When Big Data Becomes Bad Data

Corporations are increasingly relying on algorithms to make business decisions and that raises new legal questions.

Protesters participate in the March on Washington for Jobs and Freedom in 1963. Among the visible signs are those advocating for equal rights, integrated schools, fair housing and fair employment. (Marion S Trikosko/PhotoQuest/Getty)

A recent ProPublica analysis of The Princeton Review’s prices for online SAT tutoring shows that customers in areas with a high density of Asian residents are often charged more. When presented with this finding, The Princeton Review called it an “incidental” result of its geographic pricing scheme. The case illustrates how even a seemingly neutral price model could potentially lead to inadvertent bias — bias that’s hard for consumers to detect and even harder to challenge or prove.

Over the past several decades, an important tool for assessing and addressing discrimination has been the “disparate impact” theory. Attorneys have used this idea to successfully challenge policies that have a discriminatory effect on certain groups of people, whether or not the entity that crafted the policy was motivated by an intent to discriminate. It’s been deployed in lawsuits involving employment decisions, housing and credit. Going forward, the question is whether the theory can be applied to bias that results from new technologies that use algorithms.

Asians Are Nearly Twice as Likely to Get a Higher Price from The Princeton Review

One unexpected effect of the company’s geographic approach to pricing is that Asians are almost twice as likely to be offered a higher price than non-Asians, an analysis by ProPublica shows. Read the story.

The term “disparate impact” was first used in the 1971 Supreme Court case Griggs v. Duke Power Company. The Court ruled that, under Title VII of the Civil Rights Act, it was illegal for the company to use intelligence test scores and high school diplomas — factors which were shown to disproportionately favor white applicants and substantially disqualify people of color — to make hiring or promotion decisions, whether or not the company intended the tests to discriminate. A key aspect of the Griggs decision was that the power company couldn’t prove their intelligence tests or diploma requirements were actually relevant to the jobs they were hiring for.

In the years since, several disparate impact cases have made their way to the Supreme Court and lowercourts, most having to do with employment discrimination. This June, the Supreme Court’s decision in Texas Dept. of Housing and Community Affairs v. Inclusive Communities Project, Inc. affirmed the use of the disparate impact theory to fight housing discrimination. The Inclusive Communities Project had used a statistical analysis of housing patterns to show that a tax credit program effectively segregated Texans by race. Sorelle Friedler, a computer science researcher at Haverford College and a fellow at Data & Society, called the Court’s decision “huge,” both “in favor of civil rights…and in favor of statistics.”

So how will the courts address algorithmic bias? From retail to real estate, from employment to criminal justice, the use of data mining, scoring software and predictive analytics programs is proliferating at an exponential rate. Software that makes decisions based on data like a person’s ZIP code can reflect, or even amplify, the results of historical or institutional discrimination.“[A]n algorithm is only as good as the data it works with,” Solon Barocas and Andrew Selbst write in their article “Big Data’s Disparate Impact,” forthcoming in the California Law Review. “Even in situations where data miners are extremely careful, they can still affect discriminatory results with models that, quite unintentionally, pick out proxy variables for protected classes.”

It’s troubling enough when Flickr’s auto-tagging of online photos label pictures of black men as “animal” or “ape,” or when researchers determine that Google search results for black-sounding names are more likely to be accompanied by ads about criminal activity than search results for white-sounding names. But what about when big data is used to determine a person’s credit score, ability to get hired, or even the length of a prison sentence?

Because disparate impact theory is results-oriented, it would seem to be a good way to challenge algorithmic bias in court. A plaintiff would only need to demonstrate bias in the results, without having to prove that a program was conceived with bias as its goal. But there is little legal precedent. Barocas and Selbst argue in their article that expanding disparate impact theory to challenge discriminatory data-mining in court “will be difficult technically, difficult legally, and difficult politically.”

Some researchers argue that it makes more sense to design systems from the start in a more considered and discrimination-conscious way. Barocas and Moritz Hardtestablished a traveling workshop called Fairness and Transparency in Machine Learningto encourage other computer scientists to do just that. Some of their fellow organizers are also developing tools they hope companies and government agencies could use to test whether their algorithms yield discriminatory results and to fix them when necessary. Some legal scholars (including the University of Maryland’s Danielle Keats Citron andFrank Pasquale) argue for the creation of new regulations or even regulatory bodies to govern the algorithms that make increasingly important decisions in our lives.

There still exists “a large legal difference between whether there is explicit legal discrimination or implicit discrimination,” said Friedler, the computer science researcher. “My opinion is that, because more decisions are being made by algorithms, that these distinctions are being blurred.”

 

http://www.propublica.org/article/when-big-data-becomes-bad-data?utm_source=et&utm_medium=email&utm_campaign=dailynewsletter&utm_content=&utm_name=

More signs of global downturn send stocks plunging again

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By Andre Damon
2 September 2015

Global stock markets staged yet another selloff Tuesday following the release of negative economic data in the US and China and downbeat assessments of the global economy from officials at the Federal Reserve and International Monetary Fund.

At the time of this writing, Asian markets continued to fall Wednesday morning, with China’s Shanghai Composite Index down by 3.66 percent.

The Dow Jones Industrial Average fell 469 points, or 2.8 percent, on Tuesday. The Standard & Poor’s 500 index fell 3 percent and the Nasdaq fell 2.9 percent. All three indexes are now down by more than 10 percent from their recent highs, placing them in correction territory.

The selloff in the US followed a 3.8 percent drop on the Japanese Nikkei and a 3 percent fall on Britain’s FTSE 100, with almost every major global stock index closing down for the day. The Shanghai index fell by over 5 percent before closing with a loss of 1.3 percent.

The renewed turbulence on financial markets follows last week’s dramatic global selloff, in which the Dow opened August 24 with a loss of nearly 1,100 points, its largest intraday fall in history, and closed down by 588 points.

Tuesday’s selloff was initially triggered by weak data from China, showing the country’s manufacturing activity hitting its lowest level since August 2012. China’s official Purchasing Managers’ Index fell to 49.7 last month, indicating the first contraction in manufacturing since February.

As one trader quoted by the Financial Times put it, “People are losing confidence, with the whole situation [in China] breaking down, not just in the stock market but in [real economic] data as well.”

The same day, an index of factory activity in the US for August fell to a two-year low of 51.1, down from 52.7 in July, a decline that analysts attributed to the slump in global demand and the appreciation of the dollar.

The negative data corresponded with a downbeat assessment of the global economy by the International Monetary Fund and Federal Reserve. IMF Managing Director Christine Lagarde said Tuesday that global growth is expected to be weaker than the IMF had predicted, reflecting “a weaker-than-expected recovery in advanced economies and a further slowdown in emerging economies, especially Latin America.”

