The Panopticon is for optimists

Governments have always tried to control their people. The biggest weakness of government policies was that they don’t actually work in practice.

Smuggling was rife wherever trade was restricted. Prohibition of alcohol and drugs didn’t make them less available. Wealth taxes pushed the rich overseas and shifted money into hidden asset classes. Borders are porous to immigration.

The grey economy thrives slightly more with every tax and regulation. Companies like Uber and Airbnb undermine licensing. And so on and so forth…

Today, city streets are littered with empty packets of black-market cigarettes. Illegal immigrants pour across borders. And drones shut down airports at will. The law is irrelevant.

As a result of their policies’ failure, governments often abandon them. Or pursue them half-heartedly. Like the war on drugs.

The point being that throughout human history, there has been an inherent check on government policies. Politicians could only go so far in pursuing their mad dreams. Eventually, reality woke them up to what’s actually viable in practice.

Voters may only choose their leaders every few years. But we choose whether or not to comply with their stupid regulations every minute of every day. And we ignore many of them as a matter of course already.

Most importantly of all, a lot of the government’s worst policies were never even tried because nobody expected them to work. They were discarded for not being viable in practice. People would simply refuse to follow them.

But what if this is about to change? What if technology has given governments the chance to force compliance at a level never considered possible?

Then a whole new array of policies thought to be unviable in the past suddenly become plausible. We will face a barrage of entirely new and far more draconian government policies. And, this time, they will work.

From threatening enforcement
to ubiquitous control

When the pandemic first began, governments initially ruled out lockdowns because they didn’t expect people to comply.

But what if compliance could be enforced effectively using CCTV, mobile phone data, public transport travel data, credit card data and more?

Then we could all be confined to our homes with stunning compliance. Anyone heading to the beach could later be fined for it. That’s a level of power only science fiction authors had achieved in the past. But technology makes it possible.

Stupid rules like limits to outdoor exercise times suddenly became viable during the pandemic. An absurd state of affairs that saw a cyclist fined in front of me because he was sitting on a park bench fixing his chain instead of actively exercising!

If your life is run digitally, governments will be able to create rules that are not just difficult to avoid, but inherently impossible to dodge. If cash is abolished, governments will be able to control what you can buy, not just make rules about what you can buy. Your card simply won’t work if you are breaking the restrictions.

The meaning of “codification of law” will shift from legislation to computer code that automates compliance. Technocrat will come to mean “someone who uses technology to control you” rather than “someone who uses rules to try and control you”.

That is a paradigm shift. And yet, few people can distinguish the difference.

Compliance by definition instead of by threat

Most people presume government laws are simply followed without second order effects or unintended consequences. Greta Thunberg’s clan believe that banning coal in Western countries will reduce emissions instead of just shifting them East.

Belief that laws define reality is why people believe the government “ought to do something” about the problems we face. The war on drugs and poverty, for example. We forget that compliance and the law are entirely different things. As are intention and outcome.

In the future, we may all be subservient to the do-gooders trying to reshape the world with badly flawed government policies. But we will no longer be able to opt out by ignoring their mad rules when they get it wrong.

This is a radically different state of affairs than the one most people fear today. They worry about a Panopticon. A situation where government surveillance is absolute. And so we live in fear of the consequences for breaking government rules, because we expect to be caught and punished.

But I’m not just worried about the combination of surveillance and enforcement. I’m worried about ubiquitous direct control. The technological automation of compliance with rules and regulations.

If that happens, civilisation’s last loopholes from dystopia will evaporate. For the first time in human history, compliance with regulatory dictates will hold true in everyday practice, not just in flawed political theory.

Governments won’t have to threaten us with punishment for ignoring their dictates. It will become impossible to behave otherwise.

And this will unlock an entirely new suite of policies discarded in the past as unworkable.

If defiance becomes impossible,
what will politicians try next?

Consider the example of wealth taxes. In the past, this was known to be a poor policy. Because wealth is mobile and can easily shift into hidden assets like gold. Indeed, a wealth tax is counterproductive by way of shifting productive people overseas and wealth into unproductive assets.

The UK’s Labour government was recently warned that a wealth tax would trigger an exodus to tax havens like Dubai. And that investors would shift into lower risk assets. Both would undermine the economy and the tax base.

To sum up, wealth taxes don’t work. But this is only true to the extent they could be avoided. I’m not sure that’s the case anymore…

Technology and the registration of wealth via systems like our Superannuation has made it far easier for the government to force compliance, not just enforce it. To make compliance a practical fact of life, rather than something you ponder on your tax return at the end of the year.

A modern wealth tax could make foreign exchange transactions subject to an exit tax. You would not be able to move money without paying the exit tax first. That is very different to ‘requiring’ it to be self-reported and paid at the end of the tax year, under penalty of fines.

In the past, the Australian government has made Super lump-sum payouts less tax efficient. In the future, they will control how much money you can take out. You won’t be able to take more, full stop. The penalties for doing it will be mute because it won’t be possible.

Similarly, you will not be able to invest in hidden assets without being tracked while doing so. The government will know what you bought and sold directly, not just how you reported it. Your tax could be taken out of your account instead of being paid by you at the end of the year.

This is a fundamentally different state of affairs. The most important check on government power in the history of human civilisations is evaporating. You won’t be able to break the rules.

The biggest threat to your financial future is not a tax or inflation. It’s CBDCs and digital IDs. For the first time ever, there’s a shift in what government policies are going to become viable . A whole new set rules and regulations that civil servants have been dreaming of implementing for centuries, but couldn’t. Until now.