A Positive Policy for Economic Empowerment

The CBI’s reaction to John McDonnell’s employee share ownership plan was to be expected. Not only might such a plan place an initial administrative hinderance on many firms throughout the country, but in the longer term the ability for workers to lever shareholder power over executives shifts the dynamics of executive/employee power.

These are the arguments the CBI could be making – namely, that the plan is disruptive to business. Instead, across the media an almost myopic rebuttal to McDonnell’s plan can be heard. There are claims the plan will reduce productivity, reduce business investment, and drive businesses aboard, ultimately harming jobs. Above all, the CBI claims that such legislation is unnecessary as businesses already give employees the chance to become shareholders.

Partly due to disdain, partly due to inaccuracy, and partly due to the political and economic climate we find ourselves in, these arguments may be dismissed.

Consider productivity. As the Office for National Statistics (ONS) reports, UK productivity since the financial crisis has increased from an indexed value of 95.7 to 100.7. Over the 10 years prior to 2008, productivity increased from 84.9 to the cited 95.7. Of course, these are simply the figures for a problem that has not gone unnoticed: in March, July and August of this year the Financial Times (amongst others) highlighted the UK productivity issue, with a speech by the Bank of England’s chief economist Andrew Haldane on the issue being published in June.

The CBI’s claims that McDonnell’s proposal will harm productivity seems to ignore the elephant in the room, therefore: there is already a productivity problem in the UK. What is interesting, and in many ways encouraging, is that this plan may actually increase productivity, with even the CBI acknowledging that employee ownership often has a positive effect on employee motivation and thus productivity.

Of course, a productivity argument might be made when considering reduced business investment. The argument might go that the burden of this plan will disincentivise businesses to invest, causing productivity gains from new technology will be lost. Unfortunately, business investment since the financial crisis hasn’t changed much either, going from an indexed value of -0.3 in 2008 to 0.2 in 2017 (figures from the ONS). In other words, whilst business investment, or lack thereof, may drive productivity growth, given there has been very little business investment over the past decade it is a dubious argument to attack Labour’s proposal with the threat of further disinvestment.

Though this ignores a wider point. If employees have an ownership stake in businesses, they can encourage and thus counter any disinvestment that it is claimed might occur. Why? Well, following the prevailing theories of investor motivations, those employees/shareholders will want to maximise their return just as all other investors would. This, ultimately, is a more compelling argument than I think is immediately obvious: just because 10% of the company is owned by the employees, it does not mean the remaining 90% of shareholders are going to tolerate disinvestment and the forgoing of profitable endeavours. Presently, executives attempt to maximise shareholder value; they do not care who the shareholders are.

Perhaps, however, the best way to maximise such value is to move abroad and avoid Labour’s proposal. Ignoring the administrative costs of doing such a thing, let us take note of two things. Firstly, as a consequence of Brexit, firms are already leaving this country. For many, the question will be asked what difference will this policy really make? Secondly, this supposed threat of emigration has been raised countless times, be it in opposition to higher corporate taxes, greater sector regulation, increases in wages or trade union bargaining power and so on. Many times, politicians have bought into this threat – implicitly underestimating the value of the UK to these businesses – and have not acted. Now many look around and see the barren, economic desolation that such concessions have brought them. For a great many workers, if the price of keeping these businesses is low corporate taxes, low regulation and weak workers’ rights, low wages and little bargaining power, their desire to appeal to business to stay will be found to be lacking.

For a great many, now is the time to call business’s bluff.

Finally, we must address the claim by the CBI that many firms already allow employees to become shareholders, often by allowing said employees the opportunity to purchase shares at a discounted price. This statement is true, and to be sure it’s generally a positive idea. But it is not fair to bring up such a statement in the context of McDonnell’s proposal.

Whilst those working on the shop floor or the assembly line will be given these share purchase opportunities in their lifetimes, for those who are struggling to pay their rent or struggling to put food on the table because their pay is so low; for those who cannot afford to pay into their pension pot, or perhaps must leave the heating off in the winter; for those people, no matter how good the share offer is objectively, they will never be able to part-take. And even if they did, what power would their voice have versus the vast ownership shares of angel and institutional investors?

For the CBI to dismiss John McDonnell’s plan because similar means of empowering workers already exist, they are either blind to the realities of the everyday worker, or they are intentionally selling a false equivalency.

To be sure, the details of this proposal need to be checked, and checked again. It is foolish to assume all the nuances are known, all the problems are ironed out. But given the arguments offered thus far, primarily by the CBI, this plan remains – in my opinion – a positive policy for economic empowerment.

The Force that Pulls the Lever: Behavioural Economics and Big Data

Western democracies are desperately searching for Martin Luther. Following the Facebook and Cambridge Analytica data scandal, the social media platform in particular and tech giants generally have found themselves increasingly under scrutiny for their data practices. Such scrutiny takes many forms: is Facebook a threat to democracy?; are tech giants too big?; who has agency over our data?; and so on.

These are questions that have always existed, not just for social media, but for all private interests and indeed all states. There is little objective nuance in these questions. New technologies have always altered the power of the masses, and thus potentially threatened democracy; monopolies have always existed in one form or another; agency has always been a very transient thing. Even when existential questions about social media have been asked, most obviously in the campaign to delete one’s Facebook, the irony has been missed on those who distributed their rallying cries via hashtags, blogs and twitter feeds.

Luther, rather than David, is the character whom many seek as we consider data in a more critical light. We do not wish to slay social media; we want to reform it.

Social media reactionaries, irony aside, do not actually want to delete Facebook. We enjoy the curated information steams decorated in gradients of blue, the egalitarian means by which we might show approval, and the undeniable efficiency of social media as a means of consuming said information and showing said approval. Even the toxic areas of social media – and the Internet as a whole – act as reflections of social problems that exist without social media. At best, social media allows us to peer into fringe groups with relative safety. At worst social media allows these fringe groups to project their ideas outwards, protected by anonymity, which whilst often detestable or uncomfortable, we should recognise is a truth that might not have formally been identified.

Those that believe retreating from social media is the preferable reaction may be accused of suffering a similar belief that the power of invisibility may be gained by shutting one’s eyes. Just because they no longer see the world change around them does not mean change has stopped.

The question, then, is what is being reformed? To take the above scrutiny, the rhetorical questions that precede such outrage may be translated into two statements:

“Why did Facebook collect THAT piece of data about me!?”

“Facebook did WHAT with my data!?”

These statements represent either a shallower, or a deeper – respectively – understanding of the age of data. It is for those who reject the quantification of the world that exclaim the former, and not without good reason. There are legitimate causes for consternation. Privacy is that of most notable concern, and just as we teach young children not to talk to strangers, it seems good practice to not wantonly share data with faceless companies which unravel one’s privacy and leave oneself exposed.

When we realise that we have been doing such a thing by participating in social media – as many surely have since the Cambridge Analytica scandal – it is a natural reaction to withdraw. It is not necessarily the correct reaction.

By deleting one’s Facebook or Twitter, each of us might claim to be reclaiming some privacy and authority over our data. But we forget that companies which collect our data are companies, and insofar as they offer a service we would like to acquire we must pay a price. If the alternative is to pay a membership to these platforms, we would simply find ourselves out of pocket, as well as digitally exposed. If it is to legislate what data may and may not be acquired by these companies, that imbues a whole miasma of regulatory back and forth, arbitration and conflict – issues which, let’s be honest, the vast majority of social media users simply don’t care about.

Concern for one’s personal data security on something as individually innocuous as Twitter or Facebook is simply arrogance – as a data point, we are all very much unimportant. I will, however, return to this conjecture. The point is, for the vast majority, the price of their personal data is a fair cost for the services that the likes of Facebook and Twitter provide. When our data is used to suggest interesting people to follow on Twitter, to organise social gatherings on Facebook, or to recommend delectable entertainment on Amazon or Netflix, we see the great benefit that the tech giants generally provide.

This brings us onto the second statement. It follows quite logically that if the ‘THAT,’ piece of data is willingly given to produce a better service, when that same piece of data is used for an enterprise that is not a better service – the ‘WHAT,’ function – we will criticise the platform specifically, not the process generally.

This is perhaps the cure for the irony identified above: those that were calling for the deletion of Facebook were calling for the culling of a bad actor, whilst Twitter, Blogspot and others had done nothing wrong, and would have been unfairly targeted if this irony were true and discrediting. But this is not the point.

The point is this reaction to the ‘WHAT,’ function is a more rational response as it accepts the transactional nature of data and social media – that data is given only insofar as it creates and improves desired services. When Facebook as the trusted keeper of this data oversteps their mandate, or is lax in their protective duties, or both, situations like the Cambridge Analytica scandal arise. For policy makers, at least initially, this should be the area of legislative interest.

