Tag Archives: Regulations

Are Stock Buybacks Starving the Economy?

By Annie Lowrey – Stock buybacks are eating the world. The once illegal practice of companies purchasing their own shares is pulling money away from employee compensation, research and development, and other corporate priorities—with potentially sweeping effects on business dynamism, income and wealth inequality, working-class economic stagnation, and the country’s growth rate. Evidence for that conclusion comes from a new report by Irene Tung of the National Employment Law Project (NELP) and Katy Milani of the Roosevelt Institute, who looked at share buybacks in the restaurant, retail, and food industries from 2015 to 2017.

Buybacks occur when a company takes profits, cash reserves, or borrowed money to purchase its own shares on the public markets, a practice barred until the Ronald Reagan administration.

The regulatory argument against allowing the practice is that it is a way for companies to manipulate the markets; the regulatory argument for it is that companies should be able to spend money how they see fit.

In recent years, with corporate profits high, American firms have bought their own stocks with extraordinary zeal.

Federal Reserve data show that buybacks are now equivalent to 4 percent of annual economic output, up from zero percent in the 1990s. Companies spent roughly $7 trillion on their own shares from 2004 to 2014, and have spent hundreds of billions of dollars on buybacks in the past six months alone. more>

How to govern AI to make it a force for good

In the interview, Gasser identifies three things policymakers and regulators should consider when developing strategies for dealing with emerging technologies like AI.
Urs Gasser – “Everyone is talking about Artificial Intelligence and its many different applications, whether it’s self-driving cars or personal assistance on the cell phone or AI in health,” he says. “It raises all sorts of governance questions, questions about how these technologies should be regulated to mitigate some of the risks but also, of course, to embrace the opportunities.”

One of the largest challenges to AI is its complexity, which results in a divide between the knowledge of technologists and that of the policymakers and regulators tasked to address it, Gasser says.

“There is actually a relatively small group of people who understand the technology, and there are potentially a very large population affected by the technology,” he says.

This information asymmetry requires a concerted effort to increase education and awareness, he says.

“How do we train the next generation of leaders who are fluent enough to speak both languages and understand engineering enough as well as the world policy and law enough and ethics, importantly, to make these decisions about governance of AI?”

Another challenge is to ensure that new technologies benefit all people in the same way, Gasser says.

Increasing inclusivity requires efforts on the infrastructural level to expand connectivity and also on the data level to provide a “data commons” that is representative of all people, he says. more>

Guidelines to Achieve Digital Transformation

GSR-18 BEST PRACTICE GUIDELINES ON NEW REGULATORY FRONTIERS TO ACHIEVE DIGITAL TRANSFORMATION
itu.int – Digitization is increasingly and fundamentally changing societies and economies and disrupting many sectors in what has been termed the 4th Industrial Revolution. Meanwhile, ICT regulation has evolved globally over the past ten years and has experienced steady transformation.

As regulators, we need to keep pace with advances in technology, address the new regulatory frontiers and create the foundation upon which digital transformation can achieve its full potential. Being prepared for digital transformation and emerging technologies such as Artificial Intelligence (AI), the Internet of Things (IoT), Machine to Machine communications (M2M) and 5G is fundamental.

Advances in technology are creating new social phenomena and business models that impact every aspect of our personal and professional lives – and which challenge regulatory paradigms. M2M, cloud computing, 5G, AI and IoT are all bringing further profound change. Recognizing the potential of emerging technologies and the impact that policy and regulatory frameworks can have on their success, regulators should encourage a regulatory paradigm pushing frontiers and enabling the digital transformation. more> draft doc (pdf)

Why The Only Answer Is To Break Up The Biggest Wall Street Banks

By Robert Reich – Glass-Steagall’s key principle was to keep risky assets away from insured deposits. It worked well for more than half century. Then Wall Street saw opportunities to make lots of money by betting on stocks, bonds, and derivatives (bets on bets) – and in 1999 persuaded Bill Clinton and a Republican congress to repeal it.

Nine years later, Wall Street had to be bailed out, and millions of Americans lost their savings, their jobs, and their homes.

Why didn’t America simply reinstate Glass-Steagall after the last financial crisis? Because too much money was at stake. Wall Street was intent on keeping the door open to making bets with commercial deposits. So instead of Glass-Steagall, we got the Volcker Rule – almost 300 pages of regulatory mumbo-jumbo, riddled with exemptions and loopholes.

Now those loopholes and exemptions are about to get even bigger, until they swallow up the Volcker Rule altogether. If the latest proposal goes through, we’ll be nearly back to where we were before the crash of 2008. more>

Declining Majority of Online Adults Say the Internet Has Been Good for Society

By Aaron Smith and Kenneth Olmstead – Americans tend to view the impact of the internet and other digital technologies on their own lives in largely positive ways, Pew Research Center surveys have shown over the years. A survey of U.S. adults conducted in January 2018 finds continuing evidence of this trend, with the vast majority of internet users (88%) saying the internet has, on balance, been a mostly good thing for them personally.

But even as they view the internet’s personal impact in a positive light, Americans have grown somewhat more ambivalent about the impact of digital connectivity on society as a whole. A sizable majority of online adults (70%) continue to believe the internet has been a good thing for society. Yet the share of online adults saying this has declined by a modest but still significant 6 percentage points since early 2014, when the Center first asked the question. more>

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Crisis Of Globalization: Restoring Social Investment Is Key

By Robert Kuttner – Why is democracy under siege throughout the West? How much of the story is cultural or racial, and how much is economic? And can the slide into authoritarianism be reversed? I think it can.

