The European Company

I was recently asked about the structure of the oil company Shell. For those who don't know, Shell is a company that is incorporated in the UK, which has its primary listing in the UK, but which has its head office in the Netherlands. It is increasingly difficult to think of a European company as a 'British' company or a 'Dutch' company. It is increasingly the case that we are thinking in terms of a 'European' company.

This is not entirely unexpected. The primary source of company law in Europe, irrespective of the place of incorporation, derives from the EU. Nations interpret the EU directives to suit local conditions - which is why it is much more dfficult to form a company in Belgium than the UK - and may subject the companies to a local Corporation Tax regime. However, the main trend is towards a corporate harmonisation across Europe.

Another example of this trend came to light this week. Barclays, a UK bank, announced that they were in talks to take over ABN Amro, a Dutch bank. Like Shell, the resulting company would be incorporated in the UK, with a primary listing on the London Stock Exchange, but with its headquarters in Amsterdam and a secondary listing on Euronext. This is a clever move, as it would give the bank a presence in the Eurozone without leaving the Sterling zone. (See article).

In many ways, this provides further evidence that the European Project is becoming less and less reversible. As we are now thinking in terms of European companies, national distinctions within Europe becime less relevant. I suspect that the next contentious issue will be the European taxation of European companies - possibly in the name of the harmonisation of EU-wide corporate tax rates. There is something like that already in place for VAT (an EU-wide Sales Tax), all it needs is to be extended to EU-wide profits as well as EU-wide sales.

In the coming months, we shall be scanning for progress in the field of tax harmonisation - it is the next milestone in European integration.

The Economist's Curse - Part 2

If it is the case that economic forecasting suffers from an inherent flaw (that of ceteris paribus - the future will be the same as the past), the question arises over why it is that this work continues to be produced? Even to the point of it flourishing.

We can start to understand this as part of a model of consumption - the consumption of information about the future. If there were to be no demand for information about the future, then there would be no production of information about the future. In this respect, it is the demand that creates the supply. Information about the future is demanded because we all have to make decisions in the present that have consequences in the future.

A good illustration of this point was provided this week by the decision whether or not the UK ought to act now to secure the option to renew Trident (the UK independent nuclear deterrent) in about 2020. (See article for story). The decision was whether or not to sanction the concept and design work for the Trident replacement, at a very significant cost to the UK Exchequer. Not to go ahead would mean saving the cost, but eliminating the possibility of renewal in 2020. To go ahead does not commit the UK to replacement in 2020, but does enable the possibility of its renewal.

In looking for an answer to this dilemma, an element of foresight was needed by the government. The key areas of foresight were whether or not a deterrent would be needed in the 2020s and under what circumstances a deterrent would be needed. To answer these questions, point forecasts of future deployment options were taken, and the advice was given to government that it could be envisaged that a deterrent could be needed in the 2020s and 2030s.

To deter which threat is something of a moot point, but we are living in an era of great change where we cannot presume that old relationships will last indefinitely, and Trident can target Washington just as easily as it can target Moscow. In undertaking this exercise, the probable futures have been determined. This is good government, but poor futures, as we have not considered a whole range of possible futures that could happen, but now won't because they have been excluded from consideration.

Of course, by excluding a whole range of posibilities, the act of decision making has been made that much easier. Perhaps this is why we live with the Economist's Curse? The Economist's Curse cuts the cost of making decisions about the future.

Perspectives Of Globalisation

An Evening Organised By The Tomorrow Network

The Royal Society, UK

12th March 2007

Participants:

MARTIN ALBROW, Centre for Global Governance, LSE

GEORGE YIP, Director of Research & Innovation, CapGemini

There are few who would argue against Globalisation being a feature of the Post-Modern age. However, when we go beyond the platitudes, there is little agreement about what exactly constitutes Globalisation and whether or not it is a good thing. On the one hand, it is globalisation that is blamed for throwing out of work thousands of workers in the industrialised West. On the other hand, it is the phenomenon that is responsible for 100 million people moving out of poverty in China and India each year. I was attracted to the evening by the prospect of resolving these apparent paradoxes.

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The Clash Of Civilisations

by Samuel Huntington

ISBN 0-7432-3149-X

I came to this book through the recommendation of others. In our research for the America 2025 project, we continually bumped into references to the model laid out in this book. This made it important for us to consider the model, if only to use it as a base line in assessing the work undertaken by others. In turn, the model has been quite influential in the formation of foreign policy in recent years, particularly as it provides a metric whereby we can include the Islamic world. For this reason, it would be inappropriate for us not to consider a work of such influence.

The civilisational approach is a useful start to considering international relations. It can be used to explain a number of conflicts within the contemporary world (e.g. in the Ukraine), but it also has its shortcomings. It is a useful tool for us to use, but not the only one. For this reason, I would recommend the book.

READ the full review.

