Wednesday, August 31, 2016

Weaponizing Information

To some, the sweet naiveté of the America’s early-stage attempt to topple communist regimes was an assault with truth. Notwithstanding a slight tweaking toward pro-American views and themes, the Voice of America directed its transmitters towards the communist bloc nations… expanding to satellite, social media and global programming, in many languages, over the years.
The VOA charter—signed into law in 1976 by President Gerald Ford—requires VOA to ‘serve as a consistently reliable and authoritative source of news’ and ‘be accurate, objective and comprehensive’… VOA radio and television broadcasts are distributed by satellite, cable and on FM, AM, and shortwave radio frequencies. They are streamed on individual language service websites, social media sites and mobile platforms. VOA has affiliate and contract agreements with radio and television stations and cable networks worldwide.’” Wikipedia. Propaganda? Just a touch of bias but a generally reliable news source? Yesterday’s strategy that is not remotely competitive with what more sinister government and extremist disseminators of information are actually doing?
The Arab Spring “sprang” into a tsunami of violent change through what seemed to be a grassroots movement that literally formed itself and built on the successful efforts to mobilize rebellion. Social media. The Web. The results were stunning. Those who were outnumbered, outgunned and facing what seemed to be insurmountable odds took on (and then down) entire nations, armies and formal governmental structures… with words and images.
ISIS, relying heavily on generally-available images enhanced with footage by their corps of professional videographers, has turned electronic communications into highly-effective recruiting tools… and less-than-subtle messages to those facing conquest as well as their enemies to instill fear – terror if you will – to soften those targets before the physical assaults even began. They glorify their atrocities, reach far into global communications, seemingly far more advanced than the electronic counter-measures of those who oppose them.
Propaganda has always been an effective tool from dictators – from Hitler to Kim Jong-un – to control and motivate their own populations. But the use of these control mechanisms have expanded in a digital world. In addition to hacking into the servers in search of sensitive and embarrassing information, savvy operatives have learned how to reach far outside of their own national or controlled boundaries… to the world. Far beyond the little “dirty tricks” and strategic disinformation deployed by spies during earlier wars.
The master of this universe may well be Vladimir Putin’s Russia, a nation with a powerful and modern army, but one that is not remotely up to the Western NATO forces that oppose it. So they have learned how to weaponized disinformation, and they are damned good at it… and even better at making it almost impossible to prove that the disinformation was directly provided by Moscow.
Let’s face it; governments lie. Some more than others, and some are really skilled.  Russia is really good at hacking – don’t believe me?... ask the DNC about all those embarrassing emails that somehow surfaced during HRC’s campaign – and shameless when it comes to mendacity (a polite word for lying through your teeth). They never supported the pro-Russian rebels in eastern Ukraine, much less supplied real weapons and real soldiers? Hippity-hop, and I’m the Easter Bunny!
While we’re kind of sort of used to Russian lies… not so much some of our Western friends… like Sweden, a nation that is currently wrestling with whether or not to join NATO, an organization that Russia despises as it vies to pull Europe away from its American nemesis. “With a vigorous national debate underway on whether Sweden should enter a military partnership with NATO, officials in Stockholm suddenly encountered an unsettling problem: a flood of distorted and outright false information on social media, confusing public perceptions of the issue.
