Values in the 21st Century - Europe, US and China

围棋 based on encircling your opponent on the Board provides an insight into Chinese values

Max Weber and Karl Marx, the founders of modern sociology, underestimated the importance of the way people in power think, behave and persuade others of the supremacy of their values. 

The Soldier, the Merchant and the Sage

Throughout most of history three groups, the soldier, the merchant and the sage, have struggled to gain predominance over a fourth group, the greater populous. When one of these groups achieves unchallenged control over the others the result has culminated in an imbalance of values leading to war, economic disaster or revolution.

Interestingly, most societies are based on an informal alliance between two of these three groups. For example, early agrarian societies were often led by aristocrats with warrior and landowner values (soldiers) in close alliance with priests (sages), who provided a spiritual justification for their rule. The merchant was usually tolerated for bringing wealth through trade, but was also resented for being cleverer and often richer than traditional elites.

During the 17th century, the merchant's power increased and decreased always dependent on protection from the soldier group. But it was not until the late 17th century that merchants first began to emerge as the dominant group in Europe. 

 

During the 19th century the rise of “soft" merchant values really took off. The British used their growing empire as a force for promoting free trade and globalisation in the so called interests of all. Nevertheless their competitors regarded these imperial projects as less benign. By the mid-19th century, the world of merchants was becoming one of competing business cartels, increasingly backed by the might of Nation States. But no country adopted the values of the “warrior-hard merchant” with more vigour than Bismarckian Germany, where repression at home and brutal zero-sum commercial competition with other rising industrial powers became the order of the day. The first world war was largely a consequence of the limits of allowing  merchant values to become the dominant group of values.

After the first world war, the US emerged as the wealthiest nation and dominant exporter of capital. This led to the spread of a new form of merchant power across much of the developed world in the form of debt-fuelled consumer capitalism. Yet the massive financial and trade imbalances that resulted again brought the dominance of merchant values to an end with the  Depression in the early 1930s.

The second world war ultimately inspired a new alliance of “sagely technocrats” and “soft merchants”. They were determined to learn the lessons of the past, this partnership worked to create a new world order of prosperity and social harmony. The early fruit of the combination of these values was the Bretton Woods monetary system, which established the rules governing commercial relations between the developed industrial nations.

 

Interestingly, the collapse of the Bretton Woods System in 1971, heralded a new renaissance of the dominance of hard merchant values. This period was led by the Anglosphere and was characterised by the so-called Washington consensus and "Davos Man". It launched a renewed age of the dominance of merchant values without the sagely values to reign it in. This age still continues today. To understand the banking and sovereign-debt crisis that has taken hold since 2007/08, the Geo-Trade Blog believes the US and Europe are paying the price for succumbing to the values of merchants, who believe in the justice of the market, and prize the pursuit of short-term profit fuelled by credit and risk. 

 

But perhaps there is a much broader problem. Modern democratic governments in the US and Europe play a much larger role in the economy than any governments in the ancient Greek democracies could ever have imagined, therefore, this in turn makes political leaders a huge source of patronage, in the form of business contracts, social benefits, jobs and tax breaks.

What are China's中国 values ?

Perhaps a more interesting question in the 21st century is, which of these three groups, the soldier, the merchant and the sage will gain dominance in a China led world? China owes its re-emergence to its embrace of the contemporary US and European model of modernisation – to a large extent driven by hard merchant values that put the country on its current path more than three decades ago. But the question of values remains unanswered.

It is interesting to note that Chinese traditional values are being replaced by what researchers have identified as an emphasis on material values - making money has become a major concern for most Chinese people. The new material values are expressed by a desire to buy apartments, cars and fashionable clothes. Showing external signs of wealth has become a basic social requirement.

The Chinese do not play chess, a game with a rather adversarial objective to eliminate your opponent from the board. Instead the Chinese invented 围棋 where the object of the game is to encircle your opponent and gain control of a larger total area of the board (see above picture). To some extent, this provides an insight into the different ways of thinking in Europe and the US compared with China 中国. 

In traditional Chinese culture, righteousness, or justice are perceived to be an important value. If democracy can protect an individual's political rights, it would seem the Chinese are sceptical as to whether it can ensure that people use their power to do the right thing. In Chinese culture, the legality and morality of procedure as well as the result are both just as important. Here in lies the eternal challenge that all democracies are forced to grapple with - what if the laws and democratic processes do produce “immoral” results, for example, an extreme-right wing party is able to win power in democratic elections or what of wars fought by a country that are not supported by its citizens.

In conclusion, it would seem that there is some commonality of horizon but the ways of thinking and framing problems remain different. It is still too soon to tell what combination of the Soldier, Sage and Merchant values will emerge in China 中国 as dominant but the Geo-Trade blog will continue to follow closely the new thinking on values emanating from China 中国 in the 21st Century.

A new Regional Comprehensive Economic Partnership (RCEP) for the Asia Pacific Region

Map of the new Regional Comprehensive Economic Partnership

The Regional Comprehensive Economic Partnership

China is set to commence negotiations to create a 16-nation trade bloc, known as the Regional Comprehensive Economic Partnership (RCEP), which has recently been announced at the ASEAN summit in Phnom Penh that concluded in late November 2012. The RCEP will include the 10 members of the Association of Southeast Asian Nations (ASEAN) plus China, India, Japan, South Korea, Australia and New Zealand, and will have the effect of lowering trade barriers and custom duties across the region by the end of 2015. ASEAN includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.

