Category: Culture

Facebook’s Hidden Persuaders

hidden-persuadersMajor internet platforms are constantly trying new things out on users, to better change their interfaces. Perhaps they’re interested in changing their users, too. Consider this account of Facebook’s manipulation of its newsfeed:

If you were feeling glum in January 2012, it might not have been you. Facebook ran an experiment on 689,003 users to see if it could manipulate their emotions. One experimental group had stories with positive words like “love” and “nice” filtered out of their News Feeds; another experimental group had stories with negative words like “hurt” and “nasty” filtered out. And indeed, people who saw fewer positive posts created fewer of their own. Facebook made them sad for a psych experiment.

James Grimmelmann suggests some potential legal and ethical pitfalls. Julie Cohen has dissected the larger political economy of modulation. For now, I’d just like to present a subtle shift in Silicon Valley rhetoric:

c. 2008: “How dare you suggest we’d manipulate our users! What a paranoid view.”
c. 2014: “Of course we manipulate users! That’s how we optimize time-on-machine.”

There are many cards in the denialists’ deck. An earlier Facebook-inspired study warns of “greater spikes in global emotion that could generate increased volatility in everything from political systems to financial markets.” Perhaps social networks will take on the dampening of inconvenient emotions as a public service. For a few glimpses of the road ahead, take a look at Bernard Harcourt (on Zunzuneo), Jonathan Zittrain, Robert Epstein, and N. Katherine Hayles.

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Trashing, Defending, and Deferring to Yeshiva University

University bashing is in fashion, from the broad-gauged film Ivory Tower to particular attacks on given schools. Some critiques usefully expose problems that need correcting with constructive solutions on offer.  But others seem to trash the academy for other reasons, as with a recent diatribe against Yeshiva University, which seems more calculated to exacerbate the school’s problems than help it find solutions.

In an  expose-style that seems to blow the school’s financial challenges out of proportion, Steven Weiss, who acknowledges having been expelled from Yeshiva in 2002, portrays Yeshiva’s leadership since that year variously as gullible, myopic, conflicted, or greedy.  This piece stung because I am a graduate and former faculty member of Yeshiva’s law school (Cardozo) and I know and have worked with some of the people vilified in the story.  While I am not familiar with all of the factual background of the University’s recent experience, Weiss’s story seems awfully one-sided and therefore the story, as much as the facts about Yeshiva, causes concern.

I share Weiss’s praise for Yeshiva’s former president, Rabbi Norman Lamm, whom I knew, worked with, and admired.  Lamm, and later his VP for business affairs, Sheldon Socol, led Yeshiva from the brink of bankruptcy in 1975 to fiscal soundness and renewed its status for academic excellence and cultural distinction.  (Rabbi Lamm told me how, when he was about to declare bankruptcy, his hand shook so intensely that he could not sign the papers.)

But Weiss then makes a foil out of Lamm,  painting a golden era that ended after 2002 when he passed the baton to Richard Joel, the current president, who has faced a different set of challenges that entices Weiss’s wrath.  In Weiss’s telling, after Lamm’s retirement and Joel’s succession, it’s been all downhill for Yeshiva and its students.  Joel, whom I knew as an able administrator and gentleman when he served as Dean of Business Affairs at Cardozo, certainly has a different style than the rabbi-scholars such as Lamm who preceded him.  But Weiss exaggerates in inexplicably inflammatory tones how this style difference has played out, in a story misleadingly headlined “How to Lose $1 Billion: Yeshiva University Blows Its Future on Loser Hedge Funds.” Read More

Endless Replay, Continued

My post on surveillance creating an “endless replay” has some more playful applications, as well. Consider the “Groundhog Date” now marketed by Match.com: “Partnering with an LA based company … that matches people to dates using facial recognition software, users will be asked to send in pictures of their exes, which will be used to determine who they will be matched with on the site.” Critics are aghast at the prospect of outsourcing our humanity. However habitual our actions may be, no one wants to be typecast as a typecaster.

Surveillance, Capture, and the Endless Replay

Global opposition to surveillance may be coalescing around the NSA revelations. But the domestic fusion centers ought to be as big a story here in the US, because they exemplify politicized law enforcement. Consider, for instance, this recent story on the “threat” of “Buy Nothing Day:”

Fusion Centers and their personnel even conflate their anti-terrorism mission with a need for intelligence gathering on a possible consumer boycott during the holiday season. There are multiple documents from across the country referencing concerns about negative impacts on retail sales.

