Blockchain, Self-Sovereign Identity, and Selling Off Humanity

Reposted with permission from Wrench in the Gears.

facial recognition
refugee iris scans

Digital currency payments validated with biometric information like iris scans have been prototyped using refugee populations over the past few years (see the featured image). While the technology that undergirds it is complex, programmers are developing accessible interfaces that make using digital currency as easy as opening an app and verifying a transaction, financial or otherwise, with a thumbprint or facial-recognition scan.

It’s time activists began to develop a working knowledge of Blockchain and self-sovereign digital identity, because these are the mechanisms that will drive the transition to IoT monitoring for the purposes of Pay for Success deal evaluation. I created a slide share about Blockchain as part of a “Smart Cities” post I wrote last year, which can be accessed here if it helps to have visuals.

 

Blockchain Slideshare

 

The technology became public in 2008 when Santoshi Nakamoto published the whitepaper “Bitcoin: A Peer to Peer Electronic Cash System.” No one knows who Nakamoto actually is. Over the past decade Bitcoin digital currency has generated significant buzz, yet many believe Blockchain will be even more transformative, as big as or bigger than the rise of the Internet.

MIT is heavily involved in Blockchain research and development through its Digital Currency Initiative, housed within the MIT Media Lab. The program is led by Neha Nerula, formerly of Google who holds a PhD from MIT’s Computer Science and Artificial Intelligence Laboratory (CSAIL). Nerula served on the World Economic Forum’s Global Future Council on Blockchain from 2016-2017. Its faculty advisor, Simon Johnson, co-founded the Sloan School’s Global Entrepreneurship Lab and worked as chief economist for the International Monetary fund.

In an April 2018 article, “In Blockchain We Trust,” Michael Casey, global economics professor, goes into detail regarding the use of Blockchain to create “value” in virtual worlds by securing ownership of digital assets. As we kill off the planet and begin spending more and more time in online environments, there’s cold comfort knowing the forces of global monopoly capital are rapidly colonizing digital worlds, too.

Blockchain is the structure that underpins crypto-currencies like Bitcoin, but it’s much more than that. In its simplest terms, it’s a ledger that keeps track of transactions, all kinds of transactions that may or may not have a financial component. Unlike a dusty accounting ledger or its modern equivalent, something like Quick Books, data stored on Blockchain is distributed. This means multiple exact copies of the same encrypted data live on peer-to-peer networked computers, which supposedly makes it more secure. If one node goes down the information is not lost. It is portrayed as the ultimate “permanent record.”

Data stored on Blockchain is “verified” by computers that use a consensus process, competing to solve cryptographic puzzles in exchange for Bitcoin payments. This cryptographic authentication injects “trust” into transactions, enabling security without the need of a third party to ensure everyone is on the up and up. Once data is locked into Blockchain, promoters of the technology say it is immutable, unchangeable. Although, as with everything coded, there are still vulnerabilities and hacks as discussed in this MIT Technology Review article “How secure is blockchain really?”

It may be some indication of the level of actual “trust” developers have in blockchain that the Chamber of Digital Commerce and Coin Center created the Blockchain Alliance in the fall of 2015 to “pro-actively engage” with regulatory and law enforcement agencies. In the United States, government partners include: DEA, DHS, DOJ, FBI, US Marshal Service, US Secret Service, ICE/HSI, CBP, IRS-Criminal Investigation, FDA, US Postal Inspection, Commidity and Futures Trading Commission, SEC, FTC, FDIC, as well Attorney General’s Offices in California, Texas, New York, and Ulster County. Seems they have some rather powerful partners.

 

 

 

Some Blockchains are public, others are private. Data stored on private chains can be made accessible using a combination of matched public and private “keys.” A public key is used to verify and encrypt data. It is public and can be known by anyone. A private key decrypts data that has been encrypted with its paired public key. These keys consist of extremely long sets of characters, which can be shortened to a public key fingerprint or associated with biometric information via a biocryptic process.

Digital currency payments validated with biometric information like iris scans have been prototyped using refugee populations over the past few years (see the featured image). While the technology that undergirds it is complex, programmers are developing accessible interfaces that make using digital currency as easy as opening an app and verifying a transaction, financial or otherwise, with a thumbprint or facial-recognition scan.

Beyond their capacity to hold tokenized digital currencies, e-wallets are being used to hold all sorts of other information. They are touted as an effective means to manage the continuous flows of activity, money, and data that surround us. In the fall of 2016, the state of Illinois; home to many Pay for Success players including: James Heckman, JB Pritzker, Rahm Emmanuel, the MacArthur Foundation, and the Chicago Mercantile Exchange (trading financial and commodity derivatives), charged a Blockchain Taskforce with examining ways to use the technology to promote economic development in the state and “improve record keeping.” Their final report, issued in January, is available here. Below is a map of the players involved. Click here for the interactive version.

Included in the report is an info-graphic I have shared repeatedly. It depicts public welfare food benefits being put on Blockchain with “healthy” eating nudges built into the mechanics. Memorize this. Internalize it. This how they will deploy computer code to control the growing masses of the poor. See Carolyn Leith’s great post “Do you believe Universal Basic Income will save society? Think again.” Putting “friction” in the system is not limited to SNAP benefits. Similarly coded nudges could just as easily be inserted into “choice” options around education savings accounts, healthcare access, and housing vouchers. How about Sesame Credit? It’s not too much of a stretch to imagine citizen scoring being embedded into these systems as well.

In the fall of 2017, Illinois announced a partnership with Evernym, a Utah-based company that develops digital identity solutions. They plan to put birth certificates on Blockchain. Increasing attention is being paid to the field of self-sovereign identity. The premise, if you go along with it, is that you no longer need a centralized authority to recognize your identity. A person can simply build up a digital identity through recorded transactions stored on Blockchain. Un-housed people in major cities are being scooped up as test subjects.

Austin has undertaken such a program with financial support from Bloomberg “What Works Cities” Philanthropies. This population is also one that requires significant support, making them prime candidates for Pay for Success interventions. Of course the impact of the interventions must be able to be tracked and measured, because this is an investment market after all. Self-sovereign identity makes to possible to aggregate all of that data, streamlining deal assessment. Fummi is one app in development to support such programs.

