Will the many “General Data Protection Regulation” profiteers help or stand in the way of a better future for our grandchildren?

Sir, Richard Waters writes that “Europe’s new online privacy regime is a gravy train for lawyers and consultants, and it has kept IT departments and compliance officers working late for months [and] it is likely to take an onslaught…from privacy activists” “Brussels forces online reckoning by setting high bar on privacy” May 25.

That raises a question: Will that mean a better future for my grandchildren, or will it just extract value from what has been developed, making what’s to be developed more distant and expensive?

Waters also writes: “One Silicon Valley figure argues: if users were able to capitalise the future value of personal data like this that they will throw off over a lifetime, it would turn out to be one of their most valuable assets”. I have argued a similat the thing with letters sent to FT… but I have also indicated the possibility that all the web and social media added monetary value, could be used to fund a Universal Basic Income, a sort of Human Heritage Dividend.

Personally, scared of some “Big Brother Is Watching You” joint ventures between data gatherers and goverments coming into fruition, I prefer allowing development to run its full course to see where it takes us. 

Sir, I just do not feel sure enough about taking development limiting decisions on behalf of my grandchildren. Do you? 

https://teawithft.blogspot.se/2015/09/ad-blockers-do-not-allow-any.html

PS. If social media is to be fined, then have all the fines help to fund Universal Basic Income schemes. What we absolutely do not need, is to have social media (ambulance) chasers, redistribution profiteers, like a European Commission, or similar, capturing these.

@PerKurowski

Parc / Darpa, please ask the intelligent machines to explain to us, in simple terms, how human bank regulators think

Sir, Richard Waters writes about the difficulties to ascertain exactly how artificial intelligence, when sifting through immense amounts of data, reaches it conclusions. “Valley researchers press AI systems to explain their thinking in simple terms” July 9. 

Of course, if you are to follow the recommendations of someone, it is usually a very good thing to know how he (it) thinks.

But that is also relevant to humans. For instance I would love to understand why, if there has never even been a major bank crisis that has resulted from excessive exposures to something perceived as risky when placed on banks’ balance sheets, regulators came up with their risk weighted capital requirements for banks… more perceived risk more capital, less perceived risk less capital.

That causes banks to build up large exposures against little capital to what is perceived decreed or concocted as safe, like AAA rated securities and sovereigns like Greece; and to stay away almost entirely from “the risky”, like SMEs and entrepreneurs. 

I suspect it was because first they never gathered empirical data about previous banks crisis that made a relevant distinction between the ex-ante and the ex-post perceptions of risk.

And then because they might have only cared about avoiding the crisis and not one iota about how banks perform the allocation of bank credit between the crisis.

I have asked regulators over and over again about this but have not yet been able to extract even a crooked answer, much less a straight one… they just keep mum on it.

Perhaps Darpa could do us the favor to ask their intelligent machines, to explain to us, or at least to me, in simple terms, how human bank regulators think.

For instance why did they with their Basel II allow banks to leverage their capital over 62 times if AAA ratings were present, and only about 8 times with what was below BB- rated? Should they not have known that bankers love what’s “safe” and do not want to touch even with a ten feet pole something as risky as a below BB-?

@PerKurowski

PS. What's more dangerous ex-post, cars or motorcycles 

The Basel Committee for Banking Supervision was sold a regulatory algorithm that used the wrong data.

Sir, Richard Waters writes: “a new layer of technology is being added to turn [big data] into the learning that makes applications more intelligent. It represents an emerging tech infrastructure that makes AI (artificial intelligence) not just a new application but a new approach to computing.” “Crowdsourced algorithms promise to be next big thing” March 24.

I register again, for the umpteenth time, the following comment:

Bank regulators, when they defined their risk weighted capital requirements for banks, which so much influences the allocation of bank credit to the real economy, looked at the risk of the assets, and not at the risk those assets posed to the bank system.

