Globalisation's positive power

Nobel Prize winner and former Clinton economic advisor Joseph Stiglitz believes in the positive powe

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Many Americans are counting down the hours until George W. Bush leaves the Oval Office. Joseph Stiglitz, though, has gone further than most. He keeps a special clock at home just so he can see precisely how long there is to go.

The Nobel Prize winner has never been afraid of controversy, but he's not exactly alone when he says in his view things can only get better the second the countdown reaches zero and Bush moves out of the White House.

With his lack of pretensions and easy-going style Stiglitz seems more like a favourite uncle than a world-renowned economist, academic, and former presidential advisor as he chats over a cup of coffee.

His ability to put complicated concepts into easy-to-digest nuggets has endeared him greatly to the media, but also explains why his books on globalisation and economics have a far greater reach than most economists could dream of.

As he whisks around the globe, stopping in Korea and London, before heading back to Columbia University, Stiglitz has plenty to say about what the US needs to do to improve its relationship with the rest of the world and where it has taken wrong turnings. "At the end Americans will look back at a failed presidency that turned its back on the international community."

But Stiglitz is interested in more than critiquing the Bush presidency; he is campaigning for a new type of globalisation, one that puts a more equal and fair global society at its heart, and for less pressure from the US-influenced global development institutions to impose a one-size-fits-all free market, pro-privatisation model.

“The US has pushed a particular model on the rest of the world. It might work for America, but is totally not acceptable in many other parts of the world where a sense of social solidarity is important or need to be important for those societies to function.”

Where developing powers India and China have resisted US-led pressure to move towards instant privatisation of state functions, and refused to swing open their doors to multi-nationals without qualification, they have created much stronger societies, Stiglitz argues.

“These countries managed globalisation: it was their ability to take advantage of globalisation, without being taken advantage of by globalisation, that accounts for much of their success."

More transparency, easier to access information, and stronger civil societies are wearing away some of the power in the relationship between the developing and developed countries, he argues.

"Using the internet … they can see what is going on in a way that we might not like," he says relating a story about the recent US-Korea bi-lateral talks where, after the US negotiators had finished a deal they told the Koreans was good and fair, the write-up on the US government website told a different story. "Basically it said: 'we managed to screw the Koreans'.” Korean access to that information is likely to have a powerful influence on future negotiations.

With the US presidential primaries in full swing, the timing may be right for this man with global stature, and the ear of influential Democrats, to be heard by policy makers back home.

Knowledge of foreign policy and the continuing role of the US in Iraq have both emerged as part of the cut and thrust of debates between Barack Obama and Hillary Clinton as they tussle for votes. And Stiglitz has a lot of knowledge and experience to offer. He acknowledges that he has regular conversations with the three Democratic front runners, and you can imagine he is likely to be snapped up as an advisor by the Democratic candidate next year.

A long-time critic of the IMF, even in his World Bank days, Stiglitz can help build a wide base of support. He can find common ground with anti-globalisation lobbyists who cluster around Naomi Klein when he speaks of the damage Bush and his acolytes have done to the UN and other multilateral institutions, but the Nobel Laureate has far more than journalistic railing and emotion in his armoury.

Klein would no doubt agree with Stiglitz that: “The damage that has been done by Bush has been huge… the damage to the World Bank is huge, the damage to the UN is huge.”

But Stiglitz is not an anti-globalisation campaigner; just someone who believes it can be done better and to the benefit of the many, not the few. He is busy spreading his message that globalisation is not yet benefiting the world's poorest and then setting out his prescription for how to make it work.

Narrowing the gap between the richest and poorest with a strong state at the core is the only way for globalisation to work in his view. The poorest suffer the most insecurity in a global economy, but if it is to work they too must benefit from opening trade doors and jobs to international competition. In the past, he says, “when people have talked about globalisation they have talked about the impact it has had on GDP but they don’t talk about the impact it has on disparities. The way globalisation has been managed has meant increasing disparities in many parts of the world, both in developed and developing countries.”

Not only does he argue for safety nets of various kinds – medical and educational among them – as essential in creating a more secure and stable society in developing countries, but he applies these principles to the US as well.

These principles – including a centralised national health care system – have always been considered surprisingly radical in the US, but he is not alone when he says the pendulum is swinging towards significant reform.

“All the candidates have been forced to address the questions of what are they going to do about the health care crisis in the US?”

