During a 2021 earnings call with stockholders, Pfizer Chief Financial Officer Frank D’Amelio discussed how the company was using “pandemic pricing” to charge $19.50 per COVID-19 vaccine dose, a product it expected to make $15 billion on in 2021.
“[There’s] significant opportunity for those margins to improve once we get beyond the pandemic environment that we’re in,” D’Amelio said.
He wasn’t joking.
When the Associated Press rolled out a story a couple weeks ago announcing that Americans can now receive an updated COVID shot, buried in the twelfth paragraph was this little nugget.
“The list price of a dose of each shot is $120 to $130, according to the manufacturers,” the APreported.
Pfizer and its German partner BioNTech set list pricesat the bottom endof that; Moderna’s price was a bit higher.
The quadrupling in pricing from two years ago has received little media attention, but some have noticed and are not happy. Kathryn Edwards, a professor of pediatrics and infectious diseases at the Vanderbilt University School of Medicine, summed up her thoughts on the price increase in two words: “pretty awful.”
The Washington Postreports that some clinics are charging up to $150 a shot, and some patients are paying out of pocket (even though under federal law COVID vaccines are required to be covered by both public and private insurers).
“That’s ridiculous,” Jenna Vallejo, chief operating officer at a pediatric hospital in Maryland told the paper.
A spokesperson for Pfizer announced the pricing is “consistent with the value delivered.”
Pfizer’s Pricing Problem
People are unhappy about what Pfizer is charging, but it bears asking: What should Pfizer be charging for its vaccine?
Warren Buffett has famously said, “Price is what you pay; value is what you get.”
The quote is helpful because it’s a reminder that price and value are not the same thing. Value is subjective. It’s not determined by how much labor goes into a product, or how many resources.
Prices work differently. In a free market, buyers and sellers freely make decisions on a daily basis that help determine the prices of everything from bacon and peanut butter to stocks and iPhones.
Vaccines work a bit differently, of course.
For starters, as mentioned, most consumerswill not have to pay anythingfor the vaccine. In most cases, a third-party — public or private insurance — will be picking up the tab. In other cases, governments purchase vaccines directly from manufacturers at a negotiated price (more on that in a minute).
All of this means that Pfizer has a lot of leeway in the price it chooses to charge for its vaccine — especially when one considers almost all rival competitors have been sidelined by the Food and Drug Administration.
But there’s more to the story.
No More Coercion
Pfizer’s financial reportingshows that in 2021 revenue was $81.3 billion, roughly double its revenue in 2020. In 2022, total revenues surged even higher,surpassing$100 billion. In 2022, the vaccine accounted for about $38 billion (billion with a B) of Pfizer’s revenue, despite its relatively low price.
Things have changed since then. For much of 2021 and 2022, Pfizer was in the catbird seat. Governmentswere coercing peopleto get vaccinated. If you weren’t vaccinated, you could get fired. Or kicked out of school. Or denied entry to a restaurant or concert.
The use of government force (and threats of force) artificially raised the demand of Pfizer’s product, whichjuiced profits. But those days are mostly over. Politicians are no longer talking about making Americans get vaccinated, either because the policy proved too polarizing and unpopular or because public officials have finally conceded that the vaccines don’t prevent COVID infection.
Whatever the case, the lack of coercion will mean a much lower demand for COVID vaccines. Indeed, arecent CNN surveyfound that just 1 in 4 US adults say they’ll definitely be getting the updated vaccine.
Pfizer is no doubt aware of this weakened demand, and they are raising prices because of it.
A Sort of Syndicalist or ‘Corporative’ Organization
The truth is, we don’t have a genuine price of the vaccines because from the beginning they’ve operated in a government-driven market. The government decided who got to play. It was involved in the pricing and distribution (which is no doubt why hundreds of millions of vaccines weresimply wasted). And it coerced people to take them and shielded manufacturers from liability if their product harmed someone.
Ironically, some of the same people who created and defended this system are now angry about its dysfunctional pricing, noting that Pfizer and Moderna are now charging the federal governmentas much as$85 a dose, roughly triple what they were last year.
“Europeans are now negotiating with Moderna for a new vaccine, and their price is going to be substantially less in Europe than it is in the United States,” Senator Bernie Sanders said in a recent interview. “So that’s exactly the issue. We’re trying to get a hold of reasonable pricing.”
Sanders and others are saying the USmight be getting ripped offby pharmaceutical companies, but it’s hardly Pfizer’s fault the US appears to be lousy at negotiating prices (the UShas been paying morefor vaccines than European countries for years).
