Posted on

In which I defend ‘Girls Around Me’ and Public-By-Default in general

For those people that don’t know:  A few days ago John Browlee discovered and wrote about an iPhone/iPad app called ‘Girls Around Me‘.  The app does a mash-up of publicly accessible data from Facebook and foursquare, together with Google Maps, to show you girls that had checked in to locations near where you are and some information about them.  John was not amused:

[T]he girls (and men!) shown in Girls Around Me all had the power to opt out of this information being visible to strangers, but whether out of ignorance, apathy or laziness, they had all neglected to do so. This was all public information.  […]

“It’s not, really, that we’re all horrified by what this app does, is it?” I asked, finishing my drink. “It’s that we’re all horrified by how exposed these girls are, and how exposed services like Facebook and Foursquare let them be without their knowledge.” […]

This is an app you should download to teach the people you care about that privacy issues are real, that social networks like Facebook and Foursquare expose you and the ones you love, and that if you do not know exactly how much you are sharing, you are as easily preyed upon as if you were naked.

Picking up on John’s piece, Charlie Stross took the ball and ran with it, extrapolating out into the truly horrific:

It’s easy to imagine how we could make something worse than “Girls Around Me”—something much worse. Facebook encourages us to disclose a wide range of information about ourselves, including our religion and a photograph. Religion is obvious: “Yids Among Us” would obviously be one of the go-to tools of choice for Neo-Nazis. As for skin colour, ethnicity identification from face images is out there already. Want to go queer bashing? There’s an algorithm out there for guessing sexual orientation based on the network graph of the target’s facebook friends. It’s probably possible to apply this sort of data mining exercise to determine whether a woman has had an abortion or is pro-choice.

In the worst case, it’s possible to envisage geolocation and data aggregation apps being designed to facilitate the identification and elimination of some ethnic or class enemy, not only by making it easy for users to track them down, but by making it easy for users to identify each other and form ad-hoc lynch mobs. (Hence my reference to the Rwandan Genocide earlier. Think it couldn’t happen? Look at Iran and imagine an app written for the Basij to make it easy to identify dissidents and form ad-hoc goon squads to proactively hunt them down. Or any other organization in the post-networked world that has a social role corresponding to the Red Guards.)

Not surprisingly, people freaked out.  Foursquare pulled the app’s access rights to their data, Apple pulled the app from the iTunes store altogether and — no doubt to the great relief of people like John and Charlie — a lot of people started talking about internet privacy in an era of social networking (e.g. a BBC News article).

Both John and Charlie emphasise that their concern is not with the app itself, per se, but with the approach to privacy (public by default) built-in to social networking websites’ very business plans that allowed the app to exist in the first place.

I want to defend that approach to privacy.

Let me repeat the first bit of that John Brownlee quote:

[T]he girls (and men!) shown in Girls Around Me all had the power to opt out of this information being visible to strangers, but whether out of ignorance, apathy or laziness, they had all neglected to do so.

Here is Marie Connelly, one of the girls that John apparently had around him, in response to the whole kerfuffle:

I have a problem [with this], because I’m not ignorant, apathetic, or lazy.

I’ve made a choice to participate publicly in the internet. I try to be careful about what I make accessible and what I share with everyone, and for the most part, I think I’ve found a balance that works pretty well for me. […]

The whole tenor of this, however, has been that if you are in this app, if you have been posting information publicly, especially if you’re a woman, you’re doing something wrong. […]

Checking in at your office, or a coffee shop, or The Independent (which is a great bar, by the way), whether publicly or not, doesn’t mean you’re “asking” to get stalked, or mugged, or anything else. People generally don’t ask for bad things to happen to them, and by and large, I don’t really believe anyone deserves to have something bad happen to them.

Kashmire Hill captured the same point in her excellently titled post, “The Reaction To ‘Girls Around Me’ Was Far More Disturbing Than The ‘Creepy’ App Itself“:

  • All men are creepy stalkers looking for new digital aids to help them catch and rape women.
  • All women are damsels-in-distress who have no idea how much danger they are exposing themselves to with every Foursquare check-in.
  • “You’re too public with your digital data, ladies,” may be the new “your skirt was too short and you had it coming.”

