Thirty years since Wall Street’s “Black Monday”

By Nick Beams
19 October 2017

Thirty years ago today, on October 19, 1987, the New York Stock Exchange experienced what remains its largest one-day fall in history. On “Black Monday”, the Dow Jones fell 22.6 percent with the S&P 500 index dropping 28.5 percent for the period October 14-19.

The total loss of financial wealth during the crisis has been estimated to be around $1 trillion. But unlike 2008, the financial crisis did not precipitate a broader economic crisis and was over relatively quickly due to a major intervention by the US Federal Reserve, operating both directly and through the pressure it applied to major banks to extend liquidity to financial firms.

But that is not to say that its effects were transitory or that it merely represented some kind of brief malfunction in an otherwise sound financial system. In fact, what can be seen, both in the crash and the response to it, are the immediate origins of the processes that have led to the series of financial storms over the past three decades, the most serious, so far, being the crisis of September 2008.

The period leading up to “Black Monday” was one of great transition in the US economy and financial system, as well as globally. Whole areas of US industry were devastated by the high-interest rate regime, initiated by Carter appointee Paul Volcker as Federal Reserve chairman in 1979, a policy that was continued and deepened during the first years of the Reagan administration in the 1980s.

It was a process replicated around the world as key sections of industry, built up during the post-war economic boom, were laid to waste in what, to that point, was the most serious recession since the 1930s.

As industry was being destroyed, regulations that had been introduced to constrain the operations of finance started to be dismantled in order to clear the way for the accumulation of profit through speculative operations.

This was the start of the era of leveraged buyouts, using so-called junk bonds of dubious quality, in which whole firms could be gobbled up in hostile takeovers and then carved up and sold off at great profit. New financial instruments were developed to facilitate financial speculation that were to play a significant role in the 1987 crash.

In the lead-up to “Black Monday”, the Dow Jones index had raced ahead, rising by 44 percent in the seven months to the end of August, leading to expressions of concern that a financial bubble was being created. But despite these warnings, the speculation continued.

In 1985, the major industrial nations of the G6—France, the US, Britain, Canada, West Germany, Great Britain—had reached a deal (the Plaza agreement) to allow the US dollar to depreciate. But two years on, this was causing inflation concerns, leading to a new agreement, the Louvre accord, in February 1987, which was aimed at trying to halt the slide of the dollar and stabilise currency alignments.

However, in October 1987, Germany, which had agreed to keep interest rates low, moved to raise them due to inflation fears, causing the Fed to lift its discount rate to 7 percent and sending the rate on US treasury bonds to 10.25 percent. The shift in interest rates was the immediate trigger for the collapse of markets that was to follow.

With the announcement of a larger-than-expected trade deficit, a fall in the value of the dollar and fears that interest rates would rise, the markets began to fall from October 14. By the end of trading on Friday, October 16, the Dow was down 4.6 percent on the day and the S&P 500 had dropped by 9 percent in the previous week, setting the stage for what was to happen.

When international exchanges opened on Monday, before US trading began, it was a bloodbath in Asia and the Pacific as markets plummeted—the New Zealand market dropped by 60 percent.

The US market crashed from the opening bell in what was the first global financial sell-off. The plunge was exacerbated by a series of financial innovations that had been introduced in the previous years in order to facilitate speculation.

US investment firms had developed new financial products known as “portfolio insurance”. They were supposedly designed to protect investors from the effects of a downturn through the use of futures options and derivatives. The problem, however, was that they all operated on fundamentally the same model so that when the crash began there was a simultaneous rush for the exits.

Another factor was the introduction of computerised trading in which large numbers of stocks were sold, again on the basis of similar mathematical and financial models. Such was the volume of the trades that many of the reporting systems were simply overwhelmed. On the New York Stock Exchange, trade executions were reported up to an hour late, causing great confusion.

At the end of Black Monday, there were great fears about what was going to happen the next day. Before markets opened, the newly appointed chairman of the Federal Reserve, Alan Greenspan, who had taken over from Paul Volcker the previous August, issued a statement that was to become the basis of Fed policy from then down to the present day.

“The Federal Reserve, consistent with its responsibilities as the Nation’s central bank, affirmed today its readiness to serve as a source of liquidity to support the economic and financial system,” the statement read.

It was the beginning of what subsequently became known as the “Greenspan put”, understanding that the central bank would always be on hand to step in and support the financial markets.

The statement was backed up by action. In testimony given to the Senate Banking Committee in 1994, Greenspan said that “telephone calls placed by officials of the Federal Reserve Bank of New York to senior management of the major New York City banks helped to assure a continuing supply of credit to the clearinghouse members, which enabled those members to make the necessary margin payments.”

In 1990, Ben Bernanke, the future chairman of the Federal Reserve, noted that making such loans must have been a money-losing strategy from the point of view of the banks, otherwise Fed persuasion would not have been necessary, but it was a good strategy for the “preservation of the system as a whole.”

The extent of the intervention can be gauged from the fact that the lending of Citigroup to securities firms increased from a normal level of $200 to $400 million per day to $1.4 billion on October 20, after the bank’s president had received a call from the president of the New York Fed.

The policy of Fed intervention was to continue through the 1990s and into the new century. However, the fundamental contradictions of the capitalist financial system were not overcome but intensified. Consequently, when the crisis of 2008 struck, the Fed policy of leaning on the major banks was completely inadequate because it was the banks themselves that had either gone broke or were on the brink of collapse.

The Fed and other central banks around the world stepped in with massive bailouts and have sustained financial markets since then through their policies of financial asset purchases—quantitative easing—and ultra-low and even negative interest rates.

The outcome has been to neither restore economic growth nor create financial stability. Assessments of the price-earnings ratio of US markets have found that they are at elevated levels, exceeded only by 1929 and the dotcom bubble of the early 2000s. This is under conditions where economic growth, productivity and international trade—measures of the real economy—remain below their pre-2008 trends.

In 1987, the securities firms were bailed out by the banks. Little more than two decades on, the banks themselves had to be bailed out. But in another financial crisis, the central banks themselves will be directly involved because of their massive holdings of tens of trillions of dollars of government bonds and other financial assets.

In assessing the present situation, it is worth recalling an analysis made of the 20th anniversary of “Black Monday” by the Australian news outlet, the ABC—no doubt typical of many.

