Thursday, April 16, 2009

Domains of Pirates: High Seas, Cyberspace, and Boardrooms

I think there is a connection between three recent world developments – the activities of Somali Pirates (particularly the hijacking of the American freighter Maersk Alabama and the rescue of its Captain by the U.S. Navy), the spread of the sophisticated Internet Worm Conficker, and the subprime lending practices of financial institutions that led to economic chaos (and to the invention of the catchy term, “toxic asset”).

These developments aren’t directly related, of course. To my knowledge the Somali Pirates aren’t hackers, and although bank executives may have boats, they’re more likely to be found sailing near cushy resorts than on the high seas. Still, all three share some common qualities that are fun to ponder.

First, all three are motivated by greed. The Somali Pirates are collecting millions of dollars by holding ships and crews for ransom. The authors of Conficker seem to be positioning themselves to sell certain services, like computer system sabotage and spamming, to the highest bidder. Financiers at companies like AIG, Citicorp and Goldman-Sachs collect huge salaries and bonuses for enticing people with questionable creditworthiness to take out loans.

Second, all three have arisen from environments that lack normal restraints against unethical behavior. Somalia is essentially a country without a government, where the rule of law is in the hands of local warlords. The internet by design lacks centralized control and makes detection and enforcement very difficult. The de-regulation of financial markets is blamed by many analysts to be a major cause of today’s economic melt-down by allowing questionable activities to go unchecked.

Third, all three require victims that are vulnerable because of ignorance, impotence, self-interest, or some combination of these. Somali Pirates have been successful because the ships they have preyed upon are undefended and therefore impotent to withstand even a small force of attackers. The spread of the Conficker worm was possible only because computer users lack the knowledge and motivation to update their computer systems, and infected machines at first show no visible signs of being host to the Conficker program. Homebuyers with less than adequate means were ignorant of the long-term consequences of over-extending themselves, and were eager to take advantage of high-risk loans promoted by lenders.

Finally, all three of these developments contribute to the general feeling that things are out of control and that our old beliefs just don’t seem to apply any more. It is very uncomfortable to face the possibility that an economy based on “the American Dream” may not be sustainable, or that unethical behavior can’t be punished without hurting even further the victims of that behavior, or that lawlessness can’t be stopped. This is a feeling that makes people very vulnerable to political and religious leaders who offer simple fixes. Simple fixes can’t really work in this complicated environment, but believing that they will solve our problems will certainly make us feel better. On the other hand, if the current crises can somehow lead to a more realistic assessment of the true nature of our economy and its impact on society as whole, then perhaps all this will have been worth it.

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