Parliament should respond to the Wright Affair by reforming UK defamation law
Last week brought us the news that Dr. Craig Steven Wright, an eccentric Australian who has long claimed to be Bitcoin’s pseudonymous creator Satoshi Nakamoto, was bench-slapped by the High Court, where Mr. Justice Mellor ruled at the conclusion of the proceedings that Wright was not Satoshi Nakamoto, not the author of the Bitcoin white paper, not the author of its software and, by extension, not the creator of Bitcoin.
This bench ruling comes after years of litigation and weeks of hearings around the question of the provenance of the Bitcoin white paper and software. Full details of the court’s findings on these points will be provided in a written judgment at a later date so I refrain from offering my own conclusions on the evidence, or an assessment of correctness of the ruling, here.
As is public knowledge, I was one of the first lawyers – if not the first lawyer – to represent a client on the business end of Wright’s years-long litigation campaign, when, in 2019, a Twitter user I know was the first crypto community member to receive legal threats from Wright's lawyers for claiming that Wright was not Satoshi, the very conclusion Mr. Justice Mellor also reached today.
A short time later, an acquaintance of mine, Peter McCormack, dared to say the same thing. Peter was promptly sued by Wright in England. Wright won his case against Peter, albeit winning only nominal damages of £1 due to certain deficiencies in Wright's case.
In my view, Wright's legal team chose to bring these claims in England for one reason, and one reason only: England is, and long has been, the easiest place in the English-speaking world to win a defamation action, because in England, the playing field is tilted so to the advantage of a claimant that even weak claims can win.
This is not a new problem, and its roots go deep. Defamation is an ancient tort with its origins in the landed aristocracy seeking to protect their names and reputations from lesser men. The Anglo-Saxon tort of scandalum magnatum, a “fake news” tort for defaming great men of the realm (and thus not a tort capable of being inflicted on lesser men), was used as early as the 13th century. In later years, various other torts like seditious libel were used to punish political dissent – even where that dissent should be substantially true – and the imposition of these ancient rules in the Thirteen Colonies, most famously in the John Peter Zenger trial of 1735, served as focal points around which a new, young nation, the United States of America, began to develop its fledgling judicial system which led, eventually, to its free speech doctrine embodied today by First Amendment jurisprudence.
In the modern formulation, defamation is the publication of a statement of fact to a third party, which is false, which is likely to cause serious harm to their reputation. In this respect it differs little from the tort in the United States. However, in England, the history of the tort – protecting the powerful from the powerless – has never been fully written out of its bones, because the burden of proof in a defamation action rests not with the claimant but with the defense.
Not with the Saxon noble with the ear of the King, but with the humble pamphleteer who dared to speak out about his abuses. Not with the Member of Parliament accused of some lecherous or disreputable conduct, but the journalist who reported on it. Not with a person claiming to be Bitcoin’s creator, offering nothing approaching definitive proof that he or she is (being a transaction or message signed with one of Satoshi’s private keys), and armed with institutional financial backing, but the humble Twitter user who simply observed what appeared to be true, based on a cold assessment of the facts, and dared to repeat what he thought was true in writing.
Put simply, at any time, in any defamation claim, the deck is always stacked against speakers and favors those who are most likely to be spoken about.
On a practical level, this means that it is conceivable that a future plaintiff in England seeking to conceal certain truths or propound certain falsehoods, but with knowledge of the totality of the circumstances concerning that conduct, confidence that he or she can control those variables, and possessing the resources to reasonably predict that he or she will be able to use lawfare to intimidate others from discussing it, can stifle freedom of speech by using the threat of defamation litigation and, in some cases, being less than forthright with the courts. We need not look back to the Saxons to find a proven example of this: see, e.g., Jeffrey Archer, Baron Archer and former Deputy Chairman of the Conservative Party, who famously won a defamation case against the Star newspaper over a visit to a prostitute whose life was ruined by the case in the late 1980s, only to be sent to prison a decade and a half later, when his testimony was discovered to have been false.
