The Coming Digital Revolutions

Beware the promises of the third industrial revolution – the first phase may be a real revolution

It has become exceedingly fashionable in certain circles to wax lyrical about the virtues and endless possibilities of what is being termed “The Third Industrial Revolution” (TIR). While the term itself is still nebulous, it broadly refers to an assumed new paradigm in the global economy, where the rapid spread of knowledge and communications via the internet and electronic devices, is fundamentally transforming the nature of the global economy.

For many this phase is spoken of as a hallmark of human success. Whether it be through promises such as the delivery of free internet access to millions via Facebook drones, taxi-services through driverless vehicles, advanced systems that monitor weather patterns and instruct farming machinery when and where to plant, or health systems which notify their user when they are unwell before symptoms occur, the possibilities are seemingly endless. Leading this recent wave of exuberance has been the rise of AR/VR technology and advanced robotics. Augmented Reality (AR) such as Pokemon Go and Virtual Reality (such as vTime), are the innovations that are bringing digital into the real world. These innovations can revolutionise the education and health sectors, removing the need for people to be physically present and allowing for constant access to these services irrespective of ones location or time-zone.

But while the TIR undoubtedly offers a glimpse of a new reality, its visionaries have been woeful at looking at its darker consequences. In the first industrial revolution, the term “luddite” was coined and today it is commonly understood to represent those who reject technological change. However, the term is too simple. The Luddites were indeed upset with technological innovations, but not because they could not see its potential or the benefits to society, but rather they didn’t see the benefits to them. The First Industrial Revolution transformed society by creating mass unemployment and by forcing entire families and communities to uproot, re-train and re-establish their place in the new economy that was transforming around them. It is perhaps hardly surprising therefore that the first and second industrial revolutions witnessed widespread rioting, periods of extreme localised unemployment and the explosion of new ideas about society, how people should live and how people should be governed.

This re-drawing of national economies had profound implications for national wealth and power, which resulted in a fundamental change in the very structure of society. Consequently, the innovations and their associated changes were fought bitterly and by many. These industrial revolutions re-wrote the concept of “The Sovereign” nation and spawned the birth of new ideas such as Nationalism, Socialism and Communism. These new ideas, driven by the new power elite “The Merchant Class”, destroyed the traditional pillars of the pre-industrial state: The Nobility, the Church and the Sovereign (Whether King, Emperor, Sultan or other), as a vital pre-cursor to make way for the new societal power – the merchants themselves. This process was not entirely unpredicted, with a certain German philosopher adroitly predicting the process of power transformation in society as a result of the new technological changes, and he had already created a term for this new rising class, “The Bourgeoisie”.

Today the Third Industrial Revolution is seen as distinct from the challenges facing society. It is in fact, the source of many of the problems. As yet the new rising power is society are poorly understood and the losers of this new wave of change cannot yet understand or associate the challenges facing their personal circumstances, with the wider melee of changes circling them on the global stage. But while details are limited, we do already know some characteristics of the winners and of the losers, which are worth further study.

The new elite are international in a manner that is unfathomable in any other epoch of human history. The easy transfer of wealth, ideas and the ease of travel globally has created the environment which allows individuals to transcend the constraints which may be imposed on them by their country of origin. Members of this class recognise no barriers as legitimate and many see even the concept of national identity as an outdated relic, to be consigned to the dustbin of history. Leading this charge are the technology gurus, the programmers, the start-up founders, the VC backers, all of whom represent the new and rising elite. These are the “Digerati”.

Standing opposed to the digerati are those who have been left behind in this great wave of human advancement. They are the sullen, disposed, disenfranchised citizens of the 20th and early 21st century, who have been cast aside in the maelstrom of economic change that is occurring. These groups think locally, not internationally and view technological innovation as a source of instability that threatens their livelihoods, their communities, their sources of income and their very identity. These are the “Digitally Dispossessed”.

These two groups hold ideologies that are implacably opposed to the other. The Digerati resent the actions of the state, displaying a profoundly free market ideology that rejects national boundaries, taxation systems, societal attitudes towards social issues and in many cases, even intellectual property rights and democratic processes more generally. Consider the bankruptcy of the gossip site Gawker by Peter Tiel, the actions of PirateBay, Napster & Wikileaks or the aggressive tax evasion methods of Facebook, Google and Uber. The new elite reject the state as the lead actor in international and domestic affairs. By contrast, for the Digitally Disposed it is the state who remain the last line of defence against the free market’s radicalism and it’s focus on individualism, which drives the Digerati. Identity based on location and traditional values holds huge importance for the Digitally Dispossed, in a way which the Digerati cannot fathom. Freedom of expression v.s. safety of individuals in particular, is a vast dividing line in the digital debate.

