Too old to rock'n'roll, too young to die.

Last week, Led Zeppelin reformed to play a single gig at London’s O2 Arena (formerly known as the Millennium Dome). The BBC covered the story (see article), which also includes some footage of the gig. I recall seeing the band in 1976 in London, and, according to those who attended the concert, the band hadn’t lost any of their verve.

There are a number of interesting points in here that provide a signpost into the future. The demand for tickets was colossal – over 1,000,000 applications for just 9,000 pairs of tickets. The face value for the cheapest seats was £200 per pair, and one fan is reported to have paid £83,000 (yes, nearly $200,000 USD) for a pair of tickets. We have to ask: Why?

I am told that, as we grow older, we seek the comfort and reassurance of things that are associated with earlier parts of our lives. It is quite natural that, as the Boomer generation moves into the early stages of old age (Led Zeppelin are in their late 50s and early 60s), that fashion swings back to the late 1960s and early 1970s. We can expect, for the next ten years or so, ‘Retro’ to be ‘in’. The Boomers are growing old disgracefully and are funding it with the kid’s inheritance.

One possible side effect of this will be that experience may come to trump youth. For years, the fashion industry has celebrated youth. Models are getting ever younger and thinner. There has recently been a groundswell against this trend (e.g. the campaign against Size 0 models in London Fashion Week), but the Retro movement could give some momentum to the countertrend.

As the Led Zeppelin concert shows, the ageing Boomers still have plenty of cash and are prepared to spend it. A modest estimate of the gate for the concert would be between £2.5mn and £3mn, plus merchandise sales, plus additional music sales generated from the concert and the surrounding media interest. Not a bad pension nest-egg for a group of ageing rockers!

As we move into the future, we can expect to see more of this.

The Road To Bali- Follow Up

Just to follow up our earlier post on climate change (see post), we now have the results of the Predictify survey.

The question asked was:

"Will all of the Annexe I countries ratify a successor deal to the Kyoto Protocol of the United Nations Framework Convention on Climate Change by the end of the Conference of Parties in Copenhagen in December of 2009?"

We then clarified matters by stating:

"The Annex I countries are: Australia, Austria, Belarus, Belgium, Bulgaria, Canada, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Latvia, Liechtenstein, Lithuania, Luxembourg, Monaco, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Russian Federation, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, Ukraine, United Kingdom, United States of America (40 countries and separately the European Union)."

In response, 52% of respondents said 'Yes', 44% said 'No', and 4% said 'Uncertain result'. It would appear, at this moment in time, that the majority of respondents do not share my pessimism. As we go through the two year negotiation period, we shall revisit this to see if there are any changes in attitude.

HK Edgerton: The Black Confederate

HK Edgerton: The Black Confederate, originally uploaded by Jacob Krejci.

Jacob Krejci (Flickr id) writes:

"Over a year ago on a chance encounter I snapped this picture. After some research I found that the man in the picture was the enigmatic HK Edgerton. The former head of the Asheville chapter of the NAACP who has made it his personal mission to defend the confederate flag marching from NC to Texas in order to spread his gospel.

And an extremly controversial gospel it is: Edgerton claims that slavery wasn't the horrible institiution that there was a harmonious relationship between slave and slaveowner. He likens his work to that of Martin Luther King, but civil rights leaders refer to him as a white supremist.

I most certainly do not agree with his viewpoint, but I fully recognize him as a remarkeable charcter and a living legend of the South. I have been quite fascinated and curious about him."

This picture is so interesting. It contains so much about identity confusion and self appreciation.

The Many And The FEW

One of the ideas that I can take away from 2007 is that many of our future problems are likely to be caused by the FEW – Food, Energy, and Water issues. Thanks to David Harries for giving me this idea at the WFS Conference in Minneapolis. Over recent months, I have been pondering upon this a lot. However, it is in recent weeks that the whole matter has come into sharp focus.

The Economist recently ran a briefing on the end of cheap food (see briefing). The argument has it that one solution to our current energy woes is bio-ethanol derived from corn. However, the tightening of the corn market is pushing up food prices around the world, which is, in turn, stretching global water resources to grow the corn. Interestingly, the theme was taken up in the US. For example, the Washington Post took up the review from The Economist to develop the argument (see article).

I see this as interesting at two levels. First, the level of public debate is starting to become joined up. We are starting to acknowledge that solutions in one area (the need for diversification from fossil fuels) can have an adverse effect in other areas (global hunger from rising food prices and falling aquifers from excessive water extraction). There is plenty of scope for the law of unintended consequences to come into play here.

The second point of interest is that we are now seeing exchange rates (rates of equivalence) being established. For example, the use of an SUV on corn derived ethanol in the US for a month uses the same amount of corn that it would take to feed a family in Africa for a year. Additionally, at current prices, every gallon of corn derived biodiesel bought at the pumps in the US is being subsidised by the US taxpayer to the tune of $1.98 (the cost to the consumer is $3.20). To make things completely ironic, US citizens are then being asked to contribute 1% of GDP to combat world poverty, which the subsidies helped to create in the first place.

Just because the debate has become joined up does not mean that the system has become any more sensible. We are also in danger of being unfair to the US. The EU system of farm subsidies has exactly the same impact on global poverty as the US system. What is important is that we are now able to chart the linkages in a rudimentary model.

As a reality check, we sampled the Predictify web site on food and oil price movements over 2008. We asked which commodity would have the greatest price inflation in 2008, food or oil (see results). 59% of the respondents said that food would see the fastest price growth; whilst 38% of the respondents said that oil would see the fastest price growth (3% said that they would be the same). This is interesting, as both commodities are now at historic highs. If the price level of one or the other rises significantly in the coming year, then we are entering previously uncharted territory.

How is that likely to affect our behaviour?

Life at Steung Meanchey

Life at Steung Meanchey, originally uploaded by james helmer.

James Helmer (Flickr id) writes:

"STEUNG MEANCHEY, CAMBODIA. A refuse worker strolls across a mountain of garbage on his way to a recycling plant in the background. © james helmer"

It's interesting to think about what happens to our rubbish in the west. Much of our landfill is exported, where it is then trawled and recycled. I wonder how long it will be before our full landfill sites cease being 'contaminated land' and start to become 'mineral deposits'?

This is a trend that we covered in a previous post (see post).

The Road To Bali

The subject of Climate Change has come to some prominence over the past couple of weeks. Of course, the focus of much of the discussion has been the UN Convention on Climate Change in Bali, which is a nice place to have a mid-winter convention just before Christmas. The purpose of the convention is to start the process of negotiating a successor deal to the Kyoto Protocol when it expires in 2012. The focus of the discussion is to draft a framework deal that can be ratified at the UN Convention on Climate Change in Copenhagen in 2009.

We covered a couple of lectures prior to the Bali meeting that acted as briefings on the issue for us. The first lecture was given by Michael Mainelli at Gresham’s College in London (see meeting report). It was entitled ‘Stealing the family silver’, and it was about inter-generational wealth transfers. The lecture left two thoughts prominent in my mind. First, that climate change represents a very large wealth transfer from future generations (who will bear the cost of climate change) to present generations (who reap the benefits of the activities that lead to global warming). Second, that climate change also represents a large wealth transfer from the poor (whose development will be retarded if we are to act on climate change) to the rich (who have been able to develop irrespective of the environmental degradation that has been caused by their enrichment).

With these thoughts fresh in my mind, I attended a lecture by Sir Nicholas Stern (soon to be Lord Stern) on the results of the Review Panel on Climate Change (see meeting report). This lecture gave me three points to take away. The first was that the effects of climate change are felt through the water cycle – more intense droughts (and desertification), floods (then epidemics of water borne diseases such as cholera), more violent storms (such as Katrina), and a greater incidence of fires (the corollary of drought). Second, the problem of climate change has arisen due to the failure of the market mechanism to adequately price the environmental externalities of our actions. In plain speak – not ‘economist speak’ – this is a classical market failure that is best corrected by collective action. ‘Socialism’, as some will call it. Third, reflecting the point made by Michael Mainelli, that we can mitigate the effects of climate change if we are prepared to make a sacrifice now on behalf of the future.

