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Chickens, Eggs, & Connectivity

July 14, 2006


Wednesday’s [12 July] Washington Post published an article by Anush Yegyazarian, from PC World, titled “Censorship, Human Rights, and Capitalism.” Yegyazarian talks about the “Global Online Freedom Act of 2006 ( H.R. 4780 ), a bill currently pending in the House of Representatives.” The bill is a reaction to the fact that companies like Google, MSN, and Yahoo have been allowed to do business in China by agreeing to state-imposed controls on content. He writes:

Not only am I unsure whether the bill would work effectively, but I believe it raises some thorny issues: How far can our government go in mandating that private businesses serve as unofficial partners or affiliates of the State Department? To what extent can the government dictate how U.S.-based companies behave and do business in other countries? The bill also muddies the waters further on an increasingly complex problem of the Internet age: Whose laws should dictate how a cyberbusiness functions–those of its home country, or those of the country in which it conducts business at any given time?

Not only is such a bill likely to make the U.S. even less well liked abroad, it is unlikely to achieve the goals it desires. While some may see it as a chicken-and-egg discussion (which comes first freedom or capitalism?), historically economics have had a greater impact on the politics than vice versa. Whatever Tienanmen Square represents symbollically, Shanghai is the real face of change in China and it is driven by economics. For all intents and purposes, Shanghai is a developed, capitalistic, world-class city despite the controls the central government has tried to impose on Internet content.

Enterra’s Senior Managing Director, Tom Barnett, has been arguing for years that connectivity is a Pandora’s Box that no amount of central control can stop from being opened. The chicken-and-egg debate should be a settled issue in this situation. Economics and connectivity will eventually lead to the democratic freedoms that HR 4780 seeks to achieve. The bill, by trying to limit connectivity by restricting how companies do business in places like China, undermines this path dependency. Tom’s mantra — disconnected defines danger — is a guiding principle that should drive U.S. foreign policy. If one asks, does HR 4780 tend to increase or decrease connectivity, the answer is clearly the latter. If the House Members did a bit more horizontal thinking, they would recognize the folly of the course they are pursuing. Yegyazarian continues:

The bill would create a new office within the State Department that would track suppression of Internet-related speech in different countries and would coordinate efforts among government agencies dealing with these abuses and other government bodies. This office would also be responsible for working with business and industry leaders to set up a voluntary code of conduct for companies working overseas. For search engines and Web content hosting firms, the bill gets more specific. While it wouldn’t prohibit such companies from doing business in oppressive countries, it would restrict how far they can go in accommodating the desires–and the laws–of those nations. Under this act, these types of U.S.-based firms could not abide by the requirements of the local government in censoring or restricting search results or in denying access to sites such as Voice of America (a U.S. government-backed international news agency). The act would also prohibit these types of companies from having facilities with hardware that serves or stores data in the countries deemed restrictive. The bill also would use a more traditional way of regulating business overseas–export licenses–to achieve Congress’s goals. The government already employs this method to restrict the products companies may sell overseas (remember the controversy over the ban on exporting encryption technology ?). The proposed act hints at, but does not detail, new export restrictions to come. Given the thrust of the act, companies that make filtering technology, packet analysis technology, and networking gear are likely targets for new restrictions on overseas sales of these products.

Yegyazarian goes on to explain the justifications used by companies doing business in China:

Yahoo, which has been engaged in controversial business overseas, has defended its compliance with censorship laws. While not condoning the oppressive practices of some of the countries Yahoo works in, company officials have argued that the firm’s presence encourages debate on censorship issues and that its products have given residents of these nations access to more information than they would have otherwise. Though this claim is difficult to verify, Yahoo may have a point. At the very least, a lack of any non-government-supplied service does curtail user choice.