In the midst of a period of economic growth—the IMF had noted in 2006 that the world economy was expanding at its fastest rate for three decades—it cited financial analysts who maintained that a crash on a similar scale to 1987 was unlikely to be repeated. There was not the same interest rate structure and “we have a far more internationally coordinated banking system than was the case in 1987,” according to one of them.

“With rapid economic growth expected to continue in Asia,” the article concluded, “the market consensus appears to be that the bull run still has some way to go.”

Just 11 months later, in September 2008, the world was plunged into the deepest economic and financial crisis since the Great Depression of the 1930s.

http://www.wsws.org/en/articles/2017/10/19/blkm-o19.html

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Star Trek: Discovery—The latest incarnation of the popular science fiction series

By Tom Hall
18 October 2017

Star Trek: Discovery, the seventh series in the long-running Star Trek television and movie franchise, premiered September 24 on CBS.

Set in the far future, in the mid-23rd century, shortly before the events of the original series released in 1966, Discovery follows the exploits of Commander Michael Burnham (Sonequa Martin-Green), a female Starfleet officer serving aboard first the USS Shenzhou and later the USS Discovery in the midst of a war between the United Federation of Planets and the nefarious Klingon Empire.

When we first meet commander Burnham she is on a humanitarian mission with her mentor, Philippa Georgiou (Michelle Yeoh), the captain of the Shenzhou. Burnham’s promising career, however, is nearly ruined in the course of an encounter between the Shenzhou and the Klingons, with whom Starfleet has had no significant contact for generations.

The Klingons turn out to be a group of religious fanatics dedicated to uniting their long-fragmented empire through a religious war against the Federation. Meanwhile, Burnham, who was raised on planet Vulcan by the diplomat Sarek (James Frain), becomes convinced after consulting her stepfather that the only way to gain the Klingons’ respect and avoid an all-out war is to fire unprovoked on the Klingon vessel. Burnham attempts unsuccessfully to take control of the ship and fire on the Klingons herself and is arrested as a mutineer.

Doug Jones and Sonequa Martin-Green in Star Trek: Discovery

Several months later, with the Federation embroiled in an all-out war with the Klingons, Burnham is on board a prison transport that breaks down and gets rescued by Captain Gabriel Lorca (Jason Isaacs) of the USS Discovery, which is conducting top-secret military research. Burnham is dragooned into working on the project, whose ultimate aim is kept hidden from her.

She eventually deduces that Lorca is developing a banned biological weapon to use against the Klingons. However, when Lorca explains its purposes, including significant civilian applications, Burnham overcomes her initial hesitations and joins the crew of Discovery. The rest of the series deals with her trials and tribulations while fighting the Klingons.

The writing, acting and directing on Star Trek: Discovery is, to put it bluntly, poor. None of the actions the characters take that set into motion the key events of the series make much sense. Why would the Klingons, for instance, who have been supposedly consumed by infighting for decades, decide suddenly to band together against the Federation after a five-minute conversation with a cult leader? How exactly is firing on the Klingons supposed to keep the peace, and why would Burnham or anyone else find this to be plausible?

The dialogue is stilted and clichéd. “I forgot who said statues are crystallized spirituality,” Burnham says to no one in particular after encountering decorative sculptures on the Klingon vessel. An anonymous crewman wanders into Shenzhou’s brig during the climactic battle and asks Burnham, unprompted, “Why are we fighting? We’re explorers.”

The tone of the show is relentlessly grim, from the darkly lit corridors on the various spaceships and the goblin-like Klingons who grunt their lines (delivered in “Klingon” and interpreted for the viewer by subtitles), to the gratuitous violence and furrowed brows and grimaces on everyone’s faces intended to demonstrate the seriousness of the proceedings. The unnaturally cheerful cadet Sylvia Tilly (Mary Wiseman), who would be irritating under ordinary circumstances, provides some welcome and desperately needed levity.

Star Trek: Discovery

The show’s premise amounts to a pro-war science fiction parable that parrots all the lies with which Washington has sought to justify numerous imperialist crimes over the past quarter century. The Klingons, a warrior society modeled by the writers of previous shows on feudal Japan, and who had gained a certain psychological complexity in their depiction by the premiere of Deep Space 9 in 1993, are here reduced to sub-human religious fanatics, portrayed in a similar fashion to Islamic terrorists in numerous Hollywood blockbusters.

Burnham’s actions in the first two episodes in particular are effectively an explicit endorsement of the doctrine of pre-emptive war, i.e., there is no use negotiating with our enemies, because violence is the only language they understand.

Since first premiering in 1966, Star Trek has become something of a mass phenomenon, with tens of millions of fans throughout the world. Appearances by the former stars of the various Star Trek shows at annual conventions continue to attract significant audiences.

The principal reason for this enduring popularity has been the franchise’s optimistic view of the future and its willingness to grapple with serious human problems. By the 23rd century, in the show’s future history, all of the basic problems of contemporary society, including war, poverty and racial and national divisions, have long since been overcome. The international cooperation among the crew members of the Enterprise suggested that the wars and conflicts of the 20th century, far from representing the essential rottenness of humanity, as has become almost an article of faith in certain artistic circles, would eventually be discarded in the further social and technological development of human civilization.

Originally produced in the midst of the Civil Rights movement, Star Trek also became the first TV show to cast a black woman, Nichelle Nichols as Lieutenant Uhura, in a leading role. Martin Luther King, according to Nichols, was a fan of the show and urged her to continue on the show when she was thinking about quitting.

Star Trek could always be wildly uneven, even campy, but at its best, the show was capable of fairly pointed social commentary, or of exploring difficult ethical or philosophical questions. The conceit of a number of episodes was that 20th century problems, because they were grappled with by culturally more developed 23rd and 24th century humans, could be dealt with at a higher and more clarified level than could be expected in the present.

None of this finds expression thus far in Star Trek: Discovery. In fact, at times that outlook seems more or less consciously repudiated as naive by the goings-on in the show. At one point, a Starfleet admiral declares his commitment to peace only moments before he is incinerated by the Klingons. “Starfleet doesn’t fire first,” Georgiou reminds Burnham, to which the latter replies, “We have to!”