It was when we looked at how mitigation could occur and how much it would cost to do so that I became quite pessimistic. To mitigate climate change would require an unprecedented degree of international co-operation between nations that are normally hostile towards each other. It would also require the developed economies to sacrifice their further development (i.e. accept a lower standard of living) in order to moderate the pace of development of the developing nations. It would require magnanimity between nations, in a world that often appears small minded and selfish. The whole prospect, when we reviewed it, seemed beyond our reach.

Since then, the pendulum has started to move in the opposite direction. Encouragingly, the political class in the US appears to have discovered climate change as an issue. For example, our attention was recently drawn to the Presidential Climate Action Project (see web site). From a European perspective, this is an interesting development as it appears to be re-inventing the wheel. There is already an international cap-and-trade scheme in place (see web site). Alternatively, the Pop!Tech Carbon Initiative has just been launched (see web site), where we can buy carbon offsets via e-Bay.

Whilst these initiatives are to be welcomed, I rather feel that they understate the effort that is required. For example, if we are to achieve the reductions in emissions agreed at the G8 conference in Heiligendamm, Europe would have to reduce its emissions by 80% in 2050 and the US by 90%. In the absence of any improvements in energy efficiency, this would mean that only 1 in 5 Britons would be able to use their cars in 2050, compared with 1990. If fuel efficiency were to be doubled (from 35 mpg to 70 mpg), only 2 in 5 Britons could use their cars in 2050, compared with 1990. The numbers are even higher in the US, which is now half a generation (two Presidential terms) behind Europe on this issue. For this reason, I think that I remain pessimistic on this issue.

What do you think?

As a point of interest, we have linked up with Predictify to sample your opinion on whether or not a deal can be reached by 2009. Click here to vote on whether a replacement for Kyoto can be negotiated.

Nanga Parbat South Side

May Trip 2007 - Nanga Parbat South Side - Enroute 68, originally uploaded by Rizwan Quraishi.

Rizwan Quraishi (Flickr id) writes:

"Towards Shigrin Campsite, Nanga Parbat Southside, Northern Areas, Pakistan.
LUMS Adventure Society (LAS)"

Why is it that we need to go to the other end of the world in order to find self-fulfillment? What is it that is lacking in our lives that this sort of adventure fills? I liked this photo because it captures something essential in the lifestyles of the young today.

Annakin Skywalker

Annakin Skywalker, originally uploaded by SierPinskiA.

I liked this photo because it has so much to say about how uncomfortable we are with ourselves in our present time.

Some of us - such as the young man in the photo - project ourselves into a time that never was, the imaginary world of Star Wars. Others project themselves back into a romanticised world that never was, which is what 'The Victorian Image' is all about. This photo rather nicely juxtaposes the two.

Aren't we lucky that we have the time and wealth to be able to be uncomfortable about the time in which we are living.

Climate Change, Ethics, And The Economics Of The Global Deal

A Lecture Organised By The Royal Economic Society

Logan Hall, Institute of Education, London, UK
30th November 2007

Speaker:

SIR NICHOLAS STERN, London School of Economics

(Sir Nicholas will be ennobled on 11th December 2007, after which he will be known as Lord Stern).

I was invited to this lecture as a member of the Royal Economic Society. I accepted the invitation because I thought that it would be interesting to listen to one of the more influential thinkers on the subject of climate change. The Stern Review of Climate Change has become something of a landmark in terms of policy development in Europe, but has hardly registered as a policy document in North America. I relished the prospect of finding out why this might be so.

Sir Nicholas delivered a fairly standard economic review of climate change. It is an externality that stands out from other externalities in that it is global in scope, it has implications in a time frame much longer than most planning horizons allow for, the causes and effects of climate change are still uncertain, and the consequences of climate change are potentially large and potentially irreversible.

Whilst I had to admire the technical aspects of the presentation, the logic of the model, and the smooth way in which it was presented, I was unconvinced by the argument. I wasn’t convinced by the suggested use of the price mechanism to correct a market failure. I cannot foresee the US Government adopting Pigovian taxes on fuel consumption in the near future. And I cannot foresee multi-lateral agreement on the reduction of carbon emissions prior to COP 15 in Copenhagen in 2009. All in all, I came away from the presentation rather down in the dumps. Perhaps we ought to start preparing for a world in which there are 750 ppm of CO2e?

READ the full report.

You can now register your views through the Predictify web site.

Click here to vote on whether I am being unduly pessimistic ablout Climate Change.

Big Brother Parking Enforcement

Big Brother Parking Enforcement, originally uploaded by R4vi.

This struck me as amusing. A little Smart Car operated by the City of Westminster in itsw parking enforcement. It contains a CCTV to record illegal parking and speeding.

Stealing The Silver

A Meeting Organised By Gresham College

Gresham College, London, UK
12th November 2007

Speaker:

MICHAEL MAINELLI, Mercers’ Professor of Commerce, Gresham College

I was first attracted to the talk by the concept which it advances – that investment represents an intergenerational wealth transfer, and, implicit in all wealth transfers, is a value judgement upon the equity of such transfers. This has become one of the great issues of our time, particularly if we subscribe to the view that one of the most pressing problems facing humanity is that of climate change - which represents an intergenerational wealth transfer from the future to the present, a great disinvestment, you might say.

There were two central themes to the evening – the question of the appropriate discount rate between generations and the issue of wealth transfers. The presentation looked at the latter before moving on to the former. On the issue of wealth transfers, there are two principal approaches – the bottom up approach, where wealth is transferred from the poor to the rich, mainly through the tax and benefits system. This approach underpins most of the social welfare systems in Europe. The second approach is the top-down approach, where the rich appropriate from the poor and seek their own advancement through this approach. We might stylise the bottom up approach as that used by Robin Hood, and the top down approach as that used by the Sheriff of Nottingham. The evening contented itself with a review of the approach of the Sheriff of Nottingham.

I really enjoyed the evening. It was both stimulating and provocative. Although the issues were complex and the subject matter potentially dull - it is difficult to get excited about discounted future cash flows – Professor Mainelli expounded his views in such an entertaining way that the audience was captivated. As an act of theatre it was extremely enjoyable. I would recommend the lecture series as both informative and enjoyable.

READ the full report.

St Pancras Station

St Pancras Station, originally uploaded by EUFO Views.

This is billed as Europe's longest Champagne Bar. When I went through St Pancras, it was very busy because it was the only place that I could find to sit down in the station. The purchase of an over-priced glass of fizzy wine early in the day isn't exactly my idea of a good start to a trip to Paris.

The commentators at Trendwatching caught this as well as part of a 'Premiumization' trend. In their December issue they say:

"Basically, with more wealth burning holes in (saturated and experienced) consumers' pockets than ever before, quick status fixes derived from premium products and premium experiences will continue in full force next year."

Interestingly enough, in their photo, very few people are actually drinking fizzy wine - they look as if they have visited the bar just to sit down! (See full reference)

The French Thatcher

It has been an interesting fortnight in France. Whilst we have all been aware of the unrest in France, we also ought to sit back and think about the long term underlying causes of this unrest. Earlier this summer, Nicholas Sarkozy was elected as President of France with a clear mandate to revitalise the French economy. In France, the constitution is arranged so that political power in the country lies in the hands of the President. The need for reform is great. The French economy is stuck at a GDP growth rate of about 2% per annum, which is why France is falling behind in the global economy.