“The claims were alarming: If Sweden, a non-NATO member, signed the deal, the alliance would stockpile secret nuclear weapons on Swedish soil; NATO could attack Russia from Sweden without government approval; NATO soldiers, immune from prosecution, could rape Swedish women without fear of criminal charges.
“They were all false, but the disinformation had begun spilling into the traditional news media, and as the defense minister, Peter Hultqvist, traveled the country to promote the pact in speeches and town hall meetings, he was repeatedly grilled about the bogus stories.
“‘People were not used to it, and they got scared, asking what can be believed, what should be believed?’ said Marinette Nyh Radebo, Mr. Hultqvist’s spokeswoman.
“As often happens in such cases, Swedish officials were never able to pin down the source of the false reports. But they, numerous analysts and experts in American and European intelligence point to Russia as the prime suspect, noting that preventing NATO expansion is a centerpiece of the foreign policy of President Vladimir V. Putin, who invaded Georgia in 2008 largely to forestall that possibility.” New York Times, August 28th.
Russia is balancing its weaker military capacity against its more-than-adequate disinformation expertise. It’s a really big deal. “In Crimea, eastern Ukraine and now Syria, Mr. Putin has flaunted a modernized and more muscular military. But he lacks the economic strength and overall might to openly confront NATO, the European Union or the United States. Instead, he has invested heavily in a program of ‘weaponized’ information, using a variety of means to sow doubt and division. The goal is to weaken cohesion among member states, stir discord in their domestic politics and blunt opposition to Russia.
“‘Moscow views world affairs as a system of special operations, and very sincerely believes that it itself is an object of Western special operations,’ said Gleb Pavlovsky, who helped establish the Kremlin’s information machine before 2008. ‘I am sure that there are a lot of centers, some linked to the state, that are involved in inventing these kinds of fake stories’…
The flow of misleading and inaccurate stories is so strong that both NATO and the European Union have established special offices to identify and refute disinformation, particularly claims emanating from Russia.” NY Times. But that’s just Sweden; surely it can’t happen here.
As the FBI has alerted several state election officials of foreign hacks of election systems, as a rather clearly pro-Trump effort to spread disinformation is clearly traceable back to Russia, is Mr. Putin deploying his operatives to influence our presidential election? How about this report from the August 29th Washington Post: “The Post’s Ellen Nakashima reported Monday [August 29th] night that Russian hackers have also been targeting state voter-registration systems. And, in an apparent effort to boost Donald Trump’s presidential candidacy, they’re leaking what they believe to be the most damaging documents at strategic points in the campaign.
“[In late August], we learned something else: The Russians aren’t just hackers — they’re also hacks. Turns out that before leaking their stolen information, they are in some cases doctoring the documents, making edits that add false information and then passing the documents off as the originals.”
Is Vladimir going to manipulate the Donald into the presidency? How do we counter this move? And do we match Mr. Putin and the spin-masters at ISIS? Do we unmask them? What do we use to counter these lies? From where? Directly from governmental sources or untraceable clandestine sources with lots of plausible deniability? Although we are a technical giant, we seem to be utterly helpless against some fairly pedestrian patterns of lies and digital manipulation… and we’re not talking fingers or toes!
I’m Peter Dekom, and if you were charged with deploying counter-measures, what would you do?

