Thursday, July 04, 2013

Information Happens

We live in the Information Age.

In this age governments, corporations and political entities have huge piles of data. These groups wish to use their information to advance of their various causes.

Information is power, and people should be extremely worried about the misuse of information in this age.

Unfortunately, our culture has not had a good substantive debate about the role that information should play in our society.

In the current superficial debate the media frames concerns about misused information as "privacy rights." I find this frame misleading.

Political players use the call of privacy rights in attempts to regulate the flow of information. Sadly, the political players who appoint themselves are protectors of privacy rights often do little more than throw up blocks for competitors while they continue to use the information for their political and financial ends.

A truly substantive debate about information in our society would start by looking at the information (and not a claim to a fictitious right). We should start by looking at the ownership and flow of information.

For example, a fundamental question is if the flow of information is highly centralized or if it is well distributed.

This issue of centralized control of information is far more important the vague and contentious issue of "privacy rights."

Centralized systems have single points of failure. In general people are safer when the information flows through highly decentralized systems.

The frame of "privacy rights" creates a false illusion. Highly centralized systems tend to have more lawyers than distributed networks, so we think they do a better job protecting "privacy rights." In reality, people are safer if they own the data and the data is held closer to home in a distributed network.

The key to creating a robust distributed network that empowers the people is the ownership of the data. Our current system treats our financial information as proprietary data owned by the government and financial firms.

If we saw people as the primary author of their lives and recognized that the people are the primary owners of their personal data, then we could create a system in which the data is held closer to home in a distributed network.

The flow of information is the common theme in both my work in health care and tax reform.

To explain my ideas, I need to jump in real quickly with one absolutely fundamental observation. The observation is that information follows the flow of money. This happens because money itself it nothing more than a little blip of information.

If you look at your checking account and it says you have $84. This is just a blip of information. When you use money to pay your phone bill, we see a flow of information about your spending.

Since money is information, talking about the flow of money is the same as talking about the flow of information. The flow of information has a real world impact.

In health care, money is held in a pool. When you receive care, money flows from the pool to the care provider. The information about your care flows from the care provider back to the pool. This system cuts people out of the flow of information about their health. Although we are spending record amounts of money on health care, the fact that we just cut people out of their care means we become less healthy.

In the tax system, money flows from your employer to the government in the form of payroll withholdings.

The flow of the money and information is going from large centralized groups to other large centralized groups. Individuals are sidelined in this process. This twisted system decreases the status of the people.

The widespread abuse of information in our society shows that this restricted flow from centralized bureaucracy to centralized bureaucracy is not protecting peoples. It impoverishes people. The restricted flow of information turns Americans into marks to be abused by the rogues of the world.

From a data perspective, I believe that the key to turning America around involves a restructuring of the flow of information so that people have stronger direct control over their information.

I actually start with the premise that, in a truly free society, one would see information flowing directly from people in a highly decentralized network and that we should measure the success or failure of reform efforts in how they affect they data flow.

The two reforms I put on the table are about creating such a data flow.

The Medical Savings and Loan creates a financial system in which health resources flow from accounts owned by individual people. Since the money (a piece of information) flows from individuals to providers, the health records will flow back to the information and improve health.

The Object Tax is a non-disruptive reform that creates a new interface for the income tax system. The reform creates an object model of the income tax that can be implement through the current withholding system or through Tax Aware Accounts.

A Tax Aware Account works as follows: People get their entire paycheck deposited in the Tax Aware Account. They pay taxes to withdraw the money.

This reform is non-disruptive. Employers can continue with withholdings. Only people who want to move to the new system will move to the new system.

The new system creates an information flow in which the money flows from individuals to the government. This new interface gives people greater power when facing the government.

In contrast, the Fair Tax does the opposite. The Fair Tax pulls individuals out of the flow of information altogether. Taxes are collected by retailers at the point of sale. Workers get a new entitlement called a "prebate" to compensate for this change. Pulling people from the flow of data dehumanizes the entire system.

I will end this post with an advertisement that makes a point.

An Advertisement

The big box below is an advertisement for LifeLock. This program taps into the various consumer databases to see if someone has stolen your identity. The program introduces the public to a few of the databases that process information about us.

There is all of this information churning through centralized networks that sit outside of the reach of us mere mortal humans. This information can seriously affect our lives.

This information is highly vulnerable and subject to abuse as is seen by the growing crime of identity theft.

We are creating a nightmare in which these highly centralized are making more and more of the decisions that affect our lives. These databases are vulnerable and apt to abuse.

We are in a thing called "The Information Age." The Freedom Movement needs to include discussions about information that go beyond the frame of privacy rights. We need to discuss the distribution and flow of information.

For example we find that the Fair Tax pulls them out of the information flow. Pulling people out of the information flow appears to protect privacy, but it has the long term effect of disenfranchising people. The very fact that we have to buy a program to access the information that controls our fate in this economy tells me something is dreadfully wrong.

NOTE: I am required the FCC to point out that I would benefit from any sales made through the link below. The basic subscription is $99. It gives you access to databases that collect information on consumers. The goal of the program is to find people who are trying to steal your identity. Because information that affects our personal lives flows through centralized systems outside our control, we must buy programs to protect ourselves.

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