Fault lines are already being drawn. Whether it is the EU’s actions against US tech giants, Brazilian judges against Whatsapp, the FBI v.s. Apple or the battles raging against China’s “Great Digital wall”, the digital revolutions are coming. In 2011 people saw the power of social media vividly re-write the political landscape of the Middle East, in a region with low mobile and internet penetration. Between 2015 and 2016, Donald Trump secured the Republican party nomination, ISIS recruited 1,000’s of foreign fighters and two photos secured refugee access for circa 1 million people into Germany. This is just the beginning.

Technological innovation is not inherently bad, just as the NRA’s old slogan goes: “guns don’t kill people, people kill people”, it is perfectly fair to argue that technology alone is not responsible for societies troubles. But it certainly is a catalyst. In short those who pursue innovation and those who regulate society have reached a fork in the road: Is innovation always good and worth pursuing, with the consequences being addressable later? Or should innovation be closely controlled and channelled, to ensure its affects on society are managed and the vulnerable are protected?

This is the battleground space of the Third Industrial Revolution, and it has only just begun.

A letter to the nation

 Alea Iacta est – The die is cast

(Julius Caesar)

On the 23rd of June our nation took the first step in a long process to separate from political union with Europe. It was neither expected, nor were people prepared for it. Understandably, many people feel devastated. In the time since the results were known the nation has witnessed an outpouring of love for Europe never seen in my lifetime, nor perhaps in the lifetime of any individual still with us today. First came shock, then anger. Anger turned to fear, then fear into numbness. A nation feels subdued and for the first time, in a long time, people are uncertain of their future and perhaps even scared of the country they call home.

But just as every life is has a different story, the history of every nation has many chapters. A chapter in the history of our nation is now closed, but the next chapters are still to be written. In all novels, the day is always darkest before that dawning moment. Right now we are in that darkest moment. A moment filled with fear, with anger, with pain and with sorrow. But this is not how our future must be nor how our destiny can be.  I said once before that I am a romantic. I believe that love, kindness and compassion, when deployed in unison, truly create an unstoppable momentum that can move mountains and carry nations, people and societies towards greater things.

The referendum was never more than the beginning of a process and like all turning points in history, what matters is what comes next. It is for this reason that now more than ever is time for people to come together. So how do we come together, how do we heal and where can our country go from here?

This referendum was, at its core, about identity and about people feeling disconnected from the society the live in. For the first time in many decades, the poor and often disenfranchised in the UK came out to vote because they felt their voice would be heard and the issues raised were the ones that really mattered to them. They felt powerless and downtrodden. Now they feel emboldened. That is not a bad thing for society and in fact if this can be channeled, it could be the very key to making our society better.

Our society used to be governed centrally by a small group of individuals, often chosen behind closed doors, by procedures that few understood. This referendum has shown more than ever that such a model is wrong for a modern society. For people to support ideas and to accept their consequences, they must feel as though they have ownership of them. Devolution of political power within the UK has long been talked about and now is the time to revisit it again. Let’s give our cities and our regions the resources and support to make their own choices and lets end the central dominance of London and Westminster, that has upset so many in this nation.

We must also re-imagine how our nation sits within the global community which we operate in. To do so we must re-assure our friends, rebuild old connections and start new relationships.  We are a part of this continent of Europe in a very physical way. The UK may no longer wish to stay with its neighbors in a political union, but that is not a sign that the UK does not love many of the things that make Europe the envy of the world in the eyes of our global community. Now, more than ever, we need to show Europe that love, as many have already done so over the last few days and we need to go further.

Few people bothered to talk to those Europeans who live in the UK and who call it home during this referendum. That is both a disgrace and a tragedy. These people, many whom I proudly call my friends, have made this nation so much richer for their presence. They need us now more than ever to show that we appreciate all that they give us. The UK must also look more to its fellow commonwealth nations and revisit how it can do more to help them and to work closer with them. From 1999-2003 over a third of all Australian expatriates lived in the UK, while our links with Canada, the USA, New Zealand, South Africa and Hong Kong remain extremely strong. Now is the time to make them stronger and deeper. As to the rest of the world, it is clear that talented and passionate people are everywhere and many still wish to make the UK their home. We need to make sure that a future UK creates a fair and transparent system to help these people come to the UK and make it even better.

Furthermore, we must all recognise that politics is no longer something that we can ignore and  disengage from. From 1997 – 2015, less than 70% of UK registered voters turned out at general elections to choose their leaders. At local elections this was often even lower, in some places below 30%. Our power to decide who governs us is a great privilege and something many take for granted. People often feel as though their vote is irrelevant in a First Past the Post system and as a result they do not vote, nor do they bother engaging with politics in their constituency. I believe that devolution can do much to change that, as it has with the Mayor of London elections and the Scottish Parliament, but it can only do so much. People in the UK also need to be willing to commit some of their time to engaging with politics within their communities. They need to talk to local parties, perhaps attend local events and above all, they need to communicate with those who they elect to govern them.

