↳ Analysis

October 16th, 2020

↳ Analysis

Data as Property?

The legal structure of data egalitarianism

Since the proliferation of the World Wide Web in the 1990s, critics of widely used internet communications services have warned of the misuse of personal data. Alongside familiar concerns regarding user privacy and state surveillance, a now-decades-long thread connects a group of theorists who view data—and in particular data about people—as central to what they have termed informational capitalism. Critics locate in datafication—the transformation of information into commodity—a particular economic process of value creation that demarcates informational capitalism from its predecessors. Whether these critics take “information” or “capitalism” as the modifier warranting primary concern, datafication, in their analysis, serves a dual role: both a process of production and a form of injustice.

In arguments levied against informational capitalism, the creation, collection, and use of data feature prominently as an unjust way to order productive activity. For instance, in her 2019 blockbuster The Age of Surveillance Capitalism, Shoshanna Zuboff likens our inner lives to a pre-Colonial continent, invaded and strip-mined of data by technology companies seeking profits. Elsewhere, Jathan Sadowski identifies data as a distinct form of capital, and accordingly links the imperative to collect data to the perpetual cycle of capital accumulation. Julie Cohen, in the Polanyian tradition, traces the “quasi-ownership through enclosure” of data and identifies the processing of personal information in “data refineries” as a fourth factor of production under informational capitalism.

Critiques breed proposals for reform. Thus, data governance emerges as key terrain on which to discipline firms engaged in datafication and to respond to the injustices of informational capitalism. Scholars, activists, technologists and even presidential candidates have all proposed data governance reforms to address the social ills generated by the technology industry.

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October 1st, 2020

A Popular History of the Fed

On Populist programs and democratic central banking

Since Lehman collapsed in 2008, central banks have broken free of historical norms, channelling trillions into the banking system to prop up global finance and the savings of depositors from Germany to Hong Kong. The corona crash has only accelerated this emancipation. In April, the Bank of England helped the Johnson government finance an ambitious furlough scheme, while the European Central Bank stepped up their older quantitative easing program, pumping liquidity back into the bank sector. Swap lines by state banks have been set up in the United States, while the latest European recovery plan ratified an extension of the Pandemic Emergency Purchase program. Adam Tooze cast all of this as “a remarkable display of technocratic energy and imagination in western financial centers”—necessary to both “control the epidemic” and “restore the world economy.”

Amongst these institutions none possess as much luster as the American Federal Reserve. While other banks waver or bow to political leadership, the Federal Reserve’s action is swift and decisive, protecting against financial collapse at home while safeguarding assets abroad. Unsurprisingly, the Fed is often singled out as one of the greatest triumphs of capitalist statecraft, from its creation in 1913 under Woodrow Wilson to its decisive role in the neoliberal counterrevolution of the 1980s under Paul Volcker. Yet while the bank seemed deeply conservative for the intermittent period, its proactive capacity asserted itself with a vengeance in 2008, when Timothy Geithner’s New York Fed almost single-handedly saved the global financial system from collapse.

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September 25th, 2020

Direct Effects

How should we measure racial discrimination?

A 2018 National Academy of Sciences report on American policing begins its section on racial bias by noting the abundance of scholarship that records disparities in the criminal justice system. But shortly thereafter, the authors make a strange clarification: “In many cases there is little informative quantitative data on whether… policing is influenced by the racial or ethnic identity of citizens in a causal sense.”

On the one hand, troves of studies demonstrating racial disparities across a range of policing situations. On the other, a lack of data showing policing to be causally influenced by race. What accounts for the gap between evidence of racial disparities and proof of race as a causal influence on those disparities? The report presents a vignette that offers some clues:

"[A] police officer may decide to stop and question or frisk a Black citizen but may decide not to question a White citizen, creating a racial disparity in stops… Based solely on measures of officer’s behavior, however, it is impossible to know whether this behavior was actually racially biased. If the Black and White pedestrians, for instance, acted differently as the officer approached (e.g., nervous versus calm), or if the officer encountered them in different surroundings (at night in an alley versus at noon in the park), or if the officer was searching for a suspect described as Black, an objective observer might conclude that the officer was simply responding to the situation at hand."

