Ep 236: Max Velthoven, legal science, AI and epistemology. - podcast episode cover

Ep 236: Max Velthoven, legal science, AI and epistemology.

Apr 25, 20251 hr 10 minEp. 237
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Summary

Tax lawyer Max Velthoven explores the intersection of legal science, Popperian epistemology, and the philosophy of AI. He delves into complex legal concepts like the "spirit versus letter of the law" using real-world tax cases, and critiques the ethical implications of exploiting legal loopholes. The discussion extends to how flawed philosophical understandings hinder progress in AI and lead to unintended consequences in policy, emphasizing the unique explanatory power of human intelligence.

Episode description

Max is a tax lawyer who is applying Popperian epistemology to legal science and issues in AI. Links to some more of his work, and the slides to accompany part of this video are below. Slides for Max's talk(s):

https://www.bretthall.org/popper-and-legal-science.html

Max’s journal article on AI with Eric Marcus (in NLFiscaal TaxTech): NLFiscaal | Problems in AI, their roots in philosophy, and implications for science and society:

https://www.nlfiscaal.nl/nlfiscaal-doc/BEEAD89DD9E44E81B23811716258A4C4

Slides to accompany: https://www.linkedin.com/feed/update/urn:li:activity:7290619876879028225/

Made possible with support from, and In association with, https://nav.al

Transcript

Welcome and Episode Overview

B

Welcome to Topcast. Today I'm speaking with Max Veltho. This is the first of a trio of interviews I will do here on TopCast in the coming episodes, to introduce a talk each member of this trio gave in Oxford recently. So Max is the first of these. Max is a senior manager at one of the big global accounting firms, Ernst Young, where he works as an expert on international tax law.

He's got a bachelor's degree from Tilburg University in tax law, a master's in international tax law from Amsterdam University. And he was awarded his PhD in 2024 also from the University of Amsterdam. And it's his PhD that we'll be talking about in part today, specifically because it invokes Papurian epistemology as applied to legal science. This video is in two parts. The first part is where I'll be speaking to Max interview style, and then we'll cut to the talk he delivered in Oxford about.

that application of papurian epistemology, as well as some things he talked about with respect to AI and AGI. But also in the first part in the interview we cover issues around the philosophy of law, the the letter of the law versus the spirit of the law, what it means to break the law in a fundamental sense in certain circumstances, it seems a little bit tricky what that really means. Legal loopholes and what the ethical issues associated with exploiting them might be.

And what Popper had to say about the social sciences and what Max's view on all of that happens to be, as well as some other matters. Slides for Max's talk and links to Max's other work are in the links below this video. So without further ado, here is Max Velthoven.

From Law to Popperian Epistemology

For various reasons, circling around the work of David Deutsch, Karl Popper, and associated thinkers, the majority of the people that were there were scientifically minded types. And you are a scientifically minded type, however, you come from a different discipline that people might not usually associate with Popurian epistemology. So you are applying I've seen people apply Copyrian epistemology to business. I've seen them apply it to exercise.

To the law, you're seeing the way in which critical rationalism might be able to inform certain niche and uh sort of subtle ways of understanding issues in law. So before we get into the talk that we're going to be introducing today that you delivered.

got together, which were as I say, it was a unique talk because it wasn't about science, it was about something completely different. Tell us a little bit about number one, how you got into law and then How you found Popyrian epistemology and what the relationship between those two things are.

A

Yeah, Brad, and uh let me start by by thanking you for for having me on the on the podcast. Very much appreciated. So indeed uh at that um a very nice Oxford gathering. I was part of the of the small min minority of of people presenting who were not uh brilliant physicists or mathematicians or or otherwise more in the in the natural science uh branch. Uh but I'm uh I'm a tax lawyer, so my my sort of day to day job is that I'm a uh a tax lawyer at five

um clients on on their tax affairs. But on the side of that I have been pursuing a PhD which I've finalised last year in tax law. Um well I think your first question was how I got into the law in the first place. In high school, maybe even earlier. uh been very interested in uh politics, in well the law you could say in in the broad sense, right?

Everyone to a certain extent is interesting uh is interested in in criminal law, right? What makes someone a criminal, what what doesn't make someone a criminal, how can some people get away with it and not get away with it? Those kind of questions I've always found uh very intriguing. But I've always also liked economics, so once I was at the university uh studying law, uh there was this possibility to do tax law.

does combine law, uh economics but also politics. So really a nice mixture of a lot of things I found uh very interesting. Um and at a certain point I started a PhD. In that up to that point I had never I don't think I knew what the word epistemology meant. Um and I'd never cared that much for philosophy. But really not that much. Um and at the beginning of that PhD I was really looking for well, I was quite clear on what the topic of

research would be and we'll we'll get to that uh in a minute I'm sure. Uh but I wasn't really sure on how to approach it, right? How do how to actually do research, how do you uh contribute anything to science, how do you how do you go about that? And then I was pointed towards a P another PhD thesis uh that was already out there uh by a guy called Evar Wendt and he had a uh he had made a a unique contribution to Dutch legal research because he said well

We are doing a lot wrong, or at least we could do much better. And how could we do better? We we should take into account the work of Karl Popper much more in our approach to legal science. And um well that started by reading his book, but then at some point I was Was quite sure that that was gonna involve a lot more other reading by Popper, by others, and I sort of said to myself

Well, you've never really uh taken any interest in philosophy and if if you're not gonna do it now as part of your PhD then then when are you? Um so that was the start of that and then a couple of years later I was in Oxford.

B

And uh you mentioned their legal science. Can you just tell me a little bit about what is the differentiation between legal science and you be. Is there such a thing as a legal scientist as distinct from a lawyer?

A

Well I mean Certainly, I d I mean there's certainly um yes, I would say uh yes, but there are big questions on exactly what that difference is, right? And um there's there's I can assure you that there's very contentious debates about that, right, whether A lawyer should even be allowed to be a legal scientist as well, uh in in what circumstances. Um so there's definitely questions there.

