Following Obama’s December recommendations to lift a 50-year embargo on Cuba, new rules have been brought in, as of January 16, that allow US citizens to visit the island for any one of a dozen reasons. Previously, they were forced to obtain a licence from the US government before they could visit, but the new laws do away with the system and make travel to the communist-run island far easier.
Any American tourists found lazing on the beach will still be fined
President of Cuba Educational Travel Collin Laverty applauded the Treasury and Commerce Departments for “interpreting President Obama’s initiative in the broadest possible terms,” and expects to see a greater number of US citizens taking to the island in the coming months. “Under the educational category, which is bound to see the most action, travellers need only sign a piece of paper stating the purpose of their trip is to learn about Cuba and interact with the Cuban people”, says Laverty. “It’s that simple; find someone who can book your trip, sign a piece of paper, and off you go. You will be expected to visit the agricultural market, speak with the owners of private restaurants, share your own life experiences with Cubans and, of course, to stay away from the beaches. That’s it.”
Any American tourists found lazing on the beach will still be fined, though the new rules mean that a greater number of US citizens will be taking to Cuba without red tape hanging over their every move. However, the actions stop short of allowing US citizens to travel about the island as they wish, and the changes mark only the first of a long line of measures intended to improve US diplomatic relations with Cuba.
“At the moment there are only a number of agencies and charter airlines that have experience working with Cuba and the infrastructure to handle the surging demand”, says Laverty. “Soon, however, expect major airliners and online booking sites to get in on the action. One can expect an uptick in both custom tours and, now for the first time, legal travel by individuals, families and small groups to Cuba, who will take part in these self-directed educational visits.”
In addition to expanding trade ties with Cuba, the reforms will bring a range of new employment opportunities for those in bot countries.
We spend an obscene amount of time on the internet; often on some form of social media. Whether it be Facebook, Twitter or Instagram, these platforms are where we share and store our every thought and photo. They act as a digital map for the brief blip in which we exist on this planet. Facebook has replaced the scrapbook. Websites and blogs have become our digital diaries and textbooks. But while we have become comfortable (perhaps worryingly so) with uploading every second of our lives, do we ever stop to think about how safe the information we store on these digital journals really is? Not just from cyber-attacks by hackers, but also from the steady decay if time.
People around the world should be able to learn and build upon the work of previous generations, but they can only do that if they can have access
to it
Digital data is vulnerable – far more so than physical artefacts such as books or photographs. The average life of a web page is only about 100 days before it is altered or deleted. The shelf life of data stored on any hard drive – depending on how it is maintained – is roughly five years. After that, as a result of things such as magnetic field breakdown and advancements in the hardware, there is an increasing probability that the information will begin to deteriorate or become unreadable. Lost forever.
At the same time, libraries are quickly going the way of the dodo, with visitors falling year-on-year. Their gradual extinction seems natural when you consider we have access to everything at the click of a button or a tap of a screen. But there are some, such as Brewster Kahle, founder of the Internet Archive, who fear that, if we do not act now, we could lose large pieces of our past, plunging us into an Orwellian world of the perpetual present.
The Internet Archive
“Anyone who has ever lost data because the hard drive in their computer died knows that, while it is easy to put data on a hard drive, it isn’t easy to keep it backed up and safe,” says Alexis Rossi, Director of Web Services at the Internet Archive, a non-profit organisation that aims to build a digital library of websites and other cultural artefacts. Workers store data on at least two hard drives, which are kept in separate physical locations to maximise the chances of at least one copy surviving any catastrophic event. Content is audited periodically to ensure files are complete. They even remake files in new formats when they become popular, making sure to preserve the originals.
But simply keeping data effectively backed up and stored may not be enough. “We are also working with software archivists to emulate hardware and operating systems in order to replay old pieces of software”, says Rossi. “The Internet Arcade is the latest example of a collection like this.” Developing emulators to run old video games highlights how retaining a means of reading stored digital data is just as important as the information itself. It could be that there is an abundance of compact discs laying around someone’s home, each one a different album from a prolific artist, but without a CD player to access the information stored on them, the information is as good as gone.
When people buy, or in reality rent, music from the iTunes store, they don’t perceive that, if Apple (heaven forbid) were to go into liquidation and its devices left to fade, so too, over time, would consumers’ music catalogues become inaccessible.