Star Trek: Discovery

In a panel discussion at this year’s San Diego Comic-Con, co-creator Alex Kurtzman explained that the “defining factor of [ Star Trek creator Gene] Roddenberry’s vision is the optimistic view of the future. He envisioned a world where all species, all races came together to not only make our world better, but to make every world better.”

Kurtzman went on, “That being said … we live in very troubled times. … Star Trek has always been a mirror to the time it reflected and right now … the question is how do you preserve and protect what Starfleet is [“national security”!] in the weight of a challenge like war and the things that have to be done in war is a very interesting and dramatic problem. And it feels like a very topical one given the world where we live now.”

Star Trek: Discovery seems to have struck a chord among certain layers. They are particularly enthusiastic that the show’s bloody goings-on center around a black woman in a position of authority. It’s “beautiful,” Daily Beast reviewer Ira Madison III writes, “watching two women of color, black and Asian, navigate a realm that traditionally hasn’t included them.”

On one level, given the history of the Star Trek franchise, and indeed the science fiction genre in general, this is simply absurd. On another level, however, this expresses the essential social outlook of identity politics—an indifference to larger social issues, and support for war, together with a ferocious conflict over the spoils.

WSWS

The conspiracy to censor the Internet

18 October 2017

The political representatives of the American ruling class are engaged in a conspiracy to suppress free speech. Under the guise of combating “trolls” and “fake news” supposedly controlled by Russia, the most basic constitutional rights enumerated in the First Amendment are under direct attack.

The leading political force in this campaign is the Democratic Party, working in collaboration with sections of the Republican Party, the mass media and the military-intelligence establishment.

The Trump administration is threatening nuclear war against North Korea, escalating the assault on health care, demanding new tax cuts for the rich, waging war on immigrant workers, and eviscerating corporate and environmental regulations. This reactionary agenda is not, however, the focus of the Democratic Party. It is concentrating instead on increasingly hysterical claims that Russia is “sowing divisions” within the United States.

In the media, one report follows another, each more ludicrous than the last. The claim that Russia shifted the US election by means of $100,000 in advertisements on Facebook and Twitter has been followed by breathless reports of the Putin government’s manipulation of other forms of communication.

An “exclusive” report from CNN last week proclaimed that one organization, “Don’t Shoot Us,” which it alleges without substantiation is connected to Russia, sought to “exploit racial tensions and sow discord” on Instagram, Twitter, YouTube, Tumblr and even Pokémon Go, a reality game played on cell phones.

Another report from CNN on Monday asserted that a Russian “troll factory” was involved in posting comments critical of Hillary Clinton as “part of President Vladimir Putin’s campaign to influence the 2016 election.” All of the negative commentary in news media and other publications directed at Clinton, it implied, were the product of Russian agents or people duped by Russian agents.

As during the period of Cold War McCarthyism, the absurdity of the charges goes unchallenged. They are picked up and repeated by other media outlets and by politicians to demonstrate just how far-reaching the actions of the nefarious “foreign enemy” really are.

While one aim has been to continue and escalate an anti-Russia foreign policy, the more basic purpose is emerging ever more clearly: to criminalize political dissent within the United States.

The most direct expression to date of this conspiracy against free speech was given by the anticommunist ideologue Anne Applebaum in a column published Monday in the Washington Post, “If Russia can create fake ‘Black Lives Matter’ accounts, who will next?”

Her answer: the American people. “I can imagine multiple groups, many of them proudly American, who might well want to manipulate a range of fake accounts during a riot or disaster to increase anxiety or fear,” she writes. She warns that “political groups—on the left, the right, you name it—will quickly figure out” how to use social media to spread “disinformation” and “demoralization.”

Applebaum rails against all those who seek to hide their identity online. “There is a better case than ever against anonymity, at least against anonymity in the public forums of social media and comment sections,” she writes. She continues: “The right to free speech is something that is granted to humans, not bits of computer code.” Her target, however, is not “bots” operating “fake accounts,” but anyone who seeks, fearing state repression or unjust punishment by his or her employer, to make an anonymous statement online. And that is only the opening shot in a drive to silence political dissent.

Applebaum is closely connected to the highest echelons of the capitalist state. She is a member of key foreign policy think tanks and sits on the board of directors of the CIA-linked National Endowment for Democracy. Married to the former foreign minister of Poland, she is a ferocious war hawk. Following the Russian annexation of Crimea, she authored a column in the Washington Postin which she called for “total war” against nuclear-armed Russia. She embodies the connection between militarism and political repression.

The implications of Applebaum’s arguments are made clear in an extraordinary article published on the front page of Tuesday’s New York Times, “As US Confronts Internet’s Disruptions, China Feels Vindicated,” which takes a favorable view of China’s aggressive censorship of the Internet and implies that the United States is moving toward just such a regime.

“For years, the United States and others saw” China’s “heavy-handed censorship as a sign of political vulnerability and a barrier to China’s economic development,” the Times writes. “But as countries in the West discuss potential Internet restrictions and wring their hands over fake news, hacking and foreign meddling, some in China see a powerful affirmation of the country’s vision for the internet.”

The article goes on to assert that while “few would argue that China’s Internet control serves as a model for democratic societies… At the same time, China anticipated many of the questions now flummoxing governments from the United States to Germany to Indonesia.”

Glaringly absent from the Times article, Applebaum’s commentary and all of the endless demands for a crackdown on social media is any reference to democratic rights, free speech or the First Amendment.

The First Amendment, which asserts that “Congress shall make no law… abridging the freedom of speech,” is the broadest amendment in the US Constitution. Contrary to Applebaum, there is no caveat exempting anonymous speech from Constitutional protection. It is a historical fact that leaders of the American Revolution and drafters of the Constitution wrote articles under pseudonyms to avoid repression by the British authorities.

The Constitution does not give the government or powerful corporations the right to proclaim what is “fake” and what is not, what is a “conspiracy theory” and what is “authoritative.” The same arguments now being employed to crack down on social media could just as well have been used to suppress books and mass circulation newspapers that emerged with the development of the printing press.

The drive toward Internet censorship in the United States is already far advanced. Since Google announced plans to bury “alternative viewpoints” in search results earlier this year, leading left-wing sites have seen their search traffic plunge by more than 50 percent. The World Socialist Web Site’s search traffic from Google has fallen by 75 percent.