Those are my takeaways from the past week’s furor over “Girls Around Me.” […]

Many of us have become comfortable putting ourselves out there publicly in the hopes of making connections with friends and with strangers, whether through Facebook, Twitter, or OKCupid. It’s only natural that this digital openness will transfer over to the ‘real world,’ and that we will start proactively projecting our digital selves to facilitate in-person interactions. (For example, KLM is now allowing passengers to link their digital identities to their seats on the plane so that people can choose seatmates accordingly.) […]

In rejecting and banishing the app, we’re  choosing to ignore the publicity choices these women have made … in the name of keeping them safe … If you extend this kind of thinking ‘offline,’ we would be calling on all women to wear burkas so potential rapists and stalkers don’t spot them on the streets and follow them home.

I’m sorry, my friends, but I think apps like ‘Girls Around Me’ are the future … We don’t fear making connections with strangers; we crave it. […]

Yes, think about your privacy settings. They’re important. But critics, also remember that some of us have thought about our privacy settings, chosen accordingly, and don’t mind showing up on geo-mapping apps. We’re not all damsels-in-distress going pale at the thought of being seen in public places and digital spaces.

I couldn’t possibly agree more.

I’m happy to require by law that all websites that gather personal information give plain-English explanations of how your information might be used under each setting.  I’m also happy to be very, very angry at Facebook for changing their policy in such a way as to change your settings from “keep this private” to “make this public” after you made an explicit choice (although, to be fair, social networks are still a new industry and should consequently be granted at least some leeway for their frequent adjustments).

But there’s a much bigger topic here.  Whether or not public exposure has negative consequences is a social norm, based on co-ordination effects.  It’s socially acceptable in America for girls to wear bikinis at the beach, for girls in France to go topless at the beach and for people to use mixed-sex saunas and public showers throughout Germany and the Scandinavian countries.  It’s not as though they have massive rates of rape or sexual abuse.

The reason I see no problem with apps like ‘Girls Around Me’ is because I believe they represent the emergence of a new social norm that supports and encourages the public sharing of information about yourself, perhaps even a step towards David Brin’s Transparent Society.  Disagree with me?  Well, I would argue that of those people that (a) are doing it; (b) don’t realise they’re doing it; and (c) would actually care if they were to discover they’re doing it, the vast majority are over the age of 30.  In other words, this is a generational development.

Here’s an excellent example of that generational change.  Earlier this year the NY Times wrote about teenagers’ new habit of sharing their passwords with their (boy|girl)friends:

Young couples have long signaled their devotion to each other by various means — the gift of a letterman jacket, or an exchange of class rings or ID bracelets. Best friends share locker combinations.

The digital era has given rise to a more intimate custom. It has become fashionable for young people to express their affection for each other by sharing their passwords to e-mail, Facebook and other accounts. Boyfriends and girlfriends sometimes even create identical passwords, and let each other read their private e-mails and texts. […]

In a 2011 telephone survey, the Pew Internet and American Life Project found that 30 percent of teenagers who were regularly online had shared a password with a friend, boyfriend or girlfriend. The survey, of 770 teenagers aged 12 to 17, found that girls were almost twice as likely as boys to share. And in more than two dozen interviews, parents, students and counselors said that the practice had become widespread.

Knowing their audience, though, they couldn’t help being a little worried about it (and, of course, nothing sells newspapers like sex):

Rosalind Wiseman, who studies how teenagers use technology and is author of “Queen Bees and Wannabes,” a book for parents about helping girls survive adolescence, said the sharing of passwords, and the pressure to do so, was somewhat similar to sex.

