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Facebook could decide an election without anyone ever finding out

The scary future of digital gerrymandering – and how to prevent it.

On 2 November, 2010, Facebook’s American users were subject to an ambitious experiment in civic-engineering: could a social network get otherwise-indolent people to cast a ballot in that day’s congressional midterm elections?

The answer was yes.

The prod to nudge bystanders to the voting booths was simple. It consisted of a graphic containing a link for looking up polling places, a button to click to announce that you had voted, and the profile photos of up to six Facebook friends who had indicated they’d already done the same. With Facebook’s cooperation, the political scientists who dreamed up the study planted that graphic in the newsfeeds of tens of millions of users. (Other groups of Facebook users were shown a generic get-out-the-vote message or received no voting reminder at all.) Then, in an awesome feat of data-crunching, the researchers cross-referenced their subjects’ names with the day’s actual voting records from precincts across the country to measure how much their voting prompt increased turnout.

Overall, users notified of their friends’ voting were 0.39 per cent more likely to vote than those in the control group, and any resulting decisions to cast a ballot also appeared to ripple to the behaviour of close Facebook friends, even if those people hadn’t received the original message. That small increase in turnout rates amounted to a lot of new votes. The researchers concluded that their Facebook graphic directly mobilised 60,000 voters, and, thanks to the ripple effect, ultimately caused an additional 340,000 votes to be cast that day. As they point out, George W Bush won Florida, and thus the presidency, by 537 votes – fewer than 0.01 per cent of the votes cast in that state.

Now consider a hypothetical, hotly contested future election. Suppose that Mark Zuckerberg personally favours whichever candidate you don’t like. He arranges for a voting prompt to appear within the newsfeeds of tens of millions of active Facebook users – but unlike in the 2010 experiment, the group that will not receive the message is not chosen at random. Rather, Zuckerberg makes use of the fact that Facebook “likes” can predict political views and party affiliation, even beyond the many users who proudly advertise those affiliations directly. With that knowledge, our hypothetical Zuck chooses not to spice the feeds of users unsympathetic to his views. Such machinations then flip the outcome of our hypothetical election. Should the law constrain this kind of behaviour?

The scenario imagined above is an example of digital gerrymandering. All sorts of factors contribute to what Facebook or Twitter present in a feed, or what Google or Bing show us in search results. Our expectation is that those intermediaries will provide open conduits to others’ content and that the variables in their processes just help yield the information we find most relevant. (In that spirit, we expect that advertiser-sponsored links and posts will be clearly labeled so as to make them easy to distinguish from the regular ones.) Digital gerrymandering occurs when a site instead distributes information in a manner that serves its own ideological agenda. This is possible on any service that personalises what users see or the order in which they see it, and it’s increasingly easy to effect.

There are plenty of reasons to regard digital gerrymandering as such a toxic exercise that no right-thinking company would attempt it. But none of these businesses actually promises neutrality in its proprietary algorithms, whatever that would mean in practical terms. And they have already shown themselves willing to leverage their awesome platforms to attempt to influence policy. In January 2012, for example, Google blacked out its home page “doodle” as a protest against the pending Stop Online Piracy Act (SOPA), said by its opponents (myself among them) to facilitate censorship. The altered logo linked to an official blog entry importuning Google users to petition Congress; SOPA was ultimately tabled, just as Google and many others had wanted. A social-media or search company looking to take the next step and attempt to create a favourable outcome in an election would certainly have the means.

So what’s stopping that from happening? The most important fail-safe is the threat that a significant number of users, outraged by a betrayal of trust, would adopt alternative services, hurting the responsible company’s revenue and reputation. But while a propagandistic Google doodle or similarly ideological alteration to a common home page lies in plain view, newsfeeds and search results have no baseline. They can be subtly tweaked without hazarding the same backlash. Indeed, in our get-out-the-vote hypothetical, the people with the most cause for complaint are those who won’t be fed the prompt and may never know it existed. Not only that, but the disclosure policies of social networks and search engines already state that the companies reserve the right to season their newsfeeds and search results however they like. An effort to sway turnout could be construed as being covered by the existing agreements and require no special notice to users.

At the same time, passing new laws to prevent digital gerrymandering would be ill advised. People may be due the benefits of a democratic electoral process. But in the United States, content curators appropriately have a First Amendment right to present their content as they see fit. Meddling with how a company gives information to its users, especially when no one’s arguing that the information in question is false, is asking for trouble. (That’s one reason why the European Court of Justice got it wrong when it opened the door to people censoring the search-engine results for their names, validating a so-called “right to be forgotten.”)

There’s a better solution available: enticing web companies entrusted with personal data and preferences to act as “information fiduciaries”. Champions of the concept include Jack Balkin of Yale Law School, who sees a precedent in the way that lawyers and doctors obtain sensitive information about their clients and patients – and are then not allowed to use that knowledge for outside purposes. Balkin asks: “Should we treat certain online businesses, because of their importance to people’s lives, and the degree of trust and confidence that people inevitably must place in these businesses, in the same way?”