Anyone familiar with Milton Friedman’s observation onthe four ways of spending moneywill hardly find it surprising that the US government isn’t flinching over manufacturers tripling the price of vaccines (even though European countries are receiving a discounted rate).
The truth is, there’s very little incentive for the government to keep vaccine prices low, and there may very well be unseen incentives to increase them. There’s a name for this. The Russian word for it is semibankirshchina. The Koreans call it chaebol. To the Japanese it is keiretsu, theNew York Timescolumnist William Safirenoteda quarter-century ago. And the Chinese call it guanxi.
Americans know it as crony capitalism, a system that involves big business and government working together to serve their own interests, which are not necessarily the same as consumers or taxpayers.
Crony capitalism is neither socialist or capitalist; and though he didn’t use the word crony capitalism (which first appeared in 1981, according to Saffire), the economist F.A. Hayek described something like it inThe Road to Serfdom, calling it “a state of affairs which can satisfy neither planners nor liberals: a sort of syndicalist or ‘corporative’ organization of industry, in which competition is more or less suppressed but planning is left in the hands of the independent monopolies of the separate industries.”
That’s a pretty good description of crony capitalism—or at least one of its versions—and it helps explain why it’s hard to make sense of the vaccine’s new price tag.
It’s one more reminderof an essential lesson of basic economics: Free markets naturally result in the efficient allocation of scarce resources and lower consumer prices over time. Government-managed systems tend to produce just the opposite.
Jonathan Miltimore is the Editor at Large of FEE.org at the Foundation for Economic Education.
Since the 2020 “racial reckoning,” there has been increased political momentum behind reparations for slavery. Debates about reparations have moved from the halls of academia to legislatures in California and a number of cities. Americans and their leaders are increasingly asking: Are reparations justified at all? And, if so, who should get how much?
This report concerns itself with a different question: Who pays for reparations? Reparations are a form of compensation for historical injustice. But many Americans did not have any ancestors present in the country at the time that injustice was committed. It is hard to argue that Americans whose ancestors arrived after 1860 should be on the hook for the costs of reparations.
What fraction of nonblack Americans have ancestors who arrived after the end of the Civil War? Using demographic modeling techniques, this report pegs the figure as high as 70%, including more than half the non-Hispanic white population. These Americans are the descendants of immigrants who came to the U.S. either in the first great wave of immigration in the late nineteenth and early twentieth centuries, or in the second great wave, begun in 1965 and still ongoing today.
Many of these more recent arrivals are at the top of America’s economic distribution. Indeed, the recent-arrival share of top wealth earners is likely only to grow in coming years, given the prevalence of immigrants and children of immigrants at the head of top businesses. This means that the base of people and wealth that could plausibly be taxed for reparations is shrinking and will continue to shrink for the foreseeable future.
This dynamic plays out in other areas of social policy. Any transfer or subsidy proposal that is justified by historical injustice—e.g., affirmative action—will lose legitimacy as the population changes. This is an important, and often overlooked, feature not only of the reparations debate but of debates about such proposals in general.
Introduction: The Reparations Moment
Reparations for slavery are having a moment. Since the summer of 2020’s “racial reckoning,”[1] the idea of paying black Americans some form of recompense for historical injustice has gained new political currency. Support for reparations was a hallmark of Democratic campaign platforms in 2020.[2] The state of California empaneled a dedicated reparations task force, which in June, 2023 recommended that eligible black residents receive payments totaling $1.2 million each.[3] The city of Boston has a similar task force, while the Chicago suburb of Evanston has committed to paying out $10 million to its roughly 12,000 black residents in reparations for discriminatory housing policy.[4]
The idea of reparations for slavery is not new. Proponents trace it to General William Tecumseh Sherman’s Field Order 15, which reserved 400,000 acres of land to the formerly enslaved people freed by the Civil War—the origin of “forty acres and a mule.”[5] The modern history of reparations advocacy, though, originates in the Black Power movement of the 1960s and 1970s. As early as 1960, Malcolm X called on the U.S. government to “compensate us for the labor stolen from us.” In 1966, the Black Panther Party’s 10-Point Program demanded “the overdue debt of forty acres and two mules.” In the decades since, there have been several scholarly cases for reparations, including Boris Bittker’s The Case for Black Reparations (1973), Randall Robinson’s The Debt: What America Owes to Blacks (2000), and Ta-Nehisi Coates’s “The Case for Reparations” (The Atlantic, 2014).[6]
Arguments for reparations are first and foremost arguments about justice: some people (black Americans descended from enslaved people) are owed something (usually money, although sometimes land) as recompense for some wrong (their ancestors’ enslavement and its attendant horrors). Treatments of the topic tend to devote much attention to detailing the extent of slavery’s evil and arguing that those harms still hold black citizens back today. Some advocates and scholars have made efforts to estimate the exact size of the amount due (as detailed in the next section).