The Executive Director of the Intelligence Fusion Division, also the Joint Terrorism Task Force Director, for the D.C. Metropolitan Police Department circulated a 30-page report tracking the Occupy Movement in towns and cities across the country created by the trade association the International Council of Shopping Centers (ICSC).

Yes, police were briefed on the grave threat of fake shoppers bringing lots of products to the till and then pretending they’d forgotten their wallets. Perhaps the long game here is to detain members of the Church of Stop Shopping to force them to make Elves on the Shelf for $1 an hour.

More seriously: no one should be surprised by the classification of anti-consumerist activists as a threat, given what Danielle Keats Citron & I documented, and what the ACLU continues to report on. But we do need more surprising, more arresting, characterizations of this surveillance. Fortunately, social theory provides numerous models and metaphors to counter the ideology of “nothing to hide.”
Read More

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The Hand of God

78px-FIFA_World_Cup.svgWith the World Cup underway, I thought I would reprint a post I did at the start of the Cup four years ago that holds up pretty well.

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As the World Cup begins (and a groove on my couch awaits), the thought occurred to me that the Justices are more comparable to those officials than (as Chief Justice Roberts famously said) to baseball umpires. Consider the following:

1. Umpires rarely change the outcomes of a game. Soccer referees do all the time.

2. Baseball is a rule-bound game. Soccer gives the referee lots of discretion (whether to award a penalty kick or not, whether to red card somebody or not, etc.)

3. Soccer fans often accuse the ref of being biased. You rarely hear that about umpires.

4. An umpire can have his call corrected by his colleagues. There is no appeal from a soccer referee’s decision.

Which of these sounds more like a Supreme Court Justice?

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A Toast to 50 Cent’s New Series: Power

The rap artist 50 Cent, whose real name is Curtis Jackson, is producing a new series on STARZ called Power. Famed for his entrepreneurial skills in hip-hop and business, not to be overlooked is his important contribution to contract law and knowledge.  Thanks to an intense dispute with his girlfriend a decade ago, students and lawyers have been treated to a saga 50 Cent endured that illuminates the nature of contracts—of legally enforceable bargains. In a tribute to his latest venture, herewith an account of this case from my book, Contracts in the Real World: Stories of Popular Contracts and Why They Matter (Cambridge University Press 2012).

Jackson secured his first recording contract in October 2003. It came with a $300,000 advance.  To boost his professional image as a rapper, he bought a Hummer and a Connecticut mansion once owned by boxer Mike Tyson. The mansion boasted a state-of-the-art recording studio and the rapper hired a full-time caretaker and professional cleaning crew to maintain it.    In 2004 Jackson bought another house in Valley Stream, the small village in New York’s Nassau County where his grandmother lived; in December 2006, he added to his real estate holdings a $2 million house at 2 Sandra Lane, Dix Hills, on Long Island, New York. By then, he had sold tens of millions of recordings, toured the world, and amassed hundreds of millions of dollars in net worth, as chronicled in his 2005 autobiographical film, “Get Rich, or Die Tryin.”  

This success came after hard knocks. Jackson had dealt crack cocaine as a teenager. In 1995, at age 20, he was released from jail and became involved with Shaniqua Tompkins in his hometown of Jamaica in Queens, New York. The two had a son, Marquise, out of wedlock in 1996. Jackson and Tompkins had no money and no real home—living with his grandmother or hers.     In May 2000, Jackson nearly died when he was shot nine times during a gangland ambush. He was in the hospital for weeks, followed by months of rehab spent at his mother’s house, near the Pocono Mountains in Pennsylvania. Though before the shooting Jackson had been negotiating with Columbia Records, the record company stopped returning his calls.

Jackson, however, persevered. In November 2001, he launched a recording company, Rotten Apple Records. The rising rap star Eminem brought Jackson’s 2002 self-produced record to the industry’s attention.  As a result, Interscope Records offered Jackson the 2003 deal that propelled him to fame and fortune. With money flowing in and Jackson leading the high life, Tompkins asserted her right to a share. But Jackson’s relationship with Tompkins was tumultuous. They did not always live together and fought often, sometimes physically.

