Madoff, Courts, Information, and Reform

NPR's All Things Considered carried a piece on 29 June titled "Madoff Victim: Financier's Apology Does Nothing" that contained an interview with, Miriam Siegman, an investor who lost her life's savings to Madoff who had spoken in court at the sentencing hearing. The interviewer asks Siegman whether the experience offered any catharsis.

It did not:I guess not really and the reason I say that is...what I think all of us had hoped for was the truth that might have come up at trial. You know, when you have a trial you have subpoena power and people get on the stand and are cross-examined....

She goes on to say that she worries that there will be meaningful changes to the system.

When a comment like this is heard from someone engaged in a lawsuit we sometimes dismiss it as window dressing covering up the fact that, really, "it's about the money." But in this case the statement comes from someone who (1) is not going to receive money, (2) has, in fact, already lost all her money, and (3) who got from the court one result she wanted -- a maximal sentence for the defendant.

Two things are sociologically interesting here. First, Ms. Siegman says "I think all of us had hoped for" and she speaks of change of the system. These are not empty and platitudinous comments, I think. This is an example of "speaking for society." In fact, the judge, in explaining the 150 year sentence he imposed, spoke of the importance of symbolism, an important dimension of "the social." But Ms. Siegman's answer points us toward something important. The interviewer was asking "did the courtroom process provide you with any emotional or psychological benefit?" and she replied not just "no" but by changing the terms of the question. This is not about the emotional payoff from "having one's say" but rather about the court as a venue where we, collectively, can find out, as equals, what others, who have set themselves over us (she'd earlier said that she felt that Madoff had treated his victims like "roadkill") know. This is precisely the "informational equality" that Gillian Hadfield and I have written about under the phrase "Democracy and the Information Order" (also the subject of several other posts in this blog: here and here).

Siegman's statement is a perfect illustration of the social value of the informational role of courts. The victims got the most they could have hoped for on the vengeance dimension, but because the case was settled with a plea bargain they were denied something important. Legal efficiency was perhaps achieved -- punishment was meted out at minimum expense. But perhaps this was done at a cost: a deficit in the democratic function of law -- victims and non-victims, equal members of the democratic polity are left wondering how this happened, how this could happen. It may be that various official inquiries by the SEC, by congressional panels, by the Madoff trustee, or by investigative journalism will ferret out answers to such questions, but the victims, the people, will be passive recipients of the information produced by those processes, not equal participants in the asking.

And she may also be right on a social-efficiency dimension: reform might be more likely if the courts got to play this informational role in a case like this. But that's an empirical question.

Google, Trademarks, Society, and Information

Reports today of a potential class action lawsuit against Google on behalf of trademark holders in Texas. At issue, apparently, is Google practice of allowing companies to "buy" as search words the trademark of a competitor. Thus, Dell, for example, could pay Google so that when someone searches for "Gateway," Dell appears high in the search results or a Dell ad appears in the "sponsored links" box.

Apparently, trademark owners say that this "use" of a trademark is violation of their property rights. Audrey Spangenberg, a software company owner who filed the suit, suggested:

It is inappropriate for Google to sell my trademark for a profit. It really misleads our customers and our potential customers.

The theory here would be that a company has invested in the creation of its brand identity (which "exists" in the minds of all of us out here who recognize the trademark and have particular associations with it) and that the other company is profiting from the use of this "thing" that the trademark owner has built. The word itself is physically in an index on the Google server and when the user types it in an action is triggered and this action is potentially profitable to the other company.

(She uses the word "misleads" here because that's a key concept in the law of trademarks -- more on this idea below.)

That's fine as far as it goes, but it makes a mistake that is common in conversations about trademark, copyright, brand identity, and so on. And that mistake is forgetting to think about the substance, the "thing-ness" that's of value. That substance is an association in my head, in all our heads. If, as a consumer, I do a search for "Gateway," it is likely that I am looking for, say, a personal computer. Fortunately for Gateway Corporation, I have some association in my head between this category (what I am actually looking for) and their trademark. But what I am trying to do is get the best deal on the best computer I can find. I use a search tool called Google to pursue my goal. Will Gateway begrudge me the use of my association between their trademark and the category I'm looking for? The fact that I use "Gateway" as a gateway to "good computer"? Do they really want to suggest that my association of their trademark with a generic category should serve to obscure, in practice, other entities in that category? And that if it does not do that -- if it, in fact, leads me into the very marketplace where I can find out who else sells computers -- that it is misleading me? Do they think they own my associations? Do I mislead myself by using their trademark as a lever with which to locate many things in the category of interest to me?

In fact, I think they are renting my associations and they should be paying me for their use. Their entire "brand identity" (the value of which, by the way, they are allowed to put on their balance sheet as an asset) exists in our heads. Is my slipping and saying "xerox" instead of photocopy a whole lot different from putting a xerox logo on my car? They might pay me for the latter, but not for the former.

