Noam Chomsky on the Breakdown of American Society and a World in Transition

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Donald Trump addresses a rally in Richmond, Va., June 10, 2016.Donald Trump addresses a rally in Richmond, Virginia, June 10, 2016. "Trump is appealing to those who sense and experience the breakdown of American society," says Noam Chomsky. (Photo: Chet Strange / The New York Times)

The US is facing uncertain times. While it remains the only global superpower, it is no longer able to influence events and outcomes to its liking, at least not for the most part. Frustration and worry about the risk of upcoming disasters seem to far outweigh US voters' hopes for a more rational and just world order. Meanwhile, Noam Chomsky argues, the rise and popularity of Donald Trump is occurring due to the fact that US society is breaking down.

In this exclusive interview with Truthout, Noam Chomsky addresses contemporary developments in both the United States and around the world and challenges prevailing views about class warfare, neoliberalism as the outcome of economic laws, the role of the US as a global power, the status of emerging economies and the power of the Israel Lobby.

CJ Polychroniou: Noam, you have said that the rise of Donald Trump is largely due to the breakdown of American society. What exactly do you mean by this?

Noam Chomsky: The state-corporate programs of the past 35 or so years have had devastating effects on the majority of the population, with stagnation, decline and sharply enhanced inequality being the most direct outcomes. This has created fear and has left people feeling isolated, helpless, victims of powerful forces they can neither understand or influence. The breakdown is not caused by economic laws. They are policies, a kind of class war initiated by the rich and powerful against the working population and the poor. This is what defines the neoliberalism period, not only in the US but in Europe and elsewhere. Trump is appealing to those who sense and experience the breakdown of American society -- to deep feelings of anger, fear, frustration, hopelessness, probably among sectors of the population that are seeing an increase in mortality, something unheard of apart from war.

Class warfare remains as vicious and one-sided as ever. Neoliberal governance over the last thirty years, regardless if there was a Republican or a Democratic administration in place, has intensified immensely the processes of exploitation and induced ever-larger gaps between haves and have-nots in American society. Moreover, I don't see neoliberal class politics being on retreat in spite of the opportunities that opened up because of the last financial crisis and by having a centrist Democrat in the White House.

The business classes, which largely run the country, are highly class conscious. It is not a distortion to describe them as vulgar Marxists, with values and commitments reversed. It was not until 30 years ago that the head of the most powerful union recognized and criticized the "one-sided class war" that is relentlessly waged by the business world. It has succeeded in achieving the results you describe. However, neoliberal policies are in shambles. They have come to harm the most powerful and privileged (who only partially accepted them for themselves in the first place), so they cannot be sustained.

Neoliberal policies are in shambles. They have come to harm the most powerful and privileged, so they cannot be sustained.

It is rather striking to observe that the policies that the rich and powerful adopt for themselves are the precise opposite of those they dictate to the weak and poor. Thus, when Indonesia has a deep financial crisis, the instructions from the US Treasury Department (via the IMF) are to pay off the debt (to the West), to raise interest rates and thus slow the economy, to privatize (so that Western corporations can buy up their assets), and the rest of the neoliberal dogma. For ourselves, the policies are to forget about debt, to reduce interest rates to zero, to nationalize (but not to use the word) and to pour public funds into the pockets of the financial institutions, and so on. It is also striking that the dramatic contrast passes unnoticed, along with the fact that this conforms to the record of the economic history of the past several centuries, a primary reason for the separation of the first and third worlds.

Class politics is so far only marginally under attack. The Obama administration has avoided even minimal steps to end and reverse the attack on unions. Obama has even indirectly indicated his support for this attack, in interesting ways. It is worth recalling that his first trip to show his solidarity with working people (called "the middle class," in US rhetoric) was to the Caterpillar plant in Illinois. He went there in defiance of pleas by church and human rights organizations because of Caterpillar's grotesque role in the Israeli occupied territories, where it is a prime instrument in devastating the land and villages of "the wrong people." But it seems not even to have been noticed that, adopting Reagan's anti-labor policies, Caterpillar became the first industrial corporation in generations to break a powerful union by employing strike-breakers, in radical violation of international labor conventions. That left the US alone in the industrial world, along with apartheid South Africa, in tolerating such means of undermining workers' rights and democracy -- and now I presume the US is alone. It is hard to believe that the choice was accidental.

There is a widespread belief at least among some well-known political strategists that issues do not define American elections -- even if the rhetoric is that candidates need to understand public opinion in order to woo voters -- and we do know of course that media provide a wealth of false information on critical issues (take the mass media's role before and during the launching of the Iraq war) or fail to provide any information at all (on labor issues, for example). Yet, there is strong evidence indicating that the American public cares about the great social, economic and foreign policy issues facing the country. For example, according to a research study released some years ago by the University of Minnesota, Americans ranked health care among the most important problems facing the country. We also know that the overwhelming majority of Americans are in support of unions. Or that they judged the war against terror to be a total failure. In the light of all of this, what's the best way to understand the relation between media, politics and the public in contemporary American society?

It is well-established that electoral campaigns are designed so as to marginalize issues and focus on personalities, rhetorical style, body language, etc. And there are good reasons. Party managers read polls, and are well aware that on a host of major issues, both parties are well to the right of the population -- not surprisingly; they are, after all, business parties. Polls show that a large majority of voters object, but those are the only choices offered to them in the business-managed electoral system, in which the most heavily funded candidate almost always wins.