Facebook, Twitter and other social media platforms have introduced similar measures. The campaign being whipped up over Russian online activity will be used to justify even more far-reaching measures.

This is taking place as universities implement policies to give police the authority to vet campus events. There are ongoing efforts to abolish “net neutrality” so as to give giant corporations the ability to regulate Internet traffic. The intelligence agencies have demanded the ability to circumvent encryption after having been exposed for illegally monitoring the phone communications and Internet activity of the entire population.

In one “democratic” country after another governments are turning to police-state forms of rule, from France, with its permanent state of emergency, to Germany, which last month shut down a subsidiary of the left-wing political site Indymedia, to Spain, with its violent crackdown on the separatist referendum in Catalonia and arrest of separatist leaders.

The destruction of democratic rights is the political response of the corporate and financial aristocracy to the growth of working class discontent bound up with record levels of social inequality. It is intimately linked to preparations for a major escalation of imperialist violence around the world. The greatest concern of the ruling elite is the emergence of an independent movement of the working class, and the state is taking actions to prevent it.

Andre Damon and Joseph Kishore

WSWS

Are social media bots a threat to democracy?

Ryan de Laureal analyzes the push to get Silicon Valley to clamp down on promoters of “fake news”–and argues that the solution isn’t censorship, but transparency.

Are social media bots a threat to democracy? (Eric Ruder | SW)

TECH GIANTS Facebook, Google and Twitter have found themselves under fire as the latest details have emerged about the use of fake Russian social media accounts and political ads in last year’s presidential election.

The furor over various attempts to manipulate public opinion by spreading “fake news” during the 2016 campaign began almost immediately after Donald Trump’s shocking victory, resulting in a storm of criticism toward companies like Facebook, which were accused of failing to crack down on the abuse of their platforms by Russian fakesters.

The issue was revived again on September 6, when Facebook announced it had discovered that about $100,000 worth of political ads that were purchased from June 2015 to May 2017 by accounts with potential links to the Russian government, many of them posing as fake American users.

In the following weeks, the company handed over thousands of these ads to Congressional investigators and announced steps to limit the impact of such content in the future.

After Facebook, Twitter and Google were the next ones to be caught up in the investigation.

In Twitter’s case, a primary focus was on the use of so-called “bots”–automated accounts that can be programmed to post and share content, and can often be made to appear indistinguishable from real users. Hundreds of such bots were apparently used by Russian actors to spread propaganda during the election.

The alarm being raised by Democrats about this Russian influence campaign should be taken looked at skeptically. Rather than being a smoking gun, the ad spending uncovered thus far by Facebook raises serious doubts about how extensive and impactful this campaign really was.

To begin with, $100,000 is an almost laughably minuscule amount of money compared to what presidential campaigns typically spend on political propaganda. While it is possible that more Russian ad spending may come to light, the fact remains that the Trump and Clinton campaigns each spent hundreds of millions of dollars in the 2016 presidential race, large portions of which were dedicated to advertising.

Even if an extra $100,000 bump for the Trump campaign by Russian actors is taken into account, Clinton still outspent Trump by over $200 million, and even Green Party candidate Jill Stein outspent the Russians 50 times over.

If the claim that Russian propaganda activity cost the Democrats the election is taken seriously, it reveals either superhuman ability on the part of the Russians or total ineptitude on the part of the Democrats, who failed to defeat Trump despite burning through buckets of money in their attempt to do so.

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THAT ISN’T to say that there aren’t genuine concerns raised by the issue of Twitter bots and fake accounts.

Though certain bot functions–such as liking posts, following users en masse and sending direct messages–technically violate Twitter’s terms of service, the company still encourages the use of automated accounts, and there are a proliferation of services available online that allow for abuse of the platform even by those who are not tech-savvy.

Certain products allow customers to create and control thousands of bot accounts in an instant, and Twitter’s low standards for account verification (little more than an e-mail address is needed to create an account) have made bots desirable tools for anybody wishing to influence public opinion, Russians or not–which is precisely why the current concern among Democrats about their use falls short.

Allowing anonymous users to create thousands of fake accounts at the click of a button and use them to impersonate real people and spread lies certainly is something that should be of public concern. This is especially true when–as was the case with many of the pro-Trump Russian bots and fake accounts active during the campaign–they are used to incite xenophobia and bolster society’s racist, far-right fringe.

But thus far, the Democrats’ only apparent concern is the use of bots and fake accounts by the Russians–even though bots have become a fairly regular feature of U.S. political campaigns over the past few years, with Republicans and Democrats alike investing in automated Twitter traffic to spread their campaign propaganda, alongside more traditional advertising routes.

An analysis of selected Twitter traffic during the 2016 election by the Oxford Internet Institute’s Computational Propaganda Project found that over 10 percent of users tweeting election-related hashtags were potential bots–and it’s likely that most of them weren’t Russian.

Though the concentration of bot activity was stronger for accounts tweeting pro-Trump content, bots were also used to spread pro-Clinton content in 2016.

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DESPITE THE often narrow, jingoistic focus of the current frenzy over “fake news,” and its obvious use for Democrats as a political tool in their ongoing Russia inquiry, there are clear problems posed by bots and other forms of modern technological propaganda that should be taken seriously.

Addressing these problems must go hand in hand with the fight to defend the Internet as a free and open form of communication.

The ease and anonymity with which platforms such as Twitter can be abused make them attractive venues for wealthy and powerful actors–from dictatorial regimes to corporate interest groups–to manipulate public opinion, sow confusion and quell dissent.

In addition to their use by multiple players in the 2016 U.S. election, bots have been used extensively by the widely despised Institutional Revolutionary Party of Mexico to manufacture fake support for its candidates and silence criticism online. Pro-government bots have also been used by repressive regimes in Syria and Turkey to spread propaganda in support of the Assad and Erdoğan dictatorships.

A number of solutions have been proposed by the government and by companies such as Twitter and Facebook in response to the current Russia scandal, including tighter regulation and greater transparency in online political advertising, more aggressive enforcement of terms of service rules by social media companies, and greater collaboration between Silicon Valley and the national security state.

While some proposals, such as greater transparency around online ads and automated accounts, could be welcomed, many of these are quite dangerous. Of particular concern are measures that would lead to greater control over the Internet or censorship powers against online speech by either the state or corporations or both.

