That debatable time of year...

Can it really be a year since I drove over to University of Aston one autumn evening in 2007, and had the most terrifying and also rewarding evening in years?

Once again the opening rounds of the national schools competition Debating Matters are taking place across the land, and this year the venue for me, as one of the judges, was Wolverhampton High School for Girls. The competition has presumably grown so much in the past year that there are now two opening rounds in the West Midlands instead of one. Which is utterly fantastic, as Debating Matters must be one of the finest cerebral experiences you can have, either as a sixth former or as a judge.

This year the three subjects for debate in the opening round were

• Space Travel - Manned or unmanned?
• Privacy
• Congestion charge

The passing year had not dimmed the memory of the sheer tedium of ecotourism and the various arcane offsetting schemes that I had to ingest for last year's competition, so naturally I avoided the congestion charge like the plague. This was a shame because it produced the liveliest debate of the night. Having done quite a lot of the recommended reading on space travel and privacy, then, and considered some tricky questions to ask the hapless debaters, I drove off to Wolverhampton and managed to arrive on time by some quirk of luck entirely unrelated to the degree of journey planning carried out.

In fact I felt like crap; I had done all day, so I'd worked from home, secure in the belief that the sight of me rocking back and forth in physical pain might cause some consternation among my colleagues. But by the end of the evening, I felt great, and just like last year, the whole experience gave me a boost of energy that lasted for days. I think I wrote words to this effect in my blog posting on this subject last (academic) year, but it bears repeating. When you are privileged enough to share a room with these 17 year olds who are unbelievably well prepared and arguing so passionately and skilfully, all your anxieties about our dumbed down society just fall away and you remember that the very best of humanity can prevail in the most unlikely of circumstances.

All of this was underlined by the content of the Space Travel debate. I plead guilty to having been completely ignorant about the manned vs unmanned debate prior to preparing for Debating Matters, whereas I am now a veteran of over 3 articles from The Space Review!! The arguments in favour of manned space exploration are unapologetically humanist. It's not even a pro-science versus anti-science thing. Right now, to take a purely pro-science stance involves arguing for unmanned not manned space travel - the progress that robotic and other forms of unmanned exploration have made in a number of fields vastly outweighs the scientific achievements of the Apollo missions. But apparently, as a result of those Apollo missions, admissions to undergraduate science courses doubled in the US, as did PhD applications. The very existence of Silicon Valley is testimony to the inspiration that the moon landings created among us earth-dwellers. Manned space travel is also extremely unsafe and bloody expensive! So it's pretty difficult to argue its case, particularly in the straitened economic circumstances (not to mention the prevailing mood of risk-aversion) that we're all experiencing right now. But sometimes you've just got to take a long term view. Because if a bunch of British 17 year olds, brought up in an era of Reality TV and ubiquitous corporate branding, can demonstrate rigorous and passionate debating beyond their years, just think what they might achieve if human space explorers once again go beyond what was previously considered to be unachievable.

Meanwhile, Debating Matters goes from strength to strength, as indeed it should. It was recently announced that The British Council will be bringing the competition to India, using its network of schools and educational institutions, and the plan is that the contest will gradually be developed into "a real-time television reality show" according to India edunews. Time to revise my opinions of reality TV? Let's have a debate!

Emerging Economies Question Time @Battle of Ideas

Panellists at this session were:

• John Dovey – acting president, UK Corporates BT Global Services
• Jim O’Neill – MD Global Economic Research, Goldman Sachs, creator of the acronym BRICS
• Stuart Simpson – Financial Analyst and journalist
• Dr Linda Yueh – Oxford University, author of Macroeconomics and globalisation and economic growth in China
• Professor Slavo Redosovich, LSE
  

Main arguments:
What will be the foreign policy consequences of the crisis for China and India?

