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FreedomLab

China’s CBDC-as-a-standard?

Written by Alexander van Wijnen
September 20, 2021

An August 2021 report by the Carnegie Endowment for International Peace (CEIP) shows that China is far ahead of other countries in the development of a “central bank digital currency” (CBDC). Whereas most countries are still researching the possibility of a CBDC, China has been running different types of pilots since 2019. In effect, a CBDC, by eliminating the role of intermediary entities in the financial system, allows for more efficient financial transactions. Based on such efficiency, it is expected that China’s CBDC will boost the share of the yuan in the global financial system. Yet, turning the yuan into the global reserve currency is not China’s primary goal here.

Instead, China primarily seeks to protect its companies against American sanctions by building a financial infrastructure that parallels the US dollar system. The report highlights several reasons as to why China’s CBDC is likely to become a standard. China’s pilots are far ahead of other countries and its government is willing to boost adoption aggressively (e.g. discounts for consumers, incentives for trade). Also, China has already set standards for a new global financial infrastructure through “m-CBDC” (a cross-border payment project between China, Hong Kong, Thailand and the UAE), the Blockchain Service Network, and the inter-bank payment system of CIPS. Finally, China already has large international payment platforms which are accessible through government intervention (UnionPay, Alipay, WeChat Pay).

Burning questions:

  • What are the consequences of a Chinese parallel (to the U.S. dollar) financial system for trade and capital flows?
  • To what extent will the CBDC be able to boost the dominance of Chinese firms in other regions (e.g. Southeast Asia)?

A new narrative on climate change

Written by Sjoerd Bakker
September 3, 2021

The recent IPCC report marks the definitive rhetorical shift from preventing climate change to limiting climate change. While it was widely known that climate change was taking place already, the common narrative was nevertheless that sufficient climate action could still limit global warming to acceptable levels. The new narrative instead tells us that climate change will be disastrous, no matter what we do, but that we still can, and should, prevent matters from getting even worse.

Looking back, we have to acknowledge that the mere threat of climate change was not sufficient to persuade us to take necessary measures. Looking ahead, we can only hope that being confronted with visible and undeniable climate change in the coming years, in the form of droughts, floods and wildfires, will finally result in the institutional and behavioral change that is needed to limit further harm. Most of all, such experiences could lead to concrete and direct action, instead of the long-term goals that have defined climate agreements thus far.

Burning questions:

  • Given the new narrative, can we avoid a sense of climate fatalism that would shift our focus towards (local) forms of climate adaption?
  • How can a so-called “just transition” prevent climate mitigation measures from hurting the poor the most?

What would a sufficiently sustainable ordinary life look like?

Written by Jessica van der Schalk
September 3, 2021

For many consumer practices it is difficult to imagine how we can make them sustainable. In some cases, such as flying, there’s simply no sustainable mode available, while in other cases the potential solutions require us to change our behavior radically (e.g. shopping without packaging material). Yet a clear and enticing perspective on what our new lives should look like when we do not live as if there are multiple worlds is lacking. Concepts such as minimalism or zero waste give some practical tips to reduce consumerism, but lack guidance regarding how we should organize our society when we would actually stop consuming non-essential products and services, and the profound impact this would have on financing our care system, infrastructure etc.

What is more, we lack perspective regarding how our society as a whole could give (new) substance to such a life. So called cli-fi (climate fiction) mostly paints an apocalyptic picture of a world tormented by one climate disaster after another, abandoning a successful response altogether. Finally, tech companies that are working on solutions frequently offer nothing more than pictures of high-tech worlds with many plants, remaining silent about the problems that technology cannot solve. Add to this the continuation of the encouragement of consumerism and we are left in the dark about how to build a new way of living that is both compelling and realistic.

Burning questions:

  • In the past, some have tried to organize society in a way in which consumerism had no place, for example communism (society) or the Franciscans (monks that aimed to live in accordance with the life of Christ). Those models did not last, will we be able to imagine one that will?
  • What new expectations, values and life purposes could form the new building blocks of a worldview that will support different consumer practices in a fulfilling manner, and will we be able to adopt them in time?
  • Are there other, and more just, means of changing our behavior, than steep taxes on polluting products?

Climate litigation and civil society

Written by Sebastiaan Crul
September 3, 2021

Over the past years, there has been a “rights turn” in climate litigation. Previously, most cases focused primarily on the violation of specific laws, when the court has to decide, for example, if a company is responsible for environmental damage in a specific region. Currently, a growing percentage of climate litigation employs right claims in lawsuits, with the Urgenda case as both a landmark case and turning point in climate litigation. Climate litigation has become climate change litigation. Governments worldwide are now being sued over global warming and their insufficient action to protect citizens.

