The Economically Out-Of-Date Nation-State

[Traktion]

I stumbled across this article the other day. It's from a reputable business analysis publisher too, which is interesting too.

They discuss how corporations have essentially become stateless and the nation state is being left behind, unable to adapt to the situation.

I thought it was an interesting reflection and a sign of the times. Will stateless organisations be some how put back into a nation-state box or will the nation-state box be discarded instead?

http://blogs.hbr.org/cs/2012/11/the_economically_out_of_date_n.html

(More at the link, as well as comments)

...

It is too little, too late. The world's major economies have been engaged in a strategy of irreversible interconnection for so long that there's no turning back. The future of prosperity will be in investing in new economic and democratic networks, not in hoping that business can somehow reform itself to defend the now moribund nation-state.

The past few decades have seen the birth of an era in which large, stateless corporations succeed irrespective of the long-term impact of one nation-state or another. These global corporations are thus exceedingly unlikely to embrace a nationalist strategy of shared value, or to volunteer to help shape up national ledgers. As has been pointed out countless times, many corporations have capital structures that aren't tied to any one nation. The British-Swedish pharmaceutical giant Astra-Zeneca is a huge employer in the state of Delaware — but can we reasonably expect it to engage in a "shared value" strategy in the Mid-Atlantic? Apple's manufacturing strategy and General Motors' growth market and Wal-Mart's supply chain are all based in China — do we really expect them to radically remake their strategies in favor of California's fiscal crisis, Detroit's economic depression, or Arkansas' rural poverty?

...

What is the alternative to a national economic strategy? A wide variety of new networks that may well drive the future of prosperity. In the wake of global instability, we see new economic and political networks popping up as people excluded from the global financial system look for alternatives. The fiscal failures of the nation-state are strengthening independence movements in places like Scotland, Catalunya, and Quebec. New forms of money, such as regional currencies and stateless digital currencies like Bitcoin, are emerging to tie likeminded people together economically while global bankers worry about the chaotic debt structures they designed. Transition Towns are inspiring locals to make their communities robust in the face of potential shocks to food, energy, or money supplies.

One strength of these regional networks is that they are based on relationships and interdependence rather than top-down policies. Moreover, in the digital era, very little will impede these smaller entities from finding trading partners all over the world. Essentially, corporations have already seceded from the nation-state system to derive economic benefits. Now, individuals and communities may follow suit.

If these examples seem marginal, that's because they are on the margins — for now. But as entire nations find themselves unable to compete in the global system, the margins will widen from towns and rural communities to Greece, Portugal — maybe even Spain and Italy. When things cease to function from the top down, people are forced by necessity to remake a system that will function on their own terms.

If this breakaway is the future, it poses a host of incredibly complex questions. How shall taxation work as nation-states enter this phase of transformation? What about all these bonds floating around with the words "United States," "España," and "Italia" printed on them? Will some countries, like China and Germany, maintain a national strategy while others break down into smaller nations? Who pays for healthcare? Or infrastructure? What about "national security?" Who will govern a world this complex? I suspect that each region will have its own solution, and that the next century will be dedicated to exploring the answers to these questions.

I doubt, however, that we shall avoid these tough questions by turning back to national strategies reminiscent of the 20th century. The moment for this should have been 1991, when the Soviet empire gave way and we had an unprecedented opportunity to shape the global system. We bet on globalization, for good and for ill. Our way, scary as it seems, is forward, not back.

[Injin]

Wishful thinking, really.

When the shit hits the fam in earnest it'll be statism all the way. Good luck doing the globalisation schtick once the borders go back up.

Next up once benefit slaves don't work is price controls.

[Toto deVeer]

This could have been written during the last great globalization movement at the beginning of the 20th century. And we know how that ended.

I don't think that much has changed. If national economies implode (and they will at some point soon) then globalization will go with it. Ipso fatso.

[Toto deVeer]

Wishful thinking, really.

When the shit hits the fam in earnest it'll be statism all the way. Good luck doing the globalisation schtick once the borders go back up.

Next up once benefit slaves don't work is price controls.

Telepathic.

[DiggerUK]

I love the irony of UK government policy from the 80's till now.

They've developed a more centralised state, in their victorious war against communist centralised states.

With the advent of twice yearly budgets, are we now in the era of 'The Six Month Plan'

Best book your tickets for the British Spring now.

..._

[Traktion]

Wishful thinking, really.