The point is not that Archer lied, or that he was punished for a lie. The point is that his initial case was so weak that he should never have won a civil action in the first place, or assumed that victory was possible, but the structure of English defamation law made a victory possible if not inevitable, thus incentivizing Archer to bring it anyway. Requiring a defendant to prove the truth of his statement, particularly where seeking to prove a negative, can be nearly impossible. It is far fairer and in the interests of justice to require a claimant, who starts the dispute, seeks the remedy, possesses direct knowledge of all of relevant facts about his past conduct, and is the party asking the state to intercede on his or her behalf with the full might of its power, to prove the truth under these circumstances.
I offer no view on the truth or falsity of Wright's statements or evidence in this case. That is a matter for the High Court to address in its fuller ruling. What I do know is that the question of the truth of his claims should have been addressed years ago in Wright v. McCormack, but it was not dealt with because the burden of proof was on the defense and the cost of going through the exercise COPA - a coalition of very well-funded corporations - just went through was likely too much for an individual defendant like Peter to bear.
In future, it is possible to make England a fairer place for speakers and help the English marketplace of ideas be a home for the truth. Ask claimants in a defamation action to bear the burden of proving their case. It’s a simple change. Parliament should make it.
So, how does this subsidy of the green economy work then?
We should all be aware how public goods work. The problem is that they’re extremely difficult to make money out of. Therefore there’s a role for government in producing them. Not, not necessarily, that government should produce them, but that government should do some stuff to make sure they’re produced.
So, we get government to directly provide defence, enable excludability through copyright and therefore profit and so on. Which system works best - direct provision, regulation, law, or heck it’ll all work well enough anyway, just depends upon the specifics of what is being discussed.
There’s nothing there even vaguely controversial about public goods.
So, politics has defined the climate as being a problem that must be dealt with. There is a significant public goods problem here - given that emissions are not in market prices we at least have something hugely akin to the public goods problem. Politics has also decided that planning and subsidy are the way to deal with these - we disagree but then OK, we disagree.
Now we get to an absurdity.
The entire point of public goods is that it doesn’t matter who produces them. By their very nature once produced all can enjoy them. That they are produced matters, who by does not.
Yes, going green is akin to this. That someone develops cheap solar panels means we can all enjoy cheap solar panels. Windmills that work - when someone achieves that - similarly. Fusion only needs to be designed and proven once for us all to benefit from it.
As we say, politics has decided that planning and subsidy is the way to gain these desirable things:
The remarks are the first public acknowledgement by a minister that Britain could resort to trade tariffs if Chinese cars are found to have benefited from large state subsidies.
Since 2009, China’s central and local governments have subsidised domestic EV businesses to the tune of $100bn (£78bn), according to a study by the Washington-based Center for Strategic and International Studies (CSIS).
The claims have triggered an anti-subsidy investigation by the EU, which could put pressure on the UK government to act if it is found that Chinese brands have received an unfair advantage.
But this is insane.
We’ve decided that we must subsidise all sorts of people to develop the technologies we need. Because those technologies are, once they exist, those public goods. However, the moment Johnny Foreigner subsidises something that we all benefit from then this isn’t allowed. Because something or other absurd.
To repeat, the current conversation insists that cheap EVs must be achieved for climate change reasons. China’s taxpayers have spent $100 billion on getting to cheap EVs that we can now enjoy - and also save the climate. But we can’t have those cheap EVs and save the climate because it’s dirty, Johnny Foreigner, money that solved the problem?
This is entirely, wholly, fruit loop, insane.
This is before we even begin to consider how much of what we’ve expensively subsidised China will be willing to buy if we ban their stuff.
Just to remind, only local things for only local people is a joke in League of Gentlemen, not a blueprint for the running of a nation nor an economy.
And now really try thinking. The claim is it took $100 billion in subsidies to make EVs cheap enough to actually use. We’re now rejecting those cheap EVs because what? We want to spend $100 billion ourselves? It’s madness.
Why not have compulsory physical training every morning?
If the population being managed is not, as is claimed, fit enough for our Glorious National Health Service, then why not insist upon compulsory physical training every morning? That way we could make sure that everyone did the approved stretches, steps and sweats to make us supportive of the efforts made by those Angels in Blue.
Think of the jobs that would be created! Trainers, obviously, but the block captains to keep an eye on all doing their bit. Punishments for those who do not turn out at 6 am. Think of the employment opportunities of proper, wholesome, management of the population.
Of course, we’d also need to severely limit the food intake anyone were allowed - fortunately, Henry Dimbleby already has that in hand.
