Benefits and Costs of the Better Seeing State?

by on April 13, 2017 at 5:55 am in Economics, Law, Web/Tech | Permalink

The Economist has two good pieces on India’s Aadhaar card. First, the bright side:

IT TAKES a little over 90 seconds. At the government-subsidised ration shop in Sargasan, a village in Gujarat, Chandana Prajapati places her thumb on a fingerprint scanner. A list of the staples she and her family are entitled to this month appears on the shopkeeper’s computer: 10kg of rice, 25kg of wheat, some cooking oil, salt and sugar. The 55-year-old housewife has no cash nor credit card, but no matter. By tapping in an identifying number and presenting her thumb one more time, Mrs Prajapati authorises a payment of 271 rupees ($4.20) straight from her bank account. It is technical wizardry worthy of Stockholm or New York; yet outside buffaloes graze, a pot of water is coming to the boil on a pile of firewood and children scamper between mud-brick houses.

Like most Indians, Mrs Prajapati would have struggled to identify herself to the authorities a few years ago, let alone to a faraway bank. But 99% of adults are now enrolled in Aadhaar, a scheme which has amassed the fingerprints and iris scans of over 1.1bn people since 2010. With her authorisation, any government body or private business can check whether her fingerprints or irises match those recorded against her unique 12-digit identifying number in its database. When it comes to identification, India has unexpectedly leapfrogged every country with the possible exception of Estonia, a tiddler with a penchant for innovation.

The Aadhaar system has cut corruption and cleaned the rolls of people with fake identities trying to scam fertilizer, food or some other subsidized good. But the government wants the mark of the beast Aadhaar system to be used for just about everything including paying taxes, getting school lunches, buying airline tickets or a cell phone and that makes some people worried:

In theory, the law on Aadhaar passed last year by Mr Modi’s government includes stringent protections against the sharing of information; its rules allowing exceptions on grounds of national security, although vaguely worded, appear well intended. Sweden has required all citizens to have a national ID number since 1947—the year of India’s birth—with little trouble. Most Swedes consider the scheme, which is linked to tax, school, medical and other records, an immense convenience.

But India is not a tidy Nordic kingdom. Mr Modi’s government, with its strident nationalism and occasional recklessness—such as last year’s abrupt voiding of most of the paper currency in circulation—does not always inspire confidence that it will respect citizens’ rights and legal niceties. By sneaking the linkage between Aadhaar and tax into a budget bill, it raises concerns about intent: will the government stalk tax evaders, or perhaps enemies of the state, using ostensibly “fire-walled” Aadhaar data? Many Indians will remember that, following sectarian riots in the past, ruling parties were accused of using voter rolls to target victims.

As the Economist wisely concludes:

…for Aadhaar to fulfil its potential, Indians must trust that it will not be misused. Adopting coercive regulations, ignoring the Supreme Court’s qualms and dismissing critics peremptorily will achieve the opposite.

1 chuck martel April 13, 2017 at 6:25 am

No government endures forever in its original form. No one can predict what the entity with the literal power of life and death over its population will do with the information at its disposal.

2 Rich Berger April 13, 2017 at 6:41 am

Of course it will be misused.

3 prior_test2 April 13, 2017 at 7:07 am

Which is why Germany is such an intentional laggard when it comes to joining the administrative efficiency of using big data. The country is fully aware of its recent history as being the premier example of how social welfare records were subsequently used to exterminate hundreds of thousands of worthless human beings, so as to allow government resources to be used more productively, in full ‘Einklang’ with eugenic principles.

4 Paavo O April 13, 2017 at 9:46 am

So we must keep states inefficient to safeguard against efficient ethnic cleansing. A state that can collect taxes and prevent welfare fraud can also efficiently kill select groups.

5 prior_test2 April 13, 2017 at 10:06 am

‘A state that can collect taxes and prevent welfare fraud can also efficiently kill select groups.’

Obviously – as Germany proved, so such a discussion is not based merely on theory. And of course, the contrast between the efficient East German police state and the notably inefficient West German government in terms of administrative capabilities – for example, the massive criticism, and often successful legal challenges, to carry through with ‘Rasterfahndung’ when hunting terrorists, starting with the RAF in 1980.

6 Boonton April 13, 2017 at 10:55 am

Did Rwanda have a very advanced social welfare system backed up by a cutting edge IT department?