For those who are afraid and uncertain of the future, this is a rallying cry for those who call Britain their home. We have a chance to make a better Britain, one that is global, modern and uniquely ours. Let us make sure that we take this chance and that the next chapter in our nation’s history is one that we can be proud of.

An open letter to the BREMAIN voters

BREXIT ImageWhy does a man who is one of the biggest winners of the European Union campaign so fiercely against it? That is the question that friends, colleagues, family and acquaintances ask me every time we discuss Europe. The funny thing is, I ask myself that question too.

Since I can remember, I have always visited Europe every summer and likely most winters of my life. My family have owned properties on the continent since I was 15, while my cousins have studied in the Czech Republic, Florence and Bologna. My sister studied in Montpelier and I’ve just completed my year in Bologna. My dad speaks three European languages. My mother is the same. My oldest friends are Swedish and German. Today, over half of my friends are non-UK nationals. I speak (albeit badly) German and some Italian. And (so I’m told), I’m a young voter (26,) and by most polling statistics available, ¾ of my UK contemporaries are voting to remain in Europe.

I love Europe, the place. I love Europe, the people. I love Europe, the food. And, I love Europe, the culture. But, I’m voting to leave. Why?

It’s fashionable to see people who support BREXIT as “little Englanders”. Nostalgic for the days of Empire, when “Britannia ruled the waves”. And perhaps I am. In my heart I am a romantic. Seduced by stories of heroism, triumph over overwhelming odds, and love. All popular elements in nostalgic history. The cliché of love conquers all and the triumph of good over evil.

But what is more Romantic than a continent at war, now at peace? A continent of prosperity and shared values, where all are equal, regardless of faith, gender or where they were born? In fact, is Europe not the most romantic of things? Furthermore, is it not in fact a totem to the success of the UK and its leaders? From Churchill to Thatcher, British leaders led the fight to free Europe from totalitarian rule, secured American intervention on the continent and, when the Cold War was over, it was Britain that brought the east of Europe in from the cold. Surely, for many, the successes of the EU are a testimony to the UK’s achievements. A sign of its importance in the world. But if this is all true, then why am I’m voting to leave?

Voters like me in this referendum could have and should have been at the forefront of the remain campaign. But we are not. It is this remarkable fact that seems to cause such utter shock, terror and concern across the world’s elite circles of high finance and politics. Why on earth do we want to leave?

The answer is that something with our society is very ill and this referendum was a chance for the EU and those who believe in the idea of Europe to articulate a vision of how we could fix it. This isn’t new, nor is it sudden. Myself and others have been waiting over a decade for a vision of Europe’s future. But the reality is, there isn’t one. That is the reason why I am leaving. Belief in an idea requires the conviction that it can work. That requires confidence and that requires trust, but also it requires communication. It requires people to understand what it is they are believing in and to buy into that idea. What Europe and the UK’s leaders have forgotten in their hubris is simple: to buy into an idea without understanding it is not courageous, it’s fanaticism.

People all over Europe are really scared. Real term wages have barely grown for most UK citizens in over 15 years, home ownership rates are at their lowest in the UK for over 30 years, domestic companies in the UK are now 88% owned by overseas investors and crime, terrorism and the threat of conflict is higher than they have been since 1992. But it’s not just the UK whose people are scared, its all of Europe too.

Many friends have said that the UK isn’t alone in being unhappy with the EU. That other countries also dislike many things that happen at the EU level, but that the UK should work with them to fix it. What they have missed though is the basic question: fix it to what? What should Europe be? How should it look? And, most importantly, why is that good for me, my family, my friends and my community?

The fact is that elites in Europe and the UK that lead their communities in business, media, academia and politics have failed to deliver an answer. And now they are reaping the consequences. From Austrian presidential elections, to Victor Orban in Hungary, the FN’s rise in France, the 5-star movement in Italy, Podemos in Spain, Golden Dawn in Greece and PiS in Poland, parties are trying to do exactly that. Give people an image of a future. A future where things appear better, appear more certain and more secure. They may all be wrong. They may all be a disaster. But they are an idea, they are a point of reference and increasingly, they are popular.

A vote to leave the EU will hurt in the short term economically. Maybe even the longer term too. But just maybe, it will also help the country to look deep at itself, at its society, and to search for a new system and a new vision of what its future should be. Many Brexiters are doing that now. From free-market liberals like Daniel Hannan, to Michael Gove, Boris Johnson and yes, Nigel Farage, people are suggesting ideas of a new Britain. Maybe they might all be worse than they are now. But maybe they might be better. Maybe a weaker pound, lower house prices and a migration policy that gives skilled workers from the US, Japan, Canada, Australia and Hong Kong the same rights as a worker from Poland, Austria or Estonia, might in fact make for a more equal and stable society. Maybe.