We wish we merely jested here. Freddie Hayek pointed out that this would happen, we’d be dragged down that road to health serfdom by the government direct provision of health care - we’d all be managed so as to benefit the government health service rather than what should happen, the other way around, it servicing us and our desires.
It’s also true that while we enjoy having a crack at Dimbleby - as all right thinking people do - we really are not joking about this:
Policies to help people walk and cycle such as low-traffic neighbourhoods can create public health benefits as much as 100 times greater than the cost of the schemes, a long-term study of active travel measures has concluded.
The research, based on six years of surveys among thousands of people living in three outer London boroughs that introduced LTNs or similar schemes, found they tended to prompt people to switch some trips from cars to active travel, although the effects were varied.
The cumulative public health benefit of people being more active was estimated at as much as £4,800 per local adult over a 20-year period, the authors found, as against a cost per person to build LTNs of about £28-£35, or £112, depending on the type of scheme built.
That is the justification being used for those low traffic zones. That the population does more exercise, this is good for the NHS. Therefore, because it is good for the NHS therefore people must be forced to do more exercise by low traffic zones.
It is not that we are joking, or satirising, by suggesting mandatory physical jerks each morning, it is that we are already ruled by those imposing them upon us.
Perhaps we should let them know that the point of this democracy thing is not that they manage us, but they manage for us. They run the difficult bits in our name, not that they run us.
Invent a new accounting method, apply to everything - profit!
We have a little outbreak here of people solving the Underpants Gnome problem. It’s all very well desiring to make money but it is necessary to have a plan about doing so. The solution here is to invent some new - and absurd - accounting method, apply it to ever more areas of the economy, then profit by charging political actors for the reports that show this new measure in all its glory.
Today’s example of this is the horror - The Horror! - of private equity investing in child care.
The Guardian and the JRF analysed the annual accounts of the 43 largest childcare providers in England for which relevant information is available, which represent 13% of the nursery places.
….
The analysis also found that the cost of servicing debts is higher in providers backed by investment companies, with interest payments and other fees associated with having borrowed money representing a quarter of their income. In comparison, debt repayments represent on average 6% in other for-profit nurseries and 2% in non-profits.
…
The companies backed by private equity or investment firms covered by the analysis – which represent some of England’s largest childcare providers – reported average profits equivalent to 22% of their turnover over the five-year period between 2018 and 2022.
This is twice the 11% reported by other private providers not backed by investment companies, and more than seven times the 3% reported by the non-profit companies analysed.
Ah, yes, now we recognise this. For we saw it - have been seeing it for some years in fact - with reference to childrens’ homes, not mere child care.
What is being done here is, umm, most odd as an accounting method. For the analysis looks at “profits” as being EBITDA margin. Earnings before interest, taxation, depreciation and amortisation. This is a measure that has its uses, sure it does. But it’s useful as a measure of the operating cashflow of an organisation before it starts to service its capital costs - that interest, amortisation and so on. But using it as a measure of “profits” is wrong, conceptually wrong.
But by doing this it is possible to claim two wildly contradictory things. Both that vast profits are being made and also that the debt piles are so high as to call into question the viability of the business model. Those with even a vague grasp of business will note that vast profits mean debt burdens are not a problem, or equally, that vast debt burdens mean that not much profit is being made. It’s only possible to claim the wrong pair of that quartet - high profits and also dangerous debt - by entirely misusing EBITDA as a measure. Firmly grasping the wrong end of that ordure encrusted stick that is. Then stirring.
Now, true, this “analysis” was done by Trinava Consulting, which is a different company from Revolution Consulting which did the care homes “work”. But then as Adam Smith himself pointed out, once someone does solve the “?” in the Underpants Gnome problem then other capitalists will quickly follow suit. For there is money to be made.
Which really only leaves the one final problem. Who is it being exploited by capitalism here? Is it the likes of The Guardian who seem to believe this? Or is it us out here who are expected to believe this dreck?
Book Review: Zitelmann's How to Escape Poverty
Well, how do nations escape poverty? Those of us familiar with the prominent US economic historian Deirdre McClosky know the answer to that. Liberal values (what she calls ‘bourgeois values’). Things like respect for individuals and their freedom of action, toleration, limited government, the rule of law, minimising the use of force, property and honouring contracts. All those things provide the compost in which the seeds of prosperity can grow.