When Jackson bought the Dix Hills house in 2006, both agreed it was the best place to raise Marquise, then almost 10-years-old, and Tompkins pled with Jackson to put it in her name. Though Jackson promised to do so, he never did. After the relationship soured, Jackson tried to evict Tompkins from the Dix Hills house.  During that battle, the house burned to the ground under circumstances that authorities considered suspicious. The house had been insured against fire, but the policy lapsed for non-payment of the premium a few weeks before. In response to Jackson’s eviction lawsuit, Tompkins asserted a claim of her own: that the two had a contract entitling her to $50 million. Read More

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Signing off

AFC-cover      Thanks to all for having me back to Concurring Opinions.  I’ve enjoyed the visit immensely.

During my stay, I blogged about the conception of my new book, America’s Forgotten Constitutions: Defiant Visions of Power and Community (Harvard, 2014).  I discussed ideas of constitutional formation and reorganization, alternative theories of popular consent, and certain black nationalists’ view of the Fourteenth Amendment (and even guns and self-defense).  I analyzed Cliven Bundy’s theory of rancher sovereignty, which is shared by many who rallied to his armed defense against the Bureau of Land Management (here and here).  I advocated the creation of a new national office, the Tribune of the People, whose sole responsibility would be defending civil and human rights. Finally, I discussed the Supreme Court’s recent decision on legislative prayer as an example of institutional withdrawal, as issues of prayer were thrown back to the hurly-burly of the public sphere.

News about America’s Forgotten Constitutions can be followed on my author’s page, book blog, facebook, or twitter.  On September 18, 2014, during the week celebrating the U.S. Constitution, I’ll be giving a noontime book talk and signing at the National Archives (more details later).  I hope to see you there.

I am working on a variety of other research projects, including books and papers exploring presidential leadership over individual rights, war-dependent forms of constitutional argumentation (to be published by Constitutional Commentary in the fall), and popular theories of law found in poetry and fiction (my latest, “‘Simple’ Takes On the Supreme Court” is hot off the press).  My papers can be downloaded here.

So long!

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What Everyone Should Remember about Buffett’s Views on Executive Compensation

Intelligent and well-meaning as they are, critics of Warren Buffett’s decision to have Berkshire Hathaway abstain from voting as a shareholder of Coca-Cola on the latter’s executive pay proposal suffer from two problems.  Some, like Joe Nocera of the New York Timesseem to believe that, since Buffett is powerful and historically a strong vocal critic of executive compensation, he is obliged to cast Berkshire’s vote against it.  When he explained last weekend that directors may not always vote against proposals with which they disagreed others, including Vitaliy Katsenelson at the Institutional Investor, lamented that directors may not always stand up for what they believe.

These positions are a combination of misreading history and naïve. Buffett has always stressed that, as costly to shareholders as executive compensation may be, in raw amounts and in terms of conflicts of interest, they pale in comparison to the vastly larger costs to shareholders of other conflicts between executives and shareholders, especially on acquisitions.  No rational investor should believe that directors are unabashed devotees of the shareholder interest at every turn.  Here is an excerpt from remarks Buffett made as discussant at a Cardozo Law School conference I hosted in 1997, the themes of which he has repeated for two decades:

As a stockholder, I’m really only interested in the board accomplishing two ends. One is to get a first class manager and the second is to intervene in some way when even that first class manager will have interests that are contrary to the interests of the owners.

I think there are great difficulties in achieving both of those ends. I’ve been a director of, counting them up, seventeen publicly owned companies, not counting ones which we control (which probably shows a very dominant, masochistic gene) (laughter). But over that time I’ve wrestled with just these couple of problems and there may be processes that would improve them.

The first one: getting the first class manager. I have never seen in those seventeen cases – and I’m not aware of it in other cases – where a question of mediocrity or worse and the evaluation of change has been made in the presence of a chief executive. It just doesn’t happen. So, I think absolutely to have any chance of having that one solved, you have to have regular meetings of evaluation of chief executives, absent that chief executive. If they are rump meetings or something of the sort – if they’re not regularly scheduled – there is just too much tension created. Because a board may be a legal creation, but it’s a social animal. It is very difficult for a group of people without a very strong leader to all of a sudden, spontaneously decide that they’re going to hold some meetings elsewhere and discuss whether this person who may be a perfectly decent individual, really should be batting clean-up.

So, I think there should be a lot of emphasis on process in terms of evaluation of a CEO. I don’t know how you create a greater willingness on the part of directors to really bounce somebody that they would bounce if they owned 100% of the company or if their family was dependent on the income from the business and so on. I just have not seen it in corporate America.