• Linda: India and China are grappling with the potential foreign policy consequences of the global downturn. China sees itself as an emerging economy, focusing primarily on the growth of its own economy.
• Jim: Next week France will formally propose that the G7 be expanded to include the BRICs. This is long overdue, especially in view of the crisis. It’s going to be important that the Chinese economy be led by internal consumption rather than export, as there won’t be a US economy to export to .
• Stuart: We need to differentiate between China entering the world stage, and China as a global manager. China is not yet a rich country.
  

Why so much talk about China and India, why so little attention to Brazil and Russia?

• Jim: India has 1.1 bn people; China has 1.3 bn. Russian and Brazilian populations are small in comparison. With urbanisation a key driver for both China and India, the scale of their potential is of a different order. It is wrong to focus on India and China though. Brazil and Russia are much more powerful economically than in the past. Brazil keeps good macroeconomic stability, and in 30 years time could be one of the biggest 7-8 economies of the world. Brazil has handled itself very well in the crisis to date. Russia is far too dependent on oil. It needs to reduce this dependency to reach its potential.
  Traditionally economic downturns have impacted the developing world disproportionately. Is this still true?
• Stuart: The decoupling issue. China et al are becoming more self-reliant. Unless some solutions are arrived at, though, some countries will really suffer. Some countries can’t rely on national banks, foreign exchange reserves, i.e. those mechanisms currently being widely used across the globe to deal with the crisis.
• Jim: The BRIC economies are still developing in the classical sense. Now they’re an integral part of the world economy with their own multinationals and so on. The consensus is that the BRICs will continue to grow in the next 30 years.
• John: The world is a lot more complex. The average price in Chinese designer shops is a lot higher than in the Western equivalents. And most of the shoppers there are Chinese not tourists. So there’s a significant middle-class emerging.
• Linda: Are they themselves in financial crisis? All markets are interlinked. One potential problem is protectionism. The view that opening the borders for trade isn’t helpful is a bit dated. Brazil has brought actions against US and Europe and won. Virtually no country in the world truly has free trade and open borders. In the NGO world, protectionism will be strongly under consideration. The IMF will have to provide bail-out packages for Pakistan, but they shouldn’t be telling them how to run their own country. The IMF is weaker than it was 10 years ago, in any case.
• Jim: There is a difference between modest protection for countries in an emergent phase and the aggressive protectionism of the 1930s. Germany has been sustained over the past 2 years by exports to China and Russia. IMF seems strongly pro-international trade at the moment. The Norman Foster partnership, with 1400 employees the biggest employer in Wandsworth, is almost entirely dependent on China.
  

Could international institutions like the World Bank and the IMF become obsolete?

• Linda: IMF has just appointed its first Chief Economist from an emerging economy – China. So it’s trying to reinvent itself although it may be too slow.
• Slavo: World Bank started this process earlier with its “Learning from the 90s” document. It’s trying to fashion itself as a developing agency.
• Stuart: The IMF doesn’t have the resources to perform the same role as before. Partly because of BRIC growth - the reserves of China dwarf IMF reserves. Years ago, South Korea needed IMF help. So the IMF came in and dictated how South Korea was to be run. China saw this and decided the same would never happen to him,a nd built its foreign exchange reserves.
• Jim: The world has blown up. This is a very powerful and scary crisis. Without powerful responses by multiple countries, it would be a lot worse. The IMF is currently back in business because a couple of developing countries have been very irresponsible. But the IMF and the World Bank need to become institutions reflecting the complexity of the modern world. So Western nations need to agree to substantial structural changes. The IMF and World Bank are currently well past their sell-by date.

To what extent is the crisis due to under-consumption in China?