But it’s a long and difficult process. And unfortunately, says the prolific German author and economist Rainer Zitelmann in his new book, we don’t often help poor countries to do what it takes to acquire these values. On the contrary, we try to help them with foreign aid, which messes up what markets there are and is too often badly managed or even abused. And when the funding runs out, projects become unaffordable and are terminated, so whatever good was created by them is lost, as William Easterly and Dambisa Moyo point out. So what can poor countries do, and do better, to pull themselves out of poverty?
Zitelmann takes two very different countries, Vietnam and Poland, who took very different paths to reform. Vietnam, of course, was not helped by years of destructive war, then communism sweeping down from the north. Like everywhere else, it found that collective agriculture systems, borne of communist ideology, simply didn’t work. So, like China and so many others, they were eventually forced to modify it, still claiming it was collectivised, of course, but actually transferring responsibility to individual families, who had an incentive to produce more rather than work less. The limited markets for agricultural products gradually expanded, then individuals were allowed to employ up to ten other people. Internal customs barriers were eroded, and international trade opened up. Then price controls and subsidies faded, banking was reformed. The trappings of socialism remained, but it declined in economic significance.
By contrast to this slow and piecemeal approach, says Zitelmann, Poland change rapidly and radically after the fall of communism. Its new finance minister, Leszek Balcerowicz realised that only ‘shock therapy’ would reverse decades of soviet mentality. A new law allowed people to engage in any economic activity they liked, and to employ as many others as they chose. Inflation was reined in by sound money policies. Debt was cut. Banks and other businesses were privatised. Industries were deregulated. Taxes were simpliefied, along the lines of a flat tas. That all led to a big rise in entrepreneurship. And the opening up of trade with the West brought people more and better products, and a rise in prosperity.
The lesson, really, is that there is no ‘right’ way to make a country rich — ‘to carry a state to the highest degree of opulence from the lowest barbarism,’ as Adam Smith put it. But ‘peace, easy taxes and a tolerable administration of justice’ seem to be the essentials that you cannot do without.
If you get your economics wrong then so too will be your solution
Willy Hague is telling us about the decline of local newspapers. Important for local democracy and all that, doncha know. So, there’s a solution:
Such abuse of global dominance warrants some international solidarity — the UK could join with other countries to require links to local news, and payment for them, and levy serious fines for non-compliance. Here at home, the new Digital Markets Bill must be used to require the social media firms to negotiate with local papers.
Sigh. As we’ve pointed out before, this is not the correct solution for it’s also not the correct diagnosis of the problem.
We should, perhaps, just take a moment to marvel at the claim being made there. The search engines and social media sites must send traffic to the local papers because that benefits the local papers. And also, the same sources of that traffic must pay the local papers for sending them the traffic which benefits the the local papers. That betrays a certain confusion, no?
But that initial mistake. It’s not the social media companies which have sucked the revenues out of local papers. Newspaper economics did not work that way. The grand profit centre was always the classifieds ads section. Those classifieds have moved to Autotrader, Rightmove, Monster and Gumtree. That initial analysis has misdiagnosed which part of the internet cut the local papers off at the knees.
And therefore - and of course - the proposed solution is wrong.
So, err, let’s not do that then.
Subsidising your own taxes doesn't sound like a good idea at all
We do, here, seem to have a proof that renewables are not cheaper. Which is a bit of a blow to so much of the current rhetoric on the subject:
British battery plants given cheap power to break dependence on China
Cheap power, eh?
The costs of the scheme will be borne by consumers, with the measure expected to add between £3 and £5 to household bills per year.
Ah, no, not cheap power then. Just power paid for by someone else.
So, how cheap paid for by someone else?
Paul Atherley, chairman of Tees Valley Lithium and Pensana, which are building plants in Teesside and Humberside respectively, said the changes will cut the price his companies pay for energy from a quarterly average of 19 pence per kilowatt hour (kWh) to “single digits” in September.
So, call that halving the cost to the user. Well, how is this to be done?
