The fire next time

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At the CSaP conference last week there was an interesting session on what (if anything) we have learned from the 2008 banking crisis. The consensus was not reassuring. The banking system we have now is still dangerously fragile, despite all the ‘stress testing’ of banks etc. And, as always, we prepare to fight the last war. Barry Eichengreen, whose book, Hall of Mirrors: The Great Depression, The Great Recession, and the Uses-and Misuses-of History, is a must-read on this stuff, said something bracing about this towards the end of the session. In the course of a discussion of where we should be looking for the early-warning signals of the next catastrophe, he said: “I think we’ve done a good job of putting in place an early-warning system for the last crisis”. (My emphasis.)

So what kinds of shocks could trigger another collapse? Two candidates were discussed. One was Grexit — the departure of Greece from the Euro and the chaos that would ensue from that. The other is a crisis in the Chinese economy triggered by a collapse in its housing and construction sector. A few days later, I talked to an expert on the Chinese property market, who poo-poohed the idea. And then, today, I find in the New York Times this quote from Henry Paulson’s new book, *Dealing with China:

“Frankly, it’s not a question of if, but when, China’s financial system will face a reckoning and have to contend with a wave of credit losses and debt restructurings.”

Note: not if but when. And Paulson is bullish on China!

The Eurosceptic UK

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If a referendum were held on the UK’s membership of the EU with the options being to remain a member or withdraw, how do you think you would vote?

  • Would definitely vote to leave the EU = 28%
  • Would probably vote to leave the EU = 18%
  • Would probably vote to remain in the EU = 20%
  • Would definitely vote to remain in the EU = 18%
  • Don’t know = 17%

    • Source

    So can software handle your emotions?

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    Interesting piece by Zeynep Tufecki in the NYT. She starts with the news that

    A robot with emotion-detection software interviews visitors to the United States at the border. In field tests, this eerily named “embodied avatar kiosk” does much better than humans in catching those with invalid documentation. Emotional-processing software has gotten so good that ad companies are looking into “mood-targeted” advertising, and the government of Dubai wants to use it to scan all its closed-circuit TV feeds.

    Before buying or using any software, consumers increasingly rely on detailed reviews to ensure they are making the right choice. With the rise of emotion-detection software, this trend has extended beyond mere functionality and into how technology impacts user experience.

    For those considering new products, it’s wise to explore resources like https://www.digitalproductsdp.com/ to get a clearer picture of the software’s capabilities and limitations. This ensures that consumers are well-informed and prepared to navigate the complexities of emerging technologies.

    What this means is that

    Machines are getting better than humans at figuring out who to hire, who’s in a mood to pay a little more for that sweater, and who needs a coupon to nudge them toward a sale. In applications around the world, software is being used to predict whether people are lying, how they feel and whom they’ll vote for.

    To crack these cognitive and emotional puzzles, computers needed not only sophisticated, efficient algorithms, but also vast amounts of human-generated data, which can now be easily harvested from our digitized world. The results are dazzling. Most of what we think of as expertise, knowledge and intuition is being deconstructed and recreated as an algorithmic competency, fueled by big data.

    But computers do not just replace humans in the workplace. They shift the balance of power even more in favor of employers. Our normal response to technological innovation that threatens jobs is to encourage workers to acquire more skills, or to trust that the nuances of the human mind or human attention will always be superior in crucial ways. But when machines of this capacity enter the equation, employers have even more leverage, and our standard response is not sufficient for the looming crisis.

    Googlepower challenged? Not really

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    This morning’s Observer column:

    To those of us who follow these things, the most interesting thing about Thursday’s announcement is the way it highlights the radical differences that are emerging between European and American attitudes to internet giants. The Wall Street Journal recently revealed that the US Federal Trade Commission had investigated similar claims about Google’s abuse of monopoly power in 2012 and that some of the agency’s staff had recommended charging the company with violating antitrust (unfair competition) laws. But in the end, the FTC backed off.

    Now it turns out that its staff had been in regular communication with the European commission’s investigators in Brussels, which means that the Europeans knew what the Americans knew about Google’s activities. But the commission has acted, whereas the FTC did not. Why?