Eric Rosengren, president of the Boston Federal Reserve, said in a speech in New York later in the day that the collapse in commodity prices and the slowdown in the global economy “might suggest a downward revision in the forecast” for economic growth in the United States.

Also Tuesday, the South Korean trade ministry said the country’s exports fell by 14.7 percent compared with a year ago, the eighth consecutive monthly decline. The figure showed the worst annual fall in exports for South Korea, the biggest exporter to China, since 2009.

This report added weight to the observation by the Financial Times over the weekend that recent data showed “world goods trade contracting at its fastest rate since the global financial crisis.”

Over the weekend the newspaper concluded, based on its own research, that “weakness in emerging market currencies is hurting global trade by reducing imports without any benefit to export volumes.” It quoted former Pimco CEO Mohamed El-Erian as declaring, “We risk slipping into a beggar thy neighbour, competitive spiral of currency devaluations.”

The article noted, “Since June 2014, the currencies of Russia, Colombia, Brazil, Turkey, Mexico and Chile have fallen by between 20 per cent and 50 per cent against the dollar, while the Malaysian ringgit and Indonesian rupiah are at their weakest since the Asian financial crisis of 1998.”

The global turbulence is leading to a substantial selloff of assets by mutual funds, particularly those with exposure to emerging markets. CNBC noted that “if current trends hold, July and August will mark the first consecutive monthly net outflow from both bond and equity funds since late 2008.”

A major factor in the financial turbulence is the dramatic economic reversal in emerging market economies, whose export-led booms are collapsing amid slowing global demand, the slump in commoditiy prices and a reversal of massive capital inflows that predominated in previous years. As a result, the prices of both sovereign and corporate bonds are falling, threatening the solvency of financial institutions that speculated in these assets.

Commodity prices also slumped dramatically, with oil prices dropping by 7 percent following a three-day rally. The Financial Times cited hedge fund manager Pierre Andurand as declaring that oil prices were likely to continue falling, possibly sinking as low as $30 per barrel.

The rout on global markets took place despite renewed indications from central banks that they would respond to the weakening economic situation with a further easing of monetary policy. Boston Fed President Rosengren, in the speech noted above, suggested that the weakening of economic data “is large enough to raise concerns about whether further tightening of labour markets is likely.”

This points to the fact that the continuing flood of money from the Fed, European Central Bank, Bank of England and Bank of Japan into the financial markets does little to halt or reverse the stagnation in the real economy. While propping up the asset values of the financial elite, this policy has only exacerbated the financial parasitism that underlies the slump dominating the world economy.

The world’s governments and central banks responded to the 2008 financial crisis by blowing a massive financial bubble and transferring trillions of dollars in social wealth from the working class to the financial aristocracy. Seven years after the collapse of Lehman Brothers, the global capitalist crisis is once again erupting with full force.

 

http://www.wsws.org/en/articles/2015/09/02/econ-s02.html

Is Silicon Valley in Another Bubble . . . and What Could Burst It?

CITY BY THE FROTH
In the U.S. alone, nearly 100 tech start-ups are currently considered unicorns.
Photo Illustration by Sean McCabe.
With the tech industry awash in cash and 100 “unicorn” start-ups now valued at $1 billion or more, Silicon Valley can’t escape the question. Nick Bilton reports.
One Thursday morning in early June, the ballroom of the Rosewood Sand Hill hotel, in Menlo Park, was closed for a private presentation. The grand banquet hall appeared worthy of the sprawling resort’s five-star designation: ornate chandeliers hung from the ceiling; silk panels with a silver stenciled design covered the walls. Behind a stage in the 2,800-square-foot room, a large sign bore the name of Andreessen Horowitz, one of Silicon Valley’s most revered venture-capital firms.As breakfast and coffee were offered, the company’s partners mingled with the men and women who endow their $1.5 billion fund. The investors were dressed invariably in business casual, with the top button of their dress shirts noticeably undone. (A mere handful of men stood out in a suit and tie.) Off in the distance, you could make out the faint purr of Bentleys and Teslas ferrying along Sand Hill Road, depositing the Valley’s other top V.C.’s at their respective offices—Greylock Partners, Draper Fisher Jurvetson, and Sequoia Capital, to name just a few—for another day of meetings with founders, reviewing the decks of new start-ups, and searching for the next can’t-miss company.

After some chitchat (Mitt Romney had addressed the group the previous night), Scott Kupor, a managing partner, took the stage to tell the assembled investors what was going on with their money. A16z, as the firm is commonly known in the Valley, had invested hundreds of millions of dollars in some of the industry’s biggest companies—Instagram, Facebook, Box, Twitter, and Oculus VR—along with a number of upstarts, such as Instacart, a grocery-delivery business that had been recently valued at about $2 billion. After the guests found their seats, Kupor began moving through a series of slides depicting the past and present of the tech sector, using data that would help inform the firm’s investments in the future. Each set of numbers had been meticulously researched and culled from sources that included Capital IQ, Bloomberg, and the National Venture Capital Association.

Yet the presentation, which adhered to a16z’s gray-and-deep-orange palette, seemed to have an ulterior motive. Kupor, his hair neatly parted, was eager to assuage any worry about the existence of a tech bubble. While he conceded that there were some eerie similarities with the infamous dot-com bubble of 1999—such as the preponderance of so-called unicorns, or tech start-ups valued at $1 billion and upward—Kupor confidently buoyed his audience with slides that read, “It’s different this time,” and charts highlighting the decrease in tech I.P.O.’s, the metric that eventually pierced the froth in March of 2000. Back then, a company went public almost every single day; now it was down to about once per week. This time around, he noted, the money was flowing backward. Rather than entering a company’s coffers in the public markets, it was making its way to start-ups in late-stage investments. There was little, he suggested, to worry about.

And then, toward the end of his reassuring soliloquy, the ANDREESSEN HOROWITZ sign fell from the wall and landed on the floor with an ominous thud. As the investors looked on, some partners in the Rosewood ballroom laughed awkwardly. Others did not seem so amused.

