Archive for the ‘Information technology’ Category

A Future for News

March 8, 2017

Jodi Rudoren, Editorial Director of the New York Times Global, writes March 7th, 2017.

“The idea of NYT Global is to grow our audience around the world and to make The Times a truly international news organization. That means expanded coverage in Australia and Canada, where the decline of the local media has left readers clamoring for quality journalism.”

As a reader, it appears that the local print media in Canada is dying, at least in the case of the Ottawa Citizen, which has become an emaciated news sheet. There are some excellent columnists writing in various publications and appearing on TV, but in order to find out what is going on beyond the Canadian borders, and understanding how this might affect the country, one is forced to look elsewhere.

Each person is constrained by the 24 hours in each day and has to allocate time for news consumption by reading, listening and watching. The possibility of gaining quality access is expanding with developments in communications technology.

The Shattered Mirror

February 8, 2017

 

 

The Shattered Mirror – News, Democracy and Trust in the Digital Age proposes increased bureaucratic input and public funding for a sector rocked by new technology.

What Uber has done to the taxi business and Airbnb to accommodation, has invaded all forms of media including news reporting and distribution. Daily newspapers are haemorrhaging advertising revenues and many have been forced out of business, or to adopt different means of distribution. Many other sectors are affected by technology such as education with the offerings of online courses. Existing suppliers fight back to maintain at least some semblance of the status quo, often lobbying governments for increased support. Ultimately new technology usually wins and a new breed of entrepreneurs rise to fill any gaps to provide the desired goods and services.

The process is part of Schumpeter’s stages of creative destruction which benefits consumers, and those producers who adapt. Those who lose appeal to the government for support. Such is the case for The Canadian Public Policy Forum’s latest report The Shattered Mirror, News, Democracy and Trust in the Digital Age which examines how technology has affected traditional news media. It argues that the public is poorly served by the new digital news providers and that democracy is at risk with, for example, the reporting of fake news.

Since the 1950’s numerous reports have examined the Canadian media including news. They include:

1951 Royal Commission on National Development in the Arts Letters and Sciences (Massey Report).

1961 Royal Commission on Publication (O’Leary Report)

1970 Special Senate Committee Report on the Mass Media, (Davey Report)

1981 Royal Commission on Newspapers (Kent Report)

1982 Report of the Federal Cultural Policy Review Committee (Applebaum Hebert Report)

2006 Senate Report on the Canadian News Media (40 recommendations and 10 suggestions).

 

All recommended measures of protection and support to which The Shattered Mirror adds its contribution. Written by a person who has had a distinguished career in journalism, this almost assures that the recommendations will include further government support for the industry. It succeeds in this regard. It would be the same if dairy farmers were asked for advice on supply management or academics on university funding.

The report contains thirteen proposals. Many require additional administration of funds and rules which in total would require both added bureaucratic overhead and time spent by firms to qualify for the funding.

Two proposals provide the tenor of the report and the tortuous process that would be required to comply with the provisions.

  1. In the proposal to extend provisions of Section 19 of the income tax act to other media. Producers of eligible news will be required to show that: (Recommendation No.1).

At least 75 percent of editorial payroll and 75 percent of their eight most highly paid employees are Canadian individuals or personal-service companies.

At least five percent of the company’s revenue generated in Canada is spent on editorial operations, with a significant amount for civic-function journalism.

 

  1. Creation of a fund managed independently from the government (Recommendation No.5).

Creation of the Future of Journalism and Democracy Fund would provide financing for digital innovation, especially in its early stages, and be directed at those operators who produce civic-function journalism at the national, regional and local levels. To qualify, enterprises would have to be Section 19-compliant and deliver original news on digital platforms that are refreshed at least once a week. The fund would cover a maximum of 75 percent of the cost of a project. The ability of applicants to attract support from other partners would factor into the grant decision.

 

Proposals regarding the CBC fail to note shrinking audiences especially for English language television. CRTC Annual Monitoring Reports (available online) show the CBC’s share of the English language television market fell from 13.2 percent in 1994 to 7.5 percent in 2000 and to 5.1 percent in 2012. While government financing has remained around $1bn, this segment of its mandate has been shrinking, so that on a per viewer basis the funding has been increasing.

If the CBC is to survive, consideration should be given to it being funded only by government and not selling commercials. The latter puts it in competition with private broadcasters, allowing it to use public funds to buy programs like major sporting events. In the UK and Australia, the public broadcaster is funded almost entirely by government, with far less angst being created between public and private broadcasters. A government owned broadcaster, if one is needed, can devote its attention to its public service mandate and have a far lesser concern for audience size.

 

The Shattered Mirror focuses on the importance of civic-function journalism defined as the coverage of elected officials and public institutions, from legislatures, judicial and quasi-judicial bodies and city halls to school boards and supporting public services. That is important, but in a globalized world coverage of what happens outside Canada is increasingly important. Much of this can be accessed online from websites and blogs run by people whose judgement I personally respect in different news related fields, and superior to many traditional news sources. In broadcast media, my preference is for The Agenda on TVO and the PBS Newshour. In both instances the anchors are informed but do not insert their own opinions, unlike what prevails with the CBC and CTV.