7 JWatts April 13, 2017 at 9:28 am

“Of course it will be misused.”


8 Ray Lopez April 13, 2017 at 9:56 am

Of course Rich Berger is right, the Aadhaar system eliminates low level end user corruption while leaving big scale government corruption in place. AlexT is in one of the most corrupt Indian states, just Google it, for example the South Africa Zuma Gupta scandal ( “Brothers Ajay, Atul and Rajesh (also known as Tony) Gupta, all in their 40s, relocated to South Africa from India’s northern state of Uttar Pradesh in Saharanpur in 1993”), but for the safety of AlexT I urge him not to mention too much about that. Keeping peasants from collecting an extra penny or two is fine however.

9 leppa April 13, 2017 at 3:01 pm

I don’t think AlexT is staying in that state. May be visited as a Tourist. And just because the Guptas are from there , it doesn’t make it the most corrupt state.Most Indians would name other states.The Government in power was booted out.
Don’t underestimate the peasants. The way they threw out Indira Gandhi’s dictatorial regime in the 1977 elections , should have made it clear that illiteracy is no constraint to democracy.
And Uttar Pradesh , if it was a country , would be 7th I think in the world in population. Any genralization like that would be too facile.

10 Anonymous April 13, 2017 at 7:24 am

It’s really (un?)fortunate how useful all this centralization is. There’s big, global benefits that we’re missing out by resisting these schemes. But we may be approaching an era where for the first time, a popular revolution is no longer on the table.

11 The Anti-Gnostic April 13, 2017 at 9:41 am

Hasn’t every imperialist in human history said the same thing? And hasn’t it always ended the same way?

12 Anonymous April 13, 2017 at 6:45 pm

People also had never flown despite all the dreamers trying to make it so. Until one day they did.

Looking back I see a lot of avenues for rebellion that have been lost since. I read about the cluttered, confusing streets of Paris that made it possible for an audacious local to strike and then escape without being tracked. Now every street is mapped and even a casual tourist is at no risk of getting lost. I read about taxation and conscription systems that were very evadable, because it was impossible to know everyone’s wealth and family size. Now most of your transactions pass through a state-monitored bank account and all your sons are indexed at birth. And there are major advantages to these things – if we ever move to a truly cashless society, it would become tremendously hard for organized crime to launder money, for example. But the point is, doors that used to be there are closing, there are yet more that we’ll economically benefit from closing in the future, and I don’t see any new ones opening, especially not anywhere near as many. Really the only new tool for the public I can think of is the net, and that’s pretty centralized and vulnerable if not compromised long ago.

And the popular sentiment is that free society can keep discarding its weapons without acquiring new ones and stay invulnerable. Because it hasn’t been defeated before. Naive, complacent.

13 Bill April 13, 2017 at 8:18 am

Alex is sending all these posts from India,


What I want to know is

How is his stomach feeling?

14 harpersnotes April 13, 2017 at 8:59 am

Is it a general rule (perhaps only a very loose one at that), more surveillance / monitoring-capacity means a chilling of democratic values of give and take in political discourse? Also, and please pardon the Godwin’s Law here, but the book IBM and the Holocaust. (IBM punch card technology was used in the rapid rounding up of Jews during the Holocaust.) Not denying the benefits to a more seeing State, just expressing concern about possible downsides. #Panopticon

15 JWatts April 13, 2017 at 9:37 am

“Is it a general rule (perhaps only a very loose one at that), more surveillance / monitoring-capacity means a chilling of democratic values of give and take in political discourse? ”

It would certainly lessen the ability of a people to remove themselves from the grasp of an authoritarian state. At the very least, removing physical currency would allow the government far greater control of the market, shrinking the size of the gray and black markets. If you can extend that to actual people, using biometrics and cameras to determine where people are at any time, then you absolutely do end up with a Panopticon.

16 Petar April 13, 2017 at 9:04 am

A more intellectually honest comment about the dangers of national ID schemes wouldn’t have used Sweden as a counterpoint to India, but places like former Yugoslavia, which also had full coverage with national ID cards and did go through a period of civil war and ethnic cleansing and as such could be used to gauge the effect of id cards as enabler of sectarian cleansing.