However, this simple model of social media and agency is incomplete, and not wholly due to simplicity. Whilst for some the collection of data (THAT) is the point of incredulity, for many it is the outcome of having given that data (WHAT). But how does THAT become WHAT?

As stated above, individually our data is not substantial. Most people understand this, hence the emergence of Big Data. But Big Data is often an overvalued asset; social media sites will gleam any and all data they can from us, and they will surely have fantastical ideas of the services they might provide in the future (the THAT and the WHAT, respectively). A specific example is Cambridge Analytica, who siphoned the data of Facebook users with the intention of supporting a particular election outcome.

Perhaps it is unique to the Cambridge Analytica scandal, with its politicisation, or perhaps it’s a condition of our data obsessed lives, but the scandal was not about the THAT and the WHAT. Users had already given Facebook that data, and citizens were already exposed to campaign advertising via the Internet and traditional platforms. The scandal, I believe, revolves around the HOW.

It would be abjectly unfair to place the blame for the scandal at the door of behavioural economics. For the most part, Big Data analysis doesn’t really care why a person with a particular set of data points is more likely to support one candidate/product/idea as opposed to another. Big Data simply identifies the pattern and targets the resources associated so as to match the pattern. Here, behavioural economics becomes the far too fastidious an advisor, the consultant who didn’t get the memo about going fast and breaking stuff.

As such, in lieu of the Cambridge Analytica scandal, pillars of behavioural economics such as nudge theory probably find more of a role as villainous underlings in targeted news campaigns (the presumed resources of a political advertising machine) than they do in deciding who will be targeted in the first place. Indeed, would the Cambridge Analytica scandal be a scandal if people did not believe – rightly or wrongly – that the efforts of the company were relevant to whatever outcome they were trying to facilitate?

Possibly, but it is much less clear than it might be otherwise. If the HOW of the matter is to receive some blame, and be subject to some reformation, behavioural economics may be as worthy of criticism as Big Data is. I find myself coming to this conclusion on the Cambridge Analytica story: Big Data is the new corporate sexy; cognitive deficiencies make us feel dumb. The latter should not be forgotten because the former is a more palatable creature.

This point, however, should not be conflated with the Cambridge Analytica story. That circumstance is more unique; the tandem utilisation of Big Data and behavioural economics need not be.

In an election, everyone is a potential consumer. Whilst Big Data might be used to target those more susceptible to a particular side’s advertising, for those who are accidently targeted the message is not wholly lost – the message is just less efficiently received. But for a commercial advertising campaign, where the promises of bang for your buck may make or break a would-be Cambridge Analytica’s business model, behavioural economics becomes more relevant.

Here, there is no need to go fast, and certainly no desire to break stuff. On the contrary; where the demands of Big Data are the maximum return from the number of advertisements placed, behavioural economics comes to the aid. The manipulation or exploitation (both controversial words) of ubiquitous cognitive shortcomings may reduce the cost of accidental mis-targeting, whilst the framing of products as defaults, offers as loss averting and the use of multiple ads to invoke herding effects may make advertisements too effective for those already considered susceptible.

In other words, Big Data may tell us who to talk to, but behavioural economics may tell us what to say. In this sense I return to the title of this piece; behavioural economics may be the force that pulls the lever of Big Data. This is a logical realisation I believe many in the field of behavioural economics will come to. A nudge such as a default option effect is far from perfect; for benefits of this nudge to be seen, a great many observations are often needed. As such, the domains in which Big Data and behavioural economics rely are the same: across populations.

Whilst the discussion of this piece has been framed around a scandal, it is not my intention to suggest either Big Data or behavioural economics are malignant. As with the discussion of the benefits of social media, such an accusation would be far too simple, and far too easy. But a great deal of the commentary on the nature of data and its place in society misses the point: it is HOW we use data that matters. If this discussion is to be had, I feel behavioural economics must be included.

Why I (Currently) Believe a No-Deal is Unlikely

Theresa May started her premiership with a lie. Or, at least, an implied mistruth. Whilst many debated the content of the statement, “No deal is better than a bad deal,” almost everyone missed the point. Politically, for Theresa May, no-deal is the worst deal.

This is why I believe a no-deal outcome is (currently) unlikely to occur.

Let us step back a moment and unpack this situation, because it does not take much pontificating to realise no-deal is not universally politically bad. In the short-term, such a scenario would satisfy the hard Brexiteers (though I stress in the short-term; in the long-term it is less clear how beneficial no-deal would be to this sect) and may extend political capital. Additionally, if the chaos that is forecast comes to pass, those campaigning for a second referendum will feel validated, if not invigorated. Whilst they might deny this – less they be accused of complacency in this outcome – it is the reality.

The third group to consider are those backing the Prime Minister’s Chequers agreement. By pitching this plan as the last workable option, this group seeks to rally support for the plan. Yet with dissenters on both sides, such a pitch demands we re-evaluate the ground on which we stand: if the Chequer’s agreement is the only deal that can be done, surely the only alternative is a no-deal?

It is the jockeying of hard Brexiteers on the one hand, and advocates of a second referendum on the other, that is propelling this narrative about no-deal. And the media, though rightly evaluating and informing of the consequences of a no-deal, wrongly projects significance onto the meagre odds of such an outcome espoused by those with their own agendas.

Let us remember this Prime Minister’s agenda. Theresa May was a Remainer; I am confident that she desires to be more than just a Brexit Prime Minister. Brexit, in lieu of her legacy, will be an inevitable cornerstone. Yet I see little reason to believe Brexit is all she desires to achieve, and – from the Prime Minister’s perspective – it seems hard to not characterise Brexit as that thing that simply need be achieved before the regular business of governing can begin. No-deal is not an option, because it is almost by definition an admittance of her failure.

This should be obvious. Whilst it is necessary to retain the rhetoric of walking away, the purpose of a negotiation is to reach a negotiated position. Should Theresa May fail to do so, she will have failed in her primary task as Prime Minister, and her remaining in the position will be untenable. Alternatively, consider the reality of a no-deal; a no-deal represents a breakdown in negotiations, not a satisficing of those things which need be negotiated. In other words, sooner or later the UK would have to negotiate with the EU again, over one matter or another. Would this country really entrust a Prime Minister who failed in the primary negotiation to lead secondary or tertiary negotiations?

A no-deal demands Theresa May’s resignation, and if we have learnt anything of Theresa May this past year or more, it is that she is not easily displaced.

I am not sure, either, whether the Conservative party realise the political damage a no-deal would do to them. Whether or not the average Tory voter is inclined to see a no-deal outcome as beneficial, they must surely concede their elected party has failed in its aim. This will be the narrative that dominates the party for the foreseeable future; the failure that calls into question the would-be party of competency.

If there is any entity that I consider more desperate to cling to power than Theresa May, it is perhaps the Conservative party as a whole.

We could play around with a scenario for a moment: that Theresa May, stoic in her resolve, walks away at the eleventh hour claiming such an action was the duty of any good Prime Minister given the villainous proposal on which the EU would not compromise. This, I concede, might score some points in her party. But it would be an obvious change in tone, one that no one would truly believe. It would not mask the sense of failure; it would not protect the party.

I do not deny the possibility of a no-deal, and to do so I think would be foolish. But rather than get caught up in the hysteria of a no-deal apocalypse, let us refocus our attention on the politics of this matter. A no-deal would be disastrous for the Prime Minister, and the Conservative party. Even those who would like to see the former gone will often find themselves exposed to the latter. It is for these reasons I (currently) do not think a no-deal will happen.

Cryptocurrencies are not Libertarian

Introduction

Beyond all those discussions which confuse or concern the financier and bemuse or excite the speculator, the prevalence of opinion that cryptocurrencies are a vehicle for the libertarian’s dream seems to be a point of great consensus. However, I contend, with little abstraction beyond ordinary observation and the same liberal thinking that should be familiar to my adversaries on this account, that the belief that cryptocurrencies are libertarian is in fact a myth; the victim of a miasma of technological optimism and general ignorance that accompanies any assessment of that which is new and unknown.

My arguments, and the structure of this piece, follow in what I believe to be the most logical order. I will begin by addressing the most common point of contention: that cryptocurrencies, being decentralised and anonymised, embody and facilitate libertarian values significantly more than traditional currencies might. I dispel this first argument by pointing to the benefits of cash.

This, of course, invokes retort in lieu of financialization and an increasingly cashless society. In such a world, I confess, there may be benefits to cryptocurrency; but only insofar as anonymity is concerned, and not as regards centralisation. Here, I argue, the general ledger system of cryptocurrency is simply a parallel of online paper trails which may be generated via online financial systems and offers little new to the individual. Further, I contend, the lack of transparency that may be associated with the creator of a cryptocurrency, compared with levels of transparency that may be found in a company or a government, serves as a further libertarian deficiency of cryptocurrency.

