The Truth Machine: The Blockchain and the Future of Everything. Paul Vigna

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СКАЧАТЬ Brothers is often Exhibit A in the breakdown of trust in the twenty-first century. A lion of Wall Street, the firm was revealed to be little more than a debt-ravaged shell kept alive only by shady accounting—in other words, the bank was manipulating its ledgers. Sometimes, that manipulation involved moving debt off the books come reporting season. Other times, it involved assigning arbitrarily high values to “hard-to-value” assets—when the great selloff came, the shocking reality hit home: the assets had no value.

      The crash of 2008 revealed most of what we know about Wall Street’s confidence game at that time. It entailed a vast manipulation of ledgers. The recorded value of the assets those ledgers were supposed to track—including those havoc-causing credit default swaps—turned out to be largely vapor. The shock of Lehman wasn’t so much that it happened, but that even most experts trusted the ledgers so completely until it was too late.

      Governments and central banks around the world spent trillions to clean up the mess, but all they really did was restore the old order, because they misdiagnosed the problem. The accepted wisdom was that this was a crisis of liquidity, in which the market broke down due to a lack of short-term funding. If you’ve ever been short a couple of hundred to cover your monthly bills, you understand what this looks like. The reality is, banks were sitting on trillions of purportedly valuable assets they could not even remotely value in the real world. They’d simply assigned poorly substantiated values and put them on their books. We all believed them because we trusted them. We trusted what the ledgers told us. The real problem was never really about liquidity, or a breakdown of the market. It was a failure of trust. When that trust was broken, the impact on society—including on our divided political culture—was devastating.

      The authorities swore in the wake of the crisis that they had a handle on the problem—they passed legislation to bring the banking sector to heel and rein in Wall Street’s worst speculative habits. But to many in the public, it seemed they’d done little more than save the banks and corporations. Anger festered and turned into the Tea Party and Occupy Wall Street. Through all of the years since, the general public’s trust has never been restored. Look no further than the election of a reality-show TV star to the U.S. presidency. It may have felt good to cast that protest vote for Donald Trump and stick it to the elites, but it seems pretty clear—to us at least—that all Trump was offering was the same old warmed-over economic ideas with a dash of hot sauce. We are no better off now than we were in 2008.

      By various measures, the U.S. economy has recovered—at the time of writing, unemployment was near record lows and the Dow Jones Industrial Average was at record highs. But those gains are not evenly distributed; wage growth at the top is six times what it is for those in the middle, and even more compared to those at the bottom. That’s a dynamic that’s been building for decades, but it was made worse by the financial crisis, as well as the policies imposed since then to prop up the financial markets in which the rich hold their assets. It’s one reason people both within and outside the United States believe they’ve been shortchanged by the institutions that had throughout the twentieth century delivered progress and prosperity. This is clear in Pew Research’s ongoing longitudinal study of trust in government in the United States, which puts trust near historic lows (about 20 percent in May 2017). A separate survey by Gallop showed that only 12 percent of U.S. citizens trusted Congress in 2017, down from 40 percent in 1979; that about 27 percent trusted what they heard from newspapers, compared with 51 percent thirty-eight years earlier; and that 21 percent trusted big business, down from 32 percent.

      At the time of writing, even traditional Republicans are wondering (1) how on earth Donald Trump was ever elected president, and (2) why so many people seem to fall prey to blatant disinformation and conspiracy theories. Trump’s manifestly a liar, someone who lies even when evidence disproving the lie is readily available. But here’s the bigger problem: in a world where trust has eroded sharply, where our government doesn’t work, and where companies that once guaranteed jobs for life are now either outsourcing them or hiring robots, Trump’s lies can seem minor in comparison to the more systemic breach of trust voters are feeling. Once-trusted news organizations are now thrust into competition with dubious online purveyors of disinformation, with both being accused of peddling “fake news.” The public’s store of trust in institutions is being depleted, and without resolving that breakdown, our democracy will continue to deteriorate at the hands of politicians and media that tell them what they want to hear.

      Trust—particularly trust in our institutions—is a vital social resource, the true lubricant of all human interaction. When it works, we take it for granted—we wait our place in line, follow road rules, and assume everyone else will do the same. The trust behind these interactions is not present in our conscious minds. But when trust is lacking, things really, really break down. Today, it’s seen most starkly in places like Venezuela, where people have lost faith in the stewardship of their government and its money, leading to hyperinflation, goods shortages, starvation, violence, rioting, and massive social upheaval. But it’s evident in more subtle ways across the Western world. As government officials and central bankers seek to boost investment and create jobs, printing more money or bestowing more favor on connected players as they go, citizens everywhere are calling foul on the whole enterprise. It brought the United States Donald Trump and the United Kingdom Brexit. But it also created economic dysfunction. If people don’t trust our economic systems, they don’t take risks; they don’t spend. The loser is economic growth and development.

      This trust problem is intrinsically connected with ledgers and record-keeping. To comprehend that, we’ll explore the little-known story of a Franciscan friar with a love of math who developed a system that fueled Europe’s explosion out of the Dark Ages more directly than the Medici bankers who financed that growth. From there, we can draw a line all the way forward to Lehman Brothers and show how a better accounting system, such as blockchain, could be the answer to society’s deep funk.

       Truth, Trust, and “the Books”

      How is it possible that a business could earn $4.2 billion one year and be out of business the next? The reason is not just because Lehman Brothers was manipulating its ledgers but because it was taking advantage of the trust invested in it by shareholders, regulators, and the public at large. On the accounting side, Lehman resorted to myriad tricks to bolster its books, those all-important financial documents that investors and other stakeholders depend upon to ascertain the risk of dealing with an institution. Lehman’s accountants would move billions of dollars’ worth of debts off the bank’s balance sheet at the end of a quarter and stash them in a temporary accounting facility called a repo transaction, a device that’s supposed to be used to raise short-term capital, not hide debt. When it came time to report, the company didn’t appear to be overly indebted. Once the report was in, the company brought the debt back on the books. Really, it was as if the company was maintaining two sets of books—one it showed the public, one it kept private. Most people accepted what was reported in the public-facing books, Lehman’s version of “the truth.” Just how severely skewed Lehman’s books were would become clear in September 2008. But the problem really started with the public’s trust, in the blind faith given to the company’s numbers. And that problem—quite literally one of faith—goes way, way back.

      Double-entry accounting was popularized in Europe toward the end of the fifteenth century, and most scholars believe it set the table for the flowering of the Renaissance and the emergence of modern capitalism. What is far less well understood is the why. Why was something as dull as bookkeeping so integral to a complete cultural revolution in Europe?

      Over nearly seven centuries, “the books” have become something that, in our collective minds, we equate with truth itself—even if only subconsciously. When we doubt a candidate’s claims of wealth, we want to go to his СКАЧАТЬ