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The Staid Side of Money

I interviewed my Twitter friend Marc Hochstein, who is the editor-in-chief at American Banker, about finance and technology. (He didn’t speak with me in a professional capacity, but I think his workplace is helpful context.)

Hochstein started his career as a wire service reporter at Dow Jones. He called it a “character-building experience” that involved a lot of cold-calling day traders. The upshot is that Hochstein has been reporting on banks and finance for decades, so his perspective on recent industry developments is interesting.

(Why you should care about this: Our world runs on money. The financial-services industry is hyper-entwined with government, and together they’re the base-level system that everything else is built on top of. That’s actually a simplification since “everything else” and “finance” developed concurrently, but you get the idea.)

I think this quote sums up a lot:

In the last two years — maybe three or four years — there’s been a lot more interest in technology as a potentially transformational force, than there has been in a very long time. You could argue that banking was always, in a way, a technological industry, or always a data industry. There’s a quote from Walter Wriston, who was the chairman of Citicorp back in the ’80s and ’90s. I forget the exact verbatim quote, but it’s something like, “A bank is nothing but a data warehouse, that’s always what it’s been.”

But the banks — financial institutions in general — have been slow to upgrade their core technology, and for some understandable reasons. Changing the core of the bank is a hard thing to do. […] When times are good, when they’re making a lot of money, there’s no real impetus to change anything. And then when times are bad, they don’t have the resources to do anything. Or resources are scarce, I should say.

Hochstein pointed out that the “Uber narrative” hasn’t played out in finance like it has in other industries. He told me, “The barriers to entry are higher. The stakes are higher, because you’re talking about people’s money.” Fintech startups can’t afford to beg forgiveness instead of asking permission. Regulators don’t take kindly to that, and users don’t either.

Technology hasn’t shaken up finance as much as people in Silicon Valley might have expected. Over the last few years, Hochstein explained, “The rhetoric changed from ‘fintech is going to eat the banks’ lunch’ to ‘fintech is going to make banking better at what they do’.” Still, “it’s a little early to say” whether fintech is actually improving banking, or what the degree of change will be. “I wouldn’t say it’s been a profound effect, but it’s there.”

On the bright side, “Transferring money is slowly getting faster.” The Automated Clearing House is finally moving to same-day settlement. “Part of the reason why they did that, why they finally had an impetus to go there,” Hochstein said, “is because of things like Ripple, and bitcoin, and cryptocurrency, as well as real-time payment systems that you see in a lot of other countries.” Hochstein noted that regulators and the Fed have also been pushing in this direction.

I find this slightly mind-boggling. It’s a big deal that ACH is moving to same-day settlement — not real-time, just same-day. In the year 2017.

I asked Hochstein which issues are going to dominate a lot of attention going forward, and he mentioned “open banking” and data portability. Basically, banks have a tremendous amount of lock-in because of all the information they’ve collected and stored about your identity and your account activity.

There’s some talk of forcing banks to provide this information to competitors — or whoever else might be authorized by individuals, e.g. money-management apps like Mint — via API. Guess whether the banks want to do that!

In conclusion, finance gonna finance. Big companies gonna rent-seek. They change when they’re forced to, either by regulation (Dodd-Frank Act, for example) or by the competitive environment. In general, these institutions move slowly. On balance that’s actually a good thing, considering how much havoc they could potentially wreak.


Thank you to Marc Hochstein for talking to me — follow him on Twitter or read his articles.

Photo of the Wall Street bull by Sam Valadi.

Reclaiming the Panopticon

The following is Tim Herd’s response to the previous dispatch about sousveillance.


A tech executive was quoted saying something like, “Privacy is dead. Deal with it.” [According to the Wall Street Journal, it was Scott McNealy of Sun Microsystems. He said, “You have zero privacy anyway. Get over it.”]

I think he’s right, for most working definitions of “privacy”. I think that security professionals, privacy advocates, etc, are fighting rearguard actions and they will lose eventually.

