it makes it less than triumphal for the cause of business rights.
When the Department of Justice first announced that it would try to use antitrust law to stop Parker’s merger from going through, DOJ antitrust chief Bill Baer said he really did want to stop the merger—he wasn’t just after a settlement where the airlines would give up some resources and DOJ would withdraw its objections. But what Baer got was a settlement. That's a victory for Parker. And it reminds us that sometimes, when you stand up to the government, you win.
Still, it’s an incomplete victory because of one word in that sentence I quoted: permission. Parker’s nascent airline must surrender certain assets, Reuters says, “in exchange for permission to merge and create the world’s largest airline.” Even if in this case DOJ caved because of legal arguments or political pressure, merging is still seen as something for which one has to get permission—even buy permission. So the settlement does not fully vindicate the individual’s right to do business for his own sake. To do that would require defeating the idea that it is up to the government to give or deny permission for mergers. So long as mergers are regarded as a matter of permission, the principle that the government is entitled to manage the economy will still threaten everyone’s right to work for his own benefit.
Nov 08, 2013
If you’re working for a U.S. senator and you think your boss is doing something unconstitutional, you need to be able to say so. If you’re not free to inform the public about it, even by publishing information the senator isn’t willing to release, the voters can’t hold their senator accountable.
And no matter how much public anger you pull down on your senator—even if you deliberately stop him from getting the bills that are most important to him passed—you need to be able to keep your job. If senators retaliated against employees who blow the whistle on constitutional violations, staffers would be too scared to tell the public what their bosses are up to.
So if you want an informed public—if you want to uphold the Constitution—you should support the Senate Constitutional Anti-Retaliation Act!
There is, of course, an argument against it. Senators need their staffs to be on their side. If an employee wants to destroy a senator’s agenda, he should quit. If he doesn’t, the senator may need to fire him, so that he doesn’t have someone in his office working against him. The SCARA would make it a lot harder for senators to organize their offices to get their work done.
Lucky for senators I made it up. I’m pretty sure no such thing exists in reality; if it is, it hasn’t been very effective. Capitol Hill is known for a culture that discourages staffers from publicizing their own opinions.
The Criminal Antitrust Anti-Retaliation Act, however, may soon be a reality. The Senate passed it this week. The CAARA would force private businesses to continue to employ workers who call down the wrath of the federal government for their employers’ suspected violation of the antitrust laws. So if you’re running a business, and one of your employees turns against you over an antitrust issue, you would have to keep employing him—even if that means giving him internal information which he then turns over to the government.
You might say the cases are different because antitrust is the law. But so is the Constitution. The biggest difference is this: Senators chose to work for the people, and the SCARA would help the electorate hold them accountable. Business executives chose to produce wealth for themselves and their investors, but the CAARA would help force them to sacrifice their goals to the government’s priorities.
Where are the good apples?
The Business Rights Center has noted a fair few bad deeds by prosecutors. Timothy Crudo lied to the jury about Greg Reyes. Prosecutors have interfered with business defendants’ relationships with their lawyers. Prosecutors threatened a man with half a century in prison to get him to give up his right to a trial and accept a sentence of half a year or less, and U.S. Attorney General Eric Holder sanctioned that. Stefan Cassella explained his harsher treatment of one forfeiture victim by explaining that another hadn’t spoken to the media. I could go on.
One might try to blame all of this on a few bad apples, and I understand that inclination. But last month the Arizona Republic revealed that the Arizona Supreme Court has found prosecutorial misconduct or impropriety in more than a fifth of capital convictions. Forty-two times since 2002, death row inmates have gone to that state’s supreme court alleging prosecutorial misconduct. And in nearly half of those appeals, the court agreed: Prosecutors had fallen short—in cases that could end people’s lives. Many of those cases were not overturned; rarely was a prosecutor punished. Defense lawyers were afraid to file Bar charges, and some prosecutors were more focused on defense misconduct. (Note: Misconduct identified by the Arizona Supreme Court could be as little as eye-rolling, or much more serious.)
I am a lawyer. Hanging on my wall is the document marking my admission to the Bar. It says I am a person of good moral character, which is supposed to be one of the prerequisites for this profession. And I would like to believe that prosecutors—some of the most powerful lawyers in this country—are, on the whole, upstanding citizens committed to the rule of law and the pursuit of justice.
But I keep seeing more and more evidence that many of them are not. So I have to ask: Where are the honorable ones? The job prosecutors have chosen is to pursue justice under law. How many of them are as serious about doing justice to their colleagues who violate defendants' legal rights or effectively deprive them of the law's protections as they are about punishing the defendants they identify among the rest of us?
I genuinely don't know, and I doubt I ever will. But it is clear that too many of them are not.