Similarly, consumers might prefer decent mass transportation to a choice between two automobiles, but that option is not provided by advertisers -- indeed, by markets. Ads on TV do not provide information about products; rather, they provide illusion and imagery. The same Public Relations firms that seek to undermine markets by ensuring that uninformed consumers will make irrational choices (contrary to abstract economic theories) seek to undermine democracy in the same way. And the managers are well aware of all of this. Leading figures in the industry have exulted in the business press that they have been marketing candidates like commodities ever since Reagan, and this is their greatest success yet, which they predict will provide a model for corporate executives and the marketing industry in the future.

The Obama administration has avoided even minimal steps to end and reverse the attack on unions.

You mentioned the Minnesota poll on health care. It is typical. For decades, polls have shown that health care is at or near the top of public concerns -- not surprisingly, given the disastrous failure of the health care system, with per capita costs twice as high as comparable societies and some of the worst outcomes. Polls also consistently show that large majorities want a nationalized system, called "single payer," rather like the existing Medicare system for the elderly, which is far more efficient than the privatized systems or the one introduced by Obama. When any of this is mentioned, which is rare, it is called "politically impossible" or "lacking political support" -- meaning that the insurance and pharmaceutical industries, and others who benefit from the current system, object. We gained an interesting insight into the workings of American democracy from the fact that in 2008, unlike 2004, the Democratic candidates -- first Edwards, then Clinton and Obama -- came forward with proposals that at least begun to approach what the public has wanted for decades. Why? Not because of a shift in public attitudes, which have remained steady. Rather, [the] manufacturing industry has been suffering from the costly and inefficient privatized health care system, and the enormous privileges granted, by law, to the pharmaceutical industries. When a large sector of concentrated capital favors some program, it becomes "politically possible" and has "political support." Just as revealing as the facts themselves is that they are not noticed.

Much the same is true on many other issues, domestic and international.

The US economy is facing myriad problems, although profits for the rich and corporations returned long ago to the levels they were prior to the eruption of the 2008 financial crisis. But the one single problem which most of academic and financial analysts seem to focus on as being of most critical nature is that of government debt. According to mainstream analysts, US debt is already out of control, which is why they have been arguing consistently against big economic stimulus packages to boost growth, contending that such measures will only push the US deeper into debt. What is the likely impact that a ballooning debt will have on the American economy and on international investor's confidence in the event of a new financial crisis?

No one really knows. Debt has been far higher in the past, particularly after World War II. But that was overcome thanks to the remarkable economic growth under the wartime semi-command economy. So we know that if government stimulus spurs sustained economic growth, the debt can be controlled. And there are other devices, such as inflation. But the rest is very much guesswork. The main funders -- primarily China, Japan, oil producers -- might decide to shift their funds elsewhere for higher profits. But there are few signs of such developments, and they are not too likely. The funders have a stake in sustaining the US considerable economy for their own exports. There is no way to make confident predictions, but it seems clear that the entire world is in a tenuous situation, to say the least.

You seem to believe, in contrast to so many others, that the US remains a global economic, political and of course military superpower even after the latest crisis -- and I do have the same impression, as well, as the rest of the world economies are not only not in any shape to challenge America's hegemony but are looking toward the US as a savior of the global economy. What do you see as the competitive advantages that US capitalism has over the EU economy and the newly emerging economies in Asia?

The 2007-08 financial crisis in large measure originated in the US, but its major competitors -- Europe and Japan -- ended up suffering more severely, and the US remained the choice location for investors who are looking for security in a time of crisis. The advantages of the US are substantial. It has extensive internal resources. It is unified, an important fact. Until the civil war in the 1860s, the phrase "United States" was plural (as it still is in European languages). But since then the phrase has been singular, in standard English. Policies designed in Washington by state power and concentrated capital apply to the whole country. That is far harder in Europe. A couple of years after the eruption of the latest global financial crisis, the European Commission task force issued a report saying that "Europe needs new bodies to monitor systemic risk and co-ordinate oversight of financial institutions across the region's patchwork of supervision," though the task force, headed then by a former French central banker, "stopped well short of suggesting a single European watchdog" -- which the US can have any time it wants. For Europe, it would be "an almost impossible mission," the task force leader said. [Several] analysts, including the Financial Times, have described such a goal as politically impossible, "a step too far for many member states reluctant to cede authority in this area." There are many other advantages to unity. Some of the harmful effects of European inability to coordinate reactions to the crisis have been widely discussed by European economists.

When a large sector of concentrated capital favors some program, it becomes "politically possible" and has "political support."

The historical roots of these differences between Europe and the US are familiar. Centuries of … conflict imposed a nation-state system in Europe, and the experience of World War II convinced Europeans that they must abandon their traditional sport of slaughtering one another, because the next try would be the last. So we have what political scientists like to call "a democratic peace," though it is far from clear that democracy has much to do with it. In contrast, the US is a settler-colonial state, which [murdered] the indigenous population and consigned the remnants to "reservations," while conquering half of Mexico, then expanding beyond. Far more than in Europe, the rich internal diversity was destroyed. The civil war cemented central authority, and uniformity in other domains as well: national language, cultural patterns, huge state-corporate social engineering projects such as the suburbanization of the society, massive central subsidy of advanced industry by research and development, procurement and other devices, and much else.

The new emerging economies in Asia have incredible internal problems, unknown in the West. We know more about India than China, because it is a more open society. There are reasons why it ranks 130th in the Human Development Index (about where it was before the partial neoliberal reforms); China ranks 90th, and the rank could be worse if more were known about it. That only scratches the surface. In the 18th century, China and India were the commercial and industrial centers of the world, with sophisticated market systems, advanced health levels by comparative standards, and so on. But imperial conquest and economic policies (state intervention for the rich, free markets rammed down the throats of the poor) left them in miserable conditions. It is notable that the one country of the [global] South that developed was Japan, the one country that was not colonized. The correlation is not accidental.

