2017 CPA-Zicklin Index of Corporate Political Disclosure and Accountability

Curated on Posted on by Stefaan Verhulst

Introduction to the 2017 CPA-Zicklin Index by Morris Pearl: “In our modern financial system, investors, by necessity, delegate virtually all control over the businesses in which they invest to a board of directors. That board then, perhaps by necessity, perhaps not, often delegates virtually all control to the officers who run the company day to day. That usually works out pretty well. The interests of the officers are generally aligned with that of the shareholders, and most boards have a compensation committee which (hopefully) deals with the obvious conflicts around the pay of the officers. That, however, is not enough. Occasionally the officers use corporate resources for politics, sometimes with disastrous consequences. The practice of spending money on politics can open up the corporation to both subtle and not-so-subtle coercion from government officials. Indeed, the first campaign finance regulations were favored by business people who found themselves under a barrage of demands for money from government officials who had some power over their businesses. There are some things that businesses can do to defend themselves. Chief among those are:

  • An official corporate policy on high level approval of political expenditures. Based on my experience, telling someone soliciting a donation that they are welcome to make their case, publicly, to a board committee, can be great fun.
  • Openness – making records of whatever the business does available to the general public. Based again on my experience, people doing things that they don’t want to be publicly known are often doing things that they should not be doing.

We do not have the ability to end the practice, but by publicly giving companies credit for doing those two things, the CPA-Zicklin Index is making a difference….(Full Report)”.

A Brief History of Living Labs: From Scattered Initiatives to Global Movement

Curated on Posted on by Stefaan Verhulst

Paper by Seppo Leminen, Veli-Pekka Niitamo, and Mika Westerlund presented at the Open Living Labs Day Conference: “This paper analyses the emergence of living labs based on a literature review and interviews with early living labs experts. Our study makes a contribution to the growing literature of living labs by analysing the emergence of living labs from the perspectives of (i) early living lab pioneers, (ii) early living lab activities in Europe and especially Nokia Corporation, (iii) framework programs of the European Union supporting the development of living labs, (iv) emergence of national living lab networks, and (v) emergence of the European Network of Living Labs (ENoLL). Moreover, the paper highlights major events in the emergence of living lab movement and labels three consecutive phases of the global living lab movement as (i) toward a new paradigm, (ii) practical experiences, and (iii) professional living labs….(More)”.

Our Gutenberg Moment: It’s Time To Grapple With The Internet’s Effect On Democracy

Curated on Posted on by Stefaan Verhulst

Alberto Ibargüen at HuffPost: “When clashes wracked Charlottesville, many Americans saw neo-nazi demonstrators as the obvious instigators. But others focused on counter-demonstrators, a view amplified by the president blaming “many sides.” The rift in perception underscored an uncomfortable but unavoidable truth about the flow of information today: Americans no longer have a shared foundation of facts upon which we can agree.

Politics has long been a messy, divisive business. I lived through the 1960s, a period of similar dissatisfaction, disillusionment, and disunity, brilliantly chronicled by Ken Burns’ new film “The Vietnam War” on PBS. But common, local knowledge —of history and current events — has always been the great equalizer in American society. Today, however, a decrease in shared knowledge has led to a collapse in trust. Over the past few years, we have watched our capacity to compromise wane as not only our politics, but also our most basic value systems, have become polarized.

The key difference between then and now is how news is delivered and consumed. At the beginning of our Republic, the reach of media was local and largely verifiable. That direct relationship between media outlets and their communities — local newspapers and, later, radio and TV stations — held until the second half of the 20th century. Network TV began to create a sense of national community but it fractioned with the sudden ability to offer targeted, membership-based models via cable.

But cable was nothing compared to Internet. Internet’s unique ability to personalize and to create virtual communities of interest accelerated the decline of newspapers and television business models and altered the flow of information in ways that we are still uncovering. “Media” now means digital and cable, cool mediums that require hot performance. Trust in all media, including traditional media, is at an all-time low, and we’re just now beginning to grapple with the threat to democracy posed by this erosion of trust.

Internet is potentially the greatest democratizing tool in history. It is also democracy’s greatest challenge. In offering access to information that can support any position and confirm any bias, social media has propelled the erosion of our common set of everyday facts….(More)”.