I mean I think there's there's pretty clearly an overlap in some cases, right? Because i if you're a legal scientist and that's also what what I've written in my PhD, um well I think an important task there and th then we do go right into the the popper stuff as well, right? Is to say, okay, can I improve the law, right? Are there deficits in the law? Is something wrong? Um how can we improve it? And do we have explanations about why there's something that can be improved?

Um in order to do do that of course you have to know what the law is. And if you want to know what the law is, well that is an activity that's also uh something that a lawyer would do a lot, right? A a a person or a company would come to you and say, Look, I'm in this particular situation. What at all is the law? What applies to me? What are my rights? What are my obligations? Um so in that extent there is very much an overlap. I think what a lawyer typically does much less.

Is uh go about improving the law, right? You might do that on a on a day to day basis, but I think most lawyers wouldn't uh advise their client and say, well, um the law is So, but it should be so and so. So I recommend you to take the action accordingly, right? You would act according to how the law is usually and not how it should be. Sometimes it might be a little different, but I think that's generally the difference.

B

That's clearer for me now. Okay, so legal science it seems to be to be a little bit more meta in a sense than what just the law is or what lawyers do. And I get the sense, and you will correct me if I'm wrong, that in your thesis

Understanding Legal Loopholes: Spirit vs. Letter

meta to a to a certain extent. Because there's a sense in which you're the difference between the letter of the law and the spirit of the law. Now for anyone who's not a lawyer like me, we've heard these phrases over and again. And I

A

감사합니다.

B

Your talk goes into a very specific case where the protagonists in the story, who are real people, But there's a sense in which they're trying to uh get around the spirit of the law. Now what's the distinction between this letter of the law and spirit of the law thing? And perhaps if you just want to outline that particular case in order to, you know, illuminate for us what that difference is.

A

Of course, yeah, no, sure. And I think I mean one example that that uh famous uh Dutch professor gave, which is even shorter than the case I'm gonna present. Example I quite like is well, suppose uh you're living together with a partner and you're uh and your partner is going to uh to a bar at night. And that partner says, Well, I'm gonna be back before eleven.

And then this person shows up the next morning at The letter of the letter of the law, right, the letter of the deal has been obeyed, you could say, because that person is back before eleven

Um but is that a correct interpretation and if so is it is it in line with the spirit of of the agreement or of of the promise? Right. I think that is a a a very short example where you have okay, well the letter you might have agreed with uh or complied with, but have you complied with the intention behind that uh that promise?

The Flash Partnership Case: Tax Law

And I think that segues nicely into the case that I presented and I've I've edited a little bit for um for entertainment purposes, let's say. But what it comes down to is there's two people in the Netherlands and they Transfer a real estate to each other. So let's just say a house. And if they would do that, they would have

And well, as many people they don't like paying taxes. So um what they found out is that if they would be married, and again those people they don't really know each other other than their their small uh business uh venture. Um if they would have been married they could well of merge within the within the marriage the under universal tide Marriage contract, you could say. And so what they devise is a little scheme where in the morning they uh get married, so legally, they actually get married.

in place. in the afternoon as part of that whole uh wedding uh setup they um transfer the house to each other or at least the the the house gets entered into their Their shared assets and then in the uh in the evening they divorce again, they're separated again. But the difference now is that person A used to have the house, and now person B has the house and person A slightly more money. And um they go actually they go themselves, they go

tax authorities and they say, Well we we did this, and do you agree with us that no tax uh should be due? Um and then um well something happens. But I mean uh the any questions on that so far?

B

Well, I think it's a good thing. Are they controversial? in this scenario tax law or are they kind of getting around the spirit of what there must be laws in the I know in Australia there are laws around marriage and in order to to demonstrate a number of things. I don't know if the same thing happens in the Netherlands or So it would seem to me that if you've satisfied the authorities on the point of marriage certificate then it should satisfy the tax authorities or am I

A

Uh well I w I would definitely not say you're completely off th I think there are specific uh provisions against well you could say fake marriages, like for example for immigration law purposes um but none of those were were were uh applicable to this scheme.

C

Uh

A

The interesting thing here, right, is for for contract law, for civil law you could say. the marriage was actually in place, right? So for example if person A had also been involved in in uh uh in incurring a big liability on that same day, then person B would have been liable for that towards the third party. Right? So the law, the the the the marriage legally it's in effect. Um but then the next question is do we respect it for tech

B

Mm. Yeah, and so that then raises the point that if they uh ultimately the the sort of the um the the the punchline of the story is that they weren't allowed to go through with Property.

Abuse of Law and Penalties

Does that mean that's the same thing? broken the law. because they didn't obey the spirit of the law even though they did obey the letter of the law. So if you don't obey the spirit of the law, you've broken the law. And therefore, if that's true, penalty. I know they had to pay the tax, but could they get into even more

A

Yeah. No, that's very interesting. And and uh you could indeed say they've they've broken the law, right? The the sort of uh law lingo for this is called uh Frauus Legis, so so abuse of law in in Latin Um

That condition applies in very rare cases where effectively we say, Well, the the the letter of the law, the regular interpretation of the law, indeed gives you what you want. But we're of the view here that you've only done this for tax purposes, right? So you've only to save some money and moreover uh the what you're trying to do or what you have done is not in line with And if that's the case

In the Dutch interpretation at least, we're gonna pretend that the trick you did, in this case the wedding, was never there. So that's that's how that's how that An interesting next question is of course, okay, what if um do you get a penalty then, right? Because you do have to pay more taxes, because you have to pay transfer tax in this case.

But the next question is, do you get a penalty? Do you have to go to jail? Do you have to uh pay um money to the government? And um in the Netherlands at least Frausle, if it's abuse of law, we are saying well that means you've got quite far, right? Because your regular interpretation of the law was correct, but under this very niche provision you were still denied what you wanted. We're not giving you the tax benefits you wanted, so you have to pay more tax, but you're not gonna get

a penalty. You're not gonna get a fine. Uh because what you did apparently did make enough sense not to give you that fine. Now there's a lot of questions on whether that's always the case, right? For example, what if those people tried again the next day, even though they knew that a judge was not gonna uphold it, are they gonna get a penalty?