There is much more to comment on in the report. As it stands it argues the case for supporting more of the same with increased bureaucratic input. It deserves further discussion.

Where will the jobs be? (2)

July 12, 2016

Those who subscribe to a “lump of labour” view believe that there is only so much work to be done, and when, for example, machines substitute for what was previously done by humans there is nothing more, or something less, for workers of any age, sex or race to do. I and many others don’t believe this is the case, but there are serious questions about what displaced workers will do and, for example, whether they can be retrained for other jobs.

In thinking about this question, consider the following, in no particular order:

  1. In countries like Germany and Japan, the population is ageing and the concern is for a future workforce shortage. This explains Germany’s welcome for refugees and displaced persons from the Middle East and Africa. Japan so far is reluctant to dilute its native population with foreigners, and will reap the consequences if it fails to do so. As people are living longer, the present retirement age can be extended providing partial relief, but there is a limit.

 

  1. Unemployment due to the need to adapt to changing technology – the Schumpeterian case of creative destruction – that is the introduction of different ways to produce familiar as well as new goods and services, gives rise to the need for retraining. This is easier for some, say younger folk, than others, but is an option that almost always occurs in similar circumstances. How fast workers can adapt is an issue. For example, a change from manual work to engaging with digitized production processes may require more of a generational change than a simple retraining course. If the change is too slow or virtually impossible then other measures, preferably of a temporary nature, can be tried.

 

  1. Young people have the flexibility to aim for employment in areas where demand is growing in both low and high skilled occupations, and to take courses accordingly. It is pretty obvious that in higher income countries there is strong demand for service sector employees in food and other types of retail operations. The job vacancy signs are posted in store windows as well as in help wanted electronic and other billboards. No, they don’t pay well, frequently offering minimum wage but they exist. Some taking these jobs may decide to experiment themselves by starting their own businesses.

 

  1. There is an active market for caregivers for old people (like myself) and for children in rich and poor countries as well as for healthcare workers. Where available nationals won’t apply for these jobs, temporary or permanent foreign workers are often hired. The work is there. The locals don’t want to do the jobs. In general, employment is increasing in the service sector in middle and upper income countries. There is no shortage of work, often a shortage of the type of work people may be willing to do.

 

  1. The educational and training paths may be out of whack with available job opportunities. A higher percentage of the population in upper income countries now go to university than previously, but the available jobs may not need degree training. Often a rewarding career in the trades benefits from attending community colleges where skills required from emerging technologies can be acquired. Past emphasis on the three Rs may now need the addition of skills like computer programming and apprenticeship-type programs. (I learned the basics of Fortran programming in the 1960s, and whereas I never followed this up and could not earn a living at it, I know what is involved. It may now be a necessary and rewarding skill in many industries subject to the use of computers.)

 

  1. There is considerable research available that addresses the question of where future job opportunities lie. I will refer to these in a future posting.

 

None of the foregoing suggestions involve rocket science. They do suggest ways of looking at the future labour market and its required skills. They do indicate a willingness to be adaptable and engage in life-long learning, something that recent technology facilitates. In my view, there is no fear of a finite lump of labour syndrome.

 

Everything old is new again

May 13, 2016

Globalization, the Internet, Silicon Valley and US politics, especially the wealth of a few, are all a repeat of the past. There have been other Silicon Valleys and moguls who became very rich.

Previous Silicon Valleys sprung up in Pittsburgh and Detroit, one with steel and the other with cars and trucks. Both withered on the vine and were replaced by California, New York and Boston where much of today’s venture capital is found, especially in communications and related industries. Both Pittsburgh and Detroit are making comebacks with university backed research in the case of Pittsburgh, and new startups around Detroit. One of Steve Case’s arguments in The Third Wave is that venture capital is migrating to many US cities not typically considered as entrepreneurial hangouts.

While American politics presents daily a sad sequence of Mad Magazine adventures, US business remains strong. It is the world’s strongest and most dynamic economy embedded in a third world political system, although parts of the economy spill over into tax havens like Panama.

The entrepreneurial forerunners of Bezos, Gates, Jobs, Page, Musk and Zuckerberg, were Carnegie, Ford, Morgan, Rockefeller, and moguls in the railroad and banking businesses. Public reaction to these titans was the passage of antitrust laws in the US, the Sherman Act, Clayton Act and FTC Act, and the 1889 Combines Act in Canada. Monopolies and price fixing were the focus of public outrage in this earlier period leading to this legislation and the prosecution of price fixing and mergers.