Many “smart” cities are establishing municipal ID programs, touted as a “solution” for people unable to obtain state-issued identification. It sounds good, but I can’t help but wonder if the plan is to convert these programs to self-sovereign identity apps on Blockchain in the not too distant future. Oakland’s program links to a debit card, so there is precedent for tying these IDs into digital payment systems.

Last fall the city of Philadelphia issued a Request for Proposals for the development of a municipal ID program, though it appears to have since been cancelled. The RFP expressed a desire to incorporate tracking other public services, including library access and health records, onto the card. They also wanted to build in the ability to share data with private and non-profit partner organizations via magnetized strips. See screenshot below or read the full RFP here.

This link from the Worldwide Web Consortium discusses use of DIDs or Decentralized Identifiers as key element of this new form of identity management. Of course there are downsides to efficient identity systems. During a panel at the Advanced Digital Identity Summit last fall around  timestamp 26:00, Bitcoin entrepreneur Andreas Atonopolous, cautioned the audience that digital identity systems could pose risks, especially for populations living under authoritarian regimes where governments may use digital methods to control how people interact with society.

Antonopolous described conversations he’d had in places like Argentina where people expressed serious reservations about these systems, because their government had a history of throwing dissidents out of aircraft. If private keys are tied to biometric markers, it should be expected that people will at some point be compelled by authorities to open access to their data-using force to attain a face or fingerprint scan against someone’s will. Or even if brute force were not used, to withhold access to needed services, until the person has no other choice but to submit.

Other pilot programs underway in Illinois include land titling in Cook County, academic credentialing at the University of Illinois, logging green energy task credits, and state licensing for healthcare providers. That last one is interesting; a toe in the water, perhaps, to begin shifting Medicaid onto Blockchain?

The day after I wrote “Minding our Health: Digital Nudge Part Two,” I discovered a 2016 whitepaper by Institute for the Future (creator of “Learning is Earning” and edu-blocks) “A Blockchain Profile for Medicaid Applicants and Recipients.” The paper pitches the idea of creating Blockchain smart contracts to devise “smart” health profiles that would allow AI-mediated sale of healthcare insurance and IoT monitoring of prescriptions and patient compliance. Pretty overwhelming if you consider that IFTF also imagines a future where AI assistants are going to help people navigate their lifelong-learning/human capital management plans.

I have a nagging fear we’re looking at a future where Universal Basic Income stipends proffer subsistence, just enough to keep the masses alive and compel them to sell their data for the most modest luxuries, maybe a chocolate bar. Platforms are being developed right now that encourage the widespread sale of personal data for the purposes of AI development. Access to data is granted using pseudonymous protocols that permit it to be queried without the initiator of the query knowing the actual identity of the person whose data is involved. Proponents of big-data government really want us to believe it’s ok to allow our personal data to be poured into massive data lakes as long as it remains anonymized. Check out Ocean ProtocolEnigma, and datum. I’d love to hear what you think.

Personally, I think they’re aiming to use our digital exhaust to build HAL.

 

-Alison McDowell

Advertisements

Digital Nudging: Data, Devices & Social Control

Reposted with permission from Wrench in the Gears.

Digital exhaust, virtual selves

…“Choice architects” create these systems and weave them into public policy. Through strategic application of “nudges,” citizens,  otherwise “irrational actors” in the market, can be guided to conform to economists’ expectations. Through nudges, human behaviors are redirected to fit mathematical equations and forecasts….

The way we live our lives generates enormous amounts of data. Keystrokes; online payments; photos with embedded meta-data; cell tower pings; fit bits; education management apps; search histories; avatars; social media posts all contribute to a cloud of digital exhaust that threatens to engulf us. Our world is being increasingly data-fied as smart phones mediate our daily activities, and Internet of Things (IoT) sensors become integrated into our homes and public spaces.

In the coming decade we’re going to have to navigate environments defined by ubiquitous computing and surveillance. Virtual and real worlds will meld in unsettling ways. The threat of state repression will intensify, especially for black and brown people, immigrants, refugees, the poor, and dissidents. As the former CIO of the City of Philadelphia Charles Brennan noted at the end of an October 22, 2017 meeting, the future of policing will encompass predictive analytics, facial recognition software, and drone surveillance.

With UPenn’s GRASP lab currently managing a $27 million contract with the US Army Research Lab to develop distributed intelligence, autonomous weapons, it’s not too soon to be thinking about what comes next. To get a feel for where we could be headed, the write up, “Singapore, City of Sensors” describes what it’s like to live in a “smart nation”  where EA3 devices track “Everyone, Everywhere, Everything, All The Time.”

Bits and bytes of data build up like passes from a 3-D printer; and as the data is aggregated, our digital doppelgangers emerge. Of course they’re merely shadows of our true, authentic selves. They magnify certain aspects of our personalities while suppressing others. The data of our online counterparts can be incorrect or incomplete, yet even with all those flaws our online profiles and reputations have begun to profoundly influence our offline lives.

As Eric Schmidt of Alphabet (Google’s parent company) says: data is the new oil, so valuable nation states will fight over it. From Cambridge Analytica to Cornell-Technion’s Small Data Lab to Wharton’s Behavior Change for Good program, social scientists are teaming up with venture capital, government agencies, and NGOs to devise new and intrusive ways to monitor people and extract profit from the management of our data-filled lives.

The relationship map below (click here for the interactive version) features individuals and organizations associated with the Small Data Lab, a program of Cornell-Technion based on Roosevelt Island in New York City. This research and development program is backed by influential impact investors and technology companies, including Google. If you know your way around social impact bonds, you’ll see quite a few familiar names: Goldman Sachs, Bloomberg Philanthropies and Atlantic Philanthropies. The aim is to come up with sophisticated ways to analyze digital exhaust and devise technological “solutions” that pressure individuals to conform to neoliberal economic conditions. The technological underpinnings of these app-ified “solutions” enable the capture of “impact metrics” that will fuel the growing social investment sector.