The takeaway is that robust correlations in observational data offer satisfactory descriptive statistics, but they cannot, at least not on their own, meet the gold standard of scientific explanation—causal explanation. Only social scientists pursuing causal inference methods are equipped to answer sought-after “why” questions: Why are there racial disparities in policing? Is the disparity because of race or because of something else?

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September 17th, 2020

Unceasing Debt, Disparate Burdens: Student Debt and Young America

Since the Great Recession, outstanding student loan debt in the United States has increased by 122% in 2019 dollars, reaching the staggering sum of \$1.66 trillion in June of this year. Student loan debt has grown faster than other debt types, including auto, credit card and mortgage debt. For many, education is the only pathway towards good employment with benefits, leading to economic and social opportunities later in life. But as college becomes more unaffordable with each passing year, student loans are bridging the ever-expanding chasm between college savings and obtaining an education. The crisis has reached the national political arena, with policymakers recently calling for debt cancellation up to \$50,000 for federal borrowers.

Our research demonstrates that the student debt crisis has exacerbated existing inequalities. We found that all young borrowers are saddled with dramatically rising debt since 2009, but low-income groups, BIPOC, and those in their 30s fare far worse than others. While richer students have higher absolute debt, low-income students experience massive and growing relative debt burdens. And students in majority-Black and Hispanic zip codes, who are more likely to attend for-profit private institutions, have seen larger debt increases than those in majority-white zip codes. Debt levels have jumped in states like Wisconsin, Michigan, Pennsylvania, and Ohio. Gaining insight into broad trends in debt accumulation, as well as details about the particular demographic or labor market characteristics that shape changes in individuals’ debt burden over time, allows us to more effectively tailor our policy recommendations. For example, our research finds that forgiving $50,000 in student loans would make 80% of young adult borrowers student debt free.

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September 5th, 2020

Hot Oil

Gardiner Means, administered prices, and why the Texas Railroad Commission should regulate oil production again

Even at the depth of the Great Depression, oil producers were always paid a positive price for their product. But on April 20 of this year the price of West Texas Intermediate oil traded for negative prices, reaching a record low of negative \$37.86. While oil prices have largely recovered at the time of writing, negative prices indicate deep underlying problems with the oil market. Currently, OPEC+ coordinates with Russia, Mexico, and other oil producing nations to set production quotas and balance supply and demand. Their systematic reduction in oil production prevented the collapse in prices that the United States saw, and the Brent oil contract, a global benchmark, continued to trade for positive prices (on the same day West Texas Intermediate reached subterranean prices Brent Oil traded for +\$17.36, a spread of over \$50). In response to the US disaster, oil producers called for the Texas Railroad Commission (TRC) to regulate oil production to try and balance American oil markets.

Yet the Texas Railroad Commissioners maintained that plunging prices would reduce production and balance the market on their own. It is true that US producers, facing negative prices, have rapidly reduced production. But with prices rising, production may return quickly, setting the stage for another crash.

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August 15th, 2020

Another Lost Decade?

The systemic character of the global periphery debt crisis

Contrary to common beliefs on fiscal fundamentals, the current debt crisis in the global periphery demonstrates that the solvency of sovereign states is critically determined by their monetary power. Crucially, liquidity has a cyclical character in the periphery of global capitalism and a countercyclical character in the core.

During economic booms, when many contracts look safe, private actors are more prone to purchase assets denominated in peripheral currencies, which typically reward higher interest rates. But during busts, perceptions of asset safety may quickly change. Peripheral currency states are more vulnerable to suffering quick withdrawals from contracts denominated in their currency. Private investors seek the safest assets in the global economy, which, despite lower interest rates, guarantee low credit and market risks, high market liquidity, and limited inflation, exchange rate and idiosyncratic risks.

