Europe takes a big step towards a post-dollar world
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
There's a reason every decentralized system eventually finds its way onto a platform: platforms solve real-world problems that platform users struggle to solve for themselves.
I've written before about the indie/outsider author Crad Kilodney, who wrote, edited, typeset and published chapbooks of his weird and wonderful fiction, and then sold his books from Toronto street-corners with a sign around his neck reading VERY FAMOUS CANADIAN AUTHOR BUY MY BOOKS (or, if he was feeling spicy, simply: MARGARET ATWOOD):
Crad was a hell of a writer and a bit of a force of nature, but there are plenty of writers I want to hear from who are never going to publish their own books, much less stand on a street-corner selling them with a MARGARET ATWOOD sign around their necks. Publishers, editors, distributors and booksellers all do important work, allowing writers to get on with their writing, taking all the other parts of the publishing process off their shoulders.
That's the value of platforms. The danger of platforms is when they grow so powerful that they usurp the relationship between the parties they are supposed to be facilitating, locking them in and then extracting value from them (someone should coin a word to describe this process!):
Everyone needs platforms: writers, social media users, people looking for a romantic partner. What's more, the world needs platforms. Say you want to connect all 200+ countries on Earth with high-speed fiber lines; you can run a cable from each country to every other country (about 21,000 cables, many of them expensively draped across the ocean floor), or you can pick one country (preferably one with both Atlantic and Pacific coasts) and run all your cables there, and then interconnect them.
That's America, the world's global fiber hub. The problem is, America isn't just a platform for fiber interconnections – it's a Great Power that uses its position at the center of the world's fiber networks to surveil and disrupt the world's communications networks:
https://en.wikipedia.org/wiki/Edward_Snowden
That's a classic enshittification move on a geopolitical scale. It's not the only one America's made, either.
Consider the US dollar. The dollar is to global commerce what America's fiber head-ends are to the world's data network: a site of essential, (nominally) neutral interchange that is actually a weapon that the US uses to gain advantage over its allies and to punish its enemies:
The world's also got about 200 currencies. For parties in one country to trade with those in another country, the buyer needs to possess a currency the seller can readily spend. The problem is that setting up 21,000 pairwise exchange markets from every currency to every other currency is expensive and cumbersome – traders would have to amass reserves of hundreds of rarely used currencies, or they would have to construct long, brittle, expensive, high-risk chains that convert, say, Thai baht into Icelandic kroner to Brazilian reals and finally into Costa Rican colones.
Thanks to a bunch of complicated maneuvers following World War II, the world settled on the US dollar as its currency platform. Most important international transactions use "dollar clearing" (where goods are priced in USD irrespective of their country of origin) and buyers need only find someone who will convert their currency to dollars in order to buy food, oil, and other essentials.
There are two problems with this system. The first is that America has never treated the dollar as a neutral platform; rather, American leaders have found subtle, deniable ways to use "dollar dominance" to further America's geopolitical agenda, at the expense of other dollar users (you know, "enshittification"). The other problem is that America has become steadily less deniable and subtle in these machinations, finding all kinds of "exceptional circumstances" to use the dollar against dollar users:
America's unabashed dollar weaponization has been getting worse for years, but under Trump, the weaponized dollar has come to constitute an existential risk to the rest of the world, sending them scrambling for alternatives. As November Kelly says, Trump inherited a poker game that was rigged in his favor, but he still flipped over the table because he resents having to pretend to play at all:
Once Trump tried to steal Greenland, it became apparent that the downsides of the dollar far outweigh its upsides. Last month, Christine Lagarde (president of the European Central Bank) made a public announcement on a radio show that Europe "urgently" needed to build its own payment system to avoid the American payment duopoly, Visa/Mastercard:
Now, there's plenty of reasons to want to avoid Visa/Mastercard, starting with cost: the companies have raised their prices by more than 40% since the pandemic started (needless to say, updating database entries has not gotten 40% more expensive since 2020). This allows two American companies to impose a tax on the entire global economy, collecting swipe fees and other commissions on $24t worth of the world's transactions every year:
But there's another reason to get shut of Visa/Mastercard: Trump controls them. He can order them to cut off payment processing for any individual or institution that displeases him. He's already done this to punish the International Criminal Court for issuing a genocide arrest warrant for Benjamin Netanyahu, and against a Brazilian judge for finding against the criminal dictator Jair Bolsonaro (Trump also threatened to have the judge in Bolsonaro's case assassinated). What's more, Visa/Mastercard have a record of billions (trillions?) of retail transactions taking place between non-Americans, which Trump's officials can access for surveillance purposes, or just to conduct commercial espionage to benefit American firms as a loyalty bonus for the companies that buy the most $TRUMP coins.