I think there's definitely a chance that that that would be the case. But generally there is some Um Some leniency you would expect, but again, not in all countries. Don't try this at home before uh consulting with an appropriate tax lawyer.

B

Yeah, yeah, yeah. I mean it gets so technical in some of these areas, you don't want to try and be an amateur in in in many of these situations. You mentioned the word tricky Uh uh you know, doing something sort of kind of underhanded. But when you were giving the talk in Oxford about this, someone yelled out the word that would normally crop up.

Ethical Aspects of Tax Minimization

So a loophole. Seemingly what I thought the characters in your story or actual case were you Um uh so in general is exploiting loopholes okay? And I'll give a case study here and people will be aware and we we we were talking about this um off camera as well that there this famous YouTube clip that goes around I'll I I'll probably insert it here as well.

Of this media mogul in Australia. He used to be Australia's wealthiest person. His name was Kerry Packer. And he was hauled before a Senate committee for a hearing where the politicians complained that he was avoiding or evading tax And he said he's never avoided or evaded tax.

And then the politicians came back with Oh, okay, maybe you haven't broken the law, but what you've done is you've tried to minimise the amount of tax. You've tried to use loopholes in order to get around evading tax, but you're still minimum and very famously Carrie Packer retorted, Well of course Everyone's gonna do it.

They should have their head read. And he said and he was it's a very famous thing he's been saying, because it's not as if you politicians are doing such great things with the tax money that we should be donating.

F

What the Four Corners program suggested was not that you were evading tax at all, that would have been libelous, but that you were minimising tax.

E

There's nothing wrong with minimising tax. I don't know anybody who doesn't minimise their tax.

F

And that you were doing so in in ways that were that were contrary to the spirit of the law.

E

Well, I just got through telling you what I thought about that and what you're saying is exactly what the Four Corners program says. I am not evading tax in any way, shape or form. Now, of course I am minimizing my tax, and if anybody in in this country doesn't minimize their tax, they want their heads read. Because as look as a government, I can tell you you're not spending it that well that we should be donating X.

B

So it's this wonderful sort of thing where there's this to and fro the politicians and the businessman where the businessman is saying, look, you made the law. This is the law. I am obeying the law. And if there's ways I can use the law in order to minimize my tax, call that a loophole. Then I'm doing the right thing. Uh so is that in general what loopholes are about?

A

Yeah, no and again a very good very good question and uh very um much on point of some. we discuss uh as tax lawyers on a very regular basis, right? And I think if I recall correctly in the case that I I discussed um There was there had in Parliament when the new law um legal partnerships, right, because they didn't actually get married, they got into a legal partnership.

The same. Um someone said well in Parliament said well this is creating a loophole. And I if I recall correctly, the legislative legislator even said, Well I'm I'm aware of that but I'm Okay, I've I've noted your response. Uh but didn't take any action and um the Supreme Court didn't hold that against. Um against the tax authorities in that case, because they said, well, even then still there there can be a problematic.

abuse of law. What I think is very interesting in that that uh short video that you shared is that uh Carrie Packer was his name?

B

That's right, carry back again.

A

Yes. So he sort of in in the first instance he seems to think that what he did was actually in line with the spirit of the new law. And then within that short two minute video it's sort of

uh changes into well um I'm not so sure whether I was actually obeying the spirit of the law, but what I did was was good in any ways because you're wasting my tax dollars, right? That that's basically sort of how it how it evolves during during the In most legal systems I would say there is uh there is a very firm um principle or very firm commandment in EU law but also

uh countries laws. There is a principle of legality and there is and from that follows the idea that as a taxpayer, in principle you are allowed to minimize your tax burden in in any legal way. So you're not obliged to do that. to do something that's that's plain stupid, uh makes you pay more tax, right? You have to y you're you're allowed to structure your affairs and

Um but then really come comes the question of the details of that, right? So for example If a loophole is so obvious that any child that would have been in the legislature could have predicted that, does that mean uh that it that it cannot be uh held against the taxpayer as abuse of law? Or if the legislator has been made aware of of the loophole but hasn't acted. Or if the legislator has acted but didn't do so in a competent manner, right? There's all kinds of sort of Grey and grayer areas.

Um but in general yeah there is definitely some there might be more leeway if a loophole is very obvious or if a loophole has been accounted for one way or other.

B

I imagine as well that I Because just for an individual taxpayer, tax law is exceedingly complicated. I don't think it matters what country you come from, when tax time comes around. So many different check whether or not you are entitled to a particular reduction. for you know buying this particular thing

claim this back on your tax or you might have to pay additional tax on this thing. Just for an individual it can be exceedingly complicated. The more wealthy you become, the more businesses you own, uh the more diverse your business interests, then the more complicated still. have to account yourself to the government and pay what is owed Is it generally the case being a tax That you see that courts look kind of favour.

with many businesses you're going to have to employ not only accountants but possibly tax lawyers like yourself just to make sure that you're dotting the I's crossing the T's and not doing something egregious such that you're going to end up in jail. Are the courts You know, predisposed to think it's just an honest mistake rather than oh that person was a vacuum.

C

Bye.

A

Yeah. No that's a again a very uh very very uh very apt question. something that comes up a lot. I would say, right, I mean uh in the end judges are are are human as well, right? So uh there may be ju uh judges that are a bit more legalistic and are more that are thinking more in line with the sort of the spirit of the law or their own feeling of just

Um however there is indeed actually there is literally an example of what you what you just said in the Netherlands where uh a taxpayer, a corporate taxpayer, did engage you could say quite aggressive tax planning. Um but it was to use to get a tax benefit under a very arcane rule. It's a rule I mean I could show you in in my in my textbook. I think it ha that it spans four pages of of very small levels.