Is the US still dictating IMF policies?

It's opaque, but my understanding is that IMF's economists are supposed to be, maybe are, somewhat independent of the political people. In the case of Greece, and austerity generally, the economists have come out with some strongly critical papers in the Brussels programs, but the political people seem to be ignoring them.

On the foreign policy front, the "war on terror" seems to be a never ending enterprise and, as with the Hydra monster, a new head pops when one is cut off. Can massive interventions of force wipe out terrorist organizations like ISIS?

Upon taking office, Obama expanded intervention forces and stepped up the wars in Afghanistan and Pakistan, just as he had promised he would do. There were peaceful options, some recommended right in the mainstream: in Foreign Affairs, for example. But these did not fall under consideration. Afghan president Hamid Karzai's first message to Obama, which went unanswered, was a request to stop bombing civilians. Karzai also informed a UN delegation that he wanted a timetable for withdrawal of foreign (meaning US) troops. Immediately he fell out of favor in Washington, and accordingly shifted from a media favorite to "unreliable," "corrupt," etc. -- which was no more true than when he was feted as our "our man" in Kabul. Obama sent many more troops and stepped up bombing on both sides of the Afghan-Pakistan border -- the Durand line, an artificial border established by the British, which cuts the Pashtun areas in two and which the people have never accepted. Afghanistan in the past often pressed for obliterating it.

The entire world is in a tenuous situation, to say the least.

That is the central component of the "war on terror." It was certain to stimulate terror, just as the invasion of Iraq did, and as resort to force does quite generally. Force can succeed. The existence of the US is one illustration. The Russians in Chechnya is another. But it has to be overwhelming, and there are probably too many tentacles to wipe out the terrorist monster that was largely created by Reagan and his associates, since nurtured by others. ISIS is the latest one, and a far more brutal organization than al-Qaeda. It is also different in the sense that it has territorial claims. It can be wiped out through massive employment of troops on the ground, but that won't end the emergence of similar-minded organizations. Violence begets violence.

US relations with China have gone through different phases over the past few decades, and it is hard to get a handle on where things stand today. Do you anticipate future US-Sino relations to improve or deteriorate?

The US has a love-hate relation with China. China's abysmal wages, working conditions, and lack of environmental constraints are a great boon to US and other Western manufacturers who transfer operations there, and to the huge retail industry, which can obtain cheap goods. And the US now relies on China, Japan and others to sustain its own economy. But China poses problems as well. It does not intimidate easily… When the US shakes its fist at Europe and tells Europeans to stop doing business with Iran, they mostly comply. China doesn't pay much attention. That's frightening. There is a long history of conjuring up imaginary Chinese threats. It continues.

Do you see China being in a position any time soon to pose a threat to US global interests?

Among the great powers, China has been the most reserved in use of force, even military preparations. So much so that leading US strategic analysts (John Steinbrunner and Nancy Gallagher, writing in the journal of the ultra-respectable American Academy of Arts and Sciences) called on China some years ago to lead a coalition of peace-loving nations to confront the US aggressive militarism that they think is leading to "ultimate doom." There is little indication of any significant change in that respect. But China does not follow orders, and is taking steps to gain access to energy and other resources around the world. That constitutes a threat.

Indian-Pakistani relations pose clearly a major challenge in US foreign policy. Is this a situation the US can actually have under control?

To a limited extent. And the situation is highly volatile. There is constant ongoing violence in Kashmir -- state terror by India, Pakistan-based terrorists. And much more, as the recent Mumbai bombings revealed. There are also possible ways to reduce tensions. One is a planned pipeline to India through Pakistan from Iran, the natural source of energy for India. Presumably, Washington's decision to undermine the Nonproliferation treaty by granting India access to nuclear technology was in part motivated by the hope of undercutting this option, and bringing India to join in Washington's campaign against Iran. It also may be a related issue in Afghanistan, where there has long been discussion of a pipeline (TAPI) from Turkmenistan through Afghanistan to Pakistan and then India. It is probably not a very live issue, but quite possibly is in the background. The "great game" of the 19th century is alive and well.

In many circles, there is a widespread impression that the Israel lobby calls the shots in US foreign policy in the Middle East. Is the power of the Israel lobby so strong that it can have sway over a superpower?

My friend Gilbert Achcar, a noted specialist on the Middle East and international affairs generally, describes that idea as "phantasmagoric." Rightly. It is not the lobby that intimidates US high tech industry to expand its investments in Israel, or that twists the arm of the US government so that it will pre-position supplies there for later US military operations and intensify close military and intelligence relations.

When the lobby's goals conform to perceived US strategic and economic interests, it generally gets its way: crushing of Palestinians, for example, a matter of little concern to US state-corporate power. When goals diverge, as often happens, the Lobby quickly disappears, knowing better than to confront authentic power.

I agree totally with your analysis, but I think you would also agree that the Israel lobby is influential enough, and beyond whatever economic and political leverage it carries, that criticisms of Israel still cause hysterical reactions in the US -- and you certainly have been a target of right-wing Zionists for many years. To what do we attribute this intangible influence on the part of the Israel lobby over American public opinion?

That is all true, though much less so than in recent years. It is not really power over public opinion. In numbers, by far the largest support for Israeli actions is independent of the lobby: Christian religious fundamentalist. British and American Zionism preceded the Zionist movement, based on providentialist interpretations of Biblical prophecies. The population at large supports the two-state settlement, doubtless unaware that the US has been unilaterally blocking it. Among educated sectors, including Jewish intellectuals, there was little interest in Israel before its great military victory in 1967, which really established the US-Israeli alliance. That led to a major love affair with Israel on the part of the educated classes. Israel's military prowess and the US-Israel alliance provided an irresistible temptation to combine support for Washington with worship of power and humanitarian pretexts… But to put it in perspective, reactions to criticism of US crimes are at least as severe, often more so. If I count up the death threats I have received over the years, or the diatribes in journals of opinion, Israel is far from the leading factor. The phenomenon is by no means restricted to the US. Despite much self-delusion, Western Europe is not very different -- though, of course, it is more open to criticism of US actions. The crimes of others usually tend to be welcome, offering opportunities to posture about one's profound moral commitments.