In the Asia-Pacific region, economic alliance negotiations have mostly so far been conducted bilaterally.The six ASEAN partner countries, including China, Japan, Australia, India, South Korea and New Zealand, already have respective Free Trade Agreements (FTA) with the ASEAN nations. But the envisioned extensive FTA would be created by expanding the existing frameworks. The countries will beging to hold first-round talks with the aim of concluding the negotiations at the end of 2015. Nevertheless, this is not to say that the new FTA will be easily achieved, there are many challenging tasks to be accomplished before it can produce effective results.

China will become No. 1

The OECD believes that within 50 years China and India will have become the major economic powers of the world. The organisation that brings together the 32 most industrialised countries of the world maintains that these two countries will account for almost half of the world's wealth in 2060.

In a report entitled A Look at 2060: An overview of long-term growth, the OECD concluded that the global economy will grow at a rate of 3pc over the next 50 years. The OECD estimates that the current economic crisis will fade and the world economy will grow with consistency, but with a different pattern to the current. The Report identifies that emerging countries will behave with more vigor and growth, but gradually their evolution will slow and will go on to match the average of the current OECD countries.

This uneven pace of economic growth will lead to a radical change in the world balance. The combined GDP of China and India will soon overtake the European economies and exceed that of all current members of the OECD in 2060. In 2060, China will have economic growth of 4pc and will increase its specific share of the global economy from 17pc to 28pc of the total.

The euro area which now accounts for 17pc of the global economy, according to OECD projections in 50 years will only account for 9pc of the total. Furthermore, the US whose economy currently represents 23pc of the world economy will reduce its weight to 17pc in 2060.

Australia's place in the Asia-Pacific Region

At the end of October 2012, Australia published a policy white paper that looks at its role of being a European country in the Asia-Pacific region.

Australia has European cultural origins and other alignments which sometimes hamper its image in the Asia Pacific Region. But nevertheless it relies increasingly on Asian immigration, especially from China and India, to ensure its economy competitiveness and to meet the annual residence quota within its population policy.

It has considerable security interests in its territory and maritime zones, but it only has a small population of 23 million. It is a US ally but it also has close economic and increasingly societal ties with China who has become its top trading partner in recent years.

Interestingly, Qantas, its national airline, has just re-positioned itself as a new regional hub-and-spoke network airline to service the Asia-Pacific region. It has abandoned its flights to Europe choosing instead to enter into a partnership agreement with Emirates flying its customers to the Dubai hub where they will be able to connect to other destinations outside the Asia-Pacific Region.

The Geo-Trade Blog will continue to follow closely how Australia continues to engage with the Asia-Pacific region and how it develops its strategic policy alignments with China and the US, particularly whether they will be governed by cultural affiliation with the US or by economic interests in the Asia Pacific Region.

The Pacific Century is getting underway

Map of the Asia Pacific Region

The US and the Pacific

Rarely has Rarotonga, the main city of the Cook Islands, seen so many important world leaders at its annual summit of the Pacific Islands Forum as at this year's event with the US Secretary of State in attendance. But this is indicative of the wider US' policy of the re-balancing of the US' strategic posture away from Europe and the Atlantic towards the Pacific. 

The competition for influence in the Pacific Islands recalls the days when they were more significant, both economically and strategically in the 19th Century when boats sailed readily from European countries in search of trading opportunities. In contrast, the 20th Century was very much an Atlantic Century dominated by the US and Europe.

Russia's Pacific Side

Russia has just inaugurated the longest cable bridge in the world, measuring 3,100 metres between Russky Island and Vladivostok. The bridge is quite spectacular, it is as tall as the Eiffel Tower and was built for the APEC Heads of State meeting. As such, the bridge is a symbol of Russia's plans to develop its Pacific side and strengthen its ties with its Pacific side, which in the words of Putin is "the most important geopolitical task" for the 21st century. 

Russia's new Vladivostok Bridge on its Pacific Coast

Europe is set to become the biggest loser

So far the impact of the shift in power from Europe to the Asia Pacific has been greatly underestimated by Europe. Interestingly, Asia has developed so fast that its population has not adjusted to their growth in prosperity by taking its foot off the throttle the way people have in Europe — opting for more leisure and higher levels of public spending. In Asia, people continue to work as hard as they did when they were much poorer.

For example, the average UK citizen works 1625 hours a year — a 35-hour week with four weeks’ holiday plus bank holidays. This compares with 2307 hours in Singapore and 2287 in Hong Kong. In economic terms, this means the Singaporean is working the equivalent of four months a year more than Europeans do. 

Add to that the top rate of income tax in Singapore is 20pc and in Hong Kong 15pc, and the net effect is that per capita GDP in Singapore is 30pc higher than in the UK, and in Hong Kong it is 50pc higher. The gap is widening as people in Asia show little sign of slackening off. Furthermore, life expectancy rates are also on the rise. 

Therefore, changes in Europe to compete with this blast of competition from Asia Pacific will have to be more fundamental and far-reaching than anything European politicians have yet dared suggest. The West has allowed its cost base to become bloated. Unless this is tackled, the future looks bleak, with many other countries going the way of Greece through stagnation to economic near-collapse with all the accompanying political implications that will test democracy.

Conclusion

The Geo-Trade Blog predicts that the next decade is going to see closer regional cooperation around the world – in América Latina, and in Asia too and maybe even in Africa. Basically if your neighbour’s house is on fire, then your house is on fire too, it makes sense to work together to prevent fires in the first place although the Geo-Trade Blog expects this to be a long and tortuous process.

