On the importance of boundaries: NSA's grave error and the future social order*

    In his famous poem, Robert Frost wrote, "good fences make good neighbors"--a truism that is all too often forgotten, both literally and symbolically.  One could perhaps account a great number of crimes precisely on the fact that personal boundaries have not been respected--social and psychological 'fences' which cannot be seen or touched, but which are very real nonetheless.  Constantly tread upon a person's dignity, walk all over their natural rights, and one will be sure to guarantee some sort of reaction.  Careless disregard and brazen disrespect of these invisible fences is in part what Frost alluded in his poem, a behavior, however sometimes not as accidentally as one might imagine.

    The importance of boundaries and fences can also be seen at the institutional level, where relationships are mediated by broader social aggregates.  The best examples of which can be seen recently in the US financial crises, due in part by the fact that banks crossed the line between their traditional role as retainers of financial deposits and the more risky but highly remunerative (when successful) investment banking.  Why sit on so much money, to only "slowly and tediously" earn a return via business loans, when one could directly participate in capital markets and their now infamous "derivatives".  "Ahhh, it doesn't matter.  We are covered", said the banks.

    Yet there is another trend that is even more worrisome, and that might also be constituted as a crass violation of sacred boundaries.  This is when markets begin participating in the production and sale of the commodities therein.  A good example of this might be when Walgreens begins selling and producing products, to be sold in their own very store shelves. You'e seen them: aspirin, multivitamins, etc.   There can be no doubt that this constitutes a crass violation of fundamental business ethics, simply because the store can underprice the products belonging to the very companies they serve.  In other words, the market which was supposed to be a neutral "tent" in which other producers could sell their own products suddenly becomes itself a competitor upon the selling of similar products under its own umbrella.  No wonder so many producers often seek to establish their own stores.  It is a process which inevitably destroys the very concept of a 'market' and its inherent benefits.

    One can see this noxious trend in many places, and the technology sector is not exempt from this unfortunate tendency.  Perhaps the worst and earliest offender was Microsoft, whose operating system "Windows" served as a 'tent' for other 'goods and services' (programs).  When Windows began producing and selling its own programs, such as Office or Internet Explorer, it began monopolistically kicking out all other programs, and driving out of business the companies which produced these.  Why it was never split up as an abusive monopoly is beyond me.

    There can be no doubt that that state has to act as a ruthless regulator to insure that such abuses of power do not occur in the market place, given that they inevitably lead to the formation of conflicts of interests.  Only by being the most ruthless of regulators that participants can be guaranteed by the government a fair playing field and honest return for their efforts.   In simple layman's terms, if a baseball game's umpire is actually participating in the very game he is supposed to be evaluating, immediately the calls will tend to become biased and partialized as a result of that umpire's self interest.  The game will be unfair, and naturally few will want to participate.  It was a pervasive problem  during the Spanish colonial period in Latin America.

    Good fences make for good neighbors indeed.