Chinese Electronic Espionage Leads To UK Office of Cyber Security…

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The Times Online reported in January that the UK’s MI5 was battling devious Chinese attempts to entrap UK businessmen, with electronic bugging devices….and sexual “honey traps”. (Not as imaginative as the CIA’s “acoustic kitty,”  but probably more effective):

“A leaked MI5 document says that undercover intelligence officers from the People’s Liberation Army and the Ministry of Public Security have also approached UK businessmen at trade fairs and exhibitions with the offer of “gifts” and “lavish hospitality”.

The gifts — cameras and memory sticks — have been found to contain electronic Trojan bugs which provide the Chinese with remote access to users’ computers.

MI5 says the Chinese government “represents one of the most significant espionage threats to the UK” because of its use of these methods, as well as widespread electronic hacking.

Written by MI5’s Centre for the Protection of National Infrastructure, the 14-page “restricted” report describes how China has attacked UK defence, energy, communications and manufacturing companies in a concerted hacking campaign.

It claims China has also gone much further, targeting the computer networks and email accounts of public relations companies and international law firms. “Any UK company might be at risk if it holds information which would benefit the Chinese,” the report says.

The explicit nature of the MI5 warning is likely to strain diplomatic ties between London and Beijing. Relations between the two countries were damaged last month after China’s decision to execute a mentally ill British man for alleged drug trafficking.

Earlier this month the United States demanded that China investigate a sophisticated hacking attack on Google and a further 30 American companies from Chinese soil.

China has occasionally attempted sexual entrapment to target senior British political figures. Two years ago an aide to Gordon Brown had his BlackBerry phone stolen after being picked up by a Chinese woman who had approached him in a Shanghai hotel disco.”

So now you know better than to fraternize too cozily at a Chinese trade event.

The 14-page “restricted” report by MI5 Director General, Jonathan Evans, lists attacks on UK defense, energy, communications and manufacturing companies and is the latest and most explicit warning from UK authorities on Chinese espionage.  It was sent to hundreds of business leaders in 2009.

Evans’ lobbying led to the creation of the Office of Cyber Security (due to open in March 2010).

The UK only follows the US on this. As far back as June 2009, Barack Obama announced the need for a new official position to oversee cybersecurity in the US, a move applauded by some in the IT community, like McAfee’s Director of Threat Intelligence, Phyllis Schneck, but criticized by others, like Wayne Crews, VP at the Competitive Enterprise Institute, who argued that attempts to collectivize and centralize information technology risks were liable to crowd out private enterprise solutions.

The Cat They Sent Out Into The Cold…

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The more you dig into the history of the CIA’s covert programs, the more it resembles not so much a fast-paced who-dunnit as a low-rent why-ever-did-they-do-it. Only it wasn’t low rent. A hefty wad of tax-payer money subsidized such expensive follies as Project Acoustic Kitty, in which the agency’s whizzes tried to turn man’s favorite feline into a wired-up bot that would snoop on conversations in back-alleys:

“Victor Marchetti, a former CIA officer, told The Telegraph that Project Acoustic Kitty was a gruesome creation. He said: “They slit the cat open, put batteries in him, wired him up. The tail was used as an antenna. They made a monstrosity. They tested him and tested him. They found he would walk off the job when he got hungry, so they put another wire in to override that.”

Mr Marchetti said that the first live trial was an expensive disaster. The technology is thought to have cost more than £10 million. He said: “They took it out to a park and put him out of the van, and a taxi comes and runs him over. There they were, sitting in the van with all those dials, and the cat was dead.”

The document, which was one of 40 to be declassified from the CIA’s closely guarded Science and Technology Directorate – where spying techniques are refined – is still partly censored. This implies that the CIA was embarrassed about disclosing all the details of Acoustic Kitty, which took five years to design.

Dr Richelson, who is the a senior fellow at the National Security Archive in Washington, said of the document: “I’m not sure for how long after the operation the cat would have survived even if it hadn’t been run over.”

From “CIA Recruited Cat To Bug Russians,” The Telegraph, November, 2001

Roderick Long On Confucian Libertarianism

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Masterful libertarian scholar, Roderick Long, has a very long, fascinating paper, “Rituals of Freedom: Austro-Libertarian Themes In Early Confucianism,” at Mises.org. It traces libertarian ideas in Confucian thought, and makes a convincing argument that Confucianism is a better source of libertarian inspiration than the much more frequently cited Daoism.