Finally, I address the silver bullet that is anonymity. Whilst I will not attempt to refute the claims of anonymity in this piece, I will argue that the libertarian’s placing of importance on the matter of anonymity demonstrate their misplaced concerns, with the regulation and legality of that which any currency might purchase, rather than the currency itself, being the correct target for libertarian efforts.

It is my sincere hope that the logical progression of my arguments might be ascertained from the above; certainly, it is my hope that by the end of this piece, irrespective of one’s opinion on the validity of my arguments, the process of these arguments’ development is clear.

Groupthink on Value

The state is the easiest enemy of the libertarian to identify. This, of course, is a simplification – if not an error – with entities such as the state being used to supplement more abstract ideas in layperson discussions. Yet, with the state more often than not cast as the enemy in libertarian discussions, it is the term I use here.

The libertarian benefit of cryptocurrency in the first degree is that the value and the issuance of units of value – namely the cryptocurrency – are not controlled and regulated by the state or similar financial institutions such as a central bank. Insofar as the things I have read and the discussions I have had, I have been left wondering why such a feature is exactly a benefit of cryptocurrency from the perspective of the libertarian; yet, given some thought, I propose two ideas.

The first is that a cryptocurrency not produced by the state, but rather legitimised via individual consent, may insofar as the philosophy of human value is concerned, better reflect the value of a given individual. Let me explain: irrespective of any labour theory of value, if the return to the worker in terms of a wage is denominated in a currency whose value is only acknowledged and guaranteed by the state, then the worker may feel like their value added due to their labour is detached from themselves. If the end product of labour is owned by the capitalist, and the return to worker is only valuable pending the approval of some entity other than the worker, what immediate role might the worker be said to have beyond being that of a puppet whose strings past from one set of hands to another?

The contention we might make in defence of the libertarian nature of cryptocurrency is that no entity such as the state or the central bank exists to give value to the cryptocurrency. Rather, the value of the cryptocurrency is determined – besides the costs of producing the currency – solely by the attributing of value by the holders of the currency. Our hypothetical worker, in a world where they may choose in what currency they received their wage, may be said to exhibit more liberty over their labour as it is their advocation of the value of the currency – much as they might advocate the value of their labour by pointing out the quality of their work – which gives the currency value.

The second, though only subtly different, argument that I suggest is that a cryptocurrency represents a choice on the part of the individual, rather than an imposition. In whatever country a citizen lives in, baring the rare exception, we citizens have never been consulted on what currency should be commonly used. We have not been asked what the currency should be called, what assets might back it, at what rate it should be exchangeable with another currency, and for what it should be exchanged and by who. This list is not exhaustive. Like a great many things that come to form the state – what we oft call institutions – we are born into them, with little individual power to really change them. Insofar as this might frustrate the libertarian, cryptocurrency perhaps offers a solution, if only for a small part of a larger structure, as they can choose almost all aspects of a cryptocurrency. An individual can be the creator, the central banker, the account manager, the publicist, etc. of a cryptocurrency, and regain some of that liberty that, if we are honest, was dubiously lost in the first place.

Yet I lament to say these supposed benefits offer little more than a perception of enhanced liberty, and, in actuality, demonstrate little difference between crypto- and traditional currencies. My primary point of refute on both charges is that the mechanism by which the state deems a currency to be valuable is identical – practically speaking – to how an individual deems a cryptocurrency valuable.

The question of what a state is is beyond the scope of this piece; it is sufficient enough here to say a state is an identity which a large enough number of people subscribe to such that – if this identity were to be challenged – the constituent parts could defend in one way or another their advocacy for that identity. The provision of defence is necessary for this point, for it is what we might call the weight or the clout of a state which allows the value of a currency to become accepted and maintained despite the objections of any given individual. Indeed, we need not consider a state, but simply two individuals, to understand this concept. The value that the owner of an item assigns to that item can be any value they choose. Yet if they desire to convert that item into another item of the same value, they must find other individuals who are in possession of the desired item, but who also acknowledge the value of the owned item.

In other words, whilst the individual might desire and – in isolation – be able to prescribe a value to themselves, their work and their possessions, it is only through the acknowledgement of value in such things by others that gives those items any semblance of objective value.

In both benefits, whilst an individual may feel a sense of liberty from choosing to use a cryptocurrency over another unit of value, there is no legitimate claim to the individual giving it value. Instead, the individual must rely on others to recognise the value of the cryptocurrency in much the same way a state gains the legitimacy to guarantee a currency. I dismiss any arguments of subjective value: should an individual be able to survive based on their subjective valuation of things alone, then there is logically no need for a cryptocurrency, and thus no benefit to be gained, as that individual is already master of all that which they require, and may – it is hoped – always be able to strike a deal with oneself on the price of a good.

If these are the only benefits, insofar as libertarianism is concerned, that can be gained from the decentralised structure of cryptocurrency, then I must conclude presently that cryptocurrencies offer no libertarian benefit as they, as with traditional units of value, demand the acceptance of value from others. One might, I concede, gain benefit from the feeling of choice that cryptocurrencies allow – ignoring the lack of markets where cryptocurrencies may actually be used – yet I contend that few individuals would find such feelings satisfying when faced with the reality of a valueless asset.

Considerations of cash, credit and consent

We shall return to arguments of state and decentralisation. It is now I would like to turn -  having established the commonality of traditional currency and cryptocurrency in terms of value – to a discussion of anonymity and cash. This argument, I believe, is a very simply one.

Whilst I cannot deny the anonymous nature of cryptocurrency, I feel compelled to defend traditional currencies against the claims of the libertarian that traditional currencies may not be similar. Let us make one thing clear; insofar as there is any substance on the matter, my decision to enter a store and purchase an item with cash preserves my anonymity. Should such a purchase be performed on credit, this statement is disputable, yet I will address such a dispute shortly.

First, however, it might be argued that my statement is false as there are repercussions to my purchasing an item with cash that do in fact infringe my anonymity. Is it not the case, it might be supposed, that my anonymity is tarnished by those who see me entering the store; by the shop workers who facilitate my purchase; by the cameras that capture my image and store it for as long as interested parties desire? I cannot deny these activities as being necessary for any purchase to occur; but let us think rationally.

The concern over cameras, for example, is an issue of liberty, but it is not one that concerns the means by which I purchase an item. For the libertarian to take aim at the cash in my pocket, rather than the surveillance utilised by others, is to mark such a person as senseless in their priorities. Of course, there remain others who might identify me in the process of purchase; who might destroy my anonymity. To this point, I feel compelled to express sympathy to any person who imagines this to genuinely be a problem worthy of concern. Is not the alternative – again, irrespective of the currency used – to be a hermit, to hide away in self-imposed isolation such that some mystical notion of anonymity might be preserved? Is it not a foolish admittance of desperate anti-social behaviour to argue the witness of others threatens one’s anonymity, and thus strengthens the libertarian claims of cryptocurrency? I think so.

What might strengthen these claims, I do admit, is if such a purchase is done on credit. Before all else, it is necessary to explain why such a method may infringe my anonymity. To this point, I offer a discussion of consent. By virtue of it being necessary, I consent to the shop worker participating in any purchase I make from the store; further, in keeping with the values of individual liberty which any reasonable person will accept, I accept the reality of others seeing me when I make me way to and from the store; and I consent, as part of my obligations to purchasing an item from a store, to be photographed and recorded doing so. Even if questions of consent regarding these issues may still be raised, for the sake of our present discussion, let us allow for my consent on these things to be given actively and unquestionably.

To what activities do I consent to my credit card company doing with my purchase information? Let us be sensible: I consent to their handling of my money, requiring access to my financial information and knowledge of with whom I am transacting; I consent to their sending me billing information so that I might pay the costs of the service, and as such I consent to their having my address and again access to my purchasing information; and, by the act of being a customer, I consent to whatever fees are associated with their service.

I do not necessarily consent to a stranger, an individual at the credit card company, looking at, analysing or wantonly distributing my purchase information. Further, I do not consent to the company holding my data forever. These are valid points, and in establishing the boundaries of consent in any transaction, we might begin to see how cryptocurrency purchases may diminish the opportunity for our consent to be violated – for our liberty to be preserved. It stands to reason, therefore, that any libertarian benefit of cryptocurrencies must improve on the weaknesses of credit cards by – in my simple analysis – keeping my data private, even from the eyes of those who handle the data, and by keeping no record of my purchase, or at least a record which I control.