To lift the French economy from this malaise will take a series of profound reforms to the economy akin to those undertaken in the British economy in the 1980s. This is why The Economist has dubbed President Sarkozy as France’s Thatcher (see article). So far, the President has remained resolute and the discord in France has grown. The Economist reports that the protesters are becoming more resolute (see article), which has resulted in a spiral of increasing violence (see BBC report).

It is worth, at this point, just considering some of the longer term factors behind this position. If we compare the position of France and Germany in recent years, we can clearly see the impact of reform in the German economy, and the absence of it in the French economy. Whilst this chart only covers a short period, it is telling a story for the long term. If the French economy is not reformed, then it is likely that French GDP growth will remain behind that of Germany and that French unemployment will remain higher than that of Germany.

As a longer term issue, a polarisation of French society is occurring between those who have economic protection (safe jobs, regular salaries, generous pensions) and those who do not. Whilst travelling across France recently, at the Gare du Nord in Paris I was struck by the number of desperate people milling around (they had come from the banlieu of St Denis, which is close by) and the number of police and military at the station. This did not suggest a society at ease with itself.

The current situation could resolve itself in a number of ways. President Sarkozy could give in to the protesters, as his predecessors did. This suggests a France with a sluggish economy in the future. Exactly how this might play out in terms of social dislocation is not quite clear at the moment. However, history suggests that the more able French Citizens will simply move elsewhere in Europe (there is a large colony in London at present).

Equally, the two sides could fudge the issue, in which case we may revisit this situation again in the near future. It is the culmination of a long trend that will need to be resolved. Alternatively, President Sarkozy might gain the upper hand and reform the French economy. Whilst being possible, this is a task that is being made harder as time goes by because the other economies – especially the BRIC economies – are not waiting for the French to make up their minds over what they want to do. There will come a time when this window of action will close. Personally, I believe that, if the French economy is not reformed by the end of this decade, then France will start to lose its position as a major western economy.

What do you think?

You can now register your views through the Predictify web site.

Click here to vote on French GDP Growth.

Click here to vote on French unemployment.

Salute 2007

Salute 2007, originally uploaded by inrepose.

inrespose (Flickr id) writes:

"German gear. This chap was worried that I might capture his British army issue socks, which might spoil the authentic look. It all looked pretty authentic to me! On the one hand these chaps enjoyed showing off their nice German clothes and kit but they also did not like having their faces photographed."

It's interesting how some people find meaning in their lives by shifting into a different period of history. The whole re-enactment movement seems to tap into this trend. However, the mind boggles about those who find meaning by re-enacting the Holocaust. I also attended Salute 2007, and I found this display of very bad taste.

Bamboo Scaffolding

Bamboo Scaffolding, originally uploaded by EUFO Views.

In Hong Kong, surprisingly large structures are constructed using Bamboo scaffolding. Bamboo is a naturally produced, renewable, and sustainable product. I wonder if this is a glimpse of future building products?

Pay for a Prayer

Pay for a Prayer, originally uploaded by inrepose.

inrepose (Flickr id) writes:

"Insert 20p and select one of a range of prayers. An interactive sculpture which gives you back the money after providing an interesting message. Warning not to be used by the holy or holey. The prayers were about relationships with various chocolate bar brands."

An interesting combination of machine, spirituality, and commerce.

Innocent Promotion

Innocent Promotion, originally uploaded by EUFO Views.

A three-way marketing promotion, linking Sainsbury (the supermarket chain), Innocent (the smoothie manufacturer), and Age Concern (a charity for the relief of poverty in the elderly).

This can be a useful device to create brand loyalty amongst consumers. For example, smoothie buyers tend to be young and affluent - just the demographic that Sainsbury needs to attract as a company.

The young also tend to give more to charity, so a link to a widely known charity is a positive affiliation. 'Fuel poverty' (where fuel costs absorb more than 10% of houshold income) is an issue that is increasing in profile in the UK that disproportionately affects the elderly. The little wooly hat on top of the bottle is just that - a marketing device to act as the cherry on the cake that consolidates the loyalty to the project by reminding us of outr grandmothers.

However, what happens of things go wrong? For example, if there were to be a scandal about Trustees expenses at Age Concern. Or if the smoothie ingredients were found to be 'impure'. The carefully constructed affiliation would collapse and sales may well plummet.

Perhaps affiliative marketing is a high risk strategy? If things go well, sales can be well in excess of what they otherwise would have been. If things don't go well, then the investment in the brand and its affiliations may not be recouped.

Book Crossing

Book Crossing, originally uploaded by EUFO Views.

The US idea of Book Crossing, whilst having some resonance in Europe, hasn't really crossed cultures.

In the US, people read in coffee houses. In Europe, they converse. Equally, we might question the purpose of a book. If reading a book is an act of consumption (possibly more so in the US), then a book becomes disposable. If the book is an investment (possibly more so in Europe), then a book is bought to retain.

This indicates that a cultural nuance in one area (the US) may not be resdily replicated in another (Europe). Is it surprising that this book exchange in Starbucks Luzern is empty?

The Dollar Wobbles

Sometimes the future catches up with the present faster than we originally had anticipated. A couple of years ago we had suggested that a time would come when the US Federal Reserve would be in bit of a bind, as domestic pressures were for interest rates to move downwards, but external pressures would be for interest rates to move upwards. In our original thinking, we foresaw this happening in the time frame of about 2009 to 2011, and we viewed it as part of a much larger and much longer term realignment of the world economy.

An interesting article in the Wall Street Journal caught my attention this week (see article) as it suggested that the conundrum to be faced by the Fed had, actually, happened a couple of years earlier than we had anticipated. This position was supported by The Economist, which has a nice little graphic that captures the situation (see article).

We are starting to live in interesting times! It was more than coincidental that the sell-off last week was caused by a minor official in the Chinese Government thinking aloud about the diversification of the currency reserves away from a depreciating currency (i.e. the US Dollar). In this area, we have two key milestones. The first is the composition of the East Asian currency reserves. The second is the destination of the Petrocurrency surpluses. In recent months, both have been away from the US Dollar, which has created the bind that the US Fed faces.

It could be that other OECD members might act in concert to support the US Dollar, by why should they? Open market operations to support the US Dollar would effectively export inflation into the Euro and Sterling zones. It would help the US if the Sterling and Euro nominal interest rates were to fall faster than the fall in the Dollar interest rates, but monetary conditions in Europe do not warrant such a move.

From a longer perspective, we can now visibly see the wealth and influence of the US flowing out of the country and into China, Japan, South Korea, Russia, and the EU. Every time a US citizen fills their car with petrol, money and influence flows out of the US. And yet, such is the disconnect that the US voters have not seen this linkage. Mere rhetoric will not restore influence to the US. It will take actions such as the conservation of energy and the restoration of production over consumption to restore the US to its position of primacy.

As we look at the candidates to be the next US President, we cannot but help thinking that the mediocrity of the Clinton years and the disaster of the Bush years are not likely to be turned around by the next incumbent. For this reason we are still bearish about the US, and we wonder if the US Dollar might have a long way further to fall.

Would Suffolk Benefit From Snoasis?

A Meeting Organised By EUFO

The Ipswich Institute
7th November 2007

Speakers:

GODFREY SPANNER, Onslow Suffolk Limited

JOHN WILLIAMS, Snoasis Community Alliance

Plans are currently going through the public planning process to construct a large winter sports complex at Great Blakenham in Suffolk. The proposals have met with resistance from local residents, who feel that the development, if it goes ahead, could have a severe detrimental effect upon their lifestyles. Equally, the prospect of the development, with the thousands of jobs that it would create, is one that is welcomed by a number of groups within Suffolk.

