Metadata and Networks; Why It’s Important
- Posted by Jeff Carter
- on June 11th, 2013
We are all connected in some way to some group. Intrinsically, I knew this. The trading floor was the best network in the entire world. If you wanted to find something somewhere, it could be found there. Somebody had a “guy” and all it took was working the network and enough cash to get what you needed.
If someone on the CME floor didn’t have what you needed, a simple walk or call to the CBOT floor usually did the trick. Not there? Walk across the street to the CBOE. Not there, someone knew someone at the NYSE, and if what you wanted to get wasn’t at all those places, it was either illegal or unattainable.
When I went back for my MBA at Chicago Booth, one of the classes I took was from Professor Ron Burt. He has studied networks for his whole career. He mapped them. Lots of them were interesting. You could see maps of how boards of directors were connected. You could see how the city of Chicago was connected. The reason for the class was there are internal networks inside corporations. Knowing how to tap them and use them can help your career-and help your organization be more profitable.
Burt’s study of networks shows that there are powerful economic forces, both monetary and intrinsic, at work. These forces drive networks and help them operate. This isn’t soft and squishy sociology. This is hard core in your face quantifiable economics that explains a lot when it comes to organizational behavior.
I have been thinking a bit about this now that I know the NSA, IRS and rest of the federal government are snooping on my metadata.
This post about revolutionary Paul Revere jogged my memory of Professor Burt’s class. There was a reason that Paul Revere had to make the ride to tell everyone the British were coming. He had credibility in the network. If someone else had made the ride, the revolutionaries might not have listened.
Revere was what’s known as a “broker” in academic terms. Brokers are necessary cogs in a network. They take information from vertical silo to vertical silo and distribute it. Many times, the broker earns economic rent from this activity. From a Harvard study,
First, one of the key foci in research on brokerage has been on showing that brokers can gain by charging commissions for facilitating the exchanges, as in Burt’s tertius gaudens— literally, “the third who benefits” (1992: 30). Brokers’ rent from intermediation has been found in a wide range of empirical settings: they achieve better outcomes, for example, in terms of higher power, faster career advancement, and more creative ideas (Burt 2004; Padgett and Ansell 1993; Podolny and Baron 1997). Second, the structural condition that privileges the brokerage position is the absence of relations, or the presence of “structural holes” (Burt 1992), between the actors. In other words, “the feat of bridging differentiated spheres depends on the spheres first being separate” (Granovetter 2002: 46), and the mechanism works only as long as these holes are kept from being closed up. Hence, the broker who extracts rent from his mediating role has a vested interest in keeping the other parties apart so that he can continue to monopolize the channel through which they can be connected (Boissevain 1974; Granovetter 2002).
The first scary thing that governments could do using metadata would be to close the structural holes between networks to make the brokers useless. Forget about identifying individuals and putting out of commission by rounding them up and tossing them in jail. An agency could just close all the structural holes making the person impotent. A silent killer.
Because of all this metadata, and the various ways to manipulate it, identifying individuals that are “connective tissue” in networks becomes much easier. Taking out the connective tissue doesn’t solve the problem in many cases. A new person will emerge, because there are economic incentives for them to do so.
Revere undertook his ride even though there were no monetary incentives. But there were intrinsic incentives that were important to him. The incentives were not monetary. “First, in the case of Revere and Warren, the commission, typically associated with the brokerage positions like theirs, was not found in any tangible, personal form.” Sort of reminds you of a terrorist committed to their cause, even though they get no monetary gain out of it.
Knowing where the connective tissue in networks is, and what the underlying economic incentives are can be much more powerful than simply extracting people and eliminating them. Often times that results in fear, which drives networks deeper underground and makes everything tougher to identify.
During the campaign, when Obama said they had Al Queda on the run-all they had done was drive it to places where it was tougher to identify. As we have come to find out, Al Queda still exists and is operational.
That’s why the revelation that there was a PRIZM collection apparatus, that the NSA was snooping on Americans, that they are building a massive data center in Utah to store and collect data is so unnerving to Americans. The problem was the Obama administration used the data to target political opponents-not terrorists that would try and destroy the country.
The next question that needs to be answered is what motivates Obama to do this? What one finds there might be scarier than knowing the government is snooping on you.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
Jeffrey Carter is an angel investor and independent trader. He specializes in turning concepts into profits. He co-founded Hyde Park Angels one of the most active angel groups in the United States in April of 2007. He previously served on the Chicago Mercantile Exchange Board of Directors. He has done market commentary for (More...)