Later On

A blog written for those whose interests more or less match mine.

From Territorial to Functional Sovereignty: The Case of Amazon

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Frank Pasquale writes in Law and Political Economy:

Economists tend to characterize the scope of regulation as a simple matter of expandingor contracting state power. But a political economy perspective emphasizes that social relations abhor a power vacuum. When state authority contracts, private parties fill the gap. That power can feel just as oppressive, and have effects just as pervasive, as garden variety administrative agency enforcement of civil law. As Robert Lee Hale stated, “There is government whenever one person or group can tell others what they must do and when those others have to obey or suffer a penalty.”

We are familiar with that power in employer-employee relationships, or when a massive firm extracts concessions from suppliers. But what about when a firm presumes to exercise juridical power, not as a party to a conflict, but the authority deciding it? I worry that such scenarios will become all the more common as massive digital platformsexercise more power over our commercial lives.

A few weeks ago, the Friedrich Ebert Stiftung (a think tank affiliated with the Social Democratic Party in Germany) invited me to speak at their Conference on Digital Capitalism. As European authorities develop long-term plans to address the rise of powerful platforms, they want to know: What is new, or particularly challenging, in digital capitalism?

My answer focused on the identity and aspirations of major digital firms. They are no longer market participants. Rather, in their fields, they are market makers, able to exert regulatory control over the terms on which others can sell goods and services. Moreover, they aspire to displace more government roles over time, replacing the logic of territorial sovereignty with functional sovereignty. In functional arenas from room-letting to transportation to commerce, persons will be increasingly subject to corporate, rather than democratic, control.

For example: Who needs city housing regulators when AirBnB can use data-driven methods to effectively regulate room-letting, then house-letting, and eventually urban planning generally? Why not let Amazon have its own jurisdiction or charter city, or establish special judicial procedures for Foxconn? Some vanguardists of functional sovereignty believe online rating systems could replace state occupational licensure—so rather than having government boards credential workers, a platform like LinkedIn could collect star ratings on them.

In this and later posts, I want to explain how this shift from territorial to functional sovereignty is creating a new digital political economy. Amazon’s rise is instructive. As Lina Khan explains, “the company has positioned itself at the center of e-commerce and now serves as essential infrastructure for a host of other businesses that depend upon it.” The “everything store” may seem like just another service in the economy—a virtual mall. But when a firm combines tens of millions of customers with a “marketing platform, a delivery and logistics network, a payment service, a credit lender, an auction house…a hardware manufacturer, and a leading host of cloud server space,” as Khan observes, it’s not just another shopping option.

Digital political economy helps us understand how platforms accumulate power. With online platforms, it’s not a simple narrative of “best service wins.” Network effects have been on the cyberlaw (and digital economics) agenda for over twenty years. Amazon’s dominance has exhibited how network effects can be self-reinforcing. The more merchants there are selling on (or to) Amazon, the better shoppers can be assured that they are searching all possible vendors. The more shoppers there are, the more vendors consider Amazon a “must-have” venue. As crowds build on either side of the platform, the middleman becomes ever more indispensable. Oh, sure, a new platform can enter the market—but until it gets access to the 480 million items Amazon sells (often at deep discounts), why should the median consumer defect to it? If I want garbage bags, do I really want to go over to to re-enter all my credit card details, create a new log-in, read the small print about shipping, and hope that this retailer can negotiate a better deal with Glad? Or do I, ala Sunstein, want a predictive shopping purveyor that intimately knows my past purchase habits, with satisfaction just a click away?