Um and then and then but they found a loophole. Uh and that loophole was closed actually while the case was gone, but of course that couldn't be done retroactively. Um and then the s the the Supreme Court uh also said, Well look this this rule it's so complicated, it has so many uh nuts and bolts That could go either way, right? So it it could also be to your detriment, right? If you do one small thing wrong, your complete tax benefit is gone, even though maybe you you would be entitled.

Well in this case you've checked all the boxes, all those four pages, you you went through, you did what you needed to do, um and even though it may be a bit of aggressive, the legislator has chosen a very deliberate, very hard rule. And that means that if the outcome is in line with that rule, then you should be able to get

B

Well that's good to hear yet.

Popper's View on Social Sciences

Um we should get to pop up. Popyrian epistemology, how it can inform something like legal science. Legal science would be even though it's called legal science, it would be well within the the the social sciences. Uh things about people, things about society, where in which policy can be made, that kind of thing. sciences as not in the same way that physical science uh those set of good explanations that are testable. In the social sciences you generally won't have testable theories. And the

So a human choice doesn't make a difference to the outcome of your chemistry experiment or demonstration that you happen to be doing. But it's going to be

A

Every

B

It's going to make up a lot of what goes on in economics, and it's going to have a lot to do with how we understand or interpret the law. But when you do make these policies, You need to have a Papurian. policies if you want to understand the distinction between good policy and bad policy. And one of the

Talk is this concept that Popper has of the unintended consequences. Can you talk a little bit about What you think Popper's view of the soci social sciences was and how you think that might apply to, for example, legal

A

No, of course, of course. And um Well maybe maybe to start there I would say that indeed uh in my view the legal sciences are are part of the social sciences, although um right

The whole paperian uh framework and thinking that's not very relevant, right? There's just there is science, you could say, or there's epistemology, and we think about problems and whether those problems can physics or uh legal science or uh psychology, we shouldn't really care and sometimes they cross the boundaries of those things. So their their those boundaries are arbitrary and often not very necessary.

Having said that, of course, within the social sciences uh that's a phenomenon which Popper also described aping, there is a tendency to really look at a mistaken view of what the natural science Which basically comes down to well they gather ob objective facts um of the world around us and from those facts they derive theories which get increasingly uh probable or at some point

uh are entirely sure that they're true as long as they found enough examples of that uh out there. Um and um well in legal science that's already also quite hard, right? Choices, you have to do with human interference. But there is in the social sciences as a whole and in the legal sciences as well, there is clearly, quite clearly a tendency. for a couple of years now to say okay we should also look more towards how we perceive the natural sciences uh Empiricist, we should do more experiments.

We should do more questionnaires, uh those kind of of things. Um and what Povers actually said is well, the starting point is all wrong because the natural sciences actually don't progress and don't make progress the way uh you guys think, right? So uh you should not be doing that in the first place because what you should do

As Popper says, well you should start with a conjecture uh and then um you should start with a r refutation or an elimination. You can do that by doing tests, and that is harder in the social science. But the most important part of it is actually the creative enterprise of coming up with a solution, with an explanation, and then criticizing that as part of scientific debate. That is something that could easily be done in legal sciences and I think actually does happen a lot.

as well. So I think that that that's that's really a a good part. Um and you can apply that to policymaking as well, right? If you if you go and you apply policy making

um in the wrong manner, so in the way in which you say, Well, I think that natural sciences progresses as as I just described, and I'm gonna apply that to policy. So how would you go about? You would say, Well First we're gonna objectively look around the world to see if there's any signs of anything that's objectively wrong, whatever way you want to describe that.

Um then based on that we're gonna we're gonna formulate a theory, we're gonna put that into law, and then that's great because once that law is in effect, we can go around the world and we collect evidence, positive evidence, um that our law is doing what it should. And if you're gonna do that, you're undoubtedly gonna find evidence, right? You're gonna find an maybe an infinite number even of instances in which you could say, well, here you you can see that the law is doing exactly

And um right, that's yeah, well so that that's empiricism you could say applied to policymaking. And I think the Poperian alternative, and that's also what I what I discussed in my talk, is that Popper says well

A good deal.

A

Policy debate from a from a from a social scientist perspective should not be looking at how can we confirm that the policy is objectively doing what it should, or how can we collect evidence. But it should be about well, can we critically examine the policy before it's put into place? That's the most important part, right? But also uh can we find problems or can we find unintended consequences of the policy Once it did is into place.

That it's doing what it's set out to do, but we should actually be looking for evidence or even better explanations of why this policy. is having unintended consequences. So doing some things that it might not have been doing, uh been been set out to do, or even having some adverse effects that that were not intended to be there in the first place.

B

Yeah, so you you're starting with a problem as always. So i go but going back to your original question. If it was the case that you know this policy of the first time, it's not a very important All of these people are getting married, they're going through this facade of pretending to be married. That would be an unintended consequence of some laws. So the Papyron view is okay, well let's conjecture a solution to this particular problem, close the loophole.

Is something better than what went before. And you're refuting the previous law, not because you made some kind of prediction or you're it's some sort of testable theory like in the physical sciences, but rather you're focusing on this idea of we didn't intend for this problem. But the problem inevitably arises everywhere, all the time. We're just surrounded by problems and so now we're going to conjecture solutions to that.

AI, AGI, and Philosophical Misconceptions

interested in law, you're actually also an expert in the AI AGI thing that is happening right now. And you've written a wonderful paper with your friend and colleague Eric Marcus.

A

I mean Eric is is is is many things, uh'cause he he seems to know uh he seems to know a lot about basically every think of but I think uh he is he is um he is a physicist, yeah that's why he got his his PhD uh I would say I'm it's very flattering of you to say that about me, but I'm not an AI or an AGI expert. What I do hopefully know a little bit about, and maybe even that part is wrong.

is about the uh philosophical ramifications of AI and AGI and how you can sort of tie that with the popper and Deutsch uh work that that were both involved.