If you get that first class chief executive – which is a top priority – he doesn’t have to be the best in the world, just a first class one. And I may agree with Jill to some extent – you may be able to turn a five into a five-and-a-half or something by having him consult with lots of other CEOs and get a lot of advice from the board. But my experience is that you don’t turn a five into an eight. I think you’re better off getting rid of the five and having him find something else to do in life and going out and acquiring an eight.

The second problem is: even a first class chief executive has some interests that are in conflict with the shareholders. One is his or her own compensation. The second one gets into the acquisition category. There are psychic benefits to an executive of running a bigger show or just having more action or whatever that can be in conflict with the shareholders, even though that executive may be first class in other respects. The nature of acquisitions is that they get to the board at a point where if you turn them down you are rejecting the chief executive, you are embarrassing him in front of his troops, you’re doing all kinds of things. So, it just doesn’t happen.

I have seen board after board approve deals that afterwards the board members say, “you know, I really didn’t think it was a very good idea but what could we do about it?” And there should be a better mechanism. But I’m not sure what it is. There should be a better mechanism, though, for a board to make those important decisions where a first class chief executive can have an absolutely different equation than the shareholders, weighing all of the personal economic and non-economic considerations. There should be a mechanism that enables the board to bring independent judgment on those in a way that doesn’t put the CEO in a position virtually where he or she has to resign or is embarrassed in front of the troops. And I would welcome any discussion on those matters.

The compensation question where the first class executive could be in conflict with the owners, I think it gets abused some but I don’t think that it amounts to that much when compared with the other two questions – getting the right one and also the question of acquisitions. I think it costs shareholders some money that’s unnecessary, and I think that a lot of the compensation schemes have been quite illogical, but I don’t think that they are overwhelming in terms of evaluation.

On compensation, I can turn purple in meetings. But in the end, the big, dumb acquisitions are going to cost shareholders far, far more money than all of the other stuff.

 

 

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Buffett’s Evolution: From Stock-Picking Disciple of Ben Graham to Business-Building Devotee of Tom Murphy

While everyone knows that Warren Buffett modeled himself after Ben Graham for the stock picking that made Buffett famous in the latter 20th century, virtually no one knows a more important point for the 21st century: he has modeled himself after Tom Murphy in assembling a mighty conglomerate.   Murphy, a legendary executive with great skills in the field of acquisitions that resulted in the Capital Cities communications empire, engineered the 1985 $3.5 billion takeover by Capital Cities of ABC before selling it all to to Disney a decade later for $19 billion.  You did not hear that explicitly at Saturday’s Berkshire Hathaway annual meeting, but Warren mentioned it to me at brunch on Sunday and, when you think about it, it’s a point implicit deep in the meeting’s themes and many questions.

In fact, Berkshire mBBB COvereetings are wonderful for their predictability.   Few questions surprise informed participants and most seasoned observers can give the correct outlines of answers before hearing Buffett or vice chairman Charlie Munger speak. While exact issues vary year to year and the company and its leaders evolve, the core principles are few, simple, and unwavering.  The meetings reinforce the venerability and durability of Berkshire’s bedrock principles even as they drive important underlying shifts that accumulate over many years.  Three examples and their upshot illustrate, all of which I expand on in a new book due out later this year (pictured; pre-order here).

Permanence versus Size/Break Up. People since the 1980s have argued that as Berkshire grows, it gets more difficult to outperform. Buffett has always agreed that scale is an anchor. And it’s true that these critics have always been right that it gets harder but always wrong that it is impossible to outperform.   People for at least a decade have wondered whether it might be desirable to divide Berkshire’s 50+ direct subsidiaries into multiple corporations or spin-off some businesses.  The answer has always been and remains no.  Berkshire’s most fundamental principle is permanence, always has been, always will be. Divisions and divestitures are antithetical to that proposition.

Trust and Autonomy versus Internal Control. Every time there is a problem at a given subsidiary or with a given person—spotlighted at 2011’s meeting by subsidiary CEO David Sokol’s buying stock in Lubrizol before pitching it as an acquisition target—people want to know whether Berkshire gives its personnel too much autonomy. The answer is Berkshire is totally decentralized and always will be-another distinctive bedrock principle. The rationale has always been the same: yes, tight leashes and controls might help avoid this or that costly embarrassment but the gains from a trust-based culture of autonomy, while less visible, dwarf those costs.