Under Erdogan, Turkey has been in a process of unfolding a new-Ottoman strategy towards the Middle East and Central Asia. Is the unfolding of this grand strategy taking place with the collaboration or the opposition of the United States?

Turkey of course has been a very significant US ally, so much so that under Clinton it became the leading recipient of US arms (after Israel and Egypt, in a separate category). Clinton poured arms into Turkey to help it carry out a vast campaign of murder, destruction, and terror against its Kurdish minority. Turkey has also been a major ally of Israel since 1958, part of a general alliance of non-Arab states, under the US aegis, with the task of ensuring control over the world's major energy sources by protecting the ruling dictators against what is called "radical nationalism" -- a euphemism for the populations. US-Turkish relations have sometimes been strained. That was particularly true in the build-up to the US invasion of Iraq, when the Turkish government, bowing to the will of 95% of the population, refused to join. That caused fury in the US. Paul Wolfowitz was dispatched to order the disobedient government to mend its evil ways, to apologize to the US and to recognize that its duty is to help the US. These well-publicized events in no way undermined Wolfowitz's reputation in the liberal media as the "idealist-in-chief" of the Bush administration, utterly dedicated to promoting democracy. Relations are somewhat tense today too, though the alliance is in place. Turkey has quite natural potential relations with Iran and Central Asia and might be inclined to pursue them, perhaps raising tensions with Washington again. But it does not look too likely right now.

On the western front, are plans for the eastward expansion of NATO, which go back to the era of Bill Clinton, still in place?

One of Clinton's major crimes in my opinion -- and there were many -- was to expand NATO to the East, in violation of a firm pledge to Gorbachev by his predecessors after Gorbachev made the astonishing concession to allow a united German to join a hostile military alliance. These very serious provocations were carried forward by Bush, along with a posture of aggressive militarism which, as predicted, elicited strong reactions from Russia. But American redlines are already placed on Russia's borders.

What are your views about the EU? It is still largely a trailblazer for neoliberalism and hardly a bulwark for US aggression. But do you see any signs that it can emerge at some point as a constructive, influential actor on the world stage?

It could. That is a decision for Europeans to make. Some have favored taking an independent stance, notably De Gaulle. But by and large European elites have preferred passivity, following pretty much in Washington's footsteps.



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What is Libertarianism?

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This is not without reason. Libertarians talk a lot about auditing the Federal Reserve and returning U.S. currency to the gold standard. They rail against the war on drugs and many of them, including the party's front-runner, enjoy pot. But as the Libertarian Party gathers in Florida to select its nominee during an unprecedented year in politics, it has a chance to break out of the fringe.

Founded in 1971, the Libertarian Party offers an ideological and political alternative to the Democratic and Republican parties, in favor of reducing government involvement in all sectors, from the economy to social issues.

Although disagreement abounds on specific measures and the extent to which government should shrink, Libertarians almost universally advocate for slashing government benefits, reducing economic regulations and implementing radical reform -- if not the outright elimination -- of the Federal Reserve. On social matters, Libertarians generally take a liberal approach, favoring same-sex marriage and the decriminalization of most, or all, drugs. The party is deeply pro-gun rights and takes a skeptical stance on any military involvement in other countries.

Many of these ideas are rooted in principles espoused by Ayn Rand, author of "Atlas Shrugged." Rand helped popularize the controversial Libertarian principle that "egoism" was preferable to altruism -- that one's self-interest trumped anything else so long as it did not mean hurting anyone else.

These ideas are old, and debates over core Libertarian principles abound. Rather than dig through the weeds, CNN reached out to several contemporary Libertarians -- all of whom will be key players in the national convention this weekend -- to get a better understanding of Libertarianism as it stands now.

Gary Johnson

Former New Mexico Gov. Gary Johnson, the party's 2012 presidential nominee and the frontrunner this cycle, said, "The more government does, the less freedom we enjoy. The Libertarian view is in favor of smaller government and greater individual liberty."

Austin Petersen

Austin Petersen, a hardcore party advocate and candidate for president, said Libertarianism "means being fiscally conservative and socially whatever you want provided you don't force it on anyone else."

He said people could live as they pleased. Whether that meant living by traditional values or taking hard drugs, Petersen said the government should not regulate anyone's lifestyle.

"You can live a socially conservative lifestyle, but it doesn't mean you want to legislate other people to have a socially conservative lifestyle," Petersen said.

Petersen has split with many socially liberal members of his party on abortion, which allows him to pitch himself social conservatives in a way other candidates cannot.

"I believe a fetus is a human child," Petersen said. "You cannot have liberty without sanctity of life."

John McAfee

Meanwhile, John McAfee, a cybersecurity expert who earned international notoriety years before his recent run for the Libertarian nomination, described libertarianism as an economic and social lifestyle of its own. He rolled off a list of principles he said defined his understanding of the party.

"Number one, our bodies and our minds belong to ourselves and not to the government or anyone else for that matter. Number two, we should not harm one another," McAfee recited.

"Number three, we should not take each other's stuff. We should not steal each other's property. Number four, we should keep our agreements."

Carla Howell

Carla Howell, political director of the Libertarian National Committee, offered the party's own answer.