KIM JONG UN VS. HITLER

While the rest of the country has spent the past year debating gay marriage, policing tactics, Obamacare, and Deflate-gate, the inescapable topic of discussion in Silicon Valley is whether we are in a technology bubble. Marc Andreessen, the co-founder of his eponymous venture firm, is perhaps the leading advocate against the bubble chatter. On his Twitter feed, he has referenced the word “bubble” more than 300 times, repeatedly mocking or refuting anyone on his radar who even hints at such a possibility. One of his arguments, as the slides in the Rosewood ballroom suggested, is the exponential growth of mobile phones, which have fundamentally changed the way we buy and sell virtually everything, from groceries to taxi-like services, and created unprecedented disruption. Also, in contrast to the days of the dot-com boom, many tech companies are creating revenue—in some instances, lots of it.Andreessen’s points are all valid, but the bubble chatter is still impossible to quell, in part, because the signs are increasingly ubiquitous. When I moved to the Bay Area to cover the tech industry for The New York Times,in the summer of 2011, the Valley was still reeling from the bursting of the last bubble, which led to more than $6 trillion in losses, and sent the NASDAQ on a downward spiral similar to the Dow’s amid the Wall Street crash of 1929. In 2000, some start-up C.E.O.’s lost millions of dollars in a matter of hours. Others saw their entire net worth fall to zero in months. People vanished; commuting times were sawed in half; private investment ossified. At the time I arrived, LinkedIn was the only publicly traded social-media company. A little-known upstart with a catchy name, Uber, had just raised a seemingly staggering amount ($11 million) in venture capital. Postmates, Tinder, Instacart, Lyft, and Slack didn’t exist. Silicon Valley was an actual place, not an HBO show.

But within months I noticed that private money was returning and a cavalcade of start-ups were reshaping the city in their image. Engineers from companies I hadn’t yet heard of began showing up at open houses with checks written out to cover rent for the first few months (a recruiting perk, I later learned). I attended a jungle-themed Halloween extravaganza featuring acrobats, a 600-pound tiger, and other wild animals in order to bolster photo moments that people were posting on a hot new start-up, Instagram. Meanwhile, I was pitched countless apps to find a parking space, or messaging services to tell someone that you are running late. The founders told me their companies were worth tens of millions of dollars. When I asked for their logic, they looked at me as though I were the crazy one. Shortly after the Facebook I.P.O., I learned about a secret group within the social-network company called “T.N.R. 250”; it was an abbreviation of “The Nouveau Riche 250,” comprising Facebook’s first 250 employees, many of whom had become multi-millionaires. The members of T.N.R. 250 privately discussed things they wanted to buy with their windfall, including boats, planes, Banksy portraits, and even tropical islands.

Whenever I even suggested the word “bubble” in my reporting, I became a punching bag. After I scrutinized the ethics (and preposterous valuation) of Path, an ill-fated social network, Michael Arrington, once a nexus of power in Silicon Valley who had invested in the start-up, called me a “pit bull” and said I wasn’t a very noble person. But lately the worries have spread. There are now fast approaching 100 unicorns based in the U.S. alone, and counting. The NASDAQ recently closed at an all-time high, surpassing a record set right before the dot-com crash in 2000. The Shiller P/E ratio, a measure of the ratio of price to earnings, has a number of investors worrying, with The Wall Street Journal noting that it shows stocks are “frothy.”

Lately, in fact, even some of the most aggressive V.C.’s have cowered. Not long after the Andreessen Horowitz presentation, Roger McNamee, co-founder of the private-equity firm Elevation Partners, told CNBC, “We are going to have a correction one of these days.” Bill Gurley, a partner at Benchmark Capital and Andreessen’s nemesis (“my Newman,” as he recently put it, referring to the Seinfeld character), echoed this sentiment on Twitter, venture capitalists’ preferred platform of communication. (Many are staked in it.) “Arguing we aren’t in a bubble because it’s not as bad as 1999,” Gurley tweeted, “is like saying that Kim Jong-un is fine because he’s not as bad as Hitler.” (Gurley declined to comment for this story.)CONTINUED:

http://www.vanityfair.com/news/2015/08/is-silicon-valley-in-another-bubble

Why the Rich Love Burning Man

Burning Man became a festival that rich libertarians love because it never had a radical critique at its core.

burning-man

In principle the annual Burning Man festival sounds a bit like a socialist utopia: bring thousands of people to an empty desert to create an alternative society. Ban money and advertisements and make it a gift economy. Encourage members to bring the necessary ingredients of this new world with them, according to their ability.

Introduce “radical inclusion,” “radical self-expression,” and “decommodification” as tenets, and designate the alternative society as a free space, where sex and gender boundaries are fluid and meant to be transgressed.

These ideas — the essence of Burning Man — are certainly appealing.

Yet capitalists also unironically love Burning Man, and to anyone who has followed the recent history of Burning Man, the idea that it is at all anticapitalist seems absurd: last year, a venture capitalist billionaire threw a $16,500-per-head party at the festival, his camp a hyper-exclusive affair replete with wristbands and models flown in to keep the guests company.

Burning Man is earning a reputation as a “networking event” among Silicon Valley techies, and tech magazines now send reporters to cover it. CEOs like Mark Zuckerberg of Facebook and Larry Page of Alphabet are foaming fans, along with conservative anti-tax icon Grover Norquist and many writers of the libertarian (and Koch-funded) Reason magazine. Tesla CEO Elon Musk even went so far as to claim that Burning Man “is Silicon Valley.”

Radical Self-Expression

The weeklong Burning Man festival takes place once a year over Labor Day weekend in a remote alkali flat in northwestern Nevada. Two hours north of Reno, the inhospitable Black Rock Desert seems a poor place to create a temporary sixty-thousand-person city — and yet that’s entirely the point. On the desert playa, an alien world is created and then dismantled within the span of a month. The festival culminates with the deliberate burning of a symbolic effigy, the titular “man,” a wooden sculpture around a hundred feet tall.

Burning Man grew from unpretentious origins: a group of artists and hippies came together to burn an effigy at Baker Beach in San Francisco, and in 1990 set out to have the same festival in a place where the cops wouldn’t hassle them about unlicensed pyrotechnics. The search led them to the Black Rock Desert.

Burning Man is very much a descendent of the counterculture San Francisco of yesteryear, and possesses the same sort of libertine, nudity-positive spirit. Some of the early organizers of the festival professed particular admiration for the Situationists, the group of French leftists whose manifestos and graffitied slogans like “Never Work” became icons of the May 1968 upsurge in France.

Though the Situationists were always a bit ideologically opaque, one of their core beliefs was that cities had become oppressive slabs of consumption and labor, and needed to be reimagined as places of play and revolt. Hence, much of their art involved cutting up and reassembling maps, and consuming intoxicants while wandering about in Paris.

You can feel traces of the Situationists when walking through Black Rock City, Burning Man’s ephemeral village. Though Black Rock City resembles a city in some sense, with a circular dirt street grid oriented around the “man” sculpture, in another sense it is completely surreal: people walk half-naked in furs and glitter, art cars shaped like ships or dragons pump house music as they purr down the street.

