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China’s Communist Regime vs. the Hackers

Written by Gary North on November 21, 2014

In an article about the Chinese government’s massive firewall to restrict social media in China, the following statistic was reported: there are 1.4 billion Chinese, and 632 million of them are online.

I would not place too much credence in the specificity of these figures, but the general estimates are probably correct. Something in the range of half of all the people in China now have access to the Internet. Over the next 10 years, this is likely to increase to at least three-quarters.

The Internet is the most powerful communications tool in the history of mankind. It is spreading at such a pace, and with such magnitude in terms of its audience, that we have never seen anything like this in the history of man. Gutenberg’s development of moving type was nothing compared to what is happening with the Internet. Neither was radio. Neither was television. The Internet is extending its tentacles into the lives of almost everybody on earth. Almost everybody will soon have essentially equal access to the information that is contained on the Internet.

There is no possibility that the Chinese oligarchs are going to be able to protect themselves against the corrosive effects of information that is attainable at close to zero monetary cost. They can put up all the firewalls they want. There are kids out there who are skilled at defeating every attempt of the Chinese government to block out sections of the Internet from them. These young men are highly motivated. Their self-interest is at stake, and their self-image is also at stake. They want to gain a reputation within their inside group of hackers that they can beat the system. There is no question that they can beat the system. The only question is this: what percentage of the population is going to beat the system with them?

The Chinese system of economics is essentially Keynesianism. It involves central bank funding, and it involves state banks funding various enterprises. There is so much money in the hands of the planners, and so many opportunities to make money, that there is no way that this is not going to transform Chinese society. We already know this. We have never seen this rate of economic change inside the boundaries of a large nation. (South Korea, 1950-90, was faster, but it was smaller.)

The oligarchs at the top of the Chinese pyramid of power issue statements that reinforce the government’s official view of the necessity for controlling access to information on the Internet. But the press releases in no way change the facts. I am reminded of the RIAA’s press releases on the organization’s success in limiting the spread of unpaid exchanges of copyrighted music. This is whistling past the graveyard. The magnitude of free music exchanges has buried the old models that have been used by the record industry to control access to music, and to take the lion’s share of the income. A best-selling album today is about 150,000. Prior to the Internet, it was probably in the range of two million.

Press releases may impress the bureaucrats who pay bureaucrats to write them, but these documents have very little to do with reality. There is no way that the Chinese government can create firewalls that will not be penetrated by something in the range of 20% of those who have access to the Internet. We’re talking something in the range of 100 million people to 200 million people. This number is going to increase as access to the Internet increases.

(For the rest of my article, click the link.)

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