One example of these dangers can be found in the debate over the Stop Enabling Sex Traffickers Act, or SESTA, which is currently gaining traction in the Senate.

While the bill has the ostensible purpose of cracking down on sex trafficking, it has been criticized by Internet advocacy groups for its proposal to limit the application of Section 230 of the 1996 Communications Decency Act.

Section 230 has been described as “the law that built the modern Internet” by the Electronic Frontier Foundation (EFF):

Section 230 says that for purposes of enforcing certain laws affecting speech online, an intermediary”–such as a company, website, or organization that provides a platform for others to share speech and content–“cannot be held legally responsible for any content created by others. The law thus protects intermediaries against a range of laws that might otherwise be used to hold them liable for what others say and do on their platforms.

It’s thanks to Section 230 that social media exists in the way that we know it today. The proposal to limit it, which could make companies like Facebook or Twitter open to lawsuits for illegal content posted by users, means that any organization providing an online platform for speech would be incentivized to more heavily police and censor content.

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THIS DEMAND to be more vigilant in finding and removing malicious content is essentially what many have been making of Facebook and Twitter in the current Russian hacking scandal.

But what counts as malicious is subjective–whether there are human moderators on the other end screening ads and content and deciding what gets approved, and even more especially, when the moderators themselves are bots.

The enormous amount of advertising that is bought and sold on platforms like Facebook makes it impossible for a human to review and approve every ad purchase. An attractive alternative for tech companies is bots, programmed with an algorithm that allows them to automatically review and flag content as potentially troublesome.

If Internet companies censor content more heavily, it won’t be humans doing the moderating. Instead, as the EFF argues, increased sanctioning for online platforms will actually lead to a greater automation of this function.

A number of programs like this already exist, such as Google’s recently rolled out Perspective, a programming interface designed to fight online trolls by automatically moderating comment threads and flagging posts based on their “toxicity.”

The danger posed to free speech by programs like Perspective isn’t hard to see. After its rollout, users experimenting with it discovered a discriminatory streak in the kinds of statements flagged as toxic.

A statement such as “I am a man” is flagged as 20 percent likely to be seen as toxic, while “I am a Black man” is flagged at 80 percent. “I am a woman” is 41 percent, and “I am a gay Black woman” is flagged as 87 percent.

The problem is that algorithms can’t understand things like human intent. They can search posts for key words–like “Black” or “Jew”–that might be used by racist online trolls, but they have trouble distinguishing between actually racist posts containing these words from ones that aren’t racist.

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SPAMBOTS AND fake news are legitimate problems. They muddy the waters of online speech and are ripe for abuse. Governments, including the U.S., use them for psychological operations to spread false ideas and silence dissent, and they can also be used by hackers to spread malware.

But sanctioning Internet companies for the actions of their users and giving them more power to censor content online is a route that could chill the Internet as a venue for free speech.

There are better ways to handle bots. If Twitter were simply to disclose which of its user accounts were automated–in the same way that it has been proposed to create greater transparency around Facebook ads by disclosing who bought them–it would go a long way toward eliminating the ability to disguise bots as real users.

There are trickier Internet questions out there, such as how to handle the epidemic of online harassment. But when it comes to bots, increased transparency may not be the best solution for Silicon Valley’s profit margins, but it would make for a better Internet for the rest of us.

https://socialistworker.org/2017/10/12/are-social-media-bots-a-threat-to-democracy

The New York Times and the criminalization of dissent

11 October 2017

The campaign within the American media and political establishment over allegations of Russian “hacking” and manipulation of the US elections is being transformed into an increasingly frenzied demand for the criminalization of dissent.

During the first months of the Trump administration, the charges of Russian interference in US politics were primarily used to prosecute a struggle within the American ruling class centered on issues of foreign policy. The anti-Russian campaign has now developed into an effort to associate all opposition within the United States to the actions of a “foreign enemy.”

A series of increasingly ludicrous articles have appeared in the US press, channeling information supposedly gathered by the Senate Intelligence Committee from social media companies. The latest appeared on Tuesday in the New York Times, which has played the central role in the media campaign. The front-page article (“Russians Spun American Rage Into a Weapon: Facebook Posts in US Fueled Propaganda”) is a piece of pure political propaganda, filled with unsubstantiated statements, wild speculation and unsupported conclusions.

Social media posts from Americans, the Times asserts, have become “grist for a network of Facebook pages linked to a shadowy Russian company that carried out propaganda campaigns for the Kremlin.” The newspaper claims to have reviewed hundreds of these posts, concluding, “One of the most powerful weapons that Russian agents used to reshape American politics was the anger, passion and misinformation that real Americans were broadcasting across social media platforms.”

The article names several Facebook pages that it baldly asserts, without proof, were owned and controlled by the unnamed Russian company, including United Muslims of America, Being Patriotic, Secured Borders, and Blacktivist.

The entire premise of the Times article is absurd. Pages associated with Russia, it is claimed, are reporting and sharing expressions of anger, sowing discontent and divisions. United Muslims of America, for example, “frequently posted content highlighting discrimination against Muslims.” This, somehow, is criminal activity. Those who originally produced the content or shared the posts are acting, at best, as Russian patsies, and, at worst, as co-conspirators. The Times cites one Trump supporter who shared a post from the Being Patriotic group, characterizing him as “not bothered…by becoming an unwitting cog in the Russian propaganda machine.”

The claims of Russian manipulation read like the ravings of individuals suffering from paranoid delusions. According to an earlier statement from Republican Senator James Lankford, a member of the Senate Intelligence Committee, Russian “trolls” are responsible for pushing the controversy over NFL players kneeling during the national anthem to protest police violence. Russian “troll farms,” he claimed, were working to “raise the noise level in America.”

Clint Watts, a former top FBI agent who has testified at Senate Intelligence Committee hearings on Russian intervention in the elections and has been frequently quoted in the media, replied to Lankford’s comments by declaring, “The Russians can just sit back and say: ‘Amplify on both sides. Make people angry.’ And it works, man, God, it works.”

Such claims reproduce the worst tactics used during the period of McCarthyite redbaiting. What used to be called “Commie dupes” are now “Russian dupes.” (Unconcerned by the fact that the Soviet Union was dissolved over a quarter century ago, GQ magazine recently posted an article that featured a graphic replacing the “G” in “Google” with a hammer and sickle). Dissent and opposition, according to this line, are to be interpreted not as the product of internal divisions and social tensions, but the nefarious workings of a foreign power.

