We need more downward mobility

Written by Sebastiaan Crul
June 16, 2021

We often gauge inequality by looking at income distributions and complain about the lack of equal opportunity in society. To fight inequality, governments are in search of social measures to ease the path upwards and close the income gap. For example, better education is widely held to be the great equalizer and the best way to move up on the social ladder. Although this is presumably true, it is only half the story. Income distributions only offer a static snapshot of equality.

To fully comprehend inequality, one should also look at the dynamics of the population. Equally important is the capacity of the population to constantly change positions, keep moving from time to time, including the rich and arrived (i.e. downward mobility). Mathematically, this is called the ergodicity of the system and, more intuitively, this tells us whether the rich stay rich and lock in their privileges and wealth or if one has a good chance to become rich(er), but still end up poor(er). From this point of view, Europe may be more unequal than the U.S., because, according to Nassim Taleb, Europe excels in non-ergodic systems. So, often neglected, the path to equal societies is not only to empower the lower classes, but just as much to add some skin in the game for the richest decile of the income distribution, to increase the chances some of them actually slide down the social ladder.

Burning questions:

  • Is the current surge in “public executions” based on someone’s private behavior a symptom of our non-ergodic system and lack of downward mobility by other means?
  • How do we make our central and bureaucratic organizations, companies and governments have more skin in the game?
  • Can the decentralized architecture of Web3 increase the ergodicity of the system in the future, or will it establish new, unforeseen mechanisms and patterns of absorbing wealth and sticky wealth in a decentralized economy?

The G7 tax deal is all about American geo-economics

Written by Alexander van Wijnen
June 16, 2021

The G7 reached a historic agreement for a global corporate tax rate of a minimum of 15% in which corporations must also pay taxes in nations where they sell (and not just where they’re headquartered). If we take the deal at face value, it seems that power is shifting from corporations to states. After all, since the 1980s, the global corporate tax rate had been dropping from 50% to 24%, as developing countries built growth models by attracting foreign investors with lower taxes and some developed countries also took part in the ‘race to the bottom’ (e.g. Ireland, the Netherlands, Singapore).

However, behind the deal of the G7, more forces are at play. Although it is a multilateral deal, hailed by many as the return of responsible U.S. leadership, it is primarily the U.S. that will benefit. First, it is expected that the biggest share of taxes will be paid by U.S. big tech companies to the U.S. itself. Second, in exchange for its concessions in the deal, the U.S. has demanded the removal of the Digital Services Taxes of European countries. It shows that American multilateralism is still a ‘geo-economic’ instrument to wield power across the globe.

Burning questions:

  • How will the EU adjust to U.S. demands to drop digital services taxes?
  • Will there be a G20 tax deal in July?

Lifestyle politics in the planetary age

Written by Sebastiaan Crul
June 3, 2021

Lifestyle politics refers to the politicization of everyday life choices and is closely tied to our self-actualization in late modernity. This form of political participation has become a strong political weapon in these times of complexity, uncertainty and pressing global issues. In late modernity, various new forms of extra-parliamentary politics are arising to mitigate the (perceived) weakening of state-oriented politics.

On the one hand, lifestyle politics fit the ideal of subsidiarity in our planetary age. To battle planetary challenges such as rising sea levels and pandemics effectively, we have to delegate governance to the lowest level possible. The individual becomes the first “governing institution” of the globalized world. At the same time, if everyday life choices become so central to politics, this dependence on lifestyle could further alleviate the polarization and fragmentation of societies within nation-states. Furthermore, contrary to the expectations of some advocates of lifestyle politics, the pandemic has made us realize that state-oriented politics is anything but obsolete. The inward orientation of lifestyle politics combined with strong nation-states might lead to what the philosopher Tocqueville calls “soft despotism”, meaning that the will and freedom of man are “not shattered but softened, bent and guided”. Individuals are not oppressed, but are subject to the tutelary power of expanding national bureaucratic states and institutions.

Burning questions:

  • How do we align global lifestyle politics with the representative institutions of the political systems of nation-states?
  • Is the tutelary power of the bureaucratic welfare state a serious threat to our post-coronavirus world?
  • How do we prevent lifestyle politics from degenerating into trivial forms of lifestyle consumerism?