Two days after Lagarde's radio announcement, 13 European countries announced the formation of "EuroPA," an alliance that will facilitate regionwide transactions that bypass American payment processors (as well as Chinese processors like Alipay):
There's Wero, a 2024 launch from the 16-country European Payments Initiative, which currently boasts 47m users and 1,100 banks in Belgium, France and Germany, who've spent €7.5b through the network:
Wero launched as a peer-to-peer payment system that used phone numbers as identifiers, but it expanded into retail at the end of last year, with several large retailers (such as Lidl) signing on to accept Wero payments.
Last week, Wero announced an alliance with EuroPA, making another 130m people eligible to use the service, which now covers 72% of the EU and Norway. They're rolling out international peer-to-peer payments in 2026, and retail/ecommerce payments in 2027.
These successes are all the more notable for the failures they follow, like Monnet (born 2008, died 2012). Even the EPI has been limping along since its founding, only finding a new vigor on the heels of Trump threatening EU member states with military force if he wasn't given Greenland.
As EBM writes, earlier efforts to build a regional payment processor foundered due to infighting among national payment processors within the EU, who jealously guarded their own turf and compulsively ratfucked one another. This left Visa/Mastercard as the best (and often sole) means of conducting cross-border commerce. This produced a "network effect" for Visa/Mastercard: since so many Europeans had an American credit card in their wallets, European merchants had to support them; and since so many EU merchants supported Visa/Mastercard, Europeans had to carry them in their wallets.
Network effects are pernicious, but not insurmountable. The EU is attacking this problem from multiple angles – not just through EuroPA, but also through the creation of the Digital Euro, a Central Bank Digital Currency (CBDC). Essentially, this would give any European who signs up an account with the ECB, the federal bank of the Eurozone. Then, using an app or a website, any two Digital Euro customers could transfer funds to one another using the bank's own ledgers, instantaneously and at zero cost.
EBM points out that there's a critical difficulty in getting EuroPA off the ground: because it is designed to be cheap to use, it doesn't offer participating banks the windfall profits that Visa/Mastercard enjoy, which might hold back investment in EuroPA infrastructure.
But banks are used to making small amounts of money from a lot of people, and with the Digital Euro offering a "public option," the private sector EuroPA system will have a competitor that pushes it to continuously improve its systems.
It's true that European payment processing has been slow and halting until now, but that was when European businesses, governments and households could still pretend that the dollar – and the payment processing companies that come along with it – was a neutral platform, and not a geopolitical adversary.
If there's one thing the EU has demonstrated over the past three years, it's that geopolitical threats from massive, heavily armed mad empires can break longstanding deadlocks. Remember: Putin's invasion of Ukraine and the end of Russian gas moved the EU's climate goals in ways that beggar belief: the region went from 15 years behind on its solar rollout to ten years ahead of schedule in just a handful of months:
I'm about to leave for a 20+ city book tour for my new novel PICKS AND SHOVELS. Catch me on Feb 14 in BOSTON for FREE at BOSKONE , and on Feb 15 for a virtual event with YANIS VAROUFAKIS. More tour dates here.