The Times article includes lines that read like they came straight from the proclamations of Senator Joe McCarthy or the files of J. Edgar Hoover. “The Russians,” it states, “appear to have insinuated themselves across American social media platforms and used the same promotional tools that people employ to share cat videos, airline complaints, and personal rants.” The article speaks of the need to “purge social media networks of foreign influence.”

And what was supposedly involved in this major “covert propaganda campaign?” According to US Senate investigators, Russian companies spent a total of $100,000 on Facebook advertisements to promote messages like those cited by the Times.

Another article appearing in the Times on Tuesday (“Google Inquiry Connects Election Ads to Russians”) asserts that “accounts believed to be connected to the Russian government” purchased a grand total of $4,700 worth of ads, while “a separate $53,000 worth of ads with political material…were purchased from Russian internet addresses, building addresses or with Russian currency…”

This is an infinitesimal fraction of what is spent by political campaigns awash in money from corporate executives and American plutocrats. Some $2.65 billion was spent by the Clinton and Trump campaigns and organizations supporting them during the presidential race. Nearly $7 billion was spent on all US federal elections last year. Yet the Russian government’s supposedly massive campaign of subversion and propaganda amounts to a few tens or hundreds of thousands of dollars on Facebook, Twitter and Google!

The conclusions would be laughable if the consequence were not so serious.

The New York Times, in close coordination with the Democratic Party and the US intelligence agencies, is engaged in a campaign that is nothing less than criminal. It is engaged in a political conspiracy to outlaw dissent in the United States and justify state efforts to prohibit, blacklist and suppress speech, particularly on the Internet. If the Russian government is merely amplifying content produced by others—including videos depicting police violence and other crimes—then the logical conclusion is that this original content must be proscribed.

Any content or article, including from the Times itself, that examines social discontent in the United States is susceptible to being picked up by the Russians and promoted. Halting such “foreign intervention” requires a regime of censorship and self-censorship of and by all media outlets—precisely what exists in a dictatorship.

The basic target of the lying campaign over Russian manipulation of US public opinion is not Russia, but the American population. The state institutions and the two parties, Democratic and Republican, are deeply discredited and broadly hated. The working class does not need the Russian or Chinese governments to know that American society is massively unequal, that the political system is controlled by the rich, and that the police engage in brutal acts of violence on a daily basis.

Control of the Internet and the suppression of free speech online is a basic strategic issue for the American ruling class. The emergence of online communication and Internet platforms broke the control of the major media conglomerates over the distribution of information. Under conditions of growing popular opposition to social inequality and war, and deepening political crisis, establishing state control over the Internet is seen as a matter of the greatest urgency.

This is what Google has already begun to do. As the World Socialist Web Site has documented, changes to Google’s search algorithm in April, introduced under the pretext of combating “fake news” and promoting “authoritative content,” have resulted in a fall in referrals from Google to the WSWS by nearly 70 percent, and to 13 other left-wing sites by between 19 and 63 percent.

The actions of Google are only the beginning. Facebook, Twitter, YouTube and other platforms are preparing or have already begun to implement similar measures. The US Justice Department has demanded that staff at the American branch of Russian news agency RT register as foreign agents by October 17 or face possible arrest. This action will be used as a precedent for targeting left-wing and antiwar websites and organizations as agencies of a “foreign enemy” that must be shut down or censored.

It is necessary to organize the working class and youth against this neo-McCarthyite assault on free speech and the Internet, connecting the defense of democratic rights to opposition to social inequality, war, dictatorship and the capitalist system. Meetings must be organized throughout the country and internationally to expose what is taking place and mobilize opposition. The WSWS urges all its readers to sign the petition against Internet censorship and contact the Socialist Equality Party today.

Joseph Kishore

http://www.wsws.org/en/articles/2017/10/11/pers-o11.html

6 Ways We Can Begin to Rein in Facebook’s Immense Power Over Media and Our Society

How can we protect ourselves from Zuckerberg’s algorithms?

Photo Credit: Frederic Legrand – COMEO / Shutterstock.com

Mark Zuckerberg is really, really sorry.

Last year he dismissed as “crazy” the critics who said “fake news” delivered by Facebook might have given the election to Donald Trump. Last week he said he regretted it.

On Yom Kippur, the Jewish Day of Atonement, he apologized for what Facebook has wrought.

On Monday, a senior Facebook executive repented some more, reporting that $100,000 from Russian-sponsored troll farms bought 4.4 million page viewsbefore the 2016 election. “We understand more about how our service was abused and we will continue to investigate to learn all we can,” said vice president Elliot Schrage.

The Facebook leadership, like the U.S. government and the rest of us, is belatedly facing up to what Zuckerberg once denied: the social harms that can be inflicted by digital platform monopolies. The contrition and the voluntary remedies, notes Quartz, are “designed to head off looming regulations.”

What Is To Be Done

Facebook came to dominate social media with an ingenious interface that enables users to escape the Wild West of the open internet and join a sentimental community of family and friends, knitted together by likes, links, timelines, photos and videos.

Along the way, the company employed a scalable and amoral business model: use alogorithms of people’ personal data to mix messges of “promoted posts” with family messages and friendly momentos. Its an automated system that is profitable because it requires relatively little human intervention and can be used by anyone who wants to influence the behavior of Facebook users.

When the Russia government wanted to use the platform to confused and demoralize Democratic voters and promote favorite son Donald Trump, Facebook was ready, willing and able to monetize the opportunity. As sociologist Zeynep Tufekci has explained, “Facebook’s Ad Scandal Isn’t a ‘Fail,’ It’s a Feature.”

The question is, what can government and civil society do to protect the public interest from a $300 billion monopoly with 2 billion users? “Facebook is so gargantuan,” says Siva Vaidhyanathan, director of the Center for Media and Citizenship at the University of Virginia, “it’s exceeded our capability to manage it.”

One tool is traditional antitrust laws, created in the late 19th century and early 20th century to control railroads, the oil industry and electrical utilities. The reformers, in the Progressive era and the New Deal, passed legislation like the Sherman Anti-Trust Act and the Glass-Steagall Act to prevent and break up concentrations of economic power.