Opponents of reparations also make arguments grounded in justice. They contend that it is unfair to impose on people today the costs of crimes committed by their ancestors, or (relatedly) that it is unreasonable that today’s black Americans should receive recompense for harms done to their ancestors. A 2021 UMass Amherst poll demonstrates that the public has additional concerns about reparations, including that the price tag is too high; that reparations would be difficult to administer; and that black Americans already receive equal treatment, such that reparations are unnecessary.[7] (A variation of the last argument is that black Americans have already received substantial “reparations” by virtue of being net beneficiaries of transfer spending.)
This report addresses a different, albeit related, challenge to the reparations project: Who pays for it? Even most advocates for reparations agree that nongovernmental institutions (like businesses and universities) could not plausibly pay for reparations; the funds would come from the U.S. government. But the same advocates tend to ignore the fact that U.S. government spending is ultimately funded by taxpayers. This means that “who pays” is a question of justice, too: granting, for the sake of argument, the legitimacy of the reparations idea, which Americans deserve to foot the bill? On whom should the burden of paying for reparations fall?
A substantial proportion of the nonblack population—as much as 70%, as estimated below—is descended from people who arrived after the end of slavery. These include descendants of the European arrivals in the first great period of American immigration, from the late nineteenth century to 1924, and those who have arrived or are descendants of arrivals during the second great period, beginning in 1965 and extending to the present. This second group, furthermore, is represented among the wealthiest Americans and American households, challenging the feasibility of a “soak the rich” approach to reparations.
Even if we otherwise grant the arguments for reparations, this basic demographic fact—that a majority of nonblack Americans are attributable to post–Civil War immigration—throws a wrench into the reparations project. Publicly funded reparations for slavery will entail taking money from tens of millions of people who are not—even under assumptions of inherited guilt that are already wildly at odds with the American tradition—plausibly responsible for slavery. To ask the question “Who pays?” produces uncomfortable answers for those who would like to see reparations paid.
How Much, for Whom, and from Where?
It is worth exploring some of the hard questions about reparations for slavery: How much? Who gets it? And where, in general, do advocates think the money comes from?
How much will reparations for slavery cost? In From Here to Equality: Reparations for Black Americans in the Twenty-First Century, economist William Darity and folklorist A. Kirsten Mullen identify a range of estimates, a subset of which are depicted in Figure 1.[8] These estimates use a variety of methods: the value of work done by slaves; the value of promised 40 acres not delivered on; even the total value of the stock of slaves claimed by Confederate Secretary of State Judah P. Benjamin on the eve of the Civil War.[9] In each case, Darity and Mullen take the original estimate of the value and add compounding interest in the amount of 4%, 5%, and 6% annually, an exercise I extend to 2023.[10]
The result is a wide range of estimates: the value of 40 acres in 1865, compounded at 4%, would yield a reparations bill of $196 billion; the estimated value of all slaves in 1860, compounded at 6% annually, puts the figure at $53.3 trillion, more than twice the U.S. gross domestic product. The mean across all estimates is $12.9 trillion, including a mean of $6.6 trillion if we use a 4% interest rate, $10.2 trillion for 5%, and $22 trillion for 6%. By way of comparison, it has been estimated that closing the black–white wealth gap would cost $15 trillion.[11]
To whom would this money go? On this topic, there seems to be a fair amount of consensus: black Americans who are descendants of slavery.[12] Darity and Mullen, for example, specify three criteria: that the person be a U.S. citizen; that the person “had at least one ancestor who was enslaved in the United States after the formation of the Republic”; and that the person publicly identified—e.g., on the census—as black or an equivalent category at least 12 years before enactment of the reparations program.[13] Similarly, Brookings Institution senior fellows Rashawn Ray and Andre Perry, in a 2020 report, say that reparations should go to “a Black person who can trace their heritage to people enslaved in U.S. states and territories,” adding: “Black people who can show how they were excluded from various policies after emancipation should seek separate damages.”[14] California’s reparations task force, the nation’s first statewide effort to produce a plan for reparations, also proposed that eligibility be restricted to “only those individuals who are able to demonstrate that they are the descendant of either an enslaved African American in the United States, or a free African American living in the United States prior to 1900.”[15]
How many people qualify under these conditions? As of the 2021 American Community Survey (ACS), roughly 40 million Americans self-identified as black.[16] Although identifying what fraction have enslaved ancestors requires more detailed genealogical work than is within the scope of this report, some ballpark estimates can be made. For example: 57% of black Americans believe that their ancestors were enslaved, while just 8% are certain that they were not.[17] Among those who reported an ancestry on the 2021 ACS, 78% of black people said that they were “Afro-American,” “African-American,” or from the United States, which may indicate sufficiently deep roots to be slave-descended. A similar share, 78.7%, reported that both their parents were native-born in the 2022 Annual Social and Economic Supplement to the Bureau of Labor Statistics’ Current Population Survey (CPS-ASEC).[18]
To a first approximation, then, it is plausible that 75%–90% of black Americans are eligible for reparations for slavery, or 30–36 million. For the estimate of the value of reparations above, $12.9 trillion, that works out to $360,000–$430,000 per person. The highest estimate, $53.3 trillion, is proportionally higher: $1.48–$1.78 million per person.