Furthermore, the last few years have seen economics and politics pulling in opposite directions. The economics calls for more labour mobility; the politics argues for closed borders, particularly in Europe and the US. The economics calls for investment in the productive potential of the economy for 21st Century but  the politics is dominated by older voters in Europe and the US for whom the prime issue is the debt that society owes them for a lifetime of work. These two positions look very challenging to reconcile.


 

Copying and business - does it really matter?

The new composite 787 Dreamliner airplane Photo: Boeing

 
Copying, Imitation and Business Innovation

Copying is much more common than innovation in business and it is a much surer route to growth and profits. Studies consistently show that imitators do at least as well and often far better from any new product than the original business innovators do.

 

Companies do not readily admit to being copycats. This is because it is not well accepted in general and secondly, because it can be legally risky. Apple recently won a victory in the US over Samsung for imitating the design features of its products with its Galaxy smartphones and tablets. 
 

The pace and intensity of legal imitation has quickened in recent years. In the real world, companies copy and succeed. Interestingly, the iPod was not the first digital-music player; nor was the iPhone the first smartphone or the iPad the first tablet. Apple imitated others' products but made them more appealing to consumers. 

 

The multi-billion-dollar category of supermarket own-label products is based on copying well-known brands, sometimes down to the details of the packaging. Fast-fashion firms like Zara have built empires copying innovations from the catwalk.

Copying may be safer still when the imitator is not grabbing the innovator's customers: Southwest Airlines, an American low cost airline, did not object when Ireland's Ryanair cloned its business model in Europe. 

 

Furthermore, Asian companies—such as Panasonic, whose former parent, Matsushita, was nicknamed maneshita denki, “electronics that have been copied”—have excelled at legal imitation. Therefore it would appear that copying is here to stay.

But what is the role of fakes

The role of high end luxury good fakes is an interesting social phenomenon. Some people buy luxury brands as an act of self-expression. The key to understanding fakes is that "Status" is a “positional” good. This means that to be at the top of the social heap, it is not enough to have fine things. Your things need to be finer than everyone else's. 

Others buy them as an act of social emulation, that is, they want to wear the same brands as the people they aspire to be. Studies suggest, such status-seeking consumers are more likely to buy counterfeits.

For example a Prada handbag is a mixture of two things: a well-made product and a well-marketed brand. But some consumers value prestige, but not quality. Imitations allow shoppers to “consume” the prestigious brand without buying the high-quality good.

But a luxury brand confers status only because it is exclusive. That is, it has to be widely popular, but not widely accessible. People who buy Prada are paying for exclusivity.

Copying paintings is nothing new either

A copy of the Mona Lisa was recently discovered in the Prado Museum in Madrid. This painting was created side by side with the original that now hangs in the Louvre - the version signed by Leonardo da Vinci. In the Louvre's original, which will not be cleaned in the forseeable future, Lisa's face is obscured by old, cracked varnish, making her appear almost middle-aged. In the Prado copy we can see her as she would have looked at the time - as a radiant young woman in her early 20s. Hence there now exists the rather odd spectacle that the copy of the Mona Lisa is more beautiful than the original.

Mona Lisa (Left Louvre) (Right Prado Copy)

The better preserved Madrid copy reveals much about the painting that has been lost in the original, for example,  the semi-transparent veil around her left shoulder.

Also of note, it would appear that the underdrawing of the Madrid copy was very similar to that of the original. This suggests that the original and the copy were begun at the same time and painted next to each other, as the work progressed. This is important in itself for what it tells us about Leonardo's studio practice. The production of a second painting alongside the original is indeed intriguing. The value of the original masterpiece surely is diminished given that a further copy exists, albeit produced in the same studio and preserved in a better state, even though it may not have been fully authored by the master artist. This surely blurs the relationship between copy and original that so much emphasis is put on in the art world. 

Conclusion

Whether it be copying of business models, ideas, products, artworks, copying and imitating is an essential part of most creative processes that we often choose to conveniently ignore. The Geo-Trade blog has sought to illustrate this point and to highlight that by putting limits on the freedom to copy and imitate only restricts the flow of ideas and knowledge to everyone's detriment. This is not to say that someone should not be able to benefit from the time and effort they have put into inventing something (otherwise perhaps nobody would bother to invest their time in innovating) hence to avoid their innovation being ripped off immediately, the Geo-Trade Blog endorses the need for an "exclusive right" during a relatively "short period" to enable them to reaps the full benefits of their innovation, but, with the acceptance that this is a limited right and sooner or later, their innovation will be replicated by others that may well do it better, who will in turn be copied. The cycle continues. 

Enhancing Human Ability in the 21st Century

The Economist recently published a video interview on pushing the limits of human ability in light of the 2012 London Olympic Games. Watch an interesting discussion on the limits of human ability and what it would take to surpass them.

The Top Genetic Enhancements already done in mammals

Whether we are talking about making people smarter or stronger or able to fly or whatever, we are talking about making changes to the complex systems that underpin human ability. Below is a quick canter through the top genetic enhancements that have already been done in mammals (and hence could presumably be done in humans).

1. The Doogie Mouse. Better memory through over expression of NMR2B. A very simple, yet good demonstration of how plastic our memory system is. Since then several other ways of enhancing memory genetically have been found, with slightly different effects on different types of memory, forgetting and side effects.

Tan, D. P., Q. Y. Liu, et al. (2006). "Enhancement of long-term memory retention and short-term synaptic plasticity in cbl-b null mice." Proceedings of the National Academy of Sciences of the United States of America 103(13): 5125-5130.

2. Color vision mice. Adding human photo pigment allows (at least females) to see new colors. This is extra interesting since it shows the brain can adapt to the signals from a new sense, at least when growing up with it.

