Predicting company misconduct before it even happens … really?

Researchers from the Harvard and Tilburg Business Schools think they’ve found a method to do just that.

One of the research techniques that has sprung up in the era of online engagement and interactivity is “mining” reader comments — then analyzing the granular data to discern their wider implications for companies and brands.

One way this happens is by analyzing the words that employees use to describe their own companies on review sites. Doing so can provide clues as to what’s going on inside these companies that others can’t discovers based on forward-facing reporting about the organizations in the business or news press.

Underscoring this point, a study conducted jointly by researchers at Harvard Business School and the Tilburg School of Economics and Management in The Netherlands has found that such information extracted from employee-review websites like Glassdoor.com is helpful in being able to predict potential misconduct beyond other observable factors such as a firm’s financial performance and  industry risk analysis.

The correlating factors revolve around employee observations concerning the environments in which they work – factors like:

  • Company culture
  • Company operations
  • Control practices
  • Performance pressures

Negative or critical comments made within these broad categories contribute to weighing the risk for corporate misconduct.  Business management professor Dennis Campbell of the Harvard Business School notes that the “tone at the bottom” revealed by such comments can be a good early-warning signal of potential misconduct.

“Our theory is that what leads people to commit misconduct is actually the environment they are in,” adds Ruidi Shang, the Tilburg professor heading up the research team.

The Harvard/Tilburg study sifted through information from anonymous reviews of publicly traded U.S. companies that had been posted on Glassdoor.com over a nine-year period between 2008 and 2017.  Focusing on nearly 1,500 companies that had been the subject of ten or more review entries each over the period, by comparing keywords in the comments to actual corporate misconduct cases brought against public U.S. firms over the same period, direct correlations were found between the statements and the companies that were later found guilty of misconduct.

The researchers discovered that certain terms and phrases used by employees in their comments correlate highly to misconduct cases – terms like bureaucracy, compliance, favoritism, harassment, hostile and strict.  Such terms came up disproportionately more frequently in the discussions and comments.

Of course, such analyses are rough measures at best.  Because the researchers drew comparisons between the comments and the corporate misconduct based only on cases that the U.S. government pursued, the methodology would have missed misconduct wasn’t known (or pursued) by the government.  But as for providing “directional indicators,” the methodology seems to be a valid approach. I think we could see it being employed by Wall Street analysts as part of efforts to predict threats to future financial performance – and other potential problems — based on what the granular data reveals.

More details on the study and its findings can be read in this report.

Another summer of natural disasters — and still too few people heed the warnings.

Waverly, Tennessee Flooding (2021)

This summer’s natural disasters have been par for the course. Just like clockwork, we’ve had wildfires, tropical storms and flooding — with likely more such events happening between now and the end of the season.

And even as these events occur with numbing regularity, it seems that year after year we hear the same stories of people being caught up in nature’s wake. No matter how much effort officials put into evacuation planning and alerts, not everyone hears the message — or “gets it” if they do hear it.

Some states such as Florida and California have worked to build programs that provide explicit guidelines for local officials to follow during evacuations. For example, California’s guidance urges communities to rely on the federal warning system so that alerts can reach the greatest number of people most quickly — usually through cellphone alerts. Local officials are routinely reminded that “incomplete or imperfect information is not a valid reason to delay or avoid issuing a warning.”  When time is of the essence, the “20-80 rule” of information is better than an “80-20” ratio.

The problem is, research shows that many people aren’t inclined to act on these alerts. Typically only about half of those located in mandatory evacuation zones actually leave before hurricanes hit.  For wildfires the percentage of people who comply is higher, but still far too many ignore the orders

Why do people stay rather than leave?  Research finds a variety of factors at play, including:

  • Health problems or disability issues that make it difficult for some people to evacuate
  • Lack of transportation
  • Skepticism about the level of danger
  • Concern about leaving property unattended
  • The inability to accommodate pets, livestock or animals such as horses

Wildfires make for particularly challenging situations because they can quickly shift direction with very little warning. Rural and remote towns with fewer resources and fewer roads face particular challenges.  Often the main evaluation routes are narrow, two-lane thoroughfares that can’t handle the sudden influx of traffic when thousands are being directed to leave the vicinity.

Flash floods can also hit without warning, but with hurricanes it’s often easier to plan for evacuations because typically there are several days’ warning before exit routes will need to shut down.