I said earlier that blind believe is fanaticism. That is how I see the vote to Remain today. A belief that your faith in a system, person or ideology must somehow work out, with no idea of how or why. Is BREXIT a risk? Of that I am sure. But I am also sure that with every decision in my life I’d rather know that I took a chance to make something better and shape my world for the better.

For what it’s worth, I am sure we will vote to stay in Europe on June 23rd. My guess would be by about 5%. And afterwards I am sure many of those reading this will be celebrating. But during your celebrations you should pause to consider, if only for a moment, if this referendum is not in fact Europe’s Pyrrhic victory. A win that has cost Europe so much, that you have already lost the argument for the future. The idea of a life without the European Union has been born and is growing every day across Europe and despite facing one of the biggest existential crises to its existence, Europe’s answer has been to beg, to scare and to threaten people to stay.

In the war of ideas, a future of a better and united Europe is dead. For those of you voting to remain, I am left to ask you two final questions before you vote on Thursday: Europe will have to change again in our life times, do you know what that change will be, and are you really sure that Europe’s next phase is better?

Whatever your answer, make sure you vote. Either way, our votes may never be so important as they will be on June 23rd.

 

The World in crisis and the cyclicality of history

Looking at the world there are many reasons to be optimistic. No war between the major powers has occurred for several decades. Global economic growth has raised the quality of living for millions of people, meanwhile major scientific discoveries continue to advance human understanding of our world. Furthermore, modern technology continues to enhance human productivity and with advances in modern telecommunications, global inter-connectivity is at an all time high.

Or so the optimists of the early 1900’s thought.

For individuals like President Truman and Sir Norman Angell, the famous British Labour MP, the world before 1914 had reached a new level of civilisation. The continuing advances of modern technology alongside a seemingly growing global endorsement of liberalism and democracy, would slowly convert the world and its citizens, and in so doing, consign war and global poverty into oblivion.

If all of this sounds oddly familiar, it should. Just as in the early 20th century the men of the hour trumpeted the success of mankind, so too do the modern heroes of the early 21st century. In the same tradition that Norman Angel followed, when he wrote his famous book “The Great Illusion”, arguing that war was rendered essentially impossible because of global integration, the 21st century has its own optimists. Whether it be Lawrence Summers recent piece, “The case for Global Optimism” or Steven Pinker’s work on declining violence, the optimists are out in force. Moreover, so are the idealists.

From Mark Zuckerberg to Jeff Bezos, Tim Cook, Elon Musk, Jack Ma and many more, the future appears bright and full of promise. Except they are wrong, all wrong. And the biggest problem is that no-one seems to have realised it.

Across the OECD, household, private and government debt is high, with weak economic growth across all the major economies. In China, despite unprecedented economic stimulus, the economy is rapidly decelerating. Climate change and high birth rates across the world’s poorest nations continue to drive increasing numbers of people to migrate from their homes, many travelling thousands of miles in search of a new life. Thus as the global economic engine groans and as new migrants seek the opportunity of a better life in the worlds more developed economies, a resurgence of nationalism, often coupled with xenophobia and racism is spreading.

But that is not all. Global fear and insecurity, economic weakness and popular anxiety are a breading ground for nations with a penchant for making their country great again. These leaders believe in cultural exceptionalism, they focus on the global balance of power and they view the world as a zero sum game. Moreover, such leaders are not confined to the developing world, and as time continues, their message is gaining traction globally.

But what is driving all of these issues? What is the problem?

Many would suggest that the world is facing a crisis of global economic demand. A slump in commodity prices, combined with nearly three consecutive years of stagnant or falling prices for manufactured goods, is threatening global growth, so the argument goes. Thus follows the inevitable argument of trade restrictions v.s. trade imbalances. To simplify the points, the debate circulates around whether the only way to improve the demand for a countries domestic goods is to introduce protectionist trade measures, or whether countries with “excess” levels of savings and large trade surpluses should be forced to spend more, thus allowing other nations with large trade and savings deficits to catch up. Such is the debate over China within the USA today. But the debate misses the core issue. While the US and China may fight over the issue of trade imbalances, the problem facing the world economy is much more simple:

The world is facing a crisis of inequality.

The World Bank and Asian Development Bank speak of the worlds’ success in reducing global poverty by 950 million people and thus achieving the Millennium Development Goals. But this figure hides all manner of sins. True, the number of people living on $1.90 a day has fallen by 950 million between 1990 and 2015, but if we move to $3.10 a day benchmark, then the poverty rate still stands at 35% of the world. More simply, the actual number of people in extreme poverty today, Paul Collier’s “Bottom Billion”, has not changed in over 20 years.