“There seems to be a perception that once you put something on the internet, it will always be available”, explains Rossi. “We have seen many examples where this is not true.” He points to sites such as MobileMe (to which users uploaded large amounts of photos in a similar fashion to Facebook) and Friendster (which was once where millions of people conducted their online social lives). “The companies who ran those services decided to close them down, and much of that data would have disappeared if archivists around the world hadn’t done their best to save what they could. We make the saved versions of these sites available through archive.org to try to prevent that history and work from being lost.” This immense amount of data is stored on what the Internet Archive calls ‘petaboxes’, which are purpose built for high-density storage.
Digitising the past
Digital data is not the only concern of the Internet Archive. It has also amassed a huge physical collection, with 1.5 million books, 50,000 VHS tapes, 100,000 LPs and thousands of reels of film, which its workers digitise with purpose-built scanners. While the work they do is incredible, what is revolutionary is that all this information is freely accessible. You do not even need a login. In just a few clicks, you can be reading, watching or playing anything in the library’s archives. This freedom of information is key to the vision of the Internet Archive’s curators. “Access drives preservation”, says Rossi. “People around the world should be able to learn and build upon the work of previous generations, but they can only do that if they can have access to it.”
It is sad to think that we have less than one percent of the written documents from Rome and less than 0.1 percent of those from Ancient Egypt – but look at how we have built on that limited information and how it has shaped our modern world. Our treatment of the data stored in digital libraries is indicative of how complacent we have become about our recent history. Without the work of archivists, future generations may have 0.01 percent of our history. Information empowers us. Let’s hold onto it.
Patently Apple, a blog which chronicles the tech giant’s patent history, reported that Apple had been granted a new patent to develop a waterproof camera system that “could directly move into GoPro’s territory as the patent specifically mentions the weaknesses of GoPro devices”.
The news is widely believed to have driven a plunge in GoPro stock, which saw shares fall by 12 percent, or $6.91, to $49.87. That’s around half of its record-high 2014 price of $98.47 (although it’s still substantially up from its June 2014 opening IPO price of $28.65).
The news is widely believed to have driven a plunge in GoPro stock
The patent itself – which was bought from Kodak in 2012 – talks of a camera that could be attached to bike helmets, scuba masks, motorbike handlebars and other objects for on-the-go filming. According to information published by Kodak in 2013, the digital camera would be controlled from a remote worn on the wrist.
But Apple Insider claimed there was no guarantee the patent would see the company actually develop an action camera, arguing that the technology could be used for existing products, such as the Apple Watch.
JMP Securities analyst Alex Gauna was likewise weary of jumping to conclusions, telling Reuters: “It does not seem to me that launching an action camera accessory is the most logical product extension for Apple to pursue right now.”
But that hasn’t stopped concern rising among GoPro investors, demonstrating the power Apple has a market influencer. The company has until now managed to fight off competition from rival Sony action cameras, but given Apple’s current dominance in the tech sphere it’s not unrealistic to believe its own version could threaten GoPro’s monopoly.
If the patent does see Apple move into the arena, it will be interesting to see GoPro’s reaction, and whether moving into China – a plan suggested by CEO Nick Woodman at CES 2015 – could help the company continue to triumph.
If the global business landscape has profoundly changed over the last couple of decades, given economies have become increasingly interdependent, the economic conditions created have provided a further push for trade liberalisation.
One economic consequence is that supply chains have become genuinely global. This had led in turn to demands for even greater trade liberalisation – largely out of the economic self-interest of those in the corporate sphere. Globalisation of the supply chain has led to the formation not only of regional trade zones but also bilateral, multilateral and global ones.
ASEAN’s regional integration process is very different to Europe’s and the EU is facing difficulties in negotiations because of the heterogeneity of ASEAN as a group
Asia, like other regions, has long been economically plugged into the global economy – principally through the World Trade Organisation (WTO), which has overseen much of the underpinning of this liberalisation. Yet the WTO ‘template’ has proven no guarantor of a smooth path towards further liberalisation, as Doha (the WTO’s latest negotiation round) has shown. While its objective of lowering trade barriers globally has been little different to its predecessors’, negotiations on further liberalisation have been stalled since July 2008 (save for a multilateral ‘trade facilitation’ agreement reached in December 2013 that could cut global trade costs by 10 percent, according to the OECD) over issues such as agricultural import rules and industrial tariffs that have been raised by the EU, US, Japan and China among others.
On a macroeconomic level, business costs – largely the resulting increases in wages, property values and reflecting currency fluctuations that have negatively impacted costs in US dollar terms – have put Asia’s low-cost export model at risk. Higher costs have affected profit margins and, while prices have remained relatively stable, production costs have increased in many instances.