The BIS is comprised of 3 measures which will together address the areas of the domestic energy system which currently contribute to higher electricity costs for EIIs than comparable countries. The 3 measures are as follows:
an increase in the subsidy under the existing EII Renewable Levy Exemption scheme from 85% to 100% aid intensity
a new full exemption from the indirect costs associated with the GB Capacity Market
a proposed compensation scheme for the charges paid for using the GB electricity grid through the EII Network Charging Compensation (NCC) Scheme
At which point we can all observe the deliciousness of the policy. Electricity prices have been pushed so high by government intervention that we have to give industry a subsidy from those high costs. Should’a gone fracking instead, obviously.
There is also the logical problem here. Emissions are emissions, the CO2 does the same damage whether it’s one tonne of many millions from a factory or one tonne of three or four from a household. But the value of being able the make the emissions is clearly much, much, higher for those domestic ones than some factory producing a few hundred jobs (the Tyne lithium plant claims it will produce 500 jobs). Therefore any system of emissions reduction should be concentrating upon those from the millions from industry, not the handful from households.
We might also note that there’s absolutely no reason at all why Britain should refine or separate its own rare earths or lithium. There’s this thing called trade that can deal with that for us.
But the real lesson here? Renewables cost twice as much as not having to carry the costs of renewables. Because, as this announcement explains, if electricity users do not have to pay the costs of renewables - which is what the subsidy is, that they do not have to carry those costs - then electricity is half the price of having to pay those renewables costs.
Renewables aren’t cheap. So perhaps everyone could stop saying they are?
That folk can gain a subsidy of half price electricity if only they’ve not got to pay the renewables costs is all the proof we need of that contention.
We're beginning to understand this UPF idea now
As we’ve been musing for some time now the whole idea of Ultraprocessed Foods, UPFs, seems very odd. However, we think we now grasp what’s going on:
But UPFs are a different beast – they are the products of industrial processing methods that we cannot replicate in a domestic situation. They include pretty much all carbonated drinks, ice-cream, biscuits, margarines, pastries, cakes, breakfast cereals, stock cubes, infant formulas and mass-produced packaged breads.
That’s Rousseau. There was some past moment of rural idyll when human life was perfect. We have erred by having that Big Bad Capitalism and factories and mass production and abandoning our Polanyi-sque web of mutual interdependence and gone for the impersonality of Smithian market exchange.
Tsk, should have remained under that tree awaiting the acorns to bounce on the bounce.
That’s all it is and as that’s all it is we can pay it no mind. Except, of course, to insist that those infected with the delusion have no power over us.
We might also suggest a little solution too. If Big Bad Capitalism were to produce, in those factories and for that impersonal market exchange, a little kit that could, if used, perform those industrial processes in the home then UPF would vanish back into the aether from which it should never have emerged. It doesn’t have to perform such processes well, or efficiently, or economically. Just the fact that they can be done in the home kitchen kills the UPF idea stone dead.
If, that is, simply telling the wowsers to go boil their heads doesn’t work.
The Road to Serfdom is a Slippery Downward Slope
Eighty years ago (on 10 March 1944) a short but hugely influential book was published: The Road to Serfdom. Written by the prominent economist, social theorist, and later Nobel laureate Friedrich Hayek. It sought to explain how a civilized country could fast descend into a warmongering, totalitarian dictatorship, as Germany had done.
The book certainly caught the imagination of a world still at war. A US edition came out six months after the British publication, then in April 1945, Reader’s Digest published a condensed version that brought it to a mass audience.
But The Road to Serfdom is much more than an explanation of what had gone wrong in the country of Goethe and Beethoven those eighty years ago. It is also a stark warning to future ages of how easy it is to stumble down a road to serfdom of their own — and a warning to us today that we may already have taken fateful steps in that direction.
Probably nobody in a liberal society intends to turn their country into a tyranny like Hitler’s Germany, or for that matter, Stalin’s Soviet Union. But Hayek’s shocking thesis is that public policies that are introduced for the most noble of reasons can, and often do, create the conditions that make this fate more likely. Then, by the time people have come to understand what is happening, it is already too late.
Even more shocking is his firm belief that it is the pursuit of social democracy that is responsible for this result. Social democrats, and centrists of many varieties, promote policies that they hope will reduce inequality and boost social welfare. Such policies usually demand greater government control over the economic system, the use of taxation to redistribute wealth and income and compensate for other inequalities, and the establishment of a comprehensive welfare state to provide essentials such as housing, education, healthcare, and social benefits.