Like a real city, Burning Man has bars, restaurants, clubs, and theaters, but they are all brought by participants because everyone is required to “bring something”:

The people who attend Burning Man are no mere “attendees,” but rather active participants in every sense of the word: they create the city, the interaction, the art, the performance and ultimately the “experience.” Participation is at the very core of Burning Man.

Participation sounds egalitarian, but it leads to some interesting contradictions. The most elaborate camps and spectacles tend to be brought by the rich because they have the time, the money, or both, to do so. Wealthier attendees often pay laborers to build and plan their own massive (and often exclusive) camps. If you scan San Francisco’s Craigslist in the month of August, you’ll start to see ads for part-time service labor gigs to plump the metaphorical pillows of wealthy Burners.

The rich also hire sherpas to guide them around the festival and wait on them at the camp. Some burners derogatorily refer to these rich person camps as “turnkey camps.

Silicon Valley’s adoration of Burning Man goes back a long way, and tech workers have always been fans of the festival. But it hasn’t always been the provenance of billionaires — in the early days, it was a free festival with a cluster of pitched tents, weird art, and explosives; but as the years went on, more exclusive, turnkey camps appeared and increased in step with the ticket price — which went from $35 in 1994 to $390 in 2015 (about sixteen times the rate of inflation).

Black Rock City has had its own FAA-licensed airport since 2000, and it’s been getting much busier. These days you can even get from San Carlos in Silicon Valley to the festival for $1500. In 2012, Mark Zuckerberg flew into Burning Man on a private helicopter, staying for just one day, to eat and serve artisanal grilled cheese sandwiches. From the New York Times:

“We used to have R.V.s and precooked meals,” said a man who attends Burning Man with a group of Silicon Valley entrepreneurs. (He asked not to be named so as not to jeopardize those relationships.) “Now, we have the craziest chefs in the world and people who build yurts for us that have beds and air-conditioning.” He added with a sense of amazement, “Yes, air-conditioning in the middle of the desert!”

The growing presence of the elite in Burning Man is not just noticed by outsiders — long-time attendees grumble that Burning Man has become “gentrified.” Commenting on the New York Times piece, burners express dismay at attendees who do no work. “Paying people to come and take care of you and build for you . . . and clean up after you . . . those people missed the point.”

Many Burners seethed after reading one woman’s first-person account of how she was exploited while working at the $17,000-per-head camp of venture capitalist Jim Tananbaum. In her account, she documented the many ways in which Tananbaum violated the principles of the festival, maintaining “VIP status” by making events and art cars private and flipping out on one of his hired artists.

Tananbaum’s workers were paid a flat $180 a day with no overtime, but the anonymous whistleblower attests that she and others worked fifteen- to twenty-hour days during the festival.

The emergent class divides of Burning Man attendees is borne out by data: the Burning Man census (yes, they have a census, just like a real nation-state) showed that from 2010 to 2014, the number of attendees who make more than $300,000 a year doubled from 1.4% to 2.7%. This number is especially significant given the outsize presence 1 percenters command at Burning Man.

In a just, democratic society, everyone has equal voice. At Burning Man everyone is invited to participate, but the people who have the most money decide what kind of society Burning Man will be — they commission artists of their choice and build to their own whims. They also determine how generous they are feeling, and whether to withhold money.

It might seem silly to quibble over the lack of democracy in the “governance” of Black Rock City. After all, why should we care whether Jeff Bezos has commissioned a giant metal unicorn or a giant metal pirate ship, or whether Tananbaum wants to spend $2 million on an air-conditioned camp? But the principles of these tech scions — that societies are created through charity, and that the true “world-builders” are the rich and privileged — don’t just play out in the Burning Man fantasy world. They carry over into the real world, often with less-than-positive results.

Remember when Facebook CEO Mark Zuckerberg decided to help “fix” Newark’s public schools? In 2010, Zuckerberg — perhaps hoping to improve his image after his callous depiction in biopic The Social Network donated $100 million to Newark’s education system to overhaul Newark schools.

The money was directed as a part of then–Newark Mayor Cory Booker’s plan to remake the city into the “charter school capital of the nation,” bypassing public oversight through partnership with private philanthropists.

Traditionally, public education has been interwoven with the democratic process: in a given school district, the community elects the school board every few years. School boards then make public decisions and deliberations. Zuckerberg’s donation, and the project it was attached to, directly undermined this democratic process by promoting an agenda to privatize public schools, destroy local unions, disempower teachers, and put the reins of public education into the hands of technocrats and profiteers.

This might seem like an unrelated tangent — after all, Burning Man is supposed to be a fun, liberating world all its own. But it isn’t. The top-down, do what you want, radically express yourself and fuck everyone else worldview is precisely why Burning Man is so appealing to the Silicon Valley technocratic scions.

To these young tech workers — mostly white, mostly men — who flock to the festival, Burning Man reinforces and fosters the idea that they can remake the world without anyone else’s input. It’s a rabid libertarian fantasy. It fluffs their egos and tells them that they have the power and right to make society for all of us, to determine how things should be.

This is the dark heart of Burning Man, the reason that high-powered capitalists — and especially capitalist libertarians — love Burning Man so much. It heralds their ideal world: one where vague notions of participation replace real democracy, and the only form of taxation is self-imposed charity. Recall Whole Foods CEO John Mackey’s op-ed, in the wake of the Obamacare announcement, in which he proposed a healthcare system reliant on “voluntary, tax-deductible donations.”

This is the dream of libertarians and the 1 percent, and it reifies itself at Burning Man — the lower caste of Burners who want to partake in the festival are dependent on the whims and fantasies of the wealthy to create Black Rock City.

Burning Man foreshadows a future social model that is particularly appealing to the wealthy: a libertarian oligarchy, where people of all classes and identities coexist, yet social welfare and the commons exist solely on a charitable basis.

Of course, the wealthy can afford more, both in lodging and in what they “bring” to the table: so at Burning Man, those with more money, who can bring more in terms of participation, labor and charity, are celebrated more.

It is a society that we find ourselves moving closer towards the other 358 (non–Burning Man) days of the year: with a decaying social welfare state, more and more public amenities exist only as the result of the hyper-wealthy donating them. But when the commons are donated by the wealthy, rather than guaranteed by membership in society, the democratic component of civic society is vastly diminished and placed in the hands of the elite few who gained their wealth by using their influence to cut taxes and gut the social welfare state in the first place.

