Linked by Thom Holwerda on Mon 5th Sep 2011 22:26 UTC
Privacy, Security, Encryption So, people from within Iran have hacked the Dutch company DigiNotar, allowing them to issue fake certificates so they could listen in on Iranian dissidents and other organisation within Iran. This is a very simplified version of the story, since it's all quite complicated and I honestly don't even understand all of it. In any case, DigiNotar detected the intrusion July 19, but didn't really do anything with it until it all blew up in their face this past week. Now, the Dutch government has taken over operational management of DigiNotar... But as a Dutch citizen, that doesn't really fill me with confidence, because, well - whenever the Dutch government does anything even remotely related to IT technology, they mess it up. And mess it up bad.
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Thanks for this more precise and open-minded comment. I owe you one, will try to do my best.

In my opinion, every service which at the same time is expensive to provide and requires a universal reach to be useful, needs some form of government backing and/or regulation to work in a fashion that is socially and morally acceptable. Services in this category include :
-Public transportation
-Postal service
-Telecommunication networks

If one of these services is left to a free market, then the laws of financial rentability will do their job and the areas of high wealth/population density will get a high-quality service while the areas of low wealth/population density will get little to no service.

If we consider that every human being in a country has a right to a minimal level of service in one of these areas, then regulation must be introduced, as a force that makes sure market actors will provide this level to everyone, even when it economically means a loss.

This does not mean that the government has to own the company and dictate every single decision. Only a limited number of objectives must be ensured, and the company is left free to take care of other aspects of the situation. It's not the color or brand of a bus that matters, it's how much people it can carry, where it goes, and how often.

The drawback is that as you say, sometimes governments may abuse their power. Which is why justice must work in a fashion that's roughly independent from the government (as is the case in many countries), and why governments must be regularly renewed through elections in order to ensure that they still match the demand of most.

Besides this "stick" side of things, governments also have a "carrot" at hand : they have a budget, fairly collected among the population, which may be used to provide backing when companies can't realistically meet an economic objective alone. As an example, high-speed trains are often operated at a loss, and require financial backing from the whole population to become profitable while still remaining accessible to most travellers.

Fundamental research is another example of service which requires government backing to be operated optimally. It's financially too risky for most companies to provide significant backing to it, even though in the end that work may benefit everyone.

Globally, government backing and regulation is necessary to meet demand for a higher quality of service than what is financially optimal.

Edited 2011-09-06 11:53 UTC

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