Steel, railroads, automobiles and banking are examples of developments which affected many industries, and were in many ways the equivalent to the way information technology is impacting all economic sectors today. When I was growing up (1934 and on), I seldom travelled far from home, when I did it was by bicycle, bus or train, certainly not air. When I communicated with family and friends, it was by letter, occasionally by telephone, but not long distance which was far too expensive. Telegrams were a cheaper means but provided nothing like Facetime, Skype and email. News came from newspapers and the radio with few broadcast stations. Public libraries were widely used for reading material, and music was sold on vinyl records often with one song per record.

Today, the allure of Trump to his supporters is because they feel disadvantaged as a result of the rapid pace of change in many economic sectors, resulting in either the loss of jobs or the receipt of lower salaries. One issue becomes the means of retraining the existing workforce, always more difficult for older workers, but similar changes have happened before. For example, in the printing industry, metal typesetters transitioned to keyboard typesetting. And the farming sector has become mechanized, so that less than two percent of the workforce now produces a far larger output than the thirty percent did a century ago.

Steinbeck in the Grapes of Wrath portrays what happens to a rural population when a natural disaster and the depression hit simultaneously. But adjustment did occur eventually as a result of a combination of migration, retraining and a war. Today, people expect faster adjustment, and communications provides the means to lobby for change politically. It is just weird to see a business tycoon represent those who are much poorer, and feel disadvantaged by the system which makes him rich.

Today, some similarities exist with the French Revolution described in Wikipedia as follows:

The French Revolution was a period of far-reaching social and political upheaval in France that lasted from 1789 until 1799, and was partially carried forward by Napoleon during the later expansion of the French Empire. The Revolution overthrew the monarchy, established a republic, experienced violent periods of political turmoil, and finally culminated in a dictatorship under Napoleon that rapidly brought many of its principles to Western Europe and beyond. Inspired by liberal and radical ideas, the Revolution profoundly altered the course of modern history,  triggering the global decline of absolute monarchies while replacing them with republics and liberal democracies. Through the Revolutionary Wars, it unleashed a wave of global conflicts that extended from the Caribbean to the Middle East. Historians widely regard the Revolution as one of the most important events in human history.

I make no claim to be an historian, and Trump may be no Napoleon, but the political commotion in the US, and the rise of the right in many European countries, added to the turmoil in the Middle East and North (and other parts of) Africa, suggest that some fairly significant changes are afoot……especially if you believe everything old is new again.

The Third Wave by Steve Case – Review

May 1, 2016

When historians come to write about the birth of the internet and globalization, they will research what the entrepreneurs did and what they thought. Steve Case will be one of those sources, and his book, The Third Wave, An Entrepreneur’s Vision of the Future (Simon and Schuster, 2016) will an important read. Walter Isaacson, who provides the book’s forward, will be another source. Among his publications, Isaacson has written The Innovators: How a Group of Inventors, Hackers, Geniuses, and Geeks Created the Digital Revolution (Simon and Schuster, 2014). Both authors assess where we have come from and where we may be going.

Case’s title stems from Alvin Toffler’s The Third Wave published in 1980, and described by its publisher’s blurb as:
Sweeping across history and the future, this stunning portrait of a new civilization springing up across the globe…. It reveals the hidden connections among today’s changes – in business, family life, technology, markets, politics and personal life.

Toffler’s Third Wave, a follow-up to his Future Shock published in 1970, describes events following the agricultural and industrial revolutions. Case, on the other hand, examines the third wave of the internet revolution…..or a third wave of what Toffler was describing as his third wave.

In 1980, Toffler could only imagine how economies and societies might develop. Thirty-six years later, Steve Case, provides an update and leads the reader into an idea of what the future of the internet might bring. It is written by someone who has played a major role in this ongoing revolution both as an entrepreneur, and as a person who has known other entrepreneurs and their companies. He is described as follows on the US Presidential “Jobs and Competitiveness” website”:

Steve Case is one of America’s best-known and most accomplished entrepreneurs and philanthropists, and a pioneer in making the Internet part of everyday life.    Steve co-founded America Online (AOL) in 1985, when the Internet was in its infancy.  Under Steve’s leadership as Chairman and CEO, AOL became the world’s largest and most valuable Internet company.  AOL helped drive the worldwide adoption of a medium that has transformed business and society.  AOL’s early focus on ease of use and social media set the stage for its rapid growth, and at its peak nearly half of Internet users in the United States used AOL. In 1992, AOL became the first Internet company to go public, and was the best performing stock of the 1990s, with a 11,616% return.   At the peak of the Internet boom, Steve negotiated what remains the largest merger in business history, bringing together AOL and Time Warner in a transaction that gave AOL shareholders a majority stake in the combined company.   To facilitate the merger, Steve agreed to step down as CEO when the merger closed in 2001.  He served as Chairman of the Board of the combined company (then known as AOL Time Warner) until 2003.

Steve Case provides a rich menu of observations on the internet revolution and globalization. My choices derive from my tastes. Other diners should read the book to find what satisfies their appetites. In the interests of brevity, I will summarize mine, in no particular order, as follows.