Tuesday, August 30, 2016

A Bite out of The Apple

Here’s how the largest market-cap company in the world minimizes its tax bite. First, Apple negotiated a really, really low effective corporate tax rate (1% or less?) with the Irish government in exchange for building significant backroom operations – lots of white collar jobs – in Ireland.
Second, it moved ownership and control of all (most) of its intellectual property – patents, trademarks and copyrights – to an Irish company controlled by Apple (let’s just call that company “Apple Ireland”).
Third, all of Apple’s operations in high tax countries have to pay Apple Ireland a pretty penny for the license to use that intellectual property in their Apple products. For those Apple companies, the cost of that Apple Ireland license is a fully deductible business expense in those high tax venues (like the United States) where they operate, which lowers their taxable income (or completely eliminates it).
The license revenues received by Apple Ireland generate lots of taxable income… in Ireland… but Apple already negotiated an exceptionally lower tax rate there. So effectively, Apple has transferred profits from high tax countries (U.S. federal corporate tax is roughly 35%), with this licensing scheme, to low tax Ireland. Legally.
Turns out that U.S. corporations with $10 million or more in gross annual revenues generally can use loopholes and off-shore structures to lower their effective U.S. federal corporate tax rate from 35% to an average 12.6%. Some of the biggest U.S. companies pay no tax at all. Wow! And with a Republican-controlled Congress, no matter what you hear, one of the cornerstones of their platform is leaving those loopholes very much intact.
Pressure then mounted from Apple shareholders for measurable current income, noting that Apple had transformed from a high-growth-no-dividends corporation into a mature company where dividends now mattered. So Apple had to figure out how to get all that low-taxed pile of cash in Ireland into the U.S. to pay dividends… without paying a tax for moving all that money into the U.S. How did they do it? They borrowed money in the U.S., secured by all that Irish cash, and paid the dividends. No tax on borrowed money, and you even get to deduct the interest you have to pay on the loan. Wooo hoooo! Apple is doing its happy dance.
Incoming fly in the ointment! Ireland is a member of the European Union. The EU’s European Commission has been looking at how multinational companies have taken advantage of their size and bargaining power to avoid taxes. Since Ireland is a member state, the Commission has examined their proclivity to negotiate favorable, single-company tax rates to attract business, both distorting the tax needs of other EU nations and creating an unfair advantage in attracting multinationals to set up shop in their countries. The Apple-Irish deal was an obvious place to begin.
Three years after that investigation started, the Commission announced that the special tax rate accorded by Ireland to Apple violated EU law, and that as a result Apple really owed an additional $14.5 billion (with a “b”) in taxes. The Commission was really clear: “‘Member states cannot give tax benefits to selected companies - this is illegal under EU state aid rules,’ said Commissioner Margrethe Vestager.
“‘The Commission's investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years,’ she added… The standard rate of Irish corporate tax is 12.5%. The Commissions' investigation concluded that Apple had effectively paid 1% tax on its European profits in 2003 and about 0.005% in 2014… Ms Vestager said that the tax agreement reached between Ireland and Apple meant that the company's taxable profits ‘did not correspond to economic reality.’”, August 30th.
Apple’s happy dance stopped dead in its tracks. Its lawyers responded that there was no basis in fact or law for that EU assessment and that they would fight that ruling to the bitter end. “‘Apple said the decision would be harmful for jobs.
“‘The European Commission has launched an effort to rewrite Apple's history in Europe, ignore Ireland's tax laws and upend the international tax system in the process,’ the company said in a statement.
“‘The Commission's case is not about how much Apple pays in taxes, it's about which government collects the money. It will have a profound and harmful effect on investment and job creation in Europe.
“‘Apple follows the law and pays all of the taxes we owe wherever we operate. We will appeal and we are confident the decision will be overturned.’”
Of an estimated $200 billion of Apple’s cash reserves, about $180 billion are overseas with most of that purportedly in Ireland. Ireland’s Department of Financial Services (Ministry of Finance) responded that the EU’s ruling was “bizarre,” “confusing,” “over-reaching” and interfering with Ireland’s lawful sovereign rights. It is clear that Ireland will also appeal the ruling, notwithstanding that $14.5 billion of owed taxes would support the country’s entire healthcare system for a full year. They’re worried about job loss that might result.
Even the U.S. Internal Revenue Service chimed in, opposing the absorption of that tax revenue into European tax coffers (which Apple could then credit against U.S. taxes) when the IRS believes all (or most of) that money should accrue to the U.S. There are literally trillions of dollars from U.S. corporations sitting in tax-dodge accounts in foreign bank accounts, money that could generate taxes the United States needs to avoid growing its deficit even higher. But without Congressional action, there are only limited steps that the IRS can take to tax that mass of off-shore income. The Treasury Department has moved to prevent U.S. corporations from buying smaller foreign companies to shift their headquarters to lower-tax countries (called “inversions”), but that’s about all it can do without Congress’ help.
If you listen carefully to both Donald’s Trump’s tax plan and the GOP platform on taxes, their proposals are all about lowering taxes primarily to the wealthiest taxpayers in the land. They are going precisely in the other direction. They pretend they are releasing money to the “job creators” to create greater employment, but we already know that this phony supply-side/trickle-down theory has never worked. The most recent example of the failed application of theory: Governor Sam Brownback in Kansas plunged his state into massive budget deficits with no improvement in the job picture by cutting taxes for the wealthy. It just does not work!
To make matters worse, the move away from globalization – assuming it is implemented – pretty much guarantees that foreign governments will have little reason to cooperate with us to catch such corporate tax-avoiders and reform international practices that encourage tax havens to exist. We need a global effort, and we need a Congress willing to begin to fix income inequality with serious tax reform. Remember, under the U.S. Constitution, all federal appropriations legislation must begin within the House of Representatives. Think about it when you vote in November.
I’m Peter Dekom, and fairness requires that those at the top of the food chain pay their fair share under the same laws that should apply equally to all of us.