Less than a year after Amazon rolls out Alexa, cops pull audio from it to get evidence for a conviction. That microphone is on 24/7, and in full knowledge of this people still buy them.

Why?

Information is valuable. The same technology that lets me look up photos of your house for shits and grins, or to stalk you, is what powers Google Maps.

Privacy and these new technologies will, and have already, come into conflict. The value of the new tech is way, way more than the value of the privacy lost.

This can devolve into 1984 lightning fast. On the other hand, think about this: “Probably the best-known recent example of sousveillance is when Los Angeles resident George Holliday videotaped police officers beating Rodney King after he had been stopped for a traffic violation.” [From the Steve Mann paper.]

The same surveillance tech that makes us spied on all the time, makes other people spied on all the time. I can’t get up to no good, but cops can’t either.

It’s a tool, and it all depends on how it’s used.

Take me, for example. With a handful of exceptions that I am not putting to paper, there is nothing in my life that is particularly problematic. If the government were spying on me 24/7, it wouldn’t even matter. I have nothing to hide.

(I understand the implications regarding wider social norms. I’m working under the assumption that That Ship Has Sailed.)

The people who do have things to hide, well, we made that shit illegal for a reason. Why should I care when they get burned? That’s the whole goddamn point of the law.

(Aside: I believe that the more strictly enforced a law is, the better it is for everyone overall, because consistency of expectations is important. I bet that the roads would be much safer and more orderly if every single time anyone sped, ever, they automatically got a speeding ticket. Always. No matter what. No cat-and-mouse games with cops, no wondering which lights have speed cameras. Just a dirt-simple law. Here is the rule. Follow it and we are fine. Break it and you will always lose. So many problems are caused by people trying to game the rules, break them whenever possible, and follow them only when they have to.)

(Continued aside: Obviously shit would hit the fan if we started automatically 100% enforcing every traffic law. But you better believe that within a month of that policy being rolled out nationwide, speed limits would rise by at least 50%.)

The reason we care about surveillance is that a lot of things are more illegal than we think they should be.

Obvious example: In a world of perfect surveillance, 50% of California gets thrown in federal prison for smoking weed.

All of this is build-up to my hypothesis:

  • The fully surveilled world is coming, whether we like it or not.
  • This will bring us a ton of benefits if we’re smart and brave enough to leverage it.
  • This will bring an unprecedented ability for authorities to impose on us and coerce us, if we are not careful.

Which brings me to the actual thesis: Libertarianism and formal anarchy is going to be way more important in the near future, to cope with this. In a world of perfect surveillance, every person in San Francisco can be thrown in prison if a prosecutor feels like it. Because, for example, literally every in-law rental is illegal (unless they changed the law).

The way you get a perfect surveillance world without everyone going to prison is drastic liberalization of criminal law, drastic reduction of regulatory law, and live-and-let-live social norms that focus very precisely on harms suffered and on restorative justice.

A more general idea that I am anchoring everything on: A lot of people think tech is bad, but that is because they do not take agency over it. Tech is a tool with unimaginable potential for good… if you take initiative and use it. If you sit back and just wait for it to happen, it goes bad.

If you sit back and wait as Facebook starts spying on you more and more, then you will get burned. But if instead you take advantage of it and come up with a harebrained scheme to find dates by using Facebook’s extremely powerful ad-targeting technology… you will benefit so hard.


Header artwork depicting Facebook as a global panopticon by Joelle L.

Don’t Grudge What Changes

I thought most of this article was stupid, but here’s a statement that hit me:

[A] human being without any technological prostheses is nothing, an unsteady sac of flesh defined only by what it doesn’t have: no shelter, no protection, no society.

Without our material inventions, we are doomed. Without our cultural inventions, we are endangered. At least! Society depends on cohesion. We must cluster and justify our clustering.