In the remarkable three decades after World War II, the economy delivered for ordinary people and there was broad support for democracy. That era was unique in two key respects.

First, the economy not only grew at record rates for peacetime, but it also became more equal. Second—and not coincidentally—this was a period when raw capitalism was tightly regulated, on both sides of the Atlantic, economically and politically.

Banking was very limited in what products it could offer, and at what prices. It was almost like a public utility. There were no exotic securities like credit derivatives to deliver exorbitant profits and put the whole economy at risk. Globally, there were fixed exchange rates and capital controls, so bankers could not make bets against currencies and entire economies.

Organized labor was empowered. Unions were accepted as legitimate social partners and had substantial influence. This was true in both Europe and America.

In the years since then, political and financial elites have redefined trade agreements to mean not just reciprocal cuts in tariffs but broader changes in global rules to make it easier for banks and corporations to evade national regulation.

Laissez-faire, discredited and marginalized after 1929, got another turn at bat(ting). Hyper-globalization was a key instrument. And that reversion had economic and ultimately political consequences. more>

We Don’t Have Elections

BOOK REVIEW

Terms of Service: Social Media and the Price of Constant Connection, Autor: Jacob Silverman.

How tech companies merge with the nation-state
By Jacob Silverman – It should shock no one if Facebook emerges from its latest privacy imbroglio with a meager fine and a promise to do better—even as our elected leaders, whose lack of knowledge of Facebook’s workings reflected their advanced age, tut-tutted that this time Facebook has to do better.

The canon of American regulatory practices tends toward the ceremonial, with extreme deference shown toward corporations that may one day hire former regulators. Senator Lindsey Graham even invited Zuckerberg to submit possible regulations—an example of regulatory capture so blatant that “corruption” doesn’t even seem like the proper word.

Playing along, Zuckerberg expressed an openness to regulation, though he asked for a light touch, which, barring another data spillage, he should expect.

Beyond a few mild critiques, Congress’s overriding opinion of Zuck seems to be that he was a classic American success story, and perhaps—in his cunning acquisition of ungodly riches on the backs of others’ labor—he is.

To better understand Silicon Valley’s politics, we might return to the nation-state metaphor and consider technology companies as recently ascendant great powers. Endowed with impressive resources, making themselves known in assorted global capitals, their CEOs are greeted in the manner of heads of state. Their vast offshore cash reserves resemble sovereign wealth funds, whose investments have the power to shape politics. more>

Updates from Chicago Booth

Why policy makers should nudge more
By Alex Verkhivker – When policy makers around the world want to influence their constituents’ behavior, they have a few options. They can offer a carrot, such as a tax incentive, stipend, or other reward. They can use the legislative stick by passing a mandate or a ban.

But research suggests they should turn more often to a third tool, a “nudge,” which in many cases is the most cost-effective option.

Nudging is the word used in behavioral science for structuring policies and programs in ways that encourage, but don’t compel, particular choices. For instance, requiring people to opt out of rather than into a program, such as a retirement savings plan, might nudge them toward participating. So might reducing the paperwork necessary to enroll. more>

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How the EU’s General Data Protection Regulation empowers digital civic engagement


By Hollie Russon-Gilman – The European Union’s General Data Protection Regulation (GDPR) is scheduled to take effect on May 25. While companies who serve customers in the EU have to adhere, there are numerous applications for civil society, journalists, academia, philanthropy, and the private sector as well.

The GDPR represents an important step forward for envisioning a civic life where citizens are empowered not only as data producers but also data owners. Any conversation of leveraging data, technology, or innovation to enhance civic life or governance should seriously consider how such a framework could more deeply empower citizens in the United States.

Several core components of the GDPR are relevant for broader governance and civic conversations around the world. First, having a clear sense of who collects your information and what information they collect. This reflects a demand to look under the hood at how your personal information is used and what is shown to you in turn. The GDPR requires notification if a breach has occurred within 72 hours.

Understanding the implications behind algorithmic decisionmaking begins with understanding what data is being generated and how that information is being collected, used, disseminated, and re-packaged both to the user and others.

Second, having a right to be forgotten. If I want my data to be removed from a company, the GDPR provides this opportunity. One of the most exciting aspects of the GDPR is the concept of “data portability.”

Third, enhancing data protection responsibilities. The GDPR aims to foster better practices from the onset with privacy in mind.

As communication moves almost entirely to networked online technology platforms, the governance questions surrounding data and privacy have far-reaching civic and political implications for how people interact with all aspects of their lives, from commerce and government services to their friends, families, and communities. That is why we need a discussion about data protections, empowering users with their own information, and transparency. more>

Are We Master or Machine?

By Junko Yoshida – The two AI leaders are the US and China. In the US, it’s entirely driven by the private sector… Chinese players collect a lot of data driven by a government. Neither reflects our principles and values, says French President.

Most U.S. consumers, swept into the era of Big Data, in a prosperous nation where Google, Apple, Facebook and Amazon have become the definition of Big Business, don’t readily dwell on the constitutional complexities of personal privacy.

Last Thursday, Emmanuel Macron, president of France, laid out a new strategy for artificial intelligence in his country. The French government will spend 1.5 billion euro ($1.85 billion) over five years to support research in the field, encourage startups, and collect data that can be used and shared by engineers.

Macron’s goal is obvious. France is figuring out that they’ve got to start catching up to the U.S. and China. He wants the best and the brightest in the AI field to come to Paris.

To most American observers, Macron’s economic argument is easy to understand. Where things get tricky for most Americans to comprehend is the French argument on “values.”

This is where Macron introduces “digital sovereignty.” more>