Those who are familiar with blockchain technology must acknowledge, either partly or wholly, that cryptocurrencies do neither. Let us consider the latter point first. Blockchain technology records the transactions between parties of a particular cryptocurrency in an online, distributed ledger. It is not possible, and would certainly undermine the innovative thinking behind blockchain, if a transaction could be removed off the blockchain. Whilst my credit card purchase might eventually be deleted off the company’s system or diminished within a literal paper trail of historic transactions, the blockchain ledger remains. One might argue the anonymity of a posting to the blockchain invalidates this point – indeed, at this time I have no rebuttal which I would dare to call strong – but one also cannot deny this is a weak defence of the spirit of libertarianism, predicated only on the infallibility of online anonymity.

The spirit is weakened in another regard: the blockchain is publicly visible. This is a necessary part of maintaining the sanctity on blockchain transactions, one that promotes transparency and which I applaud. Yet, when compared to my credit card transaction which could only be seen by those who had access to such data at the company, the spirit of anonymity, or the spirit of individual privacy, seems to me so much more publicly exposed by cryptocurrencies than alternative technological methods. In actuality, this claim might be dubious; but in actuality, again, one must surely see that the two methods are more similar than they are alien. If one is a panacea to a libertarian crisis, then is the libertarian not twice cured? If one is not, surely the libertarian is still sick?

But, allow me to interject one final point before moving on. I have offered the state as the enemy of the libertarian, though I have done so acknowledging this is an over simplification. As such, let us now complicate it: are not the issues of consumer rights regarding credit cards, of data access and distribution and security and so on, are those concerns not countered by state legislation? Legislation which, less we forget, does not necessarily exist with cryptocurrencies. From the simplified perspective of libertarianism, I agree this makes cryptocurrencies more libertarian; but even the famed liberal John Stuart Mill, and a great many critics thereafter, acknowledge that some legislation and regulation may actually preserve and enhance liberty! Such laws as govern the treatment of consumers and their data give me confidence to use credit cards, allowing me – through such use – to exercise my liberty. It is not my contention, but it should not go unsaid, that concerns regarding the security of cryptocurrencies may infringe a person’s capacity to exercise their liberty.  Such a thought requires addressing by those advocates of this whole libertarian affair.

Returning to question of state

The above is perhaps a preamble as to what I would like to discuss now. Partly as an aside, but yet I hope soon obvious, is mention of the irony that so much surrounding cryptocurrency seems to be applicable to that old adage of two sides to every (bit)coin. We have seen it above, to various degrees, be it the similarities in value mechanisms between traditional and cryptocurrencies, or – as I would contend – the false positive claims of greater liberty through reduced regulation.

These debates, these positives and negatives and the ensuing tug of war for argumentative dominance are not surprising when we consider that questions of liberty are messy, if for no other reason than perspectives bend and break, switch and grow, and what one might consider perfectly acceptable, another considers abhorrent, and so on. Nothing is new here, though I remind the reader the state most often is the subject of many disparaging remarks in these debates. I speculate, if I might for a moment, that this is because – almost ironically – the state is the great unifier; the omnipresent other of which we all know intimately, and yet inevitable feel detached from. Perhaps, I suggest, even those individuals who find great strife with one another may unite against the state should it attempt to deny the warring peoples their strife.

Above, I offered the state a reprieve. I now offer it another. A strong, positive argument for the proliferation of cryptocurrency is improved transparency. Ignoring the distant laughs of tax authorities and criminal enterprises, the blockchain does seem – at least theoretically – to promote transparency of exchanges even if the exchangers remain anonymous. Compared to the great behemoths of the state, of central banks and the financial industry more widely, we should acknowledge the beauty of the blockchain idea.

It is necessary, however, before proceeding, to clarify why the question of transparency is crucial to the libertarian debate. First, liberty insofar as the natural sciences allow, and its denial, requires someone to deny said liberty. One can deny their own liberty but may just as easily reclaim it; it is only through the interaction with others that a person’s liberty may become diminished. Secondly, I would argue that any interaction with another in some way reduces a person’s liberty, be it through violence or obstacle or the then-established prejudices of another, the initiation and continuation of a dynamic with another reduces a person’s liberty (it may, of course, enhance their liberty. My point should focus more on a person’s changing sense of liberties; where one door opens, another may close. That person is not necessarily worse off than they were previously, but they are changed, and insofar as they don’t want to be changed, as they desire to return to a time without the bonds of this connection, they are left stranded. More, of course, could be said of this issue, but it is not the intention of this piece to do so). This though, is not necessarily a matter of moral repugnance. If the reader will recall, I may consent to the restriction of my liberties to assume various benefits from compliance, or to adhere to my own beliefs. Considering all these things, it follows that the entity which seeks to deny us of liberty must be sufficiently transparent for us to consent or reject the entity. This notion, loosely, is an abstraction of the Rawls’ (1971) publicity principle, an idea previously considered by Kant.

Now we may return to cryptocurrency. Cryptocurrency, it appears to me, solves the transparency problem by claiming to remove the second party – the party that is necessary to deprive a person of their liberty. Supposing this is the case, it is easy to see why many would call cryptocurrency a libertarian tool. Similarly, considering the bureaucracy of state – indeed, the very existence of the state! – those same individuals will surely argue that centralised institutions are abhorrently opaque, and thus fail a test such as the publicity principle.

I have demonstrated above, in regard to data security, evidence of this flawed thinking. I now offer my retort to this accusation directly. To do so, I ask a simple question: how might one be anonymous, and yet transparent? For all the rhetoric that may surround the state or private banking institutions, let us not forget we know who they are. I can, should my dissatisfaction become so great, change my bank, vote out my representatives, or indeed move to a different country entirely. I can write letters to CEOs and politicians whom I am disgruntled with; I can hold protests and write essays exclaiming my frustrations; I can, if I want, even challenge directly the positions of those individuals with whom I am so irate.

It is an insufficient argument to say that the state or a bank is too large to surely know which specific individual it is that is violating my liberty at that moment, for such a grievance may be handled in a manner that is sufficient simply by knowing the party or the bank with whom this individual is associated. Can I do the same with cryptocurrency? I cannot.

Whilst I can access the blockchain and perhaps see evidence of market manipulation, I cannot see which person or organisation is behind it. Whilst I can know exactly how much of a particular cryptocurrency has been mined, I cannot petition more to be realised, as I might be able to petition a central bank to increase the money supply. Note the difference: I need not know the person who operates the printing presses at the Bank of England for my concerns to be discharged at the bank generally; but given the nature of cryptocurrencies, my screams may echo into the aether. This is liberty, but only nominally. This is transparency, but only technically.

This argument is perhaps the beginning of my attack on the claims of anonymity, but I would rather consider it a defence of the merits of the state, of which I would hope any wise libertarian would acknowledge there are. If this argument feels detached from the rest of this piece, that is unfortunate, but perhaps inevitable. Let us turn, therefore, back to the claims of anonymity once more.

The correct target

In my introduction, I described anonymity as the silver bullet of cryptocurrency, a feature which serves a purpose and fulfils a promise of the technology that no rival has come close to dislodging. The promise of anonymity, insofar as the libertarian is concerned, is panacea, for it offers the chance for the individual to do whatever they like and not suffer the consequences of these actions. It is now, therefore, that we must address criminal activity.

Let me be clear here: it is not the purpose of this piece to levy a moral judgement on such activity beyond that which all civil society must surely agree is repugnant. As short commentary on this matter, I see no point in debating the content of this piece with that person so fanciful of the doctrine of libertarianism that they might permiss those activities that bring harm to others. This is not a clear line, as any scholar of the harm principle will know; but I take solace in the belief that at the extremes the colours are less grey. It is the person whose colour is much distinguishable from grey, and much the opposite of the average person’s, to whom I address my repugnance.

The anonymity of cryptocurrency enables individuals to purchase a whole range of illegal products and services online. By doing so, these individuals seem to circumvent the laws of society and insofar as libertarianism advocates the liberty of all people, this feature of cryptocurrency certainly seems initially to be libertarian. There will be, of course, those libertarians that do not support this argument; those who argue we should be granted maximum liberty within the confines of the law, law which exists for a valid reason. I recognise this perspective, despite having never myself met a libertarian who did not advocate some adjustment of the law in one way or another, and for this I am glad. Just as those who might permit repugnant acts in the name of libertarianism ignore the wider debate of what should and should not be legal, so too do those that only challenge liberty within the confines of the law, and do not push for debate – all be it from the opposite direction to their counterparts.

At present, I feel I am offering a reasonable defence for the libertarian nature of cryptocurrency as it allows individuals to interpret the grey areas of legality safely – by which I mean anonymously – which I will not deny may have benefits. But this, I contend, is actually a great weakness of cryptocurrency as a libertarian tool, and the impetus for the invalidation of anonymity as a worthwhile feature.