This post has been revised and weakend by the author in light of further reading and reflection. Look for a further blog post on the subject in the near future.
For further reading:
- Alexander R. Cohen, DOJ Suspends Prosecutors for Failure to Disclose
- Alexander R. Cohen, Holding Prosecutors Accountable
- Alexander R. Cohen, Government by Intimidation
Nov 01, 2013
Lavabit founder Ladar Levison, who created the email system that Edward Snowden used and who tried to protect it from the government, closed that system—but he hasn’t given up on providing private email.
The approach Levison is now promoting is based on a simple principle: If your email provider has access to your data, it can be forced to compromise it—so if you want your data to be private, you need to secure it even from the company that’s providing your email service. You need to store your data on that company’s computers, but in encrypted form, with the private key needed to decrypt it only on your own machines. The idea is known as end-to-end encryption: that is, keeping the email encrypted all the way from the computer on which it is written to the computer on which the intended recipient reads it. Then if the National Security Agency or anyone else tries to catch it in between, all the snoops get is a mash of gibberish—unless they devote massive computer power to decrypt it (the digital equivalent of picking the lock) or somehow get the keys.
End-to-end encryption is already possible among people willing to learn some skills and put in the effort. But in order to make it easy for a wide range of users to adopt, Levison and his former competitor Silent Circle are urging email providers such as Google, Microsoft, and Yahoo to build end-to-end encryption into their technology. They’ve named their movement the Dark Mail Alliance.
This would come at a cost. Some email providers, most notably Google, pay for the free email service they give their users by showing ads relevant to their email. You can’t do that if your own computers can’t scan the email to see what’s relevant. But the NSA continues to attack Google and its competitors, and Google has slammed the door on an abusive government before.
Meanwhile, Levison, Silent Circle, and their Dark Mail Alliance are setting a powerful example. They are reminding us all that those who create value can stand up and fight for the values they create.
Reihan Salam at National Review Online blogged today that people who want to improve health care should look to antitrust law.
Strangely, he didn’t note that the federal government is already applying antitrust in the health field. Last Supreme Court term saw antitrust cases involving hospitals and pharmaceuticals. And my Google Alert on antitrust keeps telling me about a health company in Idaho that’s trying to buy some hospitals there.
Nor did Salam note that there are many laws in place, such as licensing laws and "certificate of need" laws, to restrict competition in health care—and laws that restrict competition generally trump antitrust law.
But the biggest thing Salam didn’t mention is that antitrust and (in its typical forms) health reform share a premise, the premise that the government must orchestrate the work of those who produce for the benefit of those who consume. This premise is the opposite of the right to the pursuit of one’s own happiness.
Suppose the government accuses you of a crime. Suppose it freezes your money while you await trial, claiming that if you’re convicted, you’ll have to forfeit the assets. Are you entitled to argue to a judge that you’re entitled to the money, so that you can use it to pay an attorney to get you acquitted? Or do you have to go to trial without the money you maintain you earned legally, even if that means relying on a public defender?
The Supreme Court took up this issue Wednesday in Kaley v. United States. Oral arguments were complicated. Much of the discussion concerned the nature of the hearing Kerri Kaley and her husband were asking for. What were they entitled to try to prove? What evidence would be considered? If the hearing gave the defense the chance to dispute that there was probable cause, wouldn’t that undermine the grand jury?
Troubled by that last point, Justice Antonin Scalia suggested, on page 14 of the transcript, that it would be better not to have any such hearing—but to let defendants use their otherwise frozen funds to hire lawyers anyway. The Kaleys’ lawyer didn’t take him up on it. He thought that issue had been decided in the 1989 Supreme Court cases of Monsanto and Caplin & Drysdale. But the Supreme Court has the power to overturn its own precedents, and considering the difficulties Scalia and other Justices were having with the idea of a hearing, counsel might have been wiser to pursue his invitation to advocate a blanket rule that otherwise frozen funds may be used to pay for a defense.
Certainly such a ruling would do more to protect the right to a fair trial in business cases. In these cases, vast collections of documents may be involved, and mounting a reasonable defense may require correspondingly large expenditures. Moreover, business defendants may already have relationships with lawyers whom they trust and who have relevant expertise.
In deciding Kaley, the Court should remember that we now have an attorney general and a Department of Justice who don’t believe that defendants (at least as a rule) should insist on a trial—and that the overwhelming majority of convictions are now obtained through guilty pleas. The power to freeze the money a defendant needs to defend himself as he thinks best is a bludgeon the government can use to try to beat defendants into submission—and out of their right to a trial. In a society where the prosecutors are working to keep people accused of crimes from defending themselves, all such bludgeons are dangerous, not just to the guilty, but to the falsely accused. The Court should consider whether due process allows the government to use this bludgeon.