Florida has experimented with various tactics to improve evacuations by opening emergency shoulders to highway traffic, adding emergency roadside services on major evacuation routes, and posting more cameras and message signs to alert drivers to changing traffic conditions and other developments.

Sending a single unambiguous message from local officials is the best policy regarding evacuations. Offering “options” can create confusion and lead people to pick the option that appeals most to them personally — which might not be the safest one.  Whatever the communication, it must be definitive and precise.  Otherwise, the whole evacuation effort can go sidewise.

Fort McMurray Fire (2016)

Lest anyone become complacent about the dangers that natural disasters can pose, watch this terrifying “you are there” dash cam footage of a resident of Fort McMurray attempting to escape the wildfires that engulfed a portion of that Canadian city in 2016.  There’s no news anchor voiceover … no ominous music in the background to add “drama” … just the gripping footage as documented by the camera. Viewing it once a year is enough to become “scared straight” about natural disasters, all over again.

Not so neat: The rise of the NEET generation.

Millions of Americans age 20 to 24 fall into the NEET category: “Not in Employment, Education or Training.”

The COVID-19 pandemic has exposed some interesting fault-lines in the socio-economic fabric of  the United States.  One of these relates to young adults — those between the ages of 20 and 25. What we find paints a potentially disturbing picture of an economic and employment situation that may not be easily fixable.

A recently issued economic report published by the Center for Economic and Policy Research (CEPR) focuses on the so-called “NEET rate“– young Americans who are not employed, not in school, and not in training.

As of the First Quarter of 2021, the NEET category represented nearly 4 million Americans between the ages of 20 and 24. This eye-popping statistic goes well beyond the particular circumstances of the pandemic and may turn out to be an economically devastating trend with a myriad of adverse ripple effects related to it.

Look at any business newspaper or website these days and you’ll see reports regularly about worker shortages across many sectors — including unfilled jobs at the lower end of the pay scale which offer employment opportunities that fit well with the capabilities of lower skilled workers newly coming into the workplace.

At this moment, pretty much anyone who is willing to look around can easily find employment, schooling, or training of various kinds.  But for millions of Americans in the 20-24 age cohort, the  job opportunities appear to be falling on deaf ears. Bloomberg/Quint‘s reaction to the CEPT study certainly hits home:

“Inactive youth is a worrying sign for the future of the [U.S.] economy, as they don’t gain critical job skills to help realize their future earnings potential.  Further, high NEET rates may foster environments that are fertile for social unrest.”

… Daily urban strife in Portland, Minneapolis and Seattle, anyone?

It doesn’t much help that younger Americans appear to be less enamored with the basic economic foundations of the country than are their older compatriots.  A recent poll by Axios/Momentive has found that while nearly 60% of Americans hold positive views of capitalism, those sentiments are share by a only little more than 40% of those in the 18-24 age category. 

Moreover, more than 50% of the younger group view socialism positively compared to only around 40% of all Americans that feel the same way.

The coronavirus pandemic may have laid bare these trends, but it would be foolish to think that the issues weren’t percolating well before the first U.S. businesses began to lock down in March 2020. 

And more fundamentally, one could question just how much government can do to reverse the trend; perhaps the best thing to do is to stop “helping” so much … ?

More information about the CEPR report can be viewed here.  What are your thoughts on this issue?  Please share your views with other readers here. 

A second look at the prospects for persistent price inflation in our future.

The blog post I published this past week about reports of recent price hikes and what this might portend for the future has sparked some interesting feedback and comments.  Based on that feedback, it appears that feelings are mixed on whether we’re poised to  be entering a period of prolonged inflation. 

Responses from two people in particular are worth highlighting for the “countervailing views” that they espouse.  I think both have merit.

The first response came from my brother, Nelson Nones, who has lived and worked outside the United States for decades.  His perspectives are interesting because, while fully understanding domestic events and policies, he also brings an international orientation to the discussion due to his own personal circumstances.  Nelson is looking to history for his perspectives on the inflation issue, offering these comments:

The chart below shows annual U.S. CPI percentage change for the past 106 years:

Note:  See https://www.usinflationcalculator.com/inflation/consumer-price-index-and-annual-percent-changes-from-1913-to-2008/ for source data.

Projecting the latest (April 2021) Consumer Price Index forward to an entire year suggests that the U.S. will experience a 3.1% inflation rate in 2021.  That would be higher than in any year since 2011, which was a bounce-back year following the Great Recession.  Otherwise, the generic inflation trend has been consistently down since 1982 (nearly 40 years).