When the shit hits the fam in earnest it'll be statism all the way. Good luck doing the globalisation schtick once the borders go back up.

Next up once benefit slaves don't work is price controls.

I'm sure they will try it. I see little evidence of the contrary being embraced, for sure.

However, with the likes of the Internet, can they really prevent it? If they clamp down on the net, surely it is obvious that it will cause far more harm than it solves?

[evetsm]

Wishful thinking, really.

When the shit hits the fam in earnest it'll be statism all the way. Good luck doing the globalisation schtick once the borders go back up.

Next up once benefit slaves don't work is price controls.

How do you erect borders for cryto-currencies ? You can't, not unless you shut down the internet.

If states cannot collect taxes effectively because they cannot control or trace the movement of crypto -money and the transactions done with them, then they cease to be states.

I reckon it is not wishful , it is inevitable.

[Injin]

I'm sure they will try it. I see little evidence of the contrary being embraced, for sure.

However, with the likes of the Internet, can they really prevent it? If they clamp down on the net, surely it is obvious that it will cause far more harm than it solves?

Perfectly possible to have the net and stop the passage of goods through a border.

Might even make it easier, in fact.

And the fact that it won't work is irrelevent, really. Always has been. What matters is the psychological impact.

[DTMark]

I'm sure they will try it. I see little evidence of the contrary being embraced, for sure.

However, with the likes of the Internet, can they really prevent it? If they clamp down on the net, surely it is obvious that it will cause far more harm than it solves?

Theresa May was busy selling the pros of the Communications Bill, which requires providers to keep records.

The big sell was that it will enable superior crime detection, protect children, and only those who have something to hide should fear it.

http://www.homeoffic...tions-data-bill

Vital powers to help catch criminals, save lives and protect children were today outlined in the Communications Data Bill.

Communications data is information generated about a communication. It includes the time and duration of a communication, the number or email address of the originator and recipient and sometimes the location of the device from which the communication was made. Communications data is distinct from communications content.

The legislation will require Communications Service Providers, when requested to do so, to retain and store communications records which they may not retain at present for their own business reasons.

For some reason the phrase "scope creep" springs to mind.

Yes, those technically savvy enough will always be able to circumvent any measures put in place, but this relies on most people lacking the knowledge or the inclination to do so.

Those who have such knowledge may be the future home-grown "terrorists".

[Traktion]

How do you erect borders for cryto-currencies ? You can't, not unless you shut down the internet.

If states cannot collect taxes effectively because they cannot control or trace the movement of crypto -money and the transactions done with them, then they cease to be states.

I reckon it is not wishful , it is inevitable.

This is a very good point.

When the goods are not physical, crypto-currencies are impossible to stop. They could attempt to ban them, but I doubt that would be successful, nor supported by citizens (unless draped in 'terrorism' or some such - doubt it would stick though, tbh).

Combine this with 3D printers and it isn't just digital services which can be exchanged for crypto-currencies - you could buy/download the schematics and 'print' physical goods out too. Many people printing out various things, will inevitably mean that you can construct all sorts of stuff, with only raw materials added.

This in itself creates an interesting challenge to authorities. I read something about a basic, plastic gun being 'printed' out (in Australia, I think - could be wrong). They confiscated the printer, but that pretty much misses the point - it is the schematics which are what the authorities need to stop and that isn't going to happen. The net will just distribute them regardless.

[Traktion]

Theresa May was busy selling the pros of the Communications Bill, which requires providers to keep records.

The big sell was that it will enable superior crime detection, protect children, and only those who have something to hide should fear it.

http://www.homeoffic...tions-data-bill

For some reason the phrase "scope creep" springs to mind.

Yes, those technically savvy enough will always be able to circumvent any measures put in place, but this relies on most people lacking the knowledge or the inclination to do so.

Those who have such knowledge may be the future home-grown "terrorists".

Even if they try and monitor everything, you can already use anonymous VPNs (encrypted tunnels) from outside of the UK. You can pay with Bitcoins too, potentially making the whole process anonymous.

You could then throw in the likes of Tor, for a military class, open source, encryption system. Much like the net, it was designed to be indestructible...

The only people they will likely track with such laws are those who are doing nothing wrong. The professional criminals and terrorists will work right around them.

Ofc, that won't stop them trying to snoop.

[Toto deVeer]

This is a very good point.

When the goods are not physical, crypto-currencies are impossible to stop. They could attempt to ban them, but I doubt that would be successful, nor supported by citizens (unless draped in 'terrorism' or some such - doubt it would stick though, tbh).