Capital Allocation: Berkshire has always adopted the doubled-barreled approach to capital allocation, buying minority stakes in common stocks as well as entire subsidiaries (and subs of subs).  The significant change at Berkshire in the past two decades is moving from a mix of 80% stocks with 20% subsidiaries to the opposite, now 80% subsidiaries with 20% stocks.  That underscores the unnoticed change: in addition to Munger, Buffett’s most important model is not only Graham but Murphy, who built Capital Cities/ABC in the way that Buffett has consciously emulated in the recent building of Berkshire.

For me, this year’s meeting was a particularly joy because I’ve just completed the manuscript of my next book, Berkshire Beyond Buffett: The Enduring Value of Values (Columbia University Press, available October 2014). It articulates and consolidates these themes through a close and delightful look at its fifty-plus subsidiaries, based in part on interviews and surveys of many subsidiary CEOs and other Berkshire insiders and shareholders.   The draft jacket copy follows. Read More

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Self-Defense and the Fourteenth Amendment

negroes_with_guns-01

Dance and sing you black creatures

of Mother Africa.

Move to the sound of the drums

of your forefathers.

Hold on to your drums and beat

them in defiance of the slavemaster and

let their thundering sound awaken those who sleep.

–Mabel Robinson Williams, Transition (1966)

 

Mabel Robinson Williams passed away last week.  Williams may have been most famous for being married to Robert F. Williams, the controversial former head of the NAACP in Monroe County, NC, but she was an intriguing theorist and fierce activist in her own right.  She recalled that her father slept every night with a pearl-handled pistol under his pillow in case the Klan’s night riders attacked.  As an adult, she served as Secretary of the local NAACP, co-founded a newsletter called The Crusader, organized a mutual aid society called CARE, and helped run Radio Free Dixie.  Mabel called herself a “co-warrior” and “helpmate” to Robert, even as she served as a nurse’s aid and later operated a day care.  When her sons joined a picket against a segregated swimming pool, she sat in the car with guns, keeping one eye out for armed whites.  She and other female members of a rifle club trained to protect their families against the Klan.  Once, Mabel came out of her house with a shotgun and chased off deputies trying to arrest her husband.

Husband and wife worked together on Negroes With Guns (1962), which articulated a theory of self-defense of constitutional rights.  The Williamses “did not advocate violence for its own sake,” nor did they urge “reprisals against whites.”  Instead, they argued that armed self-reliance was compatible with the tactics of peaceful protest promoted by Martin Luther King, Jr. to promote legal change (but they blamed proponents of non-violence for inflexibility in demanding that blacks renounce their right to self-protection).  In their view, armed self-defense was justified because of a “breakdown of the law” in failing to protect black families from armed whites.  As they tell it, Brown v. Board of Education unleashed not only generalized racial unrest in the South, but also a wave of violence directly against NAACP members and their allies.  “[T]here was no such thing as a 14th Amendment to the Constitution in Monroe, NC,” because local officials refused to enforce the law and protect the life, liberty, and property of black families.  Federal and state officials, too, were nowhere to be found.  In fact, many in the community believed that state and local officials were conspiring to deprive black Americans of their constitutional rights. Black self-defense filled this gap in the constitutional order.

Any limited theory of armed self-defense became greatly complicated by the pair’s embrace of Marxist revolutionary ideas about the worldwide liberation of the oppressed.  Negroes With Guns predicted a day when racial violence in the United States became so pervasive that “non-violence will be suicidal in itself.”  It cited with approval the legacy of John Brown favoring the “righteous use” of weapons to “destroy those things that block [the American Negro's] path to a greater happiness in life.”  Linking armed tactics with revolutionary ends blurred the lines between constitutional preservation and constitutional usurpation–a recurring problem that faced all black power groups during this period.  In theory and practice, it became difficult to draw clear lines between self-defense and the armed instigation of foundational change.

After a protest turned unruly and Robert Williams was charged with kidnapping a white family (he claimed to be protecting the family from a mob), the pair fled.  While in exile in China, Robert briefly held the Presidency of the Republic of New Afrika, founded by the followers of Malcolm X after his assassination.  Professor Pero Gaglo Dagbovie recounts that in later years, Mabel became a community historian and keeper of an oral tradition of the Black Power period.  This tradition includes not only the major events that transpired during a tumultuous period of American history, but also popular interpretations of the law.