The banking industry prepares itself for Maxine Waters

The past 48 hours have been filling up with analysis as to what the next moves by the House Democrats will be as they take over the lower chamber on 3 January 2019.  Here is my quick take.

U.S. Representative Maxine Waters, Democrat of California, is expected to become chairman of the U.S. House Committee on Financial Services and using her new position to seek increased regulation of the major banks in the United States.  These banks may include JP Morgan Chase, Bank of America, and Wells Fargo.

According to reporting by CNBC, Mrs. Waters would like to shut down Wells Fargo for good.  Mrs. Waters holds the financial industry responsible for foreclosures that occurred during and in the wake of the 2008-2009 financial crisis.  She wants higher fines for financial institutions that break the law and some banks believe that Mrs. Waters will use the committee’s subpoena powers to harass Wells Fargo and other banks. It is also believed that Mrs. Waters would focus on the Consumer Financial Protection Bureau and housing reform should she become chairman.

According to analysis by MarketWatch, elevated levels of headline risks are expected for banks with Ms. Waters at the helm of the House financial services committee. While her measures won’t pass the Republican-dominated Senate, it is the negative perceptions she may create about the financial industry that has analyst worried.

And these negative perceptions may be generated by investigative powers stemming from Mrs. Waters ability to issue subpoenas once she assumes the chairmanship.

The American Bankers Association acknowledges the flip in agendas resulting from a new chairman at the helm and expects Congress to be very involved in oversight. The ABA wants the banking industry to brace itself for something it has never seen before in terms of the tone of the potential incoming chairman.  Given Mrs. Waters tenor, the ABA hopes that remaining moderates on the Committee can move Mrs. Waters toward pragmatism.

The ABA is has identified top issues for the 116th Congress including anti-money laundering, data security, cannabis banking, and reform in government sponsored entities. With one-third of the house financial services committee expected to be new members, the ABA is ready to launch an education campaign toward these members.

Watching Mrs. Waters at the helm of the Committee will be an experience to say the least.

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Black Georgia voters opting for history versus substance

Dropped by the polling spot in the West End Atlanta to cast a vote.  Gentleman behind me, African American, begins to harp quietly but confidently about the historic moment; the opportunity to send Georgia’s first black American female to the governor’s office.

I held my tongue.  I am not impressed by the notion of symbolic voting, the need to be the “first black this” or the “first black that.”  It has garnered black Americans nothing of substance other than a brief few hours of pride for the onesie-twosies.

Should Stacey Abrams pull off a victory, whether tonight or in a run-off, she will have her ability to negotiate across the aisle challenged by a legislature dominated by Republicans who reside mostly outside of Interstate 485. Democrats don’t appear to have invested any time in providing Ms. Abrams a legislature that will work with her or at least a legislature with enough Democrats to provide her some leverage.

My instincts tell me, however, that Ms. Abrams will be satisfied with milking the “Oh, the Republicans are blocking me at all turns because I am a black woman” argument. Given the amount of support she has received from liberal political action committees outside of the Peach State, the end game may be for Ms. Abrams to survive long enough to be a viable candidate for the Democratic nomination in 2024.

I expected Kasim Reed to make a play for statewide office, but it seems that liberals have made Ms. Abrams their “people of color” poster child and hung their hopes on her.

For this to come to fruition, of course, Ms. Abrams will have to win.

Urbanization: Atlanta isn’t Delhi … yet

According to economist Dambisa Moyo in her book, Edge of Chaos: Why Democracy is Failing to Deliver Economic Growth and How to Fix It, 55% of the world’s population lives in urban areas and that number is rising.  In this Bloomberg podcast, Stephanie Flanders provides some insights into the inequality brewing in urban areas while at the same time serving as a hub for attracting workers seeking higher incomes.

In the podcast, Ms.. Flanders uses Delhi, Mumbai, and other cities in India as case studies for urban population and economic growth, the problems with governance, and income and wealth inequality. I don’t have to travel to south central Asia to witness inequality.  Living in Atlanta I see inequality everyday where a significant population of Blacks and Latinos take the train into Atlanta’s core to go to work.  Cranes are everywhere downtown as the city continues to put up new office and residential buildings.