Stiglitz believes that high levels of inequality in the US have started to change people’s views about the role of the state. Inequality has grown under Bush and has even started to undermine that greatest of national myths – the American dream.

He argues plausibly for greater emphasis on equality in development theory and practise. This, he believes, will help create greater stability and security internationally.

“The argument has always been that [if] the country is a whole lot better off…those that have gained could compensate the losers, but the problem is under Bush that hasn’t happened. Rather than trickledown it has been trickle up.”

Inequality, he argues, produces social unrest. “I believe that it is important for countries to focus on equity, on ensuring that the fruits of growth are widely shared,” he says.

"The people at the bottom keep paying the price. We could compensate them, we could help them share more the fruits…by improving education, and having more progressive taxation. Under Bush we have done just the opposite and I think that is part of the social tension in America.”

And who can find fault with his campaign to bring the same kind of democracy and transparency to international development organisations such as the World Bank and IMF? It seems only fair that these international organisations should have a clearer voting structure, and the public should know how they come to decisions, as they would with their own governments.

He argues idealistically for a fairer world built not on the single pillar of the market, but on three more — government, individuals and community. As someone who has worked in the highest levels of both academia and politics, he offers more than just analysis; he provides a set of potential policy solutions - and that is his advantage over other critics of US foreign policy and development theory.

It may be stating the obvious to say that free trade will not bring equal benefits while everyone has different levels of skills, but sometimes the obvious needs to be stated and re-stated, until the time is right to hear it. And Stiglitz isn't giving up.

A version of this article was first published in the Fabian Review. Check out the society's website for details of the Fabian Society Change the World conference on 19 January in association with the New Statesman

title="Link to posting">In conversation with Joseph Stiglitz

Rachael Jolley talks to Bill Clinton’s ex-economic adviser about the positive power of globalisation and other issues ahead of the Fabian foreign affairs conference on 19 January in association with the New Statesman

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Are smart toys spying on children?

If you thought stepping on a Lego was bad, consider the new ways in which toys can hurt and harm families.

In January 1999, the president of Tiger Electronics, Roger Shiffman, was forced to issue a statement clearing the name of the company’s hottest new toy. “Furby is not a spy,” he announced to the waiting world.

Shiffman was speaking out after America’s National Security Agency (NSA) banned the toy from its premises. The ban was its response to a playground rumour that Furbies could be taught to speak, and therefore could record and repeat human speech. “The NSA did not do their homework,” said Shiffman at the time.

But if America’s security agencies are still in the habit of banning toys that can record, spy, and store private information, then the list of contraband items must be getting exceptionally long. Nearly 18 years after TE were forced to deny Furby’s secret agent credentials, EU and US consumer watchdogs are filing complaints about a number of WiFi and Bluetooth connected interactive toys, also known as smart toys, which have hit the shelves. Equipped with microphones and an internet connection, many have the power to invade both children’s and adults’ private lives.

***

“We wanted a smart toy that could learn and grow with a child,” says JP Benini, the co-founder of the CogniToys “Dino”, an interactive WiFi-enabled plastic dinosaur that can hold conversations with children and answer their questions. Benini and his team won the 2014 Watson Mobile Developer Challenge, allowing them to use the question-answering software IBM Watson to develop the Dino. As such, unlike the “interactive” toys of the Nineties and Noughties, Dino doesn’t simply reiterate a host of pre-recorded stock phrases, but has real, organic conversations. “We grew it from something that was like a Siri for kids to something that was more conversational in nature.”

In order for this to work, Dino has a speaker in one nostril and a microphone in the other, and once a child presses the button on his belly, everything they say is processed by the internet-connected toy. The audio files are turned into statistical data and transcripts, which are then anonymised and encrypted. Most of this data is, in Benini’s words, “tossed out”, but his company, Elemental Path, which owns CogniToys, do store statistical data about a child, which they call “Play Data”. “We keep pieces from the interaction, not the full interaction itself,” he tells me.

“Play Data” are things like a child’s favourite colour or sport, which are used to make a profile of the child. This data is then available for the company to view, use, and pass on to third parties, and for parents to see on a “Parental Panel”. For example, if a child tells Dino their favourite colour is “red”, their mother or father will be able to see this on their app, and Elemental Path will be able to use this information to, Benini says, “make a better toy”.