Gerald H. Jacobs, Gary A. Williams, Hugh Cahill, Jeremy Nathans, Emergence of Novel Color Vision in Mice Engineered to Express a Human Cone Photopigment, Science 23 March 2007: Vol. 315. no. 5819, pp. 1723 - 1725

3. Methuselah mice. By reducing growth hormone levels long-lived dwarf mice can be produced. The current record holder survived 4 years 11 months and 3 weeks, while normal mice have a two year lifespan.

A. Bartke, H. Brown-Borg, J. Mattison, B. Kinney, S. Hauck, C. Wright, Prolonged longevity of hypopituitary dwarf mice. Exp. Gerontol. 36, 21-28 (2001) Bartke A, Brown-Borg H. Life extension in the dwarf mouse. Curr Top Dev Biol. 2004;63:189-225.

4. Monogamous voles. Normally non-monogamous voles can be turned monogamous (and more social) by changing the vassopressin V1a receptor.

Lim M. M., Wang Z., Olazábal D. E., Ren X., Terwilliger E. F. and Young L. J. 2004 Enhanced partner preference in a promiscuous species by manipulating the expression of a single gene. Nature 429, 754–757.

5. Regenerating MRL mice (OK, a case of accidental breeding rather than genetic engineering, and it involves at least 20 genes). These mice regenerate holes punched in their ears as well as some injuries to heart muscle.

Schuelke M, Wagner KR, Stolz LE, Hubner C, Riebel T, Komen W, Braun T., Tobin JF, Lee SJ. Myostatin mutation associated with gross muscle hypertrophy in a child. N Engl J Med 2004: 350: 2682–2688.

Lee SJ (2007) Quadrupling Muscle Mass in Mice by Targeting TGF-ß Signaling Pathways. PLoS ONE 2(8)

6. The hard working monkeys. Work discipline through a blocked dopamine D2 gene. Monkeys tend to slack off until they get close to a reward they have to work for. If injected with a DNA construct that blocks the D2 receptor they worked at an even rate. This is likely less a case of workaholism and more a case of specific memory impairment for how rewarding situations look. Still, adjusting the dopamine system is likely to enable boosts of motivation.

Zheng Liu, Barry J. Richmond, Elisabeth A. Murray, Richard C. Saunders, Sara Steenrod, Barbara K. Stubblefield, Deidra M. Montague, and Edward I. Ginns, DNA targeting of rhinal cortex D2 receptor protein reversibly blocks learning of cues that predict reward, PNAS August 17, 2004 vol. 101 no. 33, 12336–12341

7. Anticancer mice. These mice (the result of a lucky mutation) have immune systems that kill cancer cells efficiently and can even help other mice through blood transfusions.

Cui Z, Willingham MC, Hicks AM, Alexander-Miller MA, Howard TD, Hawkins GA, Miller MS, Weir HM, Du W, DeLong CJ. Spontaneous regression of advanced cancer: identification of a unique genetically determined, age-dependent trait in mice. Proc Natl Acad Sci U S A. 2003 May 27;100(11):6682-7.

Hicks AM, Riedlinger G, Willingham MC, Alexander-Miller MA, Von Kap-Herr C, Pettenati MJ, Sanders AM, Weir HM, Du W, Kim J, Simpson AJG, Old LG, Cui Z. Transferable anticancer innate immunity in spontaneous regression/complete resistance mice. PNAS E-published May 8, 2006.

8. Antiobesity mice. These mice are protected from getting obese and diabetic from their diet by their lack of acyl-CoA:diacylglycerol acyltransferase 1 (DGAT1). Their fat tissue can even reduce obesity and glucose buildup in other mice if transplanted. There are other strains protected from obesity by lack of other proteins, and a strain that have more adiponectin that put all excess fat into their blubber, remaining healthy despite turning very obese.

Smith SJ, et al. Obesity resistance and multiple mechanisms of triglyceride synthesis in mice lacking DGAT. Nat. Genet. 2000;25:87–90 

 

Chen HC, et al. Increased insulin and leptin sensitivity in mice lacking acyl CoA:diacylglylcerol acyltransferase 1. J. Clin. Invest. 2002;109:1049–1055. doi:10.1172/JCI200214672.

9. Marathon mice. These mice have more expression of PPARδ in their muscles, which makes them turn into type I (slow twitch) fibers that work well for long-distance running. The mice have more endurance and - even when not training - increased resistance to obesity.

Wang YX, Zhang CL, Yu RT, Cho HK, Nelson MC, et al. (2004) Regulation of Muscle Fiber Type and Running Endurance by PPARδ. PLoS Biol 2(10): e294

So what does this mean for the future

The Geo-Trade Blog believes that our relationship with technology and how it stretches our ability to perform in the world will be one of the key areas of advance in the 21st Century. In fact, how we answer the following questions will be key to determining the parameters: What does the future, near and far, hold for humans? Is enhancement the next stage of evolution? Should any limits be imposed? And if so, how?

Water in the 21st Century

Water is a common pool resource in the 21st Century

From the water wars and the pumping races in California in the 1950s to irrigation systems in Spain and mountain villages in Switzerland, all have demonstrated that people are able to draw up sensible rules for the use of common-pool resources like water. Water in the 21st century will increasingly need its own set of sensible rules to meet the new political, economic and environmental realities of the 21st century.