Sharing passwords, she noted, feels forbidden because it is generally discouraged by adults and involves vulnerability. And there is pressure in many teenage relationships to share passwords, just as there is to have sex. […]

Ms. Cole’s mother, Patti, 48, a child psychologist, said she believed her daughter would be more judicious now about sharing a password. But, more broadly, she thinks young people are sometimes drawn to such behavior as they might be toward sex, in part because parents and others warn them against doing so.

“What worries me is we haven’t done a very good job at stopping kids from having sex,” she said. “So I’m not real confident about how much we can change this behavior.”

Speaking of sex and intergenerational concerns, this whole affair reminds me enormously of a post I wrote back in 2008 about the increasing public acceptability of sex for it’s own sake:

These developments are not without their concerns. Sara Montague – a presenter on BBC Radio 4′s Today programme – is clearly concerned, noting that much of the movement seems grounded in the hope of empowerment and self-confidence, but worrying that this serves indirectly to promote eating disorders among girls and the acceptance of rape among boys.

The main problem that Montague faces is that for most people, embracing public sexuality is non-harmful – not every girl gets an eating disorder and not every boy contemplates forcing himself on a girl – and is undertaken by choice. Montague is, in essence, faced with Douglas Adams’ cow that wants to be eaten. […]

By all means work to increase support for those burdened excessively by concerns of body image. By all means increase support to rape victims and ease the ability of the state to bring those guilty to justice. But that doesn’t mean we should fight to stop it altogether if people choose it freely and feel that it helps them, or even if they just enjoy it.

Anyway, that brings me back to ‘Girls Around Me’.  It — and other apps like it — really are designed to be fun, to let Kashmir and people like her make connections with strangers.  Yes, of course Facebook and Foursquare can be used by creepy stalkers and Rwanda 2.0 ethnic cleansers.  So what?  I have a 20cm Global Cook knife beside me right now.  I could use it to cut chunks out of hipsters, but that doesn’t make it flawed by design.  My credit card can be used to fund the KKK, but it’s also useful for other stuff, too.  There’s nothing wrong (and there should be nothing illegal) with having information.  It’s only when somebody acts on information in a manner harmful to others that we should care.  ‘Girls Around Me’ was about sharing information; how people act on that information is up to them.

Let me finish with this incredibly relevant and, as ever, excellent comic from xkcd:

Posted on

Running (March 2012)

Generally a good month when I ran, although it had almost two weeks (11 days) off in the middle.

Count:  10 runs (February was 16; January was 10)

Distance:  73km (February was 95km; January was 57km)

Av. Pace:  5:12/km (February was 5:27/km; January was 5:48/km)

I’m now at 68 runs, covering 397km, in my current block of running (started on 10 Oct 2011) and it’s definitely showing results.  My run on 31 March (6.3km @ 4:27/km) was my fastest run over 5+ km since 1994 and possibly since late 1992.  In addition to my existing goals, I’ve now added a broader one of managing 800km (500 miles) in 2012.  That’s 67km/month.  Since I’ve averaged 75km/month for the last five, it should be entirely achievable if I stick with it.

All exercise is publicly visible here (on runkeeper.com).

Posted on

Two awesome links

Posted on

A brief note to George Osborne

Hi, George.

No doubt your political advisers have mentioned this to you by now, but just in case they haven’t, I thought I’d drop you a line.  The UK press are a funny lot. They will insist on making hay out of the budget every year (and let’s be frank, you like the attention), but you can never really tell which bits they’re going to ignore and which bits they’re going to put in the spotlight.  Take this hullabaloo over your decision to equalise the regular and old-age tax free allowances.  The ‘granny tax‘ (nice work on getting the Telegraph to rail against a Conservative chancellor, by the way).  There’s no way you could have seen it coming, right?  Right?

Wrong.

