The bureaucratic AI arms-race is mutually assured destruction
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
According to an Economist editorial, "AI is breaking the British state" by making it too easy to file complaints, demands and appeals, which will "drown the state" with "demands as well-crafted as a first-class lawyer's":
https://archive.is/VTrj9
Let's pause a moment to appreciate the Economist's touching credulity about AI's coming legal mastery. The law seems to be the area where AI is most prone to "hallucinate" (that is, "produce defective outputs"), which can only be sorted through by skilled practitioners whose experience gives them the discernment to distinguish useful arguments from foolish ones:
(And this requires those skilled practitioners to avoid the "automation blindness" that afflicts people who are asked to remain vigilant for things that seldom occur, a phenomenon that has turned every TSA agent into the water-bottle-detectingest motherfucker the human race has ever produced, who still misses 95% of the guns that red teams bring through the checkpoint):
More notable than the Economist's faith-based predictions about the impending army of hyper-competent robo-lawyers is the magazine's proposed solution to this looming crisis: "stop creating entitlements that are ripe for AI-fuelled claims…prune the mass of procedural rights." Above all, replace the bureaucrats who process your "complaints, demands and appeals" with more AI, which will arbitrarily decide who gets what, through "personalised welfare interventions" that are not based on any kind of guaranteed rights.
Writing on his blog, the political scientist Henry Farrell tells us where this will inevitably end up: with AI-based robot wars in which increasingly stingy and pernickety robo-bureaucrats create demand for progressively more aggressive robo-lawyers:
As Farrell writes, this end-time was foretold by the prophet Alan Moore with his 1980s 2000 AD character Abelard Snazz, "the man with the two-storey brain":
https://en.wikipedia.org/wiki/Abelard_Snazz
Snazz "solves" the street crime epidemic on the planet Twopp with "Big Police Robots," who spiral out of control, arresting the citizens of Twopp for trivial crimes like wearing brown shoes with a blue suit ("breaking the laws of good taste"). To solve this new problem, Snazz invents "Big Criminal Robots" whose "cunning, efficient" crimes "take up all the police's time."
Twopp is left in a state of high-stakes Big Robot crimewars, in which the most efficient criminals imaginable battle the most ruthless robocops science can deliver, with the Twoppians caught in the crossfire, collateral damage in a robotic forever war (on crime).
As Farrell writes, this is already afflicting the US health system, where an army of insurance company robo-claim-deniers have been countered with a doctors' army of robot-claim-appealers:
The point being that people need health care, people need public services, and while there will always be some waste at the margins (whether due to incompetence or dishonesty) responding to this by beefing up the system's defenses with more advanced red tape just requires the people who legitimately need these services to employ more aggressive tactics.
In support of this, Farrell points to a great, long essay by Dan "Accountability Sink" Davies for the Niskanen Center, "'The Problem Factory' – Preemptive risk aversion in infrastructure planning and the role of professional services":
Davies' essay describes how increasing bureaucratic defenses against frivolous or dishonest claims drives the participants in these processes to assume a war footing and approach the system as a battlefield, leading to the very runaway cost inflation that the bureaucratic process was instituted to prevent.
(Davies, a cybernetician, has some fascinating advice about how to structure planning processes to minimize this, but that's out of scope for this particular post.)
This reminds me of nothing so much as the spam wars. There was a time when it was very easy to set up a mail server and provide email access for anyone who wanted it – including spammers. Increased spam begat increased anti-spam countermeasures, notably the creation of blocklists that allowed mail administrators to automatically reject email from "insecure" mail servers.
Inevitably, spammers figured out how to send spam from "secure" servers, resulting in stricter, more onerous standards for mail server configuration. Spammers – for whom the ability to send spam is an existential matter – figured out how to meet these standards, so the security demands jumped again – and again, and again.