Remember the cameras. The anonymity of cryptocurrency is only necessary when pertaining to the purchase of illegal items because such items are illegal. If those items were legal, the narrative reverts to the isolated hermit terrified of the world, less common sense be allowed to take over. Anonymity as a feature is a result of the illegality of some items that may be purchased. As such, I suggest it is not libertarian to tout cryptocurrency as a libertarian tool; the liberal activity is actually the debate surrounding the legality or illegality of those items being purchased. Recall our discussion on the merits of cash; my purchasing from a store may just as well have been a purchase of illegal substances. Should I be caught, justice – rightly or wrongly – will be levied not on the means by which I purchased those substances, but on the act of purchase and possession of those substances.

It is thus the debate about the illegality of the substances that is relevant to the libertarian and should be the target of their efforts. Cryptocurrency, beyond the benefit recognised above, merely serves as a substitutable method amongst many others, and should not in und itself be considered the focus of libertarian attention.

But there is a further point to be had. The great defence of cryptocurrencies as being anonymous and thus libertarian crumbles when we realise that anonymity is only relevant when it comes to the purchase of illegal items, and in all other cases, be it the charge of transparency or of value, anonymity is perhaps harmful to the libertarian cause. Of course, I do not seek to belittle the debate; I simply charge libertarians with identifying the wrong area of debate – not the currency, but the item for purchase.

Let us debate the illegality of various things but let us simultaneously relegate cryptocurrencies to the realm of simple units of value. Let us not place anonymity on a pedestal, for anonymity – when necessary – may be found in all currencies and is only necessary in almost all circumstances when they facilitate the purchasing of illegal items. Anonymity is not a feature that should be touted and, insofar as questions of liberty are concerned, anonymity offers little practical benefit.

Concluding remarks

It is easy I believe to take the remarks I have presented here and see an author wholly opposed to cryptocurrencies. I am not. But, with an arrogance I fear has pervaded this piece, I charged some readers with ignorance at the start of this piece. I am surely ignorant also.

However, on this matter I stake a defence. Cryptocurrencies are not libertarian. This does not mean they detract from the libertarian cause, and it does not mean I am opposed to them outright. On the contrary, throughout this piece I have argued the features of cryptocurrencies often mimic that of regular units of value – a strategy I would contend may facilitate the widespread adoption of the technology.

But in far too many discussions I have heard this rhetoric repeated: cryptocurrencies have many libertarian advantages over traditional units of value. I hope I have conveyed to you why this is false:

1. As a means of value being determined, multiple people must agree on a value; as such, the individual is not free to set the value;
2. Cash is insofar as it practically matters as anonymous as a cryptocurrency;
3. Where credit is concerned, blockchain creates a record of transaction that – at least in spirit – fails to differentiate cryptocurrencies and credit;
4. Anonymity shrouds cryptocurrencies in shadows, making adherence to the publicity principle difficult and diminishing the individual’s power of objection;
5. Anonymity is only necessary for the purchase of illegal items, with such items being the true centre of any libertarian debate, rather than the means of purchase

In writing this piece, other ideas came to mind. But I feel, in one form or another, any objections that I presently have the power to predict may sufficiently find redress in the content of this piece.

If I may repeat myself once more: I am surely ignorant also. There is not a semblance of belief in my mind that I have the vision to imagine the future of this technology, nor the cognitive power to predict all the nuances attached. I only levy this one charge, based on the content of this piece: cryptocurrencies are not libertarian.

A Second Referendum is not a Solution

The problem with vapid statements is they work only as placeholders, and cannot exist as anything beyond meaningless soundbites – except, maybe, in the form of a joke. A wonderful example of such a statement is Theresa May’s, “Brexit means Brexit,” which, this country has come to discover in recent days/weeks/months (I guess it depends how much obnoxious foresight one wishes to prescribe to themselves) isn’t quite sufficient to negotiate one of the most complicated diplomatic de-couplings in history. The effectiveness of, “Brexit means Brexit,” at least initially, stems from the same syllogistic logic that 1 = 1. The difference, however, is that most people know what the number 1 means.

It is not that people – be it politicians or pundits or the public – do not know what Brexit means per se; we all know that Brexit means the United Kingdom leaving the European Union. Rather, the problem is the question of how we leave the European Union – stumbling drunkenly out of the club reciting an infamous retort of Bender from Futurama; or thanking everyone on our way out for giving us such a lovely time, before sending them a Facebook friend request.

Such analogies for a hard and soft Brexit might sound dumb, but frankly, they are as valid as any other description of our current negotiating debate. Do not misunderstand me: it is not that people do not know what they are doing, it is that nobody seems able to agree on whose nicely typeset and grammar checked proposal should be put through the Westminster meat-grinder this week, and whose should live to die another day.

This, “majority for nothing,” situation is what has caused the former education secretary Justine Greening to add her voice to the increasing numbers calling for a people’s vote on the final Brexit outcome (why exactly they are calling it a people’s vote and not a referendum, beyond the benefits such linguistic wizardry may provide in a PR battle, is beyond me). I have previously written about a potential second referendum, to an extent advocating for it, and I will not shy away from grounding my thoughts on Ms. Greening’s proposal in my previously held position. But first, let us lay out what is being proposed:

• There will be three options available: a clean break (no-deal), a facilitated customs arrangement (FCA; Mrs. May’s Chequers plan) and the option to remain in the EU.
• Voters will be given a primary and secondary vote, allowing them to vote for two of the above options – essentially showing their ranked preference of all three options – which will ensure the option that wins has a majority backing.

Insofar as such an incendiary thing as a second referendum goes, I like Ms. Greening’s initial proposal, and her rationale for proposing it. Whilst a Remainer, this referendum feels less like an obvious Remainer coup masquerading as devolved democracy than previous calls might have done. The proposal certainly tries – though, may not succeed – to ensure the vote spells out a more specific arrangement than the 2016 referendum question achieved. Finally, at least theoretically, the primary and secondary vote structure brings clarity to the country’s preference, and again helps dissuade criticism that this is just a Remainer coup.

On that latter, and indeed immediately former point of praise, I have heard criticism, however. Some might argue that two leave options and only one remain option will split the leave vote, biasing the vote towards remain. This may be true of a vote consisting of only one elected choice, but with a primary and secondary choice, such criticism appears to be a misunderstanding of reality. A leaver, we might presume, will vote for both leave options (the exact preference does not matter). Yet a Remainer, whose primary vote will support remaining in the EU, will have to (provided single-elective votes are not counted, which, given this is all presently hypothetical, I must assume) vote for a leave option as their secondary choice. Rather than such a referendum being biased towards Remain, this referendum proffers a Leave sentiment.

This, in turn, leads to a second curiosity to consider: who would win? To that it is hard to say, but I do offer an alternative proposition: the vote for a soft-Brexit (the FCA plan backed by Mrs. May’s) will dominate, and will muddy any outcome. This will be despite it  would be the public’s least preferred option. Here’s why.

Extend the rationale prescribed above. Those on the extremes of this debate, hard Brexiteers and Remainers, will of course favour no-deal and remain respectively. Their second elective, by demographic definition, must be for a soft-Brexit. On paper, thus, the only apparent agreeable consensus between these two groups is a soft-Brexit – they both said it was their secondary choice! In as long as it is short, this is the situation we presently find ourselves, and we are at an impasse. In terms of the extremes, this referendum will solve nothing.

Of course, the purpose of the referendum is to garner the opinions of the British people, and the majority of the British people are not on the extremes, at least insofar as they are willing to listen to argument and allow themselves to be convinced by it. But even a Remain-leaning voter, or a Leave-leaning voter, will most commonly select amongst their choices the soft-Brexit option (possibly as a first-choice, often as a second-choice).

The structure of this vote will inevitably polarise people (this is mathematical fact: if 1 and 3 represent polar opposite positions, and you must pick two numbers between 1 and 3, one foot must end up on an icecap), and thus the majority of people, whom we might assume are broadly split down the middle between the extreme positions, will appear most reconcilable around a soft-Brexit. Again, this accomplishes nothing.

Further, because the vote is inevitably polarising, I would predict the Remain and Leave campaigns, rather than a third soft-Brexit campaign, to dominant the narrative. In effect, then, this vote would be rendered a re-run of the last referendum, which has a smell of democratic-subversion. But this is not the point I would immediately like to make. Rather, my point is this: in such a referendum campaign, the number of individuals who elect, primarily or secondly, both no-deal and remain in, will be reduced, and thus the proliferation of a soft-Brexit vote will be facilitated. We might expect such a group of people to be small anyway, and that is true, but unless there is a strong core of supporters campaigning for a soft-Brexit, this group will get smaller. As an aside, if such hypothesising is true, it seems terribly offensive to the democratic process that the winning strategy might be to do nothing.