Currently, the company has no plans to use the data with any external marketers, though it is becoming more and more common for smart toys to store and sell data about how they are played with. “This isn’t meant to be just another monitoring device that's using the information that it gathers to sell it back to its user,” says Benini.

Sometimes, however, Elemental Path does save, store, and use the raw audio files of what a child has said to the toy. “If the Dino is asked a question that it doesn’t know, we take that question and separate it from the actual child that’s asking it and it goes into this giant bucket of unresolved questions and we can analyse that over time,” says Benini. It is worth noting, however, that Amazon reviews of the toy claim it is frequently unable to answer questions, meaning there is potentially an abundance of audio saved, rather than it being an occasional occurrence.

CogniToys have a relatively transparent Privacy Policy on their website, and it is clear that Benini has considered privacy at length. He admits that the company has been back and forth about how much data to store, originally offering parents the opportunity to see full transcripts of what their child had been saying, until many fed back that they found this “creepy”. Dino is not the first smart toy to be criticised in this way.

Hello Barbie is the world’s first interactive Barbie doll, and when it was released by Mattel in 2015, it was met with scorn by parents’ rights groups and privacy campaigners. Like Dino, the doll holds conversations with children and stores data about them which it passes back to the parents, and articles expressing concerns about the toy featured on CNN, the Guardian, and the New York Times. Despite Dino’s similarities, however, Benini’s toy received almost no negative attention, while Hello Barbie won the Campaign for a Commercial-Free Childhood’s prize for worst toy of the year 2015.

“We were lucky with that one,” he says, “Like the whole story of the early bird gets the worm but the second worm doesn’t get eaten. Coming second on all of this allowed us to be prepared to address the privacy concerns in greater depth.”

Nonetheless, Dino is in many ways essentially the same as Hello Barbie. Both toys allow companies and parents to spy on children’s private playtimes, and while the former might seem more troubling, the latter is not without its problems. A feature on the Parental Panel of the Dino also allows parents to see the exact wording of questions children have asked about certain difficult topics, such as sex or bullying. In many ways, this is the modern equivalent of a parent reading their child's diary. 

“Giving parents the opportunity to side-step their basic responsibility of talking to, engaging with, encouraging and reassuring their child is a terrifying glimpse into a society where plastic dinosaurs rule and humans are little more than machines providing the babies for the reptile robots to nurture,” says Renate Samson, the chief executive of privacy campaign group Big Brother Watch. “We are used to technology providing convenience in our lives to the detriment of our privacy, but allowing your child to be taught, consoled and even told to meditate by a WiFi connected talking dinosaur really is a step in the wrong direction.”

***

Toy companies and parents are one thing, however, and to many it might seem trivial for a child’s privacy to be comprised in this way. Yet many smart toys are also vulnerable to hackers, meaning security and privacy are under threat in a much more direct way. Ken Munro, of Pen Test Partners, is an ethical hacker who exposed security flaws in the interactive smart toy “My Friend Cayla” by making her say, among other things, “Calm down or I will kick the shit out of you.”

“We just thought ‘Wow’, the opportunity to get a talking doll to swear was too good,” he says. “It was the kid in me. But there were deeper concerns.”

Munro explains that any device could connect to the doll over Bluetooth, provided it was in range, as the set-up didn’t require a pin or password. He also found issues with the encryption processes used by the company. “You can say anything to a child through the doll because there's no security,” he says. “That means you've got a device that can potentially be used to groom a child and that's really creepy.”

Pen Test Partners tells companies about the flaws they find with their products in a process they call “responsible disclosure”. Most of the time, companies are grateful for the information, and work through ways to fix the problem. Munro feels that Vivid Toy Group, the company behind Cayla, did a “poor job” at fixing the issue. “All they did was put one more step in the process of getting it to swear for us.”

It is one thing for a hacker to speak to a child through a toy and another for them to hear them. Early this year, a hack on baby monitors ignited such concerns. But any toy with speech recognition that is connected to the internet is also vulnerable to being hacked. The data that is stored about how children play with smart toys is also under threat, as Fisher Price found out this year when a security company managed to obtain the names, ages, birthdays, and genders of children who had played with its smart toys. In 2015, VTech also admitted that five million of its customers had their data breached in a hack.