As things stand, web companies are simply bound to follow their own privacy policies, however flimsy. Information fiduciaries would have to do more. For example, they might be required to keep automatic audit trails reflecting when the personal data of their users is shared with another company, or is used in a new way. (Interestingly, the kind of ledger that crypto-currencies like Bitcoin use to track the movement of money could be adapted to this function.) They would provide a way for users to toggle search results or newsfeeds to see how that content would appear without the influence of reams of personal data – that is, non-personalised. And, most important, information fiduciaries would forswear any formulas of personalisation derived from their own ideological goals. Such a system could be voluntary, in the way that businesspeople who make suggestions on buying and selling stocks and bonds can elect between careers as investment advisers or brokers: the “advisers” owe duties not to put their own interests above those of their clients, while the “brokers” have no such duty, even as they – confusingly – can go by such titles as financial adviser, financial consultant, wealth manager, and registered representative. (If someone’s telling you how to handle your nest egg, you might ask flat out whether he or she is your fiduciary and walk swiftly to the exit if the answer is no.)

Constructed correctly, the duties of the information fiduciary would be limited enough for the Facebooks and Googles of the world, while meaningful enough to the people who rely on the services, that the intermediaries could be induced to opt into them. To provide further incentive, the government could offer tax breaks or certain legal immunities for those willing to step up toward an enhanced duty to their users. My search results and newsfeed might still end up different from yours based on our political leanings, but only because the algorithm is trying to give me what I want – the way that an investment adviser may recommend stocks to the reckless and bonds to the sedate – and never because the search engine or social network is trying to covertly pick election winners.

Four decades ago, another emerging technology had Americans worried about how it might be manipulating them. In 1974, amid a panic over the possibility of subliminal messages in TV advertisements, the Federal Communications Commission strictly forbade that kind of communication. There was a foundation for the move; historically, broadcasters have accepted a burden of evenhandedness in exchange for licenses to use the public airwaves. The same duty of audience protection ought to be brought to today’s dominant medium. As more and more of what shapes our views and behaviors comes from inscrutable, artificial-intelligence-driven processes, the worst-case scenarios should be placed off limits in ways that don’t trip over into restrictions on free speech. Our information intermediaries can keep their sauces secret, inevitably advantaging some sources of content and disadvantaging others, while still agreeing that some ingredients are poison – and must be off the table.

Jonathan Zittrain is a professor of law and computer science at Harvard University, and author of “The Future of the Internet – and How to Stop It”. This article is adapted from remarks given at the 2014 Harvard Law Review Symposium on Freedom of the Press. A version will appear this month in the Harvard Law Review Forum.

This article first appeared on newrepublic.com

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We're racing towards another private debt crisis - so why did no one see it coming?

The Office for Budget Responsibility failed to foresee the rise in household debt. 

This is a call for a public inquiry on the current situation regarding private debt.

For almost a decade now, since 2007, we have been living a lie. And that lie is preparing to wreak havoc on our economy. If we do not create some kind of impartial forum to discuss what is actually happening, the results might well prove disastrous. 

The lie I am referring to is the idea that the financial crisis of 2008, and subsequent “Great Recession,” were caused by profligate government spending and subsequent public debt. The exact opposite is in fact the case. The crash happened because of dangerously high levels of private debt (a mortgage crisis specifically). And - this is the part we are not supposed to talk about—there is an inverse relation between public and private debt levels.

If the public sector reduces its debt, overall private sector debt goes up. That's what happened in the years leading up to 2008. Now austerity is making it happening again. And if we don't do something about it, the results will, inevitably, be another catastrophe.

The winners and losers of debt

These graphs show the relationship between public and private debt. They are both forecasts from the Office for Budget Responsibility, produced in 2015 and 2017. 

This is what the OBR was projecting what would happen around now back in 2015:

This year the OBR completely changed its forecast. This is how it now projects things are likely to turn out:

First, notice how both diagrams are symmetrical. What happens on top (that part of the economy that is in surplus) precisely mirrors what happens in the bottom (that part of the economy that is in deficit). This is called an “accounting identity.”

As in any ledger sheet, credits and debits have to match. The easiest way to understand this is to imagine there are just two actors, government, and the private sector. If the government borrows £100, and spends it, then the government has a debt of £100. But by spending, it has injected £100 more pounds into the private economy. In other words, -£100 for the government, +£100 for everyone else in the diagram. 

Similarly, if the government taxes someone for £100 , then the government is £100 richer but there’s £100 subtracted from the private economy (+£100 for government, -£100 for everybody else on the diagram).

So what implications does this kind of bookkeeping have for the overall economy? It means that if the government goes into surplus, then everyone else has to go into debt.