The real reason why this doesn’t matter, beyond our hearts: only acceptable justifications matter. “Acceptable” is a malleable thing.

“Technology” is a very broad term that we’ve narrowed down to “computers and software” for no reason except the zeitgeist; no reason except length of existence. So many tools; so much material. We’ve narrowed what counts as “technology” for no proper reason — none that I’m aware of, anyway.

Unless the reason is “ease of classification and control” — but perhaps that is always the reason.

Maybe it’s just because we become accustomed to the tech that already exists. Technically speaking, pun intended, anything manmade counts as technology. It’s very mundane.


Header photo by Nadya Peek.

It Shouldn’t Be Easy to Understand

Mathias Lafeldt writes about complex technical systems. For example, on finding root causes when something goes wrong:

One reason we tend to look for a single, simple cause of an outcome is because the failure is too complex to keep it in our head. Thus we oversimplify without really understanding the failure’s nature and then blame particular, local forces or events for outcomes.

I think this is a fractal insight. It applies to software, it applies to individual human decisions, and it applies to collective human decisions. We look for neat stories. We want to pinpoint one factor that explains everything. But the world doesn’t work that way. Almost nothing works that way.

In another essay, Lafeldt wrote, “Our built-in pattern detector is able to simplify complexity into manageable decision rules.” Navigating life without heuristics is too hard, so we adapted. But using heuristics — or really any kind of abstraction — means losing some of the details. Or a lot of the details, depending on how far you abstract.

That said, here’s Alice Maz with an incisive explanation of why everything is imploding:

Automation is transforming bell curve to power law, hollowing out the middle class as only a minority can leverage their labor to an extreme degree. Cosmopolitan egalitarianism for the productive elite, nationalism and demagoguery for the masses. For what it’s worth, I consider this a Bad Outcome, but it is one of the least bad ones I have been able to come up with that is mid-term realistic.

Which corporation will be the first to issue passports?

Rushkoff argued that programming was the new literacy, and he was right, but the specifics of his argument get lost in the retelling. The way he saw it, this was the start of the third epoch, the preceding two ushered in by 1) the invention of writing, 2) the printing press.

Writing broke communal oral tradition and replaced it with record-keeping and authoritative narration by the literate minority to the masses. Only the few could produce texts, and the many depended on them to recite and interpret. This the frame (pre-V2 maybe) that Catholicism inhabits.

The printing press led to mass literacy. This is the frame of Protestantism: the idea is for each man to read and interpret for himself. But after a brief spate of widely-accessible press (remember Paine’s Common Sense? very dangerous!) access tightened up. Hence mass media as gatekeeper, arbiter of consensus reality.

The few report, and the many receive. Not that journalists were ever the elite, just as the Egyptian scribes. They were the priestly class, Weber’s “new middle”. (Also lawyers. Remember the backwoods lawyer? Used to be all you needed was the books and a good head. Before credentialism ate the field.)

The internet killed consensus reality. Now anyone can trivially disseminate arbitrary text. But the platforms on which those texts are seen are controlled by the new priests, line programmers, which determine how information flows. This is what critics of “the Facebook algorithm” et al are groping at. The many can create, but the few craft the landscape that hosts creation.

It’s still early. Remains to be seen if we can keep relatively open platforms (like Twitter circa 2010; open in the unimpeded sense). Or if the space narrows, new gatekeepers secure hold. But that will be determined by programmers. (Maybe lawmakers.) Rest along for the ride.

That’s all copy-pasted from Twitter and then lightly edited to be more readable in this format.

I included the opening quote about complex systems because although this neat narrative holds more truth than some others, it’s still a neat narrative. Don’t forget that. Reality is multi-textured.


Header photo by kev-shine.