The question of Snoasis is of interest at a broader level, as it provides a clear example of the difficulties in balancing the broad benefits to the community that are to be gained from development and progress, whilst acknowledging that the external costs of the development will weigh very heavily on the narrower section of society affected by that development. This process is further hampered by dealing with the prospect of events yet to happen in an uncertain future, which brings into question the way in which we, as a community, deal with risk in our public affairs. We do not have any simple answers to these questions, but I feel that we have made a start in understanding them.

We deliberately avoided taking a sample of opinions at the meeting because we felt that would detract from our aims. We wanted to provide an evening where the issues could be aired, both for and against Snoasis, with the intention of leaving it to the audience to make up their own minds after further reflection. On the whole, I think that we achieved this objective. For my part, it certainly helped me to clarify my thoughts on the issue.

The meeting captured the imagination of the general public, and was considerably over-subscribed. It attracted the attention of the local press both before the meeting (see article) and after the meeting (see article). we apologise to all of those who widshed to attend, but who we were unable to accommodate. I hope that our meeting report can help to provide a bit of illumination on the subject.

READ the full report.

The Family Of The Future

One of the news items that caught our attention this week was a BBC series on the family of the future (out to about 2050). The series consisted of a number of short pieces that are collected about a central web page (see page). The pieces are evidentially based upon an attitudinal survey conducted for the BBC by ICM (see survey), and the TV pieces highlight some of the more interesting findings in the survey. A more interesting summary page is on the BBC web site (see page).

Some of the points that have stayed with me are that there are just over 17 million families in the UK. 71% of these are headed by a married couple (is marriage failing as an institution?) and the average family has 1.8 children – below the demographic replacement rate, but not far below. It amused me to see that families without children under 10 sleep for 38% of their time, and those with children under 10 sleep for 36% of their time. I remember well the sleep deprivation associated with small children!

Another aspect of the survey that caught my interest was the comparison of a UK family with ones from Egypt, Sierra Leone, India and Indonesia. The video on family life in China (see video) is particularly timely in reminding us of how easy family life is in Europe when compared with other parts of the world.

Perhaps the most thought provoking piece is the speculative piece on the family of 2050 (see piece). It begs the question of what sort of architecture the family might have (More same sex families? More revolving parentage?), how the family – as an institution – will interact with technology (Virtual families? Teleconferencing family meals?), and how the family will interact with the state (More state intervention in family life? Less privacy within the family?).

All in all, this proved to be a fascinating glimpse into one of the core elements of society. It is unlikely that the family will cease to exist as an institution by 2050. However, as it reflects the world around it, family life in 2050 might be very different to how it is today.

Europe Revisited

In an earlier post (see post), we asked if the European experiment was irreversible. Ever since the French and Dutch public voted against their national ratification of the European Constitution in 2005, it has been taken for granted by the Eurosceptics (the Atlanticists in our previous post) that no further integration would occur. Even at the time, we thought this to be a rather simplistic view. This has proved to be the case.

The original document was ratified by sixteen member states, including Spain who tested the document by Referenda. After the rejection of the document by the Dutch and French publics, seven further member states, including the UK, decided not to continue with the ratification process. Upon joining the EU in 2007, Bulgaria and Romania signed up to the principles of the Constitution as a condition of their membership. This resulted in an unhappy situation where the majority of member states wished to reform the way in which the EU operates, but were unable to affect that reform at a national level.

The answer to this quandary was to use the device of a Reform Treaty. The Lisbon Treaty (as it will come to be known) seeks to reform the existing treaty arrangements between member states rather than to create new arrangements (see article). Although the Atlanticists cry ‘foul’, it is unlikely that any action can effectively be taken to derail this arrangement (see article), despite mounting pressure to halt the process (see article).

This is significant for a number of reasons. First, it demonstrates that there is a momentum behind European integration. This point needs to be remembered when considering the case for further enlargement of the EU (in particular in the case of Turkey). The momentum of the project will continue to drive it forward, which brings us to the second point. If the EU is evolving and changing, any forecasts about its development over the next twenty years need to be hedged with a great deal of uncertainty. The EU may well not have an ageing population – through enlargement. It may not turn out to have a sclerotic economy – through enlargement. These issues depend upon how the EU evolves in this time frame.

The EU is a supra-national response to the supra-national issues of climate change and globalisation. As these issues progress in the years to come, the justification for the EU will also grow stronger. The challenge to be faced by the EU will be to develop as a supra-national institution whilst allowing the character of local communities to remain. The evidence so far suggests that this challenge is being met more than adequately.

Indeed, the future challenge might be for national governments to demonstrate their continued relevance.

Second Life Again

In an earlier post (see note), we reported on the use of the virtual world in Second Life by paedophiles. A story on Sky News (yes, I know that it's Murdoch - see story) caught our attention as it shows Linden Labs co-operating with the authorities on both sides of the Atlantic and closing down the offending areas of Second Life.

The point that I find most interesting is that the US principle of the First Amendment (the right to freedom of speech to some, the pornographers charter to others) has been watered down by the impact of legal pressure from jurisdictions outside of the US.

We see this as an example of how Globalisation as a rule set is homogenising the way we all live our lives.

The Sick Old Man Of Europe Gets Well Again

Ever since joining NATO in 1952, Turkey has been the southern cornerstone of the Atlantic alliance. First, as a bulwark against Soviet expansion in the Black sea, and then as a beacon of what a Westernised Islamic democracy could be, Turkey has been held in special regard for a number of decades. This settled position is now starting to change.

Relations between Turkey and the EU have blown hot and cold over the years. Many in the EU see the importance of Turkey in terms of geopolitics and many look enviously at the demographics of the country. Turkey, in some quarters within the EU, is seen as a potential bulwark against the spread of a fundamentalist variety of Islam and as a potential source of millions of young workers. However, not everyone in the EU sees it in this way. The potential influx of millions of Turkish workers into the EU is seen by many as a threat rather than an opportunity, whilst one EU state – Cyprus – has declared that it will veto Turkish membership to the EU.

While the EU blows hot and cold over Turkish membership, the Turks have always been able to rely on the support of the US. This element is changing. Relations between the US and Turkey have cooled noticeably in recent weeks. In an interesting article in The Economist (see article), the recent Congressional vote on the Armenian massacres in 1915 is seen as a backwards step. The Turks now feel that, as they do not have the goodwill of the US, they need not be so restrained in using the military option to deal with Kurdish terrorism originating in northern Iraq.

In an interesting paper for the Centre for European Reform (see paper), Charles Grant considers the options for Turkey. Spurned by the EU, alienated by the US, Turkey is too small a nation to be able to function without friends. It would be natural for the Turks to be pushed into the arms of the Russians, whose diplomacy is less likely to alienate the Turks than that of the EU and the US. This is a theme that The Economist dealt with a few weeks back (see article), which suggests that a new alignment between Russia, Turkey, and Iran is developing.

This is in accordance with much of our research. Our studies suggest that, if Turkey does not join the EU, then further geographical expansion of the EU eastwards would be very difficult to achieve and the EU would be overly dependent upon Russian energy for the next fifteen years or so. Equally, our studies suggest that the solution to the American impasse in Iraq lies in Tehran. If the US does not find an accommodation with Iran, then extrication from Iraq will be fraught with unfortunate consequences.

For those interested in the geopolitics of the near future, if Turkey does realign away from the EU and the US and towards Russia and Iran, then we shall see a significant shift in the global balance of power. This is possibly more evidence of the relative decline of the US and the resurgence of Russia.

Perhaps we are getting closer to oil at $200 a barrel?

Would Better Transport Links To London Add To The Suffolk Brain Drain?

A Meeting Organised By EUFO

The Ipswich Institute
10th October 2007


Speakers:

STEPHEN AGUILAR-MILLAN, European Futures Observatory

Recently, the County Council hosted a forum on transport within Suffolk in the Twenty-First Century (see link). In this discussion, it was presumed that improved transport links with London would assist the development of the local economy in Suffolk. However, this may not necessarily be the case. Improved transport links make it easier for talent to flow out of the county as well as for opportunities to flow into the county. The purpose of the discussion was to examine some of these contentions.