Cornell-Technion also aims to grow the STEM/cyber-security human capital pipeline, having recently accepted at $50 million gift from Tata Consulting, one of India’s most highly-capitalized IT companies, to build an innovation center on their campus. The program plans to do outreach into New York City schools to promote skill development in AI and human-computer interaction.

PTB Ventures, Project Trillion Billion, is one example of a company positioning itself for this new market. A financial backer of Learning Machine, spun out of the MIT Media Lab and specializing in Blockchain education credentials, PTB has also invested in Callsign (digital identity authentication), Element (biometrics), and DISC Holdings (digital payments and credit on blockchain). Their website states the company anticipates a future where trillions of devices will be connected to billions of humans and create trillions of dollars in economic value. These investors hope to use connected devices and sensors to mine the lives of the global poor and dispossessed for the economic benefit of the social impact and fin-tech sectors.

Proposals for online platforms are beginning to emerge that aim to combine decentralized identifiers (DIDs used to create self-sovereign digital identities), e-government transactions, and online payment systems (including public welfare benefits) with “digital nudges” grounded in behavioral economics. See the screenshot taken from the Illinois Blockchain Task Force’s January 2018 report. It shows a desire to digitally incentivize healthy eating purchases for people receiving SNAP benefits.

Behavioral economics is the study of how psychological, cognitive, emotional, social, and cultural factors influence the economic choices a person makes. It challenges the idea of homo economicus, that people maintain stable preferences and consistently make self-interested choices in relation to market forces. The field was popularized in the United States by Nobel-prize winning psychologist Daniel Kaheneman. University of Chicago economist Richard Thaler built upon this work. Thaler won a Nobel Prize in Economics for his research last year.

Thaler worked closely with Cass Sunstein, who headed Obama’s Office of Information and Regulatory Affairs. In 2008, they co-wrote Nudge, a book espousing “libertarian paternalism.” People make “choices,” but systems can be designed and implemented to encourage a preferred “choice,” generally one that prioritizes long-term cost-savings. “Choice architects” create these systems and weave them into public policy. Through strategic application of “nudges,” citizens,  otherwise “irrational actors” in the market, can be guided to conform to economists’ expectations. Through nudges, human behaviors are redirected to fit mathematical equations and forecasts. David Johnson’s 2016 New Republic article Twilight of the Nudges, provides useful background on this technique and the ethical implications of applying nudges to public policy.

Sunstein Obama

The first “nudge unit” was established in the United Kingdom in 2010 as the Behavioural Insights Team (BIT). It operated as a cabinet office for several years before reinventing itself as a global consultancy in 2014. BIT is now owned in equal parts by staff, the UK government and NESTA, a social policy innovation / impact investing foundation funded with proceeds from the UK lottery system. Thaler is on their Academic Advisory Team. From 2015 to 2018 BIT had a $42 million contract with Bloomberg Philanthropies to support development of their “What Works Cities” initiative in the United States. Results for America, the organization that co-hosted the $100 Million “Pay for Success” celebration in Washington, DC last month, currently manages the What Works Cities program on behalf of Bloomberg Philanthropies.

Ideas42 has also been very active at the intersection of social science, behavioral economics and impact investing strategies. It was founded in 2008 as a program of Harvard University with support from scholars and experts at MIT, Princeton, the International Finance Commission (IFC), and the Brookings Institution. Focus areas include education, healthcare and financial inclusion. Numerous mega-philanthropies that are actively implementing the Ed Reform 2.0 agenda have partnered with the organization: Gates, MacArthur, Arnold, Lumina, HP, and Dell. Other partners are involved in deployment of global aid: USAID, the World Bank, the International Rescue Committee (see my previous post re BIT and IRC involvement with Syrian refugee children), and the UN Environment Programme. There are representatives of global finance including Citi Foundation and American Express; insurance companies, MetLife and the Association of British Insurers; and impact investors focused health and wellness, the Robert Woods Johnson and Kellogg Foundations.

Over one hundred experts are allied with this program, including Angela Duckworth and Katherine Milkman of the University of Pennsylvania. They created the ninety-second video “Making Behavior Change Stick” as part of their application to the MacArthur Foundation’s $100 Million and Change challenge. While the proposal was not a finalist, Duckworth and Milkman’s research continues to move forward with private support, housed within the Wharton Business School. Their first $1 million came from the Chan Zuckerberg Initiative (founded with Facebook stock), that interestingly enough is also currently working with the Philadelphia District Attorney’s office (Larry Krasner) on criminal justice “reform.” More opportunities for our technological overlords to encourage “good” decision making while completely disregarding “broken on purpose” social programs, I suppose.

Take note of the partners identified in Duckworth and Milkman’s MacArthur proposal:

Duckworth and Milkman’s premise is that technology can be used to encourage people to make “good choices,” which the begs the question, “Good for whom?” I suspect what will make a certain choice “good” is the likelihood it will enrich social impact investors while furthering the austerity that drives reduction in public services, increases outsourcing, and fosters the creation of public-private partnerships. The desires of those needing to access services will not be factored into the computer code that sets up friction points and establishes preferred outcomes. Citizens are simply inert, raw material to be molded, for profit, by inhumane digital systems. In the nudge model, economic systems that create mass poverty are not addressed. Instead, the impetus is placed upon the individual to better navigate existing systems steeped in structural racism.

As you may remember from my previous post, Duckworth has been working closely with human capital and labor economist James (7-13% ROI on Early Childhood Education Investments) Heckman. She is one of five leaders of the “Identity and Personality” division of his Human Capital and Economic Opportunity Working Group, based out of the University of Chicago and funded by the Institute for New Economic Thinking (INET). In May 2017, Duckworth brought an interdisciplinary group of experts in behavior change to the University of Pennsylvania for two-day conference sponsored by the Center for Economics of Human Development. Fourteen presentations, including  a “Fireside Chat With Daniel Kahneman” were recorded and are viewable here.