Today, sending and receiving mail is so technically challenging that most of the internet's email is run by a handful of giant, mostly US-based corporations. If any of these companies decides your mail server is spamming, you effectively disappear from the internet and good luck getting them to acknowledge an error. Meanwhile, these companies emit an avalanche of spam, but no one will ever block their servers, because to do so would be to cut off billions of legitimate email users:
https://pluralistic.net/2021/10/10/dead-letters/
And since most of these companies are US-based, they are liable to being weaponized by Trump, who has taken to ordering his tech giants to block foreign officials whose policy decisions make him angry:
Another parallel is the content moderation wars that saw the large platforms coming up with progressively more detailed rules about what constituted harassment and hate speech, only to have dedicated trolls master these rule-books. Trolls – for whom harassment was a full-time vocation – became the world's greatest experts on the platforms' speech policies, which let them skate right up to the line when abusing their victims, and to get those victims kicked off the platforms if they could be lured into putting a single toe over the line in response:
Farrell criticizes the Economist's answer to the (allege) looming robo-lawyer threat as "solutionism," Evgeny Morozov's word for "Recasting all complex social situations either as neat problems with definite, computable solutions":
https://en.wikipedia.org/wiki/Technological_fix
Using AI to root AI-generated bureaucratic appeals sacrifices the system's putative purpose – delivering services – in the name of defending that service from abuse and misuse of the system's resources. As the pioneering cybernetician Stafford Beer famously wrote, "the purpose of a system is what it does." If your bureaucracy is more concerned with fighting fraud than delivering service, then it isn't a service delivery system at all – it's a service denial system.
As Farrell writes, the people of Twopp can tell you how this ends – in a war of giant robots in which we are all collateral damage.
(A brief postscript: Farrell is a font of science fictional analogies to modern policy issues. This weekend in the FT, he and Dan Wang published an excellent editorial on the relevance of the paranoid, claustrophobic fiction of Philip K Dick to our present political reality:)
Anya is live and ready to show you everything. Watch her strip, dance, and perform exclusive shows just for you. Interact in real-time and make your fantasies come true.
✓ Live Streaming✓ Interactive Chat✓ Private Shows✓ HD Quality✓ Free Actions
Free to watch • No registration required • HD streaming
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
The theory of markets goes like this: even the best of us can fall prey to selfishness and rationalization, so let's arrange society so that people acting on their most selfish impulses end up producing benefit for all of us. That'll be easier and more reliable than convincing everyone to be more generous.
How do you arrange society so that selfishness produces public benefit? With markets. Faced with relentless competition, the most effective way to accumulate and retain wealth is by striving to make your wares cheaper and better. In a competitive labor market, we can secure fair treatment for workers without labor law or unions – bosses who treat their workers badly will lose them to better bosses. Just "align the incentives" and let markets do the rest.
This is an area where there's broad overlap between the left and the right. Chapter one of The Communist Manifesto is Marx and Engels' love letter to the incredible power of markets to improve everyone's material conditions by increasing production while lowering costs:
Meanwhile, over in Wealth of Nations, Adam Smith comes to the same conclusion:
It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.
In other words: if you get the incentives right, then even the greediest baker will resist the temptation to fill his loaves with sawdust and gravel. The greedier he is, the more he'll strive to make his bread cheap and delicious, because that will let him sell as many loaves as possible, thus maximizing his own wealth.
It's not exactly horseshoe theory vindicated, but if you squint just right, you'll see both communists and capitalists agreeing on this one thing: if you want the bourgeoisie to bend its efforts to producing something that the rest of us can benefit from, you'll get further by appealing to their fear and greed than by trusting in their munificence.
This is how you can have both leftists and market true believers coming onto the same side on antitrust: they may not both exactly agree that the best way to run things is by appealing to capitalists' fear of being dethroned by a competitor, but they absolutely agree that the worst way to run things is to simply trust in capitalists' generosity.
They're right, of course. As Lina Khan likes to say, companies that are too big to fail become too big to jail, and thus too big to care. If you doubt it, consider this internal email sent by an Apple executive insisting that the company is wasting money by making iPhones that are too good, and counseling a corporate strategy of deliberate shittiness:
In looking at it with hindsight, I think going forward we need to set a stake in the ground for what features we think are 'good enough' for the consumer. I would argue we're already doing more than what would have been good enough. But we find it very hard to regress our product features YOY [year over year]." Existing features "would have been good enough today if we hadn't introduced [them] already," and "anything new and especially expensive needs to be rigorously challenged before it's allowed into the consumer phone.
https://www.justice.gov/d9/2024-06/423137.pdf
Policymakers can assume the profit motive, but they have to craft the conditions under which that motive is shaped by competitive anxiety to produce quality goods and services at a fair price.