  1. The road to entrepreneurial success is never smooth. Many projects never make it, and the ones that do proceed often face dead-ends and are forced to take new routes. Nothing new in this, but Case provides chapter and verse of how it worked for him. Many entrepreneurs are reluctant to document setbacks.
  2. Entrepreneurial success is often a case of getting the right team together to deal with different aspects of the project, where the members feel free to criticize (assess) each other. This is similar to what happened with a successful comedy team like Monty Python, where success resulted from a team effort by individuals who had to suppress their prima donna genes.
  3. Individuals who succeed in internet related endeavours need not have much or any post secondary education. They will often read in a wide range of subjects, play mind games like chess or solve a Rubik’s Cube, experiment with machines in their garage or basement, and have a sports related interest like basketball, fitness, running, yoga, or tai chi.
  4. Once a firm is set up and receives venture capital, it may carry on for a time losing money and having to depend on angel investors. Maintaining good relations with those supplying the money in the early stages is crucial, or the project will often die on the vine.
  5. Steve Case provides a clearly written case of what worked and what didn’t in his own case. He illustrates how success often depends on having the right team of players providing various inputs. Often one person is celebrated as the successful entrepreneur, but it is because he (or occasionally she) has a support group that makes it possible.
  6. Unlike many in the private sector, Case explains the importance of the role of government in nurturing new ventures, which are going to upset the way existing industries are organized. As technology affects industries, so governments will have to make policy changes to ensure that the economic and social benefits filter down.

 

  • Familiar internet related names include, Geoff Bezos, Sergey Brin, Steve Case, Bill Gates, Steve Jobs, Pierre Omidyar, Larry Page, Steve Wozniak, Mark Zuckerberg, and companies like Amazon, AOL, Apple, eBay, Facebook, Google, and Microsoft…try matching people with companies. These names are related largely to the first two waves of the internet. What Steve Case writes about is how these and other companies will affect individuals, industries and economic activities in the future.
  • For example, education and health care absorb a large share of resources in all countries. They are expensive to run and often have inefficiencies which can be reduced by the use of technology. Education is experimenting with online classes. At one time I thought they might replace many onsite classes, but what seems to be happening is that onsite lecturers are often providing online versions of their courses to accompany the lectures. Students have the option of attending the live lecture and an online version, or only the online version. If the live lecture is at 8.30am, it’s not difficult to imagine what the choice will often be. Another issue is to decide how to give a credential for taking an online course which is recognized by employers, a not unsolvable problem, especially if there is money to be made.
  • Healthcare is developing means to monitor and prescribe for patients at a distance which can revolutionize the way these services are delivered. The technology is involved with medicine in many other ways.
  • Airbnb in 2015 was valued at $25bn. It is the largest hospitality provider in the US and does not own a single hotel (Case 2158 on eBook edition)….a challenge to the hotel industry.
  • Uber has shaken up if not destroyed the traditional taxi industry. The company does not own a single car, but acts to provide the service. The next stage, driverless cars and more importantly driverless trucks will bring further radical change to the taxi and trucking industries. Watch out for protests by truck drivers.

Many more examples could be quoted about how traditional economic sectors will be affected, and there is much more to garner from this book. I strongly recommend it to anyone interested in how entrepreneurship works, and how these evolving technologies will impact economies and societies. It is a must read for entrepreneurs, and for those of us with grandchildren who are going to live in this changed environment.

Uber shows the pervasiveness of sharing

July 7, 2015

There is nothing very remarkable about sharing. Even with rides it goes on in many ways. I use my car as a taxi-like service when I give friends a ride to the airport. No money changes hands but I hope the favour may be returned. The alternative is to call a licensed taxi service or now to use Uber. On vacation I may rent a car, boat or bike. These belong to someone who shares their use with others. Truck rentals are another form of sharing. Any time the word rental is used, it relates to some form of sharing.

 

In other venues we share space in places like restaurants, hotels, theatres, car washes, garages, and in rental clothing outlets. In a capital intensive society the ownership of capital provides both the opportunities and incentives for sharing and creating ways to be financially rewarded. Making intensive use of capital or finding ways for it to be used and paid for is a natural inclination for its owners.

 

The complaint by taxi owners and drivers is that they provide a service under conditions which are less favourable than those of Uber. Rules can be changed but from society’s viewpoint Uber is making more efficient use of capital resources. Cars parked or used to carry one person, say to work and back, means that it is under utilised for a large part of the day. Much of city street space is often used as a parking lot for idle capital.

 

So far the sharing examples relate to physical capital. Many items that carry a patent or copyright, such as the text of a book, a piece of music, picture or formula are bits of intangible capital which can be used over and over again without wearing out like a car or piece of machinery. Society shares aspects of this type of capital and has set up complicated means for owners to be rewarded from the sharing which takes place. Thus owners of this intangible capital can claim rewards from those who use it. The users will often try to avoid making payment, and avoidance is now aided by the ease of distribution over the Internet.