The Colorado River in the US

The Colorado River provides much of the water for many cities and farms in seven states in the US including Colorado, Wyoming, Utah, New Mexico, Nevada, Arizona and California before it reaches México. But flows of water on the Colorado River in the US have been forecast to decrease by up to 30pc by 2050. In the Northern States its water supports cattle empires. In the Southern States especially in California, the river irrigates deserts to produce much of the US' agricultural products, fruit and winter vegetables. And all along the way, aqueducts branch off to supply cities from Salt Lake City, Denver, Phoenix and Los Angeles. Interestingly, the Metropolis closest to Lake Mead, Las Vegas, gets 90pc of its water from this one source. 

Map of Colorado River in US West

Arguments over water tend to have four dimensions – physical, legal, political and cultural. For the physical the standard response is to summon the engineers. In the case of the Colorado River, engineers are already digging a new intake at 890 feet (lower than the current intakes as the water level in Lake Mead has decreased to ensure a guaranteed water supply to Las Vegas). Another response is to call in the lawyers. This was the preferred approach in the 20th century, in the era of the so called “water wars”. Starting with the the Colorado River Compact of 1922 and continuing with statutes, a treaty with México and case law until the 1960s, a truce was achieved. Called the Law of the River, the resulting regime determines who along the river has what right to how much water. 

At least, it does in theory. The problem is that the law took shape after two decades of record water flows, which became the basis for allocation. As a result it apportions more water than there is in the river. For decades that did not matter, since there was so few people. Then the cattle, fruit and people multiplied. The law's seniority rules theoretically mean that, for example, the taps to Las Vegas would be shut completely before agriculture in California were to loose a drop of water. This gives rise to the political dimension.

In the 21st century, cooperation has mostly replaced the old rivalries among agricultural and urban users among the seven river states. Nevada and Arizona have a water banking partnership and Arizona stores excess water in its aquifers to share with Nevada if needed. In California, the water utility of Los Angeles has bought water rights from some farmers. But inevitably arguments still persist. 

This leads into the final dimension which is the cultural dimension. The argument here is directly related to the culture of the US West. For example, does every middle-class household really need a lawn in a desert? In some cases, counties have begun paying their citizens to rip out their turf and opt for a desert landscape garden instead that can be just as chic. 

Egypt and Ethiopia are fighting for the Nile's water too

Most of the water that flows down the lower reaches of the Nile, the world's longest river, comes from the Ethiopian highlands. Up until recently the Ethiopian Government had been content to abide by a Nile River Water Treaty negotiated in 1959. The trouble is the current treaty has strongly favoured the biggest and most influential consumer of Nile water, Egypt. Ethiopia, which has recently overtaken Egypt as Africa's second-most populous nation has joined together with the other upstream Nile nations including Burundi, Congo, Kenya, Rwanda, Tanzania and Uganda to re-write the 1959 Nile River Water treaty taking advantage of the power vaccuum in Egypt's leadership after the Arab Spring. 

The combined population of the upstream countries along the Nile is 240m against Egypt (85m) and Sudan (30m) and South Sudan (14m). There are also plans afoot for Ethiopia to dam its bit of the Blue Nile and to build a large hydro-power capacity that would be the centrepiece of a plan to increase the country's electricity supply five fold over the next five years. These plans will undoubtedly have a big impact on other Nile countries downstream and have the potential to provoke cross-border water conflicts.

 And what about fracking and high water use it requires

In order to extract gas held in the hard shale rock, it is necessary to break up small sections by firing large quantities of water mixed with fine sand and fracking chemicals at a very high pressure to make the shale rock give up its gas. Water has been identified as a serious problem for mining shale gas mainly because of the quantities of it that are needed to successfully frack wells. But worse of all there have already been cases where local ground water aquifiers have been polluted by the harsh chemicals used in the fracking process. It is estimated that the average shale well uses around of 22m litres of water to extract the gas. If as predicted by many energy experts, shale gas extraction goes ahead at full speed, worldwide gas could make up around 25pc of primary energy by 2035 adding further pressure to the common pool resource of water.

So what does the future hold

The Geo-Trade Blog believes there is an increasing awareness of the need to act on the world’s impending water challenge in the 21st Century. Nevertheless growing global resource use highlights the complex interdependencies between water and energy, agriculture, industry, urban growth and ecosystems.

Governments and business need to prepare for long term water scarcity and to consider a framework to share the world's water - a common pool resource. Of particular importance are the challenges to addressing water issues at policy level nationally and internationally, to avoid cross-border water conflict. The Geo-Trade Blog believes that people do have the capacity to  draw up sensible rules for water use in the 21st Century but consideration needs to start now.

Life in the Universe - why do living things die?

Living things glow in the dark

Is there life outside Earth?

By far the strongest driving force for the exploration of the Mars is the question: Is it alive? From thousands of images and measurements we have already ruled out the presence of large surface plants and animals. What we cannot entirely dismiss, however, is the possibility of “invisible” Martians such as micro-organisms or anything that could exist below the surface. What makes this question so important is that from a “Yes” we can infer that life is probably prevalent throughout the universe. And there is nothing that an astrobiologist would love more than to be able to analyse the sequence of alien DNA (or other genetic code) to compare with terrestrial organisms.

Given the hostile Martian surface environment, if we are going to detect  traces of life, we will need highly sensitive instruments that look for the faintest possible biological signatures such as organic molecules. This is where the story begins to sound more like something out of science fiction. In order for an astronaut to step down onto the surface, they will need to step out of an airlock from their spaceship. By necessity, the volume of this airlock will first be exposed to the inside of the spacecraft, and then to the Martian atmosphere. Even clever designs like the lunar electric rover suitport suffer from this inherent limitation. Living on the surface of each astronaut will be one trillion microorganisms, representing more than 1,000 species of skin flora. Combined with microorganisms from other parts of the body, every single astronaut will bring along to Mars a soup of Earth micro-organisms that will be released into the atmosphere every time they climb out of the hatch. These micro-organisms can, under favorable conditions, multiply every 20 minutes, allowing them to rapidly grow, mutate, and adapt to adverse environmental conditions. 