Why is any of this important for a sociology of information? Because figuring out what kind of property different types of information represent is a big project for the 21st century. A significant portion of the information that is valuable to corporations resides in consumer interest, practice, and their social networks. The social, in other words, is creating a lot of the value of information.

Think about this in connection with recent debates about copyright in which it is implied that all the value of, say, a Beatles song, resides in the song itself. If we, collectively lose interest, there's nothing there at all. If, on the other hand, we hum along, talk about it, dance to it, request it on the radio, play covers of it, etc. then it has value. The record company wants all the value to lie in the thing itself because that's what they control and that's what they know how to extract value from. But without the social, they got nuffin'.

The Origins of Life/Information

Now you will know I'm a little loonie.

In a former life I spent a lot of time studying chemistry and mathematics and I have for some time been thinking about molecules and information. In particular, I've been puzzling over the question of how information carrying molecules like RNA and DNA came into existence and how they manage to "code" for more information than they "contain." And I've been recently urging the idea of catalysis as a metaphor for infrastructure on my partner.

And so I was quite excited to read Nicholas Wade's report in this morning's Times ("Chemist Shows How RNA Can Be the Starting Point for Life") on the work of John D. Sutherland and colleagues at the University of Manchester. The abstract of their article in Nature this week starts out like this:

At some stage in the origin of life, an informational polymer must have arisen by purely chemical means.

They go on to describe how molecules that could be present in a pre-biotic "warm pond" -- cyanamide, cyanoacetylene, glycolaldehyde, glyceraldehyde and inorganic phosphate -- can react to form the building blocks of RNA. (The chemistry of the reaction is shown in a nice series of graphics here.)

Can I say something really clever about what this really has to do with the sociology of information? No. But stay tuned. I can connect back to that comment about infrastructure and catalysis, though. The authors of the article note that the presence of phosphate not as an reactant but earlier in the process:

its presence from the start is essential as it controls three reactions in the earlier stages by acting as a general acid/base catalyst, a nucleophilic catalyst, a pH buffer and a chemical buffer.

In other words, its presence changes the environment, makes possible reactions that energetics would otherwise forbid or discourage. That seems like an interesting definition for infrastructure.

Information and Fairness

Insider trading is a classic example of the instrumental value of information and it reminds us of how markets are socially constructed (not in the sense that they are figments of the collective imagination but in the sense that they generally need the support of some social norms, rules, and laws in order to function well.)

The New York Times reported last November (in "S.E.C. Accuses Mark Cuban of Insider Trading") that Mark Cuban, owner of the Dallas Mavericks, has been accused of selling all of his shares in a company a few hours after receiving confidential inside information suggesting the stock price would drop. At first glance it would appear that the "bottom line" is the monetary value of the information (that Cuban had but others did not), but consider how a source explained things, as quoted by the article's writer: "It is fundamentally unfair for someone to use access to nonpublic information to improperly gain an edge on the market." The "technical" reason for prohibiting insider trading is that markets can fail if people think others have private information, but this comment suggests that there's a social norm at work too: it's just not informationally fair.

Friends of Friends

I've been thinking about social networks today, and how they grow. In particular, I've noticed that sometimes when I "make" a new friend on Facebook, I comb over their friend list to see if there's anyone on it that I should try to friend.

And so, I've been trying to coin a term for this (maybe someone already has -- probably someone already has). The first candidates I considered were friend-poaching, friend-lifting (via shoplifting), and friend-pilfering (to steal in small quantities).

A focus on going through the friend lists (rather than the act of making the friend request) might be called friend-prospecting (I like the triple entendre here -- one of looking for precious minerals, the other of a salesperson sending out feelers, "looking for prospects," and lastly, the image of scanning the horizon (of your network)); related would be "friend-foraging."

I rejected words like pillage or appropriate because you don't remove them (friend as non-zero-sum phenom). That imagery pushed me to think about friend-piracy, friend-cribbing, and friend-plagiarizing. Friend-sponging has the attraction by analogy to friends using friends. Friend-riding as a variation on free-riding captures something essential, especially among those who ONLY get their friends this way (thereby contributing little to other folks' ability to do the same*).

I'm working on a simulation that analyzes how network structures change if this is the dominant mode of growth. Stay tuned for an online applet illustrating this.

Any ideas? Any of these strike you as closer to the mark to describe what you are doing when you scan friends' friend lists? Or what you think about others doing this to yours? Or friends who are only connected this way ("you didn't think of me yourself! you just saw me on X's list!")?

Thanks in advance for your thoughts. If you are interested, I also just started the "virtual focus group" blog as an experiment in collecting data on things like this.

*Important from network analysis point of view, though, is that this would not be completely true since if I forage among the friend lists of multiple friends, everyone I manage to snag becomes available to all of my friends.

Whose Information?

Robert Smith had a piece ("Sept. 11 Families Want Confidential Files Released") on NPR's Morning Edition today that dovetails nicely with a number of posts that have appeared here* on the relationship between courts and the information order. Our argument has been that courts play a role in enacting an important relational component of equality in a democracy: under certain circumstances, formal equals cannot arbitrarily withhold information from one another.