Reflecting on Dystopian San Francisco Again

One of the reasons I started Exolymph is that I live in the Bay Area. San Francisco is the hottest local metropolis, so I visit occasionally, both for work and pleasure. The city is a parallel mixture of luxe yuppie haven and downtrodden slum:

“He pointed out the animated software ads wrapped around bus shelters and glowing on the sides of buildings. He reminded me that the streets smelled of urine and we were passing homeless people wrapped in rags. Sleeping on the damp sidewalk. Meanwhile, money churned in and out of Silicon Valley’s sister city.”

I’ve written about this before, as have others, so please forgive me for flogging a dead horse. But it never ceases to astound me: in this place of economic and technological abundance, you walk by people subsisting on garbage. Maybe if I’d worked in the city full-time for more than three months, I would be desensitized.

San Francisco as a floating prison colony. Artwork by Silvio Bertonati.

Artwork by Silvio Bertonati.

It’s bizarre how normal it feels to live in a dystopia. That is one of my central premises — a lot of the frightening themes of classic cyberpunk fiction have come true in one way or another, but daily life is still mundane. You and I are side characters or NPCs, not the protagonists, so all the depraved systems aren’t exciting. They’re just exhausting.

And I do feel exhausted. I feel exhausted by the constant deluge of bad news — certainly not the first to say so — and I feel exhausted by the pressure to react to each new development, to perform outrage or heartsickness for a drive-by audience.

I feel exhausted by pointing out, again and again, that while technology does “change the world” just by virtue of existing, sometimes it allocates power in scary ways. The ever-accelerating ~innovation~ will knock some of us down.

There’s no solution here. This is just how the world works. Bad things happen. New media happens. Tech businesses happen. Maybe I’d feel better about it if I were more personally laissez-faire.

Relentlessly Growth-Oriented & Profit-Seeking

Developer Francis Tseng, who made Humans of Simulated New York, is currently crowdfunding a dystopian business simulator called The Founder. You play as the head of a startup and your goal is to grow the company however you can. Little obstacles like other people’s lives shouldn’t bother you!

Artwork from dystopian video game The Founder. Image via the Kickstarter campaign.

Image via the Kickstarter campaign.

Tseng writes in his crowdfunding pitch:

“How is the promise of technology corrupted when businesses’ relentlessly growth-oriented and profit-seeking logic plays out to its conclusion? What does progress look like in a world obsessed with growth, as measured only by sheer economic output?”

It looks a lot like San Francisco. That’s not a compliment.

“Winning in The Founder means shaping a world in which you are successful — at the expense of almost everyone else.”

Not so different from the real world of business, right?

Screenshot from The Founder's game website. "Change the world. Everything you do has a consequence. With your revolutionary new products, you have the power to shape a brave new world — one in which every facet serves your ceaseless expansion."

Screenshot from the game site.

I don’t believe that economics is a zero-sum game, especially when it comes to technology. “Innovation” may be an over-fetishized buzzword, but it really is able to move the needle on people’s quality of life.

Unfortunately, that aspect of industry is not prioritized in practice. The profit motive should be a proxy for ~making the world a better place~ but it often gets treated as an end in and of itself.

The Founder interrogates this trend and hopefully makes the player feel uneasy about their own incentives. If you’re interested in playing, contribute!

“The best minds of my generation are thinking about how to make people click ads.” — Jeffrey Hammerbacher, data scientist and early Facebook employee

No Transhumanism Without Technology

“Transhumanism (abbreviated as H+ or h+) is an international and intellectual movement that aims to transform the human condition by developing and creating widely available sophisticated technologies to greatly enhance human intellectual, physical, and psychological capacities.” — Wikipedia

“To whatever extent transhumanism is a concept with meaning, we’ve all been doing it since we started writing things down.” — Aboniks

The difference between a notebook and Wikipedia, or Wikipedia and Google Glass, or Google Glass and a brain-integrated all-of-the-above combination, is mainly the level of convenience. The other big difference is that instead of having to memorize information or track it down yourself, anonymous strangers will contribute directly to your knowledge repository.

