The question of the EU

The debate is now on and in 100 days we have to make a decision that will have repercussions for at least the next 30 years.


Lots of people are arguing over the issues of sovereignty. But I should declare my point of view – In an increasingly global world, it not a question of whether we should pool our sovereignty, it is only a question of with whom we should be collaborating?

Great Britain has just 1.3% of the world’s people but we still run the 5th largest economy (by gdp). We are disproportionately well represented in the institutions of the world which is a legacy of our days as an imperial power. None of these benefits are seen by the rest of the world as ‘the natural order of things’, and they are unlikely to help us to sustain them beyond the very near future.

Democratic Deficit

Some claim that there is a democratic deficit at the heart of Europe and that is grounds for leaving. It is True there is a democratic deficit which I deplore!

But that democratic deficit is not unique to Europe. There is a democratic deficit in our 2nd chamber the Lords, or in our eviscerated local government. The house of commons is the most centralised and powerful of all the governments of Europe and whenever we try to deliver democratic accountability, central government closes rank to prevent it on the grounds that it diminishes their power. There is no real political will to give democratic legitimacy to any European institutions. That is why the political establishment is unified in its hatred of ‘ever closer union’. How will it help if we are outside of the EU especially if Scotland and Northern Island end up seceding from the UK.

The Economy

One of the advantages of living longer is that you remember the past. I particularly remember the time when each new Labour election victory was met by a ‘run on the £’. The expectation of poor economic performance meant that the ‘hot money’ of the world’s financiers fled the UK, which in turn devalued the currency and caused the economic problems that they predicted. A vicious circle of self-fulfilling prophesy that impoverished people in the real world. Today that same hot money has been pumping up the UK property bubble to the extent that many people in the South East are now making more from the appreciation of their houses, than they are capable of earning in a full time job.

Once you see lunacy of that magnitude, it is clear that there are troubled times ahead. How should we manage these difficult time? Now is the time when we should be trying hard to make friends not enemies.

Stop the world I want to get off

There are some people who think that the troubles of the EU are the cause of instability rather than the effect. They argue that the EU is on a terminal trajectory towards self-destruction and we should get off the boat before it sinks.

The EU might well be in deep difficulties and I am of the opinion that the global economy is in a worse state than we think because the repercussions of the 2008 banking crisis are yet to work their way through the global economy. Economic dangers abound in all countries and the only bright spot is likely to be the economic stimulus we will derive form the collapse in Oil prices

But even if the EU is especially vulnerable, there are 2 questions we need to consider. If we are at a tipping point of economic Armageddon

1. Could the UK choosing to leave the EU be exactly the push needed to tip the collapse of the EU that we are scared of? There is a sever risk of contagion throughout the continent if we choose to leave.

2. Whether we are inside or outside the EU we will be very adversely affected by a wholesale collapse of the largest economic block in the world. How would being outside the EU protect us from the consequences?

There is some strength in numbers and despite being separated by different languages, our European shared history means that we still have more in common with the people of the EU than we do with the dictatorships of Russia and China or even the type of America being advocated by Donald Trump.

I prefer to face whatever this uncertain future may bring, on the inside of the EU contributing to changes that will help us to collectively navigate a dangerous world, than facing it on our own.

I am sure that if the tectonic plates of the world economy are about to be convulsed by one of its periodic earthquakes, we will be better off as a part of Europe than as the pariah trigger that set it off. An easy target for economic or military forces that may wish to pick us off.

Global warming and the power of change

In 1898, delegates from across the globe gathered in New York City for the world’s first international urban planning conference. One topic dominated the discussion. It was not housing, land use, economic development, or infrastructure. The delegates were driven to desperation by horse manure.

The situation seemed dire. In 1894, the Times of London estimated that by 1950 every street in the city would be buried nine feet deep in horse manure. One New York prognosticator of the 1890s concluded that by 1930 the horse droppings would rise to Manhattan’s third-story windows. A public health and sanitation crisis of almost unimaginable dimensions loomed.
And no possible solution could be devised

The solution turned out to be the Automobile. This was much more than just a technological fix,  it also transformed the way we worked and lived, it arguably assisted in the democratisation of the word and played its part in a new era of prosperity in the Western world.

Today we are faced with a similar dilemma with Climate change.  We know that it is a pending disaster and it is on such a colossal scale that our individually puny efforts seem completely inadequate to form even a part of the solution.

Given the speed of technologic development that we are seeing today, it is very likely that the next 50 years will see more technology driven change than has occurred in the last 250 years since the beginning of the industrial revolution. It only takes a few moments of imagination to see how society has been transformed in that time, and the potential capacity to use that change to both solve the global warming problem in the long term and mitigate its effect in the short term.

Just imagine for a moment what the world might look like if we had an internet running at 1Tbps speeds instead of the current 24Mbps that is the norm.  We would immediately stop worrying about new airport runways, high speed trains, extra bypasses and focus on the requirements of the 21century’s infrastructure.  It would significantly reduce the amount of travelling that we do, and at the same time transform the way we work, educate, manage our health and socialise. And that is just one strand of the transformations we are likely to see. New materials that transform the thermal efficiency of our buildings, generate power, light our environments and enable us to grow foods, all have transformative power.