B

Yes, yes, yes. experts at the moment. So that's one thing we can say is that there is no such domain of expertise as AGI. Just to have Tyler Cohen, I think he's an economist or something, he was on um Twitter X and and then uh announced A few days away. And he's not the only one who thinks that because Chat GPT is passing the Turing test and he's having quality conversations with uh with chatbots and LLMs, that he thinks that well, AGI, if it's not already Now you disagree with that.

Give me a uh a a few minute um sort of summary of what you've said with Eric and and what you think about this idea that we're we're already there.

What do you want?

A

Yeah. as I sometimes like to ex explain this to other people, is that um well AI or the AI debate is what uh a day at the beach For people that are in bad shape is what the AI debate is for people that have well a mistaken philosophy. a philosophy that that we happen to disagree with. Um and the point of that metaphor is to say, well usually right in a day to day um affair or day to day

business you don't really talk about what someone's epistemology or philosophy is right that you don't really talk about it maybe in academics but I think not even there. But the AI debate actually is a platform where even people that don't have any interest in philosophy and I mean good for them, right? That that's fine, um, are saying really profound philosophical statements like, well, the human brain

works by collecting data of the world around it. Or humans learn by collecting as many examples as possible.

And they make very profound statements and from that they derive very radical conclusions. So for example, well um if you think that that's how a human progresses, well that means that if an AI or a computer that collects enough examples or collects enough data of something, then that's gonna make it well equivalent to a human uh brain or it's gonna make it equivalent general intelligence or or or even concept that that goes beyond that.

So that is that is a very interesting aspect I think of the of the of the philosophical debate that can suddenly arise when people are trying to make statements on on AI that that that don't really have anything to do with that.

Um and what you do see indeed is is and that's that's what the Day at the Beach metaphor uh relates to is well suddenly um it turns out that philosophically people are well not in shape or at least having views that that are Very different to ours because once it's time to talk about AI, everyone says, Well, sure, you know, we just need enough computer power, we just need enough that, and then we're gonna have uh superhuman intelligence.

Um whereas the first question would of course be okay, but what is superhuman intelligence? Does that even exist? And what is human intelligence? What we're doing in our paper is really building on uh well mostly uh the work of of David Deutsch but also uh Karl Popper.

And David has given a number of talks, podcasts couple of papers about well guys hold on um AI doesn't do what you think it does from a philosophical perspective it's not at all equivalent to how um uh humans think or learn and we're not moving toward a human like AI. In fact actually a lot what's happened over the recent years is moving AI away from anything that resembles human thinking as as far as David's concerned from a philosophical perspective.

And what we're doing in our paper is really applying that and building a bit further on that and saying, Well, if you agree with us, right, so if you agree with with David Deutsch and with his application of Popper and what that means for AI that that

a lot of the uh philosophical comments made on that are wrong and that actually we should be thinking in a radically different manner, then what does that mean for the AI debate? And uh well I think that means a number of things. One of the things it means is that well If you agree with David's proposition that uh knowledge grows by formulating and criticizing new better explanations,

AI cannot make explanations like that at this point. Um that that means that humans are still the only universal explainers and the only ones that can make progress uh really growing explanatory knowledge. Sure AI can help them, as can other any other technology. It can lead to different and new problems, to better problems. It can help and assist with that. But the human remains at the creative steering. Um and that also has has various other uh implications.

Human vs. AI: Qualitative Differences

B

There there's a real philosophical divide in the culture between I think people who understand the mystery, wonder the entire universe. And the other people who think that well human beings Ape were just slightly more intelligent than a chimpanzee. All you need to do is to give chimpanzee a little bit more processing power and it's going to be basically a human being. And you could draw a graph. But if you forget about And you think in terms of explanations, then you do have a lot of things.

Quantitative difference between us and other animals or us and AI. What you have is a qualitative black and white difference between systems that can explain. And those that can't. And by explain it means conjecture something new and potentially make errors along the way. An interesting example I also saw. On X was someone having a go at Chat GPT was making fun of it, saying, This is what you think AGI is by providing.

A very simple arithmetic question that the Chat GPT could not get right. And many such I've done this myself. Such people have provided ridiculous examples of where, for example, um, I think in this case it was a decimal subtraction, it was something like three point one.

Takeaway 3.3 and the answer that the chat GPT gave was 0.8. So it it got it completely wrong. It didn't understand what it was doing. And but the the point is that the person that was Uh holding it as up as an example of the uh. This could not possibly be AGI when other people are claiming it's AGI. But not for that reason. Because an AGI would actually be able Mistake.

is not to ever make that mistake again, to correct it so that it's prohibited from ever possibly making that mistake. But AGI, you can't do that. By definition, you can't prohibit. Any mistake of any kind of And this is one of the things that there's so many qualitative ways to distinguish between AGI or now That's also becoming uh almost a redundant term because people are saying, you know, Chat GPT is AGI when it's not. But David Deutsch also talks about the concept of disobedience that an AGI

can can disobey. I don't know if that formed part of your paper as well, this this this capacity to do other than the code says.

A

Yeah, it's a good question. I think I'm not sure we explicitly included that. I mean it is implicitly there, right? Because it's a creative enterprise and as as they Well uh creativity is disobedient, right?

C

Thank you.

A

quoting that uh because of course you cannot prove anything by looking by just looking at it. But I mean most artist types that people will know are not generally quite obedient, right? They tend to be rather dis Um which sort of proved that point.

B

Now the paper that you wrote we will we will link to that as well because I think it's wonderful. some of this philosophy about the distinction between AI and Asia. But it's just a very good it has a very good overall And inductivism and all those other misconceptions that the the people that uh that circle the work of David Deutsch and Karl Popper have come to understand.

Introducing Max's Oxford Talk

Immediately after this we're going to go to your talk. Is there anything you want to say about um about your talk by way of introduction as we segue into that or any final thoughts before I let you go?

