“Globalisation empowers elites economically but disempowers them politically.”
Michael Ignatieff, reviewing Nick Clegg’s memoir in the FT.
Monthly Archives: September 2016
Remember, remember the ninth of September
For personal reasons I have vivid memories of 9/11, so today is always a sombre day in my calendar. But I was suddenly reminded this morning of how some of my Internet buddies rose magnificently to the challenge of the day. This is Dave Winer’s Scripting.com blog, for example. And here are Jeff Jarvis’s audio reports, as unforgettable now as they were then.
And then this memoir by the WSJ‘s John Bussey.
The long history of ‘cyber’
My Observer piece on Thomas Rid’s alternative history of computing, The Rise of the Machines: the Lost History of Cybernetics:
Where did the “cyber” in “cyberspace” come from? Most people, when asked, will probably credit William Gibson, who famously introduced the term in his celebrated 1984 novel, Neuromancer. It came to him while watching some kids play early video games. Searching for a name for the virtual space in which they seemed immersed, he wrote “cyberspace” in his notepad. “As I stared at it in red Sharpie on a yellow legal pad,” he later recalled, “my whole delight was that it meant absolutely nothing.”
How wrong can you be? Cyberspace turned out to be the space that somehow morphed into the networked world we now inhabit, and which might ultimately prove our undoing by making us totally dependent on a system that is both unfathomably complex and fundamentally insecure. But the cyber- prefix actually goes back a long way before Gibson – to the late 1940s and Norbert Wiener’s book, Cybernetics, Or Control and Communication in the Animal and the Machine, which was published in 1948.
Cybernetics was the term Wiener, an MIT mathematician and polymath, coined for the scientific study of feedback control and communication in animals and machines. As a “transdiscipline” that cuts across traditional fields such as physics, chemistry and biology, cybernetics had a brief and largely unsuccessful existence: few of the world’s universities now have departments of cybernetics. But as Thomas Rid’s absorbing new book, The Rise of the Machines: The Lost History of Cybernetics shows, it has had a long afterglow as a source of mythic inspiration that endures to the present day…
Time to stop firms sailing under the ‘tech’ flag of convenience
This morning’s Observer column:
The rise and precipitous fall of Theranos is a cautionary tale for our times and is beautifully told by Nick Bilton of Vanity Fair in a fascinating article that is worth reading in full. For me, though, it has a wider significance, because it illustrates a more general problem with corporations that sail under the tech banner, namely their loud insistence that any attempt to regulate them constitutes an attempt by the analogue world to stifle innovation and hold back the digital future.
At the moment, most governments and almost all mainstream media are so dazzled by digital technology that they seem unable to appreciate what’s really going on. What’s happening is that the internet and its associated technologies have morphed from exotic novelties into a general purpose technology (GPT) like mains electricity. That has two implications. The first is that the companies that have mastered the technology are moving out of the tech compound and into the wider world. This is why Apple is planning to move into the automobile business, Tesla is heading for trucking, Google is moving into healthcare, Uber is aiming to eliminate car ownership altogether and Airbnb has the global hotel business in its sights.
The second implication is that, as Anil Dash puts it in an insightful essay, there is no “tech” industry any more…
How traditional political parties are disintegrating
The Republican Party is now a coalition of globalization-loving business executives and globalization-hating white workers. That’s untenable. At its molten core, the Republican Party has become the party of the dispossessed, not the party of cosmopolitan business. The blunderers at the Chamber of Commerce and the Business Roundtable bet all their chips on the G.O.P. at the exact instant it stopped being their party.
David Brooks writing in today’s New York Times
How to make better decisions: consider two options rather than just one
It’s not rocket science.
Ohio State University professor Paul Nutt spent a career studying strategic decisions in businesses and nonprofits and government organizations. The number of alternatives that leadership teams consider in 70 percent of all important strategic decisions is exactly one. Yet there’s evidence that if you get a second alternative, your decisions improve dramatically.