The current position is that talent flows out of Suffolk. The more talented youngsters tend to leave the county - mainly for higher education and better career prospects – never to return. As a relatively under-developed economy, Suffolk lacks the inherent career opportunities to attract bright graduates into the county. It is argued by some, such as the Suffolk Development Agency, that improved transport links to London would assist the commercial development of Suffolk, thus improving the career paths within the Suffolk economy. As a starting point for the discussion, we assumed that, by magic, those improved transport links would be made overnight. In which case, would that be enough to stem the brain drain?

The statistics about business location proved to be interesting. When asked why they located in Suffolk, 46.5% of the respondents to the EUFO survey stated that it was because Suffolk is a nice place in which to live. This suggests to us that about half of the small business community is located in Suffolk precisely because it is relatively unspoilt and relatively under-developed. If Suffolk were to be made more accessible through better transport links to London, one wonders whether or not this cultural and environmental advantage would be sacrificed. Would Ipswich turn into a northern Croydon? I am afraid that this is a question that we were unable to answer. However, we could express our hopes and our fears for the future.

READ the full report.

Wanted - 9 New Planets

The recent postal disruption in the UK has served to change our habits – in the short term at least. One of the consequences of the postal disruption is that magazine subscriptions have not been delivered at their usual time. For me, whilst waiting for newer editions, I have been reading the editions that I have more fully. And what a world it has opened up for me!

In an obscure part of The Spectator of two weeks ago (the last issue to make it to me), is an article about soybeans (See Article). Actually, the article is about Biofuels, but the part about soybeans caught my attention. Apparently, if we wanted to produce enough ethanol to meet 10% of all present global energy demands, we would have to double the world’s farmland and plant it with soybeans. If we were to rely on soybeans to meet our present energy demands, we would need to find another 9 planets, as well as this one, and devote them to the production of soybeans.

This article points to three things. First, it demonstrates just how reliant we are upon oil-based fuels for transportation. Even if demand for transportation fuels were to remain constant, we would be unable to replace oil-based fuel for bio-fuels because there isn’t enough land on the planet to grow fuel (even if there would be enough water, sunlight, and so on). Of course, demand isn’t likely to remain static in the foreseeable future. The growth of China and India are already adding to the pace at which the demand for fossil fuels is growing.

This leads to our second point, which is that the article highlights the case for energy conservation. Conservation would allow the increasing demand for fuel in the developing economies to be offset – ideally, perfectly offset – by a reduced demand in the developed economies. However, this presumes that Europeans and Americans would get out of their cars and onto public transport to allow Chinese and Indians to use their cars. It is unlikely that such a switch will be seen without a major political effort to make it happen.

And that leads us to our third point – that the political leadership to make this happen doesn’t exist in Europe and North America. One way of enforcing such a change of behaviour would be to implement a Pigovian Tax on fossil fuels. The political will is not there to do so because we are so reliant upon fossil fuels.

This means that when politicians in Europe and North America make bold statements about the future use of bio-fuels, we can discount the statements as wishful thinking. For example, President Bush assured us in 2006 that the US will replace Middle East oil imports by biofuels by 75% by 2025. Even if there is enough land and enough water in the US to do this, one has to be sceptical about such a claim because we do not live in a world where everything else is equal. If there isn’t enough land and water in the US to deliver this promise, then is President Bush simply suggesting that the US exchanges its Middle East oil dependency with, say, a Brazilian corn dependency?

It seems that, in more ways than one, we are simply making a fragile system even more fragile.

Are We Ready For This?

I plead guilty to watching rubbish on You Tube.

However every now and then an interesting idea emerges. Have a look at this (Link to You Tube) - although you may find it disturbing.I'm not going to argue whether or not this is a correct view - it's fairly extreme. However, it does reflect a widely held sentiment outside of the US, even if that view is exaggerated.

For this reason, US leadership in the world is rather badly damaged. In it's place, we feel that Europe is now providing the diplomatic leadership, and China is on the verge of providing the commercial leadership in the world.

This may well become a dominant force in the near future. More so if the US is unable to find an alternative to Middle Eastern oil and petro-dollar financing.

The Return Of The Millenarians

The year 2000 came and went without the end of the world. All of the forecasts of impending global catastrophe, even those of Y2K computer meltdown, proved to be nothing more than unduly pessimistic speculation. As it happens, history has a number of examples of Millenarian movements around the Years 500 AD, 1000 AD, and 1500 AD. If one thing were predictable, it would be that a group of Millenarians would predict the end of the world in the Year 2000.

And so, in the Year 2007, we would have thought that we could lay the Millenarians to rest for another 493 years. We will need to think again. Apparently, there is an ‘ancient Mayan calendar’ that predicts that the world will end on 21st December 2012. This prediction has been taken up by the Millenarians and given an air of respectability. For example, in ‘The Mystery Of 2012’ (see book), a collection of researchers examine the basis of the prediction. It has also spawned a large collection of videos on You Tube (see example) that are, frankly, of little value at all.

In ‘The Chaos Point’, Ervin Laszlo examined how the 2012 prophecy might come about. If it were to be true, what would be the sequence of events that would lead up to it (see entry)? The analysis examined the theme of the potential impact of the Singularity, if that were to occur. It was this analysis that caught my attention as a futurist.

If we lay aside the more extreme of the Millenarian views, ought we not to contemplate the possibility of a major disruptive force in the world? That disruption may not come in 2012. It may be a single event that has already happened (e.g. 9/11). It may be a process that has, by and large, already happened (e.g. the creation of the Internet). Or it may be a process that we are currently experiencing (e.g. the decline of the US). It is at this point that the Millenarians may have a case.

It is comfortable to think that the future will simply be an extension of the past. However, if this is not true today, why should it be true in the future?

Child Abuse In Second Life

This is an interesting variation on a theme. A report from the BBC (see report) tells us that the German authorities are investigating Second Life (Linden Labs) over an alleged trade in under age sex on Second Life. Under European law, the directors of Linden Labs would be responsible for the conveyance of illegal pornographic images, even if they were unaware that these images were being traded from their servers. Looking ahead, if it proves to be the case that Second Life is becoming a harbour of criminality, I wonder how long it will be before it is closed?

Shocking Truths - The 21st Century Slave Trade

A Meeting Organised By The RSA

The RSA, London, UK
27th September 2007

Speakers:

EMMA THOMPSON

HELEN BAMBER, The Helen Bamber Foundation

My attraction to this meeting was the content. As part of our project on the Globalisation of Crime, I felt that this would be an interesting source of information about the flow of people, both legal and illegal, for the purposes of an illicit objective – the UK sex trade. I did have reservations about the involvement of celebrity (Emma Thompson has won two Oscars, and is quite well known on the UK) because I feared that it might overshadow the purpose of the meeting. However, on the other hand, it appears to me that many of my fellow attendees were there to see Emma Thompson, so the inclusion of celebrity, on this occasion, did broaden the conversation to a wider audience.

On the whole, I found the talk to very useful and illuminating. Although there were times when Emma Thompson’s celebrity played to the audience, I don’t feel that it detracted too much from the issues. The key point was that the talk persuaded me to go over to Trafalgar Square to have a look at the installation. If that was the purpose of the talk, then it achieved that purpose.

READ the full report.

