Digifesto

Tag: julie cohen

Regulating infoglut?

In the 20’s, many people were attracted for the first time in investing in the stock market. It was a time when fortunes were made and lost, but made more than they were lost, and so on average investors saw large returns. However, the growth in value of stocks was driven in part, and especially in the later half of the decade, by debt. The U.S. Federal Reserve chose to lower interest rates, making it easier to borrow money. When the interest rates on loans were lower than the rates of return on stocks, everybody from households to brokers began to take on debt to reinvest in the stock market. (Brooks, 1999)

After the crash of ’29, which left the economy decimated, there was a reckoning, leading to the Securities Act of 1933 and the Securities Exchange Act of 1934. The latter established the Securities and Exchange Commission (SEC), and established the groundwork for the more trusted financial institutions we have today.

Cohen (2016) writes about a more current economic issue. As the economy changes from being centered on industrial capitalism to informational capitalism, the infrastructural affordances of modern computing and networking have invalidated the background logic of how many regulations are supposed to work. For example, anti-discrimination regulation is designed to prevent decisions from being made based on protected or sensitive attributes of individuals. However, those regulations made most sense when personal information was relatively scarce. Today, when individual activity is highly instrumented by pervasive computing infrastructure, we suffer from infoglut — more information than is good for us, either as individuals or as a society. As a consequence, proxies of protected attributes are readily available for decision-makers and indeed are difficult to weed out of a machine learning system even when market actors fully intend to do so (see Datta et al., 2017). In other words, the structural conditions that enable infoglut erode rights that we took for granted in the absence of today’s network and computing systems.

In an ongoing project with Salome Viljoen, we are examining the parallels between the financial economy and the data economy. These economies are, of course, not fully distinct. However, they are distinguished in part by how they are regulated: the financial economy has over a century of matured regulations defining it and reducing system risks such as those resulting from a debt-financed speculative bubble; the data economy has emerged only recently as a major source of profit with perhaps unforeseen systemic risks.

We have an intuition that we would like to pin down more carefully as we work through these comparisons: that there is something similar about the speculative bubbles that led to the Great Depression and today’s infoglut. In a similar vein to prior work looking that uses regulatory analogy to motivate new thinking about data regulation (Hirsch, 2013; Froomkin, 2015) and professional codes (Stark and Hoffman, 2019), we are interested in how financial regulation may be a precedent for regulation of the data economy.

However, we have reason to believe that the connections between finance and personal data are not merely metaphorical. Indeed, finance is an area with well-developed sectoral privacy laws that guarantee the confidentiality of personal data (Swire, 2003); it is also the case that financial institutions are one of the many ways personal data originating from non-financial contexts is monetized. We do not have to get poetic to see how these assets are connected; they are related as a matter of fact.

What is more elusive, and at this point only a hypothesis, is that there is valid sense in which the systemic risks of infoglut can be conceptually understood using tools similar to those that are used to understand financial risk. Here I maintain an ambition: that systemic risk due to infoglut may be understood using the tools of macroeconomics and hence internalized via technocratic regulatory mechanisms. This would be a departure from Cohen (2016), who gestures more favorably towards “uncertainty” based regulation that does not attempt probabilistic expectation but rather involves tools such as threat modeling, as used in some cybersecurity practices.

References

Brooks, J. (1999). Once in Golconda: A true drama of Wall Street 1920-1938. John Wiley & Sons.

Cohen, J. E. (2016). The regulatory state in the information age. Theoretical Inquiries in Law17(2), 369-414.

Datta, A., Fredrikson, M., Ko, G., Mardziel, P., & Sen, S. (2017, October). Use privacy in data-driven systems: Theory and experiments with machine learnt programs. In Proceedings of the 2017 ACM SIGSAC Conference on Computer and Communications Security (pp. 1193-1210).

Froomkin, A. M. (2015). Regulating Mass Surveillance as Privacy Pollution: Learning from Environmental Impact Statements. U. Ill. L. Rev., 1713.

Hirsch, D. D. (2013). The glass house effect: Big Data, the new oil, and the power of analogy. Me. L. Rev.66, 373.

Stark, L., & Hoffmann, A. L. (2019). Data is the new what? Popular metaphors & professional ethics in emerging data culture.

Swire, P. P. (2003). Efficient confidentiality for privacy, security, and confidential business information. Brookings-Wharton Papers on Financial Services2003(1), 273-310.

Surden, H. (2007). Structural rights in privacy. SMUL Rev.60, 1605.

The diverging philosophical roots of U.S. and E.U. privacy regimes

For those in the privacy scholarship community, there is an awkward truth that European data protection law is going to a different direction from U.S. Federal privacy law. A thorough realpolitical analysis of how the current U.S. regime regarding personal data has been constructed over time to advantage large technology companies can be found in Cohen’s Between Truth and Power (2019). There is, to be sure, a corresponding story to be told about EU data protection law.

Adjacent, somehow, to the operations of political power are the normative arguments leveraged both in the U.S. and in Europe for their respective regimes. Legal scholarship, however remote from actual policy change, remains as a form of moral inquiry. It is possible, still, that through professional training of lawyers and policy-makers, some form of ethical imperative can take root. Democratic interventions into the operations of power, while unlikely, are still in principle possible: but only if education stays true to principle and does not succumb to mere ideology.