As artificial intelligence improves, the tracking of shopping into the Amazon groove will tend to become ever more rational for both buyers and sellers. Like a path through a forest trod ever clearer of debris, it becomes the natural default. To examine just one of many centripetal forces sucking money, data, and commerce into online behemoths, play out game theoretically how the possibility of online conflict redounds in Amazon’s favor. If you have a problem with a merchant online, do you want to pursue it as a one-off buyer? Or as someone whose reputation has been established over dozens or hundreds of transactions—and someone who can credibly threaten to deny Amazon hundreds or thousands of dollars of revenue each year? The same goes for merchants: The more tribute they can pay to Amazon, the more likely they are to achieve visibility in search results and attention (and perhaps even favor) when disputes come up. What Bruce Schneier said about security is increasingly true of commerce online: You want to be in the good graces of one of the neo-feudal giants who bring order to a lawless realm. Yet few hesitate to think about exactly how the digital lords might use their data advantages against those they ostensibly protect.

Forward-thinking legal thinkers are helping us grasp these dynamics. For example, . . .

Continue reading.

Written by LeisureGuy

17 December 2017 at 3:37 pm

Trump’s base sees in Trump what they would do themselves if they had the power

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And, of course, Trump supporters who do have power now have a new model of acceptable behavior (e.g., it’s okay to “rough up” suspects).

They don’t see what he does as strange, because it’s exactly what they would do. “Of course, he does that! Wouldn’t you? If you could get away with it? I sure would, and I admire Trump for doing it.”

Written by LeisureGuy

17 December 2017 at 1:58 pm

Bitcoin Is a Lousy Form of Money

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Very interesting post by Kevin Drum, in which he explains the attributes of money. From the post:

. . . Pay particular attention to #6 on the list of moneylike attributes. It’s often said that although the dollar is no longer backed by gold, it’s still a solid currency because it’s backed by the productive capacity of the United States and the integrity of the US government. And that’s true. Ultimately, though, it’s backed by the willingness of the US government to take dollars as payment of taxes. No matter how skeptical you may be of fiat money, you’ll still accept it if you know that, at the very least, you can pay your taxes with it. And if that’s true of you, it’s true of everyone else. . .

Written by LeisureGuy

17 December 2017 at 12:32 pm

Jennifer Rubin clearly explains why Rupert Murdoch must GO

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Ms. Rubin worked as a labor lawyer in Hollywood for twenty years, so I imagine she fully understands what’s going on and what’s at stake. She writes:

Unless you’ve been living under a rock — or are the aging executive chairman of News Corp. —  you know that Fox News has been ground zero in the epidemic of sexual assault scandals in which powerful men have abused younger, more vulnerable women. Fox, of course, has been slammed by a series of sexual harassment cases that cost the company tens of millions in settlement money and ended the careers of Bill O’Reilly, Roger Ailes, Eric Bolling and Fox News co-president Bill Shine (who  was accused of covering up a culture of sexual predation).

So it was more than a bit stunning that News Corp.’s executive chairman Rupert Murdoch chose to brush off the epidemic of sexual harassment that has bludgeoned his company — especially during a cultural firestorm in which star news personalities, entertainment moguls and politicians have been forced out of their jobs (and in a few egregious cases now face criminal investigations) for accused sexual misconduct. Everywhere the code of silence that protected abusive men is crumbling — but the elderly news tycoon seems oblivious.

Huffington Post reported on Friday:

Current and former female Fox News employees say they are “stunned,” “disgusted” and “hungry for justice” after media mogul Rupert Murdoch on Thursday dismissed allegations of sexual misconduct at the network as “nonsense” outside of a few “isolated incidents” with former Fox News Chairman Roger Ailes.

In a televised interview, Sky News host Ian King focused on the Thursday announcement that the Disney Company is acquiring most of the assets belonging to 21st Century Fox, Fox News Channel’s parent, in a deal valued at $52 billion. Disney is not acquiring Fox News Channel or several other broadcast properties as part of the deal.

King asked Murdoch if sexual misconduct allegations had inflicted damage on Fox News Channel.