 

An outstanding feature of modern societies is that they contain large amounts of tangible and intangible capital, much of which is used less intensively than it could be. Homeowners, often for reasons of convenience, own their own set of indoor and outdoor appliances which are used less intensively than if they were shared. A wealthy society is often characterized by people owning assets and a lack of sharing. When hard times occur, as with gasoline rationing during wartime, then people resort to sharing and planning rides to make greater use of a planned trip.

 

While Uber for ride sharing and rentals in homes for room sharing are obvious examples of this practice, every economic activity can be examined for its sharing potential and to explore why it does or does not occur. Sharing is as useful a concept as scarcity in explaining the basis for how economic activity is organized and managed. Developments in information technology have expanded the sharing potential for certain types of activity, often for the greater benefit of consumers, but at times for producers who can organize activities to create additional streams of income or exposure to potential buyers.

Governance and the Internet

April 18, 2015

Orwell, Assange and  Snowden

Skill testing question…..what do these three have in common? All have been concerned with the state using technology to spy on and control its citizens. When George Orwell wrote 1984 in 1948, he recognised the issues, but had no idea of how the technology would develop to allow the state and others to spy on and influence citizens. When Julian Assange and Edward Snowden showed what and how the US government in 2014 actually collected, stored and used information in to spy on people at home and abroad, they confirmed Orwell’s warnings. Today, Assange shelters in the Ecuadorian Embassy in London to avoid arrest and deportation to Sweden; to avoid US authorities, Snowden resides in Moscow, where he was recently interviewed by John Oliver for a US television broadcast. Snowden had been the subject of a documentary film, CitizenFour.

In January 2013, Laura Poitras received an encrypted e-mail from a stranger who called himself Citizen Four. In it, he offered her inside information about illegal wiretapping practices of the US National Security Agency (NSA) and other intelligence agencies. Poitras had already been working for several years on a film about monitoring programs in the US that were the result of the September 11 attacks. In June 2013, accompanied by investigative journalist Glen Greenwald and The Guardian intelligence reporter Ewen MacAskill, she went to Hong Kong with her camera for the first meeting with the stranger, who identified himself as Edward Snowden. Several other meetings followed. The recordings gained from the meetings form the basis of the film. (Wikipedia).

 

Fast forward to today and the topic of the internet, what it is, what it does and what governments should do about it is the subject of numerous studies which bring together specialists from different disciplines to provide their analysis and recommendations. This material is extensive and often repetitive. One example of a paper providing an informed succinct survey of many of the issues is Melissa Hathaway, Connected Choices: How the Internet is Challenging Sovereign Decisions (Paper No. 11, April 2015 for the Global Commission on Internet Governance, CIGI and Chatham House. The Economist provides informed content of developing issues in the field.

The question posed here is whether we have been here before in dealing with a similar range of issues concerning the introduction of new communications technology. If so, then the caveat that “everything old is new again” may be a useful point of departure in discussing internet governance.

The Internet provides a means to create, store and transmit information which can be used for multiple purposes – messaging, banking, education, health services, news, book and magazine publishing, blogs, entertainment, delivery of government services, control of power grids, national defense, making and breaking criminal activities. Anything that can have an e- placed in front of it has internet implications.

Each of the listed activities has a formal and/or informal governance structure, sometimes one or more government departments or agencies, or governance organized by those involved in the activity. Thus, in Canada, the CRTC does it for telecommunications, and private producers for deciding whether food is “organic” or “gluten free.”

Given the pervasiveness of the internet, it may be ambitious to expect that it would be either easy or possible to arrange for its governance as a whole, as opposed to a particular activity which is internet related. Exhibit 1 summarises the difference between governance and government.

 

Exhibit 1.

“Governance refers to “all processes of governing, whether undertaken by a government, market or network, whether over a family, tribe, formal or informal organization or territory and whether through laws, norms, power or language.” It relates to “the processes of interaction and decision-making among the actors involved in a collective problem that lead to the creation, reinforcement, or reproduction of social norms and institutions.” 

To distinguish the term governance from government: a government is a formal body invested with the authority to make decisions in a given political system. ” (Wikipedia)

 

The case of publishing

Consider publishing as one activity impacted by the internet, and the governing regimes which have grown up over time. Publishing has a long history from development of speaking, creation of letters, alphabets and words, preparation of documents first by hand, then the printing press and now electronic word processing and distribution.

Scribes in monasteries fought the introduction of the printing press which went through changes from the setting of lead type to the use of typewriters and computers. In the UK, it took a Rupert Murdoch to break the grip of unions representing lead typesetters, some of whom were retrained to type on keyboards. This was a labour issue related to changing technology and largely unconnected with regime change except for any relevant labour laws.