This is not easy for educational institutions to accomplish. Higher education certainly is vulnerable to politics. A stark example of this was the purging of Marxist intellectuals from American academic institutions under McCarthyism. Intellectual diversity in the United States has suffered ever since. However, this was only possible because Marxism as a philosophical movement is extraneous to the legal structure of the United States. It was never embedded at a legal level in U.S. institutions.

There is a simply historical reason for this. The U.S. legal system was founded under a different set of philosophical principles; that philosophical lineage still impacts us today. The Founding Fathers were primarily influenced by John Locke. Locke rose to prominence in Britain when the Whigs, a new bourgeois class of Parliamentarian merchant leaders, rose to power, contesting the earlier monarchy. Locke’s political contributions were a treatise pointing out the absurdity of the Divine Right of Kings, the prevailing political ideology of the time, and a second treatise arguing for a natural right to property based on the appropriation of nature. This latter political philosophy was very well aligned with Britain’s new national project of colonialist expansion. With the founding of the United States, it was enshrined into the Constitution. The liberal system of rights that we enjoy in the U.S. are founded in the Lockean tradition.

Intellectual progress in Europe did not halt with Locke. Locke’s ideas were taken up by David Hume, whose introduced arguments that were so agitating that they famously woke Immanuel Kant, in Germany, from his “dogmatic slumber”, leading him to develop a new highly systematic system of morality and epistemology. Among the innovations in this work was the idea that human freedom is grounded in the dignity of being an autonomous person. The source of dignity is not based in a natural process such as the tilling of land. It is rather based in on transcendental facts about what it means to be human. The key to morality is treating people like ends, not means; in other words, not using people as tools to other aims, but as aims in themselves.

If this sound overly lofty to an American audience, it’s because this philosophical tradition has never taken hold in American education. In both the United Kingdom and Britain, Kantian philosophy has always been outside the mainstream. The tradition of Locke, through Hume, has continued on in what philosophers will call “analytic philosophy”. This philosophy has taken on the empiricist view that the only source of knowledge is individual experience. It has transformed over centuries but continues to orbit around the individual and their rights, grounded in pragmatic considerations, and learning normative rules using the case-by-case approach of Common Law.

From Kant, a different “continental philosophy” tradition produced Hegel, who produced Marx. We can trace from Kant’s original arguments about how morality is based on the transcendental dignity of the individual to the moralistic critique that Marx made against capitalism. Capitalism, Marx argued, impugns the dignity of labor because it treats it like a means, not an end. No such argument could take root in a Lockean system, because Lockean ethics has no such prescription against treating others instrumentally.

Germany lost its way at the start of the 20th century. But the post-war regime, funded by the Marshall plan, directed by U.S. constitutional scholars as well as repatriating German intellectuals, had the opportunity to rewrite their system of governance. They did so along Kantian lines: with statutory law, reflecting a priori rational inquiry, instead of empiricist Common Law. They were able to enshrine into their system the Kantian basis of ethics, with its focus on autonomy.

Many of the intellectuals influencing the creation of the new German state were “Marxist” in the loose sense that they were educated in the German continental intellectual tradition which, at that time, included Marx as one of its key figures. By the mid-20th century they had naturally surpassed this ideological view. However, as a consequence, the McCarthyist attack on Marxism had the effect of also purging some of the philosophical connection between German and U.S. legal education. Kantian notions of autonomy are still quite foreign to American jurisprudence. Legal arguments in the United States draw instead on a vast collection of other tools based on a much older and more piecemeal way of establishing rights. But are any of these tools up to the task of protecting human dignity?

The EU is very much influenced by Germany and the German legal system. The EU has the Kantian autonomy ethic at the heart of its conception of human rights. This philosophical commitment has recently expressed itself in the EU’s assertion of data protection law through the GDPR, whose transnational enforcement clauses have brought this centuries-old philosophical fight into contemporary legal debate in legal jurisdictions that predate the neo-Kantian legal innovations of Continental states.

The puzzle facing American legal scholars is this: while industrial advocates and representatives tend to disagree with the strength of the GDPR, arguing that it is unworkable and/or based on poorly defined principle, the data protections that it offer seem so far to be compelling to users, and the shifting expectations around privacy in part induced by it are having effects on democratic outcomes (such as the CCPA). American legal scholars now have to try to make sense of the GDPR’s rules and find a normative basis for them. How can these expansive ideas of data protection, which some have had the audacity to argue is a new right (Hildebrandt, 2015), be grafted onto the the Common Law, empiricist legal system in a way that gives it the legitimacy of being an authentically American project? Is there a way to explain data protection law that does not require the transcendental philosophical apparatus which, if adopted, would force the American mind to reconsider in a fundamental way the relationship between individuals and the collective, labor and capital, and other cornerstones of American ideology?

There may or may not be. Time will tell. My own view is that the corporate powers, which flourished under the Lockean judicial system because of the weaknesses in that philosophical model of the individual and her rights, will instinctively fight what is in fact a threatening conception of the person as autonomous by virtue of their transcendental similarity with other people. American corporate power will not bother to make a philosophical case at all; it will operate in the domain of realpolitic so well documented by Cohen. Even if this is so, it is notable that so much intellectual and economic energy is now being exerted in the friction around a poweful an idea.

References

Cohen, J. E. (2019). Between Truth and Power: The Legal Constructions of Informational Capitalism. Oxford University Press, USA.

Hildebrandt, M. (2015). Smart technologies and the end (s) of law: Novel entanglements of law and technology. Edward Elgar Publishing.