Such a loss of competitiveness has economic implications, given shrinking trade balances put pressure on current account balances. This in turn increases the likelihood of currency depreciation and/or higher interest rates that could potentially lead to a dampening of demand, lower exports and lower imports.
Ease of doing business
While the Doha negotiations have largely remained stalled, states have continued economic reforms and remain committed to establishing or furthering inter- and intra-regional structures. As the World Bank noted in its latest annual update, 15 of the 25 nations in the East Asia and Pacific region implemented at least one regulatory reform in the 12 months to June 1, 2014.
While this may sound piecemeal, the World Bank’s figures also show that, since 2005, the 25 economies in the East Asia and Pacific region have collectively enacted 240 business-friendly reforms. Vietnam implemented the highest number of measures with 23, followed by Indonesia (22) and China (20). Taken in a wider context, these three are among the 50 economies worldwide that have implemented the most reforms over the past decade. Singapore, meanwhile, has the highest global ranking when it comes to the ease of doing business. New Zealand, Hong Kong, China, Korea and Australia are also among the top 10.
If the WTO provides the trading groundwork at the global level, the Asia-Pacific Trade Agreement (APTA, which was previously known as the Bangkok Agreement), offers a regional version. Signed in 1975 at the behest of Economic and Social Commission for Asia and the Pacific, it is the oldest preferential trade agreement among developing countries in the Asia-Pacific region.
APTA’s principal objective has been to foster economic development through the adoption of mutually beneficial trade liberalisation measures that should theoretically contribute to intra-regional trade expansion. A measure of its success can be seen in the agreement reached at the third round of negotiations (which came into force as far back as September 2006) that led to tariff concessions on more than 4,000 items.
Most importantly, APTA is the first plurilateral agreement among the developing countries in the region to adopt common operational procedures for certification and verification of the origin of goods. It is also the only operational trade agreement linking China and India (two of the world’s fastest-growing markets), as well as including other major markets such as South Korea.
Trans-Pacific suspicions
Going forwards, the Trans-Pacific Partnership (TPP) will assume increasing importance. Also including the US, Canada and Australia among others, the TPP is set to establish a free-trade bloc stretching from Vietnam to Chile. The pace of progress in reaching an agreement has been glacial however, principally due to disagreement between the US and Japan over the degree to which Tokyo will open its doors to American farm imports.
Meanwhile, China, which isn’t part of the 12-nation TPP, has been pushing for a separate trade liberalisation framework known as the Free Trade Area of the Asia Pacific (FTAAP). Beijing has long been suspicious of the TPP, fearing it is being used by Washington as a way to either force China to open up its own markets further, or else to isolate it from other regional economies as trade is diverted to TPP signatories.
The TPP is widely viewed as the major economic plank of President Barack Obama’s longer-term strategy of ‘re-balancing’ US exports in favour of Asia. Cynics, however, concur with Beijing, arguing the TPP’s unstated aim – denied by US trade officials – is to counterbalance Beijing’s growing influence in the region by establishing a larger US presence, including military assets.
Further free trade agreements
Also now in play is the Regional Comprehensive Economic Partnership: a proposed free trade agreement between the 10 member states of ASEAN and the six states with which ASEAN has existing free trade agreements (i.e. Australia, China, India, Japan, Korea and New Zealand). This is due to be concluded by the end of 2015.
Looking further ahead, the EU concluded the final negotiations for a free trade agreement with Singapore back in 2012. Its success has subsequently led to bilateral dialogues with other ASEAN countries, such as Malaysia, Vietnam and Thailand, in order to reach the same results. The end game in this case would be to eventually reach a region-to-region approach that would facilitate EU-ASEAN relations. However, ASEAN’s regional integration process is very different to Europe’s and the EU is facing difficulties in negotiations because of the heterogeneity of ASEAN as a group.
In the meantime, China and the US have reported a breakthrough in talks to eliminate duties on IT products; a deal that could pave the way for the first major tariff-cutting agreement at the WTO in 17 years. China will inevitably prove pivotal to regional and global progress. This latest breakthrough – to reduce global tariffs on a range of products including GPS devices and next generation semi-conductors – has major ramifications for Asia as a region. It’s a start, but much work still needs to be done to bring Beijing onside and further expand trade both inside and outside Asia.
BlaBlaCar, one of Europe’s leading tech start-ups with an online community of ten million across 13 countries, has launched its carpooling service in India as the next stage of its global expansion. The news comes at a time when taxi aggregators are facing regulatory pressure in the country; meanwhile carpooling services are not yet bound by such regulations.
