Tag Archives: L. Gordon Crovitz

Assange’s Got Everybody Agitated About Anarchy

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Anarchists are back in the news again. I haven’t tracked down the first newspaper columnist to use the A-word with reference to Julian Assange, or liken him to “the anarchists of the early 20th century,” as Chas Freeman did in his New York Times editorial this past weekend. But the word has suddenly gained new currency. An old specter is once again haunting the world’s ruling powers.

One of the happier, unintended consequences of Cablegate may turn out to be a public history lesson about anarchists and the role they played in American (and European) political life before the First World War. But right now that outcome seems much less likely than another — that all the hysteria over the new anarchist threat may lead to severe restrictions on the flow of information: Palmer Raids for the twenty-first century, with the Security State raiding and policing its own Cyber-State.

This is the view L. Gordon Crovitz takes in a Wall Street Journal editorial today, labeling Assange an “Information Anarchist”:

The irony is that WikiLeaks’ use of technology to post confidential U.S. government documents will certainly result in a less free flow of information. … The Obama administration now plans to tighten information flows, which could limit leaks but would be a step back to the pre-9/11 period.
Mr. Assange is misunderstood in the media and among digirati as an advocate of transparency. Instead, this battening down of the information hatches by the U.S. is precisely his goal. The reason he launched WikiLeaks is not that he’s a whistleblower—there’s no wrongdoing inherent in diplomatic cables—but because he hopes to hobble the U.S., which according to his underreported philosophy can best be done if officials lose access to a free flow of information.

Crovitz goes on to liken Assange to “Ted Kaczynski, another math-obsessed anarchist,” and connects the “philosophy” of Assange’s writings on authoritarian conspiracy to the Unabomber Manifesto. He has to admit that Assange hasn’t mailed any bombs or killed anyone; but Kaczynski is “serving a life sentence for murder.” Ergo – nothing, really; but it sure sounds alarming, doesn’t it?

(The best Crovitz can do along these lines is to argue that Assange has put lives at risk. This is something everyone likes to say; it adds to the drama and stirs people. To his credit, Crovitz offers the example of Dr. Hossein Vahedi, an American citizen who now fears that his relatives in Iran will be targeted as a result of a leaked cable.)

In this view the state would seem justified in concealing its secrets in order to protect lives. The idea here seems to be that the American state is, mutatis mutandis, benevolent, and those who criticize the state or even seek to thwart the power of the state are likely sinister, violent or evil.

Over at the New York Times, David Brooks does not go that far, but he sees Assange as “an old-fashioned anarchist who believes that all ruling institutions are corrupt and public pronouncements are lies.” I doubt Brooks would really want to defend the counter-proposition, namely, that all ruling institutions are not corrupt and public pronouncements are true. But that’s really beside his point, and not what has him and all his fellow columnists so agitated about anarchists.

It’s really very simple. In Assange and in those who revel in the confusion and embarrassment of Cablegate, these self-appointed guardians of the public welfare see someone who wants to “disrupt the established order,” to quote Freeman. Here you may be forgiven for asking whether it is the job of the fourth estate to defend the established order. An “anarchist” like Assange forces them to declare allegiance; and their allegiance is to the power of the American super-state: these are the champions of the Pax Americana.

Still, that doesn’t keep them from reveling in the confusion and embarrassment of Cablegate. Maybe all the antidisestablishmentarianism is merely a hedge.

Be that as it may, there’s nothing terribly wrong with defending the Pax Americana: in many cases, our lies and corruption are certainly preferable to those of others. The trouble comes when those who have been entrusted with keeping the state honest by investigating its secrets and reporting on its activities turn out to be the State’s most ardent defenders, and present us only with a stark choice between raison d’etatand anarchy.

‘Mr. Rajaratnam seemed in good spirits’

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That was the report from a “friend” on October 20th. Whether Mr. Rajaratnam’s good spirits have held up despite recent events — which have ranged from the collapse of his firm, the Galleon Group, to accusations that he was funding the Tamil Tigers — is less clear; but perhaps Mr. Rajaratnam knew all along that that he had friends out there, and that his friends would rise to his defense. No need to be glum.

Friends of Raj have included, so far, a number of prominent newspaper columnists and professors of law and finance, as well as, it would appear, the entire editorial staff of The Wall Street Journal.

Most are not defending Mr. Rajaratnam himself: nobody, not even his closest friends, have stepped up to declare him innocent or incapable of any wrongdoing. Instead, we are asked to consider that what the Feds call insider trading is really another form of market transparency, or alternatively, that it is, or ought to be, perfectly legal for outsiders to trade on information provided by insiders, even if those insiders betray their fiduciary duties in providing that information.

The latter of these arguments could amount to little more than this: if you tell me a secret, and I act on that information, you may have violated a trust, but I have not. I have only acted in my own self-interest, and what else can you expect me to do? Of course this conveniently overlooks the question how I induced you to tell me the secret, or how I colluded with you in violation of a trust. Any investigation of wrongdoing at Galleon will likely focus on whether there were inducements in Mr. Rajaratnam’s network of informants and contacts, or what form collusion took. After all, we’re not really being asked to believe that these were just friendly exchanges.

Or are we? Mr. Rajaratnam cultivated friends in high places and friends with access to proprietary information, to be sure. And as L. Gordon Crovitz noted in a piece that tries to blur the line between insider and outsider trading:

Information flows these days are increasingly about networks, including information about markets shared by members of various communities. Traders use Web sites to compare notes on companies and use social media like Facebook to share information, looking for an edge. Sophisticated traders such as hedge funds draw on more selected networks such as their investors.

The word “community” is doing a lot of work here it shouldn’t do. And it’s a little hard to imagine an entire hedge fund entrusted to the fortunes of six-degree, social media friendships. The role these informal exchanges played in giving Galleon the “edge” that Mr. Rajaratnam insisted upon is most likely negligible. Instead, it seems fair to assume, Mr. Rajaratnam and his associates depended on what Crovitz calls “more sophisticated” social information networks. (If you like acronyms, call them SINs). How sophisticated, and how social, remains to be seen.

The other argument, the argument about market transparency, is usually attributed to Milton Friedman (but originates, according to Stephen Bainbridge, with Henry Manne). Friedman summed it up when he quipped: “you should want more insider trading, not less. You want to give the people most likely to have knowledge about deficiencies of the company an incentive to make the public aware of that.” The merits of this view aside — and Bainbridge has argued persuasively that its merits are slim — it paints a deliberately naive picture of the markets, with knowledgeable insiders merely lacking some incentive to inform “the public” of a company’s deficiencies.

The public? It’s difficult to say why Friedman should choose this word. No doubt about it, inside information about a company’s shortcomings, or failures, or misdeeds can serve the public, or be a public good; and in a perfect world, or even a better world, there might be real incentives and protections for those who come forward with information about companies that serves the public interest. But in our world, in the real world, who among the public, broadly construed, the publicus, would benefit from this kind of information, or even know how to benefit from it?

It’s a very small percentage of the public, and it is disingenuous to pretend otherwise. It’s a “community,” to use Crovitz’s word. But the trouble is this: this particular community is like a gated enclave, restricted, shut off from the traffic and noise of the public world. Just Mr. Rajaratnam and friends — nobody else; a very small, very closed circle, a social information network, to which only a select few are privy.

There are, no doubt, many such networks of friends and boon companions where the line between inside and outside is blurred: after all, friends don’t let friends stay out in the cold. But these social information networks are still a long way from true transparency and public disclosure, or information that is a public good, even though we have all the technology we need to make information public. What we lack is the political intelligence to do it right, or maybe just the political will to do it at all.