Well, Saturday's come around and I have a gigantic list of links that didn't fit into this week's newsletter, so it's time for another linkdump, 26th in the series:
https://pluralistic.net/tag/linkdump/
My posting is about to get a lot more erratic, as I'm days away from leaving on a 20+ city book-tour, which starts in Boston on Feb 14, with a sold-out event at the Brookline Booksmith:
But Bostonians get another bite at the apple: I'm appearing at Boskone, the city's venerable sf convention, a few hours before my Brookline gig, and admission is free:
https://schedule.boskone.org/62/
The rest of the tour (including a virtual event with Yanis Varoufakis on the 15th) is here, and more dates (New Zealand, possibly Pittsburgh and Atlanta) are being added all the time:
Of course, even as I scramble to get ready to hit the road for months, I'm regrettably forced to give some rent-free space in my head to Elon Fucking Musk. This week, I wrote about DOGE as a government-scale private-equity style plundering of the nation:
But that was before I read Henry Farrell and Abraham Newman's Lawfare article about how Musk's seizure of payment chokepoints will allow him (and Trump) to surveil the entire economy and wield unilateral, unaccountable power:
In 2023, Farrell and Newman published an important book called Underground Empire, explaining how, during the War on Terror, GWB (and then Obama) weaponized global payment processing systems (most notably SWIFT) and other boring, technical systems, and then used them to wield enormous power around the world:
Farrell and Newman's point isn't merely that this power was used unwisely or cruelly, but also that the co-opted systems had an actual, useful, important job to do – a job that was only possible if these systems were widely viewed as credibly neutral and apolitical. The book ends with a sobering message about the chaos on the horizon if (when) other countries walk away from these system, leaving infrastructure vacuums in their wake. In their new Lawfare piece, Farrell and Newman imply not just that Musk and Trump are fashioning a powerful weapon out of the nation's digital infrastructure, but also that this could permanently undermine the vital national systems they're seizing control over, with no obvious candidates to replace them.
Meanwhile, the Democrats are still trying to find their asses with both hands, even as voters across the nation bombard them with demands to actually do something. I'm gonna call my senators and rep right after I finish this and remind them that when South Korea's autocratic president attempted a coup, lawmakers stormed the capital, leaping the fences while livestreaming to voters:
And they've launched a counterinitiative with the delightful name of "The Department of People Who Work for a Living":
https://deptofpeoplewhowork.org/
It's nice to see some inside/outside strategy underway. After all, Musk is cruel and disgusting, but he – and the lawyers and creeps who back him – are also very, very stupid, and they're fucking up all over the place.
Take shutting down the Consumer Financial Protection Bureau, the agency charged with defending America from financial predators (e.g. would-be usurers hoping to turn their social media sites into payment processing platforms). Under Biden's CFPB chief Rohit Chopra, the Bureau was an absolute powerhouse, adopting rules, investigating scammers, and punishing wrongdoers, all in service to the American people:
So naturally Musk and Trump have shut down the Bureau. But, as Adam Levitin writes for Credit Slips, this was a profoundly stupid move. You see, under Dodd-Frank – the post-2008 financial crisis law that created the CFPB – state attorneys general are empowered to enforce its rules. Those rules can't be amended or rescinded for so long as the CFPB is in a coma. What's more, any "violation of an enumerated consumer law is a violation of the Consumer Financial Protection Act," which can be gone after by state AGs. Another thing: the Truth in Lending Act has a threshold for small loans, below which the Act doesn't apply. The CFPB is supposed to adjust that threshold for inflation, but without a CFPB, that threshold will be frozen in amber like the federal minimum wage, bringing every-larger constellations of financial activity within scope for AG enforcement in any or every state in the Union. Also: none of this can be changed without a 60-vote Senate majority. Nice one, Elon:
That isn't the only way that Trump shot himself in the dick last week. As Luke Savage writes, threatening to put tariffs on Canadian goods (and to annex Canada and make it the 51st state) had a profound effect on Canadian politics:
https://www.lukewsavage.com/p/all-bets-are-off
Before last week, Justin Trudeau's political legacy seemed assured. His many leadership failures, along with a billionaire-funded dark-money hate-machine that targeted him with culture-war nonsense and climate denial all added up to record low approval ratings. It was so bad that Trudeau actually sent Parliament home (recklessly leaving Canada without a legislature on the eve of Trump's presidency) and resigned as Liberal Party leader.