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July 27th, 2020

Essential Infrastructures

The case for sovereign investment in telecommunications infrastructure

As social distancing became norm and law in the early days of the Covid-19 pandemic, people turned to video teleconferencing to meet with friends and family, attend religious services, and go on dates. Zoom work accounts became a conduit for maintaining nonwork social ties and, as people came to depend on this enterprise tool, Zoom's stock valuation soared. The pandemic has widened the sphere of life dependent on such market technologies, heightening existing questions around the political, legal, and economic governance of these companies. How should the fabric of social life, especially as it is rewoven by the pandemic, relate to the private ownership of telecommunications?

Two legal regimes regulate the ownership of and access to telecommunications technology: the market disciplining forces of antitrust law (along with allied concepts like public utilities regulation), and the national security protections of critical infrastructure regulation. Certain applications of the former, concerned primarily with market power, identify privately-owned infrastructures that are “essential,” and regulate firms to ensure that access to that infrastructure is made available to competitors and consumers on reasonable terms. The latter, on the other hand, identifies infrastructures that are “critical,” and regulates them to serve the US’s national and economic security interests.

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July 22nd, 2020

Laws of the Land

Property rights and extraction in the mineral frontier

“The Mining Law of 1872,” reported California Democrat Alan Lowenthal in May 2019, "is one of the most obsolete laws still on the books.” At a hearing before the House Subcommittee on Energy and Mineral Resources, Lowenthal was rehearsing a longstanding critique of antiquation against hard rock mineral legislation—a law to privatize federal mineral lands that has remained in place since the nineteenth century.

For decades, this statute has come under scrutiny, with Congressional hearings on its merits held under every President since George H. W. Bush. Two objections are raised consistently. The first is that, in contrast to developers in other extractive industries, hard rock mining corporations may purchase Western mineral lands from the federal government for the minuscule price of \$5.00 per acre, and are charged no royalties on the resources they extract. This nearly 150-year-old arrangement remains a major gift to multinational corporations: in 1994, the US Interior Department sold about 1,949 acres in Nevada to the Barrick Resources Corporation. The land contained 30 million ounces of gold, which was valued at \$380 per ounce. Sold for just under \$10,000, the land was worth billions. A small royalty commensurate to those of other extractive enterprises would by now have generated hundreds of millions of dollars for the public.

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July 16th, 2020

The Dollar and Empire

How the US dollar shapes geopolitical power

What does the US dollar’s continued dominance in the global monetary and financial systems mean for geo-economic and geo-political power? In a recent article, Yakov Feygin and Dominik Leusder question whether the United States actually enjoys an “exorbitant privilege” from the global use of the USD as the default currency for foreign exchange reserves, trade invoicing, and cross-border lending. Like Michael Pettis, they argue that the USD’s primacy actually imposes an exorbitant burden through its differential costs on the US population.

Global use of the dollar largely benefits the top 1 percent by wealth in the United States, while imposing job losses and weak wage growth on much of the rest of the country. This flows from the structural requirements involved in having a given currency work as international money. As Randall Germain and I have argued in various venues, a country issuing a globally dominant currency necessarily runs a current account deficit. Prolonged current account deficits erode the domestic manufacturing base. And as current account deficits are funded by issuing various kinds of liabilities to the outside world, they necessarily involve a build-up of debt and other claims on US firms and households.

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July 10th, 2020

The Crisis and the Free Market

On crisis, partisanship, and public policy

Will the current crisis transform America’s politics and economic institutions? With unemployment higher than at any point since the Great Depression, rising food insecurity, and an increasingly muscular role for government—are we witnessing the beginning of the end of the four-decade-long era of the free market ushered in by Ronald Reagan? It’s a question worth considering, whether you’re a Democrat who blames the rising inequality of the last four decades on the policies of smaller government, or a Republican who thinks those policies saved America.

It wouldn’t be the first time a crisis has altered the trajectory of the country. The Republican Party of today is defined by its commitment to tax cuts, deregulation, and cuts in social spending. But prior to the Reagan administration, the Republicans were actually the party seen as most likely to increase taxes, because their main commitment throughout the post-war period had been to avoid deficits. The party was, in Newt Gingrich’s famous dismissal, the tax collector for the welfare state.

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