Booming tech and rising inequality: correlation or causation?

This morning’s Observer column:

Here is one of the great paradoxes of our time. The world is dominated by a few corporations that are among the most profitable companies in the history of capitalism. In the US (the home of these giants) and in the UK (an enthusiastic vassal state), parts of the economy are booming and employment is at record levels. And yet, in the middle of this astonishing prosperity, inequality is at levels not seen since the period before the first world war. In the US, the share of total income going to the top 1% of the population is now back to the level it was in the 1920s. And in the UK, more than 4 million people are trapped in deep poverty.

Since this catastrophic rise in inequality seems to be correlated with the rise of the tech industry, it’s tempting to see a causal link between the two. Tempting, but too simplistic. For while digital technology has been a central factor in what’s happened, it’s only a part of the story. More often, it’s been an enabler of other forces rather than a prime mover.

The biggest force reshaping our world has been globalisation…

Read on

What can British journalists learn from US hacks’ experience of covering Trump?

Nice, useful advice by Emily Bell:

In the end, perhaps the biggest lesson the British media can learn from the US experience of Trump is that their work matters to people beyond their readership or audience, and to that end it needs to become more rigorous and more serious. On both sides of the Atlantic there is a circular firing squad of the commentariat who wonder, on a daily basis, how did this happen? The boring truth is that we need to pay attention to the substance and not the glockenspiel. When the circus has left town, we will need a reliable record to remind us of what happened, and how, and why.

Johnson’s semi-house-trained technocrat

My Observer Comment piece on Dominic Cummings:

Skulking in the background of TV news footage of Boris Johnson’s cabinet of C-list politicos, a strange figure in a T-shirt could be seen. His name: Dominic Cummings, now the prime minister’s senior adviser. He’s all forehead and no smile, clutching a pen and possibly a notebook, and doubtless making notes.

What a pity, one thought, that David Davis wasn’t round the cabinet table. In 2017 Cummings noted that Davis was as “thick as mince”, as “lazy as a toad” and as “vain as Narcissus”. As they passed him in the corridor on Thursday, many of Johnson’s new appointees must have wondered how they will be summarised in that notebook. We’ll have to wait a bit to find out.

Cummings’s appointment to the centre of Johnsonian power was the only real surprise of the week. After all, if you’re a prime minister who needs to get the government machine humming in top gear, ready for no deal, then the last person you need to lead the charge is a guy who has for years blogged his contempt for the civil service and the hapless politicians they serve.

His most recent efforts in this regard – an attack on the late, former cabinet secretary Jeremy Heywood – is a case study of how to spit on a revered grave…

Read on

Facial recognition technology — to ban or regulate it are the only options

This morning’s Observer column:

On 18 July, the House of Commons select committee on science and technology published an assessment of the work of the biometrics commissioner and the forensic science regulator. My guess is that most citizens have never heard of these two public servants, which is a pity because what they do is important for the maintenance of justice and the protection of liberty and human rights.

The current biometrics commissioner is Prof Paul Wiles. His role is to keep under review the retention and use by the police of biometric material. This used to be just about DNA samples and custody images, but digital technology promises to increase his workload significantly. “It is now seven years,” observes the Commons committee, “since the 2012 high court ruled that the indefinite retention of innocent people’s custody images was unlawful and yet the practice is continuing. A system was meant to have been put in place where any custody images were kept for six years and then reviewed. Custody images of unconvicted individuals at that point should be weeded and deleted.”

But they haven’t: photographs of innocent people remain on the police national database…

Read on

No vin rouge in DC

Latest from the White House teetotaller:

We will announce a substantial reciprocal action on Macron’s foolishness shortly,” the president added. “I’ve always said American wine is better than French wine!”

Speaking at the White House later, Mr. Trump expanded on that threat, calling France’s tax “wrong” and saying his administration was working on a possible wine tax.

“I’ve always liked American wines better than French wines. Even though I don’t drink wine. I just like the way they look,” he told reporters.

So what now for the Johnson Fanzine?

For several years now, the devotion of the Daily Telegraph, once a serious newspaper, to Boris Johnson has, like Peace of God, passeth all understanding. It had become, to all intents and purposes, a Johnson fanzine. But now that its mission has been accomplished, and its protegé is installed in power, what now for the paper? Is it just to become a government mouthpiece? You only have to ask the question to know the answer.

LATER Emily Bell (of the Tow Center in Columbia) provided the answer:

“The Daily Telegraph, where Johnson was a well-paid columnist up until entering No 10, is arguably closer and more bound up with Johnson than either Breitbart or Fox News is to Trump.”

Crises and scandals

Two thoughts running through what might loosely be called my mind.

  1. Famously, one mantra of the Obama team in the run-up to his election in 2008 was “Never let a serious crisis go to waste”.
  2. My colleague David Runciman’s distinction between scandals and crises. Scandals happen all the time in democracies. They create a great deal of controversy, publicity and heat. But in the end they don’t lead to anything: the media caravan moves on; conversation around the water-cooler switches to other topics; life goes on. Crises are different: they have all the features of scandals, but they do in the end lead to systemic change. So the question always to ask when something blows up is “is this a scandal or a crisis?”

And the connection between these two?