As a result they came up with that loony theory that what is perceived as very safe, is safer for the banking system that what is perceived as risky. That’s why they assigned only a 20% risk weight to what can be so dangerous as what is rated AAA to AA, and 150% to the so totally innocuous below BB-rated.

That caused a crisis because of excessive exposures to what was rated AAA; and low growth because of lack of exposures to what is perceived as risky, like to the 100% risk weighted SMEs and entreprenuers.

Sir, that is why all algorithms being developed should be required to carry a warning signed saying “Applying this to the wrong data, can be truly disastrous”

@PerKurowski

No Bill Gates! Taxes on robots should help fund a Universal Basic Income, not enrich the redistribution profiteers

I refer to Richard Waters’ “Robot rates: Bill Gates argues for income tax on machines to level playing field with humans” February 19.

On January 15th I sent a comment to you on an article by Richard Waters in which I stated: “impose some payroll and minimum wage taxes on robots, in order for the humans to compete on a more level playing field.”

Sir, it is clear that, notwithstanding your motto, you much favour “the world’s richest man” over one of your faithful reader who has repeatedly written to you on the subject at hand.

But, after reading the interview of Gates on Quartz website, it is clear that there is one big difference between his desires and mine. I want for those tax revenues to be distributed to all by means of a Universal Basic Income, while Bill Gates wants to conserve or augment the value of the franchise belonging to the redistribution profiteers.

PS. Who is to retrain those retrainers that are losing their jobs to robots?

@PerKurowski

Higher import tariffs and minimum wages are superb news… for robot manufacturers

Sir, Richard Waters writes: “Pace of automation will depend on how easily workers are displaced” January 13.

And that partly depends on how much robot, driverless cars and similar automation options, will lobby the governments for higher import tariffs and higher minimum wages.

Or on if we will impose some payroll and minimum wage taxes on these, in order for the humans to compete on a more level playing field.

PS. http://teawithft.blogspot.com/2016/10/let-robots-make-us-offer-we-cant-refuse.html

@PerKurowski

IBM, Watson could have a role in regulations that accept the need of the real economy for banks to take credit risks

Sir, I refer to Richard Waters report on the difficulties IBM faces in expanding the application of its Jeopardy champion Watson, “FT Big Read: Artificial Intelligence: Can Watson save IBM” January 6.

In it quotes Lynda Chin mentioning the challenge that “On Jeopardy! there’s a right answer to the question, but, in the medical world, [in the real world] there are often just well-informed opinions… [So how to know] how much trust to put in the answers the system produces. Its probabilistic approach makes it very human-like… [Watson] Having been trained by experts, it tends to make the kind of judgments that a human would, with the biases that implies.”

Indeed how much trust is just another way of stating how much risk is one willing to take.

For instance if one wants driverless cars to provide absolutely security, then traffic will probably become very slow, or even come to a standstill. And one of the difficulties these cars will encounter will be based on defining the acceptable amount of risk taking.

Likewise, if one wants our banks to be absolutely secure, then one would be better off with hiding money under mattresses in bank vaults… but the real economy would be languishing because of the lack of credit.

So there might be a big role for Watson in bank regulations. First of all it could help me convince the Basel Committee of that their credit risk weighted capital requirements are based on a very faulty human bias against risk; something which at the end of the day only endangers banks, since it causes excessive exposures to what is perceived as safe, precisely that which has caused all major bank crisis.

And, if fed with continuous information on bank credit and the state of the real economy, Watson could also be used to automatically send out countercyclical adjustments. Too much growth in credit… increase capital requirements somewhat… too little growth in credit reduce capital requirements somewhat. The most important thing needed for that would be to make Watson immune to lobbying pressures of all sorts.

What I would not allow Watson to do though is to display that kind of human arrogance of thinking itself capable of setting different capital requirements for different assets, so as to distort the allocation of bank credit as it thinks fit to distort.

To do that, I would still want a human to be behind that kind of risk taking… of course a human who understand what he is doing and is willing to be held very much accountable, if taking the next generations down the wrong path.