A week ago, pretty much everyone in Canada figured that the Conservative leader Pierre Poilievre was about to romp to victory with a Ba'ath-style Parliamentary majority. Poilievre was and is an extraordinarily weak candidate, a guy who has literally never had a job except for "politician," who nevertheless ran as a political outsider, leading a coalition of racists, climate exterminationists, xenophobes, forced-birth militants, and other cryptofascists and low-tax brain-worm victims. The threat of a Poilievre government with a commanding majority was frankly terrifying. Think of him as someone with Trump's agenda and Mitch McConnell's ruthless administrative competence. Trump is bad enough – but smart Trump? Nightmare.
Then came the Trump tariffs and the annexation threats, and overnight, the Tories' 20-point lead narrowed to a two-point lead, which continues to shrink. Poilievre's brand boils down to "Make Canada America Again" – dismantle medicare, smash unions, punish immigrants, ban abortion. With Canadians booing the American anthem at NFL and NBA games and Quebecois demonstrators waving maple-leaf flags, this is not a good time to be running as the America guy.
Don't get me wrong. Trudeau is terrible. Bill Clinton terrible, say. But Poilievre? A fucking monster. Canada's political future may just have been rescued by Trump's big, stupid mouth. Thanks, eh?
Meanwhile, south of the border, our American cousins keep getting fed into the corporate woodchipper. It's been just over a year since Mainers went to the polls and voted in a Right to Repair law with an 83% majority. But a year later, the law is foundering, amid a corporate legal blitz led by the automakers, who have also put Massachusetts' massive popular 2020 Right to Repair law on ice with endless lawfare. :
This is the status quo in America. As a highly influential, widely cited 2014 peer-reviewed study found:
economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while average citizens and mass-based interest groups have little or no independent influence.
In other words, the only time the American people get what they demand is when giant corporations and oligarchs want it too. But when the plutes want something that the people despise, they almost always get their way.
Speaking of which, how's things going with Uber?
This week, Hubert Horan, the aviation industry analyst whose writings on Uber are the most important analysis of the company's business, investor scams, wage theft, and lobbying, published his long-awaited 34th research note on the company:
This edition is devoted to Tony West, Uber's Chief Legal Officer, and also brother-in-law to Kamala Harris, as well as manager of her disastrous failure of a 2024 election campaign. West may have run a Democratic presidential campaign, but he epitomizes the corporate corruption that gave rise to Trump. As Horan writes, West's first major accomplishment at Uber was to get the company exonerated for intimidating customers who were raped by Uber drivers. But his obituary will lead with the fact that he got Prop 22 passed in Calfornia, legalizing Uber's worker misclassification gambit, which allows the company to pay well below minimum wage and evade all workplace protection laws.
It was West who tapped Silicon Valley's tech oligarchs for large-dollar donations to the Harris campaign, which presumably played a substantial role in Harri's unwillingness to take a tough line on Big Tech while on the trail, creating the (correct) impression among voters that Harris would stand up for big business over their own interests.
It's an important read, and it's a reminder that the Democrats lost the last election every bit as much as Trump won it, and that their paralysis in the face of a national crisis is absolutely in character for the Democratic Party.
But on the other hand, the antitrust surge in the US, UK, EU, Canada, Australia, France, Germany, and China (!) over the past five years are all the more remarkable and heartening in light of the dismal and corrupt state of world governments. After all, there is no billionaire-backed dark money lobby whipping up support for smashing corporate power. The antitrust victories of the 2020s marked a turning point – the first time in my memory when extremely popular policies that the wealthy hated triumphed.
Decapitating the agencies that made those policies won't change the enormous political rage that led to the antitrust surge. If anything, it will only feed it. Enforcers like Rohit Chopra, Lina Khan and Jonathan Kanter did brilliant, important work – but they were only able to do it because of us. They're out of office, but we're still here. Don't ever forget that.