The Unexamined Algorithm Is Not Worth Using

Curated on Posted on by Stefaan Verhulst

Ruben Mancha & Haslina Ali at Stanford Social Innovation Review: “In 1983, at the height of the Cold War, just one man stood between an algorithm and the outbreak of nuclear war. Stanislav Petrov, a colonel of the Soviet Air Defence Forces, was on duty in a secret command center when early-warning alarms went off indicating the launch of intercontinental ballistic missiles from an American base. The systems reported that the alarm was of the highest possible reliability. Petrov’s role was to advise his superiors on the veracity of the alarm that, in turn, would affect their decision to launch a retaliatory nuclear attack. Instead of trusting the algorithm, Petrov went with his gut and reported that the alarm was a malfunction. He turned out to be right.

This historical nugget represents an extreme example of the effect that algorithms have on our lives. The detection algorithm, it turns out, mistook the sun’s reflection for a missile launch. It is a sobering thought that a poorly designed or malfunctioning algorithm could have changed the course of history and resulted in millions of deaths….

We offer five recommendations to guide the ethical development and evaluation of algorithms used in your organization:

  1. Consider ethical outcomes first, speed and efficiency second. Organizations seeking speed and efficiency through algorithmic automation should remember that customer value comes through higher strategic speed, not higher operational speed. When implementing algorithms, organizations should never forget their ultimate goal is creating customer value, and fast yet potentially unethical algorithms defile that objective.
  2. Make ethical guiding principles salient to your organization. Your organization should reflect on the ethical principles guiding it and convey them clearly to employees, business partners, and customers. A corporate social responsibility framework is a good starting point for any organization ready to articulate its ethical principles.
  3. Employ programmers well versed in ethics. The computer engineers responsible for designing and programming algorithms should understand the ethical implications of the products of their work. While some ethical decisions may seem intuitive (such as do not use an algorithm to steal data from a user’s computer), most are not. The study of ethics and the practice of ethical inquiry should be part of every coding project.
  4. Interrogate your algorithms against your organization’s ethical standards. Through careful evaluation of the your algorithms’ behavior and outcomes, your organization can identify those circumstances, real or simulated, in which they do not meet the ethical standards.
  5. Engage your stakeholders. Transparently share with your customers, employees, and business partners details about the processes and outcomes of your algorithms. Stakeholders can help you identify and address ethical gaps….(More).

The ethical use of crowdsourcing

Curated on Posted on by Stefaan Verhulst

Susan Standing and Craig Standing in the Business Ethics. A European Review: “Crowdsourcing has attracted increasing attention as a means to enlist online participants in organisational activities. In this paper, we examine crowdsourcing from the perspective of its ethical use in the support of open innovation taking a broader system view of its use. Crowdsourcing has the potential to improve access to knowledge, skills, and creativity in a cost-effective manner but raises a number of ethical dilemmas. The paper discusses the ethical issues related to knowledge exchange, economics, and relational aspects of crowdsourcing. A guiding framework drawn from the ethics literature is proposed to guide the ethical use of crowdsourcing. A major problem is that crowdsourcing is viewed in a piecemeal fashion and separate from other organisational processes. The trend for organisations to be more digitally collaborative is explored in relation to the need for greater awareness of crowdsourcing implications….(More)”.

How online citizenship is unsettling rights and identities

Curated on Posted on by Stefaan Verhulst

James Bridle at Open Democracy: “Historically, and for those lucky enough to be born under the aegis of stable governments and national regimes, there have been two ways in which citizenship is acquired at birth. Jus soli – the right of soil – confers citizenship upon those born within the territory of a state regardless of their parentage. This right is common in the Americas, but less so elsewhere (and, since 2004, is to be found nowhere in Europe). More frequently, Jus sanguinis – the right of blood – determines a person’s citizenship based on the rights held by their parents. One might be denied citizenship in the place of one’s birth, but obtain it elsewhere….

One of the places we see traditional notions of the nation state and its methods of organisation and control – particularly the assignation of citizenship – coming under greatest stress is online, in the apparently borderless expanses of the internet, where information and data flow almost without restriction across the boundaries between states. And as our rights and protections are increasingly assigned not to our corporeal bodies but to our digital selves – the accumulations of information which stand as proxies for us in our relationships to states, banks, and corporations – so new forms of citizenship arise at these transnational digital junctions.

Jus algoritmi is a term coined by John Cheney-Lippold to describe a new form of citizenship which is produced by the surveillance state, whose primary mode of operation, like other state forms before it, is control through identification and categorisation. Jus algoritmi – the right of the algorithm – refers to the increasing use of software to make judgements about an individual’s citizenship status, and thus to decide what rights they have, and what operations upon their person are permitted….(More)”.

