FYI: Tokyo the Black Hole

[Dave Farber <farber () central cis upenn edu>]

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From: htrst1+ () pitt edu (Henry T Robertson)
Newsgroups: soc.culture.japan
Subject: Tokyo the Black Hole
Message-Id: <12665 () blue cis pitt edu>
Date: 29 May 93 23:09:35 GMT

The cost of living in Japan is a very frequently asked question on this
newsgroup.  Here is an article snipped from the front page of New York Times
on Saturday May 29:

Tokyo has long ranked as the world's most outrageously expensive city.  
American tourists loved to go home with tales of street vendors selling
muskmelons for $100 apiece.  Now, with a surge in the yen that has shaken
Japan for the last three months and driven the American dollar to historic
lows, the outrageous has turned to the ridiculous for anyone brave enough to
measure prices in dollars.

So ridiculous that when President Clinton arrives here in five weeks for his
first economic summit meeting, he won't have to summon a big-name hair stylist
to Air Force One to run up a $200 tab.  He can easily drop that much getting
his hair cut in the Okura Hotel, where Presidents traditionally stay.

Clinton Called the Villain

If political prudence induces him to settle for a quick trim and a shampoo,
the hotel's barber said the other day that he could handle it for 11,500
yen, a mere $107.50 based on today's record high rate of [106.8] yen.
For the Japanese, of course, the price in yen has remained the same; only
those paying in dollars suffer.

That includes Mr. Clinton, and Japanese officials clearly would not mind if 
his 
trip to Tokyo burns a hole in his pocket.  After all, they say, isn't a rising
yen what he wanted?  On the airwaves and in the newspapers, where the soaring
yen dominates the news, the Clinton Administration is portrayed as the chief
villain in the latest round of endaka, the term for a rising yen.

Under the many conspiracy theories circulating here, the Clinton 
Administratino
has decided to cause the maximum pain to Japanese industry by driving up the
price of its exports.  The only problem is that the strategy has so far done
nothing to narrow the trade gap between Japan and the United States; in fact,
when Japan reports new trade figures in coming days, they are expected to 
show a huge jump from the previous few months.

But if the rising yen has yet to slice a chunk out of the trade numbers, it
certainly has left a mark on the tens of thousands of Americans in Tokyo --
especially those who are paid in dollars.  Over the last few months they have
watched in horror as their salaries have dropped in value by roughly 15%.

At least it has made the math easier.  Working out the cost of things in
dollars used to involve thinking in multiples of seven or eight.  For
example, a 10,000-yen note, which passes through the hands the way a $20
bill does in America, was actually worth somewhere from $66 to $80 in
recent years.  But that was with the yen flitting between 125 and 150 to
the dollar.

"Now it's simple," said Kathleen A. Kriger, the general manager of Jardine
Business Services here, which rents out furnished offices to foreign companies
unable to afford regular Tokyo real estate costs.  "There's no multiplication.
To convert to dollars you just drop the last two digits.  And you've spent a 
hundred dollars."

If classical economic theory meant much in this town, though, foreign-made
goods should suddenly be cheaper -- 15% cheaper than they were a few months
ago based on the rising yen.

But like everything in Japan, these things operate by Japanese logic, 
something
Adam Smith never witnessed. Companies that buy their raw materials overseas
go into marvelous contortions these days explaining why they have not 
dropped their prices in yen.

Energy Prices Stay High

Japan's utilities, for example, which charge more for electricity than any
other utilities in the world, have not passed on their savings from buying
oil, which is priced in dollars.  The Ministry of International Trade and
Industry has backed them up, saying they "do not have sufficient resources."

Prices of American-grown food have not dropped either.  But a few companies
are reacting to criticism that they are simply pocketing the difference:
Tiffany's said the other day that it would shave a few yen from jewelry
prices in hopes of drawing Japanese back into its stores.