• John: Are the financial sectors of the West clearly at fault? Complex financial derivatives have produced a classic bubble.
• Jim: Indirectly, part of the crisis is caused by China saving so much. The global savings glut has led indirectly to the overheating of the US property market.
• Linda: In macroeconomics, these are just identities, rather than causes and effects. Americans were consuming too much way before China started saving too much. China needs to look internally and determine why is its consumption so low. Culturally, they have fears of catastrophic health events, and worry about their children’s education. It’s not a blame thing.
• Jim: Global economic crises happen. Human behaviour goes between greed and fear. The Chinese authorities wanted the decade to be dominated by an export strategy, and only now do we see that it was unsustainable.
• Stuart: US consumes 72% of its GDP. [Jim: This is way too much.] A lot of capital goes to the US in the form of debt, with China buying US Treasury bonds. There’s a lot of saving in the Chinese corporate sector as well. US business didn’t take advantage of the cheap credits. The money didn’t go into production. Why not?
• Linda: Usually, if there are low savings, it should be expensive to borrow.
• Jim: This is not a static environment right now. This year US’s current account deficit is starting to disappear. US is selling more cars abroad than it is importing. Surpluses in the emerging economies are slowing down – Russia, India and Brazil now have deficits. Countries will no longer be able to depend on exporting to the US.
• Jim: The current situation feels bad. But it is reality. Global growth is forecast at 3%. Last year it was 3.2%, so it isn’t the end of the world. Price mechanisms work themselves through – both sides of the US election are committed to exploring alternative forms of energy. China has done more for globalisation than the US in the past decade. Countries like Nigeria are intellectually very energised by the example of China and how they’ve raised themselves from poverty without behaving like the US.
• Stuart: There is much more political freedom for developing countries now with China in the picture.
• Linda: 56% of the Chinese population is still rural. We should be wary of learning too much from a country whose path is not yet set.
• Jim: The last decade shows that international trade is one of the few win-win games that exist. Global inequalities are no declining rapidly. In the next 30 years, there will be an additional 30 billion new members of the middle class.
  

But in Africa, aren’t some countries still undeveloped?

• Stuart: Development since the industrial revolution has been characterised by divergence between developed and developing countries. Only with China has that changed. China shows the way out of poverty – with massive infrastructural projects and engagement with the global economy, rather than the small-scale projects proposed by NGOs.
• Linda: Political reform is happening in China, but in a quiet slow way because the Chinese government wants to be responsive and stay in power. So it does it by focus groups etc. but rejects the Western model.
• Stuart? Yes! It’s following the anti-democratic practices of Western political forces like New Labour!

Growing pains: the pros and cons of economic dynamism @Battle of Ideas

Panellists at this session were:
· Daniel Ben-Ami, finance and economics journalist
· Dr Ha-Joon Chang, University of Cambridge
· Paul Mason, TV broadcast journalist
· Martin Wolf, chief economics commentator, Financial Times

Takeaways:

• Dynamism is the most profound concept for our civilisation. It matters because it transforms people’s lives. It underpins our life expectancy, food, the expectations of the next generation reaching adulthood. It both signifies and generates change. It generates a range of opportunities unimaginable to previous generations. In agrarian societies, serfdom was normal, and the prosperous had to live from their labours. It has also transformed the position of women, with labour devices, contraception and so forth. Political democracy is both a natural expression and a concomitant of economic dynamism. A positive sum society – with the total number of goods and services rising over time.
• In the early 1950s the life expectancy of people in the third world was 41, whereas today it’s 63-4. This is a measure of the huge benefits of growth for developing countries.
• Ha-Joon Chang was born in South Korea in 1963, and has experienced phenomenal changes in the standard of living during his lifetime. It’s not just about having more money and things – it’s life expectancy, reductions in infant mortality and so on. In one and a half generations, South Korea has acquired the life expectancy of Switzerland! But this is unachievable without brutality and dislocation. Nevertheless, in undeveloped countries, there’s a lot more violence and destitution. Child labour was abolished in South Korea in the early 1960s, so there are labour rights and freedoms in place now. So the main problem with today’s liberal democracy is that growth is not executed well enough.
• Paul Mason maintained that it’s correct to question the conditions of growth. In early capitalism, it was believed that capitalism would collapse without the labour of 300,000 little girls in Lancashire. Then we saw that after the Factories Act, regulated capitalism was actually more dynamic. This is inimical to the Ayn Rand principle – that only selfishness can act as a dynamo for growth. A mature debate is needed around the distribution of wealth.
• Martin Wolf argued that the pursuit of GDP per se is meaningless. The biggest change in economics over the past 30 years has been the integration of Asian labour into the global economy.
• Up to the 1980s, a great proportion of the gains of capitalism went to the working classes of industrialised countries. This is partly because of the internal politics of those countries. The interests of the UK and Chinese working classes are directly antithetical. Paul countered this by saying that labour movements have been a fundamental part of capitalism since the first strike in Lancashire in 1818. China has just passed its own Factories Act – The Contract Labour Law was passed this year. Some factories have moved to Cambodia as a result, but the Chinese government is firm that labour regulations will be enforced.
• Local pollution will ultimately be fixed by local political processes. But are there global constraints, and if so how will they be handled? Drinking water is a real constraint to growth in both India and China. Ditto petrol. India can’t afford oil at $100 a barrel, and it’s forecast to rise to $500. Paul argued that the issue of water in China isn’t about quantity but quality. Why is the Yangtse so polluted? It’s because of a succession of paper factories killing everything in the river. Daniel argued that there is no inevitability of water shortage in India. They need infrastructural investment, that’s all. There’s always desalination if all else fails – look at Dubai, Arizona etc. There is a classic Malthusian confusion of infrastructural issues and god-given problems. The Stone Age didn’t end because we ran out of Stone. Martin argued back that over-dependence on fossil fuels is a problem – the water problem in India is exaggerated, but the fuel problem isn’t. India’s challenges are unique but unbelievably exciting.
• Daniel Ben-Ami argued that the problem with the term “sustainability” is that it’s used in so many ways. He opposes the idea that entire generations should hold themselves back because of the risk of damage to future generations. The real problem is unbalanced growth that is insufficiently productive.
• In Germany in the 19th century, the average number of working hours per week was 90, whereas now it’s 35. US work about 20-30% longer than us.
• In all countries, as soon as women start having a choice, they stop having the children they don’t want.
• In India and China the benefits of growth are ceasing to spread among the population – this is a significant problem.

The Credit Crunch Demystified @Battle of Ideas

This session was an on-stage debate between:
· Phil Mullan, director of Business Transformation, Easynet (in a personal capacity)
· Dr Michael Savage, Investment Banker (in a personal capacity)

God this session was packed! Standing room only in the biggest room of the building. As Phil Mullan pointed out, you can usually house the economics session in the broom cupboard, with room to spare. As an aside, at the meeting of the CILIP Update Editorial Board on Friday, the icebreaker at the start of the meeting was to state what you’re reading, and at least 2 people said they’d stopped reading novels in order to be able to follow the news and gain an understanding of the economic situation.

The essence of the debate was:

• What is the severity of the current crisis? Well, it’s very severe! But although it’s being described as the worst financial crisis ever, the human dimension is muted – having said that, it’s so far had a limited effect on the economy – unemployment isn’t as bad as it was in the 1980s for example. But there’s a lot of misery and hardship to come.
• Phil: The most important thing is that the crisis isn’t just about economic recession: it reflects a fundamental atrophy of economic activity in the West. This is very serious, with politicians unable to cope, it will be more difficult for them to contain the consequences.
• Michael: Right across the board, everyone failed to see this coming. In terms of steps taken by governments, allowing Lehmann to fail has proven catastrophic, but that this couldn’t have been foreseen. The British banking system was within hours of failing.
• Phil: The past 14 months had been characterised as panicky paralysis with intermittent firefighting. George Soros had said that governments have been consistently behind the curve, displaying oscillation and lack of imagination. We’ve lived with an economic paradigm of “There is no alternative” [to the market] for a quarter of a century now, with a very technical as opposed to political approach to running the economy. But the people elected democratically failed to see this coming. There’s been no attempt to date to grasp the fundamentals.
• Michael: Some of the growth and dynamism in the West has been false, but this has nevertheless been a period of great consistent growth and innovation, although we should have picked up on the issues in the financial sector earlier.
• Phil: This position amounts to a fetishisation of numbers – growth looked good but what about the quality of growth? In reality, the West has experienced prosperity based on growth elsewhere. Economic activity in countries such as the US and UK has been based on a. Property and retail, and the interactions between the two b. Financial services c. Public sector. So a huge amount of activity has been based on circulation and services around it, while the productive economy has shrunk. Manufacturing in the US now only represents 12% of the economy. 30 years ago, financial activity comprised only 20% of the average US corporation, whereas today that figure is 50%. Back to the drivers, only c. public spending now remains. This introduces a very real risk of a state deficit crisis. The economy has been hollowed out. When an economy doesn’t make much, and the financial, property and retail sectors implode, what’s left? Apart from making money out of the East, of course.
• Michael: US still makes up 25% of the global economy. The East is still led by the US – the only country with the financial depth and breadth to manage the crisis. The current crisis is driven by additional money in the system, not just because of bank lending, but money from Asian and oil-producing economies. Simply put, US, UK et al have been spending more money than they’ve made. Other countries, by contrast, have been saving masses of money and pumping it into the West. This has led to low interest rates in the West. The West has then made money where it can – for example from property.
• Phil: China has been keeping the West afloat. Value production continues in the West, but it’s not new value creation, but creaming off value created elsewhere in the world. China is going to have a hard time in the next two years with the spillover from this. US is the most indebted country in the world, and yet presumes to be the world leader. The economy pre-crisis was characterised as SAD – stable; anaemic; durable. The West has been able, since the 1980s, to cope with its difficulties; political stability and credit availability have together removed the need for economic restructuring. This was like a hiatus period of muddling through. The West has now had its comeuppance, and needs a long period of regeneration. Everyone is going to feel a lot of pain, but at the moment there’s a strange feeling of denial in society about the future repercussions of the downturn.
• Michael: The recent period has been characterised by consistently high growth and employment. It hasn’t been SAD at all – actually it’s been a great period in the economy. The banking sector had to be bailed out, though, because there was a blunt choice between bail-out or generalised depression. We now need to think fully about how to manage the economy, the banks and restructure society.
• Phil: 40% of GDP in China is based on economic investment. They create more values than they can use. This is much more than an economic / financial problem. Intellectually, the most important point is the hollowness of economic life, and the imbalances between economics and politics globally. We’re closer to barbarism than we were 10 years ago; we’re at a tipping point. There’s a potential to restructure using the East as an engine, but how likely is that?

Caught in the web: who controls the Internet? @Battle of Ideas

Panellists at this session of the Institute of Ideas' annual Battle of Ideas festival were:

• Jo Glanville, editor of Index on Censorship
• Dr Tim Jordan, Open University, author of Hacking: digital media and technological determinism
• Rob Killick, CEO, cScape
• Cassandra Wilkinson, author of Don’t panic: nearly everything is better than you think

Key takeouts from this session were:

• An important question is – does the internet render the fight for free speech unnecessary? Or, in fact, is the internet at risk of becoming even more regulated than real life? Certainly, the great libertarian godfathers of the internet didn’t bargain for new forms of censorship to emerge. There is more potential for control and regulation in cyberspace than there is outside. Compare browsing in a library with browsing on the web, where the act of opening a page is exposable to other people or organisations.
• The new censors of the internet aren’t the usual suspects. Instead, they’re like a layer of middlemen. A great example is Smart Filter by Secure Computing in California. Used by some of the world’s most authoritarian regimes and also in the US, its list of blocked sites is so secret that even the countries using the software are kept in the dark, and can affect more sites than you might think – for example gay and lesbian sites wrongly interpreted as being porn. The list of blocked sites is the intellectual property of Secure Computing and is protected by copyright.
• This week Yahoo and Google signed up to a voluntary agreement to protect freedom of speech in their business practices. This code of conduct took 18 months to formulate, and they’re now trying to persuade hardware suppliers to sign up. Cisco were invited to the discussions, but declined to participate. They argue that in transactions such as the supply of hardware to the Chinese government, the application of the technology they supply is not their responsibility (I’m sure I’m not the only anti-censorship activist who’s broadly sympathetic with this position).
• On “takedown notices” and their censorship implications – a group of researchers put up a fake JS Mills Appreciation Society website containing quotes from the 19th century philosopher and freedom advocate, quotes which, of course, are now out of copyright. The same researchers then sent a takedown notice to the UK ISP on the basis of a copyright contravention, who immediately obliged, taking the site down even though the text is out of copyright. A significant global trend is how easy it is to get ISP to remove material on the basis of defamation. One ISP employee in the audience added that the number of takedown notices issued is actually quite low, around one per fortnight, so it is quite easy to investigate each one. His ISP has a policy of only taking down sites if the notice has the weight of the law.
• The breakdown of anonymity, an important principle in the early days of the internet, points to a fundamental problem of the internet as public space – namely that the very digital nature of the space makes this contentious, as the web operates on privately-run networks and we leave traces of pretty much everything we do on it. With social websites such as Facebook, we’re putting personal data in the hands of Facebook who can then do anything they want with it. Rob Killick called for Facebook’s ownership of all your data on the site to be an opt-in.
• In relation to the global economic downturn, we need to recontextualise much of the discourse. When governments experience threats which they don’t know how to deal with, they tend to react with authoritarian measures. So trends towards regulation are likely to accelerate in the coming period. As individuals, we feel more isolated and individuated in these conditions, and are therefore more likely to take accepting positions of this authoritarianism. However, the deep nature of the recession we’re facing, and the absence of political solutions means that as a society we actually need more freedom to debate than less.
• Nearly everything can be said, but almost anything can be recorded and is keyword searchable. The gap between production and consumption is radically altered by the internet, and this has important consequences. Free speech hasn’t gone away with increased surveillance, but the conditions have changed.
• Tim Jordan talked about Torpark servers, a system accessible via Firefox designed to ensure anonymity on the web. Interestingly, they were impounded by Google during a recent paedophile investigation. Users of Torpark servers, which are located in Europe and the US, and were in fact designed by the US Navy and the Free Haven project, are perceived to be in authoritarian regimes. They are OS, and this raises very interesting questions – in theory the code is open to all of us, but in practical terms it’s only open to that small minority of people who can understand code. This is important in this context for determining whether there are any “back doors” i.e. ways in which users can be identified and reported. So the OS geek subculture offering an opposition to regulation is in fact not straightforward.
• The paradox of the web is that it is simultaneously outside control and under control – free speech and surveillance cohabit in cyberspace.
• Freedom of speech only means something if it’s offensive, and it is an absolute. I agreed with this, but not all panellists did.
• The difference between private speech and free speech has been eroded by the internet. We say all sorts of things in private that we may or may not really mean. But online this can be a problem. This is a very interesting dimension. At the moment, people tend to know that everything seems private whereas it is in fact recorded, but don’t really care. To an extent, of course, it doesn’t matter right now, but it may matter in the future if what you’re doing becomes politicised in some way.
• An interesting case is coming up in the UK, with the prosecution of a civil servant who wrote violent porn about what he’d like to do with Girls Aloud. This is a potentially groundbreaking case that will come up in 2009.
• An interesting debate arose around the issue of incitement. Rob Killick argued that incitement shouldn’t be a crime, although it now is one. So child rape is a crime, for example. If you see it, you should report it. But the act of seeing it should not be a crime. There are difficult issues around this – are people who are paying to see child rape actually colluding?