Europe is focusing on all the wrong issues

Possibly one of the most engaging podcasts of 2017 for me was a show called “Talking Politics”, a Cambridge University show hosted by a historian called David Runciman. While Professor Runciman covers a number of fascinating topics on the show, his most memorable is a recording of a lecture he gave based on his latest book “How Democracy Ends”.  The talk itself excellent and the link is available here. The key takeaway of David’s talk is that democracy as we know it is extremely young and liable to fail, but its cause for failing is unlikely to look familiar to anything we have seen before. In this regard, the comparisons between modern times with the 1930s (See Macron’s recent OECD speech), are at best lazy and at worst dangerous. The risk is not the collapse of democracy we have seen before, but rather the challenges to democracy which we have not even realised are undermining democracy. All of which begs the question: if there are signs that democracy is failing, then are we even looking in the right place? Which in turn brings me to the future of the European Union.

Today politicians, pundits and the press comment tirelessly on Trump, Orban, Erdogan, Putin and a range of other global “strongmen”, whose actions are closely scrutinised under the micros-scope of historical comparative analysis. In this regard, I believe that we are falling into Runciman’s trap of focusing on the wrong challenges to Democracy.  I want to offer a different perspective. The greatest threats to democracy today are not coming from Trump, Brexit, Putin or Xi Jinping. Rather the greatest threat to the Democracy today is that political discourse, institutions and policies are focused on the wrong issues. Nowhere is this trend more apparent to me than in the European Union.

For the EU to survive, thrive and evolve, it needs to stop focusing on how to bully members like Poland and Hungary, impoverish members such as Italy and Greece, punish close allies like the UK and ignore crucial strategic partners like Turkey. An EU that retains its membership by fear of the economic consequences that leaving will entail (see Greece in 2014 and current threats in the Brexit negotiation today), rather than by promising and providing an exciting vision of a better future, is doomed to failure. Democracy in Europe will not end because countries vote to leave the EU or because citizens across the union hold different social values on immigration, human rights and economic opportunities. Rather, democracy will end because the cost of leaving the EU becomes so great that accepting technocratic governments in perpetuity becomes the default position for a public, whose increasing frustration with the inability to affect real change in their country leads to anger, then despair and finally total disengagement with the political process.

The EU needs to reflect on its history, the pillars that made it successful, the flexibility it showed as it grew and the positivism it gave to its citizens. The EU was built by people who believed the nation state could be swept away by a new identity, a “European identity”, which would create a sense of continent wide solidarity between citizens. We see this very approach today in the existence of the Schengen zone, the ERASMUS program, the joint funding of agencies like ESA, Frontex, and new EU national symbols such as a flag, an anthem and a series of diplomatic embassies abroad. But while the idea of a United States of Europe may have been the dream of the bureaucrats who built the EU’s institutions, it has never been the desire of the population of Europe. It is because of this disconnect and the lack of clear accountability between the EU institutions and EU citizens on this issue, that the future survival of the EU is at stake.

In less than ten years, a project that took over seventy years to construct is about to lose its second largest net budget contributor (The UK), it has converted the most pro-EU country into a nation whose governing coalition are explicitly anti-Europe (Italy), it has allowed an autocrat to take control of a key central European economy on an anti-EU ticket (Hungary), meanwhile facilitating the rise of anti-EU parties to become the second and third largest political parties in Europe’s core (France and Germany).

When residents of EU countries are asked if they would like to leave the EU, the majority are solidly against such an idea. But every day political parties and political movements against Europe are getting stronger and stronger and that certainty is fading. The problem is not, as many EU supporters believe, that Russia and/or fox news are spreading fake news and corrupting local politics (though I am sure they’d love to if they could). The problem is that there the EU is unable to articulate a future vision that resonates with the wishes of the EU’s own citizens and provides them with an exciting future to work towards.

If the best future outcome is a United States of Europe, then make the case. Explain the need for a European response to global issues, the merits of fiscal solidarity alongside monetary solidarity and the case for continued subsidies for poorer members, to reduce the pressure of internal migration on richer members. But the EU does not make the case.

If the future is to be a two-speed Europe, with a membership for countries like Turkey, the UK, Norway, Ukraine and potentially even more peripheral members such as Morocco, Israel or Russia, then make the case. Maintain a eurozone core, allow divergence from certain core competencies in the outer core and allow parties to decide which projects and programs they wish to contribute to and engage with. But again the EU does not make this case.