"We advocate for minimum government and maximum freedom," Howell said.

When it comes to policy, Howell cited party commitments to cutting taxes, ending the war on drugs and privatizing poorly performing government agencies. She took the TSA to task in particular, calling for its elimination. Howell also said the Libertarian Party advocates ending military interventions and foreign aid, which she said would promote peace and reduce spending.

"Bottom line," Howell said, "We need to make government much smaller than it is today."



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This Jordan Spieth-Michael Greller exchange caught by microphones is fascinating

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OAKMONT, Pa. -- Jordan Spieth and caddie Michael Greller have a long way to go in the mid-round deliberation department if they want to rival the all-time champions, Phil Mickelson and Jim "Bones" Mackay. But they're getting closer, and this exchange caught by Fox Sports' mics offered a neat window into the decision-making behind every shot (it also helps explain why Spieth is not setting any speed records this week, but that's maybe another story).

A couple of highlights.

-- This exchange:

Spieth: "Where do you want this ball? Just directly at it?"

Greller: "Yeah."

What, golf isn't that simple for you?

-- It's nice to see that even other PGA Tour players are blown away by how far Dustin Johnson projects a golf ball.

-- When Spieth knocks his approach shot on the ninth green and waits for applause, he clearly thought the shot was better than it was.

"I got no claps for that," he said, before accepting, "Must be pretty far back."

It was. Spieth's ball settled 74 feet above the hole, and he three-putted for bogey en route to a second consecutive 72. But it wasn't for a lack of effort.


WATCH: GOLF DIGEST VIDEOS



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The Road Ahead for Ethereum: Three Hard Problems

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(Image credit: Coinfox)

The Road Ahead for Ethereum: Three Hard Problems

Ethereum has generated a lot of excitement lately as a single world computer that can’t be shut down and can verifiably run applications.

What I Love About Ethereum:

First, let’s separate Ethereum the technology from the Ethereum community. The success of an open-source project depends on community involvement as much as the technology. Compared to Bitcoin, Ethereum has done a much better job at building a community of developers with multiple implementations, great communication, and quick decision making.

I love the Ethereum community and love the culture of fast experimentation.

Hard Computer Science Problems:

Ethereum, in my view, has taken on at least three hard Computer Science problems. It’s unclear if any of them can be solved in a practical sense. What’s worse is that the broader Ethereum community believes that Ethereum already has the solutions or is close to having them.

1. Scalability of Distributed Systems:

Ethereum, in the current form, works at small scale and by design breaks at large scale. Every new user/node is adding state for every other user/node at a rate that is not sustainable in a distributed system.

Eric Brewer’s CAP theorem (formally proved by Gilbert and Lynch) states that you can pick two out of the following three properties:

  • Consistency: all nodes see the same data at the same time.
  • Availability: every request receives a success/failure response.
  • Partition Tolerance: the system can operate under network partitions

Blockchains give up on consistency. That’s the design space that blockchains operate in i.e., they can only play around with 1 variable: consistency.

Bitcoin very explicitly makes the decision that (a) it is eventually consistent (data gets consistent after certain time/blocks), and (b) it tries to keep the amount of data that needs to get consistent as small as possible (hence it’s not trivial to just increase the Bitcoin blocksize and push more data).

Ethereum is pushing the boundaries of consistency in two conflicting directions. It wants to put more data in the blockchain and it wants to reduce the time it takes to become consistent. This is a logical fallacy.

Consistency for New Nodes:

Let’s look at a new node that wants to bootup and independently verify the Ethereum blockchain. That node will need to run every single computation that every Ethereum user ran ever in history. An analogy to this is that you start your web browser and the browser needs to run every single website on the Internet. That was ever created. Since the beginning of the Internet. It’d be a long long time before a new node can even start.

People seem to think Ethereum can solve these scalability problems. I hope they can, but to put things in perspective it’d require some new theoretical advancements in distributed systems that researchers didn’t discover in the last thirty years or so.

2. Running Untrusted Code:

Ethereum argues that you can run untrusted code because you are paying for compute steps and you can only do limited number of computations and can’t have infinite loops. But infinite loops are only a subset of a larger problem. Even within limited compute steps there can be attacks. The recent DAO attack is just one example. Attacks on VMs are a heavily studied area and all sorts of vulnerabilities are frequently discovered.

The problem basically boils down to: can we run untrusted remote code with 100% guarantee that it will not crash my program? If Ethereum can’t solve this problem then a single attack can effectively stop the network from making forward progress (imagine all Ethereum nodes crashing after processing a single transaction). If Ethereum can solve this problem, then they’ve opened a brave new world of remote code execution from untrusted parties, a problem that people have been wrestling with for decades.

With a limited scripting language, the scope of this problem drastically narrows down and that’s why Bitcoin uses a limited scripting language.

3. Complexity in the Network:

Ethereum, by design, wants to put all complexity in the network. This is the exact opposite design choice that the end-to-end principle made for the Internet. Complexity is not only an enemy of security (as seen in the DAO attack and running turing-complete code), but is also an enemy of building scalable networks. People have tried putting complexity in large networks earlier, e.g., active networking, only to realize how hard it is.

The Internet was able to survive and scale because of a fundamental design choice that was made at the core of the network and Ethereum needs to find a way to survive while making the exact opposite design choice.

What’s Next?

I believe that Ethereum adds a lot of value to the blockchain ecosystem. Their bold experiments are enabling new applications and bringing attention to critical problems. In the long run, we will all benefit from their efforts. However, we need a much deeper understanding of the technical challenges and need to explicitly differentiate between experimentation phase and production deployments.