 

In this industry, governance comes to the fore when considering copyright:

 “The history of copyright law starts with early privileges and monopolies granted to printers of books. The British Statute of Anne1710, full title “An Act for the Encouragement of Learning, by vesting the Copies of Printed Books in the Authors or purchasers of such Copies, during the Times therein mentioned”, was the first copyrights statute. Initially copyright law only applied to the copying of books. Over time other uses such as translations and derivative works were made subject to copyright and copyright now covers a wide range of works, including maps, performances, pantings, photographs, sound recordings, motion pictures and computer programs.”

 

Other rights, such as the moral rights of authors, evolved to increase the returns to authorship. Copyright was also used as censorship to assist the sovereign in managing news and opinions.

The terms of compensation and length of copyright ownership rights are constantly debated today, with authors lobbying to extend the protection granted to them by law. Note, a similar argument relates to patent rights, and is used by pharmaceutical and other firms to protect their intellectual property.

The accumulated protection has been weakened or undermined by the internet. It has reduced the ability of copyright owners to protect their rights. There are continual attempts to revise the laws and copyright regimes which exist to deal with electronic publishing and the use of material. This is red meat for the legal profession, which is paid to protect both owners and those seeking to introduce more competition into the intellectual property market. Economists have not done badly either as consultants in this debate.

A history of the regime for authorship, publishing and distribution, shows the way the regime has changed and is now affected by the new technology. In order to establish governance for the internet as a whole, it will be necessary to address each aspect of its impact, that is each industrial, social and political activity which is affected by it. Constructing one overall regime would seem to be a challenge to say the least. And considering there are around 200 countries in the world, each of which claims sovereignty in some sense, the challenge may be overwhelming.

 

The case of broadcasting

Fast forward to Canada in 2015, where debate swirls around the domestic regime for television. The broadcasting regulator has ruled that Canadians should, at last, be allowed to pick and pay for the channels they want to watch – as they do for food when they buy groceries in the supermarket. Previously, the regime has required that consumers be offered TV channels in bundles regardless of whether they wanted them, and some of these channels would be required to carry a certain amount of content that was branded as Canadian.

Branding meant application of a formula regarding such things as the nationality of the inputs used in the program. Requiring Canadians to view these programs proved impossible to enforce, and is even more so now with services like Netflix, YouTube and material available on the web.

The point is that the regime for broadcasting has evolved with a complex set of rules which benefited certain groups but ignored the interest of others, viewers in this case. The same thing is likely to happen when developing a regime for the wide range of activities which make use of the internet. Governance of individual activities is often complex, governance of the whole will be a Herculean task. Today about 40% of the world’s population of seven billion have internet access. In the next few years the figure is likely to rise to 80%.

Uber alles

March 7, 2015

It’s here to stay

Taxi drivers in many North American cities are feeling the pinch from “uber” competitors. Viewed as unfair competition by some, the “uber” process makes a more efficient use of resources. By increasing the use of underutlised facilities, “uber”, an organizational process – in some ways an innovation, has increased the employment and value of an asset. For example, a car which is used 20 per cent of the time may now be used 40 percent by making it available for hire. The car, a physical asset, can now be used to provide more transportation services by being part of “uber.” An organizational innovation provides a benefit to society.

 

Consider your home and items in it. It may contain unused and/or underutlised rooms. These could be rented out to others on a part- or full-time basis. This is what AirBnB does (Wikipedia)

Airbnb is a website for people to rent out lodging. It has over 800,000 listings in 33,000 cities and 192 countries. Founded in August 2008 and headquartered in San Francisco, California, the company is privately owned and operated by Airbnb, Inc.

Users of the site must register and create a personal online profile before using the site. Every property is associated with a host whose profile includes recommendations by other users, reviews by previous guests, as well as a response rating and private messaging system.

A home has other items such as appliances, clothing, furniture, books, pictures etc., all of which are underutlised to some extent and could be shared, although this would be easier and more practical for certain items than others. Extending this to commercial activities, the modern economy is awash with underutlised assets such as machinery, buildings, laboratories, movie theatres, concert halls, universities, schools, stadiums, the list is lengthy. All look for ways to increase the utilization of their fixed assets and spread these costs. A modern economy incorporates many types of sharing of goods and services and often the amount of sharing could be increased for any of these assets as well as for a car.

 

A taxi service itself is an “uber” type business based on the sharing amongst different users, the customers. Private individuals (uber owners) now do the same thing for money which they previously may have done for free, when they drove their family members or friends to catch a plane. Of course there are safety and liability issues involved but experience will sort these out. Even with official taxi services, passengers have been assaulted and driven a roundabout route to their destination, either deliberately or through driver ignorance.

 

Underutlized assets are a feature of all but especially wealthy economies where consumers are willing to pay for choice as an option, even if they do not use the asset intensively. A similar process occurs in the arts. Take authorship for example. Each year I receive a cheque from the federal government under the Public Lending Right (PLR) program. The cheque gets smaller each year as more writers participate and titles increase, and program funding remains unchanged.