And just this evening, Atlanta’s city council heard over seven hours of public comment before approving a proposed project that would turn 40 acres of downtown space into a complex of residential and commercial space.

The concerns about inequality have leaked into public policy proposals, including promises in 2017 by then mayoral candidate Keisha Lance Bottoms to increase the amount of affordable housing in Atlanta.  Today, Mrs. Bottoms is mayor and, to her credit, has made affordable housing the tip of her economic development spear.  Late last evening Mayor Bottoms scored big in persuading Atlanta’s city council to approve the $5 billion project.  One condition of project approval was for developers to set aside a required minimum affordable housing units of 20% or 200, whichever is larger.

I think even with these efforts, Atlanta is on its way to being unaffordable for middle income residents.  Buckhead, Midtown, and soon downtown will be out of reach for the middle class.  Even residential areas in the southwest and southeast quadrants of the city may be unaffordable for an increasing number of residents as people moving back into the city with either sufficient capital or credit have been able to take advantage of low rates and purchase homes in the West End, Westview, and Adair Park sections of the city.

What should Atlanta policymakers do? Nothing. A tax and income redistribution scheme may only provide very short term relief to the middle income populace. Higher property taxes would threaten housing values and give homeowners second thoughts about maintaining residence in Atlanta.  Requiring developers to set aside affordable units for each of their projects can only go so far given the limit on the number of appropriate projects in the first place.

As Ms. Flanders points out in her podcast, municipalities in the United States may have a bit more independence and flexibility to effect affordable housing policy but eventually the market for housing, available capital, and credit markets will limit the availability of units overall and affordable housing in particular making urbanization a difficult environment for the middle class.

Why they should have stopped at Star Trek: The Motion Picture

This one is off the beaten path a bit, but with six days left until the congressional elections, a break from the political shenanigans is in order, and I have decided to take that brief break by talking about Star Trek.  After fifty-two years it is time to let Captain Kirk and the crew of the Enterprise sail off into the starlight.  And the vehicle I will use to bid my farewell is Star Trek: The Motion Picture.

To most fans of the Star Trek movies, Star Trek: The Motion Picture is not a favorite.  The movie gets panned for its slow pace.  I have even heard critics compare Kirk’s reunification with the Enterprise to an orgasm. You know, the scene where Mr Scott takes Kirk for a shuttle ride around a dry-docked Enterprise being refitted for its first deep-space mission in almost two years.

The irony of that fly-by scene was that James Doohan, the actor who played Montgomery Scott, had no love for William Shatner, although Mr Doohan would admit that he did like Captain Kirk.  I guess Mr Doohan was able to channel that love for that scene because he was able to present Scotty as a crew member that cradled much love and admiration for his captain.

Yes, the movie did lumber on and I admit I was subjected to ennui during a few scenes, but watching that movie god knows how many times over the last 39 years has led me to appreciate its art… and its message.

For its art, for 1979, Star Trek: The Motion Picture was a good looking movie. It won the Academy Award for special effects.  I also liked the costumes; they were fitting for the end of the era.  The actors were still young enough and fit enough to look good in the costumes. (Just don’t let William Shatner’s impersonation of Diana Ross distract you. I could allow him his seemingly frequent uniform changes.)

More important was the message.  Unlike the militaristic, Star Wars-lite shoot ’em ups that followed, Star Trek: The Motion Picture attempted to delve into consciousness using Kirk, Spock, and a mysterious space cloud as the prime vehicles.  All three were faced with the choice of evolution.

Kirk had to face his ego and eliminate it by taking himself out of the equation.  He had to learn that it has never been about him. He also had to begin the journey of getting rid of obsession, particularly the obsession he had with space and his ship.

Spock, who experienced first contact with the consciousness encompassed in the cloud had to reconcile his Vulcan logic with his human traits.  All attempts to purge his human side had failed and it was on this voyage that he learned that running away from his humanity was the wrong course. He journey to reconciliation could not occur until he embraced that side.

