[arin-ppml] simple question about money

[Tom Vest]

On Jun 13, 2008, at 2:54 PM, Milton L Mueller wrote:

>> -----Original Message-----
>> From: Tom Vest [mailto:tvest at pch.net]
>> The Chinese privatization was short-lived, and when the authorities
>> decided they didn't like the results they re-nationalized
>> the "flagship" private/competitive carrier and turned it into the
>> telco for the northern provinces.
>
> There was never any "privatization" in China, nor any
> re-nationalization.

I suppose these were only "transfers" too, that were later reversed  
and suspended?
Then the argument is the same, for reasons described below.

>> If things turn out to be other that the transfer enthusiasts wish,
>> there will no return path for address resources -- or at least none
>> involving "self-governance" as it currently exists.
>
> Huh? First, a transfer policy can simply be stopped. The policy is
> repealed, as of X date. Then there are no more (authorized) transfers;
> i.e. no more than there would be if there were no policy at all and  
> the
> RIRs continue to bury their heads in the sand. Second, if indeed there
> is v6 take up and the whole scheme is transitional as intended, then  
> the
> commies have their paradise in the v6 space and can continue to  
> serve as
> God-like central planners judging others' needs there.

The reason I believe that that you're wrong about this is because you  
are also mistaken about your next point...

>> "Diehard communists" are not the only kind of people that raise
>> concerns about embarking on far-reaching privatization plans without
>> adequate forethought.
>
> The frame of "privatization" is the wrong one to draw around the IP
> address transfer proposals. Privatization means conferring a legal  
> right
> of ownership to the address block assignee. A right to transfer the
> address from one user to another using ARIN as an intermediary does  
> not
> imply legal ownership.

There is a large and diverse set of (mostly new) laws and precedents  
used in many countries that goes under the rubric of "economic  
substance doctrine". Very roughly it's the legal equivalent of an "if  
it walks like a duck and talks like a duck..." argument that lawyers,  
accountants, and/or regulators sometimes apply when confronted with a  
description of some value-bearing asset or transaction that has been  
undervalued, or characterized as valueless by the interested parties  
(e.g., in cases of cross-border transfer pricing, obfuscation to avoid  
taxes, regulation, bankruptcy proceedings, etc.). The punchline is, as  
you might expect, that a duck is sometimes a duck no matter what one  
may wish to call it.

Repeating something I wrote first to this list back in April,

a "transfer" of resources that were previously defined and/or treated  
as common pool resources, which makes those resources alienable, and  
grants the initial recipients the right to choose the identity,  
timing, and terms of transfer to subsequent recipients is  
privatization, plain and simple.

We may all wish to passionately assert otherwise. Perhaps that passion  
will have weight in legal proceedings. I'll guess we'll have to wait  
and see. I readily admit that I'm not a lawyer; perhaps there are  
lawyers with expertise in this new/emerging field on the list?

>> Do you remember the debates for and against "shock therapy"
>> in Poland and Russia?
>
> Do you seriously consider these moderate transfer policies as "shock
> therapy?" I guffaw, sir!  The strategy is very Chinese. ;-)

Oh I don't know, what's the actual definition of "shock therapy" -- or  
if you prefer, "big bang" style economic reforms?
Simultaneous total transformation of several core economic systems, on  
the theory that the alternative ("sequencing") is less likely to  
succeed. What kind of core functions?

1. Distribution architecture - e.g., from centralized to decentralized.
2. Eligibility criteria - e.g., from categorical ("all citizens" or  
"need-based") to competitive (i.e., markets).
3. Medium of exchange -- e.g., from one currency to another, or in  
this case from "credible promises of new Internet production" to  
whatever considerations are acceptable to incumbent IPv4 holders.

What are/were the theoretical justifications for shock therapy?

1. The current system has reached end-of-life, and nothing less than  
total transformation will make it better.
2. The incentives are misaligned, let's introduce the profit motive to  
get things moving in another direction.
3. The medium of exchange has failed -- usually that means  
hyperinflation, not severe deflation as in this case -- so let's dump  
it.
4. The locals are too insular, too protected -- let's introduce some  
foreign capital/competition/expertise -- (this space left as an  
exercise for the reader).

What are/were some of the more common effects of shock therapy?

1. Deflation -- but the therapeutic kind rather than the Great  
Depression kind, because the previous excess was hyperinflation.
2. Initial, severe disruption -- lots of industry restructuring, with  
lots of pain for those working in the affected industries.
3. "Insider privatization" -- a necessary and accepted evil in sectors  
where expertise was scarce, but which can lead to excesses (with names  
like "crony capitalism", "kleptocracy", etc.), esp. in situations  
where public transparency or property rights/rule of law is weak.
4. Speculation / Consolidation -- i.e., the opposite of competition,  
but good for getting prices up, which spurs investment!

And sometimes, much later:

5. Recovery, normalization, usually with PTSD -- those who lived  
through it wondering if there might have been an easier way...

Guffaw if you wish; this is no joke.

I (literally) hope to be proven wrong, if anyone wishes to do me the  
kindness of trying...

TV