P1070774I need not re-hash the work of Thomas Piketty on inequality in the western world, or dwell a huge amount further on the fact that 400 americans are worth more than the remaining 50% of the country put together. Nor do I need to dwell on the estimated $21-32 trillion sitting in offshore tax havens by multinational companies and high net worth individuals. Rather, I want to explain why this inequality, if it isn’t tackled, is going to break the whole global system as we know it. And that is the biggest problem.

It is an old tenant of classical Keynesian economic, that as incomes rise, an individuals desire to save a proportion of their income will increase. While this sounds sensible, the reality has long been considered problematic. If those who are wealthier save an increasingly larger portion of their income than they spend, then global demand for goods will get relatively weaker as this proportion of people get richer. If demand does not grow as fast as income, the economy ends up with a large surplus of funds. But while this was a cause of great concern for classical economists, in the early half of the century this fear was alleviated through the work of Simon Kuznets. Kuznets demonstrated that as technology continued to develop, new demand would be created for new products, meanwhile an expansion government spending would also occur, thus collectively helping to offset a fall in demand. Thus with this discovery, economists relaxed and the fear of a global collapse in aggregate demand was averted.

Only, the essential questions were never truly explored: How would private demand for goods rise without a fall in savings? And how would government demand for goods offset a fall without absorbing the excess savings?

The answer, perhaps predictably, was debt.

The most revolutionary concepts in the global economy since the Peace of Westphalia in 1648 have been the creation of new means to raise money. Whether they be in the form of bonds, equity, derivative contracts and so on, finding new ways to help stimulate consumption has been the cornerstone of continuing economic growth. However, when analysing the power dynamics of debt, the one party that will always be better positioned is the party that has the capital. If you want evidence of this, I would advise looking at Greece’s position or that of Argentina.

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It is self evident that the use of debt allows people, who need to consume goods, to consume beyond their means whilst also allowing governments to spend beyond their tax base. In both cases, this can be sustainable, as long as the economy grows and the interest on the debt remains affordable. But what happens when people can no longer pay for the debt and perhaps even worse, what happens when there is no-one who wants to take on more debt?

Thus the crisis in the world today is not a crisis of demand, a crisis of leadership or a failure of free trade. The crisis today is that too much capital is held in the hands of too few people and organisations, who do not see sufficient opportunities to earn long term returns on their money through making investments in the real economy. If you want to understand why billions is being spent on über, amazon, facebook, airbnb, twitter, tesla, virgin galactic, whatsapp or any of the other global technology giants, it is because the worlds largest investors don’t see demand growing anywhere else. Moreover, demand growth is so weak in the real economy (i.e. commodities, manufacturing, agriculture, etc), that 100’s of billions is being invested in companies that have never made a profit, and by some forecasts may never make a profit.

Bubbles in technology, bubbles in real estate, stagnant, excess global production capacity and global unemployment (and underemployment), spell one thing: deflation. The sirens call of every major financial crisis is deflation. It is here in Europe and soon to be in the US as well. Speculative bubbles, deflation and currency crises are the hallmarks of the world’s largest recessions, but this time the central banks have no more levers and the governments have no more capacity to borrow.

In short, the world is standing on the edge of what may be the largest precipice in world economic history since the great depression. And on current trajectories, with current policies, there is nothing to stop it.

I need not elaborate on what a global economic crisis, greater than 2007-2010, would mean for the world at large. But a few points are worth mentioning. Firstly expect famines on a scale unheard of in history, as subsidies to the third world for food and agriculture collapse. Secondly expect mass unemployment, as countries fail to agree on how to reform the global economic system and protectionist trade measures return with a vengeance. Thirdly, expect a global uptick in violence. Whether from desperate authoritarian regimes, seeking to desperately shore up their legitimacy or from non-state actors capitalising on new power vacuums, the era of violence is near our doorstep. Above all, expect migration on a scale never seen in human history.

But is there another way? Is there a way to fix this economic system and to escape from this collapse into crisis?

Maybe there is….but will we be brave enough, and are we capable enough to make it happen?

The world’s demands have never been greater. Across developing and developed nations there are sufficient projects and investments that could absorb the worlds available capital many times over. The problem is that the capital needs to be channelled. Wealth that is hidden offshore must be repatriated and taxed. The financial services sector must become transparent so that corruption can be mitigated to the greatest degree imaginable. Leaders in business and politics must realise that facilitating corrupt behaviour is never an acceptable price and that any short term gains that may be won by accommodating “gangster capitalists” are illusory. In this role, the general public must vote for parties who really push these issues and they must exercise their influence over their pension providers who sit at company boards.