As for the seeming protagonist, the space cloud, it was a machine seeking to evolve to a higher level, having gathered all the knowledge that it could attain in its current form.  It needed the human element, that portion that could provide drive and passion to the cold logic of the machine.

It is the joining of man and machine in an attempt to create a higher consciousness that is most applicable to where we stand on the dawn of artificial intelligence.  An increasing number of today’s thinkers are accepting the probability of human and machine merging, where man’s creativity is joined with the machines capacity to collect and process large amounts of information.  This is why, ironically, one of the least popular of the Star Trek installments provides the most relevant contribution to today’s science.  Man will have to evolve into something higher before venturing into deep space.

And the prior sentence sums up my disaffection with the Star Trek genre.  The depiction of the 20th or 21st century in deep space is looking increasingly comical.  Just from a physical perspective, man will have to alter his body in order to survive in space and colonize any planets.  The movie, The Titan, provides an example of the metamorphosis humans will have to endure to live on another planet.  People that look like Sulu, Uhura, and Chekov will not be colonizing planets.

Americans have a problem with evolution.  Star Trek fans in 1979 should have been the first to appreciate evolution.  Instead, they wanted the same old same old, which resulted in 1982’s Star Trek: The Wrath of Khan.  Although well made and a great story (so good that it was rebooted in the Kelvin Timeline, Star Trek: Into Darkness), it fell back on a tried and true formula of good guy (Khan) versus bad guy (Kirk).  This failure to evolve, to prefer the comfortable, to look at one’s self without any accountability, seeps through our politics today (I managed to get the word “politics” in there.)

Star Trek does not accurately project the type of human that will be going into deep space.  It has left its mark as entertainment and has abandoned true science fiction’s role as a view into another world, whether a joyous or scary one.  It is time to put Star Trek to rest ….

Trump and the Federal Reserve: Governing with transparent purpose

Listening to the rhetoric of President Donald Trump over the past 19 months, if I were to summarize the role of government, it is to defend national borders, sustain an environment that creates jobs, and be impactful in driving up stock market values.  Mr. Trump has effectively drowned out the Republican congressional leadership to the point where I don’t care what Senate Majority Leader Mitch McConnell or Speaker of the House Paul Ryan’s views on what the government’s role is supposed to be.

Under my interpretation of public administration, the buck, when it comes to governing, begins and ends with who is in the White House.  It is the Executive who enforces the law and interprets the law every day given a particular problem.  An argument can be made that during the run-up to the 2020 presidential election, the views of Mr. Trump’s challengers will take on some importance as voters compare the record of Mr. Trump with the promises of his Democratic challenger, but Americans have a way to go before the Democrats settle down on a few contenders and beginning pushing their messages before the electorate.  All we have right now are the whispered names of Andrew Cuomo, Elizabeth Warren, Joe Biden, and, yes, Hillary Clinton.

I suspect that none of the above named Democrats will be serious contenders in the spring of 2020 anyway.  Listening to the roll call of potential presidential candidates is like believing that the baseball team leading their division eight weeks into the season will be in the World Series much less holding the trophy.

In my lifetime, Mr. Trump has been the most transparent of presidents when it comes to the factions that he promotes.  Mr. Trump has been consistent and clear with his America’s economy first message. He took Mr. Trudeau out to the woodshed during the renegotiations of the North American Free Trade Agreement.  He kept his word on pulling the United States out of the Paris accords on climate change and the Trans Pacific Partnership Agreement.  He will not enforce the mandate that taxpayers are required to purchase health insurance, facing penalties if they don’t.  These initiatives are driven by a philosophy of American economic nationalism with the hopes of creating incentives for American businesses to repatriate jobs and cash to America’s shores.

He’s recently been transparent about the most important engine in the American economy: the Federal Reserve.  Mr. Trump disapproves of the Federal Reserve’s increase in the target for its federal funds rate, even though the Federal Reserve’s independence gives the central bank the okay to thumb their noses at the President.  The federal funds rate is the interest rate at which the Federal Reserve’s member banks may lend each other money overnight.  Changes in the fed funds rate seep into the overall economy in the form of mortgage rates, credit card rates, and interest rates on bonds.  Higher rates raise the costs of borrowing making it tougher for businesses to invest in growth including hiring more labor.