In a wider context, it never stops to amuse me how people in the UK talk about national ID schemes as exotic phenomena found only in the Swedens and the deep dictatorships of the world…

17 Juan April 13, 2017 at 9:19 am

Identity theft is frequent, civil wars with ethnic cleansing are rare.

Perhaps it would be better to say “buying something” is even more frequent.

18 Apso April 13, 2017 at 1:35 pm

But ethnic cleansing hurts more than identity theft, even if less common.

19 Juan April 13, 2017 at 9:15 am

As I type this I have a couple hotel bracelets on my wrist. They give me certain benefits (free drinks and the right to swim in a cenote). We are comfortable with things like that. They are convenient, but currently compartmentalized. My health insurance provider doesn’t know about the free drinks or the sketchy cenote.

We might keep things explicitly compartmentalized with privacy laws. That would be fine with me, but it might be trouble for anyone who believes markets must provide fairiness or that’s it.

But how bad would it be if my thumbprint and PIN worked world-wide? A lot of these things really are returns to the small town or village level of privacy (low) where your doctor does hear about your bar exploits. Maybe I could be fine with that too, and get all that convenience (and certain kinds of safety) of easy and positive identification.

20 Brett Powers April 13, 2017 at 9:38 am

This will not be compartmentalized. Count on that.

21 Juan April 13, 2017 at 9:46 am

Perhaps, but ..

I am amused by those on this page who don’t think they have a National Identity Number, or a deep database associated with it, right now. The thumbprint maybe prods you to remember that it exists, but it is already there. You won’t get far trying to live without identity in any modern state.

It’s sad that many rail against “the state” but remain mute on privacy laws. Those ideologies are self-limiting. If you want privacy, support the laws.

22 Boonton April 13, 2017 at 10:59 am

Your bank, credit card, 401K, brokerage, employer, health insurance provider, IRS, Social Security and other entities know your Social Security number. Yet it would be impossible for these entities to really tie together all of this possible information. Even Social Security doesn’t really know, except perhaps after waiting a full year or more, where you worked and how much you made even though your employer is withholding SSI taxes and sending it to the IRS on your behalf!

23 mulp April 13, 2017 at 11:24 am

US data brokers amass lots of information on everyone in secret private databases.

Then the IRS and CMS confirm your identity using their databases for electronic transactions.

Fully disclosed when you create online accounts at myssa.Gov, etc.

Note, the only people the Federal government has comprehensive records on to confirm identity are immigrants and migrants, with the least information on US citizens.

Unless you migrate and must pay hundreds of dollars to the Federal government, it has no way to confirm your identity.

Thus, the Federal government must resort to the private sector, even though it has been used to steal identity because it has no legal authority to access fragmented legal databases in States and Federal government.

I find it ironic when conservatives harp on proving citizenship to be “here” or to vote, yet largely totally oppose a Federal birth recoding plus biometric national ID provided free to every citizen. Oh, no, every citizen could easily vote !!!

24 Boonton April 13, 2017 at 11:56 am

There seems to be two schools of thought on identification. Centralized single source or probabilistic.

In the US you are asked for a birth certificate, and depending upon where you were born and when the style of the ‘official’ certificate will vary widely. You are then asked for a few other pieces of identification (a credit card, a piece of mail to your alleged address). If you are online asking to look at your Social Security account, a credit report will be pulled and you’ll be asked some questions (which of the follow street addresses did you NOT live on?). Can this be faked? Yes but it would require multiple sources of forgery and if you were trying to do it on a mass scale you would need a diverse array of forgery styles.

Another way to do it is to have one central document of excellence. If you have that document you are you otherwise you aren’t. Again in the US an unexpired passport is like that…but to get it you need a few other documents including the infamous birth certificate again.

To me it seems like the decentralized probability based method is probably better. It takes more work to crack, has more hurdles where someone can get caught up. A single source sounds like it is just too much temptation to crack. Even with fingerprints wasn’t it not too long ago that someone showed they could fake a celebrities fingerprint and use it on an iphone just by using a high-res. public domain photo?

25 Boonton April 13, 2017 at 11:00 am

Another thing to think about, a potential employer would probably acquire more personal information about you using just Google and Facebook than having your social security #, let alone thumbprint.

26 mulp April 13, 2017 at 11:26 am

Employers get access to the secret private databases by business relationship and paying fees.