These large sums raise an important question: Where, exactly, does all this money come from? In a 2022 Pew survey on reparations, large majorities of those who favored them said that the money should come from “the U.S. federal government,” and majorities supported payments by businesses and banks “that profited from slavery.” A bare majority, and a minority of white and Asian respondents, supported charging colleges that had benefited. Less than half favored charging “descendants of families who engaged in the slave trade,” although even this position was supported by 60 percent of black respondents.[19]
As far as paying for reparations, colleges and businesses are nonstarters. Although they may make token gestures at reparations,[20] colleges do not have anything approaching the wealth or cash flow required. The cumulative endowment value of the colleges surveyed each year by the National Association of College and University Business Officers—the only colleges with endowments worth speaking of—added up to $838 billion in 2021, about 6% of a $12.9 trillion reparations bill.[21] Corporations are bigger earners, but total annual U.S. corporate profits—not just those of companies that were around circa 1860[22]—total about $2.8 trillion.[23] If every corporation were soaked of all its profits for 4.5 years, it could pay the cost of reparations—under the unlikely assumption that all those companies would still exist and pay taxes in the U.S., of course.[24]
The U.S. government is the only entity with sufficient capital, or access thereto, to make a six-figure payment to almost every black American. This option is far more popular, in the Pew poll, than charging the individual descendants of slaveholders. Yet on its face, this popularity makes little sense. After all, government revenues—whether raised by the income tax, duties and excise taxes, or even a (dubiously constitutional) wealth tax[25]—must eventually come from the taxpayer. If those taxpayers are not the long-term beneficiaries of slavery—the descendants of slaveholders—the tax burden will unfairly fall on people who owe no ostensible debt. If the purpose of reparations is to undo the damage of slavery, and if the benefits of reparations accrue to those ostensibly disadvantaged by the legacy of slavery, it is only fair that those who benefited from that legacy should pay the price, and manifestly unfair if those who did not benefit pay.
One common objection to this argument posits, first, that contemporary nonblack Americans are still indirect beneficiaries of slavery; and second, that reparations should be paid not only as recompense for slavery but also for post–Civil War institutional discrimination against blacks (e.g., Jim Crow). Therefore, on this view, all contemporary nonblack Americans should contribute to reparations, even if their ancestors arrived well after emancipation. Even if we grant the validity of this argument, however, there is still a question of who pays how much. It would be absurd, for example, to tax the new arrival from Ecuador and the sixth-generation descendant of slaveholders the same amount to cover the cost of reparations. Estimating how much each person has benefited—either from slavery itself or from post-slavery segregation—still yields a distribution of debt owed that is not uniform across the population but a function of the recency of the arrival of his or her first American ancestors.
Another objection is that the government could pay for reparations not out of tax revenue but by printing money (e.g., by issuing debt that would then be purchased by the Federal Reserve with printed money). Darity and Mullen, citing Vox’s Matt Yglesias, suggest that even this process could be end-run, with the Fed simply being directed to fund reparations directly.[26] But there are no free reparations: printing $13 trillion—when the current money supply is approximately $20 trillion[27]—would guarantee substantial inflation, the costs of which would still be borne by all Americans. Indeed, that inflation would fall regressively on those whom reparations are meant to benefit, meaning that it is possible that reparations-by-inflation may leave black Americans no better off in real terms than they were before.
We cannot, in short, avoid the distributional question: Who owes what for reparations? Which people should be on the hook for the taxes that pay for reparations? As the next several sections discuss, this question is far more complicated than it may first seem.
Who Pays? Some Considerations
At first blush, the problem of who pays for reparations seems a straightforward one. As previously discussed, perhaps 33 million black Americans would receive reparations paid for, in some way or another, by the other 300 million Americans. But are all those people plausibly beneficiaries of slavery? Or, alternately, should they all be equally on the hook?