Higher rates mean that the economy’s “labor to tax conversion mechanism” becomes less efficient.  The labor to tax conversion mechanism is that layer of the economy where companies convert human resources into tax dollars by adding labor to payroll and collect and transmit income, payroll, and social security taxes to the Treasury.  Tax dollars are collected by the U.S. Treasury and either deposited for future spending on public programs or to service the debt.

But as I alluded to before, companies will feel constrained by interest hikes as they see revenues and profits reduced by higher costs for doing business. This may mean, depending on the business, a move toward automation in order to reduce labor costs.  Taking labor off of payroll means removing a head that could be taxed.  Will government have to apply some type of alternative tax applicable to an artificial intelligence that replaces a human intelligence on a factory line?

Going back to transparency, neither Mr. Trump or any leading Democrats have clearly demonstrated an ability to describe to the American public how their current economic environment works.  Neither begin any of their discussions on the economy with a discussion on capital or describe how the central bank is still the only game in town and the relationship to and importance of the central bank to all Americans. Mr. Trump has come the closest which means at this time he is the only elected official that gets it.

 

On Powell, Trump, and low rates

Donald Trump has shown no shyness when it comes to lamenting his regrets. When those regrets take the form of personnel, he fires them.  Over the past 48 hours, Mr. Trump has been expressing his frustration with current Federal Reserve chairman Jerome Powell.  Mr. Powell has been on a rate raising course since his appointment earlier this year and Mr. Trump believes that, setting aside what he perceives as Mr. Powell’s enjoyment, that this is not the time, given the advances in the economy and the stock market, for rate increases that may dampen or slow down the Trump Effect.

The textbook logic behind the Federal Reserve’s rate increases is to control the growth in asset values. Assets serve as collateral for borrowing and lending money.  If a potential lender sees an opportunity to lend $1,000,000 at 5% and has a portfolio of assets valued at $1.5 million, it will use its $1.5 million in assets to borrow the $1 million at say 2% and lend those funds out at 5%, and with all things equal, bring home a net return of 3%.

If the Federal Reserve believes that discipline is in order, it will raise the rates at which  banks borrow from each other overnight. It may also raise the rates on the funds that banks leave on deposit with the Federal Reserve. Both moves are designed to keep potential loanable funds out of the system, making money scarce and more expensive to find.  Also, higher rates, because of their inverse relationship with asset prices, result in asset values falling. This means that banks, businesses, and individuals will receive less funding because the collateral they have has lessened in value.

Increases in rates threaten wealth growth and consumption.  With the advent of modern central banking, nation-states have transformed into payment systems where taxes are collected, interest payments made to bond holders, and budgets used by politicians to bribe voters are financed.

It is the role of government to ensure the political-financial payment system operates at maximum.  Rates should stay low to encourage borrowing and investing.  Deficits should be eliminated resulting in less pressure to increase interest rates in order to attract purchasers of Treasury notes and lower rates for borrowers in the private sector.

Mr. Trump, unlike most of his critics and I dare say most central bankers, has a better understanding of this reality.

 

 

Does Facebook’s business model disrupt the political information markets?

Facebook is engaging in a war against misinformation and divisiveness in the United States as perpetrated via social media, according to published reports by Bloomberg and The Atlanta Journal Constitution. Having done a 180 degree turn from its position last year that its platform was not used to cause a disruption of public opinion leading up to the 2016 presidential election, Facebook is using artificial intelligence tools to identify inauthentic posts and user behavior.  With teams comprised of data scientists, policy experts, and engineers, Facebook is blocking fake accounts and vetting news stories posted on its site.

Critics doubt that Facebook’s attempts to thwart future social media influence will outweigh its incentives to distribute fictional political stories that keep people glued to Facebook while providing advertisers with millions of pairs of eyeballs.  Facebook, according its 10-K annual report, garners almost of its revenues from advertising.  In 2017, advertising made up 98% of Facebook’s revenues.  According to Facebook’s 10-K, at the top of the list of factors that could adversely impact advertising revenues: decreases in user engagement, including a decline in the time spent using the company’s products.