Many Europhiles think these comments are unfair. The issue, they would argue, is not that the EU does not have a clear vision but rather that the national governments of Europe are too afraid of their electorates to promote a United Vision of Europe. There is certainty truth in this. In referendums on an EU treaty, France and the Netherlands voted “No” in 2005, Ireland voted “No” to Lisbon in 2007, The Netherlands voted “No” to allowing greater visa access to Ukraine in 2015 and the UK voted to leave the EU in 2016. All of which brings us back to the question of why is the EU so unpopular today and how can it change it?

I believe that the EU’s existential crisis is a direct result of the systems disconnection from democracy. It is not enough to simply suggest that electing MEPs shows that the EU is a democratic insitution. The EU now controls vital national issues such as migration, citizens’ rights, agriculture, trading relations with other nations, foreign affairs and a slew of other issues. These areas affect EU nationals every day and yet the mechanisms to change these policies are completely beyond the scope of any one nation. To change migration for example, a citizen of France would need every EU national to vote for MEPs in their countries who wanted to change migration, they would then need to get every EU national to vote for national governments who sit on the Council of Europe so they also vote to change migration. They would then need to lobby the EU commission and if a treaty change is needed, they may need a referendum in certain countries. At almost all stages, a lack of unanimity can end the whole process, see the near collapse of thee free trade deal with Canada over less than 100,000 angry Belgian farmers (500mn people almost ignored because of 100,000).

This complete lack of responsiveness to change is at the heart of why the UK is leaving, Italy could potential leave and many other Eurosceptic parties across Europe believe that their own exist from the EU is a matter of time. While the EU focuses on trade deals abroad, beating up US tech companies, punishing the UK for the EU’s own inflexibility and begging Turkey and Libya to avoid more mass migration into Europe, the EU is failing to tackle the real issues. The lack of a vision for the future and the lack of democratic accountability within the EU are the single largest issues facing the Unions survival and they are being ignored. The consequences of the EU’s continued failure on these issues will be dire: The failure of democracy within the EU itself.

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Has Facebook gone too far?

It was probably inevitable, but the crisis engulfing Facebook is one of the most embarrassing examples of Silicon valleys hubris in the last two decades.

A company that specialises in connecting people, an exercise that requires people to trust the platform as a place to share content, has managed to simultaneously violate that trust and act totally surprised in doing so. When Facebook was first created it was a place for university students to share stories, an occasional photo and talk to friends when they couldn’t afford to call abroad. Today it is a business platform for multinational corporates, a virtual monopoly in the global social media world (excluding the great digital firewalls of China and Russia), as well as the largest surveillance mechanism ever created by man. If the apocryphal tales that Facebook was created by the CIA ever become more than conspiracy theories, I would take the agents out for a beer. It’s hard to imagine them being more successful in manipulating billions of people to hand over the most intimate details of their life than Facebook.

But what do we do about it? Facebook IS the only platform where everyone can find a friend, family member or old classmate from their school days. It also owns Whatsapp, Instagram and nearly brought out Snapchat (before deciding it was cheaper just to copy all of their ideas into Instagram instead). Indeed, the monopoly is alive and very well in the social media space. So much for a dynamic and free market that internet radicals long predicted.

The issue with Facebook is that it has transcended its role as a tech company and become a global public good, much in the way that GPS, SWIFT and Wikipedia have done. This conflict between its corporate needs and Facebooks public nature is at the heart of the conundrum that is threatening Facebooks future role as the global sharing platform.

There may come a time where individuals lose their inhibitions and learn to accept the flawed nature of humanity, such that the embarrassing university photos and awkward Facebook status of our childhood become nothing more than a source of amusement. But we are not there yet.

In the interim the most radical solution may yet be the one true way to ensure the eternal legacy of Zuckerberg’s creation: turn the company into a global charity with an international non-partisan board. Such a solution has long been muted for Twitter, another social media company that serves a clear public good, but unlike Facebook it has lacked the will (some would say ability) to extract the financial gains necessary to ever become commercially viable.