BlaBlaCar is also hoping to exploit rising safety concerns surrounding Uber
BlaBlaCar operates as an online community which connects motorists and passengers, allowing the former to offer their spare seats and therefore share the cost of the journey. Operating on an inter-city basis, the service will likely come as a welcome alternative to the country’s over-crowded and unreliable trains and will start its journey in north India, gradually branching out across the country.
BlaBlaCar is also hoping to exploit rising safety concerns surrounding Uber, which was banned by the Delhi government in December following the arrest of one of its drivers on charges of raping a female customer. Because it is a community-driven service built on trust, users have access to personal details about their fellow traveller before embarking on the journey.
“India, with its young, highly-connected population, and multiple major urban hubs separated by long distances, has great potential for ride-sharing,” co-founder and Chief Operating Officer of BlaBlaCar Nicolas Brusson told India’s Business Standard. “Chronically over-crowded transport infrastructure forces travellers to book their train or bus tickets weeks in advance, while the high price of fuel makes long-distance car travel often unaffordable. BlaBlaCar will make last-minute city-to-city travel both available and affordable.”
BlaBlaCar is one of Europe’s most successful start-ups, having raised $100m from investors in July 2013 to fund its expansion into international markets. India is its first stop in Asia, but with public transport infrastructure being a common problem across the continent, further growth is highly likely.
The World Bank has warned in its bi-annual report that divergent trends pose downside risks to the global economy, and while it is projected to expand at a faster rate than in 2014, the outlook for the coming year is worse than previously stated. Whereas in June the bank forecast global growth of 3.4 and 3.5 percent in 2015 and 2016 respectively, the figures have been revised downwards to three and 3.3 percent.
The World Bank’s key fears centre on four factors
“In this uncertain economic environment, developing countries need to judiciously deploy their resources to support social programmes with a laser-like focus on the poor and undertake structural reforms that invest in people”, said World Bank Group President Jim Yong Kim in a statement. The report notes that while growth in both the UK and US is gaining momentum, the euro area and Japan in particular are key areas for concern.
The World Bank’s key fears centre on four factors: weak global trade, financial market volatility, low oil prices and stagnation or deflation in Europe and Japan, which together mean the recovery is yet to gain the momentum it so desperately needs.
“Worryingly, the stalled recovery in some high-income economies and even some middle-income countries may be a symptom of deeper structural malaise”, said Kaushik Basu, World Bank Chief Economist and Senior Vice President in the statement. “As population growth has slowed in many countries, the pool of younger workers is smaller, putting strains on productivity.” Basu goes on to state that an enduring low interest rate environment, sustained in part by record low oil prices, means there is more time and impetus for oil-reliant countries to introduce much-needed reforms and “inclusive development”.
“Risks to the global economy are considerable. Countries with relatively more credible policy frameworks and reform-oriented governments will be in a better position to navigate the challenges of 2015”, wrote Franziska Ohnsorge, lead author of the report.
The first major test of Indian Prime Minister Narendra Modi’s planned economic reforms has led to an apparent – if temporary – defeat. A five-day strike organised last week in the country’s coal industry – led by state-backed Coal India – was abandoned after just one day when the government agreed to re-examine it’s planned tendering process for new licenses. The original proposals would have seen private companies run previously state-owned producers of coal, leading to many workers fearing an erosion of their rights.
The government appeared to have caved on Wednesday evening
Five unions across the industry organised the strike that impacted as much as 75 percent of the country’s coal production. 3.7 million workers at Coal India stopped working at what was seen as the country’s largest example of industrial action since 1977.
However, the government appeared to have caved on Wednesday evening, when Coal and Power Minister Piyush Goyal told union leaders that he would form a committee that would look at the plans and address workers’ concerns.
Not all of the unions were appeased by the government’s stance. The Centre of Indian Trade Unions’ GeneralSsecretary Tapan Sen told The Economic Times of India that there were no concrete proposals and so they would continue to organise protests over privatisation. “We disagree with the stand of the other four unions and our opposition to the coal ordinance will continue in the form of demonstrations tomorrow (Thursday). There is no reason why the five-day strike should have been called off in two days by the other unions since nothing concrete has been assured to the workers.”
India’s coal industry is effectively a state monopoly, and many people have called for an opening up of the industry, so that it can become more competitive. Modi’s government will obviously look to implement some form of liberalisation in the future to the industry – and others – but this setback certainly shows how much of a struggle he will face in getting his reforms passed in the coming years.