Dates For Year 10 Time Bandits

12th September- The Futuring Quiz by Peter Bishop
19th September- UK to build zero carbon homes by 2016
26th September- Two-Parent Families: Adoptive vs. Natural
3rd October- Designing for the “Other 90 Percent”
10th October- Sub prime Lenders Target Women Unfairly
17th October- Men Not at Work

HALF TERM

7th November- Promoting Parenthood in Japan
14th November- Survival of the cutest
21st November-My Super Sweet Sixteen
28th November- Defeating Terrorism: Is it possible? Is it probable?
5th December- Dislocation and the Global Economy

Transformative Power In Action

It has been an interesting week for the students of geopolitics. Earlier in the week, the European courts upheld a previous ruling by the European Commission that Microsoft had been engaged in anti-competitive practices within the EU (see report in The Times). Microsoft, after paying a fine of just under half a billion Euros, will have to share some of its source code with other software developers, and will have to unbundle some of its products that are sold in the EU.

This is a clear example of the ‘Transformative Power’ of the EU. The thinking behind the use of Transformative power is quite simple. The EU is the largest trading area in the world, and those corporations who wish to trade in that area have to conform to the trading regulations of the EU. If foreign companies (e.g. Microsoft) wish to trade in the EU, then they have to become ‘European-like’ in their modus operandi. This has two interesting implications for the future.

First, as Mark Leonard pointed out in ‘Why Europe Will Run The Twenty-First Century’ (see our review), this will mean that, increasingly, global corporations will have to adopt the attributes of European corporations if they wish to access European markets. Although the Global Corporations may be incorporated and listed outside of Europe, they will have to become ‘European’ in what they do. They will have to transform themselves into European companies if they wish to operate within the EU.

This is not too much of a problem if European practices area broadly similar to the practices elsewhere. Sadly, they are not. There is a major difference in approach between the commercial practices in the US and in the EU. The EU operates on the basis of the Precautionary Principle (a good must be shown to be safe before it can be sold), whilst the US operates on what The Economist calls a ‘Cost Benefit Approach’ (if a good brings a net benefit to the US, irrespective of the collateral harm it may cause, then it may be sold in the US). In the US, the presumption of innocence lies with the companies, in the EU it doesn’t.

This theme is taken further by The Economist to develop the second implication (see article). Just as Russia has been using its energy policy as an instrument of foreign policy, there are also grounds to suggest that the EU has been using its trade policy as an instrument of a wider foreign policy agenda. It is interesting that the EU Trade Commissioner is Peter Mandelson, a British nominee who might be described as a hard core Federalist who is not at all sympathetic towards the US, and who is not uncomfortable in situations of conflict with the US.

The putative struggle between the EU and the US in setting the regulatory agenda for world trade is important because the trading regulations form a key piece of the architecture of globalisation. If the EU prevails, as the article in The Economist suggests, then Europe will be running the 21st Century. It will set the rules which the rest of the world will follow in global trade. In doing so, it will control a vital piece of the architecture of globalisation.

In the years to come, we shall look for further examples of US companies adopting a European modus operandi. If examples come readily to hand, then the EU is prevailing. If not, then perhaps Europe will not be running the 21st Century.

World Future 2007

This year for the World Futurists conference we went to Minneapolis. As this was my first conference I was a little nervous but really I didn't know what to expect. When I got to the Hilton it was a little overwhelming as everything was so big. Also I had never seen escalators in a hotel so I thought that was really cool.

There was some great material that was given and I learnt loads about what a “Futurist” means, like you have to know loads about everything even if you don’t do much work on it. Also how you need an opinion on most things and to be able to back that opinion up with evidence.

I started off with a pre conference course of Futuring: An Introduction to the Study of the Future by Peter Bishop. I found this really useful as there were some points where I had to speak and talk about why I thought something. Also something that is quite good to learn is that 9 out of 10 times a forecast is wrong.

In a way the conference was quite a blur as it went so quickly but one talk that stuck in my mind was Future Flow by Derek Woodgate. It really made me think about what most people must think of the future and how it is always bleak. It made me think that if many people take a step back and are less pessimistic then the world can become a much happier place. Especially, I think, in schools.

My dad did a few presentations so I went and helped him for these (being his slide girl) I think they went really well but I wasn’t always concentrating a lot as I was working. Overall I think the conference went really well and I am looking forward to next year in Washington.

Should Ipswich Develop Its Infrastructure Before It Builds More Houses?

A Meeting Organised By EUFO

The Ipswich Institute
19th September 2007


Speakers:

CLLR RICHARD ATKINS, Ipswich Borough Council

BARBARA ROBINSON, Community Campaigner

This meeting was organised as part of the RSA Coffee House Challenge initiative. The aim of the programme is to empower groups of people at a local level to meet to discuss matters of significance to them. It is part of a movement to reinvigorate public life in the UK at the grass roots level. The issues of development and regeneration in Ipswich have been at the heart of much activity of the Borough Council in recent years.

The central core of Ipswich is being modernised and given a fresh life, whilst the construction of large housing developments within the town have been a feature with us for some years. This development has not been without its problems. Traffic congestion, pollution, and the degradation of the built environment in the town centre have also accompanied the development in the town. This has led some members of the public to question whether the redevelopment of the town centre ought to be paused to allow for the accompanying infrastructure to catch up. This was the heart of the question being asked at the meeting.

READ the full report.

Transport For the 21st Century

For those following this subject (see original post), the Suffolk Chamber of Commerce - one of the organisers of the seminar have posted some Podcasts of the event onto their web site (see link).

Plate Tectonics!

Continents change as the tectonic plates on which they rest shift around. The results are earthquakes, volcanic eruptions, and the creation of mountian ranges. The global economy is a bit like this.

As the locus of economic and political power changes its centre of gravity, so there will be economic earthquakes, financial volcanoes will blow, and new political mountain ranges will form.

In practical terms, whilst there may be the occasional bout of turbulence in the financial markets, most of the effects will be slow, gradual, and prolonged. For example, it could be argued that the current value of the dollar contains a 'hyper-puissance' premium that is draining away from the US. The more that the ineffectiveness of US foreign policy is demonstrated in Iraq, the greater will be the reductions in that premium.

There is an interesting piece in The Economist this week (see article) that examines the effect of a constantly depreciating dollar. If our view is correct, then the US dollar is over-valued at the moment, and further depreciations ought to be expected in the near future.

Is It Bear Season Yet?

While the focus of the world is upon the woes of the credit crunch, other significant stories are slipping by under the radar. One of these reported in The Economist caught our attention – a discussion of the cooling of relations between Europe and Russia (see article). It would appear that the Russian tactic of asserting itself through bilateral disputes has now reached such a critical mass that Russia risks provoking a reaction from a concerted Europe. In response to this, there is evidence reported in The Times that Russia might be a little more conciliatory if the nations of the EU were to offer a conciliatory approach (see article).

For those with an interest in future geopolitics, these two stories have certain significance. On the part of the EU, it would be unusual for the nations of the EU to act together jointly on a single policy. We call the two views within the EU the Atlanticist (to follow the lead of the US, to act as a weak confederation in matters of foreign policy) and the Federalist (to act jointly in matters of foreign policy, not necessarily following the lead of the US).

If it is true that a new consensus is growing between France and Germany towards Russia that leans towards the Federalist view of the world, then that might imply the pendulum has started to swing away from the Atlanticist view of further enlargement of the EU. In practical terms, this would be a good piece of news for Turkey, which has significance in Europe as a Black Sea bulwark against a resurgent Russia, and which has a geopolitical significance in terms of the Federalist agenda, but not necessarily in terms of the Atlanticist agenda. It would also suggest that relations between Europe and the US, which have been thawing in recent months, might start to grow cooler again.

It also highlights an interesting conundrum for the Russian Government. If the EU does distance itself from Washington, as President Putin called for, then it is quite likely that a more assertive EU in Federalist colours will emerge. This may not be to the advantage of Russia, as The Economist article suggests. After all, the EU does have two vetoes on the UN Security Council in the hands of the UK and France, which may be used to counter Russian interests in the Balkans. If, on the other hand Russia wants a more compliant EU, then the result may be a more Atlanticist perspective on the world, where the US offers a lead in European affairs.

