❌ exploitation

Fast-Food Chain Gang

Are fast-food chains in Alabama using modern-day slavery?

A federal class-action lawsuit believes so. The plaintiffs, which include several current and former incarcerated people, as well as the SEIU, Union of Southern Service Workers, and more, allege that Alabama "entrapped in a system of 'convict leasing'" its disproportionately black prison population, who are then "forced to work, often for little or no money, for the benefit of the numerous government entities and private businesses that 'employ' them." This scheme has generated $450 million for the Alabama Department of Corrections (ADOC), notes the Alabama Political Reporter.

The suit further claims that the scheme incentivizes the ADOC to keep inmates incarcerated and deny them parole in order to further generate profits. After detailing the brutal working conditions of Lakiera Walker, one of the plaintiffs, who was then denied parole, the suit adds "there is no reasonable argument that Ms. Walker posed a threat to public safety for more than a decade before she was released, given her history of performing work both inside and outside prison walls without incident.” And Alabama State Representative Christopher England agrees, telling AL.com,“they work jobs every single day for eight to ten hours unsupervised… So, saying they are a threat to public safety is only a convenient excuse to deny them parole.”

As LegalDive details, some prisoners who refused to work, or even requested time off for mental/physical health, were then subject to disciplinary action by ADOC. They also note that, after various deductions, prisoners who were ostensibly paid Alabama's $7.25 minimum wage, only earned $2.06 an hour.

“This lawsuit is a strong first step toward eliminating forced labor in the Alabama prison system, and righting the wrongs from this egregious labor exploitation,” Fred Redmond of the AFL-CIO said. “Fighting to abolish forced labor is a priority of the AFL-CIO and the American labor movement. And we won’t rest until this corrupt, immoral scheme ends for good.”

Governor Kay Ivey and Attorney General Steve Marshall, who are named the architects of this scheme, have yet to publicly comment on the case.

A History of Forced Labor

In its suit, the plaintiffs cite a similar convict leasing program used by the state between 1875 and 1928. "This scheme, whereby Black laborers were forced to work for private companies, who in turn paid substantial fees to state and county governments, covered 73% of Alabama’s budget by 1898," the suit continues. "Defendants here have resurrected this practice for their own financial gain, in violation of: federal laws against human trafficking and conspiracies to deny equal protection of the laws; the Alabama Constitution, which was recently amended to outlaw all involuntary servitude; and the Ex Post Facto Clause and the First and Fourteenth Amendments of the U.S. Constitution."

THE VERDICT:

It seems shocking that such practices could still exist in the United States today. For Alabama, which has a history of using forced labor in its prison system, its an even more egregious scheme. Prison reform and prisoner rights may not be the most politically popular cause, but its a moral case worth fighting for.

🤖 Artificial intelligence

Is AI Any Good At Regulation?

It seems like an obvious move: train your firm's AI system on SEC filings and then let it perform regulatory tasks. But new research from Patronus AI should give you pause.

When even the most-advanced large language model AI system (GPT-4) was put to the test, it answered only 79% of questions about an SEC document correct. In other words: a C+ grade. As CNBC explains, the large language models tended to either refuse a response, or “hallucinate” an answer with incorrect data points.

"That type of performance rate is just absolutely unacceptable," said Anand Kannappan, Patronus’s co-founder, of the findings. "It has to be much much higher for it to really work in an automated and production-ready way."

The findings cast doubt on both how quickly AI systems can be integrated into firms, and what tasks they’ll perform. Still, it’s not slowing Wall Street down.

In April, Bloomberg announced it was working on an internal AI system based on Chat GPT. The company says the model (dubbed BloombergGPT) will help “in improving existing financial NLP (natural language processing) tasks, such as sentiment analysis, named entity recognition, news classification, and question answering, among others.” And fellow financial giant JPMorgan is reportedly working on an internal model too, having filed a patent claim for a product called IndexGPT that may be able to provide investment advice.

But doling out financial advice or judging investor sentiment, while morally dubious, is not the same as performing regulatory and compliance tasks.

"There just is no margin for error that's acceptable, because, especially in regulated industries, even if the model gets the answer wrong 1 out of 20 times, that's still not high enough accuracy," Rebecca Qian, Patronus’s co-founder, said. Kannappan added, “models will continue to get better over time. We're very hopeful that in the long term, a lot of this can be automated. But today, you will definitely need to have at least a human in the loop to help support and guide whatever workflow you have."

A Word of Caution

In a July assessment on implementing AI into regulatory tasks, consulting and accounting firm EY cautioned that "as AI tools start to become viable from a cost and value perspective, compliance professionals should perform top-down and bottom-up assessments of their operating model to proactively identify areas for potential enhancement. Designing a future-state compliance framework with key operational objectives — risk outcomes, cost reduction, process improvement — can help govern the implementation journey."

THE VERDICT:

Silicon Valley is no stranger to the hype cycle. We have been here before with cryptocurrencies, self-driving cars, and even online grocers. AI is clearly a revolutionary technology that will profoundly reshape our world, but for now, it still needs some work. Regulatory compliance departments would be wise to begin thinking of how AI can integrate into their workflows and processes, but they should not put the proverbial cart before the horse for risk of creating violation nightmares.

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