Are those strangers trustworthy? Well, most of the time… maybe it’s more accurate to say “an undetermined percentage of the time”. PR nonsense worms its way onto Wikipedia. Is the Google algorithm impartial? Of course not — it’s biased toward making money for the company. But absorbing tainted information via tainted processes is nothing new. As far as I know, that’s the only way.

Cyborg self-portrait by Dan Sakamoto.

Cyborg self-portrait by Dan Sakamoto.

The Aboniks quote from the beginning dates transhumanism to the invention of writing, but I think you could go farther back, to when we started using tools of any kind. What is a stone axe but an extension of the bearer’s arm? The people who wielded obsidian hatchets were very early cyborg prototypes.

As long as humans have been using technology, we’ve been augmenting our neurological and physical capabilities. Like so many aspects of human thriving, technology requires that we rely on each other. The people who make the hardware, whether it’s a paper book, a mainframe, or a biochemical plant. The people who provide the information and source the materials, the designers who create the interfaces by which we access and manipulate our external selves.

I find it terrifying to rely on other people, because I can’t control them, and yet that’s the human condition. That’s how we reach the future, by mutual building. (With an unhealthy dose of the profit motive, I suspect.)

26 Cyberpunk Gadgets Recommended by Reddit

Reddit user MentalRental asked /r/Cyberpunk what tech would be included in a modern-day version of the “R.U. a Cyberpunk?” magazine page. People suggested lots of cyberpunk gadgets, a few of which I didn’t know existed. Here’s a condensed list of the answers that various commenters threw into the ring — I tried to minimize redundancy and limit the list to portable devices:

More suggestions of cyberpunk gadgets can be found in the original Reddit thread.

Means & Ends of AI

Adam Elkus wrote an extremely long essay about some of the ethical quandaries raised by the development of artificial intelligence(s). In it he commented:

“The AI values community is beginning to take shape around the notion that the system can learn representations of values from relatively unstructured interactions with the environment. Which then opens the other can of worms of how the system can be biased to learn the ‘correct’ messages and ignore the incorrect ones.”

He is talking about unsupervised machine learning as it pertains to cultural assumptions. Furthermore, Elkus wrote:

“[A]ny kind of technically engineered system is a product of the social context that it is embedded within. Computers act in relatively complex ways to fulfill human needs and desires and are products of human knowledge and social grounding.”

I agree with this! Computers — and second-order products like software — are tools built by humans for human purposes. And yet this subject is most interesting when we consider how things might change when computers have the capacity to transcend human purposes.

Some people — Elkus perhaps included — scoff this possibility off as a pipe dream with no scientific basis. Perhaps the more salient inquiry is whether we can properly encode “human purposes” in the first place, and who gets to define “human purposes”, and whether those aims can be adjusted later. If a machine can learn from itself and its past experiences (so to speak), starting over with a clean slate becomes trickier.

I want to tie this quandary to a parallel phenomenon. In an article that I saw shared frequently this weekend, Google’s former design ethicist Tristan Harris (also billed as a product philosopher — dude has the best job titles) wrote of tech companies:

“They give people the illusion of free choice while architecting the menu so that they win, no matter what you choose. […] By shaping the menus we pick from, technology hijacks the way we perceive our choices and replaces them new ones. But the closer we pay attention to the options we’re given, the more we’ll notice when they don’t actually align with our true needs.”

Similarly, tech companies get to determine the parameters and “motivations” of artificially intelligent programs’ behavior. We mere users aren’t given the opportunity to ask, “What if the computer used different data analysis methods? What if the algorithm was optimized for something other than marketing conversion rates?” In other words: “What if ‘human purposes’ weren’t treated as synonymous with ‘business goals’?”

Realistically, this will never happen, just like the former design ethicist’s idea of an “FDA for Tech” is ludicrous. Platforms’ and users’ needs don’t align perfectly, but they align well enough to create tremendous economic value, and that’s probably as good as the system can get.