The prior year, Philadelphia became the first city in the US with its own municipal level “nudge unit.” Though Duckworth does not appear to be directly involved, Evan Nesterak, a researcher in Duckworth’s Characterlab, co-founded The Philadelphia Behavioral Science Initiative (PBSI) with Swarthmore Professor Syon Bhanot. Bhanot is involved with theSwarthmore Professor Syon Bhanot, as well. According to a 2018 report on PBSI published by Results for America, the initiative’s other academic partners include: the University of Pennsylvania, Drexel, Temple, St. Joseph’s, Yale, Columbia and Princeton. The report, viewable here, was funded by the John and Laura Arnold Foundation. John Arnold, a hedge-fund billionaire who made his fortune at Enron, has since moved on to education reform, gutting public pensions, and promoting pay for success “evidence-based” finance.

“Innovative” programs are being incubated within the planning and policy departments of many US cities now via fellowships and loaner “experts” who plan to advance an “evidence-based,” “big-data,” “platform-government” agenda. Anjali Chainani, Mayor Kenney’s Policy Director and Manager of the city’s GovLab, has gone through the Results for America Local Government Fellow program.  The Philadelphia Behavioral Science Initiative is an outgrowth of the City Accelerator and GovLabPHL, which she manages. While the initial program areas are strategically uncontroversial (it would be difficult to speak against seniors taking advantage of discounted water bills or public bike sharing), it seems likely an “evidence-based” campaign of nudges, once normalized, will be extended into more lucrative and ethically-dubious areas like policing, health care delivery, family services, and behavioral health.

Below is an extensive relationship map that shows interconnections between data-driven public policy / privatization programs originating out of the Harvard Kennedy School of Government, the global financial interests represented by the members of Citi Group’s “Living Cities” program, and how those interface with government operations in the city of Philadelphia. Many of these programs were put into place by our former mayor, Michael Nutter, who went on to become a senior fellow for Bloomberg’s “What Works Cities” program. His wife Lisa is now a principal with Sidecar Social Finance, an impact investing firm.

Click here for the interactive version.

Feeding this machine is our gradual yet irresistible slide into a financial world of digital economic transactions. My next post will focus on that. Please take some time to explore the maps above. They are complex but convey a great deal about the forces at work. Sometimes a nudge is actually a shove. I think our city is being positioned for some serious shoving.

The footage above is from the violent July 5, 2018 police intervention against peaceful OccupyICEPHL protestors at 8th and Cherry Streets outside Philadelphia’s ICE detention center.

-Alison McDowell

From Math to Marksmanship: Military Ties to Gamified Assessments

Reposted with permission from Wrench in the Gears.

HCeconomics

There is a difference between education and training. There is a difference between knowing just enough to carry out orders without questioning the chain of command and knowing enough to participate in civic life as a critical thinker. If educational-technology is an extension of military training/human engineering, which it is, we should give careful consideration as to what our society needs at this time, and if we should be allowing the military-industrial complex to data-mine and track our children’s innermost thoughts.

This past February, economist James Heckman convened a working group of social scientists to discuss new types of assessments that are being designed to capture data about children’s social-emotional traits and predict future behaviors. The researchers spent two days in an oak-paneled room at the University of Chicago where they collaborated on the new assessments and measurements. Impact investors, like Heckman’s patron JB Pritzker, need the metrics these tests will deliver to fuel their predatory, speculative pay for success schemes. Videos of the recorded presentations can be viewed here.

I will be excerpting segments of these talks on my blog, since I know most of you won’t have the time to sit through hours of viewing. This first segment highlights the intersection of educational technology and military training. For more information read one of my early pieces “How exactly did the Department of Defense end up in my child’s classroom?”

It is important to note that ReadyNation, sponsor of the Global Business Summit on Early Childhood, is a program of the Council for A Strong America. ReadyNation is their workforce development program. Another of the group’s five program areas is “Mission Readiness.” The website states this initiative is run by seven hundred “Retired admirals and generals strengthening national security by ensuring kids stay in school, stay fit, and stay out of trouble.”

There is a difference between education and training. There is a difference between knowing just enough to carry out orders without questioning the chain of command and knowing enough to participate in civic life as a critical thinker. If educational-technology is an extension of military training/human engineering, which it is, we should give careful consideration as to what our society needs at this time, and if we should be allowing the military-industrial complex to data-mine and track our children’s innermost thoughts.

Watch the clip here. Full talk here.

Timestamp 6 minutes 40 seconds

Jeremy Roberts (PBS Kids): I’ll hand it over to Greg. I wanted to give you a chance to talk about UCLA CRESST.

Gregory Chung (UCLA, CRESST) So, just quickly, you know what we bring to the project is expertise in the use of technology for measurement purposes. Whether it’s simulation or games. How do we turn that information about what we think is going on in their heads to their interaction with the game? So going through that whole analysis process from construct definition to behavior formation. And then just a general, we do research in a military context and in an education context, training, pre-k to adults. I joke that my motto is from math to marksmanship. (audience laughter)

Unidentified Audience Member: Can you say what the relationship is between the military and education?

Chung: Ah, it’s like…it is like… at a certain level they’re the same. Military training is about effectiveness. You train just enough to get someone to do some job. But integrated technology, adaptive systems give feedback. So all the instructional issues that you commonly apply to education, you apply to the military. But also you go from the military, who kind of created the whole instructional design system, back to education. And it’s really interesting when we have an intersection in say marksmanship, how do we measure skills (pantomimes shooting a rifle) with sensors, but then we bring in the educational assessment framework, like what’s going on in here (points to his head/brain), how that transfers to wobble and shake (points to torso).

Roberts: If the armed forces were to find out that say the students were not scoring sufficiently on the ASVAB to make them confident that they’d be able to operate the next generation of tank, for example, the army might be really interested in early childhood education.

Chung: (chuckling in audience) So, really they’re the same.

Heckman: It has, right? Already. And quite a few aren’t able to pass the ASVAB.

-Alison McDowell

Test Scores and Child Hunger: The Cold Calculus of Pay for Success Predators

Reposted with permission from Wrench in the Gears.