The not so-subtle authoritarian reign of Hungary’s Viktor Orbán happened upon its first major hurdle in October when tens of thousands of protestors gathered to cry foul against plans to introduce an internet tax. Born of a quarter-million-member-strong Facebook page and a more general sense of discontent concerning the way in which policymakers were out to capitalise on profits made online, the plan to tax internet use was met with a resounding chorus of disapproval in both Hungary and abroad. Some pelted the headquarters of the governing Fidesz party with used computer parts, while others carried banners bearing slogans opposed to the government’s infringement on personal freedoms and its increasingly authoritarian streak.
The government’s original intentions were to take 62 cents for every gigabyte of data consumed, and, though officials maintained the tax would be imposed on internet providers only and not consumers, many were of the opinion that the costs would find their way back to household users. In a country where one in three are at risk of poverty or social exclusion and the average net-adjusted disposable income per capita is almost $10,000 short of the OECD average, the everyday Hungarian citizen could ill afford to foot the bill.
The digital part of the economy is probably the main thing keeping Europe out of recession right now
The Prime Minister countered – rather limply – that the policy would recoup taxes lost as a result of consumers migrating online, though criticisms continued to mount regardless, as EU sources joined hands with protestors in opposing the proposal. Ryan Heath, spokesperson for the outgoing European Commission Vice President for Digital Agenda Neelie Kroes, condemned the plan, calling it a “terrible idea” in a strongly worded statement. “It’s part of a pattern and has to be seen as part of that pattern of actions which have limited freedom or sought to take rents without achieving a wider economic or social interest”, said Heath.
“Hungary is below the EU’s average in virtually every single digital indicator. The digital part of the economy is probably the main thing… keeping Europe out of recession right now. So taxing that, in a country that is already below the average on digital indicators, is a particularly bad idea.”
Unsurprisingly, less than a week on from its first mention, Orbán finally bowed to public pressure and agreed to drop the proposal. Taking to the radio on October 31, over two weeks before the proposal was due to be voted on, Orbán admitted: “The internet tax cannot be introduced in its current form.”
This all serves to illustrate the way in which taxes on the internet are received by the masses, who generally see a tax of this kind as a thinly veiled attempt to infringe on their civil liberties and God-given right to surf the net as they please. “The internet should not be taxed any more than any other product you buy at a store”, says Scott Drenkard, Economist and Manager of State Projects for the Tax Foundation. “I have many concerns about taxes on internet provision limiting access to information. The internet has given us more access to a wide breadth of knowledge and opinions, faster than ever before. Multiple or discriminatory taxes on its provision are bad tax policy, they are illiberal, and they put a penalty on the quintessentially human process of communicating with each other.”
Granted, the case in point is an extreme one, and proposals to impose a tax on data use (otherwise called a ‘bit tax’) are few and far between, but Hungary exemplifies the lengths some governments are willing to go to recoup tax revenue lost to the online economy. The larger question of whether – and, if so, how – the internet should be taxed, has yet to be answered. Despite steps taken to level the playing field between physical and online stores, an agreeable solution is yet to present itself.
Conquering the unconquerable
The birth of e-commerce and the onward march of internet-dwelling giants has brought with it pressures typically reserved for corporate behemoths of the bricks-and-mortar variety. Tax policy being what it is, internet entities, of which Amazon is perhaps the most notable example, have long been exempt from the liabilities placed on their physical counterparts. As such, many states have welcomed the prospect of an online income tax, safe in the knowledge it could well bolster their finances.
To fuel the fire, some sources have made it their mission to quantify what losses e-commerce has inflicted on the economy. In a 2009 University of Tennessee report entitled State and Local Government Sales Tax Revenue Losses from Electronic Commerce, technologies and digital processes were said to have had a profound effect on US state and local finances. In the six-year lead-up to 2012, the report’s authors estimated, national, state and local sales tax losses as a result of e-commerce would amount to $52bn: another report, The Impact of the Internet Sales Tax Disparity on Massachusetts Tax Revenues, Sales and Jobs, put the country’s losses at three times that amount. “States cannot compel internet and other remote sellers that do not have a physical presence in the state – such as large national online retailers or mail order houses – to collect the tax”, said the report. “As a result, billions of dollars of sales tax revenues are lost, and bricks-and-mortar stores are put at an unfair competitive disadvantage.”