27 Boonton April 13, 2017 at 11:59 am

“Secret private databases” aren’t all that secret. Marriages, divorces, voting registrations, property transactions, civil cases, obits are public records. Private databases simply pay people to collect data from those sources but you could do it yourself if you had the time and inclination. Transactional information does require you to buy private data from those holding it (assuming they can release or do….Amazon knows what you purchased from it but can you buy someone else’s purchase records from Amazon?).

28 Amigo April 13, 2017 at 12:57 pm

And soon to be available: all of your internet browsing history. The world is getting better every day!

29 harpersnotes April 13, 2017 at 9:35 am

Going more microeconomic for the moment .. Renaissance Italy finance meant the expansion of previously much more primitive accounting systems technology. Accounting systems increase the ability of management to identify various forms of corruption including employee theft (are there unexplained shortages in the high-markup departments in the grocery store?) and other various types of corruptions (over-spending in the purchasing department?) The trade-off is more control for the upper management and less for the all others including ultimately the consumers as well as the middle and lower levels of management who are brought into conformity with corporate level goals. (i.e. Reduction of the agency-problem or principal agent theory problem.) The thumbprints seem to be roughly an equivalent to an almost atomistic tracking of profit centers in management accounting. One of the downsides is upper management, well first of all tends to be not necessarily very numerate at all! But as well they tend to test just how far they can go with pushing the trade-off in their favor until a breaking point occurs. And if you go in for utilitarianism, what happens to overall utility/happiness? #DilbertLevelMorale

30 Brett Powers April 13, 2017 at 9:37 am

Bad. Bad, bad, bad, bad BAD idea. Very bad idea. Superbad.

Let’s get one thing straight: The State, by its very existence, cannot and will not resist opportunities to codify and control its populace (James Scott uses the verb “simplify” to describe state actions in this realm). Not to mention that it presents “ease and security,” but the thing given up in exchange will be liberty.

This is a truly awful, terrible, no good, very bad idea.

31 mulp April 13, 2017 at 11:27 am

So, there should be no identity required to vote or run for office?

32 Brett Powers April 13, 2017 at 5:48 pm

Aadhar is much, much more than a voting ID card. It is an economic and location tracker, and that is just the beginning. Suggesting opposition to Aadhar is opposition to voter registration is a red herring.

33 ALB April 13, 2017 at 9:56 am

I would add the point (also made by the Economist) that manual labourers — the persons for whom these benefits of rice and cooking gas are most important — appear to the population most prone to have unreadable fingerprints, or difficult-to-read fingerprints. This isn’t a problem for the iris readers, but fingerprint readers are more widely distributed because the cost of those machines is lower. This issue also came up with the demonetization of the Rs500 and Rs1000 notes.

34 zuki April 13, 2017 at 10:22 am

There is something wildly romantic about this vision of a new India. Great for putting people in a system who it would otherwise have excluded.

Here in the dictatorship ‘lite’ Argentina where the DNI is your number for life, it is asked everywhere from the post office to using your debit/credit card at the supermarket. Coming from Australia where this doesn’t exist , it is rather intimidating. You surrender your existence to the state, stripped of all privacy and sometimes dignity. I think modern argentina struggles with the notion of trust. They have little of it for their basket case of a political system, their corrupted justice system and certainly in any ability to get their economy to function. Also while personal security is huge issue here, an ID does nothing to protect nor serve you.

Another issue here is that cash still rules. Try paying for something with a credit/debit in a bank or post office or any government service- FORGET IT.. So no, trust is not here. And which is why they persist with ID , controlling the populace makes it easier to rob them..

35 wiki April 13, 2017 at 10:25 am

The entire history of mankind is a struggle between the state’s expansion to limit anarchy and provide public goods and its inherent tendency to be used for rapacious, arbitrary, and restrictive controls. If there is too little state, you often get warfare, anarchy, or autarky. People often preferred to live in despotic states rather than be pillaged randomly by warring factions. And small provinces and fiefdoms preferred to limit trade to maintain control and community. But as we well know, the most successful states that overcame these problems then saw the state grow to favor rent-seeking, redistribution, and bureaucratic inflexibility. It is rather hard to get the benefits of the state for necessary public goods while limiting “bad” controls.