Really, George, it is quite simple.  Newspapers look for news.  Given all the leaks that you and the Lib Dems fed the media over the last couple of weeks during your bargaining, this was the only morsel, juicy or otherwise, that was left.  Here, I’ll spell it out for you:

  • If it is something new, it is more likely to be in the news (funny, that).
  • If it was in the news last week, it is less likely to be in the news this week.
  • If a loss is to be imposed on a group of people that are commonly taken to be sacrosanct, it will be the news.
  • A pound lost is at least twice as news worthy as a pound gained.
  • Furthermore, gains and losses are always described in whichever way looks more miserly.  That means:
    • Gains are expressed in real terms
    • Losses are expressed in nominal terms if they can be and real terms if they must

This whole kerfuffle hits every button on the nose.

Posted on

Running (February 2012)

Okay, so I’ve actually been running again, however slowly, for a few months now.  Full details on my Running page.  February was pretty good; although the distances weren’t as great, I’d say better than last year.

Count:  16 runs (January was 10)

Distance:  95km (January was 57km)

Av. Pace:  5:27/km (January was 5:48/km)

My current block of running is far and away my best in so long it doesn’t matter.  338km over 60 runs, spanning almost five months.  If I keep this up for another few months I might just be able to start describing myself as a runner again. 🙂

All exercise is publicly visible here (on runkeeper.com).

Posted on

Warren Buffet on gold

This is a week or so old by now, but it’s so good I wanted to make sure it was permanently on my blog.

From his latest letter to shareholders in Berkshire Hathaway, the Sage of Omaha‘s opinion on gold as an investment:

The second major category of investments involves assets that will never produce anything, but that are purchased in the buyer’s hope that someone else – who also knows that the assets will be forever unproductive – will pay more for them in the future. Tulips, of all things, briefly became a favorite of such buyers in the 17th century.

This type of investment requires an expanding pool of buyers, who, in turn, are enticed because they believe the buying pool will expand still further. Owners are not inspired by what the asset itself can produce – it will remain lifeless forever – but rather by the belief that others will desire it even more avidly in the future.

The major asset in this category is gold, currently a huge favorite of investors who fear almost all other assets, especially paper money (of whose value, as noted, they are right to be fearful). Gold, however, has two significant shortcomings, being neither of much use nor procreative. True, gold has some industrial and decorative utility, but the demand for these purposes is both limited and incapable of soaking up new production. Meanwhile, if you own one ounce of gold for an eternity, you will still own one ounce at its end.

What motivates most gold purchasers is their belief that the ranks of the fearful will grow. During the past decade that belief has proved correct. Beyond that, the rising price has on its own generated additional buying enthusiasm, attracting purchasers who see the rise as validating an investment thesis. As “bandwagon” investors join any party, they create their own truth – for a while.

Over the past 15 years, both Internet stocks and houses have demonstrated the extraordinary excesses that can be created by combining an initially sensible thesis with well-publicized rising prices. In these bubbles, an army of originally skeptical investors succumbed to the “proof” delivered by the market, and the pool of buyers – for a time – expanded sufficiently to keep the bandwagon rolling. But bubbles blown large enough inevitably pop. And then the old proverb is confirmed once again: “What the wise man does in the beginning, the fool does in the end.”

Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion. Call this cube pile A.

Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B?

Beyond the staggering valuation given the existing stock of gold, current prices make today’s annual production of gold command about $160 billion. Buyers – whether jewelry and industrial users, frightened individuals, or speculators – must continually absorb this additional supply to merely maintain an equilibrium at present prices.

A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond.

Admittedly, when people a century from now are fearful, it’s likely many will still rush to gold. I’m confident, however, that the $9.6 trillion current valuation of pile A will compound over the century at a rate far inferior to that achieved by pile B.

Brilliant stuff.

Posted on

Output gaps, inflation and totally awesome blogosphere debates

I love the blogosphere.  It lets all sorts of debates happen that just can’t happen face to face in the real world.  Here’s one that happened lately:

James Bullard, of the St. Louis Fed, gave a speech in which (I believe) he argued that wealth effects meant that potential output was discretely lower now after the crash of 2006-2008.  David Andolfato and Tyler Cowen both liked his argument.