Senate Republican Conference Chairman Lamar Alexander (l) and Senate Assistant Majority Leader Richard Durbin introduce the Marketplace Fairness Bill
Not that much
Public pressure on companies such as Amazon and Google has heightened in recent years, with reports emerging that a growing number of internet-based enterprises have been employing creative ways of escaping liabilities. In answer to the concerns, a series of key reforms, backed by OECD states at the mid-point of 2013, marked the beginning of a concerted worldwide effort to eliminate the advantages afforded to online businesses ahead of bricks and mortar. However, it would appear these stop short of recouping lost taxes in their entirety.
For one, the introduction of the affiliate nexus legislation (often called ‘the Amazon Tax’) requires that out-of-state retailers collect and remit taxes that had previously escaped the state’s attention. The legislation has, in a handful of states, redefined what constitutes a taxable presence, and, whereas companies were previously subject to income tax only if they had a physical presence in the state, the range of taxable activities has now been expanded to include online sales.
True, the legislation marks a landmark change in the US taxation system, but it seems its proponents have been too quick to celebrate the policy’s success. Navigant Economics Managing Director and Principal Jeff Eisenach, for one, estimates the online sales tax’s recoverable potential is only $3.9bn – a mere third of the University of Tennessee estimate and leagues apart from Massachusetts’. Here it becomes clear that either the studies have miscalculated the amount lost to out-of-state businesses, or else the policy is not the all-encompassing measure so many assume it to be.
Simple isn’t easy
Those who insist online retailers are still harbouring billions in taxable gains have highlighted a tendency on the part of their opponents to look past SMEs and focus solely on larger corporations. However, as things stand, the internet income tax, employed principally by those in the US, remains the most effective means of levelling the playing field between online and bricks-and-mortar businesses – despite its many shortcomings.
“Requiring internet retailers to collect sales taxes for every product they sell across the United States would mean that they would be forced to comply with 10,000 different sales tax jurisdictions – this is not a level playing field, because physical businesses online have to comply with one”, says Drenkard. “However, if the federal government would insist on more sizeable simplification measures, allowing states to collect sales taxes on online purchases could be more reasonable.”
Clearly, for as long as out-of-state enterprises are required to comply with this patchwork tax system, the money owed will continue to slip through the net, if not for lack of reporting then through sheer confusion. Without a simplified policy on taxing internet sales, systematic inefficiencies will remain and states will continue to lose out on the finances they are due.
Concrete steps were taken to address the issue in 2013 with the Marketplace Fairness Act (MFA): a law that, if passed, will allow states to collect taxes on remote sales, on the condition that they simplify their tax code. The Senate voted in favour of the bill in May of that year, but it is still pending in the House Judiciary Committee almost two years on. The issue now is not whether the bill will be enacted but how policymakers could conceivably unify a byzantine system once the MFA is put in place.
In the meantime, those concerned about losing precious state finances to out-of-state enterprises have begun to flirt with alternatives. While measures such as the hybrid origin-sourcing and consumer private reporting solutions allay some concerns, each comes with its own set of problems.
No matter what the solution, the problem remains the same, not just in the US but in all the world. Tax systems are far too different state-to-state, country-to-country and continent-to-continent to introduce an all-encompassing internet sales tax. For as long as the world’s governments tackle issues born of the internet one nation at a time, they will only ever come up short. We operate within a global economy, made up of many states and many more laws, and trying to tackle the internet – a community that knows no boundaries and answers to no one – is a thankless task.
President Obama delivered a message to the Federal Trade Commission on January 12 about the importance of stronger data privacy laws in keeping consumers abreast of the cybersecurity threats facing their economic safety. The proposals come a week before the annual State of the Union address on January 20, and focus on new legislation that, if passed, would legally oblige US firms to disclose any information on data breaches.
The speech follows a string of high-profile security breaches in the past year
“As we’ve all been reminded over the past year, including the hack of Sony, this extraordinary interconnection creates enormous opportunities, but also creates enormous vulnerabilities for us as a nation and for our economy, and for individual families”, he said. “If we’re going to be connected, then we need to be protected. As Americans, we shouldn’t have to forfeit our basic privacy when we go online to do our business.”
If passed, the Personal Data Notification and Protection Act would mean that any US firm subject to a data breach would have to inform consumers of such an event within 30 days. The speech follows a string of high-profile security breaches in the past year, the most recent and significant of which being Sony and Target.
“Right now, almost every state has a different law on this, and it’s confusing for consumers and it’s confusing for companies – and it’s costly, too”, said Obama. However, the new legislation would not only clarify but also strengthen existing data protection laws, and make illegal illicit overseas trade in identities, according to a fact sheet released by the White House.