In the wake of the IPCC report, climate litigation bears some clear advantages over traditional consensus-based legislation in democracies for citizens to speed up climate action. In addition, even if climate cases have an unfavorable outcome, there may be positive indirect effects such as lower stock prices of grey companies and growing public awareness. This “strategic” litigation is on the rise and could be a core feature of planetary citizenship in the next decade, favored over mass demonstration (e.g. “the case of the century” was signed by 2.3 million French citizens). However, because climate litigation cases entail human rights, defensive counter-cases are also a growing phenomenon, as this report shows. This “anti climate litigation” is a logical consequence of the polarized debate and could undermine climate action. If climate laws harm some people more than others, such as farmers or construction workers, then climate litigation could lead to an arms race of cases and put heavy pressure on the already struggling Western parliaments. Sidelining the parliamentary democracy is never without risks.

Burning questions:

  • What are the positive indirect effects of climate litigation?
  • How can parliamentary democracies prevent their being flooded with climate litigation cases in the future?
  • Is it time to grant basic rights to glaciers and other natural phenomena that are under existential threat?

How to deal with the medical uncertainty of Long COVID?

Written by Sebastiaan Crul
August 9, 2021

It’s taken a while, but the public is starting to take long COVID seriously. Journalists are writing scores of articles to discuss the mysterious wide range of symptoms experienced by patients and report on the scientific search for possible biological explanations. In addition, the government has realized that the lack of understanding of this mysterious condition is a great biopolitical instrument to target youth: long COVID is also affecting them after mild infections.

Meanwhile, physicians remain divided about all this attention. Some simply ask for more caution when talking about long COVID. They acknowledge that the condition is not “in the mind” but until we have found a biomedical explanation, we should be careful in assessing it. Others claim there is a hidden agenda on the part of physiatrists and advocates of the biopsychosocial model at work, while the most skeptical physicians suggest journalists themselves are an important cause of the super-spread of the “disease”. Endlessly listing the wide range of symptoms makes people believe they have the illness, it is said. Evidently, this is worrying COVID long haulers, who fear new waves of medical gaslighting from professionals, similar to the dismissal of many patients who suffer from chronic fatigue syndrome (ME/CFS).

The core of the problem is perhaps not the uncertainty of the condition itself, but the lack of acceptance of diagnostic uncertainty in the culture of medicine, prompted by the intense focus on evidence-based medical practices, as bioethicist Diane O’ Leary points out in this article. Currently, unexplained symptoms are almost immediately (at least implicitly) explained as having a psychogenetic cause. Instead of humility about the disease, she proposes, we should develop a truthful humility about diagnostic uncertainty.

Burning questions:

  • Which practical guidelines can physicians follow if they want to embrace diagnostic uncertainty?
  • How can we find a balance between underdiagnosis and biological overtreatment with the risk of iatrogenesis?
  • What is the role of patients in this story? Will they ever accept more diagnostic uncertainty?

On the Chinese variety of capitalism

Written by Alexander van Wijnen
August 9, 2021

From a Western perspective, the Chinese crackdown on tech companies is a sign of an authoritarian state imposing its will on the market economy. To a certain extent, such an assessment is correct, but it prevents us from gaining an understanding of how Chinese capitalism continues to be a successful system. In his book Capitalism, Alone the economist Branko Milanovic explains that although capitalism has emerged victorious from the post-Cold War period, it has split into two models: “liberal meritocratic capitalism” (e.g. the U.S.) and “political capitalism” (e.g. China). In political capitalism, the state is autonomous, which means the absence of the rule of law is a necessary condition for capitalism to be successful.

It follows that the interest of the state will prevail over the interest of the market. Simply put, the law may not protect private companies against the state. This does not suggest an absence of capitalism, but rather a different ‘variety’ of capitalism. It is likely that the current crackdown will intensify before it abates, but beyond that, it is important to see that China has a different model for successful capitalism: the state will redirect the private sector to produce innovation that is more relevant to the good life, create sustainable growth and foster social stability.

Burning questions:

  • To what extent will Chinese companies align with the state?
  • How will the Chinese state’s policies and regulations affect the global perception of China’s financial markets?
  • Will non-Chinese societies be inspired by the way in which China regulates its tech companies and forces them to build a better life?

On realizing we are not alone

Written by Sjoerd Bakker
July 23, 2021

The recent Pentagon report on Unidentified Aerial Phenomena did not draw any clear conclusions regarding the presence of extraterrestrial objects on earth. It nevertheless opened (some of) our minds to the very idea that alien life forms may already be here. So far, such ideas have been confined to the realm of sci-fi and a small group of believers, but now the stigma may be lifted. What would it mean for humankind were we to realize that we are no longer “alone”? Above all, it would be another and possibly the final blow to our anthropocentric view. We have already come to accept that planet Earth is not the center of the universe, man is only an animal and our minds are far from rational. The next step would be to acknowledge that are there are other species like us, who, first and foremost, are far superior to us. While this would be a sobering realization and one that strikes fear into most of us, it could also offer hope. It would imply that civilizations actually have the potential to develop well beyond our current state, without destroying themselves or the planet they live on.