It’s much like how in my former home of Pittsburgh, the library system is named for Andrew Carnegie, who donated a portion of the initial funds. But the donated money was not earned by Carnegie; it trickled up from his workers’ backs, many of them suffering from overwork and illness caused by his steel factories’ pollution. The real social cost of charitable giving is the forgotten labor that builds it and the destructive effects that flow from it.

At Burning Man the 1 percenters — who have earned their money in the same way that Carnegie did so long ago — show up with an army of service laborers, yet they take the credit for what they’ve “brought.”

Burning Man’s tagline and central principle is radical self-expression:

Radical self-expression arises from the unique gifts of the individual. No one other than the individual or a collaborating group can determine its content. It is offered as a gift to others. In this spirit, the giver should respect the rights and liberties of the recipient.

The root of Burning Man’s degeneration may lie in the concept itself. Indeed, the idea of radical self-expression is, at least under the constraints of capitalism, a right-wing, Randian ideal, and could easily be the core motto of any of the large social media companies in Silicon Valley, who profit from people investing unpaid labor into cultivating their digital representations.

It is in their interest that we are as self-interested as possible, since the more we obsess over our digital identity, the more personal information of ours they can mine and sell. Little wonder that the founders of these companies have found their home on the playa.

It doesn’t seem like Burning Man can ever be salvaged, or taken back from the rich power-brokers who’ve come to adore it and now populate its board of directors. It became a festival that rich libertarians love because it never had a radical critique at its core; and, without any semblance of democracy, it could easily be controlled by those with influence, power, and wealth.

Burning Man will be remembered more as the model for Google CEO Larry Page’s dream of a libertarian state, than as the revolutionary Situationist space that it could have been.

As such, it is a cautionary tale for radicals and utopianists. When “freedom” and “inclusion” are disconnected from democracy, they often lead to elitism and reinforcement of the status quo.

 

https://www.jacobinmag.com/2015/08/burning-man-one-percent-silicon-valley-tech/

How Colleges Train For Work, Not For Thought

Prof. Larry Wilkerson discusses the role universities play in prepping a work force rather than an intellectual force.

JARED BALL, PRODUCER, TRNN: Welcome, everyone, back to the Real News Network. I’m Jared Ball here in Baltimore.

While leading Democratic party politicians are now hawking new plans for a debt-free college experience, which of course sounds great to what are now the most indebted college graduates in world history, there are still some concerned about the kind of education even those not having to pay at all would receive. In a recent article for Harper’s magazine William Deresiewicz describes a situation where, as he says, colleges have sold their soul to the market.

To discuss this is Larry Wilkerson, former chief of staff to Colin Powell and a professor at the College of William and Mary. We welcome back Col. Wilkerson to the Real News. Welcome back.

LARRY WILKERSON, FMR. CHIEF OF STAFF TO COLIN POWELL: Thanks, Jared. Good to be with you.BALL: So tell us what you think about this article. It suggests that neoliberalism has taken hold, and the designs of the corporate world are all that most universities are being encouraged, at least, to be concerned about. What do you see is the problem here with this trend?

WILKERSON: This is an age-old problem, as you probably know. It goes way back in the life of universities, certainly argued majorly in or on campuses like Oxford University, Cambridge University in England, and other, older schools. It is typified by on the one side the humanists, the exponents of liberal arts, of teaching young men and young women how to think critically as opposed to skills enhancement and training, and those on the other side of the argument exemplified at that time by the Huxley brothers, scientists, by those who reflect what we’re talking about today when we say STEM, science, technology, engineering and so forth.

And what is increasingly becoming the case, and I think is the real object of the article in Harper’s and others who are talking about this in great detail today, and that is the predatory capitalist state, which is what we have become in addition to being a national security state. That predatory capitalist state wants, one, workers who are not going to question things. That is to say, they can’t think critically. And it wants people who are more or less inured to what they produce, do, and mean in daily existence. That is to say, they want workers who are compliant with the structure that we’ve created in this country, the structure that works for minimum wages, that does things that need to be done for the corporate good, and so forth.

It’s a meaner argument, if you will, today. I can give the Huxley brothers their due, as they argued for example with John Henry Cardinal Newman about whether a liberal arts education or a science-based education was the best. And like Plato and Aristotle I would probably argue that somewhere in between is probably the best kind of education. That is to say, you need scientists who can think critically too, and therefore be good voters and so forth, and you need humanists that know something, liberal arts people who know something about science, engineering, math, and so forth. That’s the ideal world.

What you do not need is colleges and universities that are focused on getting jobs for people, and getting jobs in a society that is increasingly plutocratic, that is to say, the only people with the really good jobs are at the very top, and everybody else is a worker bee for those people. That’s what these colleges and universities are tending towards now, and that’s what the advertisements, that’s what the brouhaha in U.S. News and World Report and other places like that is all about. Oh, you’re spending $200,000 for Jane’s education. Then Jane needs to get a job, and she doesn’t need an education. What she needs is training and skills enhancement. Well, that’s not the purpose of a university.

BALL: But this sounds like, to me at least, that this is an expansion, as you said, of a much longer existing problem. That is, that for many, that is for working whites, for poor working whites in this country and certainly for African-descended people and indigenous people, there has long been a history of teaching those communities only to be part of the workforce. That is, with Native American residential schools, with the industrial schools of the 19th century for African-Americans, for the establishment of a public school system in this country in general that was designed specifically to prepare white working people for their roles in society, that this has long been an issue.

So how is this discussion, other than upping it, so to speak, into the upper echelons of society, how is this a change in terms of the history of this country’s education, generally speaking?

WILKERSON: It’s not a change in the sense that you just expressed it, that it has all this complexity, all this nuance and all these different parts to it. For example, there is the part of minority education, the part of minorities being shorted for 400 years, still being shorted. I worked in the DC public school system, for example, for Colin Powell for ten years. It is for all intents and purposes I was segregated when I worked in it as it was in 1850, if it existed at that time. I mean this is no, nothing news to people who’ve worked in inner city schools, that minorities get short shrift when it comes to education.

But this is a bigger argument. It’s a huge argument at the very top of what you might call the sophistication of education argument. And it is first of all, should everyone get a university education, well, I for one, I’m talking about. The answer to that question is no. no matter how egalitarian you may be, everyone in the world does not need to be a philosopher, does not need to be a Ph.D in nuclear physics, and so forth. They don’t have the intellectual capacity, and frankly–and this is more important–they don’t have the inclination.