A recent poll, cited by the White House, shows that nine in 10 Americans feel they’ve lost control of their personal information. “In an increasingly interconnected world, American companies are also leaders in protecting privacy, taking unprecedented steps to invest in cybersecurity and provide customers with precise control over the privacy of their online content,” according to a White House statement. The proposal, therefore, marks a significant first step to ensure consumers do not lose confidence in the ability of American companies to protect their online security.
Floating cities were once the stuff of video games and James Bond films. But yesterday’s science fiction is today’s reality, and China is planning to build the first floating city. To accomplish this incredible feat, Chinese engineering company CCCC and London-based architects AT Design Office are joining forces.
Though it’s promised the project will accommodate some of China’s 1.35 billion people, its primary function will be to act as a tourist attraction to entice holidaymakers who want to experience something revolutionary. Under the current plans, this city of the sea will be a little tacky, with all the standard staples one has come to expect aboard a luxury cruise: restaurants, bars, museums, galleries and even a theme park. The only key difference is that these recreational areas will be accessible both above and below the surface of the water.
We plan to provide a start-up sector for government
But if you prefer your futuristic floating metropolis to have a little more oomph, you might be more interested in the work of the Seasteading Institute. The central vision of the institute – which aims to create ‘seasteading communities’ on the ocean’s surface – is to test different types of political systems, because its founders believe the ones in existence leave a lot to be desired.
“We plan to provide a start-up sector for government”, explains Joe Quirk, Communications Director at the Seasteading Institute and self-proclaimed ‘Seavangelist’. “Seasteading is not an idea for government: it’s a technology for anyone to try their idea for government, and win citizens by providing superior governance.” The timing seems perfect, with many citizens expressing an ever-greater disillusionment with the state of the political landscape. Just look at the congressional approval ratings in the US, which in a recent Gallup poll sat at just 14 percent – one of the lowest in recorded history. “For innovation, we need startups. For freedom, we need choice”, says Quirk. “On a fluid frontier, citizens could sail about and choose the states they want. When you can vote with your house, we’ll see evolution in governments.”
Modern regulation
Offering alternatives to ailing administrations is just one part of the seasteading movement. Another – though still the result of inadequacies in the global political system – is to help business and science reach new heights. Many revolutionary technologies are being stifled by an abundance of regulation and government corruption. Innovations in biotechnology and stem cell therapies have suffered huge setbacks at the hands of overbearing administrations.
The 20th century regulatory regime is “not equipped to handle 21st century medicine”, argues Quirk. “Regulations written in 1970 shouldn’t be preventing medical innovations coming in 2020. We are talking to physicians and bioethicists who are eager to start a modern regulatory paradigm on seasteads. They claim it’s a moral imperative.”
The sheer amount of money in politics has increased incidents of corruption on a biblical scale. In the US, the ‘Citizens United’ ruling by the Supreme Court has allowed members of the oil and gas industry to destroy the democratic process, allowing vested interests to flood congress with cash, eliminating competition and stemming the tide of renewable alternatives that offer much-needed methods of curbing climate change.
The closest real-life comparisons we have of what can be achieved when innovation is given space to flourish are special economic zones (SEZ). Hong Kong helped inspire then-Chinese-leader Deng Xiaoping to announce his country’s new ‘open door’ policy in December 1978, which allowed at least half a billion Chinese to escape extreme poverty. Entrepreneurial types have found refuge there too, with relaxed policies helping their businesses flourish while remaining under the watchful eye of the Communist Party.
Another computer-generated image
But recent protests in the region show, no matter how free Hong Kong appears, it is still constrained by an oppressive, highly controlling central government that fears the SEZ’s successes as much as it admires them. “[It] is a prime example of a novel experiment in governance creating stupendous prosperity for the poor within the space of one generation,” says Quirk. “Unfortunately, new experiments in governance are locked to land. Today’s economic miracles are not true governance start-ups, but offshoots, locked into old paradigms that prevent progress.” That is why, he says, Seasteaders want to create thousands of floating Hong Kongs of the sea, in international waters.
International recognition
Seasteaders, however, do not believe national governments will see their objectives as a threat. In a paper for the Vanderbilt Journal of Transnational Law, Ryan H Fateh attempted to fill the gaps in international sovereignty law and the law of the seas. “Because international law promulgated by the United Nations addresses only state actors and TSI [the Seasteading Institute] is a nonstate actor, this note argues that international law does not prohibit the seastead communities from merely existing in international waters before they pursue their ambitions for international recognition”, wrote Fateh. “Considering historical practice and what guidance international law does provide, this note concludes that the United States will recognise seasteads as envisioned by TSI.”