One study at a medium-size technology firm investigated a group of leaders who had made a set of decisions ten years prior. They were asked to assess how many of those decisions turned out really well, and the percentage of “hits” was six times higher when the team considered two alternatives rather than just one.
That 70 per cent figure is interesting.
Quote of the Day
“The market can remain irrational longer than you can remain solvent.”
- Wall Street saying quoted by Dan Lyons, author of Disrupted: Ludicrous Misadventures into the Tech Start-Up Bubble
Quote of the Day
“Autonomous cars are to cars as mobile was to landlines. Looks pretty much the same at first, but then changes everything.”
Collateral damage and the NSA’s stash of cyberweapons
This morning’s Observer column:
All software has bugs and all networked systems have security holes in them. If you wanted to build a model of our online world out of cheese, you’d need emmental to make it realistic. These holes (vulnerabilities) are constantly being discovered and patched, but the process by which this happens is, inevitably, reactive. Someone discovers a vulnerability, reports it either to the software company that wrote the code or to US-CERT, the United States Computer Emergency Readiness Team. A fix for the vulnerability is then devised and a “patch” is issued by computer security companies such as Kaspersky and/or by software and computer companies. At the receiving end, it is hoped that computer users and network administrators will then install the patch. Some do, but many don’t, alas.
It’s a lousy system, but it’s the only one we’ve got. It has two obvious flaws. The first is that the response always lags behind the threat by days, weeks or months, during which the malicious software that exploits the vulnerability is doing its ghastly work. The second is that it is completely dependent on people reporting the vulnerabilities that they have discovered.
Zero-day vulnerabilities are the unreported ones…
Apple, Ireland and neoliberal delusions
Imagine this scenario: an International authority decides that a transnational company has deprived a sovereign state of anything up to €19B in back taxes plus interest over 25 years. The company, naturally enough, screams blue murder and declares its intention to appeal the judgment. The ruling, says its CEO, is “total political crap”. So what does the sovereign state decide to do? Why, it’s going to appeal the ruling and stand shoulder-to-shoulder with the transnational company. If you wanted a case study in how power has shifted from states to corporations, then this, surely is it.
The country in question is the Republic of Ireland, and the company is Apple. The ruling that so enrages both comes from the European Commission, which has decided that that Ireland must recoup the sum of up to €13 billion in unpaid taxes (plus interest, which could bring it closer to €19B) from Apple because the deal the country struck with the company 25 years ago amounts to illegal state aid to a corporation. The commission said the deal allowed Apple to pay a maximum tax rate of just 1%. In 2014, the firm paid tax at just 0.005%. The usual rate of corporation tax in Ireland is 12.5%.
Now Ireland is a small country which, despite the hype to the contrary, is not in great economic shape. There has been a much-vaunted ‘recovery’ from the devastation caused by the collapse of its major banks and the bursting on an insane property bubble, but that recovery is largely an illusion, and confined mainly to Dublin, the capital city. Last year, the Fine Gael government called a general election and campaigned under the slogan “Keep the Recovery Going”. Outside of Dublin the electorate replied “er, what recovery?”, with the result that neither of the two main political parties was able to form a government, and now an uneasy coalition rules with the assistance of five independent members of Parliament.
Ireland’s health service, for example, is in very poor shape. Likewise its social services. So €19B is a very significant sum for a country in such conditions. It would, for example, be enough to run the health service for an whole year. You’d have thought, therefore, that the European Commission’s ruling would be seen as manna from heaven. But that is not how the country’s benighted government views it.
To understand why, you need to know a bit of modern Irish history. The Republic gained its independence from British rule in 1923, and for the first 50 years of its independence it was a poor, backward, inward-looking, priest-ridden country dominated by Eamon de Valera and his Fianna Fail party. Its main industry was agriculture and its biggest export was its young people, who left in their hundreds of thousands to seek better lives in the UK, the US and Australia. At one stage in the 1930s, ‘Dev’ waged an “economic war” with Britain under slogans like “Burn everything British except their coal”. But eventually, in 1959, Dev stood down from the premiership and became the (non-executive) President, and was replaced by his son-in-law, Sean Lemass, a technocrat who realised that the country had to become outward-looking in order to survive. Along with a visionary senior civil servant, Dr T.K. ‘Ken’ Whitaker, Lemass concluded that the country’s salvation — given that it had no natural resources, lay in attracting inward investment from foreign — mainly American — companies. The vehicle Lemass charged with making this happen was the country’s only truly dynamic government agency — the Industrial Development Authority — which had the mission of attracting overseas investment to Ireland.