Combine this with 3D printers and it isn't just digital services which can be exchanged for crypto-currencies - you could buy/download the schematics and 'print' physical goods out too. Many people printing out various things, will inevitably mean that you can construct all sorts of stuff, with only raw materials added.

This in itself creates an interesting challenge to authorities. I read something about a basic, plastic gun being 'printed' out (in Australia, I think - could be wrong). They confiscated the printer, but that pretty much misses the point - it is the schematics which are what the authorities need to stop and that isn't going to happen. The net will just distribute them regardless.

By crypto-currencies do you mean things like bitcoin?

If so, this is a non-starter. At some point you will have to exchange this virtual value for something in the real world. That's where the 'gotcha' is. All a state has to do is regulate the exchanges - and this is a doddle. At present the value of bitcoin is so insignificant that they are only curious, but it (oversight) will come eventually.

[Traktion]

[Hello Mr MI5 - we're just having a harmless chat! ]

[Traktion]

By crypto-currencies do you mean things like bitcoin?

If so, this is a non-starter. At some point you will have to exchange this virtual value for something in the real world. That's where the 'gotcha' is. All a state has to do is regulate the exchanges - and this is a doddle. At present the value of bitcoin is so insignificant that they are only curious, but it (oversight) will come eventually.

How are they going to do that then?

You can exchange bitcoins with anyone with a mobile phone, as discretely* as sending a text message.

EDIT: * Hell, more discretely - you could just send them a transfer via blue tooth in theory. The receiver could then 'pull it down' to their wallet at their convenience.

BTW, this may interest you: http://www.bloomberg.com/news/2013-01-28/bitcoin-s-gains-may-fuel-central-bank-concerns-chart-of-the-day.html

“I think the ECB obviously is concerned, and it’s not reputational,” said Steve Hanke, a professor at Johns Hopkins University in Baltimore who helped to establish new currency regimes in countries such as Argentina and Bulgaria. “I think it’s a competitive threat. Maybe virtual currencies will be so convenient that they will pose a threat because of their ease of use.”

Virtual currencies “could have a negative impact on the reputation of central banks” if their use grows considerably, the Frankfurt-based ECB said in its research paper. “This risk should be considered when assessing the overall risk situation of central banks.”

Edited February 1, 2013 by Traktion

[Toto deVeer]

How are they going to do that then?

You can exchange bitcoins with anyone with a mobile phone, as discretely* as sending a text message.

EDIT: * Hell, more discretely - you could just send them a transfer via blue tooth in theory. The receiver could then 'pull it down' to their wallet at their convenience.

BTW, this may interest you: http://www.bloomberg.com/news/2013-01-28/bitcoin-s-gains-may-fuel-central-bank-concerns-chart-of-the-day.html

That's OK if you want to buy a pizza - but what if you want a car or a house? This is what makes crypto-currencies different from real money.

[Injin]

That's OK if you want to buy a pizza - but what if you want a car or a house? This is what makes crypto-currencies different from real money.

Or, ofc if you want to bulk buy the ingredients to make a lot of pizzas.

In any event, even if they could, it wouldn't matter - the populations themselves will happily go along with it all.

[DTMark]

That's OK if you want to buy a pizza - but what if you want a car or a house? This is what makes crypto-currencies different from real money.

It's normally made quite difficult to open, say, a EURO account if you live in the UK and do not have dual residence in a country wich uses it. Or, it used to be.

The tax return forms only have boxes for pounds sterling.

If I had a EURO account and clients in Europe who paid me in Euros, what am I supposed to put on the tax return since it doens't have a second set of boxes for "Income - EUROs"..

(For the same of a real world-current example... now, replace EUROs with bitcoins...)

[Traktion]

That's OK if you want to buy a pizza - but what if you want a car or a house? This is what makes crypto-currencies different from real money.

It doesn't matter whether you're buying a pizza, a super car or some sterling. You're just swapping stuff for bitcoins.

You can send crypto-money to anyone, anywhere on the planet, within moments, without going through the banking system. You don't even need a regular net link either (you just need to access the distributed ledger to transfer). It also can't be directly controlled* by central banks. That is what makes it different from 'real' money.

* Manipulated, perhaps. This has limits though.

[Toto deVeer]

It doesn't matter whether you're buying a pizza, a super car or some sterling. You're just swapping stuff for bitcoins.