There are plenty of people that ought to run automotive repair shops, ought to be tradesmen and craftsmen and so forth. And we’ve sort of lost that in this culture today because what we are is a finance giant. We service people, we finance things. We don’t do any real making of anything anymore. But there is a niche, a huge niche in our society for artisans. For craftsmen. For people who by their own wishes don’t want what I’m talking about when I say a university education. And in many cases, aren’t intellectually equipped for it.

So that’s the first division you have to make, and you do have to make that division. We’ve been very [inaud.] by allowing the market to make that division, which is why we get so many idiots who are billionaires, and so many bright people who are not making any money at all. It’s a hypocritical stance in this country that we take on merit and education, and so forth.

But back to the argument, the university takes in people who are intellectually, mentally predisposed to and want to be critical thinkers. That’s not everybody in society. I daresay if a study were done, and it were done over time, you’d probably find 30-40 percent of any given society that really ought to have a university education of the type I’m talking about. Other types of education that mostly community colleges can offer, that are in fact sort of a combination of what I mean by education and what I mean by skills enhancement that are aimed at particular niches in society for example, computer training being the latest example of that on a broad base, ought to be done also. But this is a sort of combination of the university and the artisan segments of society.

The Germans do this really well. They have trade schools and they have universities. And they know everyone’s not going to university, by inclination or by capability. So they identify those people and send those people to university. Those who want trades and good jobs in trades, like working at Mercedes or BMW or whatever, they then send to trade school. Because they want to go to trade school, and because they have intellectual and other capacity to do that. This is the way education should be divided in this country. But hypocrites that we are, hypocrites that we’ve always been, we say everyone should have a $250,000 or more university education. That’s pure poppycock.

BALL: Larry Wilkerson, thanks again for joining us here at the Real News.

WILKERSON: Thanks for having me on, Jared.

BALL: And thank you for joining us here at the Real News. For everyone involved, again, I’m Jared Ball here in Baltimore. And as always, as Fred Hampton used to say, to you we say peace if you’re willing to fight for it. So peace everybody, and we’ll catch you in the whirlwind.

 

Jared A. Ball is the author of “I MiX What I Like: A MiXtape Manifesto” (AK Press, 2011) and co-editor of “A Lie of Reinvention: Correcting Manning Marable’s Malcolm X” (Black Classic Press, 2012). Ball is an associate professor of communication studies at Morgan State University in Baltimore, Maryland and can be found online at IMixWhatILike.org.

 

http://www.alternet.org/education/how-colleges-train-work-not-thought?akid=13408.265072.1tPeuq&rd=1&src=newsletter1041316&t=16

How Google Could Rig the 2016 Election

A picture taken on October 17, 2017 in Lille, shows a figue in front of the Google internet homepage.   AFP PHOTO / PHILIPPE HUGUEN        (Photo credit should read PHILIPPE HUGUEN/AFP/Getty Images)

(Photo credit should read PHILIPPE HUGUEN/AFP/Getty Images)

Google has the ability to drive millions of votes to a candidate with no one the wiser.

August 19, 2015

America’s next president could be eased into office not just by TV ads or speeches, but by Google’s secret decisions, and no one—except for me and perhaps a few other obscure researchers—would know how this was accomplished.

Research I have been directing in recent years suggests that Google, Inc., has amassed far more power to control elections—indeed, to control a wide variety of opinions and beliefs—than any company in history has ever had. Google’s search algorithm can easily shift the voting preferences of undecided voters by 20 percent or more—up to 80 percent in some demographic groups—with virtually no one knowing they are being manipulated, according to experiments I conducted recently with Ronald E. Robertson.

Given that many elections are won by small margins, this gives Google the power, right now, to flip upwards of 25 percent of the national elections worldwide. In the United States, half of our presidential elections have been won by margins under 7.6 percent, and the 2012 election was won by a margin of only 3.9 percent—well within Google’s control.

There are at least three very real scenarios whereby Google—perhaps even without its leaders’ knowledge—could shape or even decide the election next year. Whether or not Google executives see it this way, the employees who constantly adjust the search giant’s algorithms are manipulating people every minute of every day. The adjustments they make increasingly influence our thinking—including, it turns out, our voting preferences.

What we call in our research the Search Engine Manipulation Effect (SEME) turns out to be one of the largest behavioral effects ever discovered. Our comprehensive new study, just published in the Proceedings of the National Academy of Sciences (PNAS), includes the results of five experiments we conducted with more than 4,500 participants in two countries. Because SEME is virtually invisible as a form of social influence, because the effect is so large and because there are currently no specific regulations anywhere in the world that would prevent Google from using and abusing this technique, we believe SEME is a serious threat to the democratic system of government.

According to Google Trends, at this writing Donald Trump is currently trouncing all other candidates in search activity in 47 of 50 states. Could this activity push him higher in search rankings, and could higher rankings in turn bring him more support? Most definitely—depending, that is, on how Google employees choose to adjust numeric weightings in the search algorithm. Google acknowledges adjusting the algorithm 600 times a year, but the process is secret, so what effect Mr. Trump’s success will have on how he shows up in Google searches is presumably out of his hands.

***

Our new research leaves little doubt about whether Google has the ability to control voters. In laboratory and online experiments conducted in the United States, we were able to boost the proportion of people who favored any candidate by between 37 and 63 percent after just one search session. The impact of viewing biased rankings repeatedly over a period of weeks or months would undoubtedly be larger.

In our basic experiment, participants were randomly assigned to one of three groups in which search rankings favored either Candidate A, Candidate B or neither candidate. Participants were given brief descriptions of each candidate and then asked how much they liked and trusted each candidate and whom they would vote for. Then they were allowed up to 15 minutes to conduct online research on the candidates using a Google-like search engine we created called Kadoodle.

Each group had access to the same 30 search results—all real search results linking to real web pages from a past election. Only the ordering of the results differed in the three groups. People could click freely on any result or shift between any of five different results pages, just as one can on Google’s search engine.

When our participants were done searching, we asked them those questions again, and, voilà: On all measures, opinions shifted in the direction of the candidate who was favored in the rankings. Trust, liking and voting preferences all shifted predictably.

More alarmingly, we also demonstrated this shift with real voters during an actual electoral campaign—in an experiment conducted with more than 2,000 eligible, undecided voters throughout India during the 2014 Lok Sabha election there—the largest democratic election in history, with more than 800 million eligible voters and 480 million votes ultimately cast. Even here, with real voters who were highly familiar with the candidates and who were being bombarded with campaign rhetoric every day, we showed that search rankings could boost the proportion of people favoring any candidate by more than 20 percent—more than 60 percent in some demographic groups.