While this is great news for seavangelists, there will no doubt be resistance to what the institute is attempting. But no matter what commentators say about the possible merits or malfunctions of floating cities, what is clear, is that what we have by way of governance is not fit for purpose. Solutions to the global challenges we face are hindered under political regimes that are out of touch. The lack of political diversity has made governments sluggish and complacent, harming innovation and progress in all areas of society. In free markets consumers are meant to have variety, which in turn drives progress. But in politics, citizens are given minimal choice, forcing them to choose between the lesser of two evils. Seasteads aim to offer a choice. The institute appears to have all the bases covered, in theory at least. But if it manages to succeed in practice, a wave of social, political and economic innovation may yet reach our shores.
The never-ending debate among US politicians over the Keystone XL oil pipeline is set to reach the Senate this week, after a bill proposing it was backed last week in the House of Representatives.
First announced in 2008, the Keystone XL pipeline would cost around $5.4bn to build. The 1,897km extension of the pipeline would run between Alberta, Canada, into the US and towards the Gulf of Mexico.
[E]nvironmentalists see it as a disastrous project that would be a backward step for the country
The bill is a controversial one, with Republicans almost unanimously backing the pipeline’s construction, alongside some Democrats. However, environmentalists see it as a disastrous project that would be a backward step for the country. They have long argued that President Obama would have betrayed his green credentials if he were to support the construction, as the tar sands that it would be tapping into are said to be worse for the environment than other sources of oil. For his part, Obama has hinted that he would use his power of veto to block the project if senators approve it.
However, while Republicans – who now control both the House of Representatives and the Senate – will continue to push for Keystone’s construction, some observers are arguing that the collapse in the global price of oil means it is no longer necessary. With oil dropping to below $50 a barrel in recent weeks, the US industry is under increasing pressure to remain profitable.
The State Department – which has to approve the project because it crosses international borders – released a statement a year ago that suggested Keystone might not be viable if prices continued to drop. “Oil sands production is expected to be most sensitive to increased transport costs in a range of prices around $65 to $75 per barrel. Assuming prices fell in this range, higher transportation costs could have a substantial impact on oil sands production levels.”
The report added, “Prices below this range would challenge the supply costs of many projects, regardless of pipeline constraints, but higher transport costs could further curtail production.”
While few people think that the dramatic fall in price to below $50 a barrel is likely to last into the longer term, it certainly places greater pressure on an expensive new pipeline that may not be financial viable.
Irish-based biopharmaceuticals company Shire has announced that it has entered into a merger agreement with US biotech firm NPS Pharmaceuticals in a bid to boost its competencies in developing medicines for rare diseases. Shire will acquire all of NPS Pharma’s outstanding shares for $46 each, paid for in cash, which brings the total value of the deal to approximately $5.2bn.
The deal marks the first major acquisition of 2015
“The acquisition of NPS Pharma is a significant step in advancing Shire’s strategy to become a leading biotechnology company”, wrote Shire’s Chief Executive Officer, Flemming Ornskov in a statement. “We look forward to accelerating the growth of the NPS Pharma portfolio based on our proven track record of maximising value from acquired assets and commercial execution. The NPS Pharma organisation will be a welcome addition to Shire as we continue to help transform the lives of patients with rare diseases.”
Shire’s focus going forward will fall on gastrointestinal (GI) disorders, core capabilities in rare disease patient management and global footprint, which are all areas in which the acquisition of NPS Pharma will enhance. “Shire shares NPS Pharma’s commitment to patients with rare diseases. We believe that joining our two companies will drive value for shareholders and ensure we continue to transform the lives of patients with short bowel syndrome, hypoparathyroidism, and autosomal dominant hypocalcemia worldwide. I am confident that this transaction will accelerate our ambition of creating a world where every person living with a rare disease has a therapy,” said Francois Nader, President, CEO and Director of NPS Pharma in a statement.
The deal follows a failed merger in October, after a crackdown on corporate tax avoidance meant that AbbVie’s proposed takeover would no longer come with the same degree of tax benefits. The break fee of $1.6bn, awarded by AbbVie, also meant that Shire was in a better position to strengthen its operations. The deal marks the first major acquisition of 2015 and likely the first of many, as the UK firm looks to expand its operations and tighten its grasp on the biotech market.