Tech’s fight for the upper hand on open data

Curated on Posted on by Stefaan Verhulst

Rana Foroohar at the Financial Times: “One thing that’s becoming very clear to me as I report on the digital economy is that a rethink of the legal framework in which business has been conducted for many decades is going to be required. Many of the key laws that govern digital commerce (which, increasingly, is most commerce) were crafted in the 1980s or 1990s, when the internet was an entirely different place. Consider, for example, the US Computer Fraud and Abuse Act.

This 1986 law made it a federal crime to engage in “unauthorised access” to a computer connected to the internet. It was designed to prevent hackers from breaking into government or corporate systems. …While few hackers seem to have been deterred by it, the law is being used in turf battles between companies looking to monetise the most valuable commodity on the planet — your personal data. Case in point: LinkedIn vs HiQ, which may well become a groundbreaker in Silicon Valley.

LinkedIn is the dominant professional networking platform, a Facebook for corporate types. HiQ is a “data-scraping” company, one that accesses publicly available data from LinkedIn profiles and then mixes it up in its own quantitative black box to create two products — Keeper, which tells employers which of their employees are at greatest risk of being recruited away, and Skill Mapper, which provides a summary of the skills possessed by individual workers. LinkedIn allowed HiQ to do this for five years, before developing a very similar product to Skill Mapper, at which point LinkedIn sent the company a “cease and desist” letter, and threatened to invoke the CFAA if HiQ did not stop tapping its user data.

..Meanwhile, a case that might have been significant mainly to digital insiders is being given a huge publicity boost by Harvard professor Laurence Tribe, the country’s pre-eminent constitutional law scholar. He has joined the HiQ defence team because, as he told me, he believes the case is “tremendously important”, not only in terms of setting competitive rules for the digital economy, but in the realm of free speech. According to Prof Tribe, if you accept that the internet is the new town square, and “data is a central type of capital”, then it must be freely available to everyone — and LinkedIn, as a private company, cannot suddenly decide that publicly accessible, Google-searchable data is their private property….(More)”.

Blockchain Could Help Us Reclaim Control of Our Personal Data

Curated on Posted on by Stefaan Verhulst

Michael Mainelli at Harvard Business Review: “…numerous smaller countries, such as Singapore, are exploring national identity systems that span government and the private sector. One of the more successful stories of governments instituting an identity system is Estonia, with its ID-kaarts. Reacting to cyber-attacks against the nation, the Estonian government decided that it needed to become more digital, and even more secure. They decided to use a distributed ledger to build their system, rather than a traditional central database. Distributed ledgers are used in situations where multiple parties need to share authoritative information with each other without a central third party, such as for data-logging clinical assessments or storing data from commercial deals. These are multi-organization databases with a super audit trail. As a result, the Estonian system provides its citizens with an all-digital government experience, significantly reduced bureaucracy, and significantly high citizen satisfaction with their government dealings.

Cryptocurrencies such as Bitcoin have increased the awareness of distributed ledgers with their use of a particular type of ledger — blockchain — to hold the details of coin accounts among millions of users. Cryptocurrencies have certainly had their own problems with their wallets and exchanges — even ID-kaarts are not without their technical problems — but the distributed ledger technology holds firm for Estonia and for cryptocurrencies. These technologies have been working in hostile environments now for nearly a decade.

The problem with a central database like the ones used to house social security numbers, or credit reports, is that once it’s compromised, a thief has the ability to copy all of the information stored there. Hence the huge numbers of people that can be affected — more than 140 million people in the Equifax breach, and more than 50 million at Home Depot — though perhaps Yahoo takes the cake with more than three billion alleged customer accounts hacked.  Of course, if you can find a distributed ledger online, you can copy it, too. However, a distributed ledger, while available to everyone, may be unreadable if its contents are encrypted. Bitcoin’s blockchain is readable to all, though you can encrypt things in comments. Most distributed ledgers outside cryptocurrencies are encrypted in whole or in part. The effect is that while you can have a copy of the database, you can’t actually read it.

This characteristic of encrypted distributed ledgers has big implications for identity systems.  You can keep certified copies of identity documents, biometric test results, health data, or academic and training certificates online, available at all times, yet safe unless you give away your key. At a whole system level, the database is very secure. Each single ledger entry among billions would need to be found and then individually “cracked” at great expense in time and computing, making the database as a whole very safe.