Most obviously, it is hard to argue that most Asian and Hispanic Americans benefited, at least to the same degree as the average white person. Asian American immigration to the U.S. did not meaningfully begin until after the Civil War. As of the 1860 census, there were just 30,000 Asians in the country, mostly Chinese-origin residents of California. Similarly, there were just 186,000 Hispanics in the U.S. in 1860. These were overwhelmingly Mexican nationals, who, as of 2021, made up less than 60% of the 62-million-strong Hispanic population.
One could pare down the paying population to all non-Hispanic whites, or even all non-Hispanic white residents of the old Confederacy.[28] But here, too, immigration poses a problem.
On the eve of the Civil War, there were approximately 27 million nonblack people in the U.S., the overwhelming majority of whom were white. This population was largely the product of natural increase. As Figure 2 shows, there was relatively little immigration to the U.S. in the antebellum period. The 1860-vintage nonblack population also resembled the Founding nonblack population in ethnic origin. The latter group was mostly British (86% from the United Kingdom nations), with the remainder being German, Dutch, French, and a small fraction Swedish.[29] Between 1820 and 1859, 91% of new arrivals were from Ireland, Germany, the United Kingdom, France, or Canada.[30]
The antebellum levels of infrequent, ethnically homogenous, immigration did not persist. Following the end of the Civil War, the U.S. entered its first great age of migration, powered by advances in technology and the promise of prosperity. Between 1866 and 1924—the year the Johnson-Reed Act effectively ended immigration for a generation—more than 30 million people arrived in the United States. This represented a substantial addition, compared with the 38 million already here as of 1870. As before 1860, the vast majority of these new immigrants—90% from 1860 to 1919—were European; a further 5% were Canadian. But they came from many more countries, including Italy (12% of arrivals); Austria-Hungary (12%); Germany (12%); Russia (9%); the United Kingdom (9%); Ireland (7%); and the joint kingdom of Norway-Sweden (5%).[31] A large number of Jews also arrived from across Eastern Europe.
In other words, by the time of the mid-twentieth-century immigration pause, the white population of the U.S. had a substantial component whose arrival to the country could be dated to the years following the Civil War. In 1900, the Pew Research Center has estimated, 49% of the U.S. population was foreign-born or the children of the foreign-born.[32] And white immigration continued following the liberalization of the system through the 1965 Hart-Celler Act. As of 2021, there were about 9 million foreign-born non-Hispanic white people in the U.S., about 5% of the non-Hispanic white population.
Today’s U.S. white population, then, is made up, to a substantial extent, of people whose earliest American ancestors arrived after the end of slavery—and who therefore are as little obliged to pay reparations as are their Hispanic and Asian peers in a similar situation. How many people, exactly, does that cover? What fraction of the U.S. population might be said to be on the hook for slavery? The next section turns to modeling tools to provide an estimate of the answer.
In one fell swoop, roughly 10% of the global population appears to have had some of their most valuable personal identifiable information (PII) compromised. Yet Aadhaar continues to receive plaudits from Silicon Valley.
An anonymous hacker claims to have breached the digital ID numbers, as well as other sensitive personal data, of around 815 million Indian citizens.
To put that number in perspective, it is more than 60% of the 1.3 billion Indian people enrolled in the government’s Aadhaar biometric digital identity program, and roughly 10% of the entire global population. Thanks to the breach — the largest single one in the country’s history, according to the Hindustan Times — the personal data of hundreds of millions of Indians are now up for grabs on the dark web, for as little as $80,000.
To register for an Aadhaar card, Indian residents have to provide basic demographic information, including name, date of birth, age, address and gender, as well as biometric information, including ten fingerprints, two eyeball scans and a facial photograph. Much of that data has apparently been compromised.
Media reports suggest that the source of the leak was the Covid-19 test data of the Indian Council of Medical Research (ICMR), which is linked to each individual’s Aadhaar number.
The alarm was first raised by Resecurity, a Los Angeles-based cyber security company, which on Oct 15 included the following in a blogpost on its corporate website:
On October 9th, a threat actor going by the alias ‘pwn0001’ posted a thread on Breach Forums brokering access to 815 million “Indian Citizen Aadhaar & Passport” records. To put this victim group in perspective, India’s entire population is just over 1.486 billion people.
HUNTER investigators established contact with the threat actor and learned they were willing to sell the entire Aadhaar and Indian passport dataset for $80,000.