If the historical trends are any guide, and if we are indeed entering a persistent inflationary phase, it would take another decade before inflation growth approaches the levels seen during the 1970s.

But I think the likeliest scenario is experiencing a sharp uptick this year due to pent-up demand following the COVID-19 pandemic that will causie spot shortages, followed by resumption of a downward trend over the following ten years or so.

That’s similar to the pattern you can observe in the chart [above] during the years following the end of World War II, which had also created massive pent-up consumer demand.

Consider that the coronavirus pandemic hasn’t really altered the underlying economic fundamentals. The past 40 years has witnessed an explosion of manufacturing capacity in China and other developing countries, and that hasn’t gone away.  Meanwhile, dependency on oil — a key driver of inflation in the 1970s — has shrunk due to improved energy efficiency and aggressive exploitation of renewable energy resources, which for all practical purposes are in infinite supply.

Another factor, which doesn’t get as much attention as it probably should, is declining birth rates and aging of the population on a global scale, leading to a slower rate of population growth in the future that may constrain demand for consumer products in comparison to the past century. Let’s face it — we old farts just don’t consume as much as growing families do!

So yes, we should keep an eye on inflation — but I don’t think we’re in for a repeat performance of the horrible 1970s.

Echoing Nelson’s thoughts are the perspectives of another business veteran — an editor and publisher who has been intimately involved in the commercial/B-to-B field for decades.  Here is what he wrote to me:

I don’t want to get into a public debate with the inflationistas because I will never convince them that this is likely not a replay of the 1970s and early 80s inflationary period pre-[Paul] Volcker.  (Speaking personally, I didn’t own a house until I was 42 for the very reasons you cited in your blog post, and I was just a lowly editor back then.)

What we’re seeing today is simply the price shock of suddenly soaring demand, aggravated in the case of some commodities such as steel by Trump-era tariffs.

All commodities are tied to the price of crude oil, the most volatile of all commodities, which is long-denominated in U.S. dollars. WTI crude pricing is now at around $63 per bbl. — about where it was in early 2020 before the pandemic hit. It went negative for a time during the worst period of the crash in worldwide demand that was brought about by the pandemic. Tanks couldn’t be found into which to put the excess crude coming out of the ground from U.S. fracking. Traders freaked out, as they sometimes do.

So naturally, the percentage changes today look jaw-dropping. I can go through all the other commodities mentioned in your post and provide simple explanations as to why each is currently on the rise. Logistical bottlenecks are a big problem with everything — but as with oil, most of the issue is the sudden surge in demand as the pandemic winds down even as production and logistics aren’t yet prepared to fulfill the need.

In other words, the situation has very little to do with government spending — especially since most of the infrastructure money isn’t even allocated, let alone spent. Also, the Biden administration has yet to raise a single tax. It can’t. Only the House Ways and Means Committee can initiate tax changes, and those must then go through the Senate to become law. Senate Minority Leader McConnell and his allies have made sure nothing has gotten through.  

Of course, it never hurts to keep an eye on things — especially with structural inflation as you noted in your article.  But it’s important to look also at other, broader data. The Producer Price Index in April did reflect the increase in commodities prices, but the Consumer Price Index, even though it had a month of robust increases, remains below 3% annualized. And the Personal Consumption Expenditure Price Index, which is what the Fed pays attention to the most, is still tracking under 2% on an annualized basis. (A little inflation can be a good thing, actually.)

On the income side, average wage rates aren’t rising; they’re more likely to be falling in the future as low-wage service workers, including those in foodservice, re-enter the market.

So in my view the things people see with inflation are most likely short-term issues. Let’s look at it again in six months to a year. I’d also suggest that people read economist Paul Krugman’s columns in the New York Times for a bit of perspective that’s counter to the views of the inflationistas, if only for balance. The monetarists have been wrong since Volcker squeezed out the inflationary spiral. It was painful, though — so we’ll want to keep an eye on things.

Considering the views put forward above, I think it’s fair to conclude that “the jury’s out” on whether we’re actually entering a prolonged inflationary period.  If you have additional thoughts or perspectives to share on either side of the issue, I’m sure other readers would be interested to hear them.  Feel free to leave a comment below.

The predictable — and unexpected — economic consequences of COVID.