I certainly won't. This week, I turned in the edited manuscript for my next book, a nonfiction title called Enshittification: Why Everything Suddenly Got Worse and What To Do About It, which Farrar, Straus and Giroux will publish next October:
The day I turned it in Ars Technica ran a huge package called "As Internet enshittification marches on, here are some of the worst offenders," reeling off the most disgusting high-tech ripoffs trying to worm their way into your home and wallet:
I love to see how giving a name and a description to this phenomenon has captured and directed some of that rage. And for the record, it doesn't bother me at all that some of these people are using "enshittification" to mean "corporations fucking shit up" without regard to my formal definition of the process. As I wrote last October:
Many people apply the term "enshittification" very loosely indeed, to mean "something that is bad," without bothering to learn – or apply – the theoretical framework. This is good. This is what it means for a term to enter the lexicon: it takes on a life of its own. If 10,000,000 people use "enshittification" loosely and inspire 10% of their number to look up the longer, more theoretical work I've done on it, that is one million normies who have been sucked into a discourse that used to live exclusively in the world of the most wonkish and obscure practitioners. The only way to maintain a precise, theoretically grounded use of a term is to confine its usage to a small group of largely irrelevant insiders. Policing the use of "enshittification" is worse than a self-limiting move – it would be a self-inflicted wound.
And also: there's a lot of stuff that's just shitty right now, which is one of the reasons my word's putting up such great numbers. People are getting fed up with it, in ways large…and small. Take the post-pandemic trend of using your phone in speaker-mode in public places. I'm a prison abolitionist, but I'll make an exception for people who do this. Display 'em in stocks. Chain 'em up by their wrists. Or, you know, do what they do in France: fine them €150 for using a speakerphone on the train:
Speaking of gruesome tortures, the essential Long Forgotten blog has posted its extensive, thoughtful review of the changes to Disneyland's Haunted Mansion. Very few people can write about built environment entertainment like Long Forgotten (the only other person who comes to mind is the excellent Foxx Nolte). Long Forgotten's verdict is "mostly good, but man, that new gift shop *suuuuucks:
OK, it's time for me to go and make my packing list for the tour. I'm going to leave you with a song. Last night, my pal Cynthia Hathaway turned me on to the Shotgun Jazz band, led by trumpeter/frontwoman Maria Dixon. If you like Louis Prima-style shout-singing, you'll love 'em – I bought everything they had on Bandcamp this morning:
https://www.shotgunjazzband.com/
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
Underground Empire: Henry Farrell and Abraham Newman's must-read account of "How America Weaponized the World Economy."
I'm coming to Minneapolis! Oct 15: Presenting The Internet Con at Moon Palace Books. Oct 16: Keynoting the 26th ACM Conference On Computer-Supported Cooperative Work and Social Computing.
At the end of Henry Farrell and Abraham Newman's new book Underground Empire, they cite the work of John Lewis Gaddis, "preeminent historian of the Cold War," who dubbed that perilous period "The Long Peace":
Despite several harrowing near-misses, neither of the two hair-trigger, nuclear-tipped arsenals were ever loosed. When the Cold War ended, the world breathed a sigh of relief and set about refashioning itself, braiding together economic and social interdependencies that were supposed to make future war unthinkable. Nations that depend on one another couldn't afford to go to war, because they couldn't hurt the other without hurting themselves.
The standard account of the Cold War's "Long Peace" is that the game theorists who invented Mutually Assured Destruction set up a game where "the only way to win was not to play" (to quote the Matthew Broderick documentary War Games). The interdependency strategy of the post-Cold War, neoliberal, "flat" world was built on the same fundamentals: make war more costly than peace, victory worse than the status quo, and war would be over – if we wanted it.
But Gaddis has a different idea. Any effect Mutually Assured Destruction had on keeping fingers from pushing the buttons was downstream of a much more important factor: independence. For the most part, the US and the USSR had nonintersecting spheres of influence. Each of these spheres was self-sufficient. That meant that they didn't compete with one another for the use of the same resource or territory, and neither could put the other in check by seizing some asset they both relied on. The exceptions to this – proxy wars in Latin America and Southeast Asia – were the disastrous exceptions that proved the rule.
But the past forty years rejected this theory. From Thomas Friedman's "World Is Flat" to Fukyama's "End of History," the modern road to peace is paved with networks whose nodes can be found in every country. These networks – shipping routes, money-clearing systems, supply chains, the internet itself – weave together nearly every nation on Earth into a single web of interdependencies that make war impossible.
War, you may have noticed, has become very, very possible. Even countries with their own McDonald's franchises are willing to take up arms against one another.
That's where Farrell and Newman's book comes in. The two political scientists tell the story of how these global networks were built through accidents of history, mostly by American corporations and/or the American state. The web was built by accident, but the spider at its center was always the USA.