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My Dinner with Peter Thiel

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“Lunch?” one of my co-workers at The New York Times asked me via chat.

“No thanks,” I replied. “I’m not eating lunch today. I was invited to a dinner at Peter Thiel’s house tonight. Saving my appetite for the glorious meal.”

This conversation occurred a number of years ago when I was invited to Thiel’s for a “salon,” an event in which people—generally people in Thiel’s tax bracket, that is—would opine about all matters technology. That part of the invite, however, was less important to me. Instead, I was more interested in the food. As a co-founder of PayPal, an early Facebook investor, a successful venture capitalist, and the co-founder of Palantir, the big-data start-up, Thiel, I assumed, would be presiding over some sort of gluttonous feast. I presumed that chefs had been at work for days glazing carrots with a thyme-honey citrus sauce, preparing succulent Thomas Keller–esque chicken. (Come to think of it, Keller was likely even there, cooking the fowl himself.) For dessert, I envisioned a pâtissier whipping up handmade dark-chocolate sweets. As a journalist with a Prius, this was going to be a treat. In anticipation of the feast, I chose to forgo my breakfast and lunch that day.

After I filed my last piece of the day, I made my way to Thiel’s home, and as I bounded up the steps I imagined what might greet me in this palace. The furniture, I thought, must be impeccably designed; there would be bespoke pieces, masterful craftsmanship, and opulent dinnerware. And the food—ah the food!—was probably almost ready. My belly ached with excitement as I reached the top of the steps.

Knock, knock, knock.

The door swung open and I was greeted by a trio of fledgling, effervescent assistants. “Can I take your coat,” one asked. Oh yes, I said with a smile, here you go. “Can I get you a drink?” another queried politely. Oh yes, I curtsied, that would be lovely. So this is how the other .001 percent live, I thought. “We have some food for you to snack on,” another told me, pointing me toward a dining room to the left. And there, in the middle of a disproportionately small dining table, was one large bowl filled with edamame and a plate with some sushi that looked like it had been picked up from a local Stop & Shop. Marissa Mayer, then still a top executive at Google, was standing with a tiny little plate in her hand and a bewildered look on her face. She greeted me, then fingered a couple pieces of sushi on her plate before scampering into the other room.

The actions of these tech elite are only going to become more brazen and more outlandish as they morph society into the world they believe we should live in.

The living room was filled with about 30 people, all of whom sat in a circle, picking at their sparsely decorated plates. At the top of the circle (yes, in Silicon Valley, circles have tops) Thiel sat, drinking a glass of champagne like King Joffrey on the Iron Throne (that is, if the Iron Throne were a La-Z-Boy). Everyone present was asked to introduce themselves. Most people began with, “I’m the C.E.O. of . . .,” before naming their company and then continuing with, “. . . and I graduated magna cum laude” from Harvard, Stanford, or whatever. Then the discussion began, with Thiel at the center of the conclave.

I was expecting to be served that glorious billionaire’s feast, or at least be told that dinner was being prepared in another room. But after an hour, we were still sitting there. I can’t reveal what we talked about. Not because it was privileged or off the record, but rather because I was so hungry that my brain could hardly retain the information.

Finally, about two hours in, I couldn’t take it anymore. I slipped into the bathroom and texted a friend who had spent time with Thiel and asked what the hell was going on. Does the man eat at midnight or something? Did I miss a memo? The friend wrote back with a couple of LOLs before explaining that Thiel is often on some sort of weird diet and he didn’t really eat all that much, anyway.

As I hobbled back into the living room and returned to my seat, debating whether I should try to steal the last piece of toro from Mayer’s plate (she wasn’t a C.E.O. yet), I was struck by a profound epiphany about Silicon Valley: Thiel, in many ways, sums up the entire mentality of the tech industry. He doesn’t necessarily care what other people want; if Thiel is on a weird and special diet, then we should all be on a weird and special diet. If Thiel thinks that people shouldn’t go to college because it’s a waste of time, as he’s said innumerable times before—regardless of the way such a decision could affect people’s lives in the future—then we are all fools for not dropping out. (Thiel, for what it is worth, has a B.A. and law degree from Stanford.)

If Thiel thinks people who wear suits are “bad at sales and worse at tech,” then you better change your sartorial choices. Go buy a hoodie; look the part. And if Thiel wants to disrupt how Washington works, he will become a delegate for Donald Trump. If he thinks that a blog called Gawker shouldn’t exist, then he will try to eradicate it. (Thiel did not return my request to comment for this article.)

I’m not telling this story to defend Gawker. I personally feel that citing the First Amendment to justify outing someone as gay (as Gawker did to Thiel, in 2007), or publishing a sex tape as “news” (as the site billed its Hulk Hogan scoop), is heinous. But the First Amendment in our country says the press has certain rights. That’s the law. As citizens, we have to abide by it.

But reality doesn’t seem to be the case for some of the elite in Silicon Valley. They play by their own rules. There is, of course, a positive side to all of this. These so-called disruptors have given us the iPhone and Uber and PayPal. But there is also a darker side, too—and we’re really starting to see those forces at work now. For a long time, technology pundits have wondered what will happen to the relatively young, very rich, Silicon Valley elite after they leave the companies that they created, and that made them wildly and incomprehensibly rich. What does Mark Zuckerberg, who is just 32, do after Facebook? Where does Travis Kalanick, 39, go after he’s done at Uber? What about all the young V.C.s in their 30s and 40s worth hundreds of millions?

These aren’t the kind of people who simply retire on a beach and sip Soylent through a thin straw. So the assumption has long been that these people would eventually take their money and run for office, trying to change the world through due process. But our system of government, after all, was intended to be laborious, inefficient, and filled with checks and balances. And the tech elite, who have changed society more over the past decade than all the lawmakers put together (ever, perhaps), aren’t the patient type. Using the technologies we all adore, Silicon Valley simply zig-zags around the system with unwrinkled ease.

