Data Justice Blog

The Folly of IRS Privatization

Washington politicians love handing out public money to big corporate contractors, especially the ones giving fat donations to their reelection committees.  Replacing civil service employees with private employees working for those campaign contributors is an easy way to reward donor friends.  And it promotes the fiction that private firms do the job better than government workers—even though studies repeatedly have shown that privatization consistently leads to higher costs for taxpayers.

Unfortunately, this mania for privatization has reached the Internal Revenue Service and taxpayers should be worried that tax investigations might become a political prize handed out to campaign donors.  The occasional fraud and shoddy work we see with many government contractors is one thing; but the abuses that profit-oriented companies engage in controlling tax investigations instills a whole different level of fear.

Privatization Proposals Highlight Dangers of Crony Contracting

Two proposals this year highlight this danger of the IRS becoming a focus for campaign donor spoils.

First, tucked into the proposed Senate highway bill this year was a provision to allow private firms to collect tax debts owed to the IRS, a program that failed miserably in pilot projects in the past. The Republican Senate majority pushed this privatization program, but they were joined by Sen. Chuck Schumer of New York, who frankly admitted his support for the provision was strengthened by the fact that two of the four companies likely to get a chance to bid on the debt collection contracts were based in New York.   This would generate jobs for his constituents and no doubt donations to his reelection campaign.

In a more unprecedented and potentially illegal move, the Obama administration in May of this year gave a $2.2 million contract to the legal firm Quinn Emanuel to assist directly in investigations of a corporate target of the IRS.  Unlike the debt collection program, which involves the more mundane – if often unsavory – task of collecting debts where the IRS has already determined taxpayer liability, Quinn Emanuel will be involved in what many argue is the more core governmental function of determining whether a firm being audited followed the law, including taking testimony from witnesses.   When the administration was criticized for this move, they hastily issued new regulations to allow the IRS to make such contracts, but the new regulations are being challenged in court.

Critics have noted not just the expense of substituting high-paid private lawyers for IRS staff attorneys, but that Quinn Emanuel is not even known in legal circles for tax expertise. What they are notable for, however, are being heavy donors to the Obama reelection campaign.  As data  from the Center for Responsive Politics details, Quinn Emanuel employees donated over $300,000 to the Obama campaign and the Democratic national Committee in the 2012 campaign, over half of the total political contributions by the firm employees in that cycle.

How Big Data Slashed Raises for Most Employees

The guaranteed annual raise is increasingly a thing of the past—one reason wages have stagnated overall in recent decades.  For the decades before 2000, salaries went up about 4.1 percent a year, according to data by Aon Hewitt.  But in the last four years, even as companies have recovered from the financial crisis, annual raises have averaged only about 2.8 percent. 

Instead of permanent raises, the best many employees can hope for are bonuses and other cash awards that are increasingly replacing permanent increases in employees’ base pay.   And the kicker is that companies are increasingly using “big data” analysis to dole those bonuses out selectively only to the employees most likely to leave the firm, while slashing additional compensation to the rest of their workforce.

A whole host of companies now scour employee’s personal data, social media and every other source of information on individuals to create comprehensive profiles of each worker.  “[Data] has helped us determine, with ever-greater accuracy, an employee’s probability of quitting,” related Will Wold, Credit Suisse’ Global Head of Talent Acquisition & Development, in an interview. Or as Google’s President of People Operations told the Harvard Business Review, big data lets them “get inside people’s heads even before they know they might leave.”

Knowing what employees are likely to leave is critical in helping companies deploy efforts to retain them, but knowing which employees are NOT likely to leave is just as important, since it lets companies save money by slashing the annual salary bumps for that latter group.   If employees are too timid or too in debt to risk a job switch, companies can use that information to reduce or even eliminate annual raises for them.

McKinsey and Company lays out the logic in a report, Retaining Employees in a Times of Change, where they advocate that companies not waste pay increases and bonuses on employees “who would have stayed put anyway.”  They detail how different companies use data analysis to identify the employees at risk of leaving the company in order to offer them a “mix of financial and nonfinancial incentives tailored to their aspirations and concerns.”   In McKinsey’s analysis, such incentives need only be offered to 5 to 10 percent of the workforce; the rest can either be allowed to leave or those employees are unlikely to depart even if offered no raise. 

Delivery: The New Front in Corporate Surveillance and Monopoly Power

That friendly delivery guy at the door?  He’s the new face of corporate surveillance as tech titans launch a new war to control data on what and how you buy things.

Will Uber and Driverless Cars Help Kill the Planet?