The emergence of big tech mesh networks

Written by Arief Huhn
June 3, 2021

On June 8th Amazon will launch Amazon Sidewalk, a new wireless Mesh network which is created by connecting users’ Amazon internet-connected devices to each other. With Sidewalk, Amazon aims to create emergent infrastructure to strengthen connectivity of their consumer hardware and offer new services such as finding lost items. Similarly, Apple launched Airtags in which it uses all their users’ Apple iPhones as an emergent network to spot lost items attached to an Airtag.

As device density and bandwidth of wireless technology increases, mesh networks will become more functional and reliable and thereby more common. These more emergent ad hoc forms of infrastructure show that selling consumer hardware is not only a product play, but also a latent infrastructure play, in which the former can even be seen as a Trojan Horse for the latter. At the same this raises questions around privacy, digital sovereignty and shared value in which the consumer’s hardware and part of the consumer’s bandwidth can suddenly be used to perform valuable functions at an aggregate level.

Burning questions:

  • Which other companies could deploy similar mesh networks?
  • What other services can we expect using these types of infrastructure?
  • Can we expect open decentralized mesh networks based on open standards?

Elon Musk – What does his popularity tell us about 21st century leadership?

Written by Pim Korsten
May 12, 2021

In his opening monologue on Saturday Night Live, Elon Musk revealed he has Asperger’s syndrome. Most likely, this revelation will be used to explain his provocative appearances, mysterious tweets and memestocks and possibly even his crypto allegiances or idiosyncratic products. Yet, instead of framing him as an anomaly, we may also consider Musk a model of typical 21st century leadership.

It could be argued that our metamodern age and the complex, wicked problems of the 21st century demand new types of leadership. Also, 21st century leaders are expected to use the tools offered by the information age. They can use these (e.g. memes) to inspire and unite people in the pursuit of a utopian vision or idea to make and build a better future, to grasp the attention of large but heterogeneous groups of listeners and users in a captivating way. Leaders of countries, organizations, and communities that embody (some of) these qualities could likely become the new “metamodern heroes” of our time. In this spirit, we have already identified Trumpism as a political force that is therefore here to stay, as Trump and his paradigm hold many of these qualities. Musk could be another example, with more to come.

Burning questions:

  • Does leadership actually make a meaningful impact in, for example, business, politics and sport clubs, or are change and success largely determined by systemic, anonymous structures?
  • What are the metamodern leadership qualities that are becoming important in our time?
  • What is the relationship between technology and leadership?

Building national character based on trauma

Written by Alexander van Wijnen
April 22, 2021

Since the beginning of the coronacrisis, there has been a lively debate on the successful handling of the pandemic in East Asia. In March 2020, we argued that we have to look beyond the idea of “strong governments” to explain why East Asia has coped well. Commentators, however, still point to the political leadership, social trust and state capacity of these countries to explain their success. Yet Western countries that share those characteristics have performed much worse. The key factor that seems to determine success in handling the pandemic is the historical lesson learned by East Asia in 2002/3 with SARS, another coronavirus. Interestingly, one of the most important lessons China learned with SARS is to overcome “impediments to the flow of information through the governmental hierarchy”.

Two years later, China launched its mass surveillance system to boost the flow of information for governments. Fifteen years later, China has been much better prepared for COVID-19 as rapid tracking and testing prevented the virus from spreading like in the Western world. Overall, we can explain the success of East Asia in terms of national character. However, instead of traditions of leadership, trust and capacity, national character also seems to be shaped by far more recent historical experiences.

Burning questions:

  • How will COVID-19 change the national characters of Western countries?
  • To what extent is the outperformance of East Asian governments part of a bigger competitive edge of these countries – and what does that mean for the future?

The not-so-bright future after the pandemic

Written by Sjoerd Bakker
April 22, 2021

In the West, we may be able to end the coronavirus pandemic this year, but a combination of problems could come to haunt us in the years to come. First of all, the virus will probably never really go away and may even force us into new lockdowns periodically. Especially as long as the virus is able to mutate and spread from other, developing countries. Second, governments are building up huge amounts of debt. In Europe alone, this amounts to more than €5 trillion and if and when interest rates start to rise again, this could pose serious problems for several countries. Third, groups in society fiercely disagree on strategies and priorities in battling the pandemic; the polarization, mutual distrust and violence will leave societies divided and scarred.