A world where Facebook becomes a utility like Verizon or a charity like Wikipedia is hardly likely to thrill investors and tech entrepreneurs. Then again, few people who change the world ever live to see the real fruits of their efforts.

If Zuckerberg is serious about fixing Facebook he needs to find a way to square the circle between regaining user trust and generating the returns expected by Wall Street.

For a man more concerned about his public appearance than his bank account, Mr Zuckerberg could do worse than consider what Facebook would look like if it became a true global public good rather than a Wall Street darling. The clock is ticking and the users are leaving.

Your move Mr Zuckerberg.

Wrapping up 2017

Given the volume of news in 2017, finding a common theme to make sense of the noise has proven challenging. However, as we start 2018, there is an argument to say that 2017 was defined by the actions of the world’s Central Banks.

After years of unconventional monetary policy, the actions of the Federal Reserve, the Bank of Japan, the Bank of England, and the EBC have begun to deliver results. The spectre of deflation has been defeated and inflation appears to be increasing across the world’s major developed economies. Economic growth has picked up in the Eurozone and Japan, while emerging markets have survived the first few US interest rate hikes without causing a collapse. But just as the achievements of these policies have been recognised, so have the costs.

As central bankers discouraged saving by reducing interest rates close to zero, investors were forced into equities and real assets. This led to a surge in global property prices and record levels of investment in global start-ups, crypto-currencies, and passive indexes. Rising property prices have led to bans on second homes across developed economies from New Zealand to Western Canada, and clamouring calls for a ban in London. In many developed economies, the average property price is now well beyond the 4x annual salary against which banks will provide loans, forcing a greater proportion of people to rent than ever before.

The hunt for yield has also played an essential role in the financing of the new economic giants that dominated news headlines in 2017: the FANGS (Facebook, Amazon, Netflix, Google, and Salesforce) being the most notorious. The perfect combination of ultra-low interest rates, subdued consumer demand and a psychological willingness to believe in the new technological era has encouraged investors to support “revenue over net profit” business models. The FANGS now represent five of the world’s most valuable companies; yet in over ten years only two have recorded net profits in their annual reports. Even more dramatic has been the explosion of Uber, Lyft, and AirBnB, whose valuations now exceed $100bn but who have never generated a profit.

Many of these themes were apparent in 2016, but their significance was not fully appreciated by politicians. As a result, the continuation of these economic distortions in 2017 was essential in highlighting the driving political crisis of the year, that of public outrage over growing economic inequality. As a consequence, 2017 represented a break in the conventional political wisdom that a government which achieves economic growth can offset these incentives against social and domestic challenges.

Even with a raging equities market, record low levels of unemployment, and signs of growing wage inflation, the US welcomed 2017 with the arrival of the most populist President in living memory. Similarly, the Conservative party in the UK ushered in the New Year with one of the strongest economies in the G7, only to lose its majority in Parliament following a snap election in June.  European voters showed that immigration was frequently a more significant issue for voters than headline economic numbers. In Germany, the bed-rock and engine of the Eurozone, the governing grand coalition hit record low polling numbers in the Bundestag elections, as the AfD entered the federal government for the first time. Meanwhile, France closely avoided electing the outwardly racist Front National. Austria elected a far-right party to government for the first time since the 1930s, where the party took the cabinet posts for the Ministry of Interior, Defence and Foreign Affairs.

The marker of success for 2018 will therefore be to generate broadly spread economic growth that benefits all within society. In that vein politicians of the political right are likely to find themselves in need of an alternative narrative. The appeal of socialism across western worlds, whether in the Jeremy Corbyn style, the Bernie Sanders variety or the Mélenchon school, will never be stronger. Finding an alternative slogan to challenge, ‘for the many, not the few’ will be an important starting point.

May’s masterclass in politics

It may have been long overdue (like the pun there?), but the UK Prime Minister’s decision to call a general election this morning was a piece of political masterclass and a bold, calculated gamble.

By calling a general election Theresa May is attempting to resolve several major headaches at once, assuming that she is successful: Firstly, the move creates political certainty in the UK at a time where it is sorely needed. Secondly, the move will end questions around the Theresa May’s political support within the party itself and lastly it will strengthen the UK’s negotiating hand with the EU.