Food for Children

Through outsourcing and the imposition of hard metrics, “what works” lobbyists intend to push the poor, and those teetering on the brink of poverty, into an abyss of impact-driven digital slavery. They’ll pull the non-profits in, along with their clients, since “what works” government hinges on their complicity. Moving forward, non-profits will increasingly run outsourced programs and will be required to deliver the data demanded by outcomes-based contracts. Services will be reengineered to fit the constraints of data dashboards-human life reduced to numbers to meet the demands of global capital.

When I give food to the poor they call me a saint. When I ask why the poor have no food, they call me a Communist. Dom Helder Camara, Brazilian Catholic archbishop and important figure in liberation theology (1909-1999)

Wrench in the Gears is primarily a blog about education, and the dehumanizing influence technology wields over classroom instruction. In doing this work, I’ve come to understand that, at its root, the shift to digital “education” is about aggregating vast datasets on children than can be mined for profit in the impact-investing sector. This tactic is not limited to education. In fact, it threatens to engulf ALL public services.

Through outsourcing and the imposition of hard metrics, “what works” lobbyists intend to push the poor, and those teetering on the brink of poverty, into an abyss of impact-driven digital slavery. They’ll pull the non-profits in, along with their clients, since “what works” government hinges on their complicity. Moving forward, non-profits will increasingly run outsourced programs and will be required to deliver the data demanded by outcomes-based contracts. Services will be reengineered to fit the constraints of data dashboards-human life reduced to numbers to meet the demands of global capital.

The Bipartisan Budget Act of 2018, signed into law this February, created a new $100 million Pay for Success Fund at the US Department of the Treasury. Merchant banking firms like Ridge-Lane have marshaled teams of advisors to get in on the action. Financiers and tech billionaires are grooming candidates across the country, hoping their chosen ones will usher in a wave of Pay for Success initiatives that will rival the stock market.

At its core, the new theory of “economic thinking” promoted by INET is riddled with rot. While George Soros, James Heckman, and Robert Dugger attempt to cast social impact investment programs as socially conscious and “progressive,” the public deserves to know the truth. That truth is that these predators will NOT feed hungry children UNLESS they can profit from it.

Feeding people through mutual aid has always been a radical act. The Black Panther Party knew it, which is why those in power considered their free breakfast program so dangerous. In January a dozen activists associated with Break the Ban were issued criminal citations for feeding the homeless in a public park in El Cajon, CA. In the aftermath of Hurricane Maria, mutual aid became the backbone of recovery efforts in Puerto Rico. Food is central to the human experience. Food insecurity drives poverty.

After reading the exchange below it appears impact investors have not YET found a way to track cost-offsets for feeding people, but they are trying. It is likely the tool they need will come in the form of digital identity systems linked to public assistance benefits. The Illinois Blockchain Taskforce is already envisioning ways they can use blockchain technology to track and manage a person’s food choices. See the screenshot below taken from the Illinois Blockchain and Distributed Ledger Taskforce Final Report to the General Assembly, January 31, 2018

The built-in incentive to make a “healthy choice” is part of a larger shift that will combine digital identity and payment systems with choice architecture to control the behaviors of all who utilize public benefits. We definitely need a Plan B lined up before THAT program comes online.

Below is an exchange shared during the Q&A portion of a Federal Reserve-sponsored panel presented in January at an impact investor gathering in Salt Lake City, Utah. Janis Dubno moderated the panel. She works with the Sorenson Center, served as a Pay for Success Fellow at the US Department of Education in the lead up to the passage of ESSA and designed the Salt Lake City pre-k social impact bond. Click here for interactive map.

Participants discussed Pay for Success initiatives involving justice-involved youth. The conversation between Gina Cornia of Utahans Against Hunger and the promoters of social impact investing lays bare the truth of “innovative” finance. Far from being a silver-bullet for poverty, Pay for Success doubles down on inhumane, neoliberal practices that flow from a culture of white supremacy.

The upshot is if they can’t figure out a way to predict and track a future cost savings, they won’t pursue it. What is so very sad is that instead of confronting the panel about the inhumanity built into this “innovative” finance system, Cornia attempts to figure out a way her non-profit can work WITHIN the oppressive structure…perhaps as a strategy rather than a stand-alone outcomes-based contract? It sickened me to listen to adults saying they may be able to fund a child’s breakfast if they can link the food to a rise in third grade test scores. This is an abomination that cannot be tolerated. The machine we are confronting is not just eviscerating education; it’s so much bigger than that. The stakes are so high. Now is the time to create a Plan B. Who is doing that work in YOUR community and how can you support them?

Watch the video clip here.

(Gina Cornia, Utahans Against Hunger) Hi, my name is Gina Cornia. I work for a policy advocacy agency, Utahans against hunger. And in my experience just in talking about a lot of these issues, nutrition is frequently just not even mentioned. We talk about housing. We talk about healthcare. We talk about a lot of things like that, but food insecurity and hunger is not, I mean hardly ever, mentioned. So to what extent are your projects looking at food insecurity both on the family, on the family level, and on the kids who are going into juvenile justice? Thank you.

(Caroline Ross, Sorenson Impact) Sure, I’ll go ahead and speak to that. I think it’s such an important issue, and in a couple of our projects we’re looking at actually integrating food security components. For instance in our homelessness projects integrating a piece where at least there’s food, sort of as a consideration, or provided as part of the program. As far as outcomes-based payments, we haven’t really thought to that level. Again, I’m curious if folks, anybody else on the panel has thoughts?

(Ian Galloway, San Francisco Federal Reserve) I’m so glad you asked that question, because it’s such a great example of what I kind of consider to be these sorts of nested outcomes. And there’s a lot, always you know, a lot of these determinants of success, and some of those more narrow determinants are difficult to fund with a performance-based contract or an outcomes-based funding stream. There are a lot of reasons for that; part of it has to do with the fact that it’s difficult to find savings in the system.

I know I just went on a diatribe about how we shouldn’t use that as a basis for establishing value, but the truth is a lot of people do. And you know improving nutrition; it’s hard to follow the money if you can’t follow the money to an agency that saves when you increase nutrition, then it’s difficult to re-route that money to pay for projects that address the underlying needs. So that’s one of the big reasons that we don’t do this. The larger challenge is that it’s one of many component pieces to a larger anti-poverty strategy that tends to not get included as much as I think we all wish it were.