The three remaining plaintiffs are arguing that materials they've obtained during the discovery phase of their trial -- materials about airline and airport security on 9/11 -- should be made public. The defendants are claiming that the material is meant for "the lawyers' eyes only."

The case reminds us of the informational role played by courts and civil litigation. As generic members of the public who happened to have been singled out by having a relative killed on 9/11 these plaintiffs are exercising their formal informational equality before the court. They get to say "tell us what you know about that day" and the usually much more powerful organizations are not allowed, in this forum, to say, "we don't have to tell you."

Now the question is whether their right to ask (and be answered) is tied to their formal status as equals before the court as a place where information "comes to light," or whether it's interpreted in strictly transactional terms -- since their lawsuit requires the information, they may see it, but the other party gets to maintain its right to say "we don't have to tell you" to the public at large.

Even apart from how the judge rules on the contest between the public interest of disclosure and the private interest of confidentiality here, in light of the frenzied demand for "confidential corporate information" from the bailed out insurer AIG in recent weeks, we might remind ourselves that the airlines received a pretty hefty bailout from the taxpayers after 9/11. Perhaps they'll want to be careful about how vigorously they argue that the public does not have the right to know.

*See these posts:

1. "Equality, Information and the Courts Redux: The Dan Rather Report,"
2. "Democracy and the Information Order,"
3. "Courts and the Information Order,"
4. "Suing for Information"

See also:

1. Hadfield, Gillian. 2009. "Framing the Choice Between Cash and the Courthouse: Experiences With the 9/11 Victim Compensation Fund." Law & Society Review, Volume 42, Issue 3 (p 645-682)
2. Hadfield, Gillian and Dan Ryan. "Democracy and the Information Order" (unpublished draft)
3. Weiser, Benjamin. "Value of Suing Over 9/11 Deaths Is Still Unsettled." New York Times, March 12, 2009.

Information Rot

A whole chapter in my book on the sociology of information will be about information permanence and impermanence and so this posting by David Pogue caught my eye: "Should You Worry about Data Rot?" It's text of an interview that was a part of a video piece he did for CBS a few weeks ago. The basic idea is that we store our data on media that are subject to degradation and that require for play back hardware or software that have short lifetimes. We are left with the problem of constantly "migrating" our data to new formats.

An important observation : the pace at which data recording formats become obsolete and unreadable is accelerating. The experts cited in the piece suggest we are currently at the ten year mark -- at this point, one needs to migrate to new media every ten years.

The video piece ends with the observation that there's never been, nor ever will be, a data recording technology that lasts forever. Of course, one's first thoughts go to clay tablets from ancient Persia, which seem to have held up rather well. True, but of all the clay tablets ever produced, we have, in all likelihood, but a small fraction. But then, given what's on most of them (e.g., records of grain sale transactions or inventories of food storage), it's not clear that the information order is impoverished by their absence. Of what fraction of our current information holdings could the same be said of. One wonders, but one migrates one's own data, just in case.

Foolishness as a Fount of Robustness

It has often been said that information is at the heart of the current economic crisis: markets grind to a halt as opacity erodes trust between investors.

In many of the diagnostic dissections of the crisis foolishness plays a central role, foolishness in the form of ill-advised risk-taking. In the wake of either getting burned or seeing others get burned, the players all withdraw to the sidelines, unwilling to put their money on the line.

We envision a process of rebuilding that will involve clearing out the bad assets, replenishing reserves, rewriting regulations, finding fault and assigning responsibility. In short, we imagine that it won't be over (that is, the players won't venture back out into the game) until all the t's have been crossed and all the i's have been dotted.

But maybe we'll yet be rescued by the very same foolishness that got us into the problem in the first place. It might well be that just a few glimmers of hope, a few signs that the government knows what it is doing or is willing to step up to the plate, at least a mild indication that the loonier folks won't be allowed to demagogue, a few bright spots in terms of basic indicators, and oila, the players are out there, slightly irrationally, ready to play again. If they really were careful assessors of the status quo and careful evaluators of the odds, they'd hold back and wait for all those t's and i's. But these are the same folks who thought it was fun to play with loaded guns, blind folds, and beer. It may be that the very characteristics that got us in will be what hastens our way out.

An appetite for being "only so careful" may be evolutionarily robust. It could well be that a population of more careful actors would still get into such messes every now and then (if, perhaps, a little less frequently), but they'd have less chance of climbing back out. Populations with a plentiful supply of crazies, though, might have a better chance of getting on with things.

One might think, by way of analogy, of relationships in which friends are emotionally somewhat volatile in comparison to those in which everyone is very even keeled. The former find themselves frequently at odds and at one anothers' throats, but they rapidly make up and get on with things. The latter have far fewer blowups but have a much lower chance of recovering from one when it occurs.

We'll see how the stock market does tomorrow....