What I didn’t realize after that dinner, but I do see now, is that the actions of these tech elite are only going to become more brazen as they morph society into the world they believe we should live in. Who do you think is going to create the laws on Mars? The U.S. government, or Elon Musk and his old co-worker and buddy from PayPal, Peter Thiel?

Like most people in Silicon Valley, Thiel dislikes the way the system works. That’s fine, but trying to change it through the path that he has chosen illustrates that, like hosting a dinner party where there is no dinner, he may not be all that concerned with the comforts of those around him. If he were more circumspect, perhaps, he might realize the larger ramifications. Should he succeed in destroying Gawker, Thiel won’t simply have silenced a site that he doesn’t like. He will have triumphantly instructed other thin-skinned, mega-wealthy people on how to silence journalists that write negatively about them. In the era of Donald Trump, there are few more chilling lessons.

If the present can tell us anything about the future, we are on our way to living in a world that is straight out of the pages of an Ayn Rand novel. It is a world where those who have the money, power, and (scariest of all) the technology, can act in a way that personifies Rand’s famous admonition, “The question isn’t who is going to let me; it’s who is going to stop me.”

The salon at Thiel’s house lasted three hours. Neither the dinner I envisioned, nor anything close to it, was ever served. But as the conversation came to a close, one of the assistants informed us that some chocolates were being placed out in the dining room for people to nibble on on the way out.

As I called an Uber, I grabbed a handful of the chocolates and stuffed them in my mouth, “Take me to In-N-Out Burger,” I slurred, with a mouth full of sweets, to the Uber driver. As we pulled up to the burger joint 10 minutes later, I thanked him and said, “Take some advice from me, if you ever get invited to Peter Thiel’s house for dinner, make sure you eat first.”



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To the DAO and the Ethereum community: F- you

http://ift.tt/1XvXHUA

To the DAO and the Ethereum community,

I have carefully examined the code of The DAO and decided to participate after finding the feature where splitting is rewarded with additional ether. I have made use of this feature and have rightfully claimed 3,641,694 ether, and would like to thank the DAO for this reward. It is my understanding that the DAO code contains this feature to promote decentralization and encourage the creation of "child DAOs".

I am disappointed by those who are characterizing the use of this intentional feature as "theft". I am making use of this explicitly coded feature as per the smart contract terms and my law firm has advised me that my action is fully compliant with United States criminal and tort law. For reference please review the terms of the DAO:

"The terms of The DAO Creation are set forth in the smart contract code existing on the Ethereum blockchain at 0xbb9bc244d798123fde783fcc1c72d3bb8c189413. Nothing in this explanation of terms or in any other document or communication may modify or add any additional obligations or guarantees beyond those set forth in The DAO’s code. Any and all explanatory terms or descriptions are merely offered for educational purposes and do not supercede or modify the express terms of The DAO’s code set forth on the blockchain; to the extent you believe there to be any conflict or discrepancy between the descriptions offered here and the functionality of The DAO’s code at 0xbb9bc244d798123fde783fcc1c72d3bb8c189413, The DAO’s code controls and sets forth all terms of The DAO Creation."

A soft or hard fork would amount to seizure of my legitimate and rightful ether, claimed legally through the terms of a smart contract. Such fork would permanently and irrevocably ruin all confidence in not only Ethereum but also the in the field of smart contracts and blockchain technology. Many large Ethereum holders will dump their ether, and developers, researchers, and companies will leave Ethereum. Make no mistake: any fork, soft or hard, will further damage Ethereum and destroy its reputation and appeal.

I reserve all rights to take any and all legal action against any accomplices of illegitimate theft, freezing, or seizure of my legitimate ether, and am actively working with my law firm. Those accomplices will be receiving Cease and Desist notices in the mail shortly.

I hope this event becomes an valuable learning experience for the Ethereum community and wish you all the best of luck.

Yours truly,
"The Attacker"

Message Hash (Keccak): 0xaf9e302a664122389d17ee0fa4394d0c24c33236143c1f26faed97ebb
d017d0e
Signature: 0x5f91152a2382b4acfdbfe8ad3c6c8cde45f73f6147d39b072c81637fe810060616039
08f692dc15a1b6ead217785cf5e07fb496708d129645f3370a28922136a32

PS. You probably want to revisit the 2013 discussion of "Ripple". Just because you idiots changed the name doesn't mean anything changed! Just how hard is it to grok this utterly banal point ?

PPS. Since so many people have asked : yes, there are more. This definitely isn't the only hole in the pile of shit, but in the immortal words of Jerry Seinfeld,

i-got-another-one



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An open letter to the DAO Community – attacker explains

http://ift.tt/1UUb2To


===== BEGIN SIGNED MESSAGE =====
To the DAO and the Ethereum community,

I have carefully examined the code of The DAO and decided to participate after finding the feature where splitting is rewarded with additional ether. I have made use of this feature and have rightfully claimed 3,641,694 ether, and would like to thank the DAO for this reward. It is my understanding that the DAO code contains this feature to promote decentralization and encourage the creation of "child DAOs".