In the longer term the world needs to realise that we will not resolve our problems when we assume that one person is different to another. Yes, people may have different values and beliefs. Yes people may wish for a different world to the one that you want and yes, the western world as we know it, human rights and all, may never become truly universal in the way we hoped they would. But inequality is the poison in our global system which breads fear, insecurity, anger and resentment. If we do not deal with it now, we will be fighting the challenge for the remainder of our lifetimes.

This is our future. If we do not act now and put pressure on our leaders across the world to tackle inequality, then our system will fracture and collapse. One only needs to read the horrors of the early world wars or the great depression to realise that there in no price to high to avoid that fate.

This is our world. And we have to be the one’s who change it.

Where do we go from here?

Another day, another loss. As commemorations and mourning begins for the victims in Belgium, a numbness has settled across Europe. Things weren’t supposed to be like this anymore. The world was supposed to be different. Europe was supposed to be different.

Like many of my friends I found the latest attacks upsetting, but no longer shocking. We have seen the images before and seen the same motions performed by our leaders, individuals in our social media circle and figures in our respective communities. As sad as it may be, it seems that a dawning realisation has settled across Europe that these attacks are no longer “abnormal”, but rather a new normal.

Terrorism is powerful because it taps into our most primal of instincts. It removes certainty in our lifestyles and it corrodes personal confidence in our broader society to protect us from threats. In an atmosphere of fear, we retreat into our personal networks and further isolate communities from each other. If one ever needed an example of this, then the public attitude towards 1,000’s of migrants seeking a new life in Europe, seen in the corresponding growth of far right political movements, provides clear evidence.

But while we don’t know the specifics of the latest attacks, what we do know is that the largest source of threats to European nationals thus far has come not from migrants or refugees, but from our own citizens. These individuals are not all poor, nor lacking in education or somehow psychologically “unhinged”. They are, in a sense, normal Europeans and they often come from good families. Most (or certainly many) were educated within largely secular systems and they have (and perhaps continue to) enjoy the benefits of western lifestyles[1]. In short they are very much our own problem, and one which we must accept we have helped (to varying degrees) to create.

The fact is that certain people in our communities feel so disconnected and lost in our society that they are prepared to commit unspeakable horrors to join the death cult that is ISIS today. This is not a religious motivation. ISIS are not endorsed by Muslim scholars, nor do they follow Islamic principles. Rather, these people have lost hope in the ability of democracies to make life better for themselves, their community and other communities overseas, with whom they feel an affiliation.

It is perhaps the most human of all things to simply throw in the towel and say “enough!”. Don’t let anyone else in. Build high walls and borders. Increase surveillance of our Muslim communities and restrict our human rights more if necessary. Ignore arbitrary detention laws and pursue extrajudicial killing. In short, anything that will make us believe we will be more safe (even if they wont or don’t work in reality). Certainly a few politicians and voters hold these views. Suffice to say they don’t require naming.

But sitting around and feeling helpless is not a solution and neither is extreme, knee jerk policy making. While Europe has been poor at showing solidarity for acts of terror in other parts of the world, such as Turkey, Lebanon, Nigeria and Indonesia (to name a few), everyone could learn a lot by studying how the ordinary people in these communities have responded to acts of terror in their day-to-day lives. In short, the people moved on, just as life moves on. As the Brits used to say during the Blitz “Keep calm and carry on”.

So if we are going to look at how to make our societies stronger, our people safer and ISIS unappealing to our citizens, then we have to look hard at ourselves. Do we really allow people the chance to create a better life for themselves, do we honestly believe what we say on Human Rights and universal values and perhaps most importantly, do we honestly consider the views of all our citizens as equivalent?

I am not saying that any system or any society is perfect, nor that such a goal is realistic. But as any politician knows only too well, the signalling can matter as much as the substance. It is a duty upon all of us to campaign and push for society to reconnect with politics and our governments. To fight against simplistic arguments which propagate ignorance and division. To resist the temptation to fall into despair. And, to make the most of every day and opportunity that this world gives us.

This piece was titled “Where do we go from here” in adapting to acts of terrorism at home, and humbly I submit my answer: we make the most of every opportunity that the world has to offer and we strive to improve understanding and engagement between individuals and our communities. We go for our passions and we fight for our values. Above all we never forget that this world is our home and it is only going to get better when the silent majority of our citizens fight to protect it when it’s threatened and to change it when its broken.

That is our challenge for this time and that’s how we must face this new normal.

[1] (as an aside here: Planet Money’s podcast on ISIS fighter expenditures is excellent, including $90 chocolate bars and french aftershave). http://www.npr.org/sections/money/2015/12/04/458524627/episode-667-auditing-isis

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The Case for BREXIT

The starting gun has been fired and now begins the race. By the end of June 2016, the UK will have made the most important decision it has faced in 25 years. Do we stay or do we go?