Just as the rise of the car eventually resolved the horse manure problem, so new developments can resolve the climate change problem.  But it will not happen automatically, it will be the result of a concerted effort by all of us to ensure that the political and economic environment is conducive to those changes that will help. Nor will it be an unalloyed benefit – dangers and disadvantages abound. The question of how and who makes the right choices at all levels should worry us all.

It is here that I am most concerned.  A recent survey discovered that the level of scientific literacy both here in the UK and in America is below 24% (and the bar to qualify as scientifically literate was already worryingly low!!). In America no politician who want to win an election can admit to believing the Darwinian explanation for our very existence.  The forces of conservatism both traditional and modern, are building in strength and risk choking off the best chances we have of evolving society into something more sustainable. There is a long tradition of vested interests strangling scientific progress in order to preserve their self serving status quo.

Our job as citizens is to give change a chance and be engaged in the battle.

A fall in GDP might be a good thing

Two consecutive quarters of declining GDP is the definition of recession and a general cause of economic panic which can make further decline a self fulfilling prophecy. But there is something I don’t understand….

I am sure that most of you have heard of ‘Moore’s Law’ – the prediction by the Intel executive that the price of computer chips would halve every 18 months and the their power would double.  This exponential rise in power has been more than fulfilled for the last 30 years and shows no signs of slowing down, giving rise to a massive  2^20 growth in computing power or a million times growth in power.

And, of course, it is not just computers that are seeing that kind of exponential growth in power. Texting went from zero to 8trillion texts per year in just 20 years which is a doubling of popularity every 3 months over the entire period. Even more extra-ordinary – it took $3bn and several years to decrypt the first genome of a human being.  It is expected that within 2 years the cost will be down to under $1 and it will be done in under an hour. So what are the economic consequences of these phenomenal increases in power?

If just 10% of the GDP of the economy were to reduce costs by 50%, the impact would be a 5% cut in our GDP.

Can some economist explain to me why this fabulous growth in productivity is a cause for recessionary angst instead of universal celebration?

Hadron Collider

I was just listening to a science programme and it described the camera that is used in the giant Hadron collider that is searching for the Higgs Boson or God particle in CERN. Apparently the camera that captures the images of the collision is the equivalent of a 100M pixel 3D camera that takes 400m pictures every second.

It takes a moment for these numbers to sink in…

The idea that a camera can take 400,000,000 pictures every second at the level of detail implied by 100m pixels, and store all that information with a time stamp for each image, is simply mind boggling.

No wonder that it takes so long to process all the data that is being collected.  One has to wonder what world changing/shattering knowledge might be hidden in there.

I feel quite proud that human beings are capable of this level of enquiry into where we come from and how the universe works.

100 Mbps broadband for every citizen by 2015

Unfortunately, that is only in Finland or South Korea where higher speed broadband access is recognised as both a human right and a vital commercial necessity.


Here in England most of us are still dawdling along at 6Mbps downloads and <1Mbps upload speeds, while dreaming of the day that optic fibre will reach far enough for us to enjoy the 50Mbps it promises to deliver. In the meantime the government is still intent on a massive investment in the old infrastructure of railways so we can shave 20 mins off a trip between London and Birmingham.

If the future of GB plc is dependant on us beating the world in the white hot technologies that will create competitive advantage, then the two most important elements that we need are

  • A modern infrastructure
  • A vibrant venture capital sector that will fund a great business idea, even if the entrepreneur does not have caste iron assets to put up as collateral.

A crisis is also an opportunity for change

Pre Christmas gloom following Osborne’s scary Autumn statement has settled like a cloak of depression over the whole country.  A wasted decade of zero or less GDP growth, unemployed youth and 50 year olds thrown onto a scrap heap that is becoming cruelly indifferent to their plight. Business cut backs and loss of confidence creating a self fulfilling prophecy of decline.

There is no doubt that we live in dangerous times. The economic upheaval that started in 2008 with a bank liquidity crisis and has been transformed by the bailout then, into a sovereign debt crisis today, represents a major challenge to Capitalism as it has been played.

So where are the grounds for optimism?

“If  its not broke, don’t fix it”
– well now it is  broke, so we had better do something!

As a small business we know that our opportunities come when the tectonic plates of the existing established order start to shift.  That is the moment when businesses and institutions are prepared to contemplate the idea that unfamiliar ways of doing things, may be risky, but are better than the alternative.

We live in a time of unprecedented technical innovation and each one has the potential to create opportunities to re-invent business processes. Moore’s Law which described the speed at which computing power would double every 18 months and halve in price, is only one of the many defining events (programming, DNA, genomics, neural science and many others which are showing even faster rates of exponential growth) that will certainly transform our world over the next 50 to 100 years.