Something that John Lanchester wrote at the end of his splendid piece about UBI mentioned in the previous post.

Milton Friedman wasn’t right about everything, but he knew more than anyone in modern political economics what it takes to change an intellectual climate. He worked out how to make a new idea take shape first as something thinkable, and then as a specific policy. He said that the crucial step was to be ready:

“Only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes the politically inevitable.”

Lanchester sees UBI as one of those ideas that happen to be lying around.

That’s very astute, because Friedman (and his associates, notably Hayek) were consummately successful in getting their neoliberal ideas into the political bloodstream in time for politicians like Ronald Reagan and Margaret Thatcher to pick them up.

Our recent history, in a nutshell

From John Lanchester, opening a thoughtful and informative LRB essay on the idea of Universal Basic Income. “The broad outline of 21st-century history, its first couple of decades anyway”, he writes,

is starting to become clear. A period of credit-fuelled expansion and runaway financialisation ended with an abrupt crash and an unprecedented bank bailout. The public’s reward for assuming the bankers’ losses was austerity, which crippled the recovery and led to an interminable Great Recession. At the same time, increasing automation and globalisation, and the rise of the internet, kept first-world wages stagnant and led to an increase in precarity. Elites did fine, and in the developing world, especially Asia, economies grew, but the global middle class, mainly located in the developed world, felt increasingly anxious, ignored, resentful and angry. The decades-long decline in union power made these trends worse. The UK had its longest ever peacetime squeeze on earnings.​1 In response to this the political right played one of its historically most effective cards – Blame the Immigrants – and achieved a string of successes from Brexit to Trump to Orbán to Bolsonaro to Salvini and the AfD, succeeding in normalising its new prominence to such an extent that a quasi-fascist party scored 34 per cent in the French presidential elections, which were nonetheless hailed as a triumph for the ‘centrist’ winner.

That’s a pretty good summary, IMHO. Characteristically good piece by a terrific explainer. Worth reading in full.

Microsoft 2.0

One of the most remarkable aspects of the present is the way one tech giant has become a reformed character. Microsoft — the rapacious, bullying monster of Bill Gates’s heyday — has morphed into a good (or at least better) global citizen. It’s also insanely profitable again. In fact, just about the best thing one could have done with one’s pension fund would have been to have put a sizeable chunk of it into Microsoft stock. (The company is now worth a trillion dollars.) And every week a copy of a memo from the company’s President and Chief Legal Counsel, Brad Smith, drops into my inbox. Sometimes it contains useful and civilised ideas. No other corporate bigwig talks as much sense.

How has this transformation come about? This week the Economist has a go at identifying the things that made Gates’s creature a more tolerable behemoth. There are, it says, three lessons the other tech giants could learn from the Redmond experience under Satya Nadella’s leadership:

  1. “First, be prepared to look beyond the golden goose. Microsoft missed social networks and smartphones because of its obsession with Windows, the operating system that was its main moneyspinner. One of Mr Nadella’s most important acts after taking the helm was to deprioritise Windows. More important, he also bet big on the “cloud”—just as firms started getting comfortable with renting computing power. In the past quarter revenues at Azure, Microsoft’s cloud division, grew by 68% year on year, and it now has nearly half the market share of Amazon Web Services, the industry leader.”

  2. “Second, rapaciousness may not pay. Mr Nadella has changed Microsoft’s culture as well as its technological focus. The cult of Windows ordained that customers and partners be squeezed and rivals dispatched, often by questionable means, which led to the antitrust showdown. Mr Nadella’s predecessor called Linux and other open-source software a “cancer”. But today that rival operating system is more widely used on Azure than Windows. And many companies see Microsoft as a much less threatening technology partner than Amazon, which is always looking for new industries to enter and disrupt.”

  3. “Third, work with regulators rather than try to outwit or overwhelm them. From the start Microsoft designed Azure in such a way that it could accommodate local data-protection laws. Its president and chief legal officer, Brad Smith, has been the source of many policy proposals, such as a “Digital Geneva Convention” to protect people from cyber-attacks by nation-states. He is also behind Microsoft’s comparatively cautious use of artificial intelligence, and calls for oversight of facial recognition. The firm has been relatively untouched by the current backlash against tech firms, and is less vulnerable to new regulation.”

Facebook thinks it’s a state. US Congress disagrees

This morning’s Observer column:

Now that Wimbledon is over, if you’re looking for something interesting to watch, can I suggest heading over to the video of last week’s interrogation by the US Senate committee on banking, housing and urban affairs of Facebook’s David Marcus? Given the astonishing incompetence of the Senate’s inquisition of Marcus’s boss, Mark Zuckerberg, some time ago, my hopes for last week’s hearing were not high. How wrong can you be?

But first a bit of background might be helpful. Facebook, currently the tech world’s most toxic company, has decided to get into the currency business. It proposes to launch a new global cryptocurrency called Libra. Marcus is the guy leading this project. He formerly worked at PayPal and then moved to Facebook, where he ran the company’s Messenger service.

At first sight, Marcus appears to be a Smooth Man from central casting. At second sight, he evokes the “uncanny valley”, defined by Wikipedia as “a hypothesised relationship between the degree of an object’s resemblance to a human being and the emotional response to such an object”. In that respect, he is not unlike his boss…

Read on