Distributed ledgers seem ideal for private distributed identity systems, and many organizations are working to provide such systems to help people manage the huge amount of paperwork modern society requires to open accounts, validate yourself, or make payments.  Taken a small step further, these systems can help you keep relevant health or qualification records at your fingertips.  Using “smart” ledgers, you can forward your documentation to people who need to see it, while keeping control of access, including whether another party can forward the information. You can even revoke someone’s access to the information in the future….(More)”.

Selected Readings on Blockchain and Identity

Curated on Posted on by Stefaan Verhulst

By Hannah Pierce and Stefaan Verhulst

The Living Library’s Selected Readings series seeks to build a knowledge base on innovative approaches for improving the effectiveness and legitimacy of governance. This curated and annotated collection of recommended works on the topic of blockchain and identity was originally published in 2017.

The potential of blockchain and other distributed ledger technologies to create positive social change has inspired enthusiasm, broad experimentation, and some skepticism. In this edition of the Selected Readings series, we explore and curate the literature on blockchain and how it impacts identity as a means to access services and rights. (In a previous edition we considered the Potential of Blockchain for Transforming Governance).

Introduction

In 2008, an unknown source calling itself Satoshi Nakamoto released a paper named Bitcoin: A Peer-to-Peer Electronic Cash System which introduced Blockchain. Blockchain is a novel technology that uses a distributed ledger to record transactions and ensure compliance. Blockchain and other Distributed Ledger technologies (DLTs) rely on an ability to act as a vast, transparent, and secure public database.

Distributed ledger technologies (DLTs) have disruptive potential beyond innovation in products, services, revenue streams and operating systems within industry. By providing transparency and accountability in new and distributed ways, DLTs have the potential to positively empower underserved populations in myriad ways, including providing a means for establishing a trusted digital identity.

Consider the potential of DLTs for 2.4 billion people worldwide, about 1.5 billion of whom are over the age of 14, who are unable to prove identity to the satisfaction of authorities and other organizations – often excluding them from property ownership, free movement, and social protection as a result. At the same time, transition to a DLT led system of ID management involves various risks, that if not understood and mitigated properly, could harm potential beneficiaries.

Annotated Selected Reading List

Governance

Cuomo, Jerry, Richard Nash, Veena Pureswaran, Alan Thurlow, Dave Zaharchuk. “Building trust in government: Exploring the potential of blockchains.” IBM Institute for Business Value. January 2017.

This paper from the IBM Institute for Business Value culls findings from surveys conducted with over 200 government leaders in 16 countries regarding their experiences and expectations for blockchain technology. The report also identifies “Trailblazers”, or governments that expect to have blockchain technology in place by the end of the year, and details the views and approaches that these early adopters are taking to ensure the success of blockchain in governance. These Trailblazers also believe that there will be high yields from utilizing blockchain in identity management and that citizen services, such as voting, tax collection and land registration, will become increasingly dependent upon decentralized and secure identity management systems. Additionally, some of the Trailblazers are exploring blockchain application in borderless services, like cross-province or state tax collection, because the technology removes the need for intermediaries like notaries or lawyers to verify identities and the authenticity of transactions.

Mattila, Juri. “The Blockchain Phenomenon: The Disruptive Potential of Distributed Consensus Architectures.” Berkeley Roundtable on the International Economy. May 2016.

This working paper gives a clear introduction to blockchain terminology, architecture, challenges, applications (including use cases), and implications for digital trust, disintermediation, democratizing the supply chain, an automated economy, and the reconfiguration of regulatory capacity. As far as identification management is concerned, Mattila argues that blockchain can remove the need to go through a trusted third party (such as a bank) to verify identity online. This could strengthen the security of personal data, as the move from a centralized intermediary to a decentralized network lowers the risk of a mass data security breach. In addition, using blockchain technology for identity verification allows for a more standardized documentation of identity which can be used across platforms and services. In light of these potential capabilities, Mattila addresses the disruptive power of blockchain technology on intermediary businesses and regulating bodies.

Identity Management Applications

Allen, Christopher.  “The Path to Self-Sovereign Identity.” Coindesk. April 27, 2016.

In this Coindesk article, author Christopher Allen lays out the history of digital identities, then explains a concept of a “self-sovereign” identity, where trust is enabled without compromising individual privacy. His ten principles for self-sovereign identity (Existence, Control, Access, Transparency, Persistence, Portability, Interoperability, Consent, Minimization, and Protection) lend themselves to blockchain technology for administration. Although there are actors making moves toward the establishment of self-sovereign identity, there are a few challenges that face the widespread implementation of these tenets, including legal risks, confidentiality issues, immature technology, and a reluctance to change established processes.