Murdoch said, “All nonsense, there was a problem with our chief executive [Ailes], sort of, over the years, isolated incidents. As soon as we investigated it he was out of the place in hours, well, three or four days. And there’s been nothing else since then. That was largely political because we’re conservative. Now of course the liberals are going down the drain — NBC is in deep trouble. CBS, their stars. I mean there are really bad cases and people should be moved aside. There are other things which probably amount to a bit of flirting.”

A 21st Century Fox spokesman tried to clean up the mess with a disingenuous statement that might have made Sarah Huckabee Sanders blush for its sheer audacity and contempt for the public’s intelligence. (“Rupert never characterized the sexual harassment matters at FOX News as ‘nonsense.’ Rather, he responded negatively to the suggestion that sexual harassment issues were an obstacle to the Company’s bid for the rest of Sky.”)

Fox News is not part of Disney’s announced purchase of 21st Century Fox’s TV and motion picture properties, but Murdoch’s latest utterance suggests it is long past time for a change in control and management for the rump company that will remain after Murdoch cashes out from his other businesses. The network, its employees, its advertisers, its existing shareholders, its viewers and the country would benefit if the 86-year-old Australian immigrant stepped away and let someone with some understanding of 21st century America run the place. (Murdoch, together with his sons Lachlan and James through 21st Century Fox, still effectively controls and remains the face of Fox News.)

To all but deluded Trumpians, Fox News has become a horror show for victimized women and a journalistic bad joke, disgraced by its cheerleading for the administration, ludicrous attacks on Trump adversaries (e.g. James Comey, the FBI as a whole, the special prosecutors) and bizarre conspiracy theorizing (e.g. Seth Rich). It would be hard to find a more precise encapsulation than Fox News not only of the plague of sexual violence and misogyny in American workplaces but also of the anti-democratic attacks on the (real) free press and on the notion of objective truth itself. Fox News’s damage to our political culture and to the intellectual integrity of the right is hard to measure.

Murdoch, who reportedly had to be cajoled into getting rid of Ailes, must finally be held to account. His bizarre cluelessness even nowreflects his inadequacy as the face of a news organization struggling to recover from scandal and to maintain any patina of respectability.

Ideally, another entity or entrepreneur would  . . .

Continue reading.

Written by LeisureGuy

17 December 2017 at 12:21 pm

Posted in Business, Media, Politics

Digitizing old photos

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I subscribe to a free weekly newsletter, Recomendo, and each issue contains 4-5 bits of useful knowledge. Here’s an example from the currents newsletter:

A friend who took a mountain of photos in the last century (1950s-90s) recently asked me how to get all his oId analog photos digitized, cataloged, online and printed. Here is what I told him: I get all my old stuff (slides, negatives, prints) scanned at ScanCafe because the price is right. They have the cheapest yet reliable scanning service. I box them up quickly and sort them after they are scanned. The files are returned on DVD or a thumb drive. But you need time — several months since they send them overseas (with incredible care and safety). For faster service when needed I use Costco. They scan at 600 dpi which is more than enough for most purposes. Costco is fast, but they don’t scan negatives any more. Only slides and prints. And they save to DVD, but not everyone has DVD reader these days. If you need mild retouching on the old photos, Wirecutter makes some good recommendations of scanners who retouch. After scanning and tweaking I upload my digital files to Costco to get prints. Costco Photos has an excellent quality/price ratio, for both smaller and larger sizes, including fancy metal prints. Cheap, fast (usually same day pickup!), and decent quality. To manage and organize all my scanned photo files I use Lightroom. It’s standard issue for any serious photographer; I couldn’t work without it. (I currently have 230,000 photos in Lightroom.) Its image processing interface is better than Photoshop for 99% of the time. You don’t need the subscription cloud version; the standalone version of Lightroom is still available and fine. — KK

Worth subscribing to, IMO. Here’s another useful bit of useful knowledge:

I often want to read a long PDF someone sends me on my Kindle. Here is the hack to get it loaded. Use your Kindle account name to create a Kindle email as In the subject line of an email message put < convert >. Enclose the PDF and hit send. Amazon will convert the PDF to their Kindle format and it will show up in your library. Then you can select it to download to your device. The PDF on a Kindle is clunky but readable. — KK

Written by LeisureGuy

17 December 2017 at 12:05 pm

Posted in Daily life

Current belief: “AI and automation will take away a lot of jobs, but not mine.”