BUY from Amazon UK

Paradise And Power

by Robert Kagan

ISBN 1-84354-177-7

Mr Kagan sets out his stall in the very first sentence of the book. We are told that: “It is time to stop pretending that Europeans and Americans share a common view of the world, or even that they occupy the same world.” I think, more than anything, it was this first sentence that drew me into the book.

We live at a time when many in Europe are seriously questioning the role of the USA in the world. This questioning of US leadership in world affairs has caused many in America to reconsider what the commitment of the US to world affairs ought to be. The rise of a unipolar system of international relations has also seen the increased willingness of the US to act unilaterally in world affairs. In taking up the book, I hoped to gain a deeper insight into this apparent rift that is developing between the US and its key supporters in Europe.

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BUY from Amazon UK

The Rise Of The Creative Class

By Richard Florida

ISBN 0-465-02477-7

We seem to be living in a world that defies explanation. There are many features of the world in which we are living that we cannot explain from our past experience. We know that we are living in an era of very rapid change, and we do not have a framework that we can use to understand those changes. It is this sense of bewilderment – “Futureshock” as the Tofflers would have it - that attracted me to the book. I felt that it might help me to explain the world in which I find myself. We decided to incorporate the book as part of our Small Business Project, which has a keen interest in the future direction of the UK economy over the next 15 years or so, because it seemed to have something useful to say about small business formation and regional development.

The real test for an academic work such as this lies in its utility. Does the book help us to understand the world in which we live? I feel that it does, and I also feel that it advances our knowledge by a considerable degree. It provides an alternative to the established location theory, which might not be working as effectively as it needs to. By way of conclusion, I am very convinced by the arguments advanced in the book, and I have no hesitation in recommending it to all of those who have an interest in local regeneration, social development, and the Knowledge Economy.

READ the full review.

BUY from Amazon UK.

The Economist's Curse

What are the key attributes of a good piece futures work? In my mind, one of the key attributes is that the futures work does not take the future as a given. If, for example, we are looking out to the year 2050, we ought to acknowledge that there are many permutations of the future that are, at the present time, possible. It would be silly to argue that there is only one fixed and given future on the path to 2050.

It is odd, therefore, that economists do precisely this. We have moved away from the monsters of central planning that dominated life in the 1970s, but we are still plagued by those who feel that the path out to the future is inherently knowable and determined. That the future is nothing more than a set of simultaneous partial derivatives. As an example of this type of thinking, our attention was recently drawn to a piece emanating from the LSE which predicted that, in 2051, there would be 1,735,087 people in the UK living with dementia. (See article).

Even allowing for healthy margins of error - the number could be achieved in 2048, say, or 2053, or whenever, or never - this does sound a curious piece of work. To start with, the precision is so great that the number is not quite believable. A more credible prediction would be 1.7 Britons, which is eactly how the press reported it, rather than 1,735,087 Britons. The precision almost invites us to ask where the numbers came from. A summary of the report is publicly available (see report), but that is missing the point.

The point is the assumptions that the forecast uses. It assumes that the future will be like the past - ceteris paribus, as the economists call it. However, what happens if the future is not like the past? What happens if there is a major pharmaceutical breakthrough in the next 44 years? What happens if the nature of dementia changes? What happens if society changes the way in which it treats dementia? What happens if society doesn't age quite the way it is forecast to change in the report?

This is why economists are so often wrong - their curse is ceteris paribus. The future is rarely like the past. It is the understanding of this point that gives futurists, as a group of professionals, something to add to the debate. Futurists accept that the past can guide the future, but also that the future may not be like the past. It will be diffferent. We try to lift the curse of ceteris paribus.

The Future Of Security

An Evening Organised By The Tomorrow Network

The Royal Society, UK

28th February 2007

Participants:

AUDREY CRONIN, Changing Nature of War Programme, Oxford University

MICHAEL CLARKE, Kings College, London University


A secure future is something that we all hope for. However, our concern about the security of Civil Society is a recent phenomenon. In many ways, it is true to say that our concern started on September 11th 2001, as that was the date that the US engaged with the issue. Since 9/11, security has been an issue that has dominated international affairs. Not that 9/11 touched many nations. It did, however, draw in many nations as the US engaged with the issue.

9/11 has also determined how we define ‘security’. It has come to mean that we are secure from terrorist attack. However, in a wider definition, ‘security’ could have a number of different meanings. It could mean that we – the human race - are secure from hunger. Or poverty. Or disease. There could be a number of manifestations of ‘security’ that we have lost in recent years.

It is with these points in mind that I attended the evening. I did rather expect the programme to reflect the modern usage of the term ‘security’, as Dr Cronin is the Director of Studies at the Changing Nature of War Programme, Oxford University, and Prof. Clarke is part of the Centre for Defence Studies at Kings College, London. However, I was also interested in finding out how they thought the issue of ‘security’ might develop in the future.

READ the full report.