Still, to make one's way through Tokyo these days is to feel that $100 bills
are flying through your hands -- and all you did was meet someone for a quick
lunch and hopped a taxi for the 10-minuted ride back to the office.

And that's a cheap day.  A bullet train ride to Kyoto, about the distance
between New York and Washington, now runs $120.  At Meidi-ya, a supermarket
that caters to the affluent, a gift fruit basket, the kind you would send to
a prospective client, runs $231.  That may explain why no one has ever been 
seen
actually buying one.

No Picking up the Tab.

Taking Clients out to akaiseki dinner -- the traditional Buddhist meal of 
exquisitely
presented sushi, sashimi and vegetables -- can run $230 to $400 a head, more
if you drink.  (In the days of the "bubble economy," as Japan called its
boom, the Japanese would often insist on picking up the bill; after all, the
foreigners were the visitors.  With the economic downturn, such ritual 
politeness has been forgotten.

All this has thrown something of a monkey wrench into President Clinton's 
strategy of making American business grown in Japan.  While American-made
goods should be cheaper here, the cost of doing business has caused many
companies to think twice about sending more of their employees abroad.

No wonder.  A few weeks ago a consulting firm that advises American companies
on how to arrange compensation packages for their workers abroad concluded
that to feed and house a family of four on a mid-level executive income would 
require roughly $110,000 a year in extra payments for housing and cost-of-
living adjustments.

Big Japanese Salaries

That was before the yen's run-up; now the figure would be closer to $125,000.
The biggest component of that, of course, is housing.  Unlike the Japanese,
most expatriate senior executives live close to the center of Tokyo where
a 3-bedroom apt can easily rent for 1 M yen a month, which at today's exchange
is $9,345.79.

Hiring Japanese instead of Americans is not much of a solution.  The other day
the office head of an American electronics company, having a beer after work
with a friend (3 beers: 3,200 yen, or $29.90), confided that he had made a
horrifying discovery.  His Japanese deputy, already well paid in yen, was now
making nearly twice as much in dolalr terms as the American executive, who
is paid in dollars.

"We can't pay him less; we'd lose him," the executive said.  "And he doesn't
even feel rich," he said, noting that his colleague stands for an hour on
the train every morning to get to work.

Some Prices Are Cheaper

In fact, some things here have become cheaper.  Because of the Japanese
recession, property prices are still dropping, though from stratospheric
heights.  Long-distance telephone calls and personal computers have all come
down sharply, largely because of American-induced competition.

And the muskmelons?  They are now $138, on the shelf next to the $185 box
of perfectly formed, individually cushioned cherries.  Cheapskates should
go over one aisle, where a can of Spam costs $6.48.

It is almost enough to make you skip eating and drinking and just stretch out
with the papers.  But that can be costly, too.  A Sunday issue of The New York
Times now costs $42.91, three days late.

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From: mjr () tis com (Marcus J Ranum)
Subject: Washington Post, business section Sun, May 30 privacy.clipper,sci.crypt
Date: 30 May 93 15:13:32 GMT

Organization: Trusted Information Systems, Inc.


        
Excerpted from an article entitled, "Chipping away at privacy?"

        "
        Administration sources said that if the current plan doesn't
enable the NSA and FBI to keep on top of the technology, then Clinton
is prepared to introduce legislation to require use of its encryption
technology, which is crackable by the NSA, and to ban use of the
uncrackable gear.
        "It's an option on the table," said a White House official.
        "

mjr.

Perhaps the "White House official" was the janitor or something.

Date: Fri, 21 May 93 16:13:46 EDT
From: junger () samsara law cwru edu (Peter D. Junger)
Subject: The risks of teaching about computers and the law

        A fortnight ago, in order to postpone the necessity of grading
final exams, I started writing a simple-minded encryption program, which
uses a "one-time pad" as a key, for use this Fall in my class on
Computers and the Law.  The program is intended to demonstrate certain
things that lawyers who are going to deal with the problems generated by
computers should know:  things like the nature of an algorithm and the
fact that any text (that is encoded in binary digits) of length n
contains (if one just has the key) all other texts of length n.