While Yegyazarian thinks the “claim is difficult to verify,” New York Times columnist Nicholas Kristof decided to to just that. In a column back in June [“In China It’s ******* vs. Netizens,” 20 June 2006], he wrote:

To test the limits of the Internet in China, I started a couple of Chinese blogs — in which I huff and puff as outrageously as I can. For a country that employs some 30,000 Internet censors, that turned out to be stunningly easy. In about 10 minutes, I started Ji Sidao’s blog — that’s my Chinese name — on two Chinese Web hosts, at no cost and without providing any identification. Writing in Chinese, I began by denouncing the imprisonment of my Times colleague, Zhao Yan, by the Chinese authorities. I waited for it to be censored. Instead, it promptly appeared on my blog. In frustration, I wrote something even more provocative: a call for President Hu Jintao to set an example in the fight against corruption by publicly disclosing his financial assets. To my astonishment, that wasn’t censored either. Desperate, I mentioned Falun Gong, the religious group that is the Chinese government’s greatest enemy: ”In Taiwan, the Chinese people have religious freedom. So in the Chinese mainland, why can’t we discuss Falun Gong?” That instantly appeared on both my blogs as well, although on one the characters for ”Falun” were replaced by asterisks (functioning as pasties, leaving it obvious what was covered up). Finally, I wrote the most inflammatory comment I could think of, describing how on June 4, 1989, I saw the Chinese Army fire on Tiananmen Square protesters. The two characters for June 4 were replaced by asterisks, but the description of the massacre remained intact. These various counterrevolutionary comments, all in Chinese, are still sitting there in Chinese cyberspace at http://blog.sina.com.cn/u/1238333873 and http://jisidao.blog.sohu.com. (When State Security reads this, it may finally order my blogs closed.) All this underscores, I think, that China is not the police state that its leaders sometimes would like it to be; the Communist Party’s monopoly on information is crumbling, and its monopoly on power will follow. The Internet is chipping away relentlessly at the Party, for even 30,000 censors can’t keep up with 120 million Chinese Netizens. With the Internet, China is developing for the first time in 4,000 years of history a powerful independent institution that offers checks and balances on the emperors.

Kristof got the chicken-and-egg argument right, “the Communist Party’s monopoly on information is crumbling, and its monopoly on power will follow.” We don’t want a redux of the fall of the Soviet Union, we desire a soft political landing — the negative impact on the international economy of a hard landing would be severe. The best way to achieve the soft landing is let connectivity continue to perform its magic even as Chinese leadership continues to fool itself into believing it has the situation under control. Yegyazarian concludes his article:

Given the issues here–human rights, freedom of speech and information–many of us may be tempted to say that firms should not engage in business activities that help imprison people simply for speaking out. By that logic, any law that stops this from happening is a good one. But this viewpoint assumes that private companies should be obliged to help enforce U.S. foreign policy abroad. Is that the precedent we want to set? How far do we go? Do we make companies support wars overseas that company boards and workers may object to? Do we make tech corporations lower the costs of their products to nations we like but keep them high elsewhere because we want to encourage technological development in some countries but not others? It would be like California telling a manufacturer based in the state that its plants in other states must adhere to California’s clean-air rules. Defense of human rights and free speech is such an important aim that we may as a country decide that, yes, in this case it’s okay to make private firms work with the State Department to this degree (remember, the act even dictates what data companies may or may not store at any offices they have overseas). I believe, however, that we need to discuss the implications and perhaps make it far more clear in the bill that this level of cooperation is the exception, not the rule. Moreover, if the bill passes into law, we’ll be telling companies that their home country’s laws trump local laws regardless of where their offices are located or where transactions are occurring. That invites other nations to tell their businesses that they operate under French or Russian law, say, even when they’re in the United States. This could turn into the 21st century’s version of tariff wars. Far-fetched? Maybe. But defining and enforcing sovereignty when you’re dealing with a borderless Internet is already a problem; a law like this one could exacerbate it. The goals of this kind of legislation may be admirable: I personally believe companies should think long and hard about whether they want to be party to censorship and potential oppression wherever they do business. But this particular bill could do more harm than good.

The world, as we all know, is a world of compromise. Black and white solutions seldom lead to anything except polarization and stagnation. The U.S. needs to pursue legislation that supports a foreign policy of inclusiveness and growth. Let’s put the chicken-and-egg debate behind us.

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