The data set offered by pwn0001 contains multiple fields related to the PII of Indian citizens, including but not limited to:
– name – father’s Name – phone Number – other Number – passport Number – aadhar Number – age – gender – address – district – pincode – state…
One of the leaked samples contains 100,000 records of personal identifiable information (PII) related to Indian residents. In this sample leak, HUNTER analysts identified valid Aadhaar Card IDs, which were corroborated via a government portal that provides a “Verify Aadhaar” feature. This feature allows people to validate the authenticity of Aadhaar credentials,” Resecurity said…
Resecurity acquired… 400,000 records and contacted multiple victims to validate the information, as well as used the “Verify Aadhaar” feature available via official government WEB-resource in India.
The contacted victims from the acquired data set confirmed the validity of their data, and stated they have never been notified about [the breach] before.
Digital Identity Theft
A leak of such highly sensitive personal identifiable information (PII) creates a significant risk of digital identity theft, warns Security Affairs:
Threat actors leverage stolen identity information to commit online banking theft, tax refund fraud, and other cyber-enabled financial crimes. Nation-state actors are also hunting for Aadhaar data with the goal of espionage and influence campaigns that leverage detailed insights on the Indian population. Resecurity observed a spike in incidents involving Aadhaar IDs and their leakage on underground cybercriminal forums by threat actors who look to harm Indian nationals and residents.
Aadhaar (Hindi for “foundation”) is a 12-digit unique identity (UID) number issued by the government after confirming a person’s biometric and demographic information. Launched in 2012 as part of an initiative to give each Indian resident with a unique identification number, it is the largest digital identity system on the planet, with 1.3 billion UIDs issued by 2021, covering a staggering 92% of India’s population.
It was ostensibly created to provide people without identification a formal government ID as well as crack down on duplicate, fake or stolen IDs used to benefit from government programs and welfare schemes.
And it quickly drew interest and praise from elite quarters around the world, including Silicon Valley.
In a 2019 entry of his “Gates Notes” blog, Bill Gates lauded Aadhaar for making “India’s invisible people visible.” Three years earlier, in a lecture on Technology for Transformation, Gates had said that Aadhaar is something that had never been done before by any government, not even in a rich country. He also claimed it does not pose any privacy risks; try telling that to the 815 million people whose personal data is now up for grabs on the Dark Web!
Together with Nandan Nilekani, one of the co-founders of Indian tech giant Infosys who is widely recognised as Aadhaar’s chief architect, Gates went on to play a key role in exporting Aadhaar to other parts of the so-called Global South, much of it financed by the World Bank. The two tech billionaires also reportedly helped persuade the Modi government to embark on the disastrous path of demonetisation in order to expand cashless payment alternatives. Demonetisation is believed to have caused a 2% drop in India’s GDP growth in 2016/17 alone — the equivalent of $52 billion, according to the Sunday Guardian.
Even today, Aadhaar continues to receive plaudits from Silicon Valley, despite all of its security flaws, privacy concerns and other issues. Worldcoin, the controversial cryptocurrency project set up by OpenAI CEO Sam Altman that uses an eye-scanning “orb” to give users a unique digital identity to verify whether they are human, recently said it seeks to emulate India’s Aadhaar system in its own creation of a global identity and financial network.
Ironically, both Aadhaar and World Coin were featured in a recent report by Moody’s Investor Services as examples of how not to develop a digital identity system. As I noted at the time, it is not clear whether Moody’s criticisms were merely poorly timed, given the geopolitical backdrop, or form part of a broader campaign in the Anglosphere against India’s interests. The Modi government and Indian tech businesses are desperately keen to export the so-called “Indian Stack” — the Jan Dhan Yojana, a financial inclusion program; UPI, an instant payments system launched in 2016, just six months before the government yanked 84% of India’s cash notes out of circulation in its infamous demonetisation campaign; and Aadhaar.
Mission Creep on Steroids
Aadhaar was first introduced as a voluntary way of improving welfare service delivery. But the Modi government rapidly expanded its scope by making it mandatory for welfare programs and state benefits.
The mission creep didn’t end there. Aadhaar has become all but necessary to access a growing list of private sector services, including medical records, bank accounts and pension payments. According to Security Affairs, it is the security weaknesses of many of these third parties, including utility companies, independent service providers, mobile and telecommunication operators, and lending and fintech services, that are behind many of the data breeches.
Plans are also afoot to link voter registration to Aadhaar, despite the system’s glaring security flaws. Besides the vulnerability of its data storage, India’s Aadhaar system has many other downsides, as I noted in my book Scanned:
For a start, it tracks users’ movements between cities, their employment status and purchasing records. It is a de facto social credit system that serves as the key entry point for accessing services in India. While the system has helped to speed and clean up India’s bureaucracy, it has also massively increased the Indian government’s surveillance powers and excluded over 100 million people from welfare programs as well as basic services.