I am disappointed by those who are characterizing the use of this intentional feature as "theft". I am making use of this explicitly coded feature as per the smart contract terms and my law firm has advised me that my action is fully compliant with United States criminal and tort law. For reference please review the terms of the DAO:

"The terms of The DAO Creation are set forth in the smart contract code existing on the Ethereum blockchain at 0xbb9bc244d798123fde783fcc1c72d3bb8c189413. Nothing in this explanation of terms or in any other document or communication may modify or add any additional obligations or guarantees beyond those set forth in The DAO’s code. Any and all explanatory terms or descriptions are merely offered for educational purposes and do not supercede or modify the express terms of The DAO’s code set forth on the blockchain; to the extent you believe there to be any conflict or discrepancy between the descriptions offered here and the functionality of The DAO’s code at 0xbb9bc244d798123fde783fcc1c72d3bb8c189413, The DAO’s code controls and sets forth all terms of The DAO Creation."

A soft or hard fork would amount to seizure of my legitimate and rightful ether, claimed legally through the terms of a smart contract. Such fork would permanently and irrevocably ruin all confidence in not only Ethereum but also the in the field of smart contracts and blockchain technology. Many large Ethereum holders will dump their ether, and developers, researchers, and companies will leave Ethereum. Make no mistake: any fork, soft or hard, will further damage Ethereum and destroy its reputation and appeal.

I reserve all rights to take any and all legal action against any accomplices of illegitimate theft, freezing, or seizure of my legitimate ether, and am actively working with my law firm. Those accomplices will be receiving Cease and Desist notices in the mail shortly.

I hope this event becomes an valuable learning experience for the Ethereum community and wish you all the best of luck.

Yours truly,
"The Attacker"
===== END SIGNED MESSAGE =====

Message Hash (Keccak): 0xaf9e302a664122389d17ee0fa4394d0c24c33236143c1f26faed97ebbd017d0e
Signature: 0x5f91152a2382b4acfdbfe8ad3c6c8cde45f73f6147d39b072c81637fe81006061603908f692dc15a1b6ead217785cf5e07fb496708d129645f3370a28922136a32


Just picked that up from the TheDAO slack : http://ift.tt/1UoCKrr

Your thoughts?

#TheDAO
#Ethereum
#cryptonews
#Blockchain



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This Demographic Shift Makes Our Social Security Useless

http://ift.tt/1trPmVC

Submitted by Patrick Cox via MauldinEconomics.com,

The 2008 financial crisis delivered a TKO to the global economy. Since then, the media has been reassuring us that the US economy is recovering.

Unfortunately, it has been the weakest post-recession recovery in modern history. Some people have seen no recovery whatsoever, and most Americans are losing ground and hope.

Why have so many people been so wrong?

It was reasonable to assume things were going to get better; that’s how business cycles always played out in the past. Historic patterns tricked many into thinking that the typical recovery would follow.

Historical patterns, however, have changed. Forever. And that is due to the biggest macroeconomic event in modern history.

 

The biggest demographic transition in modern history

Contrary to popular belief, population growth has started to decline. From now on, every subsequent generation will be smaller. Fertility rates in the West are already well below replacement rates, and the rest of the world is quickly catching up.

New data show that the US birth rate is at historic lows, certainly in response to economic weakness. People have always delayed childbirth in uncertain economic times. We’re seeing this today at unprecedented levels.

Our current fertility rate is barely over 1.8 children per woman. We need at least 2.1 children per woman to keep a steady growth in population and maintain economic stability. The impact of this demographic shift is immeasurable—except in the broadest of terms.

Unfortunately, almost no one with influence or authority seems to grasp this change. Most people, therefore, assume that all the age-old patterns are still in place.

I think the Obama administration was so convinced that the economy would fully recover on its own, it didn’t pay attention to the issue. This ignorance was a major mistake because demographics have fundamentally altered the dynamics of economic growth.

As the population ages, so do the costs associated with chronic age-related disease.  In the past, one generation could run up a bill and send it to a much larger future generation. Due to its size, the future generation could pay off this debt without excessive pain.

That’s no longer the case. Even though today’s generation is diminishing, it will still have to bear the burden of a much larger past generation. The social welfare model has been turned on its head, and we’re already seeing the consequences.

 

A disproportional burden on young people

Here are a few charts that prove my point and show how age-related diseases are driving our deficit and debt (be sure to read the CBO’s explanatory text).

First, let’s look at the rundown on the federal spending components. Spending is going down or stable as a percentage of GDP in all areas except major healthcare programs and the debt service. Even Social Security spending has leveled out.

This is bad, but… you ain’t seen nothin’ yet. Here’s the CBO’s long-term projection of changes in population by age group. This is what doom looks like in a graph.

Now, let’s look at the projected growth in federal spending caused by these demographics.

Who is going to bear this burden? That’s right: young people.

Sending our medical bills to our children is, to me, the greatest outrage of this preventable financial catastrophe. The Affordable Care Act is already forcing young people to pay insurance costs three times higher than they should.

The whole point of the ACA was, in fact, to get poorer young people to pay healthcare costs for richer older people. The ACA has failed, however, to enroll enough young healthy poorer people to make the program liquid in the long term.

 

There’s a way out of this

We’ve reached some sort of tipping point. The rise in public spending and debt has caused the current economic malaise. However, the costs associated with a growing older generation are what drives it. So, we have a vicious circle.

All of this is slowing economic growth, and as a result, depresses birth rates among the young who are expected to pay those costs. With fewer contributors/workers to pay escalating age-related healthcare costs, the problem will continue to spiral out of control… unless we allow biotech the freedom to address aging itself.

The latest biotech breakthroughs could already reduce medical costs by delaying aging and the onset of chronic and costly diseases. It’s the only solution to the skyrocketing medical costs projected by the CBO.

The other half of the solution is for older people to use their extended and restored health to remain productive longer, fixing the old-age dependency ratio (OADR) from both sides of the balance sheet.

It will happen. The only question is this: how much pain we will have to suffer before politicians and policy makers wake up and deal with the biggest issue of our time?



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