One of the adversities on Mars is the high level of UV radiation, which will kill off many of the bacteria that remain exposed on the surface. The organic remnants from these bacteria and viruses could potentially fool ultra-sensitive instruments. Some bacteria will become shielded from the UV, buried just below the surface by footsteps and wheels. And for some, such as a strain that has come to be known as Conan the Bacterium, radiation is not a problem. Through an elaborate collection of repair mechanisms, it is capable of withstanding radiation more than 1,000 times greater than any other known living organism. And beyond that, there is the concern of reverse contamination. With each return of an astronaut to the ship, the airlock would introduce Martian biological remnants to the crew, and subsequently, to Earth. We don’t know how serious this might be, but, historically, human exploration has frequently resulted in epidemics.

Why do living things die?

Every single-celled organism alive today has been in existence since life began over 3 billion years ago. This is because individual cells do not give birth, they divide. After cell division, the two cells that result are each as old as the single cell that preceded them. The cell does not become younger by dividing. Hence every cell in your body is over 3 billion years old.

The strategy that multicellular organisms such as humans use to project themselves into the future is to create new cell colonies from a single undifferentiated cell rather than maintaining existing colonies indefinitely. The main reason is that reproduction is more flexible and robust than maintenance, and it provides a way of starting over with a "clean slate" and slightly different genes. Complex organisms accumulate billions of errors and problems over their lifetime. Most of these errors are fixed as fast as they happen, but life takes a toll and not all problems are reversible. Just as reinstalling Microsoft Windows every so often fixes accumulated system issues, so does generating a new organism every so often from a single cell.

Given that biology has selected this strategy, evolution has optimized for producing the most successful offspring. Once the individual has reproduced, its only evolutionary role is to support the success of its offspring. Aging longer is just not something evolution has had a reason to optimize. And in fact given limited environmental resources, the offspring often do better if the older generation doesn't stay around forever competing with younger generations for scarce resources.

In terms of what happens physiologically, there are two main contributors to aging. The first is the accumulation of biological defects. Viruses and disease take a toll even after healing; UV rays slowly but inevitably damage DNA; and proteins, cell structure, and the neurons which hold memories all degrade over time due to thermodynamic molecular disruptions and invasions by other species.

The second is the aging process itself. The organism develops to maturity and ages in stages according to a genetically determined life plan. Muscles atrophy, bones brittle, and metabolism changes. But the life plan has never run more than 80 years until recently, and evolution only ever optimized the first 40 years or so. So humans are in new territory that is poorly understood, and which evolution has never had a reason to fine tune.

It may be possible to slow or stop some of the genetically determined aging processes. While this may not be good for an overpopulated planet, it will be popular with ageing populations in many developed countries.

The inner workings of the brain and mind

Real time brain scanning technology

The idea of the unconscious, a second level of the mind that is inaccessible to rational thought, but which nevertheless influences people’s behaviour was drawn from Freud's idea of psychoanalysis. During the 20th century, the idea of the unconscious lost its appeal due to the rise of more scientific approaches to psychology. These focused purely on studying behaviour and refrained from theorising about the inner workings of the brain and mind.

A new book on the "unconscious"

 

In a new book entitled “Subliminal”, its author, Leonard Mlodinow shows how the idea of the unconscious has become fashionable again in the 21st century. It has been helped by rigorous experimental evidence of the effects of the subconscious and, especially, by real-time brain-scanning technology that allows researchers to examine what is going on in their subjects’ heads.

This experimental evidence suggests that, as Freud suspected, conscious reasoning makes up a comparatively small part of the activity in the human brains, with most of the work taking place where we are not able to tap into it. However, unlike Freud’s unconscious, the modern unconscious is a place of super-fast data processing, useful survival mechanisms and rules of thumb about the world that have been honed by millions of years of evolution.

It is the unconscious, for instance, that pulls together data on colour, shape, movement and perspective to create the sight enjoyed by the conscious part of the mind. Experiments on people with certain specific forms of brain damage, which remove the ability to perform some of these tasks, can reveal something about what is going on in the unconscious. People with “blindsight” can respond to some visual stimuli even when they are not conscious of being able to see. For example, asked to walk down an obstacle-strewn corridor, they will dodge and weave and arrive at their destination unharmed because some residual data is still making its way into their brains, although at a level that is beneath the notice of their conscious minds.

The modern view of the unconscious mind may be more benign than Freud’s, but it can still generate unwelcome impulses. Psychologists theorise that the well-documented tendency of humans to categorise almost every piece of information they come across is a survival mechanism that evolved to aid quick decision making. Yet it may also lie behind the tendency for human beings to group people into races, genders, creeds and the like, and then to apply certain characteristics, often unjustifiably, to every member of that group.

The insights offered by modern science into the workings of the human mind are fascinating in their own right. But they also suggest that plenty of conventional wisdom about how humans behave may need rethinking. In his new book, Mlodinow notes that economic models, for instance, are built on the assumption that people make decisions by consciously weighing the relevant factors, whereas the psychological research suggests that, most of the time, they do no such thing. Instead, they act on the basis of simple, unconscious rules that can sometimes produce completely irrational results. 