Burning questions:

  • The report has not immediately stirred debate on extraterrestrials, but could it indeed have a profound effect on our thinking in the long term?
  • Will there be major scientific efforts to study past observations and look out for new phenomena?
  • As we get closer to our first encounter with extraterrestrial intelligence, the question of communication becomes more prominent; what kind of language would we need?

India’s rise as a digital superpower

Written by Pim Korsten
July 23, 2021

New data shows that Indian start-ups raised a record amount of $7.2 billion in the first half of 2021 and the country is closing the gap with China in terms of creating new unicorns. Significantly, Chinese investors have been cut out of the Indian tech market due to regulation that was drafted after rising India-China tensions last year. As such, most foreign capital now comes from European and American investors, from countries that see India as a geopolitical partner in the bid to contain China. Furthermore, an “Indian Stack” is taking shape, driven by large public investments in India’s digital infrastructure, based on its already strong position in the IT sector, and rapid adoption of digital tools by younger generations. Add to this its strong socio-demographics (e.g. soon to be the world’s largest population that is still growing and young) and cultural fundamentals (e.g. its culture and companies having a high willingness to adopt digital tools) and India has all the ingredients to become a digital superpower. As such, the next wave of digital innovation, companies and consumer practices could come from India.

Burning questions:

  • Could the geopolitical fundamentals of India’s digital power imply that it will further the splintering of the Internet, as interoperability with – at least – Chinese applications and ecosystems could be in jeopardy?
  • Does India have a cosmology that fits the demands and technics of digital technology, a digital “cosmotechnics”? (We believe it does.)
  • What could be the organizing and governance principles of the Indian Stack? And how would this relate to other Stacks, such as the American, Chinese or European Stack?

Winter is ending

Written by Alexander van Wijnen
July 9, 2021

During the last decade, fantasy fans were served promptly by the major studios. However, in 2019, Avengers Endgame wrapped up the third phase of the Marvel Universe, Star Wars IX: The Rise of Skywalker marked the end of the last trilogy, and season 8 of Game of Thrones meant the (preliminary) end of Westeros. Then it became quiet, “winter came”. A year later, COVID caused cinemas to close and productions to be postponed, complicating things even further. Although lockdowns spurred streaming media consumption, fantasy fans weren’t exactly spoiled. Consequently, since last year, most customer attention has turned to gaming, which has shown remarkable growth figures and is the preferred medium for younger generations. And with lockdowns ending, some media firms even fear an “attention recession”.

Yet, this might be a bit exaggerated. Behind the screens, the major studios are preparing a new cycle of high-budget fantasy adaptations, which will strongly influence the outcome of the streaming wars in the next decade, determine box offices, and could forever change theatrical window strategies (to only name a few: Lord of the Rings (2022) on Prime, Foundation (2021) on Apple TV+, and House of the Dragon (2022) on HBO max. These modern fantasy worlds are built around epic stories, comics and nostalgia that will remain attractive to aging generations. And while we are accustomed to radically prefer the art of moviemaking to that of gaming, Hollywood seems to have begun embracing gaming IP. In the next fantasy cycle, gaming IP might even become one of the most important sources of fantasy adaptations (e.g., Halo (2022) and The Last of Us (2022)).

Burning questions:

  • According to some, the time is ripe for video gaming adaptations, but which screen and format are best suitable for video gaming intellectual property?
  • How will streaming platforms change theatrical windowing?
  • To what extent will the post-COVID period see consumers return to the cinema?
  • Who will be the winners and losers in the “attention recession”?

Judges break the unwritten rule of environmental agreements

Written by Sjoerd Bakker
July 9, 2021

Even though it concerns the first-ever climate case against a company, the court ruling against Royal Dutch Shell is part of a wider trend of a demand for more action against climate change. Yet, while the intentions behind them are clear, these rulings may actually be counterproductive. They break the unwritten rule that international agreements on climate action are taken with a grain of salt. Such agreements tend to be either abstract or focused on the long term and leave a lot of room for interpretation with respect to short-term action.

The resulting wiggle room allows politicians to sign these agreements and adopt a wait-and-see strategy afterwards. By now it is clear that the courts will no longer accept this and intend to force governments to take action today in order to meet the long-term goals they agreed upon. Looking ahead, the question is whether these rulings will indeed lead to much-needed action, or rather prevent politicians from signing any new agreements that could lead to similar court cases in the future.

Burning questions:

  • Will companies anticipate future court rulings and speed up their own plans of action?
  • Will companies flee to countries where judges are less likely to make similar rulings?