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markm@eros.cs.jhu.edu
markm@eros.cs.jhu.edu
Fri, 28 Dec 2001 11:15:56 -0500
markm 01/12/28 11:15:56
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these previous attempts all fail? </p>
<p>Because the formals did not appreciate that the informals already had
worked out system of law, rights, and obligations, negotiated over time
- and idiosyncratic village by village -- <i>the people's law</i>. Instead,
- the formals approach to the situation was <i>We have a legal system. You
- don't. Here's ours. </i>Although the title listings reflected a snapshot
- of who-owns-what, the legal system governing these title listing did nothing
- to reflect the complex negotiated informal arrangements needed to understand
- what rights someone actually held to a particular asset. Given this mismatch,
- the informals proceeded to ignore the formal title registries and trade
- assets in the way they always had. The title registries were not updated
- to reflect changes of actual ownership, and so rapidly became even more
- irrelevant. De Soto's special insight in this situation has been that
- the government must discover and respect the local laws, and work out,
- at considerable cost in time and effort, a way to integrate those local
- laws with the national systems.</p>
+ and idiosyncratic village by village, sometimes called <i>the people's
+ law</i>. Instead, the formals approach to the situation was <i>We have
+ a legal system. You don't. Here's ours. </i>Although the title listings
+ reflected a snapshot of who-owns-what, the legal system governing these
+ title listing did nothing to reflect the complex informally negotiated
+ arrangements needed to understand what rights someone actually held to
+ a particular asset. Given this mismatch, the informals proceeded to ignore
+ the formal title registries and trade assets in the way they always had.
+ The title registries were not updated to reflect changes of actual ownership,
+ and so rapidly became even more irrelevant. De Soto's special insight
+ in this situation has been that the government must discover and respect
+ the local laws, and work out, at considerable cost in time and effort,
+ a way to integrate those local laws with the national systems.</p>
<h3><a name="conflict"></a>The Conflict: Local Knowledge <i>vs. </i>Global
Transferability</h3>
<p> The difficulty comes from an inherent conflict between <i>local knowledge</i>
and <i>global transferability</i> -- local knowledge of the idiosyncratic
people's law, conventions, and negotiated arrangements in force in each
village, <i>vs.</i> the need to move the governance of title transfer
- to WTIIs, whose wide scope requires them to operate from a more homogenized
- set of rules. This tension is acute on the governmental path, as the homogenized
- set of rules is not even per title company, but rather the official legal
- system itself. Governmental legal systems are hardly the wonders of adaptability
- de Soto's program would seem to require. Even with the best of intentions,
- an accommodation between the two must rapidly turn into a Procrustean
- bed. However, de Soto offers no alternative. Though difficult, he is successfully
- making this path work, and he documents how it did work when formal U.S.
- law, slowly and painfully, absorbed the informal wild west.</p>
+ to hubs, whose wide scope would seem to require them to operate from a
+ more homogenized set of rules. This tension is acute on the governmental
+ path, as the homogenized set of rules is not even per title company, but
+ rather the official legal system itself. Governmental legal systems are
+ hardly the wonders of adaptability de Soto's program would seem to require.
+ Even with the best of intentions, an accommodation between the two must
+ rapidly turn into a Procrustean bed. However, de Soto offers no alternative.
+ Though difficult, he is somehow successfully making this path work, and
+ he documents how it did work when formal U.S. law, slowly and painfully,
+ absorbed the informal wild west.</p>
<p>As if this path were not difficult enough, this whole process faces enormous
obstacles from many different factions, notably bureaucracies and lawyers
within the national sphere that see this as an assault on their prerogatives,
@@ -327,26 +328,26 @@
</tr>
</table>
</div>
- <p>Can we sidestep this brutally painful process? Perhaps eventually with
- the Net. </p>
+ <p>Can we sidestep this brutally painful process? Perhaps with the Net.
+ </p>
<p><font color="#000000"><img src="images/3-bootstrap.gif" width="366" height="214" align="right">Due
to the Net, purely electronic goods and services can now be purchased
from across the world as easily as from next door. Consumers of these
goods and services have already escaped old limits of geography and jurisdiction.
- If the functions provided by various WTIIs were offered by prominent first
- world trust hubs as purely electronic services, those in need of such
- widely trusted intermediary services could escape as well -- escape from
- the crushing assumption that such services can only be provided by institutions
- beholden to their own governments. Instead, they could reach across the
- Net to use these services, and begin to bootstrap themselves out of their
- poverty by participating in the global networks of commerce. (Figure 3)
- </font></p>
+ If the functions normally provided by trust hubs were offered by well-known
+ first world trust hubs as purely electronic services, those in need of
+ such widely trusted intermediary services could escape as well -- escape
+ from the crushing assumption that such services can only be provided by
+ institutions backed by their own governments. Instead, they could reach
+ across the Net to use these services, and begin to bootstrap themselves
+ out of their poverty by participating in the global networks of commerce.
+ (Figure 3) </font></p>
<p>Many first world trust hubs are already widely known and plausibly trusted
in the third world because of the frenetic distribution efforts of western
media: shows ranging from CNN to Dallas and Baywatch have granted an aura
of respectability to first world organizations that most governments can
only envy. (However one may feel about this process, it is occurring,
- so we may as well put it to good use.) Using first world WTIIs, villages
+ so we may as well put it to good use.) Using first world hubs, villages
on a global scale could become part of a global trust network. For example,
if a person in village A wants to sell a tractor to a person in village
D, a couple of villages away, they could easily use a title registry run
@@ -363,22 +364,22 @@
highly trustworthy behavior gets the visibility it needs to more rapidly
accumulate its own reputation-capital. </font></p>
<h3><font color="#000000"><a name="smart-contracts"></a>Smart Contracts</font></h3>
- <p>How might such WTIIs deal with the idiosyncracies of each village's <i>people's
+ <p>How might such hubs deal with the idiosyncracies of each village's <i>people's
law</i>, the idiosyncracies that sabotage traditional governmental attempts
to capitalize village assets, without taking on the impossible burden
of learning all this local knowledge itself, without imposing the costs
of homogenization? By the use of smart contracts.</p>
- <p><font color="#000000">In smart contracts, the program code is an operational
- embodiment of the contract [<a href="#Szabo97">Szabo97</a>]. A drink vending
+ <p><font color="#000000">In smart contracts, a software program is the operational
+ embodiment of a contract [<a href="#Szabo97">Szabo97</a>]. A drink vending
machine is a very primitive example of a smart contract, being executed
- on a contract host: it is the partially trusted intermediary between the
- drink manufacturer and the purchaser. It escrows drinks and money, and
- performs an exchange of those goods when both have been presented. There
- is even a rollback process, in which it returns the money if the drink
- cannot be delivered. Traditional contracts are understood to be backed
- by a coercive enforcement system made of courts and cops. However, the
- vending machine does not have the option of such recourse following a
- breach. In what sense is it a contract?</font></p>
+ on a contract host -- the machine hardware. This contract/host combination
+ is a partially trusted intermediary between the drink manufacturer and
+ the purchaser. It escrows drinks and money, and performs an exchange of
+ those goods when both have been presented. There is even a rollback process,
+ in which it returns the money if the drink cannot be delivered. Traditional
+ contracts are understood to be backed by a coercive enforcement system
+ made of courts and cops. However, the vending machine does not have the
+ option of such recourse following a breach. In what sense is it a contract?</font></p>
<p>The vending-machine-as-contract would indeed require separate enforcement
if it dispensed the drink first and then demanded payment. However, by
escrowing both drinks and payment before dispensing either, it also dispenses