As the United States emerges from the COVID crisis, the shape of the American economy is coming into clearer view.  Part of that picture is the growing realization that lockdown policies, vaccination rollouts and government stimulus actions have created imbalances in many sectors — imbalances that will time to return to equilibrium.

Everyone knows the business sectors that have been hammered “thanks” to COVID:  hospitality and foodservice, travel and tourism, the performing arts, sports and recreation, commercial real estate. 

At the same time, other corners of the economy have blossomed — home remodeling, consumer electronics … and the public sector.  This last one isn’t a function of any kind of increased demand, but rather pandemic-long guaranteed continuing income to workers on the public payroll.

As we emerge, factories and the building trades are finding it difficult to ramp up their operations to meet growing demand, hampered in part by supply chain issues and shortages of raw materials and parts sourced from offshore suppliers.  As of now, most economists believe that such shortages won’t turn out to be long-term problems — but we shall see over time if this is actually the case.

Another imbalance is what’s been happening to the labor force.  Government stimulus checks and unemployment benefits have been sufficiently robust so as to depress the number of workers seeking a return to employment in certain sectors — particularly in the service industries.  As just one example, restaurants everywhere are finding it more than a little difficult to staff their reopened locations.

The latest forecasts are for the U.S. economy to grow at a blistering pace during the balance of 2021 — perhaps as high as an 8% or 9% seasonally adjusted rate of growth.  That would be historic.  But not everyone is going to benefit.

In a recent Wall Street Journal article, David Lefkowitz of UBS Global Wealth Management points out that “the very sudden stop to the economy and then the very quick restart has created a lot of havoc — a lot of businesses have gotten caught flat-footed.”  But beyond this is the very real likelihood that inflation will emerge as a key factor in the economy, for the first time in more than 40 years. 

Viewed holistically, the situation in which we find ourselves is one where many new and unusual “ingredients” have gone into the economy over the past year, resulting in an economic brew that is just as unusual — and perhaps even unique in our history. 

An artificially depressed economy due to government fiat … followed by massive economic stimulus paid for by expanding the money supply … coupled with sudden demand propelling certain industries over others due to government-driven dictates: for sure it’s a new mix of factors.  Considering this, I’m not at all sure that very many people inside or outside of government have a clear handle on what the next 18 months will actually bring.

But that doesn’t mean we can’t speculate about it, right?  In the comment section below, please share your perspectives on what’s in store for the U.S. economy.  I’m sure others will be interested in reading your thoughts.

Robots become humans – at least in the eyes of the law.

It had to happen:  New state laws are now classifying robots as humans – specifically when it comes to traffic laws.

With the proliferation of delivery robots in quite a few urban areas, the issue was bound to arise.  Car and Driver magazine reports that the state of Pennsylvania now defines delivery robots as “pedestrians” under a newly implemented law.

More specifically, the Pennsylvania legislative measures stipulate that “autonomous delivery robots” can lawfully maneuver on sidewalks, roadways and pathways.  They’re allowed to carry cargo loads as heavy as 550 lbs. at speeds up to 25 mph. on roadways.  (On pedestrian pathways and sidewalks, their speeds are capped at 12 mph.)

Pennsylvania is just the latest state to pass new laws regulating autonomous driving and flying technologies.  Indeed, there are now a dozen states that allow delivery robots access to roads as well as pedestrian pathways.

A gita and its owner out for a stroll.

The new laws raise some interesting questions.  Undeniably, delivery robots are a popular option for businesses and logistics companies; in a relatively short period of time their deployment has evolved well-past that of being merely a “novelty factor.”  “The sidewalk is the new hot debated space that the aerial drones were maybe three or five years ago,” reports Greg Lynn, CEO of Piaggio Fast Forward, a robotics design firm that offers a suitcase-sized robot called gita that follows its owner around.

But deploying robots onto street- and sidewalk-grids that were mapped out decades ago – when there were no expectations of the sci-fi scenarios of autonomous vehicles – can be quite problematic from a safety standpoint.

Of course, we’ve faced this issue before – and not so very long ago – with the emergence of the Segway “people mover.”  Those contraptions have caused more than a few problems (accidents and injuries) in urban centers around the world, leading some European center-cities to effectively ban their use — such as in Budapest and Barcelona

And in the city of San Francisco – no technology backwater – delivery robots have been prohibited from operating on most city streets.  Municipal leaders have cited potential safety concerns.  Moreover, the National Association of City Transportation Officials (NACTO) has gone on record stating that robots “should be severely restricted, if not banned outright.”