        Although in that course we shall mainly be concerned with
copyright and patent issues relating to computer programs, we should
also spend some time on security issues and on government regulation of
computer programs.  And that, of course, includes the regulation of the
export of computer programs, including cryptographic programs and
technical information relating to such programs.  I shall also have to
discuss cryptographic programs when dealing with issues of computer
security, since it would profit lawyers to be aware of the fact that
cryptography can do far more than the law can to keep one's confidences
confidential. The latter point is, of course, of particular importance
to members of a profession who have a legal and moral duty to keep their
clients' confidences confidential from everyone, but especially from the
agents of the state.

        As I was writing this program I realized that it itself, and any
`technical data' relating to it, might be subject to federal export
licensing regulations, since I intended to give copies of it to, and
discuss it with, my students and make it available to anyone who wants
it, even foreigners.  Even if I do not put it on an anonymous FTP
server, as I originally planned, there is no way that I can guarantee
that all the students who enroll in my class will be citizens or
permanent residents of the United States.

        After a little quick research I have determined that my program
may be--and, in fact, probably is--subject to such licensing, though
whether by the Department of Commerce or that of State is a matter that
it will take some sixty days for the bureaucrats to determine.  The
trouble is that the program, which should run on any PC clone running
MSDOS 3 or higher, and which now consists in its entirety of 174 bytes
of 8086 machine code, which I am pretty sure I can get down to 170 bytes
or less, is squarely covered by the definitions of Category XIII of the
U.S. Munitions List (as is my old Captain Midnight Decoder, which I got
during the War for a boxtop--or was it an Ovaltine label?--and change).

        The relevant subdivision of Category XIII of the Munitions List
is (b), which provides in relevant part:

        (b)  Information Security Systems and equipment, cryptographic
        devices, software, and components specifically designed or
        modified therefor, including:

           (1)  Cryptographic (including key management) systems,
           equipment, assemblies, modules, integrated circuits,
           components or software with the capability of maintaining
           secrecy or confidentiality of information or information
           systems, except cryptographic equipment and software as
           follows:

              .... [none of the exceptions appear to be applicable to my
              program]

There is no exception for encryption software that is so simple minded
that a law teacher, whose only degrees are in English and law, can hack
it out in about six hours, most of which time was spent chasing bugs
that were the result of typos.  I estimate that the average computer
literate 12-year old could have written the program in about 20 minutes.

        In the course of my researches, which so far have consisted
of speaking to a very pleasant person at the Department of Commerce's
Bureau of Export Administration, to a not very nice major and a slightly
nicer person at the Department of State's Bureau of Politico-Military
Affairs, Office of Defense Trade Controls, and to a not un-nice person,
whose name I was not allowed to know, who supposedly was at NSA, and
wading an inch or so into a seven inch stack of Commerce Department
regulations and a few more inches of statutes, I have concluded that if
I `export' my little program without first getting a license I may be
subject to a fine of not more than $1,000,000, or imprisonment for not
more than ten years, or both.

        This isn't so bad, since in the case of the actual program it is
pretty clear that `exporting' means exporting, so, since I don't intend
to export the program, the only problem is that posting it on an FTP
server on the internet gets into a `grey' area (according to the
unknowable at NSA).  Of course, if the program is considered to be my
expression--which it must be if it is protected by the copyright
laws--it is probably a violation of the First Amendment to require me to
get a license before I can export it.  But since I don't intend to
export it--and the unknowable, on whom I dare not rely, did keep saying
that it was a matter of my intention--I can treat that issue as an
academic problem.  (By the way, it is my position that the actual
program--the machine code--not being in any sense expression--cannot
Constitutionally be protected by copyright law; this is a position that
the lower courts have--at least _sub silentio_--uniformly rejected, but
it is a good bet that the Supreme Court will agree with me when it
finally gets around to considering this issue!)