But these initiatives all require the creation of new levers of political power, and at least some curbs on people’s economic and social freedom. Once those two things are in place, they can potentially be exploited by politicians — not just those trying to make the policies work, but less scrupulous ones who dream of power. Moreover, these policies also give rise to perverse incentives and inefficiencies that stifle individual initiative and undermine the dynamism of markets. The resulting economic stagnation generates calls for yet more, and tougher, central planning and government intervention to correct things — which makes the rise of those unscrupulous politicians more likely.
Historians may argue that this is not exactly what happened in Germany. Hitler’s National Socialist German Workers’ Party came to be seen as an antidote to the economic chaos of the late 1920s and early 1930s. But it did not have all the instruments of power presented to it on a tray. It had to seize power. But the fact that so many people thought that more government was the answer made it easier for it to do so.
Nor did the United Kingdom, its government now furnished with all the power required to win a war, find itself too far down the road to serfdom to turn back. Rather, it found itself on a long road to economic stagnation, inflation, unemployment and decline that made British people yearn for the kind of post-war economic miracle enjoyed by the country they had so recently pummelled into defeat. Their journey down the road to road to privation was halted only in the 1980s, with Margaret Thatcher’s reforms.
Yet still, much of the apparatus of government intervention, planning and control remained in place, slowing any advance in a better direction. That — and its baleful result — is nowhere more obvious than in Britain’s hugely government-heavy planning system for land and property, a post-war creation which the Adam Smith Institute reckons to cost the economy £66bn a year, or 3% of GDP. And much of the other apparatus of government control — in education, healthcare, housing, pensions, transport and insurance — is still there and still holding back innovation and enterprise.
Today, that continuing dominance of government in so many parts of life is seriously eroding individual freedom. The government may not own utilities, transport or manufacturing operations anymore, but through law and regulation it still controls them. And as Hayek pointed out in The Road to Serfdom, if a government controls the economy, it controls freedom itself. How can critical ideas be advanced when the government controls the dominant media outlets? Or when it controls what people can and cannot say in public? How can critical ideas even arise when it sets the school curriculum and when college teachers — along with a fifth of the working population more generally — owe their living to the state? How can people find suitable accommodation when national and local government own a sixth of the land and control every aspect of how the remainder is used? Such a country is free only in name.
Hayek believed that the apparatus of a state was needed to maintain freedom and deliver defence and justice, and essential public goods and services. And these are no small tasks. But he also realised the danger that government could so easily grow into the destroyer of individual freedom. That policies that start with noble intentions — sparing people from hostile views, for example — can turn into something repressive —such as the shutting down of free debate. The road to serfdom is a slippery downward slope. And we appear to be a long way down it.
But why would we subsidise a booming business sector?
We disagree with, but grasp the idea of, subsidising a business sector that’s not doing very well. But we’re gawpmouthed with incomprehension at the idea that a business sector that is grossly outperforming therefore requires subsidy and support. But this is the claim:
Opportunities to revive the UK’s flagging economy by boosting green industry were missed in one of the least green budgets of recent years, experts have said.
Several said this failure to recognise one of the fastest-expanding areas of business – the net zero economy grew by 9% in key areas last year, while the rest of the economy was stagnant, according to CBI estimates – would drag down the UK in the short and long term.
Alasdair Johnstone, of the Energy and Climate Intelligence Unit, said: “At a time when the US and EU are competing over investment in clean industries, there was little here to attract investment.”
Clearly, little to attract investment is wrong if the sector is growing by 9% as against no growth for the rest of the economy.
Now the idea that something needs to be done to support the green economy is not alien to us. We are aware of what externalities are - those things not included in market prices - and sometimes those externalities are important enough that something must be done. Could be subsidy, could be support, could be taxation or quotas, or licences or permits and all the rest to get those externalities into market prices. But that’s not the correct question here - that, the correct one, is whether more needs to be done or are we, umm, done here?
We have a large outperformance from that green economy. Therefore we do seem to be done in the interventions we need to be making to grow the green economy.
We suspect that the insistence is simply that the green economy would enjoy ever more of other peoples’ money and therefore the green economy should gain ever more of other peoples’ money. Which is something we find easy enough to reject.