internet

...well, perhaps not quite but this is interesting, if blindingly obvious in a sort of a "why didn't we think of that" way:

I've been writing for a while now about how the globalization of communication (and delivery) technology is set to make it ever harder for states to quantify and collect taxes based on trade and incomes and make it imperative, if they want to have any revenue stream into the future, to switch taxation to more fixed sources like ("economic") land - ground rents, airspace, electromagnetic spectrum and so on, or face the prospect of ever increasingly authoritarian measures to force people to repatriate income and assets for tax purposes.

I hadn't counted on VAT being amongst the first to be threatened, but here it is. It's not going to help buying cakes from Tesco yet because it will only work if it is actually imported, I suspect (no getting away with simply operating from a warehouse in every town that happens to be owned by a Channel Island company I would think).

But people, liberal minded political types especially, need to wake up to this double threat - to recognize that revenue collection will be more difficult in future if based on moveable assets, incomes and trade, and to recognize that addressing that means going one of two ways - the more equitable land tax, or the more authoritarian crackdown on trade and "cross-border" earnings.  The ability to move money and income and so on overseas is moving fast and getting ever easier for the ordinary person - you no longer need to be super-rich to go offshore.  We need to act fast to counteract its effects on future tax revenues.

Thanks to Liberal conspiracy for highlighting protectionist amendments being sneaked into the Telecoms directive which MEPs will decide on tomorrow:

The amendments basically set the scene for forcing ISPs to monitor all their customers' traffic to catch them sharing copyrighted material on the web and to cut customers off if they keep doing it.

Over in the comments on Matt Wardman's blog posting the other day I suggested that this whole surveillance obsession smacks of "we do it because we can". Why should one's electronic communications, voice or data, be any more permissible to be snooped on than any other communication - snail mail, face to face or similar. Just because we can. For a variety of reasons electronic communications leave traces, and traces can always be tracked, but why should they be?

It is true that we need to have a debate about intellectual property and how, or indeed whether, it should be enforced in an era of global instant communication. It appears that the artists tend to be ahead of their production companies in exploring how to use the massive marketing opportunity that is the internet, such as recent experiments in releasing music for free, or on honesty box terms, on the web. But of course it is the media corporations and production companies that are lobbying for this sort of protectionist measure. The debate needs to be held much more widely than that though, and not snuck through where these measures were explicitly removed from the directive last time the European Parliament discussed it.

I have written to Sharon Bowles and Emma Nicholson. I suggest everyone take a look at the details of these amendments and give some thought to writing also to any of their MEPs. It is being debated tomorrow, so act fast!

I very fundamentally believe that the internet in particular is seen as a threat by both governments and corporations who feel they are not able to control it. For me, it is the greatest advance in people communicating with people and eventually needing far less "government" to broker their international relationships or trans-national corporations to broker their trade. But for it to bring about the vast benefits of voluntary co-operation amongst individuals around the world it needs to find its own rules, not have them imposed by those very bodies that are scared of it!

We are living through a period which is seeing some of the most momentous changes in human relations in the shortest time in history. Thirty odd years ago when we lived in Kenya and I was seven it was a big thing living abroad. Just the travel arrangements I remember seem like climbing Everest compared to today's era of mass international travel. Three stops, visas to everywhere, currency controls all over the place, expensive flights. Nowadays my father and stepmother seem to have few qualms about travelling to Durban for long weekends or shopping trips. We hear of people resident in Monaco and working three days a week in London, or people with a regular getaway home in Thailand.

Jon Snow, our university Chancellor, told us in one of his annual lectures once about when Sandy Gall, remember him, was out with the Mujihadeen in Afghanistan fighting the Soviet occupation, he would be given a camera, a notebook, a reel of film and told to come back in three weeks with an interesting story for the evening news. Nowadays we are in instant touch right around the world and news is relayed as it happens. I remember hearing that during Live Aid in 1986 stadia in South Africa and India had their first live international incoming broadcast from the concerts in London and the US and people remarking that it was really the first time they knew there were other people out there thinking about them.