The public body in charge of Aadhaar, the Unique Identification Authority of India (UIDAI), is yet to comment on the latest breach. But if past form is any guide, when it does it will deny all charges. It has so far refuted all accusations of data breaches, since the Aadhaar system went fully live seven years ago, including claims from Wikileaks that the CIA might have access to the database and allegations in the World Economic Forum’s Global Risks Report 2019 that Aadhaar had “suffered multiple breaches that potentially compromised the records of all 1.1 billion registered citizens.”
Given the sheer number of breaches Aadhaar has suffered, this level of denialism is becoming untenable. Even Biometric Update, the most important trade publication for the biometrics industry, has warned that India is “bleeding biometric data.” And biometric data is our most valuable personal identifiable information. If it is hacked there is no way of undoing the damage. You cannot change or cancel your iris or fingerprint like you can change a password or cancel a credit card.
The chances of that data being hacked are significant given how pourous most databases are, notes Professor Sandra Watcher, a data ethics professor at the Oxford Internet Institute:
“The idea of a data breach is not a question of if, it’s a question of when. Welcome to the internet: everything is hackable.
Given the sheer number and scale of recent breaches, the “Indian govt’s insistence that Aadhaar is secure rings hollow,” concludes Biometric Update:
A piece in Security Affairs reports that earlier this month, the cybersecurity firm Resecurity found hundreds of millions of records containing personally identifiable information (PII) for sale on the dark web. Aadhaar cards were among the data on offer.
Also in October, the PII of applicants to a program for young filmmakers at the International Film Festival of India was exposed on a government website for the event. The Deccan Herald reports that the Times of India was able to access a parent directory that contained the Aadhaar IDs, PAN cards and other PII of more than 100 people who applied through the National Film Development Corporation (NFDC).
Furthermore, as reported in The Hindu, a police raid on a brothel in Bengaluru found that sex workers had been given fake Aadhaar cards, and prompted an investigation into wider production of fake government IDs, voter cards and other documents.
And finally, there is the now-resolved case of fingerprint biometrics, digital ID numbers, identity documents, photographs and images submitted to Aadhaar being exposed by the West Bengal state government website.
The latter case is particularly pertinent since it reveals how fragile biometric identifiers can be, especially when it comes to finance. In recent years, a consortium of public and private sector players, including the Reserve Bank of India, UIDAI, the National Payments Corporation of India (NPCI) and the Institute for Development and Research in Banking Technology, has developed a cardless banking system called the Aadhaar-enabled Payment System, or AePS. To avail of the service, all customers need is a bank name, an Aadhaar number and the biometric identifiers captured during their Aadhaar enrolment. It’s quick, easy but not remotely safe.
A recent criminal case in Bengal has revealed that a purely biometric-enabled payment system, involving no cards and no PIN numbers, is not secure, particularly when the biometric identifiers in question and Aadhaar numbers are easily accessible on the World Wide Web. As always in these cases, enterprising fraudsters are leagues ahead of the authorities. From Business Standard:
The latest scam alert came to light after Kolkata Police uncovered cases where fraudsters are stealing data, including thumbprints, from land registries off the West Bengal Government’s land records website. Two individuals were reportedly arrested for their involvement in fraudulent transactions using the Aadhaar Enabled Payment System (AePS).
“These accused developed fake fingerprints that were used to withdraw money from the complainant’s bank account. Primarily. It has been found that the electronic data are gathered from different public domains/websites,” a senior officer of Kolkata Police told the Indian Express.
Subsequently, Kolkata Police requested the state Finance Department to conceal biometric data, including fingerprints, and Aadhaar card numbers extracted from property deeds or any other documents uploaded to the state government’s property registration website.
The response from certain banks and law enforcement agencies is revealing: they are telling bank customers to lock their biometrics at m-Aadhaar app/UIDAI portal and start using a four-digit pin to authenticate payments and prevent unauthorized access to their bank accounts. It is an open admission that biometric identifiers, on their own, are not safe enough for transaction purposes. Nor are they being stored securely by public or private entities. This should (but probably won’t) serve as a cautionary tale for all the other governments and companies around the world seeking to harness the power of biometric identifiers and digital identity.
On the latest episode of his podcast The McCarthy Report, National Review Institute fellow Andy McCarthy reacted to the revelation that Joe Biden’s brother, James, wrote him a $40,000 check when a $400,000 payment from a Chinese concern came in.
“It’s 10 percent for the big guy,” he said.
“I can’t see any other way of looking at this,” he continued, “except to say that Joe Biden, as it turns out, is what they accused Donald Trump of being: He is a clandestine agent who’s been well paid by a hostile foreign power.”