We shall continue to monitor the developments in this relationship because it could be quite significant in the near future. Much of US policy in the Middle East presumes a disengaged Russia. However, with a proximate border with Iran across the Caspian Sea, it is difficult to see how US policy towards Iran could escape comment from Moscow. So far, Russian diplomacy has not been a feature in the war in Iraq. We wonder if this might be a feature in the near future.

Flying Cars (Again)

The BBC recently carried a story that caught my attention (see story). It was about Dr Paul Moller, a Californian inventor, who claims to have a prototype flying car that will enter production in 2010. This captured my attention because I am cursed, like most futurists, by the vision of the flying car. The flying car is often touted as an example of ‘bad’ futures gone wrong. A predicted future event that didn’t happen. It would be ironic if Dr Moller was right, in which case the predictions would simply seem ahead of their time.

There are, however, grounds to suspect that we might not see Flying Cars by 2010. A Google search quickly unearthed the case against Flying Cars. An article on the Downside Web Site (see article) calls into question the veracity of the Flying Car story. Even if the Downside story is right, and we do not see Flying Cars by 2010, it would be interesting to consider what might happen if it were to be true. It would be interesting to think about a truly disruptive technology in the field of transportation.

I had hoped that this opportunity had come my way. I recently attended a half day conference on the future of transportation in Suffolk (see meeting notes). I was keen to get to grips with concepts such as the impact of Peak Oil on commuting by car, the possible impacts of disruptive technologies, and how work patterns might be reorganised in an effort to reduce carbon footprints. In doing so, I had made a key mistake.

My fellows at the conference were not futurists. They were professionals in other areas of endeavour who have an interest in the future. The conference served to remind me of two factors. First, unless we encourage people to think differently, they will continue to think in straight lines. Many at the conference thought in terms of a linear link between the past, present, and future. In which case, the key to understanding the future is to understand the past and present. The possibility that the future might be different from the past was a concept that didn’t readily settle with most participants.

Second, whilst most of the conference goers were experts in their areas, very few had managed to join the connections between the various disciplines. One of the key attributes of many futurists is their ability to piece together a connection across disciplines. We look for weak signals in a variety of areas to provide evidence for, or against, a given hypothesis about the future. Sometimes, I forget that not everyone does this, which closes the circle nicely.

When my fellow futurists rail against the Flying Cars, perhaps we ought to have a bit more patience and forbearance with others. Not all have embarked upon the journey into the future, and, if they have, they might not have travelled as far as us. After all, the future is a frightening place where anything can happen.

Transport For the 21st Century

A Conference Organised By Suffolk County Council

Trinity Park, Ipswich, UK
7th September 2007

Participants:

CLLR GUY McGREGOR, Suffolk County Council (Chair)

DAVID FROST, British Chamber of Commerce

ROB MAIDMENT, Suffolk Development Agency

ANDY CAMERON, WSP Consultants

SAMIRA AHMED, B Sky B

ROGER TURKINGTON, Suffolk ACRE

COLIN IRLAM, Suffolk County Council

I was originally attracted to this meeting by a number of factors. To begin with, the focus of the conference was local to where I live, and the issue of transport is one that will affect me – personally - for some time to come. I was also interested in observing the state of play with regards to Foresight in the Public Sector. One could quite well argue that the UK is one of the leading exponents of Public Sector Foresight. However, there is a view that this is confined to the national level and has not really permeated down to the level of Local Government in the UK. I wanted to test this hypothesis. Finally, our research indicates that one of the major trends within society is the shift of allegiance away from the national and towards the community. I wanted to gain a feel for the community in which I happen to live and work.

The Conference was a first step in the engagement with the future. It was a good first step, and we ought not to expect too much from that first step. It will be interesting to see what comes from the Conference. If it is a stand alone event, then it would take on the characteristics of an opportunity missed. If, however, it was to represent the start of a process by which there is a discussion about what futures are possible and what futures are desired, then we shall all look back at the afternoon as quite a memorable event.

READ the full report.

Thinking About The Future

by Andy Hines & Peter Bishop (Eds.)

ISBN 0-9789317-0-X

The intention of the book is to be practical. It describes itself as setting out guidelines for strategic foresight. I rather see it as a navigators guide into the future. The book identifies 115 guidelines for undertaking strategic foresight activity, which are grouped into six sequential steps – Framing, Scanning, Forecasting, Visioning, Planning, and Acting. This framework has been derived from a wide collaboration between 36 leading foresight practitioners and academics, which was also cross-referenced and synthesised by the Association of Professional Futurists’ Professional Development team. The contributing team was global in its origins and cutting-edge in its approach.

On the whole, I enjoyed the book. I believe that it will provide an important landmark in the literature of strategic foresight. It may not become a business best seller because of the limited audience to which it will appeal. However, I would thoroughly recommend it to those engaged in the area of strategic foresight and strategic planning.

READ the full review

BUY from Amazon US

When The Music Stops .....

Following up our story "Crisis, What Crisis?" (see link), this story in The Times caught our attention (see article). It would seem that Barclays is one of the banks that have been left holding the paper when the music stopped.

The Oiks 1 HSBC 0

An interesting example of the exercise of people power has come to light over the past couple of weeks. It concerns a disagreement between the banking giant HSBC and a number of their student and graduate customers. For a number of years, as an inducement for students to open an account with the bank, it has offered a facility whereby overdrafts run up whilst at college – up to a limit of about £1,500 to £2,000 – are left as interest free loans for a short period after graduation – generally no longer than two years.

This is part of a tactic to attract the custom of graduates, who, over the course of a lifetime, are unlikely to change banks and who are likely to generate a stream of profitable business for the bank (checking accounts, mortgages, insurance, pensions, savings, investments, wills & trusts, and so on). It is a common marketing tactic amongst the UK retail banks.

In July, the HSBC announced that it was to withdraw the facility with immediate effect, even for existing customers who had opened accounts on the understanding that there would be a facility after graduation, and who had relied upon that inducement in placing their business with the HSBC to begin with. The story came to our attention through a report in the Guardian (read report).

The student body, galvanised by the National Union of Students, and using Facebook as an organising vehicle, planned a campaign to protest against this unilateral change in their banking arrangements. The idea was to use the smart mob to clog up the banking facilities of the HSBC in selected cities across the UK. The protest would be non-violent, and would consist of several hundred students all turning up at a selected branch, at the same time, and querying the notice of charges sent to them as customers. It would generate a fair deal of negative publicity – particularly as the HSBC brands itself in the UK as ‘the listening bank’.

In the face of this, according to the Guardian (read report) the HSBC has relented and has scrapped the plans. The NUS are claiming this as a major victory of the small guy against the corporate world (see link). This may be a bit of an exaggeration, but the tenor of the claim is in the right direction.

In the UK, for many years, the retail banks have treated their customers with complete contempt. They realise that, in modern society, not to have a bank account is to become a non-person, who cannot be paid a salary and who cannot receive state benefits. The banks are in an oligopolistic position, and it is often alleged that they abuse this market power to the detriment of their customers. Indeed, there are now so many cases before the courts where customers are suing their banks for alleged unfair and illegal bank charges, that the judiciary are complaining about how the volume of cases is starting to paralyse the Small Claims Courts.

We see this as part of a longer trend – one that large corporations need to heed. The communications revolution and the internet have delivered a vehicle to activists to organise a campaign against companies. Turning this around, as a futurist, we now ask companies what they would do if 80% of their customers turned up to their outlets at the same time, on the same day, to complain about poor service or to return allegedly faulty goods. Or to call the Chairman’s office, or the company’s auditors, or the company’s bankers, and so on. The new technologies have given the customer a new voice.

I wonder how many organisations plan for this Wild Card.

Crisis, What Crisis?