We tend to think of money as if it is a bunch of poker chips already lying around, but that’s not how it really works. Money has to be created. And money is created when banks make loans. Either the government borrows money and injects it into the economy, or private citizens borrow money from banks. Those banks don’t take the money from people’s savings or anywhere else, they just make it up. Anyone can write an IOU. But only banks are allowed to issue IOUs that the government will accept in payment for taxes. (In other words, there actually is a magic money tree. But only banks are allowed to use it.)

There are other factors. The UK has a huge trade deficit (blue), and that means the government (yellow) also has to run a deficit (print money, or more accurately, get banks to do it) to inject into the economy to pay for all those Chinese trainers, American iPads, and German cars. The total amount of money can also fluctuate. But the real point here is, the less the government is in debt, the more everyone else must be. Austerity measures will necessarily lead to rising levels of private debt. And this is exactly what has happened.

Now, if this seems to have very little to do with the way politicians talk about such matters, there's a simple reason: most politicians don’t actually know any of this. A recent survey showed 90 per cent of MPs don't even understand where money comes from (they think it's issued by the Royal Mint). In reality, debt is money. If no one owed anyone anything at all there would be no money and the economy would grind to a halt.

But of course debt has to be owed to someone. These charts show who owes what to whom.

The crisis in private debt

Bearing all this in mind, let's look at those diagrams again - keeping our eye particularly on the dark blue that represents household debt. In the first, 2015 version, the OBR duly noted that there was a substantial build-up of household debt in the years leading up to the crash of 2008. This is significant because it was the first time in British history that total household debts were higher than total household savings, and therefore the household sector itself was in deficit territory. (Corporations, at the same time, were raking in enormous profits.) But it also predicted this wouldn't happen again.

True, the OBR observed, austerity and the reduction of government deficits meant private debt levels would have to go up. However, the OBR economists insisted this wouldn't be a problem because the burden would fall not on households but on corporations. Business-friendly Tory policies would, they insisted, inspire a boom in corporate expansion, which would mean frenzied corporate borrowing (that huge red bulge below the line in the first diagram, which was supposed to eventually replace government deficits entirely). Ordinary households would have little or nothing to worry about.

This was total fantasy. No such frenzied boom took place.

In the second diagram, two years later, the OBR is forced to acknowledge this. Corporations are just raking in the profits and sitting on them. The household sector, on the other hand, is a rolling catastrophe. Austerity has meant falling wages, less government spending on social services (or anything else), and higher de facto taxes. This puts the squeeze on household budgets and people are forced to borrow. As a result, not only are households in overall deficit for the second time in British history, the situation is actually worse than it was in the years leading up to 2008.

And remember: it was a mortgage crisis that set off the 2008 crash, which almost destroyed the world economy and plunged millions into penury. Not a crisis in public debt. A crisis in private debt.

An inquiry

In 2015, around the time the original OBR predictions came out, I wrote an essay in the Guardian predicting that austerity and budget-balancing would create a disastrous crisis in private debt. Now it's so clearly, unmistakably, happening that even the OBR cannot deny it.

I believe the time has come for there be a public investigation - a formal public inquiry, in fact - into how this could be allowed to happen. After the 2008 crash, at least the economists in Treasury and the Bank of England could plausibly claim they hadn't completely understood the relation between private debt and financial instability. Now they simply have no excuse.

What on earth is an institution called the “Office for Budget Responsibility” credulously imagining corporate borrowing binges in order to suggest the government will balance the budget to no ill effects? How responsible is that? Even the second chart is extremely odd. Up to 2017, the top and bottom of the diagram are exact mirrors of one another, as they ought to be. However, in the projected future after 2017, the section below the line is much smaller than the section above, apparently seriously understating the amount both of future government, and future private, debt. In other words, the numbers don't add up.

The OBR told the New Statesman ​that it was not aware of any errors in its 2015 forecast for corporate sector net lending, and that the forecast was based on the available data. It said the forecast for business investment has been revised down because of the uncertainty created by Brexit. 

Still, if the “Office of Budget Responsibility” was true to its name, it should be sounding off the alarm bells right about now. So far all we've got is one mention of private debt and a mild warning about the rise of personal debt from the Bank of England, which did not however connect the problem to austerity, and one fairly strong statement from a maverick columnist in the Daily Mail. Otherwise, silence. 

The only plausible explanation is that institutions like the Treasury, OBR, and to a degree as well the Bank of England can't, by definition, warn against the dangers of austerity, however alarming the situation, because they have been set up the way they have in order to justify austerity. It's important to emphasise that most professional economists have never supported Conservative policies in this regard. The policy was adopted because it was convenient to politicians; institutions were set up in order to support it; economists were hired in order to come up with arguments for austerity, rather than to judge whether it would be a good idea. At present, this situation has led us to the brink of disaster.

The last time there was a financial crash, the Queen famously asked: why was no one able to foresee this? We now have the tools. Perhaps the most important task for a public inquiry will be to finally ask: what is the real purpose of the institutions that are supposed to foresee such matters, to what degree have they been politicised, and what would it take to turn them back into institutions that can at least inform us if we're staring into the lights of an oncoming train?