One thing’s for sure:  With the fast-growing phenomenon of delivery robots and other autonomous vehicles, the whole notion of “sharing the road” has taken on an additional dimension. 

Do you have any interesting reports to share from what you may have encountered in your own town or region?  Please share your observations with other readers.

The (Very) Real Privacy Concerns Raised by Contact Tracing

Last week, I linked to a “guest” blog post about the challenges of contact tracing as part of the way out of the worldwide coronavirus pandemic.  The piece was authored by my brother, Nelson Nones, who heads up a company that has developed software capabilities to support such functions. One reader left a thoughtful response citing the personal privacy concerns that any sort of effective contact tracing regimen inevitably raises.

It’s an important issue that deserves an equally thoughtful response, so I invited Nelson to share his own thoughts on the issue. Here’s what he wrote to me:

The introduction of new contact tracing apps for smartphones has raised quite a few privacy fears around the globe. This is a very hot topic right now which deserves attention. However, to keep my original article about the ability to conduct effective contact tracing on point, I purposely sidestepped the privacy issue — other than mentioning privacy fears briefly in the ‘Technology Limitations’ section of the article. 

Here I’ll expand a bit. Naturally, the coronavirus pandemic has raised a lot of concern about Orwellian “big brother” surveillance and government overreach, but what many people may not realize is that it’s not about expanding “the target population of surveillance and state control” as the commenter notes. When it comes to public health, governments – including state governments in the United States – have possessed these powers for a long time. 

I first discovered this in my own personal life about 20 years ago. I was at work in Long Beach one day when I received a call from the California Department of Health, informing me that I was confirmed to have a highly contagious gastrointestinal infection and ordering me to submit regular stool samples until my tests came back negative. I was informed that if I did not do so, I could be forcibly quarantined — and fined or even jailed — if I refused to cooperate. 

My first question to myself was, “How the h*ll and why the h*ll did they target me?”  

I had recently returned from a trip to Thailand and started having GI issues, so I went to my doctor and gave a stool sample. They performed a lab analysis which confirmed a particular type of infection that was listed on the Department of Health’s watch list, so I was informed that my doctor was obliged by law to report my case to the Department of Health.  

The Health Department, in turn, was obliged by law to contact me and issue the orders given to me – and by law I was obliged to comply with their orders. 

The reason that nations, states and provinces have such powers is to contain and control the spread of infectious diseases. This means that governments have the power to forcibly isolate people who are confirmed to be infected — and they also have the power to forcibly quarantine people who are suspected (but not yet confirmed) to be infected.  

Whether or not, and how, they choose to exercise those powers depends on the nature of the disease, how it’s transmitted, whether or not an epidemic or pandemic has been declared, and whether or not proven cures exist. Moreover, rigorous protocols are in place to protect people against the abuse of those powers.  

But the bottom line is: in most countries, including the United States, if you are unfortunate enough to catch an infectious and communicable disease, you have no constitutional right to prevent the government from identifying you and potentially depriving you of your civil liberties, because of the risk that you could unknowingly infect other people. 

Think of it as a civic duty — just as you have no constitutional right to prevent the government from ordering you to perform jury service. 

Medical science is so advanced these days that most diseases can be contained and controlled without having to inconvenience more than a relatively small number of people, which is why most people have no idea that governments possess such vast powers. But COVID-19 is a once-in-a-century outbreak that’s so novel, so poorly understood, and so communicable that nearly everyone in the world is being deprived of their civil liberties right now out of an abundance of caution.  

Realistically, one could expect these restrictions to remain in place unless and until COVID-19 vaccines and/or therapies are invented, proven and made available to the public – at which time it will (hopefully) be possible to manage COVID-19 like the seasonal flu, which doesn’t require draconian public health measures.    

As for the new smartphone apps, have a look at this recent article that appeared in Britain’s Express newspaper which will give you a good idea of how “hot” this topic has become.  

The key question here is whether or not the database backend (which is the software that my company Geoprise makes) is “centralized” or “decentralized.” A “centralized” backend follows the Singapore model and contains personally-identifiable information (PII) about everyone who registers the app with a public health authority and/or is confirmed to be infected.  

Conversely, some researchers are proposing a “decentralized” backend which serves only as a communications platform, and only ever receives anonymized and nonlinkable data from the smartphones.  