The fight over Uber can be reduced by the media in a place like New York City as a fight between hide-bound yellow cabs and high-tech Uber “innovators”—but that’s a frame that ignores the more than 95% of the population that don’t use any kind of cab at all.  And when you take a step back, the fight over Uber and its future likely use of driverless cars as enormous implications for whether our nation and the world can stop climate change from killing the planet.

When a deal was announced Wednesday for Uber to continue growing, but sharing its data with the city for a study on its effects on transit in the City, a key part of the deal was that not only would the City be studying how Uber impacts the traffic patterns, jobs and the effects on disabled drivers, it would be looking at how Uber will share revenue to strengthen mass transit for the rest of the City’s population.

Whither the Green Metropolis?

And the impact of Uber and ultimately driverless cars on mass transit is exactly what any study of Uber should be focusing on, both for the needs of the mass of consumers who depend on it and for how more cars on the roads in New York City could undermine the fight against climate change.

A core reality is that most New Yorkers do more to fight climate change just by living here than most of the crunchiest Green-oriented consumers living in the suburbs largely because they don’t drive cars.  This isn’t a small difference.  Studies show that New York City residents use only one-third of the energy per capita of the average American consumer.  To put it another way, every million people living in NYC is equivalent to shutting down 15 coal-powered power plants.

So the long-term question is how Uber and driverless car will impact mass transit and energy use in the mass transit system that now makes New York City the “green metropolis” of the nation?

Uber: When Big Data Threatens Local Democracy

Big data is threatening to crush local democracy across the country—and if it succeeds, it may distort local transit and infrastructure development for decades to come.

As Uber has sought to dominate the local taxi industry from Delhi to New York City, the company has deployed its multi-billion dollar venture capital war chest to fight politicians across the country and world, often ignoring local laws as it introduced its app and drivers into the heavily regulated taxi industry.  In New York City, a bill has been introduced to limit the growth of the company locally while the City Council studies the implications for the local taxi industry.

Yesterday, Uber added an attack ad against the City’s mayor Bill De Blasio on the front page of its hailing app, melding its attempt to control local taxi service with seeking control of local politics.  In doing so, it highlights the danger of letting multi-billion dollar global corporations control any part of local transit or other infrastructure, since it gives them a stake in distorting local politics as well.

Uber may be a young company but they have entered old-style politics with a vengeance, hiring David Plouffe, the former strategist for President Obama’s 2008 election campaign to help direct a team of 250 lobbyists operating in at least 50 cities and states around the country.  On top of vast financial resources for traditional lobbying, they control an equally important resource – data and communication with voters throughout local constituencies.  In local political fights, Uber has used email and its app real estate to launch multiple attacks on political opponents. 

An Opening Salvo in the Politics of Local Logistics

The fight over Uber is not about who runs local taxis, but really about who will control local transit and related infrastructure in the future.  Uber has made it clear its ambitions go far beyond taxis to encompass what Inc. magazine calls “the future of logistics.” 

The data Uber collects on users and local transportation can be converted into delivery services or, as writer Ken Roose explains, “like Amazon, it can become something akin to an all-purpose utility--it'll just be a way you get things and go places.” Uber has already launched a prototype “Uber Cargo” delivery business in Hong Kong and food delivery and courier services in other cities.

This ties into plans by companies like Google and Tesla to introduce driverless cars and a rush of tech companies to control the logistics and information related to local economies and commerce.   Driverless taxis are the obvious long-term next step for a company like Uber and could reshape urban transportation as fundamentally as the original introduction of the automobile.

The Battle Over Your Car's Data

For many users, linking their iPhone to their car is a great way to listen to their music handsfree.  Apple's Carplay and Google's Android Auto are systems provided to the car companies to deliver in-car services to drivers -- but the battle brewing is who will harvest the driver data and profits from that.

The $heriff tool: detect price discrimination while you shop

Today I want to tell you about $heriff, an awesome new tool I learned about recently. It’s currently an add-on to the Firefox and IE browsers, but it will be compatible with Chrome soon. I mention this because I think you will want to use it, partly for the good of scientific discovery, but partly for your own good.

Because here’s what $heriff does for you. It allows you to see how prices for goods you’re interested in buying would change depending on where the request is coming from. And sometimes the answer is “a lot,” even on Staples.com or Amazon.com.

I talked to one of the creators, Nikolaos Laoutaris, who works as a computer science researcher in Barcelona. Nikos described how he came across the idea of creating $heriff. Namely, he and a friend were discussing their upcoming vacation to a town in Austria, and they were both looking into booking the same type of room at the same hotel (at the same time, since they were doing it over Skype) and they were seeing very different prices.