Having used Facebook for eleven years, I witnessed the increase in the use of the platform as a tool for political engagement.  Facebook has expanded opportunities for voters to vet politicians and their policies.  I have seen a significant number of posts, including memes and video, that got the facts wrong; that showed no knowledge of process, politics, or economics.  Cynicism, fear, passion, inaccuracies, sincerity, patriotism, anarchy, and indifference all run rampant on Facebook.  But do I buy the argument that messages placed on Facebook by Russian agents spread so much misinformation that America became suddenly divided overnight? That “Russian interference led to a Trump victory?

No.  The divisiveness was already there.  Giving a couple hundred million Americans the ability to quickly share their thoughts, accurate or not, on the political news of day simply tore away the scab.

Further evidence of divisiveness in American politics: print, broadcast, and cable media.  American media is meeting the demand of a divided public, with Fox News occupying the Right and MSNBC and CNN serving the frenzied Left.

What Washington may truly be afraid of is that politicians have less control over the channels through which they are vetted.  On the one hand, Jeffrey Rosen, president of the Constitution Center, shared the following with The Atlantic’s Jeffrey Goldberg:

“Twitter, Facebook, and other platforms have accelerated public discourse to warp speed, creating virtual versions of the mob.  Inflammatory posts based on passion travel farther and than arguments based on reason.  We are living, in short, in a Madisonian nightmare.”

On the other hand, Americans may be taking to Facebook, YouTube and Twitter in search of alternative opportunities to criticize the political packages and action plans that politicians offer in exchange for votes and increases in taxes.  The divisiveness may be stemming from an increased lack of enchantment with democracy itself.  After all, according to Professor Yuval Harari, democracies are “blips in history” depending on “unique technological conditions” and losing credibility as democracy faces more questions about its inability to provide for and maintain a middle class.

Democracy is hard up to explain why almost all the nine million jobs created post recovery from the 2007-2009 recession have been “gig work” paying little to no benefits.  Democracy has yet to come up with a solution to a wealth gap that the Left invests time in describing, laying blame at the feet of the rich yet coming up with no solutions for a society that prides itself on equal access to the ballot but still comes up short on adequate access to capital.

To the question whether Facebook’s business model has disrupted the political information markets, I would, for now, answer yes.  Facebook has contributed to bringing unreasonable, uninformed voices into the arena. I for one do not want to be lead or have policy fed by impassioned, unreasonable voices, no matter what part of the spectrum they fall on.  What the political class may have to look at for in the near term is that democracy may be less of a facilitator of a peaceful transfer of power between its factions as the mob continues to peel away the scab.

 

 

It will be up to people, not tech, to make government not relevant

Peter H. Diamandis penned an article recently that discusses whether technology, particularly artificial intelligence, will make government irrelevant. Failure to keep up with private sector digitization combined with declining trust on the part of its citizens, argues Dr. Diamandis, contributes to emerging technology knocking government off of its dominant perch.

While I see government remaining behind the private sector in the adoption of artificial intelligence, I don’t see the concept of government going away anytime soon.  If anything, at least in the short and intermediate run, emerging technologies are going to be used to augment what government does.

In addition, at the risk of sounding metaphysical, until humans can abandon corporeal form, they will always need access to physical infrastructure in order to get to work or entertainment venues or have goods transported between physical points.

Part of government’s role, the role that allows it to maintain its dominant perch, is its responsibility for maintaining and administering physical space.  Government in the United States, through its public works initiatives, leverages less than five percent of total national capital to carry out this role.

The American Public Works Association defines public works as the following:
“Public works is the combination of physical assets, management practices, policies, and personnel necessary for government to provide and sustain structures and services essential to the welfare and acceptable quality of life for its citizens.”

Public works is an increasingly information intensive endeavor and rather than allowing an emerging information economy disrupt government’s public management of physical jurisdiction, I see government using the information markets to strengthen its influence and control.

Some local and state governments are at the crossroads when it comes to extracting, organizing, and leveraging information and information technology in order to maintain their viability.  As Michael Ward wrote in 2015 during an assessment of the use of information technology by local and state government in Massachusetts, many of the Bay State’s agencies were not taking full advantage of data especially when it comes to determining how effective their local and state government programs are.