Anyone who believes in markets must also tacitly believe that successful market participants don't believe in markets. They should understand that capitalists hate capitalism, that every pirate yearns to be an admiral. They should understand that capitalism's winners only defend disruption when they're the ones doing the disrupting. They should understand that profits are only good when you're a scrappy challenger, but once you've conquered the market, every capitalist seeks to become a feudal lord, converting profits to rents and insulating themselves from an exhausting life of constant competition:
The (smart) defenders of markets do understand this, but they face a dilemma. By definition, the benefactors with the most money and power to contribute to their think-tanks, university economics departments, conferences and publications are the rentiers – the billionaires who've shored up their fortunes with Warren Buffet's beloved "moats and walls." They're the blitzscaling billionaires who thrive on predatory acquisitions and high capital costs that prevent new market entrants from challenging their incumbency and its easy profits. They're the pirates who've become admirals.
As Upton Sinclair famously quipped, "It is difficult to get a man to understand something, when his salary depends on his not understanding it." When your right-wing, "pro-market" think-tank depends on the largesse of someone who made their money by capturing a market, capturing its regulators, and capturing its labor force, you need to tie yourself into some very weird knots to explain why your market advocacy shouldn't start with stripping your funders of their power, wealth and position.
This is pretty much the entire edifice of neoclassical economics. There's the "consumer welfare" theory of antitrust, that says that monopolies are efficient and insists that an inefficient monopoly would immediately tempt new competitors into the market who would compete away the monopolist's advantage:
"Consumer welfare" is a perfect apologetic because it contains a lurking syllogism: it holds that "inefficient monopolies" will always bring forth competitors who trash their margins, which means that any actual monopoly we see in the wild must be efficient. If it wasn't, it would have been competed out of existence by now. QED. This means that you can be a "pro-market" think-tank and take infinite money from monopolists without any contradiction: by definition, any monopolist with extra cash on hand to fund your PR blitz on its behalf must be efficient, otherwise it would have gone broke.
This is the structure of so many of economics' "empirical, scientific" theories that boil down to new ways of saying, "Actually, your boss is right."
Take "revealed preferences," the idea that people's actions are a better indicator of their preferences than the things they say they prefer. While this theory has a certain superficial plausibility, it can really only be embraced by people who have suffered the highly specific neurological injury you get by taking an economics degree: an injury that makes you incapable of perceiving or reasoning about power.
To fully embrace "revealed preferences" is to observe someone who has just sold their kidney to make rent and exclaim, "Look at this person with a revealed preference for only having one kidney":
Then there's the right's conception of regulatory capture. When you think of "regulatory capture," you might picture a company or sector that has grown so powerful that it can boss the government around, so that it can abuse you with impunity. But for a neoclassical, "regulatory capture" isn't the result of too much corporate power – it's the result of too much state power. If states have the ability to do real things (the theory goes), then capitalists will do everything they can to take over the state and use it to punish their competitors, so the only answer is to eliminate state capacity altogether:
And finally, there's "meritocracy," which is a way of dressing up the Puritans' concept of divine providence as a scientific theory about how society must work. Puritans insisted that their god reached down into the human realm to elevate the truly virtuous among us, and that this divine favor could be discerned in the way that wealth and power were distributed among us. The rich and powerful were god's "elect." You could tell this was true, because they were rich and powerful. The corollary is that the poor and downtrodden are disfavored by god, and must therefore lack some virtue that the rich and powerful possess.
This same syllogistic thinking underpins the economic doctrine of "meritocracy," which holds that markets are giant computers that process uncountable trillions of decisions we all make about what to buy and sell and at what price, seeking out the "correct" price for every commodity and also elevating the people who are best at allocating capital in ways that arrive at the best prices for the best goods. Just as a Puritan believes that wealth is evidence of virtue, a hewer to economic orthodoxy believes the meritocratic system graces the best among us, giving them control over our lives by allowing them to "allocate capital" to create or destroy jobs, or entire firms, or whole sectors of the economy. You can tell they're the right people to do be doing this because the market chose them – if they were bad capital allocators, they'd have gone broke by now. QED.