Monday, August 29, 2016

Brain Food: Chips and Cookies

Artificial Intelligence (AI) coupled with robotics is coming fast, displacing not just old-world working class jobs, but employment among some of our best educated professionals, from medical doctors/surgeons and lawyers to engineers, tech designers and financial analysts. You can look back my past blogs, including my June 6th My Lawyer is Artificially Intelligent, March 25th Universal Basic Income (“UBI”) and my February 1st Well-Educated Professionals and Automation blogs for lots of supporting data.
Our entire socio-economic-political system is built on an assumption that there will be jobs for the skilled, better jobs for the better educated, and that government income support is only for the lowest rungs of our society. But what if AI-supported robotics and automation replaced even the best and the brightest humans, then unable to compete with their electronic replacements? How can they earn money without jobs? What kind of economic system would handle that problem? Those who will make a killing, of course, are those deeply capitalized wealthy corporations (and the individuals who own them) that own these magnificent machines… making virtually all the money that used to be earned by hard-working human beings.
“American author Marshall Brain, in his book Robotic Nation (2003), stated that intelligent robots ‘will eliminate a huge portion of the jobs currently held by human beings.’ He pointed out that there were 114 million employees working for seven million companies in the United States in 2000, according to that year's census. He predicted that more than 50 million jobs would be lost to robots by 2040 or 2050, and over half of the jobs in the US would be done by robots by that time.” The Straits Times, May 2nd. We’re talking about self-teaching machines that learn from experience and adapt and expand capabilities accordingly. And it’s happening today, from the surgical operating room to self-correcting engineering/designing automated processes.
Sooner or later, mere humans will not be remotely as productive or accurate as the AI machines that are replacing and will replace workers at every level, one by one. But what if we could gear our own brains, through mental exercise or ????, to rise to the level necessary to take on those damned robots? OK, mental exercise won’t cut it, but ???? could provide a startling alternative: electronic enhancement to our actual brains!
“Like many in Silicon Valley, technology entrepreneur Bryan Johnson [the PayPal near-billionaire] sees a future in which intelligent machines can do things like drive cars on their own and anticipate our needs before we ask… What’s uncommon is how Johnson wants to respond: find a way to supercharge the human brain so that we can keep up with the machines.
“From an unassuming office in Venice Beach, his science-fiction-meets-science start-up, Kernel, is building a tiny chip that can be implanted in the brain to help people suffering from neurological damage caused by strokes, Alzheimer’s or concussions. Top neuroscientists who are building the chip — they call it a neuroprosthetic — hope that in the longer term, it will be able to boost intelligence, memory and other cognitive tasks…
“‘Human intelligence is landlocked in relationship to artificial intelligence — and the landlock is the degeneration of the body and the brain,’ [Johnson] said in an interview about the company, which he had not discussed publicly before. ‘This is a question of keeping humans front and center as we progress.’” Washington Post, August 15th. Entrepreneurs in the field call such enhancements “bio-hacking” (what the Post describes as “the notion that you can engineer the body the way you would a software program”).
“Kernel is cognitive enhancement of the not-gimmicky variety. The concept is based on the work of Theodore Berger, a pioneering biomedical engineer who directs the Center for Neural Engineering at the University of Southern California, and is the start-up’s chief science officer… For over two decades, Berger has been working on building a neuroprosthetic to help people with dementia, strokes, concussions, brain injuries and Alzheimer's disease, which afflicts 1 in 9 adults over 65.
“The implanted devices try to replicate the way brain cells communicate with one another. Let’s say, for example, that you are having a conversation with your boss. A healthy brain will convert that conversation from short-term memory to long-term memory by firing off a set of electrical signals. The signals fire in a specific code that is unique to each person and is a bit like a software command.” The Post. Great stuff for those with brain disorders; scary stuff when the technology is refocused to make us smarter, more efficient and highly competitive.
Johnson sees this path as a social necessity: “[In] an age of AI, he insists that boosting the capacity of our brains is itself an urgent public concern. ‘Whatever endeavor we imagine — flying cars, go to Mars — it all fits downstream from our intelligence,’ he says. ‘It is the most powerful resource in existence. It is the master tool.’” The Post. So much for IQ tests and college admissions!
Bioethicists have to be squirming at the “oh that’s just a movie” technology that could put all kinds of nasties into human brains… or good stuff. But who will be afford to get those implants? Income/brain chip inequality? Who governs the field? And what possibly could go wrong, go wrong, go wrong, go wrong…?
I’m Peter Dekom, and is it easier to redesign society and how we pay people in a world of artificial intelligence-driven robots… or redesign the human brain/body instead?