"CYBERSPACE: THE GLOBAL OPPORTUNITIES"
Review of ActivMedia Report
� Henderson,
November 1997
"Economic Earthquakes"
ActivMedia Conference
Willard Intercontinental Hotel
Washington, DC
December 3, 1997
Let me begin by saying that I
live on an island off the Florida coast and have
operated out of my house as a global knowledge
worker for 25 years. It has been quite feasible�not
to mention profitable and enjoyable�to function as a
niche consultant in the global economy�with phones
and faxes�long before e-mail and the Internet.
Before we succumb to the
hype�let�s be aware that consumers are rapidly
becoming more sophisticated about their choice of
electronic connectivity. Preferences for staying
off-line are not to be confused with Luddite
tendencies�but rather a growing discernment and
selectivity that marketers must learn to serve. If
you live by your wits�as do independent futurists
like me�you must guard your privacy and solitude.
Your "attention budget" is carefully managed and
time, not money, is your most valuable resource.
We in OECD countries are well
into a new era of the "Information Age." We are
transiting to the Age of Knowledge. If we survive
and overcome our past mistakes�we may enter the Age
of Wisdom, where scarce human time and attention are
recognized as more valuable than money. At the same
time, we live in "Mediocracies" where a few media
moguls now control the attention of billions of
people�for better or worse�which has changed
politics forever.
As I describe in my
Building a Win-Win World (1996, 1997),
Chapter 5, we are already living in the new
Attention Economy. Attention deficit is not a
disorder. We now live in Attention Deficit societies
where each of us is bombarded with information
overload from advertisers, media, politicians,
teachers, health providers, not to mention junk
e-mail. The good news is that this is forcing us to
"go inside ourselves" and ask some pretty basic
questions: What do I want to pay attention
to? Who am I and what do I want written on my
tombstone?
Such basic defensive reactions
will define the growing sectors of our Attention
Economies and their inexorable shift from material
goods, (measured by traditional GNP/GDP per capita)
to services and more intangible factors in living
standards, measured by new scorecards such as my
Country Futures