Consciousness and Self

Consciousness is the core of an individual's sense of self, yet, paradoxically, it is the most elusive concept in biology. One feature of human consciousness that students of the field suggest might be unique is an awareness of self. The idea that self-awareness might be specific to humans and a few close relatives resulted from an experiment done three decades ago by Gordon Gallup, who now works at the University of Albany in New York state. This showed that chimpanzees (and, as subsequently emerged, other great apes) share with humans the ability to recognise themselves in a mirror, whereas monkeys and various other reasonably intelligent species, such as dogs, do not. A few species that are not apes have also passed the mirror test, including elephants and dolphins. But most animals fail it. All the species that have passed have something in common: abnormally large cerebral cortices relative to the rest of their brains. Whether selfawareness simply emerges from a large cortex or whether selection for it necessarily results in one is unclear. 

What is consciously perceived is not a simple mapping of the images that fall on the retina. Instead, the signals from the optic nerves are deconstructed and re-formed in a process so demanding that it involves about a third of the cerebral cortex. An even more obvious discord between reality and perception is colour. The world is not really coloured, it just looks that way because it is tremendously useful that it should, so the retina has cells that are particularly sensitive to three different wavelengths of light, and the brain weaves the signals from them together to create the phenomenon called colour.

For some time we have believed that conscious free-willed thought could override unconscious desires. But one way of interpreting the inner workings of the brain and mind is that it is possible, that such free will is, like colour vision, simply a powerful illusion. But the truth, unsatisfactory though it is, is that no one really knows. But one thing we can be sure of is that neuroscience is one area where big concepts almost certainly remain to be discovered. And when they are, they are likely to upend humanity's understanding of itself.

 

 

 

The Future of the Nation State in the 21st Century

Flag Map of the World

The idea of the territorial state’s sovereignty goes back to 1555, when at a meeting in Augsburg called by the warring dynastic rulers desperately seeking an exit or at least a respite from the devastating religious wars tearing the Christian Europe apart coined the formula cuius regio, eius religio (he who rules, determines religion of the ruled). 

 

Sovereignty meant supreme – unconstrained by external interference and indivisible – authority within a territory: Since its inclusion into the political vocabulary the concept of sovereignty referred to a territorially confined state of affairs and territorially fixed entitlements. 

 

Any attempt to meddle with the order of things established by the sovereign on the territory of his rule was therefore illegal, condemnable, a casus belli; the Augsburg formula may be read as much as the founding act of the modern phenomenon of state sovereignty as well as it is read, simultaneously and necessarily, as the textual source of the modern concept of state borders.

It then took almost 100 years more until 1648 when the “Westphalian Sovereignty” agreement was negotiated and signed in Osnabrück and Münster, this allowed the principle recommended by the Augsburg formula to take hold of European social and political reality: a full sovereignty of every ruler on the territory they ruled and over its residents – that is, the ruler’s entitlement to impose “positive” laws of their choice that may override the choices made individually by the subjects, including the choice of God they ought to believe in and must worship.

By a simple expedient of substituting “natio” for “religio”, the mental frame was used to create and operate the (secular) political order of the emergent modern Europe: the pattern of nation-state – that is, of a nation using the state’s sovereignty to set apart “us” from “them” and reserving for itself the monopolistic, inalienable and indivisible right to design the order binding for the country as a whole, and of a state claiming its right to the subjects’ discipline through invoking the commonality of national history, destiny and well-being.

The Westphalian Model in the 21st Century

After the two world wars in the 20th century the Westphalian model of sovereignty was once again the basis on which the Charter of the United Nations was founded - an assembly for the rulers of sovereign states called to collectively monitor, supervise and defend the state of peaceful coexistence. In fact, Article 2(4) of the Charter prohibits attacks on “political independence and territorial integrity”, whereas the article 2(7) sharply restricts the eventuality of an intervention from outside into affairs of a sovereign state. 

 

So far the United Nations is still the closest we have to an idea of a “global political body”. But it clearly has the entrenchment and defence of the Westphalian principle written into its charter.  While many powers (finances, commercial interests, information, drug and weapon trade, criminality and terrorism) have already obtained in practice the freedom to operate on a global level. The absence of global political agencies capable of catching up with the already global reach is held back by the grip of the nation-state and the rhetoric of state sovereignty. We live still in a “post-Westphalian era”. The process of emancipation from the shadows cast by “Westphalian sovereignty” is increasingly protracted.

 

A recent example of this is the fate of euro: the absurdity of a common currency served by seventeen finance ministers, each bound to represent and defend their country’s sovereign rights. The plight of the euro highlights the limits of local (nation-state) politics under pressures coming from two distinct, uncoordinated and thereby not easily reconcilable authoritative centres, the nationally confined electorate and supra-national European institutions, all too often instructed to act at cross-purposes. This is just one of many manifestations of a double bind: the condition of being clenched between the ghost of the Westphalian state sovereignty on one side and the realities of the global, or regional nonetheless supra-national, dependency on the other.

The essential problem of nation-state sovereignty in a global world

During the 17th, 18th and possibly 19th centuries, the nation-state was relatively well attuned to the realities of the time, but the Geo-Trade blog believes this is no longer the case. In the 21st century, our interdependence is already global, whereas our instruments of collective action and will-expression are as before local and resisting extension, infringement and/or limitation.

 

In the 21st century much of the power has evaporated from the nation-state into the supra-national, global space – while politics remains, as before, local: confined to the boundaries of the state’s territorial sovereignty. What we confront therefore is, on one hand, a free-floating power cut off from political supervision and guidance and on the other fixed and territorially-limited politics that in addition is bound to suffer from a perpetual deficit of power. 