The way it actually works is that there’s a way to “check” prices when you come across one, and the results pop up in a separate window. Here’s a screenshot of what happened with Nikos showed me $heriff checking on the price of a fancy camera at digitalrev.com:

Screen Shot 2015-07-09 at 12.35.46 PM

The list corresponds to what price showed up when a bunch of servers at academic institutions were asked to send a price request that $heriff extracted from the local webpage. To be clear, your personal request for price, coming from your browser, might depend on location as well as your cookies and referral url, among other things, but these other prices correspond to “clean browsers,” with no browsing history, and no login history, making a request from a specific location. So those price variants correspond to location changes only.

Is the Happiness Industry Creating Algorithmic Selves?

In a recent podcast called “Thinking Allowed,” host Laurie Taylor covered two fascinating books: The Wellness Syndrome, and The Happiness Industry. One author discussed a hedge fund that’s now managing what it calls “biorisk” by correlating traders’ eating, drinking, and sleeping habits, and their earnings for the firm. Will Davies, author of The Happiness Industry, discussed less intrusive, but more pervasive, efforts to assure that workers are fitter, happier, and therefore more productive. As he argues in the book,

[M]ood-tracking technologies, sentiment analysis algorithms and stress-busting meditation techniques are put to work in the service of certain political and economic interests. They are not simply gifted to us for our own Aristotelian flourishing. Positive psychology, which repeats the mantra that happiness is a personal ‘choice’, is as a result largely unable to provide the exit from consumerism and egocentricity that its gurus sense many people are seeking.

But this is only one element in the critique to be developed here. One of the ways in which happiness science operates ideologically is to present itself as radically new, ushering in a fresh start, through which the pains, politics and contradictions of the past can be overcome. In the early twenty-first century, the vehicle for this promise is the brain. ‘In the past, we had no clue about what made people happy – but now we know’, is how the offer is made. A hard science of subjective affect is available to us, which we would be crazy not to put to work via management, medicine, self-help, marketing and behaviour change policies.

The happiness industry thrives in a culture premised on an algorithmic model of the self. People (or “econs“) are seen a bundle of inputs (data collection), algorithmic processes (data analysis), and outputs (data use). Since the demands of affect can only be extirpated in robots, the challenge for the happiness industry is to optimize some quantum of satisfaction for its human subjects, compatible with their maximum productivity. Objectively, the algorithmic self is no more (nor less) than the goods and services it uses and creates; subjectively, it strives to convert inputs of resources into outputs of joy, contentment–name your positive affect. As “human resources,” it is simply raw material to be deployed to its most profitable use.

Germany vs. the U.S. on Digital Antitrust

When it surfaced a couple of months ago that the U.S. Federal Trade Commission had suppressed recommendations that the FTC pursue Google for antitrust violations, what was remarkable was how bipartisan the decision had been by the Commissioners to give a free pass to digital corporate concentration.  

Partly, this is due to what economist Robert Reich has noted is a general American abandonment of antitrust as a policy tool (see his Whatever Happened to Antitrust?).  Partly this is due to the particular political influence of Silicon Valley and Google on the Obama Administration (see my own FTC Dropped Google Antitrust Action Staff Wanted - But Why Should That be Surprising?).

But what is striking is how completely at odds the debate is in the U.S. versus Europe, where there is an active ongoing antitrust investigation into Google and more likely to be opened.  This focus on antitrust in Europe is not confined to just some of the EU countries but is in fact spearheaded by Germany, led by the conservative party headed by Angela Merkel who on other economic matters is the bête noire of progressives on the Continent.

Yet in the last year we had the German government helping to push forward the EU investigation into Google, with its Vice Chancellor and Economic Minister Sigmar Gabriel referring to big data platforms as engaged in “brutal information capitalism” and arguing that the company should be broken up if it has abused its dominant market positions. Earlier this month, Gabriel voiced worries that Google’s expansion of its Android operating system is undermining competition on the Internet.

The media in Germany has been filled with debates on what to do about economic concentration in digital markets, not just on whether to take action but getting down to specifics on what should be done.   The quite establishment German newspaper Frankfurter Rundschau recently outlined a number of options short of breakup for reining in Google’s market power.  As the paper argues (translation courtesy of Google):

A whole number of proposals under discussion. These include restrictions on the display of search results - Group-owned service about when shopping online should no longer be shown preference. It could also be a matter that the part forcibly using Google Mail for Android smartphones is prohibited. In addition, competition experts have campaigned hard to introduce permanent government supervision, as is customary with the major telecommunications companies in Europe.

The appointment of a permanent government commission to regulate search engines would be a quite important step in placing the importance of ongoing monitoring and regulation of the digital economy on par with other industries subject to regulatory oversight.

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