I say that coming from, I believe and I don’t think I’m making this up-I think Oregon is the most food insecure state in the country-which is kind of nutty, because it’s an agricultural state and if it’s no longer number one it’s certainly up there. So it’s an issue that is very personal to me, working in the state of Oregon. But I have not seen any examples of using a Pay for Success contract to address food insecurity and nutrition, yet.

(Gina Cornia) I don’t, I guess I’m not suggesting it as a Pay for Success project, but using access to nutrition to improve your outcomes in Pay for Success.

(Ian Galloway) So just, yeah, I think you’re spot on. I think that this is one of the beauties of paying for outcomes instead of programs. If your outcome that you’re being paid for, for example just to sort of set up the straw man, is improving third-grade reading scores. Well if kids are not adequately, you know, being fed at home, and their nutrition is poor…good luck, right? So that is a really important building block to academic success, but what we need to do is recognize that the outcome that we want is an education outcome, but the intervention is a food intervention. And that’s one of the things that Pay for Success and Outcomes-based funding hopefully makes a little bit easier, but we haven’t seen it yet.

(Gina Cornia) But I would encourage you that that should be the first conversation you’re having as you look at Pay for Success projects, especially in education. Are kids getting adequate nutrition? Do they get breakfast in the classroom? Are their families eligible for SNAP? Because, you know hungry kids can’t learn, and if that’s not the first thing you’re talking about then I don’t think the programs will be successful.

-Alison McDowell

Heckman and Pritzker Pitch Apps as Poverty “Solutions” Yielding a 13% Return on Investment

Reposted with permission from Wrench in the Gears.

Do You See A Child or Human Capital?

If you have time to watch the entire hour, I encourage you to listen as these two men discuss their plans to create tools that will measure non-cognitive skills in service of outcomes-based contracts and a futures market in infant and toddler data. They are creating the next “big short” right before our eyes, and this time it’s not homes hanging in the balance, it’s our children. As if IQ scores weren’t awful enough, now they are developing an IQ equivalent for Big 5 character traits: openness, conscientiousness, extraversion, agreeableness, and neuroticism. They want to define and rate our kids according to their “soft skills.”

This is the fourth in a series providing context for the Global Business Summit on Early Childhood that ReadyNation will be hosting in New York City November 1-2, 2018. The featured image is from an article pitching Waterford Upstart online preschool, piloted in Utah, a state experimenting with funding early childhood education using social impact bonds. The caption on the photo states that this four year old doesn’t have running water in her home, but she does have access to literacy education on a chromebook.

The focus of this post is Dr. James Heckman, a professor of economics at the University of Chicago since the early 1970s. Much of his research focuses on investments in early childhood as it pertains to labor markets. In 2000, Dr. Heckman was awarded the Nobel Prize in Economic Sciences for contributions to the field of micro-econometrics. James Heckman; Arthur Rolnick, former senior researcher at the Minneapolis Federal Reserve; and Robert Dugger, venture capitalist and ReadyNation advisor, have worked together for decades. Below is a relationship map for Heckman. See the interactive version here.

HeckmanDugger, and Stephen Durlauf, another professor of economics at the University of Chicago, lead the Human Capital and Economic Opportunity Global Working Group (HCEO). Launched in 2010, the initiative is run by the Center for the Economics of Human Capital Development and supported financially by the Institute for New Economic Thinking, a think tank established by George Soros in the aftermath of the financial collapse of 2008. Yes, Soros is funding human capital research conducted by a professor working out of the Becker (Milton) Friedman Institute for Economics at the University of Chicago. In the short video below, Heckman describes how HCEO fosters interdisciplinary research between 400+ academics who research poverty and then use that research to influence public policy.

HCEO’s six focus areas are closely linked to the social impact investment sector: childhood interventions, family inequality, health inequality, identity and personality, inequality measurement and policy, and markets.

With financial support from JB Pritzker via the Pritzker Children’s Initiative, Heckman’s academic work has been organized into an online tool kit to promote early childhood education as an investment opportunity, one they claim could yield a 13% annual rate of return once health outcomes are taken into account.

Suzanne Muchin’s branding firm Mind + Matter Studio developed The Heckman Equation website. Muchin served for four years as Vice President of programs for Teach for America and serves on the board of 1871, a tech accelerator based in Chicago’s Merchandise Mart launched by Pritzker in 2012.

Pritzker is a tech-oriented venture capitalist and politician. His sister Penny served on the Chicago Board of Education and later as Commerce Secretary in the Obama administration. In 2014, the Pritzker Foundation joined with the Gates, Irving Harris, and Kaiser Family Foundations and the Buffett Early Childhood Fund to create the First Five Years Fund to expand universal pre-k access. Pritzker has participated, as a funder, in two pilot early childhood social impact bond programs in the United States; one in Salt Lake City and the other in Chicago. If you are not up to speed on the history of and dangers posed by SIBs and pay for success programs, spend some time looking over the resources here.

In the trailer for a new documentary on social impact bonds, The Invisible Heart, Pritzker states:

“We are in the nascent stages of a social impact bond boom. Could be as big as the New York Stock Exchange…I’ve heard (people say), why are we letting investors make money off of our children. Well, that’s silly.” JB Pritzker

Pritzker is the Democratic candidate in Illinois governor’s race. He has also thrown money to the Silicon Valley Community Foundation’s campaign “Choose Children,” that is pushing to elect a governor of California who will be a “champion of young children.” Of course the subtext here is that Silicon Valley hopes to install a governor who will scale pay for success early childhood education programs, programs that will tap the state’s millions of vulnerable children as profit centers.

Heckman and Pritzker have been laying the groundwork for the early childhood impact investing market for years. The remainder of this post is comprised of clips and transcripts I pulled from a presentation the two men gave in San Diego in 2016. The passages that follow make it clear the formerly worthy idea of “whole child” education has been completely hijacked by global finance. It also explains why in some districts in Maine half the report card rubrics revolve around evaluations of “habits of mind.”

