Archive for September 10th, 2019

When people worried over surveillance powers of e-money way back in 1975..

September 10, 2019

Came across this interesting publication : Computers and People written way back in 1975 (HT: JP Koning blog).  In the publication, several people have written on computers and applications in 1975.

Paul Armer, Center for Advanced Study in the Behavioral Sciences at Stanford Univ writes on Computer Technology and Surveillance.

His take on Electronic Fund transfer (ETFs) is quite interesting and should be read by one and all. ETFs were just beginning to take shape back then.

Let me now turn to a new topic. Several times I have” referred to situations where the technology under discussion was developed for reasons other
than surveillance, but it happens that it is useful for surveillance purposes. As a prime example of this I want to talk about electronic funds transfer
systems. I can’t give you a detailed definition of an electronic funds transfer system (usually referred to as EFTS) because the system hasn’t been built.
Its final form will be an outcome of intensive com- petition, and also of government regulation. But the general form is reasonably clear. Terminals
will exist in stores, hotels, restaurants, etc. (where they are referred to as point-of-sale terminals), and in financial institutions, including un- attended terminals miles from the nearest office of the institution. In short, terminals will be at any location apt to have a large number of non-trivial financial transactions.

To give you an idea of how powerful a surveillance system an EFTS would be, consider the following. In 1971 a group of experts in computers, communication,
and surveillance was assembled and given the following task: Suppose you are advisors to the head of the KGB, the Soviet Secret Police. Further, suppose
that you are given the assignment of designing a system for the surveillance of all citizens and visitors within the boundaries of the USSR. Further,
the system is not to be too obtrusive or obvious.

Not only would it handle all the financial accounting and provide· the statistics crucial to a centrally planned economy; it was the best surveillance system we could imagine within the constraint that it not be obtrusive. That exercise was almost four years ago, and it was only a two-day effort. I am sure we could add some bells and whistles to increase its effectiveness somewhat.

But the fact remains that this group decided that if you wanted to build an unobtrusive system for surveillance, you couldn’t do much better than an EFTS.

Naturally, the EFTS proponents believe that laws could be written to prevent abuse of the system. I am less sanguine. I’m not concerned about the
bankers invading my privacy or using the system for surveillance purposes; but I am afraid that EFTS system operators may be unable to resist pressures
from government to let the EFTS be used for surveillance. There are in existence today computer systems which could be used in exactly this way, although
the number of financial transactions involved is comparatively small. What I haVe in mind here are the credit authorization systems of National BankAmericard, Master Charge, American Express, and various check authorization systems. All can have individual accounts flagged. If an individual tries to make a purchase, or tries to cash a check, the system is interrogated. If the account has a special flag the police (or whoever) can be notified where that individual is at that very instant.

Check authorization systems are especially subject to such abuse because they depend on the police for information about bad check passers and for information on forgers for their computer data bases. I have no doubt that such systems have already been so abused. 

He quotes Orwell’s 1984:

Why should we be so concerned about surveillance? I don’t think I can put it any better than Henry Goldberg did in a recent ” 1984 is really a state of mind. If
you are always tied to the consequences of your past activity, you will probably adopt a ‘don’t stick your neck out’ attitude. This would create a pressure towards conformity, which would, in turn, lead to a society in which creativity would be an early victim and the democratic ideal of a citizenry with
control over its own destiny would not flourish for long.

In a recent speech Professor Philip B. Kurland pointed out that we will not celebrate the 200th anniversary of the U.S. Constitution until 1987,
and that before we can do so, we must successfully get past 1984. He further said that if he were in charge of some Bicentennial celebration, he would
require all participants to read Orwell’s “1984” to show what the new nation was created to avoid. I would extend the advice to those concerned about
electronic funds transfer systems. And to “1984” I would add the recently published “The War Against the Jews – 1933 to 1945″ and Tom Houston’s memo on domestic intelligence, which was issued to all American intelligence agencies in President Nixon’s name on July 23, 1970. The book “1984” shows what might happen; the latter two documents detail actual events.

It is amazing how people foresaw all these things when these ideas were just coming up. Yet, very little attention is paid to issues of privacy and surveillance when it comes to digital payments….


British stock markets from 1829-1929

September 10, 2019

Interesting piece by Gareth Campbell, Richard Grossman and John Turner:

Although long-run stock market data are an important indicator, obtaining them is challenging. This column constructs new long-run broad-based indices of equities traded on British securities markets for the period 1829-1929 and combines them with a more recent index to examine the timing of British business cycles and compare returns on home and foreign UK investment. One finding is that the capital gains index of blue-chip companies appears to be a good bellwether of macroeconomic behaviour.

Can we use these stock market indices to understand British macroeconomic fluctuations over the long run? We use Chadha et al.’s (2000) catalogue of business cycle peaks and troughs from 1857 to 1954, and the OECD indicators on reference turning points from 1955 to 2018.  We construct business cycle diagrams in the style of Burns and Mitchell (1946). For each of the business cycles, we rebase the blue-chip index to be 100 at the cycle peak and then focus on the four-year period around this point. We then take the average value of the rebased index each month across all of the business cycles (Figure 4).

Figure 4 Blue-chip index performance over the business cycle, 1857-2018

The capital gains index of blue-chip companies appears to be a good bellwether of macroeconomic behaviour. During the two years prior to the business cycle peak, the index increases by an average of 10.7%. The index peaks one month before the peak of the business cycle, and then declines steadily thereafter. The index bottoms out 20 months following the cyclical peak, losing an average of about 7.0% from its peak value.

Superb bit of history…


From pecan pralines to ‘dots’ as currency: how the prison economy works

September 10, 2019

Superb piece by Richard Davies (HT: JP Koning blog).

Davies tracks the economies and currency markets in prisons in Louisiana (also called as Angola):

In many ways, a prison’s official economy is like that of a regular town. In Angola there is a world of work, with jobs and pay, promotions and demotions. And there is a world of shopping, with consumer goods and stores. But prisons are economic systems in which the cost of goods bears no relation to wages or the buying power of the workforce. The most important connections of a market economy – the prices that link work and pay, demand and supply – have been severed, intentionally, by the authorities. The official prison economy exists, but it may as well not, leaving the prisoners to build their own underground markets.

In the underground prison economy, things that might seem simple are hard, and things that might seem impossible can be pretty easy. The case of John Goodlow and his pecans illustrates why. For 20 years Goodlow was the pecan king of Angola, Wilbert Rideau told me. Pecan nuts are grown across the US south, and homemade pecan pralines are a favourite treat in Louisiana. Goodlow made his own – the best ever, said Rideau, “better than outside” – and sold squares of it for $2. He probably could have raised his prices, said Rideau: they were so sought after that Goodlow had often pre-sold a whole batch before he had even finished cooking it.

The fact that making pralines was possible in a maximum-security prison is surprising. Cooking them requires lots of ingredients, as well as pots, a hotplate and an oven. “Prisoners are never powerless,” Rideau said. “They always have the power of rebellion, violence, and just screwing up operations and making life hard for the management.” The power prisoners have means that management often cooperate, and facilitate certain requests, he explained. In prisons, on low-level matters, power is shared, and there is room for simple tradeoffs. So getting hold of a pan can be fairly easy.

But some things that are mundane outside are outlawed in jail. Anything that raises the probability of escape or violence is banned: weapons, drugs, cigarette lighters, mobile phones. But a host of innocent-seeming items are contraband, too: savoury spreads like Marmite contain yeast and can be used in illicit brewing; chewing gum can be used to make an imprint of a key or lock; baby oil can make an inmate’s arms slippery, rendering them impossible to restrain.

The whole thing is quite a read..

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