This post is based on this Spectator article .
The article was about the possible occurence of an MDO a Massive Digital Outage. The world hasn’t seen one yet but, in my view, the occurrence of an MDO is not merely likely, it is inevitable.
Two important concepts in any discussion of this topic. They are efficiency and redundancy. They are opposite sides of the ccoin: the greater the efficiency the less the redundancy, so that a system which is perfectly efficient has zero redundancy. With the invention of the steam engine, efficiency became the supreme goal – the utimate desiridatum. With the growth of digital systems it has become less so. Redundant elements are now routinely built into digital systems – they are called “parity checks”. Other redundancies include back-ups, hard copies and so on.
Despite these planned redundancies the digital system is still far, far too efficient. Too much information is crammed into too small a geographic area and too few networks connect users to servers – the Internet and the telephone service – that’s it.
Consider the public transport system. Most people commute from home to work or school by car. Suppose cars became inoperable due to, say, petrol shortages and resultanting price increases. As the situation worsened, firstly people might car pool, next they would use busses and trains, ultimately they could walk to work or work at home. There is still a degree of redundancy built into systems like public transport that have grown up organically.
But within my own lifetime the economic world has come to be dominated by digital management systems. It has happened incredibly rapidly and it is incredibly efficient. A little redundancy has been introduced as mentioned above, but the system as a whole has little redundancy. It is not backed up. There is no fall-back position.
There is no Plan B.
This is the thrust of the Spectator article. Certainly it dwelt on the possibility of a malicious attack by a foreign power but the issue is much broader than that. There are other contingencies which can bring down an overly efficient system apart from malicious attacks. So called black swan events – earthquakes, bushfires, meteorites or, more likely, AI powered viruses, an AI (or bitcoin) caused computer drought, programming errors, incompetent system management (remember Chernobyl).
A Massive Digital Outage is sooner or later inevitable, much like a pandemic. When it happens we must have systems in place to deal with it. One system which is already in place is cash, i.e. notes and coins. To discontinue cash is just plain crazy. Chequing accounts might be a good idea too.
Nice little summary. I can relate this to some economics. The digital world as it is now began I think with node theory, making a network of hugely redundant nodes, so that an alternative communication, or connection, route was possible if any node was down or busy. We call it the internet. I can image the nodes as market sectors or cost centres, where each has a demand. With so may, it would be called a fragmented market if it was a commercial network (of manufacturers, suppliers, sellers and so on). Any fragmented market is a flag to greed. known as a monopoly. So the predators outwit the less capable ones, bigger ones “catch and kill” to use a current term, competition, so that the fragmentation increasingly becomes a monopoly. One Microsoft, one Intel, one Apple, for instance. The advent of the Cloud is an example, where more and more of the fragmentation, the redundancy has become centralised with monopolistic fervor. And like if MS is down, or Apple is down, the world stops, when a centralised digital system is down, the world stops. Or at least Optus’s, or LinkedIn, or Virgin, or Telstra, the world stops. One type of Black Swan event involved in this is not force majeure or damnum fatale, but ransomware. These centralised systems usually eventually break up again when a disruptive technology emerges. That opens up a new fragmented market, as entrepreneurs and startups rush to the new opportunities. A bit of a waffle and a sideways look at this, but what the heck.
Cheers,
Allan
Thanks Allan. An excellent comment. It is clearly much more complex than I had realized. Furthermore it is an state of flux as well. Nevertheless governmants can still enact protections for the welfare of society at large such as the continuation of cash and cheque accounts. Furthermore the recent emphasis on digital payments discriminates against certain groups such as old people who may have difficulty in using computers and smart phones (not to mention managing bloody passwords).
I’m a fan of Keynes. I like a mixed economy. An economy that is not totally Marxist and not totally open slather market economy. An economy that is relaxed (but regulated like antitrust for instance) for the majority of enterprising people, but protects society for essentials like health, education, transport, defence. Things we collectively depend on. Else what is government for? So I totally agree that government regulation of at least the parts of this you identify such as continuation of payment, or emergency contacts of course. Like it or not, we are dependent on the digital network now. And I have read somewhere but not tried to find it again for this blog, that there is a person responsible for “inventing” passwords. So legislation to find him and track him down and kneecap him would be warranted.
Cheers,
Allan
I have forgotten the html code to put links into comments, but see
The Guy Who Invented the Password Did It Out of Need, Not Security (whatismyipaddress) at the bottom of this post. He sounds like a nice guy. I don’t want to kneecap him.
As he says, biometrics has its own issues. Having worked in speech recognition I get that. My solution is to bring back the signet ring. Instead of fancy initials to be imprinted in molten wax at the bottom of a legal document, the ring would contain an QR code to be read by a USB attachment using tiny lenses.
btw my views on Capitalism are similar to yours – somewhere between laissez faire and Socialism. Education should be the concern of the state. Private enterprise universities are a disaster.
I agree totally with this post. As an accountant and auditor for 40 years I’ve watched banking and accounting systems go from manual, with lots of built in checks, to automated with a high tolerance for error. NAB is an excellent example, and one reason why I will never bank with them. (They lost $30M to a computer error a while ago – after they fired their entire Internal Audit dept.)
All it would take is a computer virus in one of the major banks, or even just human error. Nobody employs internal auditors any more. Quite feasible for it to be malicious too.
Did the person at ANZ who was reponsible (for the decision to fire the auditors) still get their bonus? I think I can guess.
When I worked for the largest bank in Canada the systems across the country went down for over 2 days. This was back in the 70’s but the impact was monumental. The cause was eventually found to be a simple electrical fuse in the mainframe which had been doctored as a departing gift by a disgruntled fired employee.
An important category of black swan event that I forgot – disgruntled employee sabotage. It is probably the most common.
About 45-50 kms north of Amsterdam, a data centre has been situated below sea level. Just north of Abbekerk in the Wieringermeer. Either there will be no global warming/sea level rise or it is soon to be redundant. one has to wonder what they’re playing at. But wait, in 2030 we will have no money and be happy.
No need for cash or computers. Everything will be free of charge.