When I worked in a Glasgow based Stock Exchange firm in the mid eighties we still had to book international telephone calls in advance to the US. Now the fight is about roaming charges because so many of us take our phones abroad with us - unimaginable back then!

But more than that, more significant than even that has been the internet. Coupled with urbanization which has seen us reach the point where more than fifty per cent of the world's population lives in cities, it means that given the right equipment that already exists and is enjoyed by many particularly in the more wealthy world, fifty per cent of the world's 6+ billion people could be in personal individual contact with any other anywhere around the world live. It's truly like waking up one morning in human history to find a whole new dimension - imagine living in a two dimensional world and suddenly discovering the third.

This has huge implications, epochal implications for the way we live, work, form alliances, invent, learn, trade, develop our common future and view the institutions that have served us till now. Governments and trans-national corporations have developed as intermediaries, as the contact point between whole nations of people who did not have direct access to each other in other countries as individuals. Even money, national currencies, are intermediaries, temporary stores of value that allow us to separate transactions by time and guarantee the creditworthiness of our counterparties in commerce.

I have a friend who has developed a pet theory of markets:

Market 1.0 - decentralised but disconnected - past - the local market with occasional trips to other local markets

Market 2.0 - centralised but connected - ending now - bigger, say national markets with intermediaries, governments and corporations, trading between these national markets

Market 3.0 - decentralised but connected - future beginning now - consumers and producers are ever more in direct contact with each other, the markets can be global and everyone can participate on the right network.

And this third, facilitated not by governments but by technology, and even sometimes in spite of governments, poses huge challenges. Challenges that can only go two ways - one way lies a massive increase in the power of the individual as opposed to the intermediary, whether governmental or commercial, the other sees those two huge vested interests try to prevent their loss of power or compensate for it with ever more draconian measures to place limits on this super-connectivity. Of course other, new intermediaries will emerge. Instead of being dependent on government to guarantee our ability to trade we may become dependent on a small number of global communications superpowers for granting us access to their networks. But the speed with which new ideas and inventions traverse and emerge from the ether will enable the individual to keep one step ahead of absolute dependency on a single supplier or a single technology.

And it's all eminently affordable. For half of what we spend as a single nation on our NHS each year, every single household in Africa could have a "One Laptop Per Child" type device and the infrastructure to connect to the outside world with it. Skype them altogether and they could be providing secretarial services to the rest of the world or selling their best quality coffee for full price to the small boutique blender who charges premium prices to his increasingly affluent western consumers. Think of the possibilities of four hundred million kids bursting with a will to learn suddenly enjoying all of the knowledge the internet can provide.

So, we have the potential to learn from each other without intervention, to trade with each other and to learn to make decisions about who to trust in trade without paying Nestle or whoever the middleman's cut for doing so. We don't even really need money - everything on eBay could be priced in Paypal Pounds for example and we could trade away without having to convert back into real 'currency' unless we had to buy something in an old fashioned retailer - and even then they'd soon learn to accept Paypals or Tescos or whatever.

Now, you may think this is all a bit far fetched, but I predicted, even if I didn't have the skills to capitalize on it, not only the Amazon business model (I tried to sell something similar to Blackwells in return for a job developing it in 1994) but also the Amazon marketplace that manages fantastically to match sellers of second hand books and so on!

Anyways, the point is, we always talk in Libertarian circles about being pragmatic to get our policies enacted, and that's all well and good, but we must not lose sight of the bigger picture. The world is changing, changing fast. The era in which big government and big corporations thrived because we needed them to be intermediaries for us is ending in the superconnected world that makes us, truly, a global village. And it will affect every policy area. We can either sleepwalk into a totalitarianism of governments and corporations who want to stop this progress in their own interests or we can help it along by showing people that a free world need not be a chaotic and dangerous place, that on the contrary, the more we know the other individuals in our global village the more we trust and care about them.