You can send crypto-money to anyone, anywhere on the planet, within moments, without going through the banking system. You don't even need a regular net link either (you just need to access the distributed ledger to transfer). It also can't be directly controlled* by central banks. That is what makes it different from 'real' money.

* Manipulated, perhaps. This has limits though.

Don't get me wrong - I would love to see an unencumbered and anonymous form of money that could be used anywhere - but bitcoin isn't it. Perhaps the nearest to this ideal is the Swiss Franc.

But even if bitcoin was fully exchangeable for Swiss Francs (and it well may be) the moment you purchased that house, the title to it would ring a bell with the local authorities. Where did that money come from?

This again where they can interfere with it. So in my opinion crypto-currencies are not a threat to the nation state.

Furthermore, in essence the US dollar is a crypto currency already. 97% of it is just electronic digits - its a state sanctioned crypto-currency.

The main threat associated with crypto-currency and the nation state is the risk of its absence - for example, a large scale EMP or other electronic destruction event would render commerce amongst nation states impossible. This could be a threat.

For US treasuries, for example, I don't think that there are any certificates. That is why the Chinese cannot dump them. They have to get permission from the US Treasury to transfer ownership. But these electronic records could be destroyed. What would happen to the world monetary system?

[Traktion]

Don't get me wrong - I would love to see an unencumbered and anonymous form of money that could be used anywhere - but bitcoin isn't it. Perhaps the nearest to this ideal is the Swiss Franc.

But even if bitcoin was fully exchangeable for Swiss Francs (and it well may be) the moment you purchased that house, the title to it would ring a bell with the local authorities. Where did that money come from?

This again where they can interfere with it. So in my opinion crypto-currencies are not a threat to the nation state.

Clearly, you wouldn't buy something fixed, like a house. Land is one thing the state is able to manage with violence quite easily.

However, there are many things you can earn bitcoins for doing, as well as spending them, without flags lighting up the state's dashboard.

Furthermore, in essence the US dollar is a crypto currency already. 97% of it is just electronic digits - its a state sanctioned crypto-currency.

The main threat associated with crypto-currency and the nation state is the risk of its absence - for example, a large scale EMP or other electronic destruction event would render commerce amongst nation states impossible. This could be a threat.

For US treasuries, for example, I don't think that there are any certificates. That is why the Chinese cannot dump them. They have to get permission from the US Treasury to transfer ownership. But these electronic records could be destroyed. What would happen to the world monetary system?

The US dollar isn't a crypto-currency - it is a digital currency. The US government can - and does - track all transactions which go via this system (via the Fed). The same is true for other fiat currencies.

Crypto-currencies exist outside of the state monitoring and regulatory system. They also exist outside of the private banking cartel. That is why they are both rather different and arguably useful.

Still, I don't need to convince you otherwise. No one is forcing anyone to use them. If the force is high enough to prevent people from using them, all over the world, then you could be right. I disagree though.

[fluffy666]

I'm sure they will try it. I see little evidence of the contrary being embraced, for sure.

However, with the likes of the Internet, can they really prevent it? If they clamp down on the net, surely it is obvious that it will cause far more harm than it solves?

That's what they said in 1914.

[Traktion]

That's what they said in 1914.

Blimey, I didn't think the Internet was that old!

[Toto deVeer]

The US dollar isn't a crypto-currency - it is a digital currency. The US government can - and does - track all transactions which go via this system (via the Fed). The same is true for other fiat currencies.

Still, I don't need to convince you otherwise. No one is forcing anyone to use them. If the force is high enough to prevent people from using them, all over the world, then you could be right. I disagree though.

Fair enough.. But the dollar can be anonymized electronically. The founder of the EFF has set up -this website - anonymizing dollars contributed to persons or organizations like WikiLeaks, for example. This, in my view, is more of a threat to the nation state that bitcoin.

[Traktion]

Fair enough.. But the dollar can be anonymized electronically. The founder of the EFF has set up -this website - anonymizing dollars contributed to persons or organizations like WikiLeaks, for example. This, in my view, is more of a threat to the nation state that bitcoin.

Surely they would just freeze the EFF account and/or freeze transfers to it? That sounds a pretty tame threat, unless I'm missing something?

[fluffy666]

Blimey, I didn't think the Internet was that old!

In 1914, not only was the world about as globalised as it is now, but with the gold standard (and in any case far less monitoring) you'd have as much privacy..

As far as encryption goes..