In this, the IDA was spectacularly successful. Foreign corporations came to Ireland in droves, and in the process began the transformation of the country, creating jobs and bringing wealth on an unprecedented scale. The companies were lured with all kinds of incentives, including planning and infrastructure provision and exceedingly generous tax holidays. The resulting turnaround was then given a spectacular boost in 1973, when Ireland joined the European Community (as it then was), which led to a massive infusion of development funds from Brussels, much of which were sensibly spent on infrastructure and reviving the moribund rural economy.
The deal which brought Apple to Ireland conformed exactly to the IDA template. The company set up a manufacturing plant in Cork, Ireland’s second city, and eventually located its European HQ in Ireland. The taxation deal which so exercises the European Commission dates from this period. And it explains the strange reluctance of the current government to refuse the windfall that the Commission has now bestowed upon it.
As the Irish Times columnist, Fintan O’Toole, puts it,
Since the Whitaker/Lemass revolution, the unspoken rule of all Irish policy has been – don’t do anything that in any way threatens to upset the huge, mostly US-based corporations whose investments shape both the economy and a remarkably enduring political consensus. This is not mere cravenness. If Ireland has sold its soul to the corporations, it has arguably got a very good price for it – not just jobs and tax revenues but a relatively peaceful transition from conservative nationalism to global modernity. It is not surprising that the entire Establishment is of one mind on the Apple ruling – there must not be the width of an ultra-thin sheet of silicon between Apple and Ireland on this. The tricolour has an Apple logo in the centre and we will all rally behind it to ensure that the tax bite out of the apple is as tiny as the corporation wants it to be.
O’Toole, who is Ireland’s most perceptive and trenchant columnist, is strongly of the opinion that the government should take the windfall and put it to imaginative use. It could be used, for example, to
- Build 50 new hospitals
- Build an extension to Dublin’s Luas rapid transit system that is needed to ease the traffic congestion that is choking the capital’s social and economic life
- Boost the supply of sorely-needed social housing
- Fast-track the construction of a metro system in the capital
- Abolish the country’s crippling property taxes
- Provide a break from the additional Universal Service Charge levied to pay for the bail-out of the country’s zombie banks
- And encourage the formation of a sovereign wealth fund.
The decision to ignore these necessary measures and appeal the European Commission’s ruling therefore represents a clear strategic decision by the government. Or, more precisely, it suggests that the country’s ruling elites are not interested in funding the measures needed to reduce inequality and improve the country’s provision of social services. This mindset believes, O’Toole argues, that
even this vast windfall might in fact be a booby prize. If we take this money from Apple, we will make the corporations angry. When the government talks of ‘reputational damage’ it ostensibly means damage to Ireland’s reputation from the EU ruling’s implication that the State was being used as a tax haven. But the reputational damage it actually fears is quite the opposite – damage to our well-earned reputation among corporations for facilitating tax avoidance on a global scale.
He’s right. Ireland has become the world centre for corporate tax avoidance. The decision to appeal the ruling suggests that neoliberal ideology rules OK in the Emerald Isle. And it shows that the Irish state has actually given up on the idea of sovereignty. It ignores the fact that
amid a longterm crisis in global capitalism, massive corporate tax avoidance is becoming politically unsustainable. And a vision of Ireland that places the facilitation of that tax avoidance at its heart is therefore not sustainable either.
In that sense, the Irish government has deliberately chosen to put the country on the wrong side of history. Or, as Yeats might have said, my countrymen have disgraced themselves — again.