I’m republishing a post on Long’s paper by Brian Caplan, at Marginal Revolution, because the pdf of Long’s paper isn’t very reader-friendly for a blog and Caplan has nice quotes from the piece.

“Unfortunately, Long points out, a much stronger theme in Taoist is primitivist hostility to modern civilization. Listen to Lao-tzu describe the Taoist utopia:

Lessen the population. Make sure that even though there are labor saving tools, they are never used. Make sure that the people look upon death as a weighty matter and never move to distant places. Even though they have ships and carts, they will have no use for them. … Make sure that the people return to the use of the knotted cord [in lieu of writing]. … Then even though neighboring states are within sight of each other, [and] can hear the sounds of each other’s dogs and chickens … people will grow old and die without ever having visited one another.

In contrast, Long finds much of value in the Confucians:

The early Confucians, by contrast, may not be as radical in their anti-statism as the Taoists, but in my estimation they make up for this flaw by firmly yoking their anti-statism to the cause of civilization, commerce, and the Great Society; their overall program thus looks a lot more like contemporary libertarianism than the Taoist program does. One Confucian text, while noting approvingly Laozi’s hostility to despotism, sharply criticizes Laozi for wanting to “drag the present age back to the conditions of primitive times and to stop up the eyes and ears of the people”; the best ruler instead “accepts the nature of the people,” which is to long for “beautiful sounds and forms,” “ease and comfort.”

The highlight of Long’s article is his discussion of the Sima Qian (c. 145-85 B.C.). Almost two thousand years before Adam Smith, Qian opined that “Wealth and currency should be allowed to flow as freely as water!” and had arguments to defend his position. And who said that Chinese intellectuals had no appreciation for the merchant class? Few Western thinkers match Sima’s appreciation of entrepreneurship:

These, then, are examples of outstanding and unusually wealthy men. None of them enjoyed any titles or fiefs, gifts, or salaries from the government, nor did they play tricks with the law or commit any crimes to acquire their fortunes. They simply guessed what course conditions were going to take and acted accordingly, kept a sharp eye out for the opportunities of the times, and so were able to capture a fat profit. … There was a special aptness in the way they adapted to the times …. All of these men got where they did because of their devotion and singleness of purpose. … [T]here is no fixed road to wealth, and money has no permanent master. It finds its way to the man of ability like the spokes of a wheel converging upon the hub, and from the hands of the worthless it falls like shattered tiles. … Rich men such as these deserve to be called the “untitled nobility” …

Murray Rothbard praised Sima in his history of economic thought, but Long notes that he neglected to mention that he was a Confucian!

It is hard to read this piece and not stand in awe of Long’s command of the Chinese literature. This is a body of thought comparable to Western philosophy in its intricacy and depth. Even if you couldn’t care less about Chinese proto-libertarians, this article exemplifies the true meaning of scholarship. And so the Sage says: check it out!” Continue reading →

Shocks And Doctrines: WSJ Uses Quake To Critique Klein

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Bret Stephens in the Wall Street Journal adds some nuance to Naomi Klein’s black-and-white picture of Milton Friedman’s contributions to the Chilean economy, noting how prosperity and effective enforcement of building codes have protected Chilean victims of the recent earthquake from the devastation that Haiti suffered:

“In left-wing mythology—notably Naomi Klein’s tedious 2007 screed “The Shock Doctrine”—the Chicago Boys weren’t just strange bedfellows to Pinochet’s dictatorship. They were complicit in its crimes. “If the pure Chicago economic theory can be carried out in Chile only at the price of repression, should its authors feel some responsibility?” wrote New York Times columnist Anthony Lewis in October 1975. In fact, Pinochet had been mostly indifferent to the Chicago Boys’ advice until the continuing economic crisis forced him to look for some policy alternatives. In March 1975, he had a 45-minute meeting with Friedman and asked him to write a letter proposing some remedies. Friedman responded a month later with an eight-point proposal that largely mirrored the themes of the Chicago Boys.

For his trouble, Friedman would spend the rest of his life being defamed as an accomplice to evil: at his Nobel Prize ceremony the following year, he was met by protests and hecklers. Friedman himself couldn’t decide whether to be amused or annoyed by the obloquies; he later wryly noted that he had given communist dictatorships the same advice he gave Pinochet, without raising leftist hackles.