The BREXIT debate is one of identity, and it is on this issue that the referendum must deliver a clear answer. The question of Britain’s role and place in Europe has always been defined by this question: are we Europeans or are we something different?

Many misunderstand this notion. To say you are different makes people uncomfortable. In this context, it inspires claims either that British people are exhibiting national chauvinism or that they are being willfully ignorant of the realities of today’s world. These claims, however natural they may be given the appalling narrative on immigration in Britain today, are wrong. Britain is different not because we do not share with other Europeans the common bonds of humanity, shared love and respect for liberty and human decency, respect and tolerance of others and a commitment to helping those in need. We are different because we do not believe, nor do we accept, that Europe’s methods of how to build a society are the right ones.

Most would like this vote to be about a simpler issue. The “vote leave” seeks a migration narrative, the “vote stay” wants an economic narrative. But for the future of Britain, they must both fail in their endeavours. Instead, voters should understand the clear meaning of their actions. To “vote stay” means that British people must finally accept that they have a shared responsibility to working with Europeans to help solve their problems as well as our own. To “vote leave” requires British people to acknowledge that if we do not feel a responsibility to help Europeans outside of our national interest, then we must acknowledge simultaneously that Europe has no responsibilities to support our national interest.

In the narrative of history, we must all hope that the story of Europe continues. The European Union has made life better for the continent and its people. It is a symbol of hope and idealism to many across the world, despite all its failings. But it is not our story. I believe in BREXIT because in viewing my home and those from it, I see the world differently from those on the continent. Our nation is not afraid of no longer being a titan on the world stage, nor are we afraid of a world where we do not control the global agenda. Britain has always thrived on its ability to innovate, to be pragmatic and to take risks in order to survive. Such has always been the necessity of island nations.

Europeans see the EU as a mechanism to sit at the world table in the rising new world order. As an equal to China, the US and to India. Today’s modern Britain does not see that necessity. The reality of the modern world is that no nation, or body of nations, can unilaterally determine their economic environment or their security environment. The age of autarky and isolationism is dead. The challenge of our time is not do we choose to work with others, but how we choose to do so. In this context, one must always remember that national interests reflect national character.

The UK does not believe that protectionist trade tariffs, strict labour laws, state controlled economies or heavy state regulation leads to a greater quality of life for our people. The history of our nation shows that our prosperity has been driven by the periods where we innovate, where we seek out new ideas and where we search the world for new markets. The wealth of our nation similarly should never be dependant on one single trading block. It is often forgotten that before the European Union the UK’s biggest trading market was India. Why it is that such a pattern could not re-emerge is one of many unanswered questions that the “Vote stay” movement has yet to address.

The security of our nation has been achieved through the strength of our national endeavours. No foreign-armed force has landed on the British islands in over 300 years and when left alone to defend our citizens rights abroad, we have shown our ability to act unilaterally to protect them. Many mistakenly associate peace in Europe with the European Union. This is wrong. Peace in Europe has been achieved by NATO and de-facto by America. The “Special relationship”, for all its failings, has always been the recognition by Britain that Europe lacks the motivation internally to unite collectively in its own self-defence. If evidence of that were ever needed, the use of NATO in the Balkans and the European reliance on new US armoured brigades in Eastern Europe, provide two immediate examples (there are of course others). The Freedom of our nation therefore will always rely, first and foremost, on our own efforts and our relationship with the US. As to threats of terrorism and transnational crime, it is often forgotten that the UK’s worst period of terrorism came during the “Troubles” in Northern Ireland. If at the height of the cold war our allies were unwilling to help us when it conflicted with their national interest, it seems disingenuous (to say the least) that this will change in the future.

The challenge facing those who campaign to leave has been to explain “what comes next”. Setting aside the unchallenged assumption that staying in Europe will ensure that the UK follows a clear and predictable path for 20 years, it is not unreasonable to say that a vote to leave also requires a plan on how to leave and what should happen after we leave. As with all well laid plans, few survive contact with reality. Assumptions of behaviour and of processes are notoriously challenging even where precedents exist, let alone where they do not. But setting these aspects aside, a strategy for the UK would go as follows.

Following a vote to leave the UK will not immediately leave the EU. This is the reality and yet it appears often ignored. The UK will enter into a period of negotiation on the terms of our exit, while remaining in the Union. The negotiations are likely to require 4-5 years and, in essence, they will require the UK to accept EU governance for its companies who wish to trade in Europe. Conversely, European firms who wish to trade in the UK will have to follow English laws and governance. As most global regulation is increasingly being harmonised, over time there will remain few significant differences in regulation between the two. On immigration, the UK will move to a points based system. In so doing, it will significantly ease work and residency related visa requirements for Australian, New Zealand, US and Canadian nationals. Over time, these restrictions are likely to be expanded to other commonwealth states as their levels of development increasingly reach parity with our own.