A

Yeah, well um thank you. No, I mean I think I've I've introduced most of it. Uh what I'm doing in the talk is is maybe talk a little bit broader about What my research was about. uh the marriage case example in a in a bit more detail. There is someone in the audience who liked it a lot but who does spoil uh some of the some of the moments there but that's fine. I mean it was a very lively debate and very good question.

So that's very much appreciated. And I will also talk a little bit more about the possibilities that I see for Pauperian epistemology or for that philosophy to even make further segue. Um and the paper uh that I co wrote with Eric, well it is available online as a as a pre publication, but it will also be published.

B

That person stealing your thunder and and and ruining the punch lines was Charlie Lineweaver, who was also a person who was at that uh conference conference for want of another word last year. We've already uploaded one of his talks that he gave. Last year, and we're going to uh upload a few more in the coming days and weeks, including some by Sam Kuipers and also Eric's as well. Thanks so much for joining us. Hope to talk to you again soon and um uh until then.

A

Yeah, something else entirely proper and legal side. I'm not a physicist, I'm a tax lawyer. So let's go to the quick introduction. Okay, so yeah, a quick intro. I'm a tax lawyer, that's my full-time job. I work at EY a couple Some of you may know in the Netherlands in Amsterdam, but on the side, for the last uh couple of years, I've been doing a PhD research, which finalized last month on EU tax law and by some sheer coincidence I got involved in the

Carl Pauper and later also David Deutsch. That's also how I uh eventually met Eric. and Sam. And in my thesis I've done a lot with these ideas and sort of tried to explain them to legal science. So I'm gonna talk about a little bit about my work so far. mainly the PhD thesis and then in the end hopefully we'll have some time to talk about a paper that I wrote with uh with Eric on AI and Pauperian and Deutschean epistemology and a little bit about what's more to come.

Recap: The Flash Partnership Case

So I have empirically confirmed that this is the best way of explaining my uh thesis topic to non-tax lawyers. So it's a fictional uh example but it's based on a true case. true court case that is so we have a couple of facts here we we always start with the with the facts so Max wants to sell his house to Eric that's fact one and then we have That's how that... And then the problem is there is real estate transfer tax, or in I think in the UK you call that stamp duty on that transfer.

Eric and Max have found out that married couples don't pay stamp duty or transfer tax when they sell stuff to each other. So Thanks for the spoiler. So yeah, but this is this is a real kit kit court case. This actually happened. So step one, Max and Eric got married, and then on the same day, you see some rings. So on the same day they transfer the house.

To each other.

A

There you go. So on the third on the the evening they get they get the fourth on the same day. And this this this case is called the Flash Partnership Case in in Dutch tax law. You can look it up if you want. Um and what happened there is that these guys they went to they even went to the tax authorities to tell the tax authorities about this, and then you they eventually they went to the Dutch Supreme Court. And the Dutch Supreme Court

Well it first looked at the law and everything around it and it concluded you can do this. So you can be married for a day, you can get away with this trick. It it works. But there's sort of one thing we have to see. And that is where there is abuse of law here. So that's the concept I'm gonna talk about. So what did the Dutch Supreme Court see?

Well this wedding, this marriage was only driven by tax motives. There was no love here, no other reason to get married, just purely you want to reduce your tax bill. Secondly, Yeah. And that's of course very hard, but in this case they admitted that that was the case. So they said we've purely done this for taxpayers. They didn't do a fake kiss, they didn't do a fake honeymoon, it was just they said that they...

Yeah, and that that is in my topic that is the tragic actually. If you play it well you can get away with these kinds of things, but here they they admitted they didn't. Supreme Court looked at the law and they said, Look, this is not what the wedding exemption or the marriage exemption was made for. It that was not made for for these kind of things. So as a conclusion, we ha we are calling this abuse of law. And what does that mean under Dutch law?

That means that we're gonna pretend that that whole marriage and the divorce were never there when we imposed the tax. We we first we had those rings and then nope they're gone. So what do we see? We're only seeing the transfer of a house. And then at the end of the day that's how it is and they have to pay the transfer tax.

This is an explicit. You can look uh in in in Dutch it's a long name, it's a flitspartnerschaps arrest. But but I think if you do flash partnership case y you'll get it. But I'm I'm more than happy to get you the uh an English translation.

Abuse of Law in EU Corporate Tax

So what is my Yeah, but w it but it's uh it's Amsterdam, so they can do that. Yeah. What is my topic about? Well my research is about this concept, this so this idea of abuse of law that sometimes even though you're in the letter of the law, in in line with the letter of the law, you can go too far.

Um but then for corporations. So corporations of course they cannot get married, but they can do other stuff. They can do mergers, they can do financing together, all to reduce their tax bill. And in twenty sixteen the EU member states got together and said This idea of abuse of law in corporate tax, we should all have that. That should become part of EU law and should be mandatory for all of us to have.

So this change, so the fact that first it was the Netherlands making those rules, now it's the EU making those rules, that's what I've uh researched. And usually this is about the time when people from common law countries like the UK or like the US, Australia, will tell me, well, this is really this is a socialist concept.

Um in our countries you can trust the law, you d the letter of law the government should never be able to do that. If you look it up for Canada, Australia, even the US, UK, similar concept exists there. So the idea that sometimes the IRS or HMRC can just come in and say, We know you're right based on the Latzrovers law, but you did a trick here we don't like, that notion exists in common law countries.

So then when stumbling upon uh uh Pauper, well that happened at the beginning of my research. I didn't really have any Philosophy of science. Or any philosophy for that matter, but I thought, well, if you're ever gonna do an attempt there, let's do it now, because probably otherwise you'll never will. And I found someone who said in his speech d thesis, well, we should have more power in the social science.

He has not at all been uh successful in that regard, at least not in the Netherlands, but I think almost never.