As for Chile, Pinochet appointed a succession of Chicago Boys to senior economic posts. By 1990, the year he ceded power, per capita GDP had risen by 40% (in 2005 dollars) even as Peru and Argentina stagnated. Pinochet’s democratic successors—all of them nominally left-of-center—only deepened the liberalization drive. Result: Chileans have become South America’s richest people. They have the continent’s lowest level of corruption, the lowest infant-mortality rate, and the lowest number of people living below the poverty line.

Chile also has some of the world’s strictest building codes. That makes sense for a country that straddles two massive tectonic plates. But having codes is one thing, enforcing them is another. The quality and consistency of enforcement is typically correlated to the wealth of nations. The poorer the country, the likelier people are to scrimp on rebar, or use poor quality concrete, or lie about compliance. In the Sichuan earthquake of 2008, thousands of children were buried under schools also built according to code.

In “The Shock Doctrine,” Ms. Klein titles one of her sub-chapters “The Myth of the Chilean Miracle.” In her reading, the only thing Friedman and the Chicago Boys accomplished was to “hoover wealth up to the top and shock much of the middle class out of existence.” Actual Chileans of all classes—living in the aftermath of an actual shock—may take a different view of Friedman, who helped give them the wherewithal first to survive the quake, and now to build their lives anew.”

My Comment:

Friedman, was, of course, from an Austrian perspective, far from being an ideal free-marketer. In a devastating piece, “Milton Friedman Unraveled,” (1971), Rothbard even questioned his claim to be called a free marketer of any kind, listing among many sins, his advocacy of withholding taxes and of an absolute dollar standard.

All true, no doubt. But the fact remains, even if it was only in a very constrained sense that he advocated more freedom in the markets, he did advocate it. And as the article above suggests, contra Rothbard, even a limited advocacy of market freedom is better than an outright assault on it.

Glenn Greenwald On Intellectual Credibility

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Glenn Greenwald never fails. I was just catching up on the infamous Leon Wieseltier-Andrew Sullivan ethno-politico-theological brouhaha of last month that I completely missed while trekking around Latin America, and I found this simple but wise paragraph:

“What one thinks of Andrew Sullivan, or how angry he’s made one over the years, ought to be about the most irrelevant factor imaginable in determining one’s reaction to this TNR attack.  Sometimes, even people you don’t like are the targets of odious and harmful accusations, and sometimes, even your Bestest Friends, fellow party members and listserv pals might do wrong things that merit criticism.  Wieseltier’s polemic is a classic example of anti-semitism accusations tossed around with no conceivable basis and for purely ignoble ends.  It’s the very tactic that has caused significant damage in the past.  So obviously unhinged is this particular assault that it actually presents a good opportunity to discredit behavior like this once and for all.  That’s all that should matter; how many grudges one nurses towards Andrew Sullivan is nice fodder for gossipy listserv chats, but no responsible or even adult commentator would allow it to influence one’s views on this matter.”

And that’s why Glenn Greenwald is one of the very few mainstream writers on politics I can read regularly without a bad case of moral indigestion.

Other good responses to Wieseltier came from Sullivan himself, and from Matthew Yglesias and  Joe Klein.

Yglesias’s post minced no words:

“For the purposes of intimidation, after all, baseless charges work better than well-grounded ones. Nikolai Krylenko, Bolshevik Minister of Justice, said “we must execute not only the guilty, execution of the innocent will impress the masses even more.” And it’s much the same here. If you call anti-semites anti-semites, then people who aren’t motivated by anti-Jewish racism will figure “hey, since my political opinions aren’t motivated by anti-Jewish racism, then I’m safe.” The idea is to put everyone on notice that mere innocence will be no defense.”

The only problem was I wasn’t actually clear from reading Yglesias (apparently a long-time sparring partner of Wieseltier’s) where exactly runs the thin red line you can’t cross. Maybe that takes years of hanging out at MSM confabs, a future I’m as likely to encounter as sequestration in a Saudi harem.

Reading Sullivan, on the other hand, I felt I was reprising some of my own intellectual history:

“As a Jew and a Catholic, we read Buddhist scriptures together. We were, in fact, somewhat painfully alike in many ways: religious traditionalists whose reverence for our faiths was also marked by our rebellion within them. We share a commitment to secularism and religion, these days a very rare combination. His mentor was Isaiah Berlin; mine Michael Oakeshott.”

But, finally, it’s Jeffrey Goldberg, taking Wieseltier’s part, who – with minor adjustments-  gets the final word on the whole sad business:

“I wish that he (Lila: all of them) would open up  that their hearts to complexity.”