One should not ignore an additional line of inquiry, one that is somewhat ironic given my previous statement, that being that a soft-Brexit vote is one that most preserves democracy, by which I mean honours the outcome of the previous referendum. Of course, the no-deal option does so too; but I can imagine a compelling logic in the mind of the average voter that Brexit must happen, but it should not jeopardise various interests, and thus a soft-Brexit is preferential.

Let me clarify: I am not riling against a soft-Brexit outcome. Instead, I am arguing that a soft-Brexit outcome invalidates the whole reason for having the second referendum. I can see some reasoning, of course: one or both of the extreme sides of the Brexit debate may be side-lined as a result, less they be accused of subverting the democratic will. This might enable a majority in parliament for the FCA, or something similar. But a soft-Brexit arrangement, by its nature, would be a messy outcome, and thus anyone believing these groups would go quietly is deluding themselves; a soft-Brexit still leaves room for hard Brexiteers and Remainers to return. It still allows both sides to argue mass favour of, or dissention towards, the EU. Consider it another way: was the 2016 referendum not a clear-cut question that should have, in theory, silenced – or at least demobilised – those whose arguments lost? As it did not, what guarantees do we have that a second referendum, irrespective of outcome, will resolve the situation we find ourselves in?

If, then, this new referendum may devolve into a re-run of the last referendum; if the result may leave us exactly where we are; and if the new result may not guarantee parliamentary consensus; if all these things, why even have the referendum? The retort to these arguments is that we don’t know, and cannot know until run, what the outcome would be. I will not argue against such a retort, though I do not believe it invalidates the arguments I have raised. A second referendum is not a panacea.

Following my previous comments

I might be accused of being a hypocrite, given that sentence.

I have previously written about the prospect of a second referendum. In that piece, I argued Mrs. May could take a political gamble to strengthen her position in her own party, and perhaps in parliament. My proposal was simple: re-run the referendum, and side with Remain. The youth support so enamoured with Jeremy Corbyn would suddenly have a new champion – at least in terms of Brexit – in the form of Mrs. May, whilst the hard Brexiteers in her own party would be forced into an existential contest: win, or accept the PM’s authority. Of course, Mrs. May would also face an existential contest, for should she have lost she would have had to resign. This is why it was a gamble, and given Theresa May will surely have a promising career as a glue salesperson once her time in office is up, it was never one she was likely to take.

Ignoring Mrs. May’s FCA plan, this barrier to a second referendum remains. As the 2017 General election demonstrates, Mrs. May will not take a risk unless she believes herself likely to win.

But we cannot ignore the FCA; Mrs. May has made her bed, and she must now sleep in it. If my thoughts are right, nothing will change; if my thoughts are wrong, Mrs. May will have to resign. A second referendum now holds none of the advantages that it did prior to her unveiling her plan. When I hypothesised about the potential political benefits for Mrs. May of holding a second referendum, I considered only the political benefits, which – at the time – I believed existed. For Mrs. May, these benefits no longer exist, and thus she will not call another referendum.

Yet this is an obvious conclusion.

This conclusion is also simply mathematics: if there isn’t a consensus to get any Brexit plan through parliament, there is certainly not a majority to get a second referendum vote through parliament without (and possibly even with) the PM’s backing.

All of this Brexit debate, and I do mean all of it, points to the elephant in the room. Shaped by the rhetoric of the victors, too often there is a narrative that the country wants Brexit, that the country thinks Brexit will be bad for jobs, that the country wants control of its borders, that the country is concerned about leaving the single market. The only thing we can say about this country and Brexit is that 52% voted to leave the EU, and 48% voted to remain in the EU. For all the talk, for all the rhetoric and vitriol, if you want to know why we’re divided on Brexit, the answer is because we’re divided on Brexit. I am not confident a second referendum will change that.

iRegulate – Apple’s solution to screen addiction and personalised paternalism

This week at their annual developer’s conference Apple released details of new software features aimed at curbing screen addiction. Such features might be considered novel by some and a cynical attempt to avoid legal action by others (Bradshaw, 2018 in the Financial Times), but to some people – by which I mean me – this marks an important step in the development of personalised paternalism.

Personalised paternalism is an interesting idea that exists, at least in theory, as a response to the existing problems standard paternalism in regulatory frameworks. Though, standard paternalism is a bit of a misnomer, so let’s clarify some terminology first.

Without full details, it’s hard to assess how closely Apple’s new software will be borrowing from nudge theory – a branch of behavioural economics (which itself is a branch of economics with a good helping of psychology mixed in) that focuses on adjusting (or, as some might argue manipulating. See, for example, Rebonato, 2014; Arad and Rubinstein, 2015) how a proposition is presented to a decision maker in order to influence their choosing of a specific option (see Thaler and Sunstein’s Nudge (2008) for more). However, some reported elements, such as time-usage reports and mandatory downtime options, clearly have a grounding in the world of nudge.

The trouble with nudges, at least philosophically, is primarily the question of who should nudge? We all like to think we make wise decisions most of the time, but what if you were told you were often wrong in your decision making? And further, what if you were told there was someone who, at no expense to yourself, was willing to nudge you in the right direction? When phrased like this, it’s hard to really be aggrieved at your benevolent advisor. But think about it this way: what if Apple didn’t let you set the downtime options, but instead decided that they understood your usage better than you and chose for you how long you’re access to a specific app was restricted?

This is part of the problem with paternalism (and it is definitely paternalism. Nudges, typically, do not objectively limit freedom of choice – there is some debate regarding nominal freedom of choice, but that’s beyond the scope of this piece). Whilst both you and Apple may agree you need and want to cut down on your screen time, and whilst Apple may be better informed of how to meet this end more effectively, there’s something deeply sour about this approach.

In nudge theory, the scenario is not so explicit. Say you want to pick a pension scheme, but there’s a lot of information out there and you don’t really want to trawl through it all to pick the absolute best scheme for you (assuming you’re even able to do that). Nudge theory may advocate a carefully selected default option pension scheme. The default option effect states that when faced with a decision, people are more likely to pick the default option than an alternative option. If the default pension plan is the optimal pension plan for the average saver, then, so the theory goes, welfare may be maximised by nudging people towards the default plan, rather than allowing them to sift through all the information and potentially pick the objectively wrong policy.

And for most people this system works. Whilst some argue against this idea, conjecturing it’s not possible to know what other people would choose for themselves (again, see Rebonato (2014), or, more broadly, On Liberty by Mill (1859)), this misses a point: in some situations, most people will not know what is the best option for them, and they’ll be happy enough to be nudged in the ‘good enough,’ direction (see Sunstein and Thaler (2003) who cite Beattie et al. (1994) on this point). The stronger criticism comes in the form of a question: can we do better?

This is where personalised paternalism comes in. The problem with either the hard paternalism example of Apple setting the downtime options or the soft paternalism of experts nudging people towards the best – on average – pension scheme is that most people will still be left somewhat unsatisfied by these approaches. Whilst the default scheme might be good enough, it won’t necessarily be optimal for me as an individual. Similarly, whilst on average it might not be wise for a person to spend umpteen hours a day on their phone, you might be able to cope with the effects of screen time much better than the average person. By adhering to averages, everyone will lose out – though some more than others.

To get the best of both worlds, we would need to be able to feed all our preferences, ideas and uncertainties into the system, and then let someone else’s expert judgement determine the best course for us specifically (assuming, of course, you want someone else making the decision). This is personalised paternalism, and as we begin to collect more and more data about ourselves, the potential for the theory to become realised skyrockets. Apple’s screen addiction software may mark an important step in this direction. Here’s why.

Say Apple reports back to you how much time you send playing Candy Crush every week, and you decide you want to cut down. You could specify an amount of time each week you are allowed to play Candy Crush, and let the software work in the background to keep track of everything. Perhaps in the future this software might access data in your calendar to know when you should be working, or your location data to figure out you like to play whilst you’re commuting to work, and it will build your allotted time around these preferable and not so preferable time frames? This might work fantastically, potentially increasing productivity and making downtime feel more rewarding.

Of course, it’s easy to spin all of this as a positive and ignore the negatives. If the goal of this software is to cut down on screen time, is it really the best strategy to let technology coordinate more around your life? Additionally, as I have argued before – following arguments put forward by Bar-Gill (2012) – even in disclosure interventions (when a person is given more information to help them reach a better decision themselves, rather than asked to trust the judgement of someone else who has that information, i.e. a nudge) which the above example is, there are still paternalistic aspects, and aspects that infringe on freedom of choice. For example, if I was told how much time I don’t use my phone every day, my feelings about how I should moderate my use will probably be different compared to the effect of being told how much I use my phone. The decision of how to frame information disclosure is a paternalistic act in itself.