Popperian Principles for Legal Science

Um so what is the key task of the social science? So I think we've we discussed that already, uh right. According to Popper, that is to find the unintended consequences of intended human action. So you need to find Okay, if I have a new law like mine, where does that create problems that we did not see coming? Or when would we as policymakers be willing to accept that the policy that we've put in place does not achieve what it does?

Because it's very easy to find confirmation of why your policy works, but it's very hard to actually acknowledge when it has

Amen.

A

Similar to something I think you said, Brad, you s you talked about uh the perfect leaders yesterday. I think the same is true for the law. A lot of legal scientists are trying to find the perfect law and I think that That cannot be done. But you can find mistakes or problems with existing law and remove bad laws and through that create better laws or at least contribute to finding better laws. Um well in my perspective

Pauperan legal science should be normative, right? Popper's work has a very clear ethical component there as well. We're not just describing the world how it is, but also how it should be, especially when it gets to democracy and uh how to create a a good society. Um so we shouldn't just be

Explaining

A

the world well sorry, describing the world how it is we should also explain through those explanations. Improve. So, if you look holistically about how traditional legal science works, I think traditional legal science is actually not even that bad from a paperian perspective, because what a traditional legal scientist would typically do is

Analyze the law, look at the law, and just say what that what he or she thinks about that law and how it can be approved, which is quite a f a free spirited way I would say of doing science. Um however um

Critiquing Traditional Legal Research Methodologies

As you may know, the social scientists, but in particular legal scientists, have a huge inferiority complex towards the natural scientists, so towards these guys there. Um so if you wanna pretend or if if you wanna make a good impression as a legal scientist, what you will do is you will try to mimic the natural science.

And that is actually a phenomenon which Popper called aping, right? He's written about that multiple times, that social scientists will always try to mimic the natural scientists. And one example that he will talk about is Mark. Right.

um in in that regard. So what you see in the during the last years you see a lot of uh empirical legal research, comparative legal research, interdisciplinary legal research, all to pretend that what you're actually doing is is something that resembles what legal scientists think natural scientists do.

And I think Pauper can provide a huge benefit there, and Deutsch obviously as well, because they not only describe how you should do social science, but they also explain how the natural science should work. um yeah and i'll just be really actually let's just go to that

I think I like that one more. So what is one problem which I identified in my um in my particular research topic? So Deutsch uh especially talks a lot about uh self-correction, right? So when when there's a bad idea, it should be removed from the system.

Responsibility and Legal System Defects

And a key notion in self correction in my view is responsibility. And that's also something Popper and Deutsch have talked about. If you have a bad idea in society, someone should be held responsible for that and should be clearly accountable. And then you can, for example, try to remove that person from power to an electoral Project. If you don't have responsibility, there's a real risk that one, the bad people will stay in power and two, the bad laws will remain in place.

If you look at my uh topic, what I'm worried about is that you get this very murky division of competencies between the Member States. and the EU and that applies to both the parliaments

And the European Commission but also to the judiciary. So a Dutch judge can very easily say, Well, if you don't like this outcome, that's the EU's fault and the EU can say, Well, if you don't like the outcome, that's the national judge's fault. So no one's really taking responsibility there and my uh topic it that's at least that's my proposition amplifies that problem in this

So then talk about more to come. What what am I gonna am I uh excited to work on during the the next year. So firstly um more bore many boring text papers, but I won't uh I won't bother you with that one. Um second one, I'd like to bring Poparian philosophy even more into the legal science than I've already tried to do. And I think a quote of uh Steve Jobs there that's very fitting, it's it's a little bit like

giving a glass of ice water to someone in hell because uh legal science currently from a m uh from a methodological perspective and a philosoph philosophical perspective is just not good. Um

Bad Epistemology and AI Bias

And then POPAR and AI and maybe Eric, yeah, that's that's a nice moment to talk about that paper a little bit more. Um because we wrote a paper together for a conference and actually To circle back to Sam's uh uh contribution in the beginning, Sam talked a lot about all kinds of uh mistaken epistemologies, right? Uh Bayesianism, inductivism, empiric empiricism, and those ideas are um very, very present in all the debate.

on AI. And what we've tried to show in that paper is that that's not only a problem from a theoretical perspective, but that also has real-world implications. So for example if you look at Um well Eric talked about AI in medicine, but there's also AI in tax authorities, for example. Where in the Netherlands we've seen that tax authorities have on a quite a massive scale

Employed AI to uh surveillance people but also to find out which kind of groups of people had to be audited. And because they couldn't really explain why people were targeted, it turned out that they were targeting by nationality, for example, or by uh well, things like that, maybe even religion.

And um that is something that we would argue has a lot of interaction with the fact that there's bad epistemology behind a lot of the reasoning. Because if you think, well the only thing we care about is that it works and not why it works you're much more prone uh prone to uh to have those kind of mistakes.

Plato's Cave, Popper, and The Matrix

Yeah and this is one idea which I really like about uh which I put in my thesis as well is the idea of uh pauper and the matrix. Because as you'll know, Popper is quite famous for his big rebuke of Plato, right? That's the open society and his enemies. And in some passages of Poppers, he talks about Plato's famous.

cave analogy, which I guess a lot of people uh will be uh familiar with. So What's interesting about the cave analogy is that usually when people talk about that it's about reality might be fake or we all have a perception of reality that maybe mistake. But what Popper does is he places this analogy in where it should be in Plato's uh thinking, is that Plato says, Well This analogy is actually part of a much broader view, namely the world view that there should be a philosopher king.

So there is indeed a cave, but some people can escape from the cave and they can see the real reality. And in Popper's story, that is the philosopher King, he's the one who can get up from the cave, discover reality, and then reign over everything everyone who cannot. So if you apply that to the matrix, um you may actually get a very uh different opinion on Neo, because we all think Neo, keen on Reeves, great guy, trying to save humanity.

