CHAPTER 5
“Siren Servers”
There Can’t Be Complexity Without Ambiguity
We are aware of emergent, complex problems like global climate change only because of how much
data there is. But there are special challenges in assessing problems that come into our awareness
because of big data. It’s hard to confirm that such broad problems definitely exist. Then, even if a
consensus emerges about existence, it is hard to test remedies. One truism has emerged in the
networked age. The mere existence of big data doesn’t mean that people will agree about what it
means.
The problem I am acting on is that a particular way of digitizing economic and cultural activity will
ultimately shrink the economy while concentrating wealth and power in new ways that are not
sustainable. That mistake is setting us up for avoidable traumas, as machines get much better in this
century.
Some will say that the problem I worry about does not even exist. There is a legitimate claim of
ambiguity on this point, and that ambiguity is completely typical of how problems present
themselves in our modern world of networked big data. For instance, one might argue that some of
the hundred-thousand-plus jobs that seem to have been lost in the transition from Kodak to
Instagram will be made up for because people will be able to use photo sharing to sell their
handicrafts more efficiently. While this might turn out to be true in one instance or another, I argue
it is false in the big picture.
My initial interest was motivated by a simple question: If network technology is supposed to be so
good for everyone, why has the developed world suffered so much just as the technology has
become widespread? Why was there so much economic pain at once all over the developed world
just as computer networking dug in to every aspect of human activity, in the early 21st century? Was
it a coincidence?
There are a number of different explanations for the Great Recession that can be helpful. Brushing
up against fundamental limits to growth is part of it, as is the rise of new powers of India, China,
and Brazil, so that suddenly there are more customers with means bidding for the same resource
base. There are also a lot more old people in most parts of the developed world, and more ways to
spend money on their medical care than ever before.
But there’s something else going on as well, which is that the mechanisms of finance failed and
screwed almost everybody. If we acknowledge the extraordinary way in which virtually the whole
developed world seemed to go into hopeless debt at once, an explanation is demanded beyond the
rise of China, or the expense of social safety nets in southern Europe, or deregulation in the United
States.
There’s a simple answer to the mystery: Finance got networked in the wrong way. The big kinds of
computation that have made certain other industries like music “efficient” from a particular point of
view were applied to finance, and that broke finance. It made finance stupid.
Consider the expansion of the financial sector prior to the Great Recession. It’s not as if that sector
was accomplishing any more than it ever had. If its product is to manage risk, it clearly did a
terrible job. It expanded purely because of its top positions on networks. Moral hazard has never
met a more efficient amplifier than a digital network. The more influential digital networks become,
the more potential moral hazard we’ll see, unless we change the architecture.
A First Pass at a Definition
A Siren Server, as I will refer to such a thing, is an elite computer, or coordinated collection of
computers, on a network. It is characterized by narcissism, hyperamplified risk aversion, and
extreme information asymmetry. It is the winner of an all-or-nothing contest, and it inflicts smaller
all-or-nothing contests on those who interact with it.
Siren Servers gather data from the network, often without having to pay for it. The data is analyzed
using the most powerful available computers, run by the very best available technical people. The
results of the analysis are kept secret, but are used to manipulate the rest of the world to advantage.
That plan will always eventually backfire, because the rest of the world cannot indefinitely absorb
the increased risk, cost, and waste dispersed by a Siren Server. Homer sternly warned sailors to not
succumb to the call of the sirens, and yet was entirely complacent about Hephaestus’s golden
female robots. But Sirens might be even more dangerous in inorganic form, because it is then that
we are really most looking at ourselves in disguise. It is not the siren who harms the sailor, but the
sailor’s inability to think straight. So it is with us and our machines.
Siren Servers are fated by their nature to sow illusions. They are cousins to another seductive
literary creature, star of the famous thought experiment known as Maxwell’s Demon, after the great
19th century physicist James Clerk Maxwell. The demon is an imaginary creature that, if it could
only exist, would be able to implement a perpetual motion machine and perform other supernatural
tricks.
Maxwell’s Demon might be stationed at a tiny door separating two chambers filled with water or
air. It would only allow hot molecules to pass one way, and cold molecules to pass in the opposite
direction. After a while, one side would be hot and the other cold, and you could let them mix again,
rushing together so quickly that the stream could run a generator. In that way, the tiny act of
discriminating between hot and cold would produce infinite energy, because you could repeat the
process forever.
The reason Maxwell’s Demon cannot exist is that it does take resources to perform an act of
discrimination. We imagine computation is free, but it never is. The very act of choosing which
particle is cold or hot itself becomes an energy drain and a source of waste heat. The principle is
also known as “no free lunch.”
We do our best to implement Maxwell’s Demon whenever we manipulate reality with our
technologies, but we can never do so perfectly; we certainly can’t get ahead of the game, which is
known as entropy. All the air conditioners in a city emit heat that makes the city hotter overall.
While you can implement what seems to be a Maxwell’s Demon if you don’t look too far or too
closely, in the big picture you always lose more than you gain.
Every bit in a computer is a wannabe Maxwell’s Demon, separating the state of “one” from the state
of “zero” for a while, at a cost. A computer on a network can also act like a wannabe demon if it
tries to sort data from networked people into one or the other side of some imaginary door, while
pretending there is no cost or risk involved. For instance, a Siren Server might allow only those who
would be cheap to insure through a doorway (to become insured) in order to make a supernaturally
ideal, low-risk insurance company. Such a scheme would let high-risk people pass one way, and
low-risk ones pass the other way, in order to implement a phony perpetual motion machine out of a
human society. However, the uninsured would not cease to exist; rather, they would instead add to
the cost of the whole system, which includes the people who run the Siren Server. A short-term
illusion of risk reduction would actually lead to increased risk in the longer term.
Where Sirens Beckon
Some of the prominent present-day Siren Servers include high-tech finance schemes, like highfrequency
trading or derivatives funds, fashionable Silicon Valley consumer-facing businesses like
search or social networking, modern insurance, modern intelligence agencies, and a multitude of
other examples.
The latest waves of high-tech innovation have not created jobs like the old ones did.* Iconic new
ventures like Facebook employ vastly fewer people than big older companies like, say, General
Motors. Put another way, the new schemes, the Siren Servers, channel much of the productivity of
ordinary people into an informal economy of barter and reputation, while concentrating the
extracted old-fashioned wealth for themselves. All activity that takes place over digital networks
becomes subject to arbitrage, in the sense that risk is routed to whoever suffers lesser computation
resources.
*This is documented in Martin Ford’s book The Lights in the Tunnel (2009). He sees jobs going
away, and proposes that people in the future be paid only for consuming wisely, since they
eventually won’t be needed for producing anything. I find that idea inadequately human-centric and
overly dismal, but it is an interesting contrast to my proposal.
The universal advice of our times is that people who want to do well, as information technology
advances, will need to double down on their technical educations, and learn to be entrepreneurial
and adaptable. These are the skills that might win you a position close to a Siren Server.
Planning to get as close as possible to a Siren Server is good advice in the near term. That is how
the great fortunes of our age are being made. But there won’t be enough positions close to Siren
Servers to sustain a society unless we change the way we do things.