When capital allocators' kids end up allocating capital too, well, that just shows that "merit" is a heritable trait and the people who have it are born to rule over us. Meritocracy cashes out to a eugenic belief in royal blood and royal dynasties. We know King Arthur was suited to rule us because he pulled a sword out of a stone, and we know Bill Gates is suited to rule over us because he pulled a fortune out of an operating system:
Consumer welfare, revealed preferences, regulatory capture and meritocracy are just some of the ways that capitalism's alleged defenders cooked up to insist that they love the competitive discipline imposed by markets while being totally dependent on self-described capitalists who have utterly escaped from that discipline and have committed to doing everything in their power to prevent themselves from ever coming under any form of constraint.
These champions of "free markets" have spent decades defending policies like noncompetes, which makes it a crime for a fast-food worker to quit their job at Wendy's and take a job at the McDonald's across the street in order to get a $0.25/hour raise:
They defend anticircumvention laws that make it a literal felony for you to install someone else's app store on your phone or put someone else's ink in your printer:
They somehow believe that value arises when the best among us are forced to contend with the stark terror of losing everything to a competitor, but also that there is a group of people who are so perfect, so virtuous and brilliant that they do not need this kind of goad to prod them into action. Indeed, these genetic sports and generational talents are so amazing that to force them to sully themselves with grubby competition is to deny us all the fruits of their genius.
Who are these people? Why, they're billionaires of course. All billionaires: after all, if providence and the market's invisible hand has seen fit to bestow nine or more zeroes upon someone, that is an indicator of 10^9 times more virtue than someone with only a dollar to their name. But especially: intellectual billionaires, the kinds of "curious" billionaires who write books, give lectures, and (especially), make gigantic cash donations to think-tanks, university economics departments, conferences and journals.
Billionaires like Peter Thiel and Elon Musk, in other words.
These are the billionaires that capitalism's (alleged) defenders are caping for when they deplore "billionaire derangement syndrome," and fret that candidates for office now routinely cite enmity for billionaires in their campaign materials:
But as Tim O'Reilly writes, these billionaire-defending intellectuals always told us that markets would protect us from the madness of kings, by constraining the folly of the wealthy and powerful through the discipline of competition. Meanwhile, those billionaires were busily transforming themselves into kings, unshackled from rules, morals or consequences:
Reflecting on this, the political scientist Henry Farrell notes that the most vocal defenders of billionaireism – the Musks and Thiels of the world – never made a secret of their desire to become kings and insulate themselves from markets and discipline of every kind, and they've grown brazen. Musk makes social media posts deploring the very idea of elections, agreeing with the idea that only "makers" should be allowed to vote and that "takers" should not, because "universal suffrage leads to universal suffering":
As for Thiel, he has long openly advocated the idea that there exists among us a latent aristocracy who do not need the discipline of markets to keep them from lapsing into folly or self-dealing. These people – born to found tech startups and to rule – are nonconformists who, in Thiel's writing, are "the most important" and "should be let off the hook":
Thiel makes no bones about his idea that people who have the right stuff should be exempted from any constraint. He writes "capitalism and competition are opposites." Rather than compete, Thiel says the true entrepreneur should seek to establish a monopoly, because "Monopolists can afford to think about things other than making money; non-monopolists can’t…Only one thing can allow a business to transcend the daily brute struggle for survival: monopoly profits."
It's not that Thiel opposes constraints per se – he clearly thinks that most of us should operate under constraints – constraints that are dreamed up and enforced by people like him. Those people are born to rule: they emerged from a lucky orifice, in possession of lucky genes. How can we tell they were born to rule? Because they're ruling. If they weren't born to rule, they wouldn't be in a position to rule. As ever, a syllogism solves all our ideological and existential problems.
Thiel lives in what Naomi Klein would call "the mirror world." While counterculturists have long celebrated misfits and communities of nonconformists, they were invested in the idea of a space protected from power, where weirdos could let their freak flags fly:
But Thiel's version of this is to celebrate the "nonconformists" whose heterodox belief is that labor, privacy, finance and consumer protection laws shouldn't apply to them. He wants to protect those people so they can wield power. They should form "mafias" (like the "Paypal mafia") not solidaristic affinity groups. As Farrell writes:
Entrepreneurial risk taking can be awesome; weird people are often more likely to be original; densely linked communities have many advantages. Furthermore, I would guess that none of these factors was sufficient on its own to precipitate the madness of princes that we see today. It is perfectly possible that they would have worked together in much more benign ways under different external circumstances. But we are in the world we’re in: one where the boundless appetites and irrationalities of a small number of billionaires seem increasingly incompatible with the need to maintain a stable civil society.