I recently discovered a Conservative version of the Lib Dem Blogs aggregator and so my eyes have been opened to a whole new genre of political blogging! Today I spotted a chap called Mike Rouse writing about "spectrum auctions" as it was called:

I am hoping, nay praying, that Gordon Brown is out of office when the analogue TV signal is switched off. You see, that old airspace is very valuable to mobile phone operators and the likes of Google. They would be able to use it to send fast data to mobile devices and other cool things like that. The last time this government oversaw the sale of airspace to mobile networks it managed to amass itself millions of pounds, in fact it actually got too much money for it, leaving the people that bought the space with not much money to do anything else with it. Going by the track record of this government in screwing things up I wouldn’t put it past them to screw up this potentially lucrative deal when it comes around. We have to be careful to balance the government’s desire to fill its coffers and the need for a competitive marketplace that will benefit the economy in the long run. [From Not Bad for Essentially Privatising Thin Air | Mike Rouse]

Er, no Mike, the sale of 3G spectrum was an auction. That means the bidders decide how much they feel it's worth to them. Yes, they may well have made catastrophic miscalculations, but, as they say, you live and learn. These "locations" on the electromagnetic spectrum - so called "Electromagnetic Frequencies" or EMF - are, in economic terms, "land" - finite bits of nature that everyone wanting to operate in a particular technology has to share. So they should be auctioned, or leased, for whatever the market can bear and the proceeds used for public revenue (which was £22 billion in the UK). It is a form of Land Value Tax. It encourages ingenuity in ensuring the optimal use of a precious and finite natural resource (though I accept the point, that the operators chose to pay so much they could no longer raise the money to exploit it properly - but that wasn't the government's fault).

One thing I wish the government, or Ofcom, would do, is to make local bandwidth genuinely local, however. The current wireless spectrum for example is only useful over distances of a few hundred meters at most with present technology. It should be a source of revenue for local authorities rather than central government.

"Every few hundred years in Western history there occurs a sharp transformation. Within a few short decades society - its worldview, its basic values, its social and political structures, its arts, its key institutions - rearranges itself, and the people born then cannot even imagine a world in which their grandparents lived and into which their parents were born, We are currently living through such a transformation"

Peter Drucker, "The Post-Capitalist Society" Chapter 1, 1993

In "The Future of Money" former Belgian central banker Bernard Lietaer suggests two examples of Drucker's "sharp transformation".

First the invention of printing, and the unimaginable change it brought about in the literacy and therefore intellectual and political influence of a large part of the population from whom books were previously too remote. The ramifications of such a change included the Reformation and its huge upheavals as nations moved away from Rome, gave primacy to their own languages, and permitted scientific scholarship previously zealously suppressed by the Vatican.

Second, the invention of the steam engine which accelerated the process of urbanization, global trade in manufactures, created a working class steeped first in poverty, oppression and misery, and then rising up with revolutionary fervour.

Lietaer, following Drucker's suggestion, suggests that the next epochal change is on us. This time he paints a picture of four great movements that he describes as huge pistons pushing towards the same centre point, and that our reaction to these movements could push us to ever greater social inequity and environmental degradation to the disadvantage of future generations or to what he calls "sustainable abundance". His four great pistons are all too evident already: climate change, an ageing population, monetary instability and the advent of the super-connected information age.

So, you'll have spotted that this actually has nothing to do with the recent book from which I've shamelessly pinched the title. I haven't read it, and it appears now to be on reprint or something as Amazon can only offer 4-6 weeks delivery, but I will no doubt find it interesting once it arrives. But the point is that this epochal change will necessitate a reinvention of the state, the nation state, and probably every nation state on the planet.

Many of the institutions, commercial and governmental at least, that we have today were forged precisely because communication and information flow between disconnected markets was difficult. They are vehicles in which we put our trust when dealing with people and businesses we could not know personally. Even money itself is a construct that enables us to trust dealings with one another, a mechanism by which someone who sells us something can give us credit without knowing too much about us.

The information age changes all of this. The synopsis of David Cameron's Google speech yesterday at ConservativeHome does pinpoint the sort of changes we have seen in information flow and how they have been reflected in changes in the mode of government or, to use their word, bureaucracy. But it goes so much further than they seem to conceive (or maybe they're just trying not to scare the Tory horses too much).