Of course, the Third World is worst off — with the State unable to provide the most desirable public goods such as impersonal law and order, stable property rights, basic public works, and limits to arbitrary violence, while increasing use of protectionist legislation, arbitrary courts, preferential treatment of elites, and punitive but uneven taxation.

36 Anon April 13, 2017 at 11:02 am

The Guardian reports that migrants from west Africa are being ‘sold in Libyan slave markets’

37 polyglot April 13, 2017 at 10:34 am

There is a lot of continuity in Indian politics because of a large entrenched bureaucratic class which intermediates everything. Demonetisation and Aadhar had been mooted by the previous administration. Modi is aware of a looming agricultural crisis which can destroy an element of the Indian consensus which has held since the Nineteen Thirties- viz affirmative action for the worst oppressed castes. He needs to get Aadhar cards into the hands of the rural masses so that cash transfers can take the place of subsidies or ration books because of very high leakages associated with conventional anti-poverty measures. It is a race against time.

Modi has racked up the anti-Muslim rhetoric so as to consolidate the Hindu vote so it is not unreasonable for a foreigner to wonder whether some ‘ethnic cleansing’ type plan might be being hatched. However, the truth is quite different. In India, you don’t need voter lists to identify people of a particular community. We have had very successful ethnic cleaning without smartphones. So has Rwanda. The thing is inherently low tech. Hitting people on the head with agricultural implements does not require electronic thumb scanners. Sending them money so they can attend school or buy food or get medicine does require new technology because the old way of doing it was too costly, inefficient and corrupt.

38 Dmitri Helios April 13, 2017 at 10:57 am

“Modi is aware of a looming agricultural crisis which can destroy an element of the Indian consensus …It is a race against time.”

Interesting, do explain.

39 mulp April 13, 2017 at 11:37 am

When no one can subsist by farming a plot of land or hunter-gathering, you need government.

The Americas provided individual liberty by have so much land anyone could be independent on his own 40 acres.

That is no longer true in the US. Even in homestead States where you are not taxed for a self sufficient homestead of 1900, most of the people who live outside the economy are considered criminal trespassers. Aka the homeless, hobos, squatters, not the homesteaders.

40 Brett Powers April 13, 2017 at 5:49 pm

Not sure that the lack of new land then requires the intervention of government, especially not at the state level.

41 polyglot April 13, 2017 at 12:19 pm

Twenty years ago, some agriculturists were experiencing sustained 10 to 15 percent real income growth. Moreover, their surplus sons could easily get absorbed in agro-industry services. So dominant caste agriculturists were not that concerned about reservations in Govt. jobs- which dilutes the benefit currently received by the landless service castes previously called ‘untouchable’. Now farmers have seen the writing on the wall. Some are already unprofitable and unable to compensate for the wage shock caused by the Govt’s scheme to boost income by providing paid work for a certain number of days. Down the road, there is the problem of falling water table, salinisation of soil in canal irrigated areas etc. Govt. policy has distorted the market- drought prone areas are exporting thirsty cash crops. All that is now needed is an El Nino event plus a energy shock for the whole house of cards to come crashing down. That is why Modi was elected without opposition. Tough times were ahead. Modi has the gift of the gab and might muddle through. Any way, he isn’t part of the old elites so if he fails he can carry the can himself.

An agricultural crisis were cash transfers enable people to move in response to market signals- more particularly if you get a General sales tax so State borders cease to be relevant- has the potential to defuse this time-bomb. Without it, the dominant caste agriculturists are going to try to capture the anti-poverty mechanism on the ground since they face an existential threat. Worse, the whole system of reservations might be called into question. It has to be renewed every decade. Things could get really ugly if there is a polarisation of ‘haves’ and ‘have nots’ at the village level. The current anti beef agitation is a straw in the wind. Essentially, the agricultural castes are upset that their incomes have flatlined or fallen whereas the tanner caste and some Muslims are able to make a little money. Obviously, there is a political angle to this which Modi can cash in on, but he is smart enough to know the real meaning of the signal. In 1917, the administration lost control of Bihar on this issue and so a de facto beef ban came into operation. This sent a signal to local elites which even New Delhi had to respect.
Aadhar won’t work as planned but it can affect expectations. Modi probably has another trick or two up his sleeve and the hope is he can muddle through the next few years.
India has come through severe crises of this sort before- and the nice thing about Indian Public intellectuals is that they tend to be blissfully unaware of anything happening at all- but this time the Union Govt. has to take certain enabling steps. That’s why the Establishment is currently behind Modi. Once he gets the job done, no doubt they’ll want a proper dynast in the top job.