This is the privacy and security model that Apple and Google are following, but there is no way that such a “decentralized” backend could ever serve as a contact tracing database in the traditional sense. That’s because a traditional contact tracing database, by definition, always contains linkable PII. (Incidentally, our Geoprise software could be used in either a “centralized” or “decentralized” manner.) 

The key thing to understand about even the most “centralized” of the smartphone apps, such as Singapore’s TraceTogether app, is that they contain numerous privacy and security safeguards. Here’s a short list: 

  • The data which is captured and retained on individual devices identifies a particular smartphone only by an encrypted “TempID” which changes periodically (Singapore’s recommendation is to change the TempIDs every 15 minutes). This makes it impossible for a smartphone owner or eavesdropper to reconstruct complete histories of encounters held on the devices in a personally-identifiable way.
  • As my original article states, the contact tracing apps don’t use or store geo-location data (i.e. “where your smartphone was”) because GPS measurements are too unreliable for proximity-sensing purposes. Instead they use the device’s Bluetooth radio to sense other Bluetooth-enabled devices that come within very close range (i.e. “devices that were near your smartphone”).
  • The apps are opt-in. You can’t be compelled to download the app or register it with the public health authority (unless you happen to live in Mainland China — but that’s yet another story!).
  • Only people who are confirmed to be infected are ever asked to share their history of encounters with the public health authority.
  • Sharing your history of encounters is voluntary. You can’t be compelled to upload your contact tracing history to the public health authority’s backend server.

Apple and Google appear to be taking this a step further by: 

  • Allowing smartphone owners to “turn off” proximity sensing whenever they wish (such as when meeting a secret lover during trysts, or for more innocuous occasions).
  • Allowing smartphone owners to delete their history of encounters on demand, and to erase all data when uninstalling the app.
  • “Graceful dismantling” – to quote one researcher:“The system will organically dismantle itself after the end of the epidemic. Infected patients will stop uploading their data to the central server, and people will stop using the app. Data on the server is removed after 14 days.”  

The bottom-line on privacy and government overreach, I think, is for everyone to step back a safe distance from one another, and take a deep breath …

The Coronavirus Threat: A view from East Asia.

Regular readers of Nones Notes Blog know that my brother, Nelson Nones, has lived and worked outside the United States for nearly 25 years – much of that time in East Asia. So naturally I was curious about his perspectives on the spread of the Coronavirus from its epicenter in Wuhan, China, what precautions he is taking in the face of the threat, and his perspectives on how the actions of Asian countries affected by the outbreak may be mitigating the potential effects of the virus.

Here is what Nelson wrote to me in response to my query:

The Coronavirus has not affected my business here in Bangkok to date. I did make a trip to Singapore during the last week of January and to Taiwan during the first week of February, after arriving back in Thailand from the U.S. on January 12th.  I haven’t been sick at all – before or since.

However, in an abundance of caution I am keeping myself at home as much as possible, and I have decided not to travel anywhere until the current hullabaloo dies down.

As for the situation here in Thailand, this country is actually the location of the first COVID-19 (Coronavirus) case ever recorded outside Mainland China. This was back on January 13th, just two weeks after China first notified the World Health Organization (WHO) of the new disease, and only two days after China recorded its first COVID-19 death.  

The patient here in Thailand was a Chinese woman who had traveled from Wuhan, the epicenter of the pandemic.

Since then, Thailand has recorded 42 additional cases for a total of 43 patients, of whom only one died (on Sunday March 1st), and 31 have recovered.  This leaves 11 active cases – all considered mild.

The first case of human-to-human virus transmission within Thailand was recorded on January 16th, affecting a taxi driver. Of the 43 cases confirmed so far, 25 affected Chinese citizens; seven affected Thai citizens with travel histories to China, Japan or South Korea; seven affected Thai citizens who work in the tourism or healthcare industries; and the remaining four were other domestic cases (of which only two potentially represent “community spread”).  Thailand’s infection growth factor peaked on January 26th.

Being one of the world’s most popular tourist destinations (especially from China), Thailand has never imposed any travel restrictions, even from China (nor has the U.S. ever imposed any COVID-19 travel restrictions on Thailand), but all arriving international passengers are screened by an initial body temperature check. Those who fail the initial screening are required to disclose their travel histories within the past 14 days, in detail.  If they have travelled to or from any affected areas, and exhibit any COVID-19 symptoms, they are immediately quarantined at a specially-designated hospital for isolation and treatment.