Jacobovitz, Ori. “Blockchain for Identity Management.” Department of Computer Science, Ben-Gurion University. December 11, 2016.

This technical report discusses advantages of blockchain technology in managing and authenticating identities online, such as the ability for individuals to create and manage their own online identities, which offers greater control over access to personal data. Using blockchain for identity verification can also afford the potential of “digital watermarks” that could be assigned to each of an individual’s transactions, as well as negating the creation of unique usernames and passwords online. After arguing that this decentralized model will allow individuals to manage data on their own terms, Jacobvitz provides a list of companies, projects, and movements that are using blockchain for identity management.

Mainelli, Michael. “Blockchain Will Help Us Prove Our Identities in a Digital World.” Harvard Business Review. March 16, 2017.

In this Harvard Business Review article, author Michael Mainelli highlights a solution to identity problems for rich and poor alike–mutual distributed ledgers (MDLs), or blockchain technology. These multi-organizational data bases with unalterable ledgers and a “super audit trail” have three parties that deal with digital document exchanges: subjects are individuals or assets, certifiers are are organizations that verify identity, and inquisitors are entities that conducts know-your-customer (KYC) checks on the subject. This system will allow for a low-cost, secure, and global method of proving identity. After outlining some of the other benefits that this technology may have in creating secure and easily auditable digital documents, such as greater tolerance that comes from viewing widely public ledgers, Mainelli questions if these capabilities will turn out to be a boon or a burden to bureaucracy and societal behavior.

Personal Data Security Applications

Banafa, Ahmed. “How to Secure the Internet of Things (IoT) with Blockchain.” Datafloq. August 15, 2016.

This article details the data security risks that are coming up as the Internet of Things continues to expand, and how using blockchain technology can protect the personal data and identity information that is exchanged between devices. Banafa argues that, as the creation and collection of data is central to the functions of Internet of Things devices, there is an increasing need to better secure data that largely confidential and often personally identifiable. Decentralizing IoT networks, then securing their communications with blockchain can allow to remain scalable, private, and reliable. Enabling blockchain’s peer-to-peer, trustless communication may also enable smart devices to initiate personal data exchanges like financial transactions, as centralized authorities or intermediaries will not be necessary.

Shrier, David, Weige Wu and Alex Pentland. “Blockchain & Infrastructure (Identity, Data Security).” Massachusetts Institute of Technology. May 17, 2016.

This paper, the third of a four-part series on potential blockchain applications, covers the potential of blockchains to change the status quo of identity authentication systems, privacy protection, transaction monitoring, ownership rights, and data security. The paper also posits that, as personal data becomes more and more valuable, that we should move towards a “New Deal on Data” which provides individuals data protection–through blockchain technology– and the option to contribute their data to aggregates that work towards the common good. In order to achieve this New Deal on Data, robust regulatory standards and financial incentives must be provided to entice individuals to share their data to benefit society.

Comparing Models of Collaborative Journalism

Curated on Posted on by Stefaan Verhulst

Center for Cooperative Media: “Working cooperatively is nothing new, to be sure, but how frequently and impactfully news organizations have been collaborating over the last few years is certainly something new. Dramatically shifting business models, technological advances and seismic shifts in audience have lead to groundbreaking and award-winning collaborations around the world, including the Panama Papers and Electionland.

Today the Center released its first full research paper on this topic, identifying six distinct models of collaborative journalism. The report, authored by Center research director Sarah Stonbely, explains the underpinnings of each model and also explores the history of collaborative journalism.

“As we document, collaborative journalism is now being practiced on a scale that constitutes a revolution in journalism,” Stonbely writes. “The many trials and errors of the last decade have generated cooperative efforts that have stood the test of time and are showing the way for others.

“While lessons are still being learned, collaborative journalism has evolved from experiment to common practice.”

In her research, Stonbely focused on cooperative arrangements, formal and informal, between two or more news and information organizations which aim to supplement each group’s resources and maximize the impact of the content produced.

She separates various kinds of collaboration by comparing levels of integration versus time, which, when viewed on a matrix, creates six models of collaborative journalism:

Millions of dollars are being poured into such collaborative reporting projects and cooperative arrangements around the world. According to the Center’s report, for example, the Corporation for Public Broadcasting has put nearly $32 million dollars into funding 29 local and regional partnerships as of earlier this year — and that number is still growing….(More)”