Given how powerful this effect is, it’s possible that Google decided the winner of the Indian election.  Google’s own daily data on election-related search activity (subsequently removed from the Internet, but not before my colleagues and I downloaded the pages) showed that Narendra Modi, the ultimate winner, outscored his rivals in search activity by more than 25 percent for sixty-one consecutive days before the final votes were cast. That high volume of search activity could easily have been generated by higher search rankings for Modi.

Google’s official comment on SEME research is always the same: “Providing relevant answers has been the cornerstone of Google’s approach to search from the very beginning. It would undermine the people’s trust in our results and company if we were to change course.”

Could any comment be more meaningless? How does providing “relevant answers” to election-related questions rule out the possibility of favoring one candidate over another in search rankings? Google’s statement seems far short of a blanket denial that it ever puts its finger on the scales.

There are three credible scenarios under which Google could easily be flipping elections worldwide as you read this:

First, there is the Western Union Scenario: Google’s executives decide which candidate is best for us—and for the company, of course—and they fiddle with search rankings accordingly. There is precedent in the United States for this kind of backroom king-making. Rutherford B. Hayes, the 19th president of the United States, was put into office in part because of strong support by Western Union. In the late 1800s, Western Union had a monopoly on communications in America, and just before the election of 1876, the company did its best to assure that only positive news stories about Hayes appeared in newspapers nationwide. It also shared all the telegrams sent by his opponent’s campaign staff with Hayes’s staff. Perhaps the most effective way to wield political influence in today’s high-tech world is to donate money to a candidate and then to use technology to make sure he or she wins. The technology guarantees the win, and the donation guarantees allegiance, which Google has certainly tapped in recent years with the Obama administration.

Given Google’s strong ties to Democrats, there is reason to suspect that if Google or its employees intervene to favor their candidates, it will be to adjust the search algorithm to favor Hillary Clinton. In 2012, Google and its top executives donated more than $800,000 to Obama but only $37,000 to Romney. At least six top tech officials in the Obama administration, including Megan Smith, the country’s chief technology officer, are former Google employees. According to a recent report by the Wall Street Journal, since Obama took office, Google representatives have visited the White House ten times as frequently as representatives from comparable companies—once a week, on average.

Hillary Clinton clearly has Google’s support and is well aware of Google’s value in elections. In April of this year, she hired a top Google executive, Stephanie Hannon, to serve as her chief technology officer. I don’t have any reason to suspect Hannon would use her old connections to aid her candidate, but the fact that she—or any other individual with sufficient clout at Google—has the power to decide elections threatens to undermine the legitimacy of our electoral system, particularly in close elections.

This is, in any case, the most implausible scenario. What company would risk the public outrage and corporate punishment that would follow from being caught manipulating an election?

Second, there is the Marius Milner Scenario: A rogue employee at Google who has sufficient password authority or hacking skills makes a few tweaks in the rankings (perhaps after receiving a text message from some old friend who now works on a campaign), and the deed is done. In 2010, when Google got caught sweeping up personal information from unprotected Wi-Fi networks in more than 30 countries using its Street View vehicles, the entire operation was blamed on one Google employee: software engineer Marius Milner. So they fired him, right? Nope. He’s still there, and on LinkedIn he currently identifies his profession as “hacker.” If, somehow, you have gotten the impression that at least a few of Google’s 37,000 employees are every bit as smart as Milner and possess a certain mischievousness—well, you are probably right, which is why the rogue employee scenario isn’t as far-fetched as it might seem.

And third—and this is the scariest possibility—there is the Algorithm Scenario: Under this scenario, all of Google’s employees are innocent little lambs, but the software is evil. Google’s search algorithm is pushing one candidate to the top of rankings because of what the company coyly dismisses as “organic” search activity by users; it’s harmless, you see, because it’s all natural. Under this scenario, a computer program is picking our elected officials.

To put this another way, our research suggests that no matter how innocent or disinterested Google’s employees may be, Google’s search algorithm, propelled by user activity, has been determining the outcomes of close elections worldwide for years, with increasing impact every year because of increasing Internet penetration.

SEME is powerful precisely because Google is so good at what it does; its search results are generally superb. Having learned that fact over time, we have come to trust those results to a high degree. We have also learned that higher rankings mean better material, which is why 50 percent of our clicks go to the first two items, with more than 90 percent of all clicks going to that precious first search page. Unfortunately, when it comes to elections, that extreme trust we have developed makes us vulnerable to manipulation.

In the final days of a campaign, fortunes are spent on media blitzes directed at a handful of counties where swing voters will determine the winners in the all-important swing states. What a waste of resources! The right person at Google could influence those key voters more than any stump speech could; there is no cheaper, more efficient or subtler way to turn swing voters than SEME. SEME also has one eerie advantage over billboards: when people are unaware of a source of influence, they believe they weren’t being influenced at all; they believe they made up their own minds.

Republicans, take note: A manipulation on Hillary Clinton’s behalf would be particularly easy for Google to carry out, because of all the demographic groups we have looked at so far, no group has been more vulnerable to SEME—in other words, so blindly trusting of search rankings—than moderate Republicans. In a national experiment we conducted in the United States, we were able to shift a whopping 80 percent of moderate Republicans in any direction we chose just by varying search rankings.

There are many ways to influence voters—more ways than ever these days, thanks to cable television, mobile devices and the Internet. Why be so afraid of Google’s search engine? If rankings are so influential, won’t all the candidates be using the latest SEO techniques to make sure they rank high?

SEO is competitive, as are billboards and TV commercials. No problem there. The problem is that for all practical purposes, there is just one search engine. More than 75 percent of online search in the United States is conducted on Google, and in most other countries that proportion is 90 percent. That means that if Google’s CEO, a rogue employee or even just the search algorithm itself favors one candidate, there is no way to counteract that influence. It would be as if Fox News were the only television channel in the country. As Internet penetration grows and more people get their information about candidates online, SEME will become an increasingly powerful form of influence, which means that the programmers and executives who control search engines will also become more powerful.

Worse still, our research shows that even when people do notice they are seeing biased search rankings, their voting preferences still shift in the desired directions—even more than the preferences of people who are oblivious to the bias. In our national study in the United States, 36 percent of people who were unaware of the rankings bias shifted toward the candidate we chose for them, but 45 percent of those who were aware of the bias also shifted. It’s as if the bias was serving as a form of social proof; the search engine clearly prefers one candidate, so that candidate must be the best. (Search results are supposed to be biased, after all; they’re supposed to show us what’s best, second best, and so on.)

Biased rankings are hard for individuals to detect, but what about regulators or election watchdogs? Unfortunately, SEME is easy to hide. The best way to wield this type of influence is to do what Google is becoming better at doing every day: send out customized search results. If search results favoring one candidate were sent only to vulnerable individuals, regulators and watchdogs would be especially hard pressed to find them.