Under the circumstances, and considering its geographic proximity to China as well as the normal volume of Chinese tourist travel, I think Thailand’s containment efforts so far have been successful and offer some lessons for the United States. Containment in India, Indonesia and Bangladesh so far is even more impressive (Indonesia reported its first two cases only on March 2nd).

Displayed below is a listing of South, Southeast and East Asian countries, ranked by population (together with the U.S. for comparison purposes), showing the number of cases and deaths reported so far:

* Excludes Diamond Princess cruise liner cases.

Sources:

Case data are from https://www.worldometers.info/coronavirus/#countries

Populations are from https://en.wikipedia.org/wiki/List_of_countries_by_population_(United_Nations)

The countries shaded in green, above, are those which did not require advance visas for Chinese citizens holding ordinary passports, prior to the imposition of temporary COVID-19 travel restrictions. These countries were either visa-free or allowed “visa on arrival.”

The countries in red typeface, above, are those which had imposed temporary COVID-19 travel restrictions as of early February 2020. These include “entry bans on Chinese citizens or recent visitors to China, ceased issuing of visas to Chinese citizens and re-imposed visa requirements on Chinese citizens or countries that have responded with border closures with China.” (See https://en.wikipedia.org/wiki/Visa_requirements_for_Chinese_citizens for source data.)

It’s quite clear from the data above that, excluding Mainland China itself, there is little or no correlation between the incidence of COVID-19 cases or deaths and the leniency of a country’s previous or current travel restrictions in so far as Mainland Chinese are concerned.

Indeed, all of the four countries having a higher number of cases than Thailand (Japan, South Korea, Hong Kong and Singapore) required advance visas before the COVID-19 outbreak, and all but one (Hong Kong) had imposed COVID-19 entry bans as of February 2nd

Conversely, apart from Thailand, the countries which did not require advance visas before the COVID-19 outbreak have averaged fewer than one case per country (although all of them except Cambodia and East Timor had imposed temporary COVID-19 travel bans by February 2nd).

The countries shown in bold typeface above are those which are geographically closest to the COVID-19 epicenter. An average of 570 COVID-19 cases have been reported within each of these 10 countries; only Laos has been immune so far. Conversely, an average of 6 COVID-19 cases have been reported within each of the remaining 26 countries (excluding China itself).

From these data, I’ve drawn the following four generalizations:

  • Outside of Mainland China, international travel bans and visa restrictions are not effective tools for controlling the spread of COVID-19 disease within a country.
  • Geographic proximity to Mainland China is well-correlated to the historical spread of COVID-19 disease in South, Southeast and East Asia.
  • Vigilant screening and disposition of suspected cases is vital to containing the spread of COVID-19 disease, as Thailand’s experience demonstrates.
  • Allowing high concentrations of suspected cases to form without treatment, such as Wuhan (China), the Diamond Princess docked at Yokohama (Japan) and Shincheonji church at Daegu (South Korea), is a recipe for disaster.  

Of course, the virus and its spread is an evolving narrative, and Nelson’s observations may soon be overwhelmed by new developments. Still, I was somewhat surprised to read that the situation is not quite as dire as the news reporting here in the U.S. would seem to indicate.

Have you heard from overseas friends or colleagues about how they are responding to the Coronavirus outbreak? Please share their perspectives with other readers here.

Facial Recognition Faceoff

Facebook has been resisting outside efforts to rein in its “faceprints” facial recognition initiative – and mostly losing.

I’ve blogged before about the concerns many people have about facial recognition technology, and the troubling implications of the technology being misused in the wrong hands.

Facebook would claim to be the “right hands” rather than wrong ones when it comes to the database of “faceprints” it’s been compiling over the past decade or so. But its initiative has run afoul of an Illinois biometric privacy law passed in 2008.

The Illinois measure, which prohibits companies from collecting or storing people’s biometric data without their consent, is one of the strongest pieces of legislation of its kind in that it also allows individual consumers to sue for damages – to the tune of up to $5,000 per violation.

And that’s precisely what’s happened.  A class-action suite was filed in 2015 by a group of Illinois residents, alleging that Facebook has violated the Illinois privacy law through its photo-tagging function which draws on a trove of “faceprint” photos to recognize faces and suggest their names when they appear in photos uploaded by friends on Facebook.