To take a step back:-

    • The genus Homo arose about 2,500,000 years ago
    • I took a couple of million years to for Homo sapiens to evolve, about 500,000 years ago
    • We had reached the Bronze age about 3,000 years ago.
    • The industrial revolution and the birth of  our modern age is about 300 years old.
    • The age of modern computing and communication started about 50 years ago and I only have to think back to the world of my youth to see the impact that has already had and will continue to create on the way we live our lives.

If we can be flexible, imaginative and focussed, there is no end to the opportunities and the excitement that the very near future holds.

Confidence is good for the individual and bad for the organisation

We all look to experts in order to help us navigate round an increasingly complex world.  The difficulty is in working out who to trust?  Is it the person who shows plenty of self confidence and never admits either being wrong, or not knowing? Or the quiet self deprecating person in the corner?

On the whole we tend to look to those alpha beings who are prepared to take a stand and trust them to make at least some of our decisions for us.  Unfortunately there is now plenty of evidence that their self-confidence is often misplaced. (Click here for details). Autopsies have shown that even doctors who declare themselves total confident in their diagnosis of patients when they were alive , were proved to be wrong 40% of the time.

It seems that Bill Clinton has taken this very much to heart and now has a new Mantra.  Once a day he makes it a rule to say out loud “I didn’t know that” and “I was wrong”! While I don’t doubt that this makes him a better person and it is certainly a interesting  experiment from somebody with his background, the question that I would really like to get answered is whether there is any way he could have been elected as President of the United States with that level of public self doubt? My guess is that he would have been ripped apart by the press, his political enemies and the public at large.

We all claim that we want leaders to say sorry.  But it is up to the great public to enable it to happen.  In the meantime keep this definition in the back of your mind.

Definition of an Expert:   X – an unknown quantity.
Spurt – a drip acting under pressure.

Construction Sector Slows

The latest quarterly survey by the Office for National Statistics shows a fall of 0.6% since the last quarter and a fall of 1.8% compared with the same quarter last year. (Where the construction industry is defined as: construction and demolition work, civil engineering, new construction work, and repair and maintenance.)

This is a worrying reversal of the slight recovery that we saw immediately after the 2008 banking crisis and reflects the slow down in infrastructure projects and in home starts.

The exceptionally low level of Housing starts (a further fall of 9% from a very low base in March 2011) see details is contributing to the dangerous increase in rental prices that is occurring as a growing population, largely excluded from home ownership by mortgage constraints, now collides with a shortage of supply.

I am optimistic that we will shortly see results from the political pressure to deliver a Keynesian boost to the economy by investment in infrastructure as one of the few acceptable routes for delivering economic growth.

The Greek Financial Crisis – June 2011

There is at least a chance that we will look back on the next 3 months as the time the world stopped!!!

The country of Greece has a sovereign debt of about $500bn, which is just a bit less than that of Lehman Bank when its bankruptcy plunged the world into a banking crisis that was only averted by the wholesale transfer of bank debt into sovereign debt.

The UK banking system currently has outstanding loans of £6.5tr (yes that is trillions) which is 4 times the size of our GDP. And the banks themselves hold a mere £300bn of equity capital to support those loans. Nobody really has a handle on where those loans are placed and how much any individual bank is exposed in the event of a Greek default.

But what is certain is that when the default happens, if it is not managed far better than past experience gives us cause to hope for, it will lead to another crisis of the banking system as they all refuse to lend to each other as happened in 2008. And this time round the countries will not have the funds to bail out the banks.

There is no doubt that the Greek people have been culpable in that the they have been living far beyond their means for years, and they have been doing it on borrowed money.  But the punishment that is being asked of them is that they pay €100bn of debt repayments (reparations) pa.  This represents 40% of GDP and is plain impossible. This is why a default is considered inevitable.

The weather is not the only thing that is looking stormy this father’s day weekend.

Professionals now face automation

Artificial intelligence has long been the promise of the computer industry’s future, but until recently it has been characterised by a failure to deliver on almost all fronts. But there is now a serious risk to the professional classes that over the next decade their right to power, status and money will be challenged by a competitor that they cannot beat.

The way this is coming about is not as we might have expected. Take  as an example ‘e-discovery’ software.

In 1978 there was a court case in America in which over 6 million documents had to be examined at a cost of $2.2m, much of it being done by a small army of lawyers and paralegals who worked for months at high hourly rates.

In a similar case today ‘e-discovery’ software has analysed 1.5 million documents for just $100,000.  And these intelligent  discovery products go well beyond simple key word searching and are capable of extracting relevant concepts and spotting relationships that would seldom be picked up by their human counter parts.

As computers become better at mimicking human reasoning skills they are increasingly challenging the people in high powered, well paid jobs. It has been estimated by Mike Lynch (founder of Autonomy) that the software enable 1 lawyer to do the job of 500, and to do it at least twice as well.

The government is lending money to students on the basis that they only have to pay it back if they get well paid jobs.  It is not obvious which degree courses are most likely to provide a secure return on these loans!