Few could have failed to miss the stories in the Press about the turbulence in the financial markets over the past few weeks. The Financial Times has uploaded an interesting interactive graphic that charts the progress of the recent ‘Credit Crunch’ (see graphic). It is interesting to see how a problem in one geographical market spreads into others. What has been even more interesting has been the policy response of the monetary authorities across the world.

The joint response has been a policy of monetary loosening, depending upon the ability of the central banks to act. In the US, the response was to inject a bit of liquidity into the market, coupled with a reduction in the Discount Rate (think of that as the wholesale price of money traded between banks). In Japan, where the scope for interest rate reduction is much less, the Bank of Japan injected liquidity into the financial sector. This was also the response of the European Central Bank, where conditions are different to Japan. In Europe, the real economy needs monetary tightening (through higher rates), while the monetary economy, right now, needs a monetary loosening. The worst of the turbulence now seems to be over, and the Central Bankers are likely to be pleased with the way in which a potentially major problem has been dealt with.

In future terms, two questions dominate. Will the turbulence in the monetary economy bleed into the real economy? It is hard to assess this at the moment. If the turbulence has been contained, then there is an argument that the real economy is unlikely to be greatly affected. If, however, by October - when the true extent of the losses and the identities of the holders of the losses become known - further turbulence is encountered, then there is likely to be a greater chance of the real economy being affected by the turbulence in the financial markets. Further monetary loosening is likely to fuel, eventually, further asset bubbles – either in the stock markets or in the property markets.

One of the reasons why it is hard to see where the losses will fall is because of the opacity of the financial instruments being traded. We can all see the starting point – sub-prime lending to poor credit risks. These were then bundled into a further series of financial instruments. In doing so, it appears that the credit rating agencies rated the instruments according to the probity of the institution packaging the debt (usually good credit risks), and not according to the eventual borrowers (very bad credit risks). When the sub-prime market stuttered through rising defaults, nobody quite knew who was exposed to the market and by how much. This is where an element of panic set in. It is the modern corollary to the Victorian ‘run on a bank’.

This brings us on to the second question – can it happen again? It is reasonable to expect that it can, given the development of increasingly exotic financial instruments and the interconnected nature of modern financial markets. In this respect, financial turbulence is the consequence of globalisation – turbulence spreads much faster and much further afield nowadays. However, there is also a much deeper future issue buried in this question that is all to do with where the US stands in the world.

In an interesting article in The Business (see article), Bill Jamieson correctly points out that the lead agency in dealing with the recent turbulence has been the US Federal Reserve. However, one wonders how long that might continue. Financial turbulence is often the result of large scale changes in the world economy. An interesting example here is the Sterling Crisis of 1947-49, where the financial markets adjusted to Britain no longer being a world power. If we are in a period of relative US decline – possibly through the rise of China and India, then, at some point within the next five to ten years there may well be a significant run on the US Dollar analogous to that experienced by Britain in the 1940s, as the financial markets adjust from the one paradigm to another.

In this vision of the future, the market adjustment is likely to be substantially greater than the recent one. We need to remember that on 16th September 1992 (‘Black Wednesday’), the UK Treasury spent £27bn in reserves in three hours to fail to support the Pound in the ERM. It is possible to envisage a scenario where the Fed. simply does not have enough money – and the US enough friends in East Asia – to support the Dollar. In which case, recent events take on the nature of an inconvenience rather than a crisis.

I wonder how many global companies have priced that risk into their business models.

A Future Worth Building

I hadn’t intended to lead with this. I have now returned from the WFS Conference in Minneapolis. This was a great conference that managed to press many bells for me. The papers presented are starting to appear on-line (see Web Page), and are worth looking at if you have an interest in the future.

I gave three papers at the conference; all around the theme of US foreign policy to 2025 (the slides from the papers are on the WFS site). On this subject, it is very easy to become despondent and to flesh out some very dark futures in the years to 2025. Much of our work points to the relative decline of the US in the years to 2025, and many of the scenarios that we developed revolve around the question of how the US handles this relative decline.

As a corrective to the gloom and doom, we developed a scenario that starts with a happy ending for the US in 2025, and backcasts to now - to see what needs to happen in order to achieve this outcome. As with all of our scenarios, this is a story of the future. We used a fictional style because this is not a prediction; it is a possibility for the future. What are more important are the longer themes that are developed in the story.

For example, it is our belief that the force assessment for Iraq is woefully understated and that the US has a serious problem in service manpower, without reintroducing the draft. If so, then the only credible solution to this problem is to widen the responsibility for providing security to include a broader coalition of nations that include the nascent regional power of Iran. The fictional details hang around this theme – to engage Iran or not to engage Iran.

We offered this scenario (which is about 6,000 words long) for the Conference Volume, which would have acted as a nice complement to the papers that we gave. Sadly, the paper didn’t make the cut. However, in talking about it to those who attended the sessions, there were a good number of people who asked for a copy of the scenario and felt that it would be suitable for a broader audience. We have now posted a copy on our web site (link to paper).

The scenario tells the story of the winner of the 2008 US Presidential race – Eric Blair. Eric Blair is known to most as George Orwell, someone who I have admired for many years. The situation of Eric Blair is based upon that of Winston Churchill in the 1930s (he called them his ‘Wilderness Years’). There is an irony here in that George Bush has compared himself to Churchill – a comparison that many in the UK find deeply offensive, and to which we allude in the story.

We also cast Eric Blair taking over from George Bush in the same light as Churchill taking over from Chamberlain in 1940. The US in 2008 might not be facing its ‘darkest hour’, but we feel that the situation is not very encouraging and requires a great deal of adept handling – a skill that has eluded quite a number of previous Presidencies. If only another FDR would step forward …

I hope that you enjoy the scenario. Please feel free to comment on it. It is only by being told why we are wrong that we can move forward.

Fairtrade And The Future

Two strands of the future came together for me this week. On Monday, the BBC business programme ‘Working Lunch’ carried a feature on Divine Chocolate (see news clip). Divine Chocolate is an interesting company. It is a chocolate manufacturer, but with a strong corporate ethos of fairtrade. Not only does it purchase the cocoa from Ghana for a price above the market rate, it also has helped to develop the cocoa producers into a collective body, and gives 45% of its profits to social projects within the producing villages. On the company web site (see site), it states that just under half of the company has been given to the producers.

On Tuesday, I attended a session in London on the ‘Future of Civil Society in the UK and Ireland’, co-hosted by the NCVO (see site) and Carnegie UK (see site), which provided the second strand of the future. It was interesting to meet and listen to a number of people - who are not based in mainstream corporate or governmental bodies – talk about their hopes and aspirations for the future of their work. I will put a fuller review of the day on our Blog later this year, but for now, it is enough to say that the day was quite stimulating in a number of areas. The two futures strands came together in the form of describing the Social Enterprise.

As we move away from Hierarchy World (the economics of scarcity) and towards Network World (the economics of abundance), an interesting paradox is emerging. If you are in the Network World, you create more value for your company by giving it away. Value is enhanced through sharing and co-operation. This is why I always feel uneasy about those Information Age companies who are reluctant to share and co-operate. A good part of the value in Divine Chocolate is because it has given away part of itself.

Why should that be? The chocolate sold by Divine is not a commodity. It is an experience. Not only do the customers buy the chocolate, they also buy the story behind the chocolate. It makes them feel good to eat chocolate and to know that they are contributing to global development in doing so. The experience of Divine Chocolate is an action firmly rooted in the Dream Society, where we no longer buy goods but the stories behind those goods. The act of philanthropy has created the added value within Divine. This is the upside to living in an age of spin.

Does the social enterprise need new forms of corporate ownership? According to the press release issued by Divine on the declaration of the first Divine Dividend (see release), the existing corporate structures work just fine. What is needed more is a willingness to share and co-operate. If, in the West, we do not share and co-operate more, what sort of future can we expect for ourselves?