Facebook has vigorously resisted efforts to rein in its faceprint initiative, arguing that any such lawsuits should be dismissed because users haven’t actually been injured by any alleged violations of the state law.

That stance has been rejected – first in U.S. district court and then in the court of appeals. Undaunted, Facebook appealed to the U.S. Supreme Court which turned down the appeal in late January.

Rebuffed at all legal levels, Facebook has now decided to settle the suit for a reported $550 million, including payments of ~$200 each to claimants in the Illinois class-action suit.

Facebook has lost, but the whole notion of facial recognition technology could well be like playing a game of whack-a-mole. As it turns out, another firm has developed similar functionality and is busily selling facial recognition data to police departments across North America.  According to a recent investigative article publishing in The New York Times, a company called Clearview AI has mined billions of photos from Twitter, Facebook and other social platforms.  (Clearview is now being sued in Illinois for allegedly violating the same biometric privacy law that was at the center of the Facebook suit.)

And indeed, the efforts to rein in facial recognition activities may be a little too little, a little too late: According to a recent report from Business Insider, the faces of more than half of all adults in America have already been logged into police or government databases.

… Which brings us to a parallel response that appears to be gaining traction: figuring out ways to fool facial recognition software.  A number of entrepreneurs are developing intriguing methods to beat facial recognition software.  Among them are:

  • Clothing designers have begun to target weaknesses in the ability of facial recognition software to process overlapping or unusual shapes, as well as deciphering multiple similar images appearing in close proximity. One such example is a pair of goggles fitted with near-infrared LEDs that interfere with the ability to scan facial features.
  • Headscarves decorated with different faces “confuse” the software by overloading it with excessive amounts of data in the form of numerous facial features.
  • So-called “adversarial patches” – a graphic print that can be added to clothing – exploit the vulnerabilities in facial recognition scanning by making a person “virtually invisible for automatic surveillance cameras,” according to creators Simen Thys, Wiebe Van Ranst and Toon Goedemé.

Will the two-front attack on facial recognition technology from the legal as well as technology standpoint succeed in putting the facial recognition genie back in the bottle? It’s debatable.  But it’s certainly making things more of a challenge for the Facebooks and Clearviews of the world.

Cookie-blocking is having a big impact on ad revenues … now what?

When Google feels the need to go public about the state of the current ad revenue ecosystem, you know something’s up.

And “what’s up” is actually “what’s down.” According to a new study by Google, digital publishers are losing more than half of their potential ad revenue, on average, when readers set their web browser preferences to block cookies – those data files used to track the online activity of Internet users.

The impact of cookie-blocking is even bigger on news publishers, which are foregoing ad revenues of around 62%, according to the Google study.

The way Google conducted its investigation was to run a 4-month test among ~500 global publishers (May to August 2019). Google disabled cookies on a randomly selected part of each publisher’s traffic, which enabled it to compare results with and without the cookie-blocking functionality employed.

It’s only natural that Google would be keen to understand the revenue impact of cookie-blocking. Despite its best efforts to diversify its business, Alphabet, Google’s parent company, continues to rely heavily on ad revenues – to the tune of more than 85% of its entire business volume.

While that percent is down a little from the 90%+ figures of 5 or 10 years ago, in spite of diversifying into cloud computing and hardware such as mobile phones, the dizzyingly high percentage of Google revenues coming from ad sales hasn’t budged at all in more recent times.

And yet … even with all the cookie-blocking activity that’s now going on, it’s likely that this isn’t the biggest threat to Google’s business model. That distinction would go to governmental regulatory agencies and lawmakers – the people who are cracking down on the sharing of consumer data that underpins the rationale of media sales.

The regulatory pressures are biggest in Europe, but consumer privacy concerns are driving similar efforts in North America as well.

Figuring that a multipronged effort makes sense in order to counteract these trends, this week Google aired a proposal to give online users more control over how their data is being used in digital advertising, and seeking comments and feedback from interest parties.

On a parallel track, it has also initiated a project dubbed “Privacy Sandbox” to give publishers, advertisers, technology firms and web developers a vehicle to share proposals that will, in the words of Google, “protect consumer privacy while supporting the digital ad marketplace.”

Well, readers – what do you think? Do these initiatives have the potential to change the ecosystem to something more positive and actually achieve their objectives?  Or is this just another “fool’s errand” where attractive-sounding platitudes sufficiently (or insufficiently) mask a dimmer reality?