For the record, by the way, our experiments meet the gold standards of research in the behavioral sciences: They are randomized (which means people are randomly assigned to different groups), controlled (which means they include groups in which interventions are either present or absent), counterbalanced (which means critical details, such as names, are presented to half the participants in one order and to half in the opposite order) and double-blind (which means that neither the subjects nor anyone who interacts with them has any idea what the hypotheses are or what groups people are assigned to). Our subject pools are diverse, matched as closely as possible to characteristics of a country’s electorate. Finally, our recent report in PNAS included four replications; in other words, we showed repeatedly—under different conditions and with different groups—that SEME is real.

Our newest research on SEME, conducted with nearly 4,000 people just before the national elections in the UK this past spring, is looking at ways we might be able to protect people from the manipulation. We found the monster; now we’re trying to figure out how to kill it. What we have learned so far is that the only way to protect people from biased search rankings is to break the trust Google has worked so hard to build. When we deliberately mix rankings up, or when we display various kinds of alerts that identify bias, we can suppress SEME to some extent.

It’s hard to imagine Google ever degrading its product and undermining its credibility in such ways, however. To protect the free and fair election, that might leave only one option, as unpalatable as it might seem: government regulation.

Read more: http://www.politico.com/magazine/story/2015/08/how-google-could-rig-the-2016-election-121548.html#ixzz3jU90hk3U

Global markets plunge amid signs of deepening slump

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By Andre Damon
21 August 2015

Global stocks plunged Thursday as fears of a world economic slowdown mixed with concerns over a destabilization of global exchange rates and mounting geopolitical tensions.

US stocks staged their sharpest one-day selloff since February 2014, hitting six-month lows and wiping out all their gains over the past year. Shares in emerging markets, meanwhile, fell for the fifth day in a row, hitting the lowest levels since 2011.

Markets in China led Thursday’s selloff, falling 3.18 percent. This brings total declines since June to 29 percent, despite an extraordinary series of cash injections by the Chinese central bank, which intensified following the country’s currency devaluation last week. The stock market drop has been accompanied by a sharp decline in economic growth.

The most immediate trigger for Thursday’s selloff appeared to be a gloomy assessment of the global economy by the US Federal Reserve in the minutes just released for its July 28-29 policy meeting.

In recent years, the ruling class had treated reduced growth predictions by the Fed as a positive sign, signaling further infusions of cash to prop up financial markets.

But Thursday’s negative response to the figures may point to fears that, after nine years without a rate increase by the US central bank, global central banks may be running out of ammunition to combat a crisis that is increasingly affecting every corner of the globe.

Markets in the rest of Asia, Europe and North America followed the Chinese markets downward. In the US, the Dow Jones Industrial Average fell more than 350 points, closing down by 2 percent. The S&P 500 fell by 2.1 percent, and the tech-heavy Nasdaq plunged by 2.8 percent after the release of negative technology sales figures on both sides of the Pacific.

A number of industries have now officially entered stock corrections. Bloomberg reported, “The Nasdaq Biotechnology Index…entered a correction, falling more than 10 percent from a record set a month ago. The Philadelphia Semiconductor Index slid into a bear market, plunging more than 20 percent from a June peak.”

The selloff was concentrated in the stocks that have risen most sharply this year, with Netflix Inc. falling 7.8 percent in a single day. One analyst told Bloomberg, “You’re finally starting to see the untouchable stocks—some of the biggest weighting of the market—get touched.”

In addition to the negative prognosis by the Federal Reserve, markets were responding to the persistent slump in commodities prices amid a continuing fall in global demand due to the world economic slowdown.

The underlying significance of the commodities selloff was noted by theFinancial Times, which pointed out, paraphrasing a securities analyst, that “at face value, the slide in commodity prices over the past year was consistent with a global recession as severe as that in 2008-09.”

The fall in commodities prices is transmitting the recessionary tendencies of the real global economy into financial markets. Reuters noted that the two-week correlation between the US stock market and oil prices is at the highest level in five months.

Prices for Brent Crude oil, a benchmark for international oil prices, fell 1.2 percent Thursday, hitting a 7-month low of $46.62. Despite staging a small recovery earlier in the day, US crude prices hit six-year lows. This puts them on track to fall as low as $30 per barrel by the fall, which would be the lowest price since the 2008-2009 financial crisis.

The global selloff in markets has been compounded by increasing turbulence in global exchange rates following last week’s surprise devaluation of the Chinese yuan. Kazakhstan’s tenge fell by more than 20 percent after the country announced that it would stop defending its currency peg and allow the currency to float freely, following a similar move by Vietnam. The national currencies of Turkey, Russia and Colombia also saw sharp declines.

Worries over these currency devaluations were accompanied by growing fears over the destabilizing effects of a series of intensifying geopolitical conflicts, including recent military flare-ups between Russia and Ukraine, Turkey and Kurdish militias, North and South Korea, as well as India and Pakistan.

In the eight years since the US Fed began cutting its federal funds rate, the global economy has been characterized by a tug-of-war between extraordinarily accommodative monetary policies by US, Asian, and European central banks on one hand, and the persistently moribund state of the real economy.

Since the eruption of the 2008 crisis, every indicator of a global downturn was met by an overwhelming infusion of cash from global central banks. This process has succeeded in producing an enormous increase in social inequality, along with a massive speculative financial bubble that has grown increasingly divorced from real economic activity.

The measures taken by the central banks have been dictated by the interests of the financial aristocracy, and have been accompanied by unrelenting austerity and attacks on wages and working conditions.

But there are increasing indicators that the ability of world central banks to contain the swelling economic crisis has broken down. As one analyst at Société Générale told the Financial Times, “The threat of Fed tightening may be perceived to have diminished but the threat from weaker Chinese growth and falling global commodity prices isn’t going away any time soon.” The latter tendencies certainly predominated in Thursday’s selloff.

At the beginning of the year, the WSWS noted that “the contradictions of the capitalist system” are increasingly “acquiring an acute character. The ‘peaceful’ intervals between the eruption of major crises—geopolitical, economic and social—have become so short that they can hardly be described as intervals. Crises, on the other hand, appear not as isolated ‘episodes,’ but as more or less permanent features of contemporary reality.”

This prognosis is increasingly being borne out as the global economic slump, the destabilization of international currency markets, and growing geopolitical conflicts are combining into a generalized crisis to which the world’s ruling classes can offer no solution.

 

http://www.wsws.org/en/articles/2015/08/21/econ-a21.html