A new would-be aristocracy was always the visible trajectory of these guys. The only people who couldn't see it were the think-tankies they funded to write papers explaining that their paymasters didn't need market discipline to keep them from sinking into folly or attempting to overthrow democracy.
Today, these Renfields clutch their pearls at the "demonization" of the ultra-rich, calling it "billionaire derangement syndrome." But the only "billionaire derangement syndrome" that matters is the syndrome that affects billionaires and convinces them that they are above any discipline or rules.
"Whatever Happened To Baby Jane?" (1960) by Henry Farrell - Book Review
⭐⭐⭐⭐
Claustrophobic, unhinged, just the right amount of campy.
Farrell does a fantastic job of building a disturbing atmosphere, and the way he describes the house’s decay matches up perfectly with the crumbling image of “The” Baby Jane Hudson. He illustrates her psychological decline with nuance, creating a character who is disgusting while so clearly being a victim herself.
The way Blanche exists in near-total isolation - with a cleaning lady being her only real link to the outside world - is truly terrifying, and made even worse by the fact that although her movies were still on TV, she had been largely forgotten by a society that values women primarily for their beauty and fame; she and Jane both.
I’d recommend this to fans of gothic horror, psychological horror, and female rage.
I'll be in OTTAWA on WEDS (Jan 28) at Perfect Books and in TORONTO with Tim Wu on Jan 30.
The best summary of Trump's trade "philosophy" comes from Trashfuture's November Kelly, who said that Trump is flipping over the table in a poker game that's rigged in his favor because he resents having to pretend to play the game at all.
After all, the global system of trade was designed and enforced by American officials, especially the US Trade Representative. The US created a world whose most important commodities (food, oil, etc) were priced in dollars, meaning that anyone who wanted to buy these things from any country would first have to get US dollars, which they could only get by shipping their valuable stuff to the US, which sends them dollars in return.
Think about this trade for a minute: to get US dollars, people outside of the US would have to dig up or chop down or manufacture real things that were in finite supply. Meanwhile, to get the US dollars to pay for these real, finite things, the US just had to type zeros into a spreadsheet at the Federal Reserve:
https://www.youtube.com/watch?v=54fg-A1gCrM
The technical term political scientists use for this arrangement is "fucking sweet."
Two of my favorite political scientists are Henry Farrell and Dan Davies, whose new paper, "The US dollar system as a source of international disorder," was just published by The British Academy as part of its "Global (Dis)Order international policy programme":
Farrell and Davies explore the history of the weaponization of "dollar centrality" (their term for the arrangement where the whole world agreed to treat the dollar as a neutral trade instrument), and show how Trump's incontinent belligerence fits into it, and lay out some shrewd possibilities for where this could all end up.
Farrell is one of the leading experts on how these boring, invisible, complex systems of financial settlement, fiber optic connections and other plumbing of the post-war era have been increasingly weaponized by successive US administrations. In 2023, he and Abraham Newman published The Underground Empire, an excellent book on the subject (really, the definitive book on the subject):
Davies, meanwhile, is a brilliant scholar (and explainer) of complex systems. Last year, he published The Unaccountability Machine, about the way that the feedback mechanisms in the systems that keep the world running are badly broken, leading to much of our modern dysfunction:
Their paper represents a fusion of both of their approaches, and makes for fascinating reading. They start by characterizing the post-war global system as broadly "homeostatic," meaning that it can maintain stability in the face of shocks. Homeostasis requires a feedback mechanism so that it can constantly adjust itself – think of your home thermostat, which needs a thermometer so it can figure out when to run your furnace/air conditioner and when to stop.
Political scientists have identified many of these feedback systems. For example, KN Waltz describes how, when one "great power" starts to dominate the world, the weaker states in its orbit will switch their alliances to rival powers, in order to "balance" power between the big beasts. Smaller, poorer, and/or weaker countries that have looked to the US for trade and military alliances might switch to China if it looks like the US is getting too powerful – not necessarily because China offers a better deal than the US, but because a decisive global victory by the US would give it the power to squeeze these countries, because they'd have nowhere else to go.
Waltz's work is especially relevant this month, with Canada inking a Chinese trade deal and Canadian Prime Minister Mark Carney publicly declaring a "rupture" with the US-dominated order:
When great powers ignore the feedback of these systems, the result is a collapse in global homeostasis, and radical shifts in the global order. Farrell and Davies argue that this is what's happening with the weaponization of the dollar, which has prompted many countries to take action that should have caused the US to back off, but which the US has ignored as it doubled down on the weaponized dollar:
Even when the US has a "rational" case for weaponizing the dollar – for example, by forcing the world to join in a global financial surveillance project aimed at stemming financing for terrorism – it runs the risk of making things worse. If the US's anti-terror financial demands are so onerous that they provoke other countries into setting up multiple, independent, fragmented global financial schemes, then terrorists and their backers will have their pick of ways to move money around.
Even where the US has had limited success with financial sanctions (by isolating North Korea, or by targeting specific individuals rather than countries), it has undermined those successes by peddling and formalizing cryptocurrencies that evade those sanctions. With Trump's crypto project, America gets the worst of both worlds: ineffective financial sanctions that nevertheless weaken the dollar's centrality to the world, and the power that confers upon America.
The world relies on the dollar because it has to rely on something. There are hundreds of currencies in the world, and it's prohibitively expensive for exchange brokers to maintain deep reserves of all of those currencies so that any currency can be swapped for any other. Likewise, it is cumbersome and risky for transactions to rely on a chain of exchanges: if someone in Thailand can only buy oil from Norway by first trading Thai baht for Japanese yen, and then Australian dollars, and then euros, and then Norwegian kroner, they'll be bedeviled by shifting exchange rates, transaction fees, and, possibly, shady brokers who just take the money and run.
After WWII, when the great powers and middle powers were hammering out the global financial system, economists like John Maynard Keynes proposed an international supercurrency that would only be used to facilitate exchanges, but he was outmaneuvered by America's chief negotiator, Harry Dexter White, who insisted that the US dollar will fill that role:
So everyone uses the dollar, and because everyone uses the dollar, everyone has to use the dollar: the dollar enjoys "network effects," where the more parties there are who will accept it, the more valuable it becomes and the harder it is to find an alternative.
In my theory of enshittification, network effects are a powerful temptation to make a service worse. If you own a system with strong network effects, you can make it worse for all its users (and better for you) without risking your users' departure, because they are all holding each other hostage:
So it is with dollar weaponization. In order to use the dollar to settle transactions, parties must have access to systems that are directly under US government control (like a dollar account at the Federal Reserve), or are, practically speaking controlled by America (like the SWIFT system for moving money across borders). The fact that you have to use dollars, and you can't use dollars without the US government's say-so, means that the US can impose onerous terms on dollar users and not have to worry that they'll switch to another currency.
Farrell and Davies describe how, during the "high era" of globalization, US Treasury officials fought to insulate the dollar from control by the US security apparatus. Treasury officials understood that the dollar was a source of enormous US power and advantage, and they didn't want to risk all those benefits by beating up dollar users and tempting them to look elsewhere.
But ultimately, Treasury lost. This, too, is in accord with my theory of enshittification: once an institution locks in its users, the factions that want to make things worse will start winning the argument. This is exactly what happened to Google, when, having locked in search users, the company fell under control of its enshittifying faction, who oversaw a program that made search worse, so that you'd have to search repeatedly (and look at multiple screens' worth of ads) to get the answers you sought:
Google's anti-enshittification faction argued that making search worse was a betrayal of the company's mission. The pro-enshittification faction pointed out that lock-in meant that Google could make more money by betraying its mission without losing users, and they won the day. It's a lot easier to live your principles if you suffer when you betray them, and it's a lot easier to hold an institution to its principles if betraying those principles results in immediate penalties.
After 9/11, the US security apparatus demanded dollar weaponization: the Office of Foreign Asset Control bigfooted the international finance system, forcing them to spy on, report and block transactions the US disliked. The threat of being excluded from the dollar system was powerful: when one bank refused to stop doing business with North Korea, the US "designated" the bank as noncompliant, provoking a bank run. The rest of the world's banks fell into line.
The fact that the US could punish banks for actions that harmed American interests, even if the bank followed all the procedures required of it, encouraged banks to adopt a "zero risk" policy, where they made up policies that went well beyond America's rules, conducting even more surveillance, blocking even more transactions, and reporting even more activities than was required of them. All of this made participating in the dollar system steadily more costly, as dollar users had to pay for expensive compliance measures or risk the failure of key transactions, or exclusion from the dollar altogether.
Late in Obama's second term, officials sounded the alarm about the dollar becoming increasingly unattractive for international finance, and counseled a relaxation of the post-9/11 ratchet of ever-tighter rules for dollar users. But Trump's officials were totally disinterested in the long-term health of the dollar system, and pursued an even more aggressive policy of dollar weaponization during Trump's first term.
During Trump I, major blocs such as the EU began to formally prepare dollar alternatives and to formulate an "anti-coercion instrument." The anti-coercion instrument is an agreement among EU states to retaliate together in the event that the US (or some other country) used the dollar (or some other currency) to interfere in internal EU matters:
The Biden years seemed to signal a return to normalcy – the US might continue to weaponize the dollar, but they would at least pretend that they were playing fair. In Kelly's formulation, they'd actually play the rigged poker-game, rather than just taking everyone's chips and flipping over the table, the way Trump liked to do.
But Biden also seemingly couldn't help himself, and his administration pursued a much blunter program of dollar weaponization than pre-Trump presidents. In particular, Biden's sanctions on Putin, his aligned oligarchs, and the Russian state were far more aggressive than anything any president (including Trump I) had ever done with the dollar.
Farrell and Davies write that:
Informal conversations with Biden officials suggest that they had noticed that, despite Trump’s actions, other countries had not moved away from the US dollar. Therefore, the Biden administration felt the US had greater leeway to use sanctions.
In other words, the fact that enshittification produced no downside for the institution meant that its pro-enshittification factions kept winning the argument, and engaged in ever more severe forms of enshittification.
The EU wasn't alone in worrying about US financial coercion. While China maintains much of its own transaction processing infrastructure, it is still very exposed to the dollar system, prompting it to take measures for retaliation and alternatives if the US overstepped.
Meanwhile, the increasing controls and costs of using the dollar drove many parties to cryptocurrencies. Some were criminals whom dollar weaponization was supposed to harass, but many were just innocent bystanders, dolphins caught in the tuna net (think of American relatives of Russians who wanted to send their families money for food, rent, or even a plane ticket out of Russia).
Biden responded to the growing use of crypto to evade dollar rules with regulations to bring crypto under tighter control, for example, by classing crypto as a security and subjecting it to financial regulation. The Biden administration's rules for banks that offered crypto services and trading made handling crypto so expensive that most banks just gave up on it altogether.
Crypto boosters used this response to campaign against Biden and for Trump, accusing Biden of "strangling" crypto and "debanking" its users. Trump won a second presidency, in part thanks to billions in dark money from crypto insiders (many of whom Trump went on to pardon for money-laundering convictions carrying heavy fines and long prison sentences).
At the outset of the second Trump presidency, Trump relied on tariffs, rather than dollar weaponization, to push the world around. As Farrell and Davies write, Trump gave speeches where he recognized the danger of squeezing dollar users too hard:
The problem with … sanctions … [is that] ultimately it kills your dollar and it kills everything the dollar represents. … So I use sanctions very powerfully against countries that deserve it, and then I take them off. Because, look, you’re losing Iran. You’re losing Russia. China is out there trying to get their currency to be the dominant currency as you know better than anybody. … So I want to use sanctions as little as possible.
Trump thinks that using sanctions is fine, provided that then he "take[s] them off." This has resulted in the trademark Trump chaos of announced and rescinded and reimposed sanctions – against Chinese refineries, a Yemeni bank, the International Criminal Court, and the nation of Colombia.
It's possible that this is less onerous than permanent (or at least, long-term) sanctions, but not by much. If no one can be sure that they'll be able to use the dollar tomorrow – even if they might be able to use it again the day after – there's far more pressure to find dollar alternatives.
Meanwhile, Farrell and Davies observe that:
[Trump is] more willing to impose sanctions on allies, since they are less able to defect from the dollar than neutrals and rivals, and less likely to act against crypto even though it facilitates sanctions evasion.
In other words, Trump's reserving his most destructive punishments for his friends, because his enemies are more likely to flee to China if he uses his most devastating attacks on them.
This is a very interesting observation, especially in light of Canada's announcement that it is leaving the American sphere of influence to become a neutral party with many alliances, including with China. If Farrell and Davies are right, this might mean that Canada will be less likely to face sanctions in the future than it risked when it was formally allied with the USA.
Meanwhile, Trump's indiscriminate use of tariffs is steadily worsening the American domestic situation, driving up prices:
Farrell and Davies predict that this will drive Trump to switch from using tariffs to using sanctions (after all, Trump's executive function has always been terrible, and it's only declined as his white matter disease has progressed). The EU is getting ready for this by finalizing the "Digital Euro." If Trump responds to this with more sanctions, it will only hasten the world's switch away from the dollar.
The authors call this a "positive feedback loop" (despite the word "positive," that's not a good thing – a positive feedback loop causes a system to keep on speeding up until it is shaken to pieces). The EU has good reasons to escape the dollar. The US has good reasons to fight the EU's escape. Everything the US does to punish the EU for trying to escape the dollar will make the EU want to escape the dollar even more.
The post-American era is being born around us, but when it comes to US "platforms" like the dollar (or even the transoceanic fiber links that all make landfall and interchange in the US), the expense and lock-in have left the world without any obvious and ready alternatives:
But there's one post-American platform that's right there for the taking: a global collaboration to develop open, auditable, trustworthy alternatives to US tech, from administrative tools like Office365 to the firmware in tractors, cars, and medical equipment:
But I don't think they've yet grasped how crucial the project of getting off US tech is – not just because it's urgent, but because it's also tractable. While replacing the dollar is hamstrung by network effects, building a global software commons benefits from network effects. It starts strong, and gets better every time someone else joins it.
What's more: I suspect that a world that is already bound together with a common tech stack would have a much easier time coordinating resistance to dollar weaponization.
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
Anya is live and ready to show you everything. Watch her strip, dance, and perform exclusive shows just for you. Interact in real-time and make your fantasies come true.
✓ Live Streaming✓ Interactive Chat✓ Private Shows✓ HD Quality✓ Free Actions
Free to watch • No registration required • HD streaming
The relative vulnerabilities of tyrants and crowds
"The good news is that the Trump administration is playing its hand very badly. If Trump had been more willing to accept defectors into his camp, by sticking to deals that gave them something worth having, he would be in a much stronger situation than he is at the moment. Furthermore, and somewhat less obviously, this may also disrupt his own existing coalition. Wall Street, for example, may worry that it is next for the chopping block. Silicon Valley the same.
"The bad news is that the opposition is much more disorganized than it ought to be. Coordination is bolstered by shared knowledge that others will coordinate too. We don’t have that, in part because of lack of leadership, in part because of a media landscape that makes it difficult to generate such shared knowledge. Our presumptions about what other people think can play an extraordinarily powerful role in shaping how we ourselves think, and what we are prepared to do."
Hush...Hush, Sweet Charlotte was released on 16 December 1964.
After the surprise success of What Ever Happened to Baby Jane? (1962), Robert Aldrich was eager to follow up and decided to repeat with much of the same cast, on a story by the same author (Henry Farrell), same screenwriter (Lukas Heller), and some of the same crew.
Aldrich had envisioned the two stars, Joan Crawford and Bette Davis switching the roles from Baby Jane (with Crawford as the devious one and Davis as the innocent).
Problems, however, began almost immediately. Aldrich was unhappy with Heller's script and brought on Farrell to rewrite it. Davis was sued by Paramount Pictures to finish Where Love Has Gone and filming had to be halted until the matter was resolved. Crawford had to be hospitalized for a respiratory ailment, and when her recovery took longer than anticipated, the studio's insurance company demanded that she be replaced. Aldrich flew to Switzerland to ask Olivia de Havilland to take over. She hated the script, hated to leave Switzerland, but agreed to do it for Bette Davis (she later said she regretted the decision).
Despite mixed reviews, the film was a commercial success, and ended up with 7 Academy Award nominations, including Best Supporting Actress (Agnes Moorehead), Best Cinematography - Black and White (Joseph Biroc), Best Editing (Michael Luciano), and Best Song. It did not receive an Oscar.