42 FYI April 13, 2017 at 11:07 am

I know all politics are local but it is funny to think how “backwards” the US is in this regard. It’s not even the issue of not having a universal ID – here we have Democrats calling voter ID laws discriminatory! It’s the ultimate causation/correlation mix up and people keep doing it.

Yes, any information you give to a central government can be misused. But at the same time, why have government if it cannot enforce basic operations like identifying who can and who cannot vote in an election? Crazy stuff.

43 mulp April 13, 2017 at 12:02 pm

Voter ID laws are discrimatory if the Federal government does not provide free national IDs to every citizen. Instead, the proponents of voter IDS demand Federal IDs only for non-US citizens at high fees.

The only legal “proof” of my citizenship is in Michigan which I left in my parents arms in 1949.

In NH where I have lived since 1980, they have no proof of my citizenship. I am required to provide it if my driver license will be renewed in conformance with secure ID. Among documentation required are paper utility bills sent by US mail, something most people no longer get. I own property so I do get a tax bill by mail which I can only pay by check or cash, unless I pay a fee for a private business to pay the government for me electronically.

As I have ever driven a car only two dozen times (trips to stores, etc) in the past five years, and have vowed to never fly, the only reason to renew my driver license is to rent a car to go where and when I can’t go by bike reliably. I have no idea if what paper I have will convert it to secure ID compliance. But it will still not be a Federal proof of citizenship, just an ID they accept in some cases.

And in NH, it may not be considered sufficient proof to vote to conservative Republicans.

44 FYI April 13, 2017 at 12:35 pm

2 points here: first, just because something costs money it does not mean it is “discriminatory”. This is a fallacy. We charge for food and that does not mean markets are discriminatory, even though we all need to eat. Second, I agree with you that some form of ID should be provided for free since it is in our common interest to be able to identify people. As far as I know, most people do get a birth certificate now a days. Also, driver license is kind of an universal ID nowadays. Costs here is low, with the exception of northeastern states who (shocker) bundle taxes and fees into it. However, these states in their large majority have provisions for people who cannot afford it. So the whole Voter ID thing is bogus in my opinion. I think it is ridiculous that we as a nation don’t understand the necessity in regulating efficiently who can or cannot participate in our most important democratic process…

45 Amigo April 13, 2017 at 1:10 pm

I recently moved states and had to re-prove my identity. It is a burden despite having existing valid i.d. from other state, and not to mention the high fees. Luckily my wife is organized and saves documentation like birth certificates, marriage certificates, divorce “certificates”, social security cards. They warned us about the high costs of transferring vehicle registrations at the door. (Over $900 just to get our new licences and transfer vehicles). I can see some people giving up as the process seems designed to be frustrating. It explains why nearly half of the vehicles in the parking lot where I live have out of state tags.

For some of the challenges read:

46 FYI April 13, 2017 at 1:31 pm

I’ve moved between different states 5 times in the last 20 years and had no problems. But regardless, just because something is not “easy” it does not mean it should not be required. I mean, you need an ID to get into many federal government buildings and everyone is ok with that…

47 Tom DeMeo April 13, 2017 at 11:17 am

All these concerns about abuse are real, but such abuse doesn’t require an ID system that is approaching 100% efficiency. If you live in the modern world, you are already exposed, and I would argue, current messy systems like ours make that vulnerability worse.

48 Boonton April 13, 2017 at 1:18 pm

I’m sorry but wasn’t it just a short time ago that a person had announced they could copy a thumbprint of a celebrity’s high resolution photo and use it create an overlay that would allow him to open an iPhone?

This seems better than signatures, which can be forged by those with talent as well as high school kids faking excuse notes from their parents. If the stakes are only someone’s subsidized monthly rice ration, then that may not be a big deal but if cash or large transactions start coming into play then faking finger print scans seems only a short jump away.

49 ALB April 13, 2017 at 10:10 pm

“If the stakes are only someone’s subsidized monthly rice ration.” That situation is no cause for “only.” The stakes can, quite literally, be life or death, or life free and bonded labour.

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