Scott Sumner, Noah Smith, Paul Krugman, Matt Yglesias, Mark Thoma and Tim Duy (apologies if I missed anyone) all disagreed with it for largely the same reason:  A bubble is a price movement and prices don’t affect potential output, if for no other reason then because potential output is defined as the output that would occur if prices didn’t matter.

Brad DeLong also disagreed on the same grounds, but was willing to grant that a second-order effect through labour-force participation may be occurring, although that was not the argument that Bullard appeared to be making.

In response, Bullard wrote a letter to Tim Duy, in which he revised his argument slightly, saying that it’s not that potential output suddenly fell, but that it was never so high to start with.  We were overestimating potential output during the bubble period and are now estimating it more accurately.

The standard reply to this, as provided by by Scott Sumner, Tim Duy, Mark Thoma and Paul Krugman, takes the form of:  If actual output was above potential during the bubble, then where was the resulting inflation?  What is so wrong with the CBO’s estimate of potential output (which shows very little output gap during the bubble period)?

Putting to one side discussions of what the output gap really is and how to properly estimate it (see, for example, Menzie Chinn here, here and here), I’ve always felt a sympathy with the idea that Bullard is advocating here.  Although I do not have a formal model to back it up, here is how I’ve generally thought of it:

  • Positive output gaps (i.e. actual output above potential) do not directly cause final-good inflation.  Instead, they cause wage inflation, which raises firms’ marginal costs, which causes final-good inflation.
  • Globalisation in general, and the rise of China in particular, meant that there was — and remains — strong, competition-induced downward pressure on the price of internationally tradable goods.
  • That competition would induce domestic producers of tradable goods to either refuse wage increases or go out of business.
  • Labour is not (or at least is very poorly) substitutable.  Somebody trained as a mechanic cannot do the work of an accountant.
  • Therefore, the wages of workers in industries producing tradable goods stayed down, while the wages of workers in industries producing non-tradable goods were able to rise.
  • Indeed, we see in the data that both price and wage inflation in non-tradable industries have been consistently higher than those in tradable sectors over the last decade and, in some cases, very much higher.

The inflation was there.  It was just limited to a subset of industries … like the financial sector.

(Note that I’m implicitly assuming fixed, or at least sticky, exchange rates)

As it happens, I also — like Tyler Cowen — have a sneaking suspicion that temporary (nominal) demand shocks can indeed have effects that are observationally equivalent to (highly) persistent (real) supply shocks.  That’s a fairly controversial statement, but backing it up will have to wait for another post …

Posted on

Sensible government policy that still makes me twitchy

The Australian government is likely to start means testing the private health care rebate (i.e. subsidy).

I think that’s sensible — I generally support means testing of almost all government services — but it still makes me twitchy:

It amounts to saying that high-income households are free to choose how to spend their money, but for middle- and low-income households we’ll change relative prices so they’ll have an extra incentive to buy product X.

It’s analogous to food stamps in America — we don’t trust you to spend this welfare money on what we think you ought to spend it on, so we’re going to force you.

This is a problem of means testing in general, but I think it’s nevertheless worthwhile for three reasons:

(a) It helps minimise government expenditure;
(b) It avoids middle-class welfare, which I find fundamentally distasteful; and
(c) It provides an alternative mechanism of progressivity independent of the tax code, thereby permitting flatter (and, hence, simpler) taxes.
Posted on

Get set for more negative interest rates

Via FT Alphaville, I see that the US Treasury Borrowing Advisory Committee wants to allow bids for US treasury issuances that have negative interest rates:

The question was asked if it made sense for Treasury to permit bids and awards at negative interest rates in marketable Treasury bill auctions. DAS Rutherford noted that there were operational issues associated with such a rule change, but that the hurdles were not insurmountable. It was the unanimous view of the committee that Treasury should modify auction regulations to permit negative rate bidding and awards in Treasury bill auctions as soon as feasible. Rutherford noted that any decision on this policy change would likely be made at the May refunding.

Fun times.

