Digifesto

I’ve cut to the last chapter of Pasquale’s The Black Box Society, “Towards an Intelligible Society.” I’m interested in where the argument goes. I see now that I’ve gotten through it that the penultimate chapter has Pasquale’s specific policy recommendations. But as I’m not just reading for policy and framing but also for tone and underlying theoretical commitments, I think it’s worth recording some first impressions before doubling back.

These are some points Pasquale makes in the concluding chapter that I wholeheartedly agree with:

• A universal basic income would allow more people to engage in high risk activities such as the arts and entrepreneurship and more generally would be great for most people.
• There should be publicly funded options for finance, search, and information services. A great way to provide these would be to fund the development of open source algorithms for finance and search. I’ve been into this idea for so long and it’s great to see a prominent scholar like Pasquale come to its defense.
• Regulatory capture (or, as he elaborates following Charles Lindblom, “regulatory circularity”) is a problem. Revolving door participation in government and business makes government regulation an unreliable protector of the public interest.

There is quite a bit in the conclusion about the specifics of regulation the finance industry. There is an impressive amount of knowledge presented about this and I’ll admit much of it is over my head. I’ll probably have a better sense of it if I get to reading the chapter that is specifically about finance.

There are some things that I found bewildering or off-putting.

For example, there is a section on “Restoring Trust” that talks about how an important problem is that we don’t have enough trust in the reputation and search industries. His solution is to increase the penalties that the FTC and FCC can impose on Google and Facebook for its e.g. privacy violations. The current penalties are too trivial to be effective deterrence. But, Pasquale argues,

It is a broken enforcement model, and we have black boxes to thank for much of this. People can’t be outraged by what they can’t understand. And without some public concern about the trivial level of penalties for lawbreaking here, there are no consequences for the politicians ultimately responsible for them.

The logic here is a little mad. Pasquale is saying that people are not outraged enough by search and reputation companies to demand harsher penalties, and this is a problem because people don’t trust these companies enough. The solution is to convince people to trust these companies less–get outraged by them–in order to get them to punish the companies more.

This is a bit troubling, but makes sense based on Pasquale’s theory of regulatory circularity, which turns politics into a tug-of-war between interests:

The dynamic of circularity teaches us that there is no stable static equilibrium to be achieved between regulators and regulated. The government is either pushing industry to realize some public values in its activities (say, by respecting privacy or investing in sustainable growth), or industry is pushing regulators to promote its own interests.

There’s a simplicity to this that I distrust. It suggests for one that there are no public pressures on industry besides the government such as consumer’s buying power. A lot of Pasquale’s arguments depend on the monopolistic power of certain tech giants. But while network effects are strong, it’s not clear whether this is such a problem that consumers have no market buy in. In many cases tech giants compete with each other even when it looks like they aren’t. For example, many many people have both Facebook and Gmail accounts. Since there is somewhat redundant functionality in both, consumers can rather seemlessly allocate their time, which is tied to advertising revenue, according to which service they feel better serves them, or which is best reputationally. So social media (which is a bit like a combination of a search and reputation service) is not a monopoly. Similarly, if people have multiple search options available to them because, say, the have both Siri on their smart phone and can search Google directly, then that provides an alternative search market.

Meanwhile, government officials are also often self-interested. If there is a road to hell for industry that is to provide free web services to people to attain massive scale, then abuse economic lock-in to extract value from customers, then lobby for further rent-seeking, there is a similar road to hell in government. It starts with populist demagoguery, leads to stable government appointment, and then leverages that power for rents in status.

So, power is power. Everybody tries to get power. The question is what you do once you get it, right?

Perhaps I’m reading between the lines too much. Of course, my evaluation of the book should depend most on the concrete policy recommendations which I haven’t gotten to yet. But I find it unfortunate that what seems to be a lot of perfectly sound history and policy analysis is wrapped in a politics of professional identity that I find very counterproductive. The last paragraph of the book is:

Black box services are often wondrous to behold, but our black-box society has become dangerously unstable, unfair, and unproductive. Neither New York quants nor California engineers can deliver a sound economy or a secure society. Those are the tasks of a citizenry, which can perform its job only as well as it understands the stakes.

Implicitly, New York quants and California engineers are not citizens, to Pasquale, a law professor based in Maryland. Do all real citizens live around Washington, DC? Are they all lawyers? If the government were to start providing public information services, either by hosting them themselves or by funding open source alternatives, would he want everyone designing these open algorithms (who would be quants or engineers, I presume) to move to DC? Do citizens really need to understand the stakes in order to get this to happen? When have citizens, en masse, understood anything, really?

Based on what I’ve read so far, The Black Box Society is an expression of a lack of trust in the social and economic power associated with quantification and computing that took off in the past few dot-com booms. Since expressions of lack of trust for these industries is nothing new, one might wonder (under the influence of Foucault) how the quantified order and the critique of the quantified order manage to coexist and recreate a system of discipline that includes both and maintains its power as a complex of superficially agonistic forces. I give sincere credit to Pasquale for advocating both series income redistribution and public investment in open technology as ways of disrupting that order. But when he falls into the trap of engendering partisan distrust, he loses my confidence.