From a trade perspective, we will work with the WTO to expand its effort for a new set of global standards and a reduction in global trade restrictions. We will also explore deals with ASEAN and other regional markets across the world. Such action was how we once thrived. We will re-discover this talent, as many of our young entrepreneurs already are doing.

At the International level, the UK will continue to sit and act in partnership with European nations. We will join with Canada, Australia, Norway, Switzerland, Turkey, New Zealand (and occasional the USA and Japan) as part of the EU+ grouping which exists within the major multilateral banks and other international organisations. On security matters, we will remain committed to the defence of Europe and particularly Eastern Europe, where we have already increased our presence and where we played an instrumental role in bringing these nations into both the EU and NATO. For issues of transnational crime, a bilateral extradition agreement will be made with the EU as part of our terms of exit. On this last matter, there is little disagreement between the EU and the UK and little incentive from either party to prevent such an outcome.

This is the case for BREXIT. A UK that remains a friend and partner of Europe, whilst remaining an independent nation state that pursues the best interests of its people on its own terms. To “Vote leave” is not a rejection of liberal values and a statement of disregard for the well-being of Europeans. Instead, it is a re-assertion of the well known principle that the best form of governance is self-governance. It is time British people remembered this principle.

To my countrymen and women, whatever your opinion, please make sure that you vote on 23rd June. This is our future and I hope you vote to leave with me.

The Good, the Bad and the Unknown – Predictions for 2016

To kick off the 2016 period, I thought I’d share some thoughts on the world as things stand and offer some predictions for the year.

Missing Billionaires, a lost election in Taiwan, abducted Hong Kong Journalists, a public rebuke to George Soros and suggestions that China’s economy may be growing at nearer 2.4% than 6%….2016 is certainly an interesting time to watch the Middle Kingdom. For my two cents the Chinese seem spooked, but their actions appear to be precautionary measures rather than those driven from a general fear that all hell will break loose. Expect more bad news and panics in the market, but that is unlikely to reflect a true collapse in the Chinese economy and a “hard landing” is still far from predictable.

From the Iran side, it remains “too early to tell”. What seems clear is that the oil oversupply argument is over-hyped. Iran already exports circa 1m barrels per day and likely smuggles 300-500k a day. At most it can add another 1m, but even that is uncertain. At the same time global oil production is at maximum, so the system has no spare capacity should a shock hit a major supplier (look to Venezuela for a possible negative oil shock by the end of the 2nd quarter 2016).

The Refugee crisis seems destined to dominate the EU discourse. There remains no easy solution, short of following the advice of an article from The Times and letting migrants drown in the Aegean (with mercy killings for those who survive their ship sinking). The mood however is clearly ugly and this looks unlikely to change. With Europeans feeling poorer and more afraid than ever, expect the ugly monsters of racism, extreme nationalism and xenophobia to provoke ever harsher measures. Still, these will deter none. The alternative remains worse for the refugees. Watch the Greek-Macedonian border for the first signs of trouble.

Brexit will still loom large in the UK, but investors and politicians will be forgiven for their lack of patience. At the end of the day, this is nothing to do with economics or politics and everything to do with Britain’s identity and place in the world. The UK will likely become more insular in its affairs leading up to June and no meaningful concessions will be made to Cameron. Still the Out campaign have their work cut-out. The lobby of big-businesses and institutional vested interests, coupled with British inertia to radical change, gives the edge to a “yes” vote to stay in Europe. Still, Labour is not as pro-Europe as it has been, with many Corbynistas seeing the possibility of Brexit as a chance to allow state-aid and interventions into the private sector. However don’t rule out Cameron bottling the whole thing and waiting till 2017. After-all Brown made the same mistake when he failed to call a General Election in 2008, despite holding the upper hand.

Lastly the US election. My increasing feeling is that Trump will actually get the nomination. The other “moderates” have run out of time and increasingly the view is that any establishment branded candidate is doomed in the current political atmosphere. Given the evils of Trump or Cruz, most commentators overwhelmingly back Trump to make the deals necessary to secure the establishment support at the final hurdle and knock out Cruz. This then creates two challenges – do the Democrats react with their own radical (Sanders) or play it safe with Hillary? Hillary is dull and a known entity, rightly many are asking whether she could energise a campaign in the same way that Trump has energised his parties base. It is still highly unlikely, but I reckon there is a 25% chance of a Sanders v.s. Trump campaign and of Americans being offered the most divisive split of candidates in a generation. Of course, at that injunction maybe we will see that famous “3rd party” entrant, with Michael Bloomberg looking very dangerous in such a role. If, and its a big if, that becomes the 3 way split in 2016, the outcome will be huge for America and the world writ large.