At various junctures since the Cold War, American presidents, spies and military leaders have noticed this web and tugged at it. A tariff here, a sanction there, then an embargo. The NSA turns the internet into a surveillance grid and a weapon of war. The SWIFT system is turned into a way to project American political goals around the world – first by blocking transactions for things the US government disfavors, then to cut off access for people who do business with people who do things that the US wants stopped.
Networks tend to centralization, to hubs. These central points are efficient, but (as we learned during the covid lockdown) brittle. One factory fails and an entire category of goods can no longer be made – anywhere. When it comes to global resiliency, these bottlenecks are are a bug; but when it comes to US foreign policy, these chokepoints are a feature.
Farrell and Newman skillfully weave a tale of individuals, powers, circumstances and forces, showing how the rise and rise of world-is-flat rah-rah globalism created a series of irresistable opportunities for "weaponized interdependence." Some players of the game wield these weapons like a scalpel; others (like Trump) use them like a club.
This is a chronicle of the dawning realization – among US power-players and their foreign adversaries, particularly in China – that the US lured its trading partners into entrusting it with financial clearing, IP enforcement, fiber landings, and other chokepoints, on the grounds that American wouldn't risk the wealth these systems generated by turning them into engines of coercion.
But then, of course, that's exactly what America did, from the War on Terror to economic sanctions on Iran, from seizing Argentinian reserves to freezing Russia's cash. Sometimes, the US did this for reasons that I sympathize with, other times, for reasons I am aghast at. But they did it, and did it, and did it.
America's adversaries (and frenemies, like the EU) have tried to build alternative "underground empires" to offset the risk of having their interdependencies weaponized (or to escape from an ongoing situation). But therein lies a conundrum: world-is-flat-ism has ended the age of indepedence. Countries really do need each other – for energy, materials, and finished goods. Independence is a long way off.
To create new interdependency networks, it's not enough for countries to agree that they don't trust America as neutral maintainer of their strategic chokepoints. They also have to agree to trust one of their own to operate those chokepoints. Lots of countries have come to mistrust US dollar-clearing and the SWIFT system – but few are willing to allow, say, China to run an alternative system that carries out settlements in Renminbi. The EU might be able to suck in some "friendly" countries for a Euro-clearing system, but would China trust them? How about Iran?
Farrell and Newman make a good case that US's position at the center of the web is a historical accident, and possibly a one-off, contingent on the ascendant post-Cold War ideology that said that markets and the interdependencies they create would neutralize the threat of handing a rival nation that much power.
Which leaves us in a world of interdependency in conflict. If Gaddis is right and the Long Peace was the result of independence, then this bodes very ill. The only thing worse than a world where no one can depend on anyone is a world where we must depend on entities that are hostile to us, and vice-versa. That way lies a widening gyre of conflict that felt eerily palpable as world events unfolded while I read this excellent, incisive book.
Political science, done right, has the power to reframe your whole understanding of events around you. Farrell and Newman set out a compelling thesis, defend it well, and tell a fascinating tale. And when they finish, they leave you with a way to make sense of things that seem senseless and terrible. This may not make those things less terrible, but at least they're comprehensible.
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
My next novel is The Lost Cause, a hopeful novel of the climate emergency. Amazon won't sell the audiobook, so I made my own and I'm pre-selling it on Kickstarter!
Dalam sepekan terakhir, media internasional telah berfokus pada eskalasi konflik antara Amerika Serikat dan Iran. Pertama, AS menyerang Iran. Mengatakan bahwa Iran meledakkan dua kapal tanker minyak. Kemudian Iran menjatuhkan drone RQ-4A Global Hawk AS. Lalu, Amerika Serikat mengumumkan untuk menjatuhkan sanksi pada pejabat senior Iran.
New Post has been published on http://www.booksbycarolinemiller.com/musings/social-concerns/while-we-were-sleeping-2/
While We Were Sleeping
Not too long ago the European Court of Justice (ECJ) struck down the 15 year-old Safe Harbor Agreement between the European Union and the United States. The decision didn’t make the headlines because it’s a subject that makes a person’s eyes glaze over. Put simply, the court did what politics...
