November 27, 2012

Do you worry the vagaries of "vehicular finance" may pull down whatever the bankers left standing in our economic landscape? No, obviously, as nobody heeded Paul Tucker's warnings about it. Actually yes, as everyone seems concerned about "shadow banking", to use Paul McCulley's phrase. For those two titles cover the same topic, Gillian Tett tells us. "Providing a catchy label, in other words, helped shift the policy debate" (*).

Saint-Exupéry had already advised inventors against donning turkish hats (1). It is not Le Petit Prince's asteroid I discovered, only an effective way to deliver efficient eprivacy but I still need people to listen to me. Forget funny clothes and foreign accents, my current lack of success in capturing an audience may be caused by deeper reasons, yet so superficial. To believe Gillian Tett, perhaps the very name worn by my ware is at fault.

Indeed talk to someone of online privacy, eprivacy, and you are likely to hear comments on the likes of grown-up princes William and Harry. Is privacy nothing but the right to shed one's clothes or simply write about it away from unwanted viewers? Is the issue to judge who are the worst offenders, whether Rupert Murdoch's prying reporters, the prowling police of the US government or the spying stipendiaries of hostile powers?

Vehicular finance sounds like car loans spruced up in some overwrought style. Is eprivacy only a politically correct way to titillate the imagination at the expense of celebrities? Are we not ourselves much too insignificant to attract unwarranted attention and much smarter than General Petraeus?

Eprivacy is nothing of the sort. Rather its violations are both more pervasive and more pernicious than we think. Eprivacy is about money, I wrote years ago, money stealthily lifted from our pockets, money robbed by rent-seekers, money which should instead vivify economic growth.

It is true that at the beginning my predictions were just that, predictions. Six years ago, Google's Eric Schmidt spoke about targeted advertisement in the future tense. Five years ago, Verizon was only experimenting about consumer tolerance to cellphone ads. Four years ago, the combination of consumer targeting, cellphone tracking and database technology was still a research subject at MIT.

Natasha Singer's survey shows those promises have been delivered today. "You can be sold in seconds. No wait: make that milliseconds" (**). There is nothing surprising in her analysis. "In some ways, the consumer segmentation process is not as newfangled as it may seem. [...] Real-time bidding is just a faster, smarter, more automated process for brands to find prospects". This declaration from Joe Zawadzki, C.E.O. of MediaMath, a buyside trading platform" echoes a well known argument, three years old at least. If nothing has changed but speed, why worry?

Joe Zawadzki works in Manhattan. He should write to the Mayor of New York. Their city has been buffeted by the wind for ever and nothing has changed today but its speed. Why should Michael Bloomberg worry about the likes of Sandy?

"Jeffrey Chester, the executive director of the Center for Digital Democracy" has another opinion. "Online consumers are being bought and sold like chattel". He is right but much too polite. Maybe I should drop eprivacy and speak of eslavery. Two years ago, didn't I call ourselves data slaves. One year ago, didn't I declare serfdom to be our lot?

Yet can eslavery shift the policy debate in the right direction? Slavery used to be a humanitarian practice, which spared the life of war prisoners too poor to ransom themselves. As modern warfare and economic development threatened to outmode this peculiar supply chain, the lasting stain of the so-called Modern Age has been to enshrine slavery through racism, thereby transforming it into an abhorrent distortion of humanity.

Like pre-modern slavery, eprivacy violations do not target some minority, not even the very rich, the most abused of all if you were to listen to them. Cleverly rising above the fights focused on defending a specific segment of society, the scheme is a model for cash strapped governments. First what amounts to indirect hidden taxes, is charged to advertisers, not consumers, the ultimate and blind payers. Second these taxes are strictly assessed on everyone's ability to pay. "How much is a rich person worth? To Mercedes, a lot. To a used Pinto dealer, [...]" poor people are good to press.

Thus, under any name, eprivacy appears as an economic benefit which at the same time seems too low for individuals to clamor for and is too high for corporate pirates to give away. This situation brings to mind Edward Luce's essay about the aging US infrastructure. "There is remarkably little public outrage over the dilapidation in the power grid, public roads, domestic airports and waterways" (***).

"Politics is noble because it involves personal compromise for the public good", writes David Brooks (****). But this presupposes the recognition of public goods. Were I Eric Schmidt, I would fly my corporate jet, set up an emergency electricity generator and consider I earn more from my Google shares than I pay in privacy taxes to my fellow pirates. Why should I care about the little people? Why don't they fend for themselves?

By urging us to "go out to see "Lincoln," directed by Steven Spielberg and written by Tony Kushner", David Brooks implies that great political leaders can reverse such fissiparous attitudes. It is a fact Lincoln did away with slavery and kept the States United. But doesn't he owe his historical greatness as much to the Civil War itself as to his insightful statemanship?

Peace promotes few visionaries but is a future catastrophe to be wished for, even if the world is not short of potential? After calling for a revolution in favor of eprivacy, I now see the many advantages of incremental improvements. As long as the delay in their effects paves the way for passing the initial measure from which they must spring, can one complain? This is why I recently suggested the creation of a public privacy tax, to nationalize and rationalize the hidden ones of today.

Meanwhile, if people would rather let nature follow its chaotic course, if the disease must go unchecked, a good name would keep it in the public consciousness until circumstances become more favorable. If Gillian Tett's column is an indicator, perhaps "shadow marketing" will be catchy enough. Of course consumer shadowing is not new. In a book published in 2006, "Consumer Behaviour", Ray Wright describes how marketers used to follow shoppers everywhere for the day, adding "with the consumer consent". How dated!

Sandy's speed brought water to the city. A bit wet. Now marketing speed tosses out consent from shadow marketing. A bit shady. Me worry?

Philippe Coueignoux

• (*) ....... Investors must search for the next financial blind spot, by Gillian Tett (Financial Times) - November 23, 2012
• (**) ..... Your Attention, Bought in an Instant, by Natasha Singer (New York Times) - November 18, 2012
• (***) ... Why Congress should care about elderly infrastructure, by Edward Luce (Financial Times) - November 26, 2012
• (****) . Why We Love Politics, by David Brooks (New York Times) - November 23, 2012
• (1) for more details, see Le Petit Prince in the wikipedia