If the Conservatives win (especially by an increased margin), then Theresa May will have a clear mandate for her Brexit negotiation strategy. This will give investors, businesses and political leaders a greater sense of what the UK will choose to prioritise and a clearer idea of which figures will manage the UK’s transition from a full EU member state to an independent nation. Assuming that the PM will stay for a full five-year term, the Conservatives would govern until 2022, giving them the ability to handle the transition after Brexit as well and a chance to resolve any outstanding issues with EU members, the WTO and Scotland.

The surprise election is also likely to be popular with the Conservative political base, partly because the opposition are so weak. Labour remains extremely divided between its core factions, while the Lib Dems will have a mountain to climb to recover even the 40 seats it previously held before 2015. The SNP can only lose from their current position and Northern Ireland has been in deadlock since the last regional government collapsed. In 2015 UKIP won 3.9 million votes, today the country has voted to leave and they have no credible or popular leader. All of this explains why the polls suggest a clear Conservative lead, and even though polls have been consistently unreliable in the last 18 months, few polls have predicted a winning margin of this magnitude that has been overturned in such a short time period.

The reason why winning an election is important however is that it is the key to ensuring party unity. The Conservative party is famous for its political backstabbing and without an election win under her belt, the PM would have been vulnerable to challengers if the EU negotiations turn ugly. Incidentally there are even rumours that the election will help to neutralise the Conservative political right, by forcing the PM to adopt a less aggressive position to win the election. If the Conservatives wish to keep seats in London and the South West, they will need to win over unhappy remain voters and soft Brexit voters. With a mandate to govern secured on a hard Brexit, with very flexible immigration and extremely close ties to the EU, the PM will neutralise the Tory right and move the negotiations towards a less confrontational position.

The UK has had a number of challenges in getting the EU to agree on even basic terms for Brexit. The UK gave notice that they would invoke Article 50 at the end of March, but the EU has focused on the “negotiating framework” for the Brexit discussions. This focus has been both strategically and tactically driven. Strategically, by agreeing the framework for talks in advance the EU can already try and dictate the terms of the UK’s exit. Tactically, the major EU decision making member states either have elections, just had elections or have elections due in the next five months (The Netherlands, France and Germany), so delaying the main issues until after September avoids discussing the issues during elections.

The EU commission had assumed that after the EU’s major elections, its leaders would have fresh electoral mandates and solidarity across the block. This would have put the PM at a considerable disadvantage, as the EU could have decided to target politically sensitive areas like agricultural tariffs or financial service access to secure concessions. This threat has now been taken off the table. Even if the EU makes threats against these sectors, it will take years for the full effects to come through and politically speaking, the EU has lost its ability to alter who it will be negotiating with on the UK side of the table.

This is a move that carries risks though. Firstly, Labour may be more resilient than expected and the Lib Dems may well recover the 40 seats that they lost. If such an outcome occurs, the UK would have a hung parliament and the UK would enter a constitutional crisis. It is unlikely that the Conservatives could form a viable coalition at this time, but it is also unclear whether an SNP/Labour/Lib Dem coalition would be any better. This being the case, there is a chance that the UK might have a second election within a few months of the new one in June. Needless to say, Theresa May would be extremely damaged as a leader if the Conservative party did not retain an overall majority, while any further Labour party losses would trigger another bout of in-fighting over the need for  new leader to replace Corbyn.

The last piece of this story is that an election on which party will govern during and after Brexit, is also a tacit election on the Brexit process itself. If the Lib Dems did the unthinkable and gained north of 60 seats, with minimal Labour losses, the UK could very well have a crisis about the declaration of article 50 itself. More realistically however, the end of a conservative majority would likely lead to the UK seeking to remain as a member of the Single Market. Such a move would send political shockwaves through the UK and EU political system (assuming the EU even allowed it) and would leave the UK bitterly divided, in a far more dramatic way than it has been since the vote itself. Still, the election is the last chance that the British public will have to go out and vote on what relationship the UK will have with the EU.

If you haven’t registered to vote, then go out and do so. This may be one of the defining moments of British politics in the 21st century.