Addressing what makes someone “a clandestine agent,” he explained: “That you’re doing work for a foreign government and not disclosing what your status is or the fact that you’re doing it.”
He added, “I don’t know what more to say about it. CEFC, this outfit that Biden was courting, it turns out according to James Comer’s committee’s report that came out in the last few days, it’s an arm of the Xi regime and the Chinese Communist government. There’s no mystery about that.”
There is something surreal, even sick about the current Gazan war.
Throughout European and American cities and campuses, tens of thousands of Middle East immigrants and students, and radical leftists chant nonstop “Free Palestine from the River to the Sea.”
More recently, they are also yelling, “Israel, you can’t hide, we caught you in genocide.”
Consider the hypocrisy of that dual messaging.
Hamas and its supporters are openly and eagerly calling for the genocidal end of Israel by wiping it out from the Jordan River to the Mediterranean Sea.
Yet at the same time they also claim it is Israel that is committing genocide — the very current self-described agenda of Hamas and its expatriate community of devotees!
The war has become crazier still.
Hamas and its megaphones abroad also blast Israel daily for retaliating for the Oct. 7 butchery of some 1,400 Israeli infants, children, women and the elderly.
They further demand Israel must be selective in its airborne targeting of the Hamas killers, who burrow beneath hospitals and mosques while using civilians as shields.
Hamas takes for granted that a supposedly heartless Israel nevertheless will be reluctant to strike the Hamas terrorists when and if they are surrounded by civilians.
Indeed, Gazans are put in more danger by Hamas than they would otherwise be by the Israel Defense Forces.
Yet the world accepts that Israel itself would never employ such a ruse of using civilians to shield its cities from indiscriminately fired Hamas missiles.
The world further knows that if Israel ever employed such a barbaric tactic, Israeli civilian shields would attract — not deter — Hamas rockets.
Hamas’ apologists insist that Israel warn in advance civilians to keep clear of Israeli bombs.
Yet at the same time, daily Hamas launches rockets into Israel. And no one in the international community lectures Hamas first to drop leaflets or text Israeli civilians that Hamas rockets are on their way into their vicinity.
Instead, the only purpose of Hamas rockets is to indiscriminately strike and kill Israeli civilians.
So the real issue is not about the principle of civilian deaths — given Israel is damned when it tries to avoid noncombatants and Hamas is cheered on when it deliberately targets them.
Instead, the asymmetry is explained by the efficacy of the Israeli response and impotence of Hamas rocketry.
In other words, Hamas cannot stop the IDF from hitting its targets, while Israel can knock down far more Hamas rockets.
And so Israel is being blamed for being too effective — or “disproportionate” — in its bombing, and Hamas is rewarded for being too ineffective in its rocketing.
There are other sick paradoxes in this war.
Hamas started the conflict by sending death squads of 2,000 killers into Israel at a time of peace to surprise murder more than 1,000 Israeli civilians.
There was no pre-civilizational, unspeakable atrocity that the butchers did not commit — torture, beheading, rape, mutilation and necrophilia.
The terrorists were followed into Israel by a multitude of opportunistic Gaza civilians, who in turn joined in the violence and looting.
Back in Gaza crowds reviled and tried to harm Israeli captives bound as hostages to trade for jailed terrorists in Israel.
In sum, the population that once elected Hamas into power, and cheered on its bloodletting — as long as there was yet no Israeli response — now claims to have no connection at all with Hamas.
Yet the world assumes correctly that the people of Israel are inseparable from its military.
The surreal paradoxes of this war still do not end there.
In its mass murdering spree of Oct. 7, Hamas butchered more than 30 American citizens, and perhaps another 13 still are unaccounted for — and are likely hostages inside the tunnels of Hamas in Gaza.
Yet the Biden administration has not forced Hamas to return kidnapped Americans, much less responded to its killing of US citizens.
Why then despite all the rhetoric of solidarity, is the United States constantly pressuring Israel to be measured in its retaliation against the Hamas terrorists in Gaza, pressure that will only make things easier on Hamas?
Why are we seeking to restrain those who are trying to destroy the killers of Americans, and indirectly aiding those who murdered them?
And why is the global elite community siding with the murderous aggressors and not those seeking justice for the murdered?
Lots of reasons.
There are 500 million Arabs in the world, and nearly 2 billion Muslims — but only 9 or so million Israelis.
Nearly 50% of the world’s oil reserves are found in the Muslim Middle East.
Westerners, like tiny Israel, are considered too rich and powerful, while non-Westerners are romanticized as blameless, victimized underdogs.
But the best way of understanding this sick war is that Israelis are Jews and the ancient plague of antisemitism is again sweeping the globe.
