Sitting next to me at last week’s lecture by Simon Hampton of Google was David Cleevely who in addition to being a successful entrepreneur is also the Founding Director of the Cambridge Centre for Science and Policy. At one point, Simon put up a slide showing the percentage of GDP contributed by the Internet in a wide range of European countries. As the animation flashed by David whispered to me: “wonder if there’s a correlation between those percentages and bond yields?” After the lecture, he cycled off purposefully into the gathering gloom. I suspected that he was Up To Something.

He was. Yesterday he and his son Matthew (who’s currently doing a PhD at Imperial College Business School) published this chart on their blog.

They plotted 10-year governmental bond rates against the Boston Consulting Group’s measure of “e-intensity” for countries in the Eurozone group.

Member states which have not had the capacity to adopt and develop the internet and ecommerce are those with skyrocketing risk premiums on their governments’ debt. These states form a distinct group: Portugal, Italy, Spain, Ireland and Greece (which is literally off the scale) – all with high debt premiums and an e-Intensity score of well under 100.

There are two other groups: those with high e-Intensity and low government bond rates such as Germany, Denmark and the UK, and a middle group (Belgium, Austria and France) with lower e-Intensity (100-120) and raised bond rates of 3-4%.

David and Matthew see two possible (and possibly non-exclusive) explanations for this:

1. Low e-Intensity indicates underlying structural problems: countries with high e-Intensity are those which have invested in modern processes, improved productivity and benefit from strong institutions. These are the countries that have lower borrowing costs, as they are best placed to grow their economies in the future.

and/or

2. e-Intensity (or what it represents) is a fundamental capability: countries which use the internet intensively can respond more flexibly to shocks and crises, instead of being weighed down by cumbersome 20th century processes and institutions.

So…

if you can get a country to invest in, use, and compete on the internet, then you must have either eliminated or minimised any underlying structural problems, or created a flexible and robust economy, or both.

Policymakers, please note.

This evening I went to an interesting lecture on “The challenges of regulating the Internet” given by Simon Hampton, who is Google’s Director of Public Policy for Northern Europe. He was, he insisted, speaking only “in a personal capacity” and the audience, for the most part, took him at his word. His thesis was that in the technology business the greatest challenge is “the transition from scarcity to abundance” and that policy-makers haven’t taken this transition on board.

The metaphor he used to communicate abundance was the hoary story of the guy who invents the game of chess and who, when asked by the Emperor what he would like as a reward requests one grain of rice on the first square, two on the second, four on the third, etc. You know the story: according to Hampton by the time you get to the 64th square the amount of rice needed is the size of Everest. At which point my neighbour, David Cleevely, nudged me and said that he had worked it out and it was enough rice to cover the entire surface of the earth to a depth of nine inches! But it turned out that, for Hampton, the metaphor also has a chronological dimension: we’re just about half-way through the chessboard.

As befits someone who spends a lot of time in Brussels arguing with the anti-trust division of the European Commission, he has a pretty jaundiced view about what goes on there. But he made a good point, namely that the EU finds it easiest to regulate in new areas simply because regulating in existing areas means dealing with the reluctance of member states to change their existing laws. The result is that the Commission tends to to move too quickly to legislation (in the form of Directives) in emerging areas. Examples: the e-Money Directive; the e-Signature Directive; and, now, the Privacy Directive. Plus, of course, the idiocy of applying to the Net concepts designed for regulating TV broadcasters.

He then went on to list the four big companies that have “embraced abundance” — Apple, Amazon, Google and Facebook. They all operate on massive scale and have an interest in a bigger, freer Internet — though they have only recently woken up to the necessity of lobbying for this in the corridors of power (which is why the campaign against SOPA was so significant). In this context, Hampton claimed, size really matters — which is why moving into the second half of the chessboard is so significant. “The larger the haystack, the easier it is to find the needle.” (Not sure I followed his logic here.)

He was interesting on the subject of lobbying — which of course is a large part of his job and he defined it as trying to persuade legislators and policy-makers that their concept of the public interest should be realigned with those of industrial lobbies. People in declining industries tend to scream, and thereby gain public — and media and legislators’ — attention; in contrast, people in new, growing industries are too busy getting on with it — which probably explains why the big Internet companies were so slow to get their lobbying act together in Washington.

Finally, Hampton moved to the question of how to rethink policy-making in the context of abundance. In his opinion, there’s no need to change the broad objectives of public policy. The key switch that is needed is for policy-makers to “embrace abundance”.

What would that mean in practice? He suggested three general principles:

In the Q&A the main topics were (a) the cluelessness of legislators in relation to the Internet, and (b) concerns about privacy (hardly surprising given this). I made the point that legislators have always been clueless, so there’s nothing new here. (I quoted Bertrand Russell’s argument about why an MP couldn’t be more stupid than his constituents — “because the more stupid he is, the more stupid they are to elect him”.) The point is that in a representative democracy, Members of Parliament should not be expected to be knowledgeable about everything. It’s Parliament, as an institution, that needs to be knowledgeable — which is why we need evidence-based policy-making in relation to Internet regulation, intellectual property, etc. And, to date, we’ve had very little of that.

So the battle for an open Internet continues.

The product ecosystem that surrounds Apple iDevices reminds me of the Peace of God as described in the Bible — in that “it passeth all understanding”. This is an add-on for the iPhone4 (and 4S) that turns it into a microscope.

Well, sort-of.

The only thing I could find to test it when it arrived was a penny. This is how it came out.

Somehow, I don’t think it’ll make me into a latter-day Leeuwenhoek. But it’s fun.