The problem is that since the 1970s, antitrust law has been interpreted through the lens of University of Chicago “free-market” economics. In this view, the test of a monopoly is the short-term harm it does to consumers; i.e., does it raise prices?

If a monopoly doesn’t raise prices, the Chicago School claims, it’s not doing any harm. As a result, most of the legal precedents in antitrust law, developed over the last 40 years, are ideologically hostile to the notion of a “public interest.”

To deal with 21st-century platform monopolies, antitrust law needs to be revitalized or reinvented. A host of new monopoly critics, including economist Barry Lynn, journalist Matt Stoller, law professors Jonathan Zittrain and Frank Pasquale, and elected officials such as Sen. Elizabeth Warren (D-Mass.), propose to do just that.

As Pasquale, a law professor at the University of Maryland, said, “We need to have institutions that guarantee algorithmic accountability.”

Six Remedies

1. FCC regulation

Jeff John Roberts of Fortune compares Facebook to the highly regulated TV broadcast networks, “at a time when Facebook has become the equivalent of a single TV channel showing a slew of violence and propaganda, the time may have come to treat Facebook as the broadcaster it is.”

In the immediate aftermath of the Las Vegas shooting, a Facebook search yielded a page created by a chronic hoaxer who calls himself an investigative journalist for Alex Jones’ Infowars. “To Facebook’s algorithms, it’s just a fast-growing group with an engaged community,” notes Alex Madrigal of the Atlantic.

Roberts:

“Just imagine if CBS inadvertently sold secret political ads to the Chinese or broadcast a gang rape—the FCC, which punished the network over a Super Bowl nipple incident, would come down like a ton of bricks.”

This would require rewriting the Federal Communications Act to include platform monopolies. Not impossible, but not likely, and probably not the right regulator regime to diminish Facebook’s monopoly power over information.

2. Mandatory FEC Disclosure

One solution is to use existing institutions to force full disclosure of buyers of political ads, a requirement Facebook successfully resisted in 2011.

Last week, Democrats in the House and Senate sent a letter to the Federal Election Commission urging it to “develop new guidance” on how to prevent illicit foreign spending in U.S. elections.” The letter was signed by all of the possible 2020 Democratic presidential aspirants in the Senate, including Warren, Sherrod Brown (Ohio), Cory Booker (N.J.), and Kamala Harris (Calif.).

Another Democratic proposal floated in Congress would require digital platforms with more than 1 million users to publicly log any “electioneering communications” purchased by anyone who spends more than $10,000 in political ads online. The FEC defines electioneering communications as ads “that refer to a federal candidate, are targeted to voters and appear within 30 days of a primary or 60 days of a general election.”

But such measures probably would not have prevented—or called attention to—the Russian intervention in 2016, because the Russian-sponsored ads usually played on social divisions without referencing a federal candidate, and buyers could have evaded the reporting requirement with smaller payments.

Such measures address the symptoms of Facebook’s dominance, not the causes.

3. Empower Users

Luigi Zingales and Guy Rolnik, professors at the University of Chicago Booth School of Business, have a market solution: empower Facebook users to take their friends and their “likes” elsewhere. They propose giving Facebook users something they do not now possess: “ownership of all the digital connections” that they create, or a “social graph.”

Right now Facebook owns your social graph, but that is not inevitable.

“If we owned our own social graph, we could sign into a Facebook competitor — call it MyBook — and, through that network, instantly reroute all our Facebook friends’ messages to MyBook, as we reroute a phone call.”

The idea is to foster the emergence of new social networks and diminish the power of Facebook’s monopoly.

Such a reform alone isn’t going to undermine Facebook. In conjunction with other measures to create competition, it could be helpful.

4. Make Data Ephemeral                        

Facebook’s data collection is a form of surveillance that endangers dissent, says internet entrepreneuer Maciej Ceglowski.

Last January, opponents of President Trump organized the Women’s March on Facebook, and several million people participated.

“The list of those who RSVP’d is now stored on Facebook servers and will be until the end of time, or until Facebook goes bankrupt, or gets hacked, or bought by a hedge fund, or some rogue sysadmin decides that list needs to be made public.”

To ensure privacy and protect dissent, Ceglowski says, “There should be a user-configurable time horizon after which messages and membership lists in these places evaporate.”

Again, this is a small but worthwhile step. If Facebook won’t implement it voluntarily, it could be compelled to do so.

5. Break up Facebook

But Ceglowski has a more audacious idea: break up Facebook into different companies for social interaction and news consumption.

The problem, he said in an April 2017 talk, is the algorithms Facebook deploys to maximize engagement and thus ad revenue.

“The algorithms have learned that users interested in politics respond more if they’re provoked more, so they provoke. Nobody programmed the behavior into the algorithm; it made a correct observation about human nature and acted on it.”

When a monopoly controls the algorithms of engagement, commercial power is converted into political power.

“Decisions like what is promoted to the top of a news feed can swing elections. Small changes in UI can drive big changes in user behavior. There are no democratic checks or controls on this power, and the people who exercise it are trying to pretend it doesn’t exist.”

So government has to step in, he says.

“Just like banks have a regulatory ‘Chinese wall’ between investment and brokerage, and newspapers have a wall between news and editorial, there must be a separation between social network features and news delivery.”

Just as the government broke up the Standard Oil monopoly in the early 20th century and the Bell telephone monopoly in the 1970s and 1980s, splitting up a monopoly firm to reduce its power is a time-tested remedy.

6. Think Big

Most important is political imagination. The ascendancy of free-market thinking since the heyday of Ronald Reagan and Margaret Thatcher has transformed citizens into consumers and failed civil society in the process. The rise of income inequality is one result. The emergence of unaccountable platform monopolies is another.

Facebook, the website, is the creation of Zuckerberg and clever programmers. But their enormous power is the result of a selfish and short-sighted ideology that privatizes public space at the expense of most people.

With the Democrats incorporating anti-monopoly ideas into their “Better Deal” platform and right-wing nationalists such as Steve Bannon talking about regulating internet giants “like utilities,” the free-market ideology has lost credibility and there is a growing demand for action. As the Roosevelt Institute puts it, “Let’s Reimagine the Rules.”

