Search

Stewart Hotston

Hope, Anger and Writing

Category

Finance

Back to front

There’s a lot of discussion about algorithms at the moment. Algorithms are nothing more than recipes. If people say ‘algorithm’ they normally mean the recipe for whatever they’re talking about. A mathematical algorithm for finding a solution? Think the recipe for finding the solution.

Why do I care about algorithms and whether we should really call them recipes (the analogy isn’t perfect, don’t @me, I’m quite aware)? Mainly because the discussion about algorithms in the public sphere relates almost exclusively to social media and how these processing recipes lead users to ever more extreme and unpleasant content.

I’ve been quite concerned with this book over the last few days. Reminded as I was by a lecture by the author in which they said something I had entirely missed in my general thinking about the kind of content we’re shown online. I am almost embarrassed to admit it as well – because I like to think I ruminate on economics quite a lot.

As a reminder, the book is called: The Age of Surveillance Capitalism: The Fight for a Human Future at the New Frontier of Power and is written by Shoshana Zuboff. Zuboff has written a lot about this subject but this book is (despite the cover being uninspiring) a very good piece of work.

I don’t want to talk too much about the book except I want to draw out one key idea because it should turn your world upside down a bit.

First though. We have been told all over the place by tech-bros, concerned citizens (I’m in this category), opinion piece writers and others that the algorithms which we look at blaming for the slow radicalisation of people as bland and formerly innocent as our grandmothers, our friends and our children are i) in need of fixing and ii) often beyond understandding.

We’re told that these algorithms are often the product of unconscious bias (such as when facial recognition software didn’t recognise PoC as human or when Google associated PoC with gorillas in image search software). We’re told it’s a side effect but one which makes them money and so they’re loathe to change their ways. We’re told it’s the tail wagging the dog – unfortunate but fixable.

Zuboff dismisses this idea and reminds us these companies have made their fortunes by learning about us. So far so not surprising. Yet Zuboff then reminds the economically literate among us what that learning is good for. It’s not good for knowing what we did in the past because we can’t make money from that. Nor is it good for knowing what we’re doing now – again, I can make money on what you’re interested in NOW but it’s not the prize. The real prize from this learning is to know what you’re trending towards tomorrow – because then I can make real money from knowing your future tastes and preferences.

Zuboff then reminds us about the point of advertising – not simply to let us know a product is available, but to create a felt need we didn’t know we had and then sell us the solution for that sudden new found desire.

In short, these algorithms are designed to do two things.

  1. They’re designed to predict what we’ll want to buy tomorrow
  2. They’re designed to push us into buying products we don’t know we needed today.

Algorithmic drift into showing you more extremist material such as racist content, anti-vax nonsense, anti-elite conspiracies serve the two goals above. Why? Because these drifts don’t exist in a vacuum – social media companies (and let’s be honest, we’re only really talking Google and FB in liberal societies) are selling these predictions to companies – telling them they can guarantee purchases and eyeballs on adverts. Deliberate drift to extreme material is proven to guarantee both of those things.

Furthermore, there is an argument which goes like this: SM companies could see extremist material was both attractive to many people and a direction society was moving in, in part because of their exposure via SM companies’ activities, and they had a choice:

i) do they change their business model to avoid these excesses, or

ii) do they lean into extremism knowing their activity will appreciably shift society that way and thereby increase their revenue

Zuboff, among others, suggest only the second of those two options can be true without regulation.

So in the discussion around free speech this week (and possibly next?) you’ll see lots of back and forth over whether private companies have the right yadda yadda yadda. What you won’t see (yet) is much on whether these companies deliberately created these environments exactly with the intent of fostering extreme content to increase revenues.

My proposition is this: the tail never wagged the dog. The algorithms we’ve seen were designed explicitly to monetise user data by predicting their behaviour and nudging them towards it in order to create opportunities for companies they were pitching their services to. This has always been the dog wagging its tail.

Over the next few months as regulation becomes a more central concern of liberal governments (with the possible exception of the current far right UK conservative government) one key plank of companies’ defence will be it wasn’t their fault – they were, at worst, as surprised as us by the outcomes. Do not believe them. This isn’t about free speech – that is a distraction – and a different argument. This is about whether companies with our personal lives stored on their servers should be required to treat that data not as if it’s their never ending gold mine but as if it’s something to which privacy and political standards around propaganda and manipulation should be applied.