Finally, we should always ask an important question: why do we need it? Personalised paternalism supposes to make our lives better by tailoring regulatory strategies and nudges to our specific requirements; but is it right that we should feel compelled to regulate ourselves? Is it the consumer’s fault that they spend too much time on their iPhone, or Apple’s for making such an appealing device, or King’s for using bright colours and sounds in Candy Crush? There is no absolute answer to these questions, but I believe they’re important ideas to think about nevertheless.

I generally believe Apple’s announcement is a positive one, and when we accept some form of paternalism will always exist, the ability to have some control over it if we want is an important feature to have. But paternalism, nudges and the agency question that surround both remain important questions to consider, and it would be dangerous to see one solution as a panacea.

References

Arad, A, Rubinstein, A (2015) ‘The people’s perspective on libertarian-paternalistic policies,’ working paper no. 5/2015, research no. 00140100. [Date accessed: 04/06/2018] [Online]: https://www.researchgate.net/profile/Ariel_Rubinstein2/publication/321161872_The_People%27s_Perspective_on_Libertarian-Paternalistic_Policies/links/5a129b3e458515cc5aa9e5a4/The-Peoples-Perspective-on-Libertarian-Paternalistic-Policies.pdf

Bar-Gill, O (2012) ‘Seduction by Contract’ Oxford University Press: Oxford

Bradshaw, T (2018) ‘Apple addresses screen addiction with new suite of tools’ Financial Times. [Date Accessed: 04/06/2018] [Online]: https://www.ft.com/content/e4048d90-6824-11e8-b6eb-4acfcfb08c11

Beattie, J, Baron, J, Hershey, J, Spranca, M (1994) ‘Psychological determinants of decision attitude’ Journal of Behavioural Decision Making, 7(2), pp. 129-144

Mill, J S (1859) ‘On Liberty’ in ‘On Liberty, Utilitarianism and Other Essays’ (2015), Oxford University Press: Oxford

Rebonato, R (2014) ‘A Critical Assessment of Libertarian Paternalism’ Journal of Consumer Policy, 37(3), pp. 357-396

Thaler, R, Sunstein, C (2003) ‘Libertarian Paternalism’ The American Economic Review, 93(2), pp. 175 -179

Thaler, R, Sunstein, C (2008) ‘Nudge’ Penguin Books and Yale University Press: London

A Modest Proposal for a New Social Media

For many observers and commentators of the recent Facebook data scandal, now is the time to bask in smugness. Smugness, in one regard, because it is Silicon Valley (or at least a major member of it) finally receiving what some might consider to be comeuppance, but also because many will claim to have seen such a scandal coming. The logic behind the latter consideration is simple; with so much data, and so many users, eventually something would go wrong. Popularity, or perhaps frequency, breeds inevitability – a notion that we will return to.

The response to such a scandal, too, has thus far been quite typical of the current digital age, with hashtag movements seeming to galvanise the popular, if sometimes discreet, zeitgeist rejecting social media (irony, of course, pervades, namely, a hashtag campaign to rally against Facebook membership). Meanwhile, governments, who, in more ways than simply potential election irregularities, have felt marginalised by social media, embrace the opportunity to assert some legislative position, even if ultimately nothing transpires from these witch hunts (the use of the phrase ‘witch hunts,’ is not done with some hyperbolic tone as might be conceived; such investigations are supported, and the phrase has been used for lack of a better word).

It is valuable, and indeed necessary, in my opinion, that we begin to examine the role of a) social media, b) digital enterprise more widely and c) big data within the frame of the democratic and social contract. Such examination, I believe, was necessary even before the several high profile examples of dubious social media exploits that have brought these questions to the fore; whilst one should be sad that said scandals have occurred, one must be grateful of any progress given the unrelenting ferocity with which some imagined, ‘future,’ seems intent on imposing itself on society (again, I fear the negative undertones in my words; to be sure, whilst sceptical, it is poetic license, and not the entrenchment of a position, that should be identified from my choice of phrasing). Be it some calls for the public ownership of big data, or the application of anti-trust laws in the face of Silicon Valley behemoths, solutions, be them effective or fanciful, are valuable if only in acknowledging that there is a problem.

Yet, despite the themes alluded to thus far, a precise picture of what has and is happening does not appear clear. It is argued here, to an extent, this is because nothing fundamentally has changed in the way Facebook and its users operate. I think it is a helpful to begin by considering the impending crisis in social media (which, I would suggest, is not necessarily a crisis solely within social media, but also within big data regulation and anti-trust laws around tech companies) to that of the 2008 financial crisis. The parallels, though superficial at times, do, I believe, provide a reasonable basis of thought with which to proceed.

In terms that are far too simplified, the 2008 financial crisis was a failure from regulators, from government, and from individuals, in moderating the behaviour of massive financial institutions as they placed a vast number of moral hazard trades. Such hazardous morality was (and is, to an extent) found in their size and importance to society at the time. The collapse of the banking system challenged not only the financial dominance of the Western world, but also the civil authority of governments – certainly their political authority. Genuine fears of the loss of deposits (even if the threat of such lost deposits was not genuine, the fears certainly were), of home repossession and so on highlighted the importance, yet simultaneous fragility, of the financial system as a social institution. Whilst profit-motive was certainly a driving factor from the perspective of bankers, from the perspective of customers, their motive was to receive some fantastic benefit – say, a home – from the perceived progress and innovation within the financial system. They were sold an idea.

I suggest similar, all be it less apocalyptic, parallels can be drawn between the 2008 financial crisis and Facebook (amongst others) today.

Social media and the social contract

It is foolish to ignore the integral social role Facebook, Twitter and Google play in our society, even if the actual purpose or value generated by these companies within an individual mindset is limited or even possibly negative. The value of these sites is not in the services they provide per se; rather, value is derived from the ubiquity of their services. It is quite impossible to tell if Facebook is the best social media company, or Google the best search engine; but we are quite certain that a plethora of friends may be found on Facebook, and a sufficient quantity of relevant information found on Google. This is the tenet of big data – precision may be forgone, provided a large enough sample is available (precision is oft the word used when discussing big data – it is perhaps more appropriate to say personality when discussing Facebook or Google, amongst others). Equally, quality may be forgone, provided what remains is sufficient given present demands. This phenomenon, rather than traditional mechanisms of establishing monopoly, is how these sites have become embedded in our society. They do just enough, and those few that would like more, or at least different, are just that – few.

It is the popular premise that big data, harnessed via social media’s complex algorithms, can provide a social networking experience that offers genuine benefits to the user; an augmentation of a user’s social interactions with others for the better. Yet it seems unreasonable to allow a company whose business is the augmentation of societal interactions to exist outside of the social contract that governs all other social interactions, especially when the natural barriers of reality are blurred and belittled by digitised substitutes (it might be cute and amusing to see a company’s sassy Twitter response to a customer, but one should not forget that each retweet is also advertising, for example).

By engaging in this industry, one must accept their social responsibilities, and the moral hazards that are also brought forth, and act in such a way as to not defile the former and exploit the latter. Further, and in what will be discussed in more detail below, it is an insufficient argument to suggest that the lack of obvious equitable exchange between a social media platform and its users constitutes a means of invalidating the social contact; quite the opposite, I suggest: data is not currency, and as such, any exchange involving it must embed the tenets of trust and consent that follow a great many other interactions governed by the social contract.

If one still remains unconvinced that social media holds a social contract with us, or more generally that the movement of activities from reality to the online space serves to invalid any formerly present social contract, one need only ask oneself would they divulge the same amount of personal information given online to real world strangers? Would they post a photo of themselves in the middle of the town, knowing that photo is not just liable to be seen, but also stolen and exploited, by those one neither knows nor trusts? Perhaps, if all one’s friends had also participated, but then we must ask the question of who is validating the action? Surely a social contract still exists; not between oneself and the entire town, but between oneself and one’s friends, whereby faith in their judgement is levied against any other consequences. However, such an argument seems dumb – the fury at any und to ord consequences is surely to be levied at the person who steals the photo or hijacks the information, not the colleagues who advocate the advertisement of such things in the first place. And surely, by extension, the existence of any fury demonstrates a violation of something borne between oneself and this mystery villain – a social contract.

And thus, even if you would be willing to give tremendous amounts of personal information to a stranger, be it for apparent benefit, or via a friend’s recommendation, or both, one might only deny the presence of a social contract if an undesired – yet possibly permitted – use of that information does not invoke outrage, fury or despair. Given the furore presently surrounding social media, and what I would contend is a perceived undercurrent of distain for social media more generally – though, of course, I offer no evidence for this conviction – I believe my argument is sufficiently valid, at least insofar as this piece is concerned, to take that as evidence of the presence, and recent violation of, a social contract between social media and society at large.

