SIFT Score - the West's Answer to China's Social Credit Rating. Thanks, Big Brother

Data on what you buy, how, and where is secretly fed into AI-powered verification services, according to the Wall Street Journal. These are supposed to help companies guard against credit-card and other forms of fraud.

More than 16,000 signals are analyzed by a service called Sift, which generates a "Sift score," used to flag devices, credit cards and accounts that a vendor may want to block based on a person or entity's overall "trustworthiness" score. From the Sift website: "Each time we get an event -- be it a page view or an API event -- we extract features related to those events and compute the Sift Score. These features are then weighed based on fraud we've seen both on your site and within our global network, and determine a user's Score. There are features that can negatively impact a Score as well as ones which have a positive impact."

The system is similar to a credit score except there's no way to find out your own Sift score. This sounds a lot like the data that China's social credit system, in part, uses. In the PRC, a person's social score can vary depending on their behavior. The exact methodology is a secret — but examples of infractions include bad driving, smoking in non-smoking zones, buying too many video games and posting fake news online. While Edward Snowden certainly demonstrated the global extent of the US surveillance state, corporate entities have not implemented anything on the level of the Chinese social scoring system. Yet.

Why Taxis Need Uber...

The so-called "gig economy" is picking up steam... freelancers replacing full-time staff, companies focus on profits and shareholder value rather than hiring new permanent employees. With this type of work arrangement, geographically diffuse and independent workers are paid piecemeal for completing tasks -- facilitated by the connections from internet-based apps.

Amazon of course has Mechanical Turk, the original "piece work over the internet" freelancers platform. Another Amazon effort riffs on Uber: package delivery. Mechanical Turk is a platform where workers complete microtasks (such as transcribing, proofreading or answering surveys) for, many times, cents on the dollar. These internet denizens work on their own time and can pick up gigs on-demand.

But with the competition to taxis, Uber is really reshaping how the freelance economy works. People forget, in the U.S., most taxi companies retain drivers as 'contractors,' and require the drivers to pay for fuel, maintenance, etc. Regulation has come about to make a partially-public service (shared rides) more consumer-friendly (taxi meters, inspections, licensing). Tim O'Reilly says,

Regulation is not a good in itself. It is a means of achieving public goods. And so far, it is pretty clear that Uber and Lyft (and in particular, the competition between them) are improving the transportation options in American cities. Regulators should be using the opportunity to revisit the old way of doing things rather than trying to make the new conform to outdated rules that no longer serve their purpose...

Read more...

Capitalism - on the ropes?

This blog is about "intellectual capitalism." But the economic notion of capitalism is certainly at the roots of much of my writing. So where does this word come from?

The term ‘Capitalism’ has a long history. Adam Smith, thought of as the ‘father of capitalism,’ was the first modern proponent of a comprehensive philosophy defending an entire package of basic principles related to individual liberty as an indispensable ingredient to a moral, prosperous, and free society.

Today the term ‘Capitalism’ is used imprecisely-- many suggest that the term ‘Capitalism’ and ‘Capitalist,’ was first derived in English from a translation of the pejorative term used by Karl Marx to describe the class of men he called the elite “bourgeois” society who owned and controlled “society’s capital resources.” With much in etymology, word origins can be multiple and imprecise. The Oxford English Dictionary credits William Thackeray for the first published use of the word ‘capitalism’ in his novel, The Newcomes, although the word seems to refer to finance capital, rather than a discrete system.

Even if Marx didn't invented the term "capitalist," he was hip to the need to label those who control the life blood of economies, oft referred to as "M1" in the broad macroeconomic sense. Right now, there is a massive transfer of capital from labor to management. According to the Congressional Budget Office, between 1979 and 2007 incomes of the top 1% of Americans grew by an average of 275%. In 2007 the richest 1% of the American population owned 34.6% of the country's total wealth, and the next 19% owned 50.5%. Thus, the top 20% of Americans owned 85% of the country's wealth and the bottom 80% of the population owned 15%.

We have a hoarding of capital by banks. This impacts the opportunities for 'labor' (non-management) to enjoy prosperity. In fact, Banks actually create money when they lend it: Most of a bank's loans are made to its own customers and are deposited in their checking accounts. Because the loan becomes a new deposit, just like a when you deposit a check from any other source, the bank holds a small percentage of that new amount in reserve and again lends the remainder to someone else, repeating the money-creation process over and over.

Are these side-effects of the global economic crisis, or just an extension of what has been going on for 130 years?
We see governments funneling social spending away from big pension firms, organizations that might have realized institutionalization of the collective needs, if they had not been pillaged by the likes of Bain Capital.

Is private property is increasingly frustrating capitalism, by putting the brakes on spending/investment?
Wholesale buy-out of bad mortgages, while being a massive give-away, would end the arterial blockage in the flow of capital.

Now is not the time to give up on the Internet

The opposite of liberal is, well, IMHO, the desire to inflict on others a reduction in 'adaptive potential'. I would suggest this means the ability to choose between a range of attractive opportunities. Barriers to social mobility, relentless mega-corporation dominance, endless growth of government, restrictions on human sexuality and freedom of expression all qualify as narrowing.

I find the Internet has proven to be a means to facilitate growth in adaptive potential. Opening markets globally for large and small businesses. Amplifying peoples' voices. Reducing cost of public service delivery.

Supply chain and e-commerce improvements are contributing to overall economic growth. With the size of the global market getting bigger, the rewards for uncovering lucrative new ideas grow -- a multiplier effect. Moreover, as new ideas flow across national boundaries faster and more easily, humans all benefit.

Public officials, potential laws, and other public policy issues are scrutinized and influenced by Internet-organized movements.

Public spending should focus on broad-based, pro-growth, pro-poor services like primary education, primary health care and infrastructure investment.

Are the airwaves saturated?

I've had an ongoing discussion (years, really, since I had one of these -->) with an associate about the limits of wireless bandwidth. Like the popular counterargument to Malthus, my position is, "Humans are smart, we'll come up with ways to expand capacity of a seemingly limited resource..."

It seems this approach might be one way to make sure we can eventually have the wireless cloud so many hope for... Rearden Companies (what a great name, IMHO) suggests a set of techniques and technologies to radically expand the capacity of the wireless spectrum.