 

Notes on PLR program:

Initiated in 1986

Total Payments made in 2014   $9.7m

Total eligible titles  92,000

Av. payment per author $525.00

 

The logic of the program is to reward authors for use of their work when it is borrowed from libraries, a case of one book shared by many users who use (borrow) this asset at different times. If all readers purchased the book outright, the publisher and author would share the revenues earned, the author’s share being her royalty payments. When a library purchases the book, the same copy is used sequentially by readers who share its use. With the growth of library borrowing, the PLR program was introduced to benefit authors from this form of asset sharing. An automotive company could make a similar case for the purchase and use of its cars as taxis, where the car is bought once and then used by many riders with no direct return to the manufacturer. This has not happened, but another type of asset sharing has evolved with the “uber” arrangement.

 

When viewing economic activities, especially in high income economies, there are numerous examples of underutlized assets which lend themselves to different methods of management, and could often be used more intensively than at present. How that is done depends on the features of the assets and the ingenuity of entrepreneurs to find new ways to use them. The IT revolution has resulted in many organizational changes in the production and distribution of goods and services. Trying to stop “uber” taxis would require putting the genie back in the bottle. Less developed economies, which have fewer assets per capita, already make more intensive use of what they have. Sharing underutilized assets is a way of promoting efficient forms of growth and should appeal to conservationists.

Entitlements – the weakening of democracy and capitalism?

December 19, 2014

When the Soviet Union imploded in 1989, some predicted that western style democracy and market capitalism would reign supreme. Countries without these institutions would move in a westerly direction. It was a nice thought but did not happen and the hubris has since been deflated.

One reason is the epidemic of entitlements granted to and then protected by special interests. Everyone from corporations to poverty groups seek benefits from governments which once granted are difficult to roll back. While the interested parties may benefit the system as a whole becomes infected and debilitating illnesses ensue.

Twenty-five years after writing The End of History in 1989, Francis Fukuyama has revised his previous view and examined the weaknesses of market capitalism and the democratic process as practiced in the North America, Western Europe and various other countries.

A question now is whether these institutional arrangements are in decline and what will replace them? Alternatives include, amongst others, some degree of anarchy, a repressive political regime, a more centrally controlled economy, or some combination of the foregoing.

Not being a student of these issues, my views are based on the limited history I have read and experiences I have lived through.

Measures which may weaken the democratic process.

1. First past the post electoral systems result in winners often being elected with well less than 50 percent of the vote. Proportional representation lessens this problem but creates others, the existence of many parties, each with a narrow interest creating difficulties in getting majority votes for the passage of legislation. One alternative is a preferential voting system whereby an elected representative must get 50 percent of the votes cast.

2. The electoral process encourages candidates to propose policies which attract particular groups of voters. These almost always cost money and over time become considered as entitlements. They are difficult to remove and tend often to increase in terms of cost. Sunset clauses supposedly limit these effects but don’t seem to work well once a constituency is created.

3. Electoral boundaries may be drawn so as to favour a certain party. U.S. Congressional districts are rife with this process of gerrymandering but it occurs elsewhere. Limiting the number of voters is another way to rig electoral systems as is specifying the qualifications which candidates for election must have.

4. Unelected (appointed) bodies such as Canada’s Senate may be given legislative powers, while in other jurisdictions the powers of an elected upper chamber may influence appointments or legislation.

5. Judicial positions may be held as a result of appointment or election with or without specified terms. There are downsides to both processes. Appointees may be given short terms. In the case of election, the person may be influenced in decision making by the likelihood of reelection.

These are some of the shortcomings I see of the democratic process. The term democracy is much abused. It is used in cases which result in one party rule. Many authoritarian systems describe themselves as democratic, while so-called democratic regimes have elements which are often undemocratic. In the long term, I think that the growth of entitlements, which are difficult to roll back, is the main Achilles heel of functioning democracies. This is one reason for the growth of right wing groups. If the elixir of democracy is to give people more and remove nothing, then the system may grind to a halt or at least malfunction so badly that people are encouraged to resort to extreme measures.

There is now a website which ranks countries by their degree of democracy. More countries are now considered democratic than in the past, but the criteria used do not include measures like the extent, growth and permanency of entitlements.

The future for market capitalism

1. Capitalism was always a mixed system with governments involved both to produce certain goods and services, and to provide a legislative framework for private actors to produce and distribute them. The issue is the extent and nature of this government activity. Even most libertarians expect that their property rights will be protected by a judicial system, their borders defended from attack and certain public goods like highways provided by the state. Socialists advocate much more government involvement in areas affecting the distribution of income as well as the production of goods and services.

2. Issues include the effectiveness and cost with which governments provide for the publicly supplied goods and services, as well as the extent to which things like education and healthcare are publicly supplied and regulated. Some lobby for more government involvement, some for less.