The urgency of reining in Facebook is that if the public does not control its surveillance and engagement technologies, those techniques will be used to secretly manipulate, if not control, the public sphere, as they were in the 2016 election.

“Either we work with government to regulate algorithmic systems,” says Pasquale of the University of Maryland, “or we will see partnerships with governments and those running algorithmic systems to regulate and control us.”

Controlling Facebook, in other words, is a matter of self-protection.

Trump to Puerto Rico: Your lives don’t matter

 (AP Photo/Evan Vucci)

30 September 2017

Almost two weeks after Hurricane Maria hit Puerto Rico, all basic forms of social infrastructure in the US territory have completely collapsed.

Addressing the press yesterday, San Juan Mayor Carmen Yulín Cruz said that she watched in horror as Department of Homeland Security (DHS) Acting Secretary Elaine Duke called the government’s response to the hurricane a “good news story.” Duke added that she was “very satisfied” with the government response and praised the “limited number of deaths.”

To the contrary, Cruz warned, “something close to a genocide” is unfolding in Puerto Rico due to the government’s failed response. She “begged” Trump to fix the botched relief effort, adding, “We are dying here.”

That such a state of affairs could exist in a territory of the world’s wealthiest country is another unanswerable indictment of American capitalism, which has proven itself again and again incapable of addressing the most basic social needs of the population.

The financial aristocracy has responded with total indifference to the immediate needs of millions of desperate, impoverished people fighting for their lives on the island territory. Its primary concern is not saving lives in Puerto Rico but passing tax cuts in Washington. To the extent that Puerto Rico registers on its political radar, it is for the purpose of using the disaster to secure debt payments for the island’s Wall Street creditors and advance its austerity regime both in Puerto Rico and on the US mainland.

President Trump called the response “amazing” on Thursday and added on Friday, “It’s been incredible the results we’ve had with respect to loss of life. People can’t believe how successful that has been, relatively speaking.”

The contrast between these callous statements and the terrible reality exposes the oligarchic character of American social life. Aloof from and unconcerned with the needs of the masses of people, the ruling elite evinces a total disdain for human life.

Details of the disaster zone are beginning to emerge more clearly. One hundred percent of the power grid is inoperable and will not be fixed for six months. Ninety percent of homes are damaged. Forty-four percent of the population of 3.5 million is without drinking water.

Most of the island has no cell phone reception. Hospitals are running out of medications, diesel for generators and clean water. Food reserves are running low. Pumps for toilets and bathing have failed. Eighty percent of crops were destroyed.

The sewage system is broken and floodwaters have spread human and chemical waste across the island. Instances of waterborne diseases are growing and the mosquito population is exploding. Officials and relatives have not been able to make contact with many impoverished villages inland. ATMs and credit cards do not work, making it practically impossible to buy food without cash.

The relief effort has been a grotesque display of indifference and incompetence. A government capable of moving trillions of dollars worth of manpower and equipment across the world to wage war has proven unwilling and unable to mobilize emergency aid to an island less than three hours from New York City by plane. The American ruling class is far better at killing than at saving lives.

The government blocked the delivery of tons of foreign shipments of food and medical aid on the basis of the Jones Act, which restricts foreign ships from transporting goods between US ports. Only on Thursday—a week and a half after the storm hit—did the Trump administration waive the Jones Act restrictions for Puerto Rico, and even then only for a brief ten-day window.

Up to 10,000 shipping crates full of food, fuel, water and medical aid have sat for days in Puerto Rico’s ports. The Department of Homeland Security, the agency responsible for dispersing the goods through the Federal Emergency Management Agency (FEMA), had no plan to disburse these items.

Many roads, long neglected by cuts to infrastructure spending on the island, are impassible. The wind wiped out aboveground phone lines and cell towers and destroyed Puerto Rico’s power plants, which are a median 44 years old. Trucks cannot deliver fuel to power generators because they do not have enough fuel to make the drive.

Local officials in rural towns complain that the government is not delivering necessary relief even where the roads are intact. Roberto Ramirez Kurtz, Mayor of Cabo Rojo, told National Public Radio, “The Roads are open. I’ve been able to come here. So why haven’t we used this to [transport goods]?”

As a result, the death toll continues to rise. Though the official total is between 15 and 19, the Center for Investigative Journalism (CPI) wrote that this drastically underreports the number of fatalities. It puts the figure in the hundreds or higher. Sources told the CPI that “bodies are piling up” at morgues and hospitals across the island.

Again and again, storms and natural disasters lay bare the irreconcilable antagonism between the social needs of the population and the money-grubbing parasitism of the rich. While trillions are made available for war, surveillance, police militarization and corporate giveaways, the ruling class claims there is “no money” to protect the poor and working class from being killed en masse by wind and rain.

Never letting an opportunity go to waste, Trump shrugged off the growing death toll and threatened to withhold emergency funding as a bargaining chip to demand that Puerto Rico pay a higher proportion of its debts to Wall Street creditors in ongoing bankruptcy proceedings.

In a speech Friday before a room of corporate CEOs salivating over his proposed tax cuts, Trump said: “Ultimately, the Puerto Rican government will have to work with us to determine how this massive rebuilding effort [that] will end up being one of the biggest ever will be funded and organized. And what we will do with the tremendous amount of existing debt already on the island.”

Trump expresses in a more explicitly thuggish form what the financial aristocracy is thinking. While the Democrats raise token opposition to Trump’s handling of relief efforts on the grounds that the administration is moving “too slowly,” it is not just one presidential administration that is to blame, but the entire for-profit capitalist system.

Though the military is ostensibly being mobilized to help with the relief effort, the real purpose is to intimidate or crush social opposition fueled both by the storm and the austerity plan imposed by Wall Street in the island’s bankruptcy proceeding. This has been the US military’s basic role for 119 years as an occupation force on the Island.

The destruction of Puerto Rico raises the need for the immediate expenditure of billions of dollars to save the lives of those at risk of death and disease, and hundreds of billions more to provide resources such as food, water, fuel and medical supplies and rebuild and modernize the social infrastructure. All those who have lost their homes or jobs must be fully compensated and made whole.

This cannot be accomplished under capitalism. It requires confiscating the wealth of the financial aristocracy, nationalizing the banks and corporations to place them under public ownership and democratic control, and reorganizing the US and world economy not for profit, but to meet the needs of the human race.

Eric London

WSWS