A few words at the end of 2016

It is easy as a commentator on events to assume that we have a unique perspective or insight that people will benefit from reading. After all, if we didn’t believe our opinions were of interest we would hardly be sharing them. But what is often forgotten when we write pieces is the reader themselves. It is easy to fixate on the issues which we are passionate about, to analyse every scrap of detail under the most forensic microscopes we are able to acquire and to wax lyrical on the importance of the issue we are discussing. What it is harder to do is to create something that is relevant, that is interesting, that is inspiring and that is thought provoking. It is for this reason that the default subject of articles often becomes current events and specifically critiques of current politics, people and passions. But while this may be easy and often immensely enjoyable for the writer, it often leaves the readers despondent, overwhelmed and occasionally depressed.

It is partly for these reasons why I think that people have found 2016 such a challenging year. As our world develops increasing ways to communicate with each other faster and in greater detail, it becomes easy to get lost in the noise. In fact, part of what has made 2016 so difficult is how ingrained our habits of checking social media and our phone have become. Instead of using communication to supplement our lives, it has increasingly taken over our lives. Try for a week to count how many meals or meetings you attend where attendees place their phone on the table before the event has even started and consider how many would have done so 10 years ago. It may well be understandable in the context of the world we live in today, but the fact that it has become understandable and that our obsession with constantly accessing information has become rationalised, is also part of the problem. It is important to know what is happening in the world and to know what is happening in our communities, but what people have forgotten is that life moves on regardless. There are no shortage of years where American’s have elected a president, convinced that the electoral system has failed and the candidate will be a disaster, nor are there a shortage of events where major referendums have been forecast to doom entire nations. But these events, while seemingly seismic in nature, often fade quickly into the background for most people, with the challenges they create becoming quickly assimilated into most people’s daily routines.

At the end of 2016 many people are still lost in the noise of Brexit, Trump, Paris, Berlin, Aleppo, Prince and the scores of other events that have left markers this year. But what we shouldn’t lose sight of is the fact that slowly but surely, changes have been happening in the world that are making it better too. At the end of this year the world will have made its first real commitment to keeping carbon emissions below 2 degrees centigrade and the world will have invested more in installing new energy from renewable sources than fossil fuels (the first time since before the industrial era). The world also will have seen the largest single philanthropic endowment of over $100bn from wealthy individuals to fight climate change.

On gender, the proportion of women in finance, notably venture and private equity, will have more than doubled in the last decade. Women’s sport numbers continue to rise, with over 700 million people watching the women’s world cup last year and in the armed services, women will be seen in more active combat roles than at any time in modern history. In politics, the UK has its second ever female Prime Minister, alongside a female German Chancellor and 22 other female world leaders, the highest number in recorded history. On race, we have had the first ever black president of the United States and the UK has its first ever Pakistani mayor of London, with Romania almost electing a Muslim PM for the first time in the country’s history.

On poverty, world poverty and world extreme poverty continue to decline, as does access to energy and access to medication. Technology is also changing people’s lives in profound ways that we take for granted in the west. For the first time this year, Burma has been able to store anti-snake venom across the countryside thanks to renewable technologies and energy storage, a vital innovation in a country with the world’s highest number of snake related fatalities (1.4 per 100,000 people). We also now have developed a cure for ebola and drugs that allow individuals with HIV to have sex without protection, with no risk of passing the disease onto their partners.

There are certainly many more such stories. Perhaps only small and incremental in many cases, but cumulatively they are changing our world for the better. But we risk forgetting about these changes, or even worse, ignoring these advances, if instead of carrying on with our lives we instead fixate on the few issues that constantly catch the headlines.

So at the end of 2016 and the start of the new year we should all consider a piece of advice from older British history, a piece of advice now seen across the world, “Keep Calm and Carry on”. It may not be glamourous and it is certainly clichéd, but during the Blitz in Britain people carried on with their lives regardless of the perilous and fluid environment around them. People knew that major events were unfolding, but they also recognised that the main determinant of their own lives were not the actions of governments but the decisions they took themselves as individuals. That message is one I want share again for the new year’s.

The world is scary and chaotic, but we as individuals determine what role that will play in our lives. So, enjoy your drinks at New Years, the potential hangovers the next day and remember in 2017, whenever you feel overwhelmed, that life still moves on even when your social media is exploding. And when it is, try turning off your phone!

Happy New Years all!

Our system isn’t working – let’s make it better

The case for more humility in global politics and reducing the role of individualism in society.