“The idea that your child shares their playtime with a device which could potentially be hacked, leaving your child’s inane or maybe intimate and revealing questions exposed is profoundly worrying,” says Samson. Today, the US Electronic Privacy Information Center (EPIC) said in a statement that smart toys “pose an imminent and immediate threat to the safety and security of children in the United States”. 

Munro says big brands are usually great at tackling these issues, but warns about smaller, cheaper brands who have less to lose than companies like Disney or Fisher Price. “I’m not saying they get it right but if someone does find a problem they’ve got a huge incentive to get it right subsequently,” he says of larger companies. Thankfully, Munro says that he found Dino to be secure. “I would be happy for my kids to play with it,” he says. “We did find a couple of bugs but we had a chat with them and they’re a good bunch. They aren’t perfect but I think they’ve done a hell of a lot of a better job than some other smart toy vendors.”

Benini appears alert to security and the credibility it gives his company. “We took the security very, very seriously,” he says. “We were still building our systems whilst these horror stories were coming about so I already set pipelines and parameters in place. With a lot of devices out there it seems that security takes a backseat to the idea, which is really unfortunate when you’re inviting these devices into your home.”

As well as being wary of smaller brands, Munro advises that parents should look out for Bluetooth toys without a secure pairing process (ie. any device can pair with the toy if near enough), and to think twice about which toys you connect to your WiFi. He also advises to use unique passwords for toys and their corresponding apps.

“You might think ‘It's just a toy, so I can use the same password I put in everything else’ – dog’s name, football club, whatever – but actually if that ever got hacked you’d end up getting all your accounts that use that same password hacked,” he says.

Despite his security advice, Munro describes himself as “on the fence” about internet-connected smart toys as a whole. “Most internet of things devices can be hacked in one way or another,” he says. “I would urge caution.”

***

Is all of this legal? Companies might not be doing enough ethically to protect the privacy of children, but are they acting responsibly within the confines of the law?

Benini explains that Dino complies with the United States Children's Online Privacy Protection Act (COPPA) of which there is no real equivalent in the UK. COPPA says that companies must have parental permission to collect personal information over the internet about children under 13 years of age. “We’ve tried to go above and beyond the original layout of COPPA,” says Benini, when describing CogniToys transparent privacy documents. Parents give their consent for Elemental Path to collect their children’s data when they download the app that pairs with the toy.

Dino bears a striking similarity to Amazon Echo and Google Home, smart speakers that listen out for commands and questions in your home. Everything that is said to Amazon Echo is recorded and sent to the cloud, and an investigation by the Guardian earlier this year discovered that this does not comply with COPPA. We are therefore now in a strange position whereby many internet of things home devices are legally considered a threat to a child’s privacy, whereas toys with the same capabilities are not. This is an issue because many parents may not actually be aware that they are handing over their children’s data when installing a new toy.

As of today, EU consumer rights groups are also launching complaints against certain smart toys, claiming they breach the EU Unfair Contract Terms Directive and the EU Data Protection Directive, as well as potentially the Toy Safety Directive. Though smart toys may be better regulated in Europe, there are no signs that the problem is being tackled in the UK. 

At a time when the UK government are implementing unprecedented measures to survey its citizens on the internet and Jeremy Hunt wants companies to scour teens’ phones for sexts, it seems unlikely that any legislation will be enacted that protects children’s privacy from being violated by toy companies. Indeed, many internet of things companies – including Elemental Path – admit they will hand over your data to government and law enforcement officials when asked.

***

As smart toys develop, the threat they pose to children only becomes greater. The inclusion of sensors and cameras means even more data can be collected about children, and their privacy can and will be compromised in worrying ways.

Companies, hackers, and even parents are denying children their individual right to privacy and private play. “Children need to feel that they can play in their own place,” says Samson. It is worrying to set a precedent where children get used to surveillance early on. All of this is to say nothing of the educational problems of owning a toy that will tell you (rather than teach you) how to spell “space” and figure out “5+8”.

In a 1999 episode of The Simpsons, “Grift of the Magi”, a toy company takes over Springfield Elementary and spies on children in order to create the perfect toy, Funzo. It is designed to destroy all other toys, just in time for Christmas. Many at the time criticised the plot for being absurd. Like the show's prediction of President Trump, however, it seems that we are living in a world where satire slowly becomes reality.

Amelia Tait is a technology and digital culture writer at the New Statesman.