3. Private and public interests are now more intertwined. Financial institutions which are free market advocates also lobby intensively for a legislative framework which promotes their activities and protects them from loss in the case of defaults. After the latest global financial meltdown, the financial sector, with assistance from governments, has seen measures introduced which protect their interests. This is a form of corporate entitlement which becomes entrenched in the economy.

4. In the past the framework for market activity included laws and policies dealing with incorporation, taxation, competition, bankruptcy and contracts. These are now extended to include special measures for particular industry or market segments. They become a form of entitlement for the private sector similar to entitlements for individuals. Removal or amendment is difficult unless they are to be increased.

5. All may not be lost. One set of forces working against the debilitating effects of entitlements is the competition generated by information technology. The list of sectors shaken up by IT include all forms of communication, broadcasting, newspapers, magazines, films, television, publishing, education, transportation, healthcare and many other industrial and especially service activities. New technologies serve to undermine established entitlements in markets and may do the same in the political sphere as well with the growth of social media.

What Future for Online Learning?

April 27, 2014

During the past year, I enrolled in a number of online courses including World History from 1300, The History and Future of Mainly Higher Education, Financial Markets and A Beginner’s Guide to Irrational Behaviour. These have helped to shape my views on the future of online learning, which, using current technology, is still in its early stages, although a form has previously existed. It is too early to know how it will turn out. The following are my impressions to-date about its future.

 

  • The beginnings of online learning occurred with correspondence courses, the Open University in the UK, and the publishing of textbooks.
  • Some who have delivered online courses see them as a substitute for text books. Students can watch the course in their own time, and attend classes conducted as discussion groups focused on the lecture content. Many lecturers already provide outlines of their lectures available as Power Point presentations, either before or after a live lecture.
  • Experimentation is taking place with various degrees of in-class and online lectures. Different disciplines and levels (undergraduate and graduate) lend themselves to different blends. The instructor and subject matter will make a difference to what does and does not work. Seminars and lab work require an in class presence.
  • Those who have given online courses say that the upfront (fixed) costs of producing the material are high. The cost of another student accessing the material (marginal cost) is negligible, and make these courses attractive to cash strapped institutions and those not wishing to raise fees. Fixed costs are likely to decline as experience is gained and software improved to facilitate presentations.
  • Those watching videos are used to the production values of first rate television programs such as Downton Abbey, a National Geographic Special or Jeopardy. Online lectures which do little more than put a camera in a classroom will be an ineffective teaching tool, regardless of the reputation of the instructor and the institution.
  • While the foregoing addresses mainly university teaching, online instruction is useful for education at all levels including schools, technical colleges, professional training and any skills which require updating as developments occur.
  • The issue of certification for online courses is always raised. For example, an online course given by a Yale professor may lead to a certificate if the student meets certain conditions. While it will not be equivalent to a Yale course credit (or degree), if the person receiving the credit gets a job, and after a probationary period appears to have the knowledge associated with the course content, the certificate will gain the recognition of having certain value which becomes known to employers. Experimentation is taking place to test different business models.
  • Richard Levin, an economist and President of Yale University for 20 years became the CEO of Coursera, one of the largest commercial companies offering MOOCs  (Massive Open Online Courses). Udacity and edX are two others, while the Kahn Academy offers course material for free. Universities and entrepreneurs are investing in these changes.
  • To-date, information technology (IT) has resulted in significant restructuring of industries, for example, television, film, newspaper, book and magazine publishing, (although less so for periodical publishing), finance, retail shopping, and manufacturing through the use of robots. As outlined above, IT is currently creating changes to the delivery of educational and training services. Quality content is now available worldwide wherever the internet and mobile phones are available. The current world population of 7bn is associated with 6.8bn mobile phones – eg. phones per 100 inhabitants by country, Italy 147, Brazil 137,Morocco 113, China 89, Canada 74, N.Korea 8.
  •  Cost implications for universities depend on the restructuring which occurs. Some universities offer only online courses, and thus save on buildings and salaries of support staff. Others offer a mix of online and on-campus courses, where there will be a mix of additional equipment to distribute online course material but savings on classrooms, offices, support staff and buildings. Ever since the introduction of portable computers, my observation is that faculty has spent less time in campus offices and more time working at home. Other industries no longer provide individual offices for their staff which use shared space. The same could occur in post-secondary institutions.
  •  Cost implications for students include more efficient use of their time, less travel time, easier to work at home and to collaborate with other students and faculty online. They can also mix study with work more easily.
  •  It is the case that taking courses online is not the same as getting the benefits of live interaction with other students and faculty, and use of the other facilities which a traditional university setting offers, such as a library, athletic facilities, clubs and cafeterias. In the same way that restaurants offer different facilities and menus, so post secondary institutions will offer different combinations of onsite and online facilities at different prices to the students and the taxpayers. The latter tend to fund a big chunk of university education in most countries.