If you have time to watch the entire hour, I encourage you to listen as these two men discuss their plans to create tools that will measure non-cognitive skills in service of outcomes-based contracts and a futures market in infant and toddler data. They are creating the next “big short” right before our eyes, and this time it’s not homes hanging in the balance, it’s our children. As if IQ scores weren’t awful enough, now they are developing an IQ equivalent for Big 5 character traits: openness, conscientiousness, extraversion, agreeableness, and neuroticism. They want to define and rate our kids according to their “soft skills.”

Below are presentation highlights in case you don’t have time to listen to the clips:

  • Poverty it’s not just about money, it’s about “parenting, encouragement and skills.”
  • Investing in young children yields higher results relative to workforce and life outcomes than do investments in older children and teens.
  • The highest returns will be on interventions directed at ages 0 to 3.
  • Children have achievement gaps documented as early as age 3.
  • IQ doesn’t increase much after a child reaches the age of 10, but interventions can continue to shape a child’s “character skills” to improve workforce outcomes.
  • It’s not just about being smart; it’s about being motivated.
  • Heckman identifies non-cognitive skills as a “target of opportunity” for investors.
  • But first they need to develop an inventory of social emotional skills to assess, track, and measure non-cognitive traits. (For the purposes of predicting outcomes for impact investment evaluation).
  • Having the OECD (promoter of PISA) on board is a good sign.
  • By “improving outcomes” through interventions, they claim poor children will require fewer public expenditures in the future. Social impact bonds will then capture those anticipated savings as profit to be handed over to privateinvestors.
  • Factoring in health outcomes, the return on these investments could be as high as 13% per year, which is HUGE.
  • Pritzker plans to identify cheap, scalable interventions-like parenting apps. (Because all impoverished families really need is an app to tell them what they should be doing to parent their children.)
  • There has been push-back from both ends of the political spectrum against using Pay for Success to Fund early childhood interventions, but they were able to convince communities by using compelling financial structures and promising “results.”
  • In closing, Heckman says you have to get parents on board or the whole thing is going to fail.

Do you hear that parents?!

Their talk was sponsored by Education Synergy Alliance, whose director Laura Kohn came from Seattle where she worked as a state-level advocate for the Gates Foundation, and San Diego Grantmakers, a collaborative that has been promoting use of Pay for Success in program delivery. Connie Matsui, social entrepreneur and former chair of the San Diego Foundation, brought Heckman and Prizker to San Diego in 2016.

This two-minute clip is from JB Pritzker’s introduction. Watch it here.

(Pritzker) “Really, I’m just grateful for the opportunity to be here. I had the opportunity to be here earlier today, and so did Jim, to speak to the larger community foundations where they are doing amazing work and where so many communities from around the country that have large endowments and lots of donor advised funds are beginning to look at early childhood development as an important arena for them. I’m, of course, particularly grateful to be asked to join Professor Heckman and to share thoughts today on a subject that I care deeply about, and that I believe is maybe the most important issue facing us in the country today, early childhood development.

So in truth, I’m a businessman (fortune valued at $3.4 billion), and I’m not a Nobel prize winner. No one will ever claim I will win anything like that. I’m lucky to share a stage occasionally with Professor Heckman. So I’ll speak from my heart about what I care about deeply and from the position that I come from. I’m here to solicit you for your business. I want to make a pitch to you today. It’s a subject that I care about, that’s about making investments. And so if you’re ready for my pitch…if you invest with me, and you invest with Professor Heckman we can not only unlock human potential, but we can also get you at HUGE return on your investment. So, do you want to hear the rest of my pitch?”

The middle section of the presentation, between timestamp 23:30 and timestamp 35:00, features Dr. Heckman presenting his theories about the importance of character education in public schools; that non-cognitive (social emotional) skills are more important to workforce outcomes than cognitive (academic) performance. He goes on to discuss the importance of interventions linked to non-cognitive skills training to health outcomes. Heckman proposes that certain interventions will yield an impressive rate of return of up to 13% once health outcomes are considered. Watch a seven-minute excerpt here.

(Heckman) “Poverty, as we understand it now is not just money. Poverty, of course the way we measure it IS money, but actually it’s more than that. We’ve come to understand that it’s not JUST money. And that is what the great experiment was launched by Johnson. We’ve also come to understand it has to do with parenting, encouragement and basically this set of skills. And I think what we have now is a much more comprehensive notion.

So basically we think the early lives play a very important role for promoting social mobility, for promoting equality. And then miracle of miracles and we started following these people using the same kind of experiments that were started, but then stopped in the wake of the war on poverty, and head start. What we found was, yes, actually IQ did fade out after about age 10, just like Jenson said, just like everybody said.

And guess what? When we follow these people to age 40 and 50, these people have very high social and economic returns, and it came exactly through this mechanism of character skills and engagement. And surprise of surprise, even though these kids didn’t have any higher IQ, it also turned out they actually did have higher test scores. Why? Because these achievement test scores involve more than just being smart, it’s being motivated

We think about the skills problem, and JB referred to this skills problem, it’s an enormous problem. So we looked for examples at this measure, the civil international adult literacy survey that’s taken every few years. It’s basically America, the United States, when stacked up against all of the OECD countries is the worst in terms of percentages of people who are at the lowest rung of literacy and numeracy. We mentioned another dimension of this is the fact that among children, among males 16 to 26 eligible for military service, only about 25% are actually qualified. They’re mostly disqualified, a lot of it has to do with cognitive deficits and so forth. Now these are preventable, because we know from these interventions that we can do something about it.

We have the skills problem. But how do you promote skills? That leads to another issue if you…look at test score gaps, which is what sees a lot of attention between the haves and the have-nots; if you look at age 18 you see a tremendous gap between those kids who have parents who are college-educated and those whose parents are high school drop outs, mothers probably, ok. So if you look at the graph you’ll also see that that gap is there before they enter school, and it’s actually there at age three, which is the earliest age we can reliably measure these things.