The internet and other communication technologies enable us vastly to expand the networks of people whom we know well enough to form an opinion about whether we trust them or not. Look at things like e-Bay, where many participants rely on recommendations from others when making decisions about whom to trade with. An operation like e-Bay could just as well work in fact with a new, corporate, common currency into and out of which people trade other currencies as they need to. In a different vein, bringing new participants into the global economy, look at things like Kiva, the internet based microfinance scheme where people from all over the developing world can pitch for micro-loans from investors the world over to help them set up or develop their businesses.

On a more day-to-day level we have seen the internet make trade "arbitrage" available to the individual consumer - we can now search the web for the best prices in many goods and in different currencies. There is simply less of a need for national currencies. When, as we are frequently promised, we no longer need cash even for small transactions, it will not matter what currency our bank account is denominated in, so long as timely information allows us to convert it at the till into something the seller wants - which may even not have to be "money" in the conventional sense at all.

The internet is also radically changing the way we could choose to work, even if not many of us have so far done so. We could choose to live on a desert island with an internet connection and still work for our tech firm in Britain, or vice versa, we could retreat to our village virtual workplace and carry out open heart surgery on a patient in Tonga. Where do we get paid for these different patterns of working, and in what - Tesco vouchers anyone, after all you can pretty much buy anything you'd need there if you want to? How would a government know, except through every more intrusive surveillance of our affairs, what our incomes are, where they ought to be taxed and so on?

What does a state have left, if it no longer has control of information about its citizens' earnings and trading patterns? And when we can trade with smaller and smaller businesses around the world because of our widened networks of trust, what does the global corporation have left to keep us buying from them? This was the great hope of the nineteenth century anarchists, libertarians and mutualists who hoped for an end to the money monopoly held by states and bankers, and to government protectionism, which would drive down the returns to capital and drive up the returns to labour.

In the light of these huge potential changes in the ways we work, socialise, trade and trust we have the opportunity to look again at the argument, that once seemed so settled in the early part of the twentieth century, the great Liberal reform era, for truly free trade over protectionism. Individual choice over state intervention. If there is a role for the state in all of this, it is in trying to ensure that we all have fair access to the media of such a new economy - communications and delivery networks.

So, Dave's been at the Googleplex trying to give an inspiring vision of what the internet can do for us, and especially our relationship with government. I imagine that if the fun-loving boffins at Google made up the audience they will have been yawningly underwhelmed or resorting to bouncing their hyper-activity stress balls off the video screens.

It's a bit of ironic timing though, after last week's debacle over Labour stealing the Tories' or more accurately the Lib Dem's policy clothing, as my speech writers are just putting the finishing touches to the second of my pieces on Revolutionary Liberalism covering a much bolder image of how technology is about to turn our entire way of life on its head in new and exciting ways that twenty-first century politicians are going to have to work with.

The duckies guarding Google from politicians
Originally uploaded by Yodel Anecdotal

Far, far greater change is afoot than simply providing national statistics to end users and citizens so they can chose and make policy in a more informed way, like the challenges of the end of money as we know it, a whole new way of working in the knowledge economy and in international commerce. A world in which the Googles, Verizons and UPSes will be the moderators and media of global trade rather than governments, where the webs of trust that nation states have established to provide the function of guarantors in worldwide business are rent asunder.

A world that has implications for all public services, creating a new era of interpersonal trust and co-operation moved by the power of market information in individuals' hands unencumbered by the protectionism of states and politicians. An era that will have the power, because it will be people based, to usurp the role of international credit markets, so 'dis-credited' in the past few weeks. And it is the geeks in Dave's audience today, not the politicians, who will be leading the way.

Cameron is right about one aspect - politicians have got to learn to back off, for if they don't do so voluntarily and in co-operation with this new world, they will be ignominiously cast aside, redundant - but I will believe that he himself is ready for that challenge when he makes policy to prove it. Some of the greatest steps in concentration of power to Whitehall and Westminster are, after all, only a couple of decades old, coinciding with the growth of the information economy in the late eighties.

The future of diplomacy?

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Can anyone seriously doubt that this is a huge and unprecedented juggernaut for change in the way we do all sorts of things, from government and trade to personal friendships and relationships?  read more »