What Mr. Ward found were local and state agencies in general and public works agencies in particular using inadequate work order systems, relying instead on antiquated technology such as Post-it notes and e-mail.  He also found that in the era of big data, machine learning, and deep learning that not only were data entry skills lacking, but also lacking were the skills necessary for analyzing data.

But government, at least on the local and state level, doesn’t appear quite ready to abdicate its role in developing or deploying public infrastructure due to a failure to use data adequately.  One example is local government exploration of the use of geographic information system technology for public works projects.

National Geographic defines a geographic information system as a computer system for capturing, storing, checking, and displaying data related to positions on Earth’s surface.  There is an efficiency resulting from this type of mapping tool as it allows various amounts of data, i.e., vegetation, buildings, roads, etc., to be shown on one map. Combining various types of data allows easier analysis of patterns and relationships.

ESRI, in a 2006 white paper, provided examples of best practices for local governments that choose to use this tool for data gathering and management.  Extracting and sharing data within public works agencies and with other local government agencies is one benefit.  According to ESRI, public works employees can tap into data collected by GIS in order to create maps,, design new projects, build infrastructure, and manage existing assets.

But if information technology such as GIS exist, why the concern that government may become irrelevant as a result of emerging technologies such as artificial intelligence, deep learning, and machine learning?  Is it just wishful thinking on the part of libertarian-leaning technologists?  Is it a belief that technology is deterministic of how political power is going to be balanced or exercised? Is it the perception that government is notoriously slow to respond to change?

The answers to the above questions may be “yes”, but I believe that the existence or relevance of institutions such as government lays in the hands of the humans that created them.  Government and politics are social relationships that may be enhanced by technology.  Technology does shape how social and political actors engage each other, whether from attending a town hall meeting in person in 1960 to listening in via telephone in 1984 to streaming it live and watching on a smart phone in 2018. It won’t change, however, the need for humans to form factions that compete against one another for the control and management of public resources.

Government will remain relevant. In what form is always the question.

 

 

 

The State’s role in integrating artificial intelligence into America’s economy

Artificial intelligence has the capability of creating another resource that can be optimized or consumed by a nation-state.  Increases in computing power and better designed algorithms along with access to increasing amounts of data translates into an increased amount of information that can be extracted via machine learning.

Venture capitalist Nick Hanauer postulates that a nation’s prosperity is a function of the rate at which we solve problems.  If he is correct, then problem solving requires that we maximize the amount of available information to find the best answer.

If information is the jet fuel for a Fourth Industrial Revolution economy, data is the oil that has to be extracted and refined. Companies such as Amazon, Facebook, and Google are using machine learning to provide better customer and subscriber experiences with their product.  They are among the largest of the data miners.  Their efforts, along with those of other technology companies is expected to contribute to economic growth beyond a baseline (no-artificial intelligence) scenario.

For example, Accenture reports that labor will see an increase in productivity of 35% by the year 2035 due to the application of artificial intelligence.  Annual growth rates in value added to gross domestic product are approximated at 4.6% by 2035. With capital and labor (due to a cap on the capacity of cognitive ability) reaching their limits as contributors to increased economic growth, artificial intelligence, taking its place along capital, labor, and entrepreneurship as a factor of production, is expected to help the economy exceed its current limits in three ways:

  1. Automating physical tasks as a result of artificial intelligence’s ability to self-learn;
  2. Augmenting labor by giving labor the opportunity to focus on creativity, imagination, and innovation; and
  3. Diffusing innovation through the economy.

With these promises of growth comes the fear on the part of labor that artificial intelligence will eliminate the need for a substantial portion of current jobs.  Even while experts and academics tout artificial intelligence as a complement to labor; as an augmenter of labor’s cognitive skills, there is still the fear that this emerging technology will create a valueless human workforce.  This perception creates a dilemma for a government that sees democracy under the attack globally.  Is artificial intelligence going to exclude millions in the name of efficiency? If so, what use is there from participating equally in an electoral process of the economy leaves you out?