 

Hence the essential problem is that the two abilities, power (that is, the ability to have things done), and politics (that is, the ability to decide which things need/ought to be done), conjoined for a few centuries in the institutions of the nation-state, now inhabit, as the result of globalisation processes, two different spaces.

The European Union and the Euro

Euro symbol with 12 EU Stars outside European Central Bank

The view from Asia

Europe plays little strategic role in the Asian region apart from its trade relations. Nevertheless in a globalized world everything is interconnected. Should the euro fail, or the EU break apart, the pain would be felt all over the globe, not least in Asia, where economies are seemingly going from strength to strength.

Interestingly one feature of European politics is very much the envy of many Asian countries: the continent's institutional and procedural framework that allows the countries of Europe to feed their problems, conflicts, and crises into an existing mechanism with established rules to have them fixed. However inefficient and underdeveloped that structure might often seem to Europeans themselves, the fact that Europe has both the EU and NATO is seen as a huge plus. 

 

For Europeans, this view is a big reminder of just how big the achievements of the european integration process really are. To be sure, Europe is flawed in many ways, and the price of being in such a closely-knit union might appear very high at times. But essentially, no one is out there alone. By comparison, in Asia, all existing forums, such as APEC, ASEAN and the like, are more loosely organised with very little binding power. 

 

The loneliness of nations in Asia's un-integrated region, and the insecurity and fear it breeds, should serve as a reminder to Europeans in this crisis of just how valuable the system they have created for themselves is. It should also remind people that underneath the economic narrative that so dominates the European debate at the moment lurks a much deeper story: a story of peace and freedom from fear, and how the European Union was the key to creating both.

What is needed to make the Euro work?

The Euro will not be safe until Europe answers some fundamental questions that it has run away from for many years. At their root is how nations should respond to a world that is rapidlly changing around them. What will it do as globalisation strips Europe and the US of the monopoly over the technologies that have made it rich.

Creditor countries want the thrust to be on national responsibility and penalties for rule breakers. Debtors want mutual solidarity; if not direct transfers from rich to poor then at least Eurobonds to pool debt (the European Commission is currently studying options for this). In short, the eurozone is badly in need of its own "Hamiltonian moment" that is the point when Alexander Hamilton committed the US federal government to assume the debts of the individual states. After the adoption of America’s constitution, Hamilton became treasury secretary. The federal government assumed the war debts of the ex-colonies, issued new national bonds backed by direct taxes and minted its own currency. Hamilton’s new financial system helped transform the young republic from a basket-case into an economic powerhouse.

America in Hamilton’s time was a young, post-revolutionary republic. Its founding fathers had the prestige to refashion the nation to confront military and economic threats. Hamilton’s assumption of state debt was contentious: virtuous states did not think they should pay for lax ones. Allowing speculators to make fortunes from the junk debt they had bought, often from destitute revolutionary warriors, rankled. This all sounds rather familiar. Yet for Hamilton, assuming the debt was a necessary price of liberty. America created political union followed by fiscal union. The reforms of 1789 were followed by a “no-bail-out” policy in 1840 that forced some states into default. The Federal Reserve was set up in 1913 to act as lender of last resort. The 1930s slump led to much-expanded federal spending under Roosevelt. American states are now constrained by balanced-budget rules, but the federal government borrows hugely to bolster demand. But Europe is doing things backwards, creating the euro partly in the hope of fostering political union. So fiscal integration is being pushed not to preserve freedom and a new nation, but to save a failing currency.

The Role of Big European Countries

Restoring Europe to health will take many years. That is because the troubled countries need to control their government deficits and to re-establish sound current accounts by improving their competitiveness. The true test will be in the content of the reforms. Germany will want to replicate its federal system, with more tough fiscal rules and more power for the European Parliament; the French will want a mirror of the Fifth Republic, with joint bonds issued by the euro zone and executive power (and much discretion) left in the hands of leaders.

Interestingly, the German word for debt, Schulden, is the plural of Schuld meaning guilt or default. Germany is firmly opposed to any solution that would imply open-ended transfers to less wealthy southerners; so are several other northern European countries, not least because guaranteeing others may raise their borrowing costs. But the alternative could be the end of the euro. In reality Europe needs to become more like the US which practices seamless fiscal transfers between the rich California-Connecticut-Illinois-New Jersey-New York quintuple and poorer states like Tennessee. If similar, transfers in the form of Medicaid and unemployment insurance were passed on to the weaker peripheral states, the comparable fiscal transfers may look similar to the graphic below:

Whereas the European Union exists – somewhat superficially – as a contractual union, in the United Kingdom, three centuries of shared experience and a common set of values has meant that English voters never questioned why English taxpayers’ money was used to prop up Scottish banks in the recent banking crisis. This essentially is the challenge for the EU to create a similar union in a relatively young Union where nation states remain considerable clout - to create a Union of belonging.

But that still doesn't resolve the big question what does globalisation mean for Europe? Does it mean Europe becoming more like Germany? (Global banking and trade, high productivity, high taxes, high welfare). Or more like say Texas? (Small budget, low pay, poor welfare). Given the shift in relative wealth and cost advantage away from Europe and the US, trying to make France, Spain, Italy and even the UK more like Germany is improbable. Making them like Texas is doable, but at heavy political cost. Austerity seems likely to be with Europe for years to come, on any policy setting. Globalisation alone will not be suffient to increase growth. Strapped as it is Europe embodies liberal and democratic values – respect for persons, a voice for all, some sense of social equity hence maybe the big questions really are: does embracing globalisation mean dropping these tiresome constraints to unfettered economic growth? And can growth alone be counted on to spread and sustain liberal democracy in 21st century?