The financial impact of Covid 19

I’ve just read and watched the unprecedented statement from the British Chancellor of the Exchequer. Shortly after him, within a matter of hours or days the US Congress will come to a similar place – with their own twist on it of course.

Someone asked me just what this money is. Where does it come from and what is it really – a loan, a repo or something else, maybe money printing.
The answer is, qualitatively the same for all people putting in place fiscal stimulus right now.

It’s based on several things but probably the best analogue are the warbonds which had no maturity but would be called at the appropriate time (the last of which weren’t called until last decade). It is unprecedented. It’s also impossible to foresee the long term consequences of this. I’m sure people are thinking about them. Ironically perhaps – this is how you get inflation because supply side is going to become more and more strained the longer borders are closed and people can’t work. Prices can and will go up because of that – not because we’ve got more money. However, this will clearly be offset by people not actually having money. It’s a hugely risky strategy – but clearly the risks of doing nothing will be worse. Rishi Sunak has just promised to cover 80% of salary up to 2500 per month indefinitely. This is astonishing and tremendously welcome but tells you just how scared everyone is by the economic impact of this. If you’re not taking this seriously right now then you are, simply, a fool. A government composed of right wing nationalists and fiscal conservatives for whom Hayek and the Chicago school remain idols have just announced Universal Basic Income and an effective socialisation of salary and all of society’s risks. This is the tiger making dinner for the rabbit, it’s the coyote apologising to Roadrunner. (and for those in the know…don’t be Peck.) The term unprecedented here is both correct and far too small to underscore what’s going on.

Back to the question of ‘how do we pay for this?’

Well I mentioned warbonds earlier. Specifically those from WWI and II. They didn’t think about how they would repay – the nation was supposed to be facing an existential crisis. So they borrowed from a future they hoped was there to be borrowed from. The sense of desperation here is the same. We fail and it’s a generational depression to make the financial crisis look like losing your lunch money vs. losing your house and being forced to live on the street.

If we successfully meet this challenge? Well then we’ll worry about the implications then. What’s clear is no western country, especially the UK, will be the same after this. The US still has a journey to go on but they too will be no less different after this is over and, perhaps a silver lining, but this will be a real insulation against partisan politics and especially popularists because the virus respects nobody. It’s not an innoculation but like a large volcanic eruption can stall climate change, this can stall the growth of populism if only for a time.

I’m not sure there’s anything further to say – beyond this point everything is speculation. There are precious few voices I’m interested in listening to on this right now – I’m kind of absorbing lots and filtering 95% of it as the noise people make when they’re scared – it’s all shouting and fear and fastening onto any details which people see that appear new.

Yet the above is relevant. The government is doing something beyond the wildest fantasies of any serious economist I know – including me. You may criticise them all you like but I’ll have less respect for you if you do (see my reference to Peck). I guarantee you, you don’t know better and you wouldn’t do better. The choices made today by Sunak and by other European countries ahead of him this week and by the US over the weekend are literally undreamt of – not simply because the world economy was never structured to allow it (and there’ll be a lot of previously important influencers in the system who will now either fall into line or disappear into irrelevance) but because fundamentally literally no one could imagine this situation and moreover, no one can foresee the consequences of this in a month, a year or a decade.

Blog at WordPress.com.

Up ↑

Knights of IOT

Design | Integrate | Connect

ScienceSwitch

The Fun Side Of Science

SwordNoob

Adventures in HEMA, LARP, Archery and other activities

ebookwyrm's Blog

Smile! You’re at the best WordPress.com site ever

Damyanti Biswas

For lovers of reading, writing, travel, humanity

countingducks

reflections on a passing life

Self-Centric Design

The art of designing your life

Adrian Faulkner

Hope, Anger and Writing

Fantasy-Faction

Hope, Anger and Writing

Alternative Realities

Why have virtual reality when you can have alternative reality?

1001Up

1001 video games and beyond

Fringeworks - Blogs

Hope, Anger and Writing

Shadows of the Apt

Hope, Anger and Writing