Accepting that a social contract does exist between social media and its users demands, thus, that we consider how this relationship manifests currently, which is to say how are these companies presently embedded within society?

Where Twitter has enabled the public broadcast of a stray thought as would previously be limited to a conversation in a coffee shop or bar, Google has enabled the modern construction of Alexander’s library. Facebook has perhaps been even bolder, combining all which might be called media into a self-curated space – what I have previously likened to the invention of the soul. These companies challenge our notions of institutions, public and private, by leveraging promises of efficiency that what might be called terrestrial institutions could never possibly achieve. The impetus of such efficiency is, of course, data; and it is to data we now turn (it is not beyond me that the transformative nature of social media makes the former comparison between social media and the stranger on the street dubious, as social media may redefine what a stranger is and indeed force us to question where, or at least how long and wide, the street is. Yet I feel the comparison still serves a relevant purpose, if only insofar as it makes a complex digital landscape more rational for non-digital entities – namely humans – to understand).

To understand what role social media plays in society, we must consider how we and it interact, and – in what might be an economist’s unavoidable habit – perform something akin to a cost-benefit analysis. I first propose a simple idea: that the exchange of data, insofar as it might act like currency, for greater efficiency through the medium of customisation, is as equitable a trade as the exchange of dollars for bread. Supposing this notion is true, then it is not the case, as some might suggest, that the act of exchanging data is inherently bad. Instead, it is an act that is concerned with choice and trust. Returning to the financial crisis, the act of taking out a mortgage was not in itself malignant; yet the act of irresponsible lending – where choice was manufactured and falsified, and trust manipulated – produced a crisis.

In a sense, one might accuse the transgressions during the financial crisis of consisting of an irresponsible leveraging of social equity, leading to dramatic consequences when such an account was ultimately balanced. Similar, I propose, has occurred with Facebook. In utilising personal data to achieve desired efficiencies such as targeted advertising, the leveraging of social equity has occurred, and it has been disastrous. In part, I feel, because the recent exploitation of private data was done with intent and purpose, rather than simple neglect, damaging the sanctity of trust between user and site.

But in part also because data is not currency. The value of data is not in the collective belief in its value, as currency might be said to function, but rather in its specificity to an individual. In that sense, we cannot compare the risking of deposits on risky mortgage products with the careless utilisation of data for questionable ends as the bank notes – regardless of one’s depository claims – bare no intrinsic relation to the depositor in the process of utilisation, whilst the data always does. The attitude of treating data like capital which might be utilised to achieve profit ignores the fundamental characteristic of data, and as such perpetuates its misuse. This serves to demonstrate the apathy of choice; that any utilisation of personal data demands that we choose to have our data utilised that way, and in absence of that conscious choice we feel betrayed. Such a betrayal may not intimately be felt when our deposits are gambled by banks, as we choose to deposit a specific amount of money, not a specific type of money (which is to say, we do not care if the bank notes we receive on withdrawal are the exact same notes we deposit, only that the value of the withdrawal meets the value desired).

Thus, in considering how social media is currently embedded in society, I suggest the answer is immediately prevalent. It is the process by which social interactions are used to derive and ultimately combined with those that might seek to interlope on such interactions – advertisers, special interests, punditry perhaps – which forms the odd amalgamation that is social media, and thus that leaves us wanting. The exploitation of personal data on an industrial scale on the one hand serves to atomise the individual’s relevance and degrades concepts of choice and trust attached to their data (for remember, data is not currency; unlike the bank deposit that can be spent as the bank wishes, for their only obligation is to return the deposit upon request, personal data is only ‘deposited,’ in the context of the need expressed by the company, and as such any further use of the data, serves to violate the data in the context of the social contract).

If we are to fix social media, or at least address some of the issues and concerns that are coming to the fore, it seems necessary as part of a partial solution to improve a user’s perception of their choice when using social media, and to improve the trust relationship between platform and user. These things are, of course, only part of the solution, though additional problems, most notably the widespread use of misinformation online, receive significantly more coverage than the problems of choice and trust. Whilst this piece does not seek to belittle the need to solve the problems of fake news and clickbait (to give them their accurate titles), these problems may be implicitly tackled by improving the choice and trust in social media. Choice, in that rather than algorithms identifying those potentially more susceptible to misinformation (and any targeted information, for that matter) it is the user whose conscious actions consent to their viewing that information. And trust, for whilst any misinformation online is undesired generally, a user will feel more aggrieved at, say, Facebook, if they believe either through intention or negligence they are receiving false information and that they can’t trust the site to respect their data and/or their intellect.

A  modest proposal

Multiple ways of embedding choice and trust surely exist, and are accessible to those minds more inspired than I; I offer here a single conceptualisation. It is an inescapable fact that those who use social media must be subjected to advertising, and thus it seems logical to target this element of social media beyond all else. My idea is rather simple at the heart of it: allow users to choose what advertising they see, and show them nothing they have not elected to see. Of course, we must then ask the question: why would anyone elect to see advertising? The answer I propose is because it is part of a fair, equitable exchange.

Here is the crux of my proposal. Social media should implement a reward based system for users, allowing users to generate some sort of token currency, perhaps even a cryptocurrency (yet, at this early stage of conception, this seems to create more problems than solutions), from their regular activity online. This currency could then be taken to an online marketplace where users could purchase benefits from innocuous cosmetic items to perhaps real-world discount coupons (in lieu of cryptocurrency once more, such a platform seems odiously suitable for a product such as crypto-kitties). In purchasing these coupons, users would consent to these companies advertising to them on the site, and thus an equitable exchange of sorts may be seen to have been established (again, and with emphasis on the infancy of this idea, such currency might be used to pay for online news subscriptions, adding a barrier to entry for dubious sites to get onto social media feeds, and imbuing in readers an expectation of quality news given they’ve laid out their hard earned, shall we call them, clicks?).

Several problems present themselves, most notably, how might such a system be created such that it is not rife for exploitation and does not degrade the meaning of a like or a share. Additionally, how might the financial relationship be structured such that a click (see above), which seems to have even less inherent value than real world fiat money, translates into a pound or a dollar?

On the latter note, my initial estimation would be that the spending commitment generated by the selling of a discount coupon is greater than the revenue generated from even well targeted advertising. Of course, without such a system in place to test such a hypothesis, we are left to pontificate. On the former, I would task the hypothetical computer scientists and mathematicians to resolve this problem. Exploitation of the laws of diminishing returns built into complex and tightly guarded algorithms with currency sinks (see cosmetic items) to regulate this new currency market seem like one answer, yet again, such a system seems difficult to judge purely theoretically.

I am not beyond the slippery slope. The slow but promising rise of Sesame credit in the East seems wholly comparable to the click system proposed here, and must certainly raise the question of where would it end. To regulate a secondary market in coupons, for example, a unique user code tied to each social media account may be necessary – how long before this becomes an online identification code?

Further, would such a system suck any soul out of social media, turning the process of socialising into a financial grind? Would a like become meaningless; a status update literally a means of earning the daily bread? For some, surely these things are already reality; yet who am I to subject others (potentially) to such a reality?

Finally, there is of course the problem of control. Those same algorithms and the computer sciences behind them would hold tremendous sway over a potentially enormous online institution. Any changes, and all judgement calls, would not just impact a person’s convenience, but also their financials. This is serious enough in itself; but when combined with the copious amounts of data also held by these gatekeepers, be it age or gender or race, the risk of implicit bias built into a system which, in its present state and for better or worse, is rather equal in this regard, seems not without concern. However, though not to diminish these issue, we should acknowledge that such faceless discretion is held by social media giants presently and must, as anyone in the regulatory and policy world will tell you, be held by someone no matter how the system is assembled. This is not to excuse this concern as one without solution; instead, I only wish to suggest any solution will likely not being wholly or even mostly satisfying.

I bring up these issues because they are inescapable whilst borne out in theory, and it is incumbent as part of good authorship to acknowledge them, even if solutions are not forthcoming. As part of any criticism that might surround this piece, surely these weaknesses must form an integral part. Whether one accepts the proposal given here as panacea, or rejects this proposal as a menacing nail in an imagined coffin, the key to any development, and certainly any online development, is time and consideration. Though hardly the sexiest of messages for Silicon Valley, if this piece has any point it is to highlight that social media cannot ignore its social responsibility, and thus, if any solution is to be proposed, it seems prudent to address the issues openly, as a means of forestalling negligence.

We cannot escape social media, and in the spirit of the internet – indeed, by the means which social media functions so effectively, it is difficult to rationalise an application of anti-trust laws as was seen with the robber barons. That is not to say these laws are irrelevant, but additional tools and nuanced ideas, of which it is hoped this piece has contributed towards, might sure to provide more effective solutions to the problems of social media.