    Read on

    Arrogance, arrogance, dear boy. That’s the tech business for you

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    Intelligent filtering and insightful curation are rare arts. But Quartz is very good at them, which is why I read its daily dispatches the moment they arrive in my inbox.

    I particularly like the Saturday edition, which comes with an elegant mini-essay by one of the editors.

    Here is today’s, written by Leo Mirani:

    For a decade, it seemed like the technology industry was going to usher in a newer, friendlier form of capitalism. The CEOs wore t-shirts and hoodies. Their staff had spare time to improve the world. They said they wouldn’t be evil. For a while, web users believed them.

    But things have been shifting. This week, the European Union formally accused Google of abusing its dominant position in search. In India, Facebook is facing an uprising against Mark Zuckerberg’s internet.org, meant to give first-time users a taste of the internet for free. Uber is under criminal investigation in the Netherlands. Apple was last week met with underwhelming reviews for its watch.

    Why? The uniting factor is arrogance. Google, with over 90% of the search market in Europe, blatantly favored its own services. Of the 500 million people who’ve used internet.org, first-time internet users make up only 1.4%, and Indians saw that this was less about connecting the poor than consolidating Facebook’s dominance. Apple decided to make the watch without any notion of what it might actually be used for—except maybe as a notifications device. No wonder even people who wanted to like it had a hard time recommending it.

    The ultimate symbol of that arrogance, of course, is tech company valuations. The latest example is Slack, a one-year-old chat tool for businesses, whose funding round this week prompted cries of disbelief. “Is Slack Really Worth $2.8 Billion?” asked the New York Times (paywall). “It is, because people say it is,” said the CEO.

    Of course he’s right, in a sense: Markets, not tech company founders, determine what their companies are worth. But when founders conflate market value with true value, they start to think they can do no wrong. That’s where their downfall begins.

    Quote of the Day

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    Reading Wilhelm II on every conceivable subject for more than 1200 pages (3000 if you read the three volumes in sequence) is like listening for days on end to a dog barking inside a locked car.

    Christopher Clark, reviewing the final volume of a massive three-volume biography of Kaiser Bill in the London Review of Books,

    The concierge economy

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    I’ve written about this before, but Anand Giridharadas is a very astute observer of it. In this NYT OpEd piece he recollects how, for the Indian affluent classes, everything was done by “sending your man” to do it.

    The culture of send-your-man was jarring to me, having grown up in an America where even rather privileged people did many things for themselves, including things easily outsourced. They drove themselves and their children around, went to the supermarket themselves, contested their own parking tickets in person. While living in India, I remember seeing a photograph of a United States Supreme Court justice driving himself into work and thinking to myself: No lowly municipal judge in India would do that.

    But as India’s economy has begun to surge and the country to modernize, send-your-man culture has foundered. As new possibilities open to those who might have been peons, the tiresome complaint at rich-people parties in New Delhi and Mumbai is how hard it is to find a servant. Well, they should come to America, because that, evidently, is where all the servants have gone.

    Uber’s chauffeurs and couriers, Instacart’s grocery deliverers, Handy’s home cleaners, Zeel’s on-demand masseurs, Seamless’s bicycle warriors of takeout, Alfred’s butlers, Amazon Home Services’ electricians and plumbers — all of this is the slick, mobile-enabled, venture-capital-backed servitude of our time. As Lauren Smiley wrote in the online magazine Matter recently, “In the new world of on-demand everything, you’re either pampered, isolated royalty — or you’re a 21st-century servant.” Now in America, too, you can have yourself a man.

    It’s a very good, insightful essay. For example:

    Is technological innovation the handmaiden of progress? People tend to use the two concepts interchangeably. But it’s possible that we live in a peculiar age that, in America at least, is innovation-rich and progress-poor. Just as we came to learn that democracy and liberalism don’t necessarily go together, that there can be illiberal democracies (Argentina, Iraq), perhaps we are starting to discover something we might call regressive innovation.

    This isn’t, on its own, dispiriting. It just means that innovation, like democracy, is without content. Democracy doesn’t automatically safeguard women and minorities. Those are layers we have to add. Likewise, perhaps, innovation doesn’t necessarily make the world flat, free and equal. It just gives us new ways of achieving the aims, good and bad, that have motivated us forever.