Posted on

Terrible news from Apple (AAPL)

Apple just reported their profits for 2011Q4.  It turns out that they made rather a lot of money.  So much, in fact, that they blew past/crushed/smashed expectations as their profit more than doubled on the back of tremendous growth in sales of iPhones and iPads.  [snark] I’ll bet nobody’s talking about Tim Cook being gay now. [/snark]

It’s an incredible result; stunning, really. I just wish it didn’t make me so depressed.

I salute the innovation and cheer on the profits. That is capitalism at its finest and we need more of it.

It’s that f***king mountain of cash (now up to $100 billion) that concerns me, because it’s symptomatic of what is holding America (and Britain) in the economic doldrums.

The return Apple will be getting on that cash will be miniscule, if it’s positive at all, and conceivably negative.  Standing next to that, their return on assets excluding cash is phenomenal.

Why aren’t they doing something with the cash? Are they not able to expand profits still further by expanding quantities sold, even in new markets? Are there no new internal projects to fund? No competitors to buy out? Why not return it to shareholders via dividends or share buybacks?

Logically, a company holds cash for some combination of three reasons: (a) they use it to manage cash flow; (b) they can imagine buying an outside asset (a competitor or some other company that might complement them) in the near future and they want to be able to move quickly (and there’s no M&A deal that’s agreed upon faster than an all cash deal); or (c) they want to demonstrate a degree of security to offset any market perceived risk with their debt.

Apple long ago surpassed all of these benefits.  The net marginal value of Apple holding an extra dollar of cash is negative because it returns nothing and incurs a lost opportunity cost.  So why aren’t their shareholders screaming at them for wasting the opportunity?

The answer, so far as I can see, is because a significant majority of AAPL’s shareholders are idiots with a short-term focus. They have no goddamn clue where else the money should be and they’re just happy to see such a bright spot in their portfolio.  Alternatively, maybe the shareholders aren’t complete idiots — Apple’s P/E ratio has been falling for a while now — but the fundamental point is that they have a mountain of cash that they’re not using.

In 2005 that wouldn’t have been as much of a problem because the shadow banking system was in full swing, doing the risk/liquidity/maturity transformation thing that the financial industry is meant to do and so getting that money out to the rest of the economy.[*] Now, the transformation channel is broken, or at least greatly impaired, and so nobody makes any use of Apple’s billions. They just sit there, useless as f***, while profitable SMEs can’t raise funds to expand and 15% of all Americans are on food stamps.

Don’t believe me?  Here’s a graph from the Bank of England showing year-over-year changes in lending to small- and medium-sized enterprises in the UK.  I can’t be bothered looking for the equivalent data for the USA, but you can rest assured it looks similar.  The report it’s from can be found here (it was published only a few days ago).  The Economist’s Free Exchange has some commentary on it here (summary:  we’re still in trouble).

So what is happening to all that money?  Well, Apple can’t exactly stick it in a bank account, so they repo it, which is a fancy way of saying that they lend it to a bank (or somebody else in the financial industry) and temporarily take some high quality asset like a US government bond to hold as collateral.  They repo it because that’s all they can do now — there are no AAA-rated, actually safe, CDO tranches being created by the shadow banking system any more, they’re too big to make use the FDIC’s guarantee (that’s an excellent paper, btw … highly recommended) and so repo is all they have left.

But the financial industry is stuck in a disgusting mess like some kid’s hair with chewing gum rubbed through it. They’re all just as scared as the next guy (especially of the Euro problems) and so they’re parking it in their own accounts at the Fed and the BoE.  As a result, “excess” reserves remain at astronomical levels and the real economy makes no use of Apple’s billions.

That’s a tragedy.

 

 

 

[*] Yes, the shadow banking industry screwed up. They got caught up in real estate fever and sent (relatively) too much money towards property and too little towards more sustainable investments. They structured things in too opaque a manner, failed to have public price discovery and operated under distorted incentives. But they operated. Otherwise useless cash was transformed into real investment and real jobs. Unless that comes back, America and the UK will stay in their slow, painful household deleveraging cycle for another frickin’ decade.