So, while we are all hoping to regain our freedom and restore the economy, the future may look a bit less bright. That is, from a somewhat pessimistic perspective, we’re facing a future in which deeply divided societies will have to figure out whether and how to cut public budgets or invest in new opportunities. Somewhat similar to the 1980s, this situation could easily lead to a prolonged period of economic and societal impasse.

Burning questions:

  • Will lockdown savings, due to travel bans and other brakes on spending, be spent as soon as lockdowns ease? Can such spending prevent a long term economic impasse?
  • Will nations remain divided after the pandemic or are we able to reunite? What kind of grand narrative could help societies overcome current divisions?

Digital advertising in a post-cookie world

Written by Pim Korsten
April 2, 2021

As Google is slowly phasing out cookies on Chrome and Apple is making the Identifier for Advertisers (IDFA) opt-in, the online advertising landscape is slowly moving to a post-cookie world. Overall, this will be an improvement for consumers. The cookie era has created an opaque system of programmatic advertising between advertisers and consumers. The incomprehensible mire of players and mechanisms has led to two decades of hardly effective marketing and a strong invasion of the privacy of uninformed or ignorant consumers.

So, what will be next? The industry is already on its way to finding alternatives that bundle data across sites and apps, such as Unified ID 2.0. Furthermore, as first-party data and alternative identifiers such as email and phone number become more relevant, the dominant ad networks of Google and Facebook are likely to benefit and strengthen their duopoly. Third, Google, Apple and others are claiming that they will bring privacy-friendly advertising and metric measurement tools to the market, using cohorts instead of individuals to target audiences and decentralizing the storage of data. Fourth, we might see a partial return to the roots of advertising, with contextual data and situation taking precedence over personal data.

Burning questions:

  • How will small publishers, websites and app developers, who strongly rely on third party trackers and cookies to function or grow, survive in this world? Is an alternative subscription-based business model a viable option for these smaller players of the internet?
  • Which problems will be solved and which new problems will arise when companies such as Google and Apple use cohorts instead of individuals to target audiences?
  • Will the world be better or worse off in terms of privacy if the duopoly of Facebook and Google benefits from this shift to a post-cookie world?

The European Deep Transition Strategy

Written by Sebastiaan Crul
April 2, 2021

A lot has been written about the unfolding European Digital Strategy to reclaim the digital sphere from private interests and make it more equitable and fair. However, the EU is also becoming a regulatory superpower in the non-digital realm. This month, for example, the European Parliament paved the way for new European legislation that stresses corporate accountability and due diligence for human rights within value chains.

Furthermore, the ECB aspires to become a pioneer in fighting climate change, by slashing bond purchases by heavy carbon emitters and advancing “green bonds” and integrating climate risk in its stress tests for the banking sector. And last year, the EU adopted new “eco-design measures” that should make it easier to repair – rather than replace – old household appliances, such as washing machines, dishwashers and refrigerators. All these measures are meant to create more equitable and sustainable consumer practices, production processes, and value chains in the real economy. As such, the EU is leveraging the “Brussels Effect” to begin to establish the meta-rules of the Second Deep Transition.

Burning questions:

  • Will other countries follow Europe’s example or will this legislation cause more geopolitical friction?
  • Does the EU have the coherence and unity to push and enforce all legislation?
  • What is the goal or set of meta-rules that the EU has in mind?

Harvest now, decrypt later

Written by Sjoerd Bakker
March 17, 2021

In the coming decade, quantum computers will likely break current modes of encryption. This is not necessarily a problem for future communication and data storage, as cryptography can be made (practically) quantum-proof, but it will retroactively expose data we store and send today. That is, intelligence agencies and hackers are harvesting encrypted data, in the hope that quantum computing will help them to uncover valuable information from it in the future.

Given the fact that quantum computers will be available to institutional users first, governmental agencies will be among the first to decrypt previously harvested data. They will be looking for sensitive or strategic data that could hurt or weaken adversaries. In the long run, as technology becomes available to a broader group of users, non-state actors may take an interest in decrypting data that they can use to blackmail their victims.

While this probably won’t affect the common man so much, as most of us are not of particular interest, high-value targets may have to start worrying about the consequences of having their data exposed.

Burning questions:

  • How much information is truly sensitive after being stored for many years?
  • To what extent does the responsibility to prevent such malign uses lie with developers of quantum computers (and algorithms) and future providers of quantum cloud computing?
  • What will society look like if all of our online data were decrypted and for everyone to see?