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From an interesting article by Helen Edwards and Dave Edwards in Quartz:

. . . People were anxious; 90% of responders thought that up to half of jobs would be lost to automation within five years. That’s a lot, more than most of the studies conclude, include studies conducted by Oxford University (pdf) and McKinsey Global Institute. But, paradoxically, we found that everyone thought it was going to happen to someone else. In our survey, 91% don’t think there’s any risk to their job and 94% don’t think they’ll be working for an AI boss—but 48% think they’ll have an AI employee (all within five years). . .

Written by LeisureGuy

17 December 2017 at 8:23 am

Super-rich shown to have grown out of ancient farming

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Robin McKie reports in the Guardian:

Scientists have traced the rise of the super-rich deep into our historical past to uncover the ancient source of social inequality. Their conclusion? Thousands of years ago, it was the use of large farm animals – horses and oxen that could pull ploughs – which created the equivalent of our multi-billionaire entrepreneurs today.

The research, published in Nature, is the first attempt to assess how significant wealth gaps arose among our ancestors. These began when farming first established the idea of land ownership – although only mild disparities resulted from the sowing and reaping of crops.

It was only with the domestication of cattle and horses – sometimes thousands of years after land cultivation had begun – that serious divisions between societies’ haves and have-nots began to emerge, eventually creating the ancient equivalent of today’s island-owning, jet-setting billionaires.

“It became possible to extend fields far from a farmhouse by using plough animals, especially oxen, to break up the soil and so plant more crops,” said project leader Professor Tim Kohler, of Washington State University in Pullman. “Some farmers were able to raise productivity significantly and became very rich.”

However, animals such as the horse or ox were not available in the New World – where farming appeared independently of its arrival in the Middle East. As a result, this extension of farms did not occur and wealth disparities in societies were less pronounced.

“The only large animals in the New World were dogs and turkeys and you cannot do a lot of ploughing with them,” said another study scientist, Professor Michael Smith of Arizona State University, in Tempe. “In the end, that had a significant impact on societies. They had less inequality.”

To measure relative wealth in a society, the team worked with archaeologists studying 62 different societies in Europe, Asia and North America. Some of these were up to 10,000 years old and included digs in ancient Babylonia, Catalhoyuk (now in Turkey) and Pompeii.

Researchers analysed the sizes of houses at these sites and used these as indicators of the variations of wealth that existed there at any one time. “House size gives a very good indication of wealth,” said Smith. This point was backed by Kohler. “We consider house size to be a proxy for wealth.”

The figures produced by these analyses provided the team with an indication of a particular society’s wealth. The greater the diversity in house size, the greater the inequality. In turn this disparity was measured using a system based on the Gini coefficient.

“Gini coefficients range from zero for societies in which each person has exactly the same amount of wealth to a society in which a single person owns the resources of an entire society. Such a society would have a Gini coefficient of one,” Kohler said.

The team found that ancient farming societies had an inequality with a coefficient of around 0.35. That is a higher level of inequality than the level that is likely to have existed in earlier millennia when humans lived as hunter gatherers and shared many resources.

“However, this inequality among these, the first farmers, is an awful lot less than the inequality you find in the US today,” said Kohler. “Here we have a Gini coefficient of around 0.8 today.”

In the ancient farms of the New World, inequality stayed more or less the same. However, in Eurasia it started to climb over time until it reached levels of around 0.6 a few thousand years ago. This rise coincides with the introduction of oxen and horses and their exploitation in the ploughing of fields. . .

Continue reading.

Written by LeisureGuy

17 December 2017 at 8:20 am

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