@PerKurowski ©

Ad-blockers, do not allow any unsolicited ads on my mobile… unless of course I get paid good money for looking at it.

Sir, Richard Waters writes: “Slow loading times for mobile web pages — when users are paying for data… cost more than just time” and yet, while discussing the issue of ad blocking he refers to all major actors, except the users. “Who gets to block ads is flip side of who gets to decide which get through” September 10.

It is we the users who end up bearing the brunt of the costs, when having our limited and valuable attention span filled up with noises of all types. And so therefore let me repeat a request for ad-blocking services that would better serve my purpose.

I want an ad-blocking that charges anyone trying to send me an unrequested solicitation of any sort, or more than one per moth of the requested, to charge the advertiser an adjustable fee for me to look at it. Let us say initially US$1 per 30 second’s view. And on that income I would be willing to pay the ad-blocker for his services an adjustable commission, let us say initially 20%.

An alternative in which I could perhaps bypass the ad-blocker is signing up an agreement, for instance with Facebook, Twitter, Google and Apple by which they share their revenues obtained from targeting me and my preferences, for instance, initially 50 percent.

Users unite! Let us maximize the returns for us of our valuable and very limited attention span. 

http://teawithft.blogspot.com/2015/07/my-ideal-adblocker-besides-earning-on.html

http://teawithft.blogspot.com/2015/03/i-want-net-40-percent-of-revenues.html

http://perkurowski.blogspot.com/2015/06/for-1us-i-will-look-for-30-seconds-with.html

http://perkurowski.blogspot.com/2014/06/should-not-google-and-other-public-eyes.html
http://teawithft.blogspot.ca/2007/06/in-search-of-answers-on-search-engines.html

@PerKurowski

The Basel Committee for Banking Supervision needs artificial intelligence, the human one does seemingly not suffice.

Sir, it was with much interest, and hope, that I read Richard Waters’ report “Investor rush to artificial intelligence is the real deal” January 5. We sure need it, urgently, at least in the Basel Committee for Banking Supervision.

First any reasonably good AI would most certainly not give in to emotions or sole intuitions as the Basel Committee did when for their risk-weighted capital requirements they decided that “risky” was risky and “safe” was safe. AI would see that in fact it is what is perceived as “safe” by bankers that which creates the biggest exposures and as a consequence the biggest dangers, if the ex ante perception turned out ex post to be wrong.

And AI would also be able to impose portfolio variant capital requirements instead of settling for Basel Committee’s “portfolio invariant” because as they admit when in “An Explanatory Note on the Basel II IRB (internal ratings-based) Risk Weight Functions” they explain: “Taking into account the actual portfolio composition when determining capital for each loan - as is done in more advanced credit portfolio models - would have been a too complex task for most banks and supervisors alike.”

And AI would also of course have asked about the purpose of the banks before regulating the banks… and therefore we would probably have saved us from the credit risk weightings that so distort the allocation of bank credit to the real economy.

That said we have to be careful though so that AI does not Frankenstein on us and imposes its own preferences (ideologies); like what the Basel Committee did when they decided that their bosses, the governments of the sovereigns, were infallible… and therefore banks did not need to hold any capital (equity) when lending to these.

PS. Perhaps we can have a competition between different AIs to see who comes up with the best proposal for how to regulate banks.

By taxing more the profits derived from patents you might, on the margin, reduce conflicts between true inventors and trolls.

Sir, Richard Waters discusses that delicate issue about a too rigid or too lax patent allocation system and so rightly states “The trouble is, one person’s abusive troll is another’s deserving inventor”, “Tech industry opens a Pandora’s box of patent strife”, April 4.

One way to diminish the conflict might be to reduce, on the margin, the worth of patents and other intellectual protection.

Since some years I have for instance argued that it does not really fair that profits obtained by competing naked in the market, without any safety net, should be taxed at the same rate as profits derived from an activity that has the protection of a patent… especially when the government is expected to spend tax revenues in its protection.