Government will have to prepare a messaging campaign if it is to maintain its legitimacy as a distributor of economic equity in the face of an increasingly digitized economy and society. The potential destructive nature of artificial intelligence is scarier than what has been presented in movies like “2001: A Space Odyssey” or “Terminator.” Immediate benefits of artificial intelligence may flow first to those who already have high tech skills or hold or have access to great amounts of capital. In other words, AI is the ultimate nail in the coffin for the capital gap. Those with access to or control of capital will only see their control over the data and information that feeds it get larger. If you can’t process data or package useful information, you are nonexistent. Just useless furniture. It won’t be some AI robot that kills you off. It will be a human with money and enhanced cognitive skills that decide we are valueless.

As Erik Brynjolfsson, Xiang Hui, and Meng Liu pointed out last month in an article for The Washington Post last month, “No economic law guarantees that productivity growth benefits everyone equally.  Unless we  thoughtfully manage the transition, some people, even a majority, are vulnerable to being left behind even as others reap billions.”

As Professor Yuri Harari notes, technology is not deterministic, however.  It is people who make decisions as to how their political economy will shift and change.  Brynjolfsson, Hui, and Liu note that voters need to urge policymakers to “invest in research that will design approaches to human learning for an era of machine learning.”

The evidence does not show that policymakers are being prodded to move on the issue of artificial intelligence. Not surprising since voters are not knowledgeable about the issue either.  Artificial intelligence is not on the top of any poll responses from voters.  As regards to Congress, the only major action has been companion bills S.2217 and HR4625 where Congress wants the Secretary of Commerce to establish a federal advisory committee on the development and implementation of artificial intelligence.  While the bills provide good working definitions of artificial intelligence and machine learning and has among its concerns economic productivity, job growth, and labor displacement, allowing a bill to sit in committee for ten months is not the kind of speedy intelligence that artificial intelligence needs to be complemented by.

Government’s role in regulating access to personal data

Yuval Noah Harari recent wrote an article for The Atlantic where he posed the question, “How do you regulate the ownership of data?” Professor Harari argues in the article that data is the most important asset today, moving ahead of land and machinery.  “Politics will be a struggle to control the data’s flow”, says Professor Harari.

Last spring saw the United States Congress’ struggle to at least map out a course through the turbulent waters of data privacy as members of the House of Representatives and Senate took the opportunity to grill Facebook CEO Mark Zuckerberg about his company’s handling of personal data obtained from the social media giant by a consultancy.

Part of this struggle may be due in part to the popularity of social media network platforms. Facebook has climbed from a digital bulletin board developed in the early 2000s in an Ivy League college dorm room to a global subscribership of over two billion people.  Former president Barack Obama’s Twitter following is in the millions while the current president, Donald Trump, is not shy or slow to taking to Twitter to either connect with and inform his base of supporters or attack the traditional media for what he perceives as unfair coverage of his administration.

Professor Harari notes that users of social media network platforms have not reached the point where they are ready to stop feeding the “attention merchants.”  Speaking on the difficulty subscribers may have in exchanging personal data for “free” services, Professor Harari points out that:

“But it, later on, ordinary people decide to block the flow of data, they are likely to have trouble doing so, especially as they may have come to rely on the network to help them make decisions, and even for their health and physical survival.”

Professor Harari offered up one solution, nationalization of data, to stem the abuses that corporations may impart on addicted social media and internet consumers, but admits that just because an asset is in the hands of government doesn’t mean things will necessarily go well.  Hence the question, how should the ownership of data be regulated?

The question will require public policymakers and politicians go through the exercise of defining “personal data.”  Would personal data be any characteristic about you? Would it be about any marker, no matter how temporary or permanent, that can be attached to you?  Must the “data” be something that the consumer actually produced?

Politically, attention merchants would want a narrow reading of the definition of personal data.  A narrower reading of personal data means being able to obtain more information pursuant to fewer restrictions. While this outcome would be ideal for corporate entities in the business of brokering data, I don’t see Republicans, even with their mantra of promoting business, enthusiastically endorsing less restrictive collection of personal data given the public’s concern for privacy.