But if you place him in Popper's reading of the cave analogy He's maybe a hero in disguise because actually what he or sorry he's a he's a tyrant in disguise. Because what he's doing

Is maybe not only trying to save humanity, but he's actually also the one who will reign over everyone, even though he's in the movie, of course, he's very nice and he it'll in the end he sacrifices himself. But it's if you apply Plato's cave analogy to it and how Popper sees that, it's actually a commercial for tyranny and not

Yeah, maybe one last thing, and we we briefly discussed it before this uh talk as well. So the idea of reality of abstractions of Deutsch, which we I believe we talked about yesterday as well, um is something which the legal science has absolutely not taken any account of.

Um which means that if in the legal science you want to pretend you've really researched something, you need to go and down to the lowest, lowest level of detail that you can find. You can have to find the most obscure niche proof. And that's usually the best. Usually more abstract, more higher level explanations, they don't do well in legal science and I believe of course that is something that that should change as well. And maybe the last one and this is this is one I I quite like is

The Concept of "Good Explanation" in Law

The concept of a good explanation within the legal system as well. So it's not entirely the same notion of explanation that that Deutsch or Popper would have, but I think it's fairly similar, and that's the idea of what we call a taxpayer position or a tax filing position. So basically what it is is if you take a position in your tax return And that turns out to be wrong, obviously sometimes you can get a penalty, or you can even go to jail.

But in some cases the judge may find that even though your explanation is wrong, it was still good enough for you not to get a penalty. So an example I put here is a bad explanation would be well I had lunch, here's my lunch receipt, and I'm declaring that lunch receipt as tax deductible because today It's great weather. That's a bad explanation for trying to take a tax deduction. A good explanation could be

Well, I'm treating this uh lunch receipt as tax deductible because I have a statute of the law which in my view provides me the basis to do that. So I think that would be in line with Text of the law. In the first case, you're very likely to get a penalty, right? You've you've made up a a very bad explanation. and you've taken a tax position, that's tax fraud, you may even go to jail.

In the second explanation, in many jurisdictions, the judge will say, Well, you were wrong, because I think the statute should be interpreted differently, but I'm still not giving you a penalty or putting you in jail because your explanation somehow And it's very hard to exactly define where the border is, reach a certain level that made it good enough, even though it turned out to be wrong.

And again, this left this idea of explanation is a little bit different, I would say, than what Popper and Deutsch say is an explanation. But it's still very interesting because it is an example where within the legal system The notion of explanation is used to make a very crucial distinction, namely if you go to j whether you go to jail or not. The first one. The second one.

It's not my explanation. It's it has to be a literal explanation. So you have to have a literal interpretation of the law. You have to be able to show the statute. Yeah yeah now you have to just say No you cannot you cannot just say I think that's how the law works. You need to actually show the law. Yeah. Yeah. My my job's not that hard, but it's not that easy.

Yeah.

A

So yeah, any I mean a couple of examples there. I think maybe Eric we can talk about the AI one a little bit more. Any questions?

Q&A: EU Law and Self-Correction

The answer is

A

Well the interesting thing is the the the European Commission has literally just released a public evalu evaluation of this of this topic. So I'm sending in my PhD as a response to that. So the in terms of actual changes, nothing. Um I think where um I've I I d well I don't think it's I don't think it's well I think from a From the if you look at the perspective of the methodology I use, right, the so the Boberian Deutsche notion of how should you do policy making, this is very clearly back.

Um and from the Deutschen perspective you could do that very easily because Deutsche thinks the whole idea the whole EU is a bad idea based on the fact that it undermines self-correction. This would just be one part of that. Um if you answer it a bit more detailed, I would say where we have some clear self-correction defects in in my topic is that if you want to look at what um

object and purpose of the law is or what is the spirit of the law, you need to have a very good understanding of what the law is. Right? There might be some religious people, for example in the wedding case, that would say I don't care that someone s was only married for one day. In my view, a wedding should always be respected by the law because it's a holy thing and and we should never pretend that it was not there.

That that is a pretty fundamental question on how you think the law is. And where I think we'll have big problems is that when a European judge Wants to really know how the national member states laws work. They have very defective procedures of doing that. And that should be much more transparent and it should be much more accountable. And there's very easy ways to do that actually. So I've I've provided a couple of recommendations for that. No, I agree.

Mechanism, the worst example of that is Norway, because what Norway does, Norway is not in the EU. Norway actually pays the EU. To be able to adopt its laws. So Norway pays to borrow the EU's laws basically, and the only thing Norway gets to do is it gets to send informal recommendations ahead of the legislative process. Well, because I think there is there is literally sometimes technical detail in what you need to do. So you need to

I mean some I mean something'cause it it can be very detailed, right? It can it it can be the it can be the description of how big I don't know like an implant has to be in order to be able to be imported into the EU. It's quite quite technical knowledge. And Norway just ahead of the legislative process just sent an informal letter saying, Well, designing these laws, could you please take account of this and that? And they have no way of enforcing it. They only just pay. Sorry.

D

So at the start of your talk you have the example of to people getting married and then trans. And I've always wondered to what extent do you think that there is A lack of self correction there because one of the things I always find old about Tax authorities have an interpretation of the spirit of the law.

C

Mm.

D

Typically at least.

A

Common.

D

If you're entering a house and you There is someone in the house that you're clearly intending to murder, then you say we're gonna This seems different. This just seems like there is a a kind of loophole in the law which we want to avoid just because uh we don't like it. We we want to be Uh isn't that kind of like an easy to vary explanation? You can you can say, Ah well, you know, we wanted a taxi

A

That is true. to use that which is why a lot of people say they should only use that in as a really ultimate as a backstop, right? If if n all else fails and then only very occasionally you should be able to use that and otherwise you should not. But there is indeed there is a certain arbit arbitrariness in

coming up with what the law is is intending to do. Um and I think that is in indeed an important problem when you're gonna have that question not only answered by a Dutch judge but in a dialogue between a Dutch judge and a U

B

Sorry, okay.

Thank you.

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