        The real trouble is that Category XIII contains as its final
subdivision paragraph (k), which covers

        (k) Technical data . . . related to the defense articles listed
        in this category.

And that, of course, means that I cannot lawfully export technical data
about my program without first obtaining a license.

        But the regulations relating to technical data that is
        included on the Munitions List say, in effect, that the
`export' of technical data includes talking about the defense
article to which the data relates--which in my case is my
piddling little program--in the presence of someone who is
neither a citizen of the United States nor admitted to permanent
residence in the United States.  So, if any foreign students
sign up for my course I will be required to get a license--which
I am not sure I can get at all, and certainly will not be able
to get in time to teach my course--before describing the program
to my class, explaining how to use it, and giving them the
source code--which, by the way, I contend _does_ contain
expression--to load in with the debug program.

        I admit that I am not greatly concerned about the
        potential criminal penalties that might be imposed if I
do discuss the program with my students without a license, and
not only because I don't have a million dollars and--far all I
know--may not have ten years.  I cannot imagine anyone--except
perhaps that major--who would be stupid enough to try to punish
me for discussing my trivial program with my students.

        But how can I teach this particular bit of computer law
        if the very act of teaching amounts--at least in
theory--to a criminal violation of the very law that I am
teaching?  That this is not a logical paradox is an illustration
of the fact that the law is not logic; but I still feel that I
am trapped in an impossible situation.

        It is hard for me as a law teacher to believe that this
        regulatory scheme that requires me to get a prior
license each time that I speak about, or publish the details of,
my trivial program (or, in the alternative, to make sure that no
foreigners get to hear or read what I have to say about it) can
withstand a constitutional challenge on First Amendment
grounds.

        The "secret" of how to keep a secret in 170 bytes or
        less is not something that imposes any conceivable
threat to the security of the United States, especially not when
the underlying algorithm is well known to most who are, and many
who aren't, knowledgeable about computers--or, for that matter,
about logic.  And thus the government can't constitutionally
punish me for revealing this "secret" of mine or talking and
writing about how it works.  And even if the government could
constitutionally punish me after the fact, that does not mean
that they can impose a prior restraint on my speaking or writing
about the "secret".  Prior restraints on speech or
publication--and especially licensing schemes--are especially
vulnerable to constitutional attack, since the First Amendment
provisions relating to the freedom of speech and of the press
were adopted in large part to prevent the federal government
from adopting the type of censorship and licensing that had
prevailed in England under the Tudor and Stuart monarchies.

        And yet I am so intimidated and disheartened by this
unconstitutional scheme that I dare not explain in a submission
to Risks, which undoubtedly has foreign subscribers, how my
silly little program works.  And even if I were willing to take
that risk, I could not in good conscience impose it on our
moderator.

        And if I have problems now, just think how ridiculous
        the situation will be if the government tries to outlaw
all encryption programs and devices other than the Clipper
Chip.

        [For those of you who understand how my program works
        and who take the effort to write your own encryption
program based on that understanding, I have a special offer.  If
you will just send me an E-mail message certifying that you are
a United States Citizen, I will send you (at any address on the
internet that is within the United States), a UUENCODEd key that
when applied by your program to this particular submission to
Risks--after all headers have been stripped off--will produce a
working copy of my program, which is a COM file that runs under
MSDOS. (Be sure that your copy of this submission uses the
Carriage Return / Line Feed combination as the End of Line
indicator.)]

Peter D. Junger

Case Western Reserve University Law School, Cleveland, OH
Internet:  JUNGER () SAMSARA LAW CWRU Edu -- Bitnet:   -- Bitnet:  JUNGER@CWRU

   [Incidentally, at last week's IEEE Symposium on Research in
   Security and Privacy, a rump group decided that because
   crypto falls under munitions controls, the right to bear arms
   must sanction private uses of cryptography!  PGN]

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