by Damon de Laszlo, ERC Chairman
A week in politics is a long time – the two months of May and June has seemed like an eternity. In Britain, Mrs May has finally thrown in the towel, having managed the extraordinary achievement of antagonising virtually the whole of her own party and both sides of the festering Brexit debate. Elections to the European Parliament have produced near paralysis and have virtually destroyed the status quo, making it difficult to see how the new leadership of Europe will evolve. The President of the USA has swung from tearing up virtually every agreement with the rest of the world to becoming everybody’s best friend at the G20 meeting. It’s difficult to understand the political mayhem and reconcile this with the extraordinary economic stability which seems to roll on, regardless of chaos in the western governments. One of the positive effects of the UK/European negotiations seems to have been that is has greatly spurred the European bureaucracy into entering into trade agreements, firstly with Japan and secondly with the so-called Mercosur group of Latin American countries* after twenty years of negotiations.
Another interesting positive side effect of the upheaval in the basic order is a realisation that leaders can break through the constraints of bureaucracy. Flouting all conventional advice, Trump’s meeting with the North Korean leader Kim Jong un in his visit to the DMZ is without precedent. He has further infuriated the political establishment in his discussions with Chinese Premier Xi on rolling back some of the embargoes on American businesses selling to China. Whether his tactics are part of a deeply thought-out strategy or just antics, we will probably never know, but they certainly break the bureaucratic hold on political leaders that has been steadily circumscribing their room to manoeuvre in recent history.
Probably the most extraordinary phenomenon of today’s world is the fact that economies in the West and most of Asia are doing relatively well, and it would seem that the political uncertainty is holding back the boom that could have developed in what economists would predict is the tail-end of an economic cycle. Full employment is the best thing for general well-being, with the caveat that the so-called middle classes are not benefiting from the current economic growth. These are the people who are most politically active and when expectations are not being met, causing political polarisation.
In the last month I have been visiting companies in China and have spent time at an electronics show in San José, California. What is extraordinary is to see the amount of incredible innovation going on in two very different economies. The advances in electronics which is the core of the development that is leading to ever-growing applications of Artificial Intelligence, robotics and virtual reality, is quite extraordinary.
In economic terms, we are indeed in an age of “capitalism without capital”. Vastly reduced amounts of capital are needed to create economic prosperity. The amount of energy being generated by new ideas and capabilities is extraordinary and will have unpredictable results. The most interesting, if not serious, by-product of this technological development is surveillance technology. In China people by and large accept that there is mass surveillance and data gathering by companies as well as the State. The US, overall, feels relatively unperturbed by corporate data gathering but is intellectually nervous of State data gathering. In Europe there is much less acceptance and understanding in general of modern technology, and Brussels, rather than encourage it, positively discriminates against the processing of mass data. This could lead to Europe becoming a technological backwater. Whether one views the ability to collect and process data on individuals as good or bad, it is going to be an inevitable consequence of modern technology.
We are in a period of rapid change with unpredictable outcomes and it is more than unusually difficult to see the consequences of the changes that are driven by disruptive technology, particularly as this development is so rapid.
This added to the political instability in the West makes for “interesting times”!
*Brazil, Argentina, Uruguay and Paraguay
Damon de Laszlo
July 1st, 2019