So now wait a minute, you can say oh we’re talking about genetics, that’s a perfect eugenic argument, right? These people are born dumb to dumb parents and their dumb parents didn’t get education, so therefore this is just the manifestation of what Charles Murray was talking about. The answer is no, because what we’ve done is we’ve actually randomly assigned these children, put them in different environments, enriched their local environment, their parenting environment, the school environments. And we then track them against students who didn’t receive such supplementation early in life, and we find they’re much better performing. But we need a much richer inventory of how we decide what’s better and a deeper understanding of what the skills are that make them successful in life.

So, I think a good measure of how much the world has changed in terms of thinking about skills is a new report issued by the OECD. The OECD was the group that promotes the PISA exam, so every few years you know Shanghai is very proud and has some of the highest PISA scores in the world. And you go into China and you go into Hong Kong and they are lower and very envious. But the OECD now is getting the point. It only got it recently, but it’s now starting to say we need to inventory exactly these character skills, because they’ve been shown to be predictive, they’re also highly malleable, and they’re actually highly valuable even to somewhat later ages.

So even when we think we can’t boost IQ, that might be very difficult because the rank is stable and your ranking in the IQ distribution is pretty well established as JB was saying around 8, 9, 10 or somewhere in that zone. It is still true that these character skills are more manipulable (malleable?). In the sense they are actually our target of opportunity. So a much deeper understanding, and I think when we go in and look at what the economic and social benefits are of these interventions, we have a deeper and more comprehensive evaluation system looking at both cognitive and non-cognitive skills.

But to come to the economic return; we can see substantial benefits. So we have actually computed the rate of return, the kind of rate of return that venture capitalists worry about, and should properly worry about, and that many of you probably worry about. What we found was the rate of return on something like the Perry Preschool Program was somewhere between seven and ten percent per annum, per annum, which is extremely high. If you look at the US stock market average investment in equity between 45 and 2008, that’s above that. Great, ok so you’re actually finding it’s a very, very good investment. These are targeted towards kids who are disadvantaged; it’s providing family supplementation. We can talk about the details of those programs. Then, more recently, we did some studies and this blew people out; it blew me out. We also followed another group of children who are actually followed now in the wake of the Perry study, but in Raleigh Durham, North Carolina. We followed these children up to age 35, and we not only gave them the standard measures of unemployment, crime, participation in the larger society, but we also looked at health.

We asked how did they look in terms of health? What we found was that those children, now actually adults, have much lower risk factors for all the adult onset diseases: lower propensity for diabetes, lower cardiovascular conditions. And what we see is that there is not only a benefit that comes, but health. How can that be? It’s because of that same notion of regulation behavior, following numeracy, getting engaged in the larger society. We find less smoking, less drinking, less engagement in unhealthy lifestyles in the wake of having these higher levels of cognitive and non-cognitive skills. So, you know, we’re in the process of learning. But the fact of the matter is we’re getting a very high rate of return for that intervention. Preliminary evidence is suggesting somewhere between 11 and 13 percent IF we include the enhanced health benefits.”

This section is from the question and answer period and closing to the presentation. Timestamp 48:50, watch it here.

(Pritzker) “That expense that you talked about; gee, that’s a very expensive intervention? That’s taken into account in these returns, okay. So it’s not like, I mean, the expense gets you that return. So it doesn’t matter that your investment was a thousand dollars or a hundred dollars or five thousand dollars. The return is what you get on those dollars invested.

(Heckman) But in addition to the direct expense you’re also going to get the welfare cost of raising taxes, so that’s also factored in here, so the sum of ten percent or the return is after accounting for actually the direct cost of hiring the teachers and the cost of collecting taxes to finance those. So that’s why I think it’s a fairly compelling study…if you look at the evidence I’m happy to send you the papers we’ve written, and we’re writing more. But you are finding very strong precision about these estimates.

(Pritzker) And we’re not advocating for very, very expensive interventions specifically. There are lots of scalable, much less expensive interventions. In fact, that’s what I spend my time looking for and helping to evaluate the scalability of, because ultimately that’s how we’re going to get the federal, state, and local governments to adopt them. Right? They’ve got to feel less expensive, but the reality is the more expensive actually works, too…

(Heckman) It’s an area of evolution. We really want to find out what’s best practice and what’s cheaper, right?

(Pritzker) The returns on preschool are much lower than on 0 to 3. So the interventions on 0 to 3 that we know work are home visitation, just as an example. Home visitation works.

Now there’s an expensive version of home visitation, and there’s a less expensive version of home visitation. And there’s been lots of study on these home visitation programs, but the critical component of it is reaching the parent. The parent is the first and best teacher for a child and if you can reach a parent, almost every parent, almost, wants to be a good parent. So we know what works and we know what are some scalable versions. Some of them, by the way, are texting programs. So almost every poor parent in America has a smart phone, and there are programs just for reminding parents what things work, and they want to know and they want to do these things and they’ll find time to do them.

But back to getting communities to buy in, it is very hard, and we got involved, I’ll talk about social impact bonds. But basically bringing preschool to Utah, a state where the political environment for preschool is hard; we did it with a finance plan that made sense for Utah, for Salt Lake. It got community engagement in it and support for it, because, frankly because we showed them what the results would look like.

So we started with that. There was resistance on both ends for preschool for example and any kind of early childhood education. On one end of the political spectrum the resistance is, you’re interfering with the parent-child relationship; you’re somehow interceding, the government is being paternalistic and getting engaged in something that should be a private matter. That’s one side of the political spectrum. On the other side of the political spectrum are the views that well with a social impact bond is why are private investors getting involved in something government should do? The government should get all the returns on this, the taxpayers should get all the returns-I happen to agree with that, that the government should put forward. But how many people think, how many people have a surplus in their local, state or federal government right now? None.”

Previous posts about the ReadyNation Global Business Summit on Early Childhood:

Pre-K Profit: ReadyNation Hosts Global Business Leaders in New York City This November: Link

Making Childhood Pay: Arthur Rolnick, Steven Rothschild and ReadyNation: Link

Galton and Global Education Futures Forum: Scientific Racism Looking Backwards and Forwards: Link

-Alison McDowell