To look at the state of the world today and believe that everything was going well would require a degree of optimism bordering on insanity. The world economy is not growing, the world’s climate is dying, and intra-country inequality continues to rise. In short, our current model for society and global governance doesn’t work. We need to try something new.

While we could point to a range of factors to explain our current predicament, the bottom line is that the way humans behave in the world today is wrong. We consume too much, we share too little and we are too insular in the way we make decisions. The question therefore is why do we behave in a way which makes our world worse and importantly, how do we change that?

The way that people behave is determined by the incentives that their society creates for them. These incentives seek to constrain the actions of individuals to a “reasonable band” of conduct, that allows a community to live alongside each other without resorting to conflict. While these incentive structures have evolved over many years, the challenge we face today is that our incentive structures over-emphasise the role of the individual and the right to individualism over the rights of the community writ large.

Individualism as an ideology is built upon two essential pillars: freedom of thought and freedom of economic opportunity. In pre-enlightenment societies individuals had neither. People were told what religion to believe, what job to do, where to live, who to marry and who to fight. The church and aristocracy worked in parallel to control as rival, but mutually reinforcing, power structures to ensure that those who sought to challenge their ideas would be mercilessly punished. During this time the role of the state was essential to ensuring that individualism was constrained. It is for these reasons today that Individualist ideas strongly reject the idea of a powerful state structure (think the USA).

 Individualism was/and is always threatened by the community, which may constrain it. From this principle individualism is synonymous with the idea of free markets and freedom of expression in their fullest forms. Individualisms strength is that it allows the individual to explore their creative impulses without the constraint imposed by their community. By freeing individuals from their communities, we allow individuals to develop in their own unique way. Diversity of outcomes and experiences act as a force multipliers, allowing for an exponential growth in interactions and facilitating an extremely powerful creative process. It is for precisely this reason that the West has been so successful for so long. The power of human creativity has been the engine that drove the development of our world today.

 But as many parts of the world today know only too well, individualism also carries great costs.

 Communitarianism is the idea that ones community matters more than the individual and the idea that all members of the community are bound to help and support one another. While some of this process is encouraged by local elites, seeking to enhance their ability to control their community, much of it is also intuitive and self-serving. Communities provide a natural safety net for individuals, an alternative form of insurance against misfortune. It also serves as an effective mechanism to mobilise large numbers of individuals and channel their energies into creating public goods.

 The rise of Individualism as a global ideology however is weakening those social safety nets. By placing the importance of ones self as above that of the broader community, people become detached from those around them. It is this detachment which leads to inadvertent selfishness in decision-making and which also reduces our natural tendency to share with others.

 So what then can we do and how do we try and resolve this conundrum?

 Politics is about providing channels for groups in society to exercise power. By power, I simply mean the ability to do (or not do) an activity. In this context, the problem is that our political structures do not allow us to re-draw the incentive structures that currently govern our societies. We need to find a way to allow our communitarian concerns for others to constrain our individual excesses, in manner that clearly benefits everyone and does not prevent individuals pursuing their own liberty.

 I personally believe the simplest way to start this long process is by making government more transparent and increasingly returning responsibility for governance back to the people. If society is not engaged in making the key decisions that affect it, then members of society will feel no attachment to ensuring these decisions succeed. Individualism has costs, but currently it is too easy for people to shift the blame for society’s failings onto others rather than themselves. We have forgotten the old adage that “No man is an island”. Our decisions have consequences and recognition that as individuals we may be making things worse for others and ourselves is essential to addressing these problems. If we can return responsibility back to society itself and we can remove the excuses for people in society to deflect blame by feigning ignorance, we can begin to come to the real solution to balancing our communal responsibilities with our individual societies: humility.

 Often in society Individuals believe that they have all the answers to societies problems and I am personally very guilty of this. However if we do not all become better at recognising the limits of our abilities and acknowledging our need to listen and respect others, we will not overcome our selfish impulse to follow our own course rather than partnering with others. This is what I mean by Humility today. In politics it remains the case that elected officials remain more interested in trying to secure their re-election and the unilateral enforcement of their ideas, rather than in the complex negotiations of engaging with all elements of society.

 Many of our greatest challenges in the world today could be resolved by people collectively demonstrating more humility than they have shown thus far. Our politicians are meant to be the leaders in our society. A bit more humility at the top may be the answer our world sorely needs.

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.