Of Pirate's Penance

   
     A black market is a kind of shadow free market. It's a shadow free market that persists in spite of the best efforts of law enforcement to eradicate it.
     Whatever you may think of it, there's a black market for recreational drugs in the United States. In fact, it's the world's largest such market, and its existence exerts a strong influence on the political economies of many nations.
     However, aside from the risks of drug abuse per se, deals concluded in a black market can be dangerous. It was the bright idea of a bright young thing named Ross William Ulbricht to create a website which he called "Silk Road" whose purpose would be to bring together sellers and buyers of contraband goods of all kinds in a safe and trustworthy environment using such recent innovations as untraceable digital currency, anonymous access to internet sites, email encryption, etc. Silk Road was a great success.
     Ulbricht operated clandestinely under a pseudonym; "Dread Pirate Roberts." Nevertheless, in October, 2014, he was arrested by an alphabet soup of government agents who caught him while he was logged into an administrative page of Silk Road at a public library.
     Since Ulbricht was operating pseudonymously, how had the g-men gotten on to him?

     Basically, what happened is he gave himself away. When he was astroturfing (a well-known online technique he used to drum up business for Silk Road), he used the same alias as when he requested technical help with a "venture-backed bitcoin startup company" and gave his gmail address as the contact. Or at least, that was the prosecution's explanation of how they found him.
     So, to summarize, one could say that, though the g-men did exhibit a certain level of familiarity with internet conventions and usages and were able to put two and two together in a moderately clever way, the crucial giveaway was provided by Ulbricht himself.
     Furthermore, although g-men were able to infiltrate Silk Road itself and even attain trusted positions in the administrative hierarchy, that wasn't how they were able to catch Ulbricht. He was indiscreet!

     In any case, the evidence on Ulbricht's logged-in laptop provided enough material for numerous trumped-up charges (all victimless crimes), and he was evidently concerned about his future prospects. The maximum sentence would be life. Accordingly, he wrote an abject letter to the judge prior to sentencing in which he stated (in part):

“Silk Road was supposed to be about giving people the freedom to make their own choices, to pursue their own happiness,” he said. “I learned from Silk Road that when you give people freedom, you don’t know what they’ll do with it . . . If I do make it out of prison, decades from now, I won’t be the same man, and the world won’t be the same place. I certainly won’t be the rebellious risk taker I was when I created Silk Road. In fact, I’ll be an old man, at least 50, with the additional wear and tear prison life brings. I will know firsthand the heavy price of breaking the law and will know better than anyone that it is not worth it. Even now I understand what a terrible mistake I made. I’ve had my youth, and I know you must take away my middle years, but please leave me my old age."

     Later, at his sentencing, he said "I wish I could go back and convince myself to take a different path. If given the chance, I would never break the law again."
     Some commenters have compared his remarks to the following passage:

"He gazed up at the enormous face. Forty years it had taken him to learn what kind of smile was hidden beneath the dark moustache. O cruel, needless misunderstanding! O stubborn, self-willed exile from the loving breast! Two gin-scented tears trickled down the sides of his nose. But it was all right, everything was all right, the struggle was finished. He had won the victory over himself. He loved Big Brother."

     Ross Ulbricht was sentenced to life in prison. But never fear, he'll undoubtedly come to understand that it was all for the best.

Will Uber Go Under?

     The idea occurred when one of its founders was unsuccessfully trying to find a cab in Paris. The result was Uber, one of the first companies to experiment with peer-to-peer ridesharing. The way it works is a person who wants a ride downloads the Uber app onto his or her smartphone (or laptop). When that person wants a ride, he or she taps the Uber app on the smartphone. Uber detects the rider's location by GPS and dispatches a car. The car is driven by its owner, who is willing to give people rides for compensation. The person who requests a ride is informed how long it will be before pickup. Car and driver details are also available. Estimated fare can be obtained by inputting the pickup and drop-off locations. Payment is via pre-recorded credit card---neither the driver nor the rider need to carry cash. Both drivers and passengers rate each other after the ride. If more than one person rides at the same time, they can split the fare and each credit card will be charged equally.
     Uber has encountered resistance from various quarters.
     1) Most jurisdictions in which Uber has attempted to operate have declared Uber illegal on the grounds that Uber drivers aren't licensed to perform ridesharing. The counter-argument is that there are no regulations with regards to ridesharing.
     2) Taxi cab associations have protested that Uber is competing unfairly, since Uber is not subject to registration fees and other regulatory hurdles. The counter-argument is that the taxi cab concept and modus operandi is outdated by software and smartphone technology.
     Recently, a new challenge to the Uber concept arose in California. Uber considers its drivers to be independent contractors. But what if they aren't?

     "Historically, the line between employee and independent contractor has been easier to draw. In California, independent contractors are generally treated as workers who serve multiple clients, have a high level of control over their work, and complete specific jobs over a limited period of time that fall outside the usual scope of their current employer’s business. Employees, by contrast, tend to be employed, supervised, and paid for a long period of time by the same one or two employers; their hours are more regular, and the way they do their work is more regimented. The legal problem for Uber and Lyft is that, by these standards, their drivers seem to fall squarely in the middle. Their hours are flexible—but only to a point. Uber, for example, has threatened to suspend the accounts of drivers who accept less than 90 percent of rides. The same is true of drivers’ control over their work. Uber and Lyft might not make drivers wear uniforms, but the companies do instruct them on other points—how to interact with passengers, what kind of music to play during rides—and threaten to deactivate drivers who don’t meet standards."

     Uber is actually being sued by drivers who claim that Uber is responsible for paying such expenses as gas and vehicle maintenance. And, if the jury decides that they are employees, Uber is on the hook for FICA, etc. That could be a big hit.
     Regardless of how Uber fares, ridesharing technology is too popular and rational to ban completely. It's been interesting to note that Uber can still operate its business in areas where it has a quasi-legal (or even illegal) status. Now that's what I call a characteristic of the shadow free market!