Israel-Palestine Problem Exhibits Wound Of PTSD

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At Forward, Leonard Fine puts his finger on the emotional trauma underlying the intellectual and political impasse in the Middle East:

“From time to time in this space, I’ve made passing reference to the post-traumatic stress disorder that afflicts Israelis (and the Palestinians, too). It may be a bit of a stretch, but there is a growing literature that suggests that not only individuals, but social institutions, can suffer from PTSD. Thus, for example, Loren and Barbara Cobb, in an article entitled “The Persistence of War,” argue that “specific symptoms of untreated PTSD are particularly troublesome for the social institutions of a society suffering from epidemic levels of these disorders. These symptoms are: hypervigilance, emotional numbing, denial and avoidance, seeing the world in black and white, magical thinking, and apocalyptic thinking.”

They go on to quote Dr. Jonathan Shay, widely regarded as among the giants in the study of PTSD: “Democratic process entails debate, persuasion, and compromise. These presuppose the trustworthiness of words. The moral dimension of severe trauma, the betrayal of ‘what’s right,’ obliterates the capacity for trust. The customary meanings of words are exchanged for new ones; fair offers from opponents are scrutinized for traps; every smile conceals a dagger.”

In the American military experience, PTSD most often arises when a soldier has witnessed the deaths or terrible wounds of his or her comrades. That happens in Israel, too, of course.

But in Israel, whole societies are the witnesses, and the word “post” is, alas, premature. The traumas are very much ongoing, and we do not yet have the clinical vocabulary to comprehend them.

For Jews, the great trauma is, of course, the Holocaust itself, the systematic and ultimately incomprehensible slaughter of one-third of world Jewry. That left a wound that will never quite heal, but that might by now have formed a bearable scab.

But mini-traumas ever since have picked at that scab, rendered the wound ever-raw. The excruciatingly painful list of suicide attacks, the hateful rhetoric, Sderot and the entire aftermath of the withdrawal from Gaza, and now, around the corner, Iran.

And then there have been and are the politicians who whether out of conviction or for purposes of dreadful exploitation pick at the scab and refresh the trauma. For Menachem Begin, Beirut was Berlin and Yasser Arafat was Adolf Hitler; for Benjamin Netanyahu, this is 1938, Tehran is Berlin, Mahmoud Ahmadinejad is Hitler. It was ever thus, it will ever be thus, hence it is here, now: They hate us. “Never again” may be our common oath, but “always, everywhere” is our common belief. The wound will not heal.

And the Palestinians? Betrayed by the corruption of their own leadership, theirs is not only the Nakba of defeat and displacement in 1948 and again in 1967; it is daily humiliation both thoughtless and intended, new bypass highways for the Jewish settlers in their midst, still more than 500 checkpoints and barriers to clog or block their own roads and travel, a security fence that slices and snakes through their fields and their farms and their villages and their cities, reminding, reminding, insulting.

Over Gaza, a sky from which at any moment death may be launched; in the streets of the West Bank, raids and roundups. Ongoing trauma, ongoing disorder. The wounds will not heal.

The Palestinians say: Without justice, there will be no peace. The Israelis say: Without peace, there will be no justice. Both sides are stuck with their wounds and their traumas; they need not only diplomacy, they need therapy. Their empathic capacity has been battered. They cannot place themselves in the shoes of the other, nor can they see themselves as the other sees them.”

John Paul II On The Moral Basis Of Capitalism

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Tom Woods cites Pope John Paul II on the moral basis of material prosperity:

“According to John Paul II, “The moral causes of prosperity . . . reside in a constellation of virtues: industriousness, competence, order, honesty, initiative, frugality, thrift, spirit of service, keeping one’s word, daring — in short, love for work well done. No system or social structure can resolve, as if by magic, the problem of poverty outside of these virtues.” These are precisely the virtues that the market economy fosters.

These ideas are not foreign to Catholic tradition: The Late Scholastics of the 16th and 17th centuries favored an economy very largely free of government controls, and John Paul II’s Centesimus Annus (1991) reflected an increasing appreciation for the moral and material benefits of non-coerced economic exchange.

The less heed we pay to slogans and propaganda, and the more we study the question on its merits, the more attractive does the market become.”

Subsidising The Baboons Through Bonds

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From Sauvik Chakraverti’s Antidote:

“Mint has a little piece that says one-third of all government expenditure is financed by borrowing, and one-fifth of all expenditure goes towards paying interest. They add that out of every 100 rupees spent, 14 rupees goes towards creating assets, while the rest goes towards salaries – that is, towards consumption. Note that “welfare” and poor relief also have nothing to do with production; they are all matters relating to consumption. Also note that, in India, most of the “consumption” is done by the personnel of The State itself – the politicians and the baboons.

Now, capital consumption is the highway to de-civilization. Progress and civilization has always meant increased saving and investment – that is, the accumulation of capital. This capital, when invested in production, raises the wages of labour and results in an abundance of goods and services for all. This is how, throughout history, civilizations have arisen.

What about those who “invest” in government bonds? Their savings do not go into capital creation or production. They merely finance the consumption activities of The State and they are rewarded with interest that comes from us taxpayers. How can this be called “investment”? It is not. It therefore becomes clear that all government borrowing is nothing but capital consumption – the highway to de-civilization.

I am therefore of the opinion that widespread awareness must be created about the pernicious consequences of putting private savings into government bonds. Investors should be made aware of the fact that they are destroying precious capital in a capital-poor country, and that they would be doing their bit for the nation if they made genuine investments either in the stock market, with the banking system or elsewhere within The Market. Further, public opinion must demand that all these perpetual irredeemable loans be repudiated at once. Those who will lose money have only themselves to blame, for they “invested” their money in an insolvent institution. They did not invest in The Market. So theirs were not “capitalist investments” at all. Throughout history, many foolish people (including the Medicis) have lost fortunes by lending to monarchs. Let this important lesson be learnt once again.”

What China Wants

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The Financial Times points out the quirks in the Chinese market that have Western companies racking their brains to stay on top of sales:

“The big spender in China, in years past and even more so today, is the state: private consumption as a percentage of gross domestic product has fallen from 60 per cent in 1968 to 36 per cent last year and could be as low as one-fifth in 2009 as the government ramps up capital investment.

In fact, the Chinese, who already have a world-beating savings rate of nearly 40 per cent of their income, tend to become more frugal when times are tough. As bank deposit rates decline, most of us spend more. The Chinese tend to stash away even greater sums to make up for the lost interest. The reason for this conservatism is the lack of a social safety net in China – citizens have to provide for their own medical care, old age and possible unemployment.

This makes them “penny pinching, ruthless, suspicious shoppers”, says Tom Doctoroff, north Asia director of advertising agency JWT and a writer on Chinese consumer trends. In a recession this behaviour only grows worse. “The downturn has made people keener on finding the cheapest deal,” says Yuval Atsmon, an associate principal in McKinsey’s Shanghai office. Even when they can easily afford it, buying a PC typically involves six visits to a store, and more often than not, customers will wait six months before making their decision after consulting blogs, online comparison sites and – the most important source of information in China – friends and family. Sales of copycat mobile phones, with all the functions of top models but a lower price, have soared from 17 million units in 2006 to 62 million units last year.

Brand consciousness is high, at least in the big cities, but brand loyalty is much lower than in the west. A price cut or good in-store promotion can often sway shoppers. And for cultural reasons, appealing to an individual’s taste or personal comfort typically doesn’t work, Doctoroff points out. A purchase either has to publicly signal status or wealth, like a flashy car does. Or provide a practical benefit: the latest craze in China is chocolate with added calcium, eaten not for pleasure but for the health benefits. The growing appeal of diamonds to women is not based on romance, but as a financial signal of a man’s commitment. Trust is another key issue in a country where so many consumer products are faked. Chinese mothers, for example, will pay 30 per cent more for safe baby milk – and this should favour foreign brands.

But foreign retailers and manufacturers have to cope with vast regional differences in demographics, language and culture that make it hard to plan a single marketing strategy – indeed treating China like a single country is usually a mistake. Natives of Zhejiang on the east coast like “toilet roll as rough as sandpaper”, the former head of Wal-Mart China liked to observe, a penchant thankfully absent elsewhere. Atsmon points out that cities even an hour apart can be entirely different: in southern Shenzhen, more than four-fifths of the population consists of migrant workers, mostly under the age of 35, who speak Mandarin and drink in bars. In nearby Guangzhou, migrants number just over a quarter, more people are older, enjoy watching Cantonese TV and go out to restaurants to drink with family members. Adequately addressing such niches requires an army of local suppliers, costly infrastructure and several layers of wholesalers and intermediaries. Even then, success may remain as elusive as it always has been: “No matter what you may be selling, your business in China should be enormous, if the Chinese who should buy your goods would only do so,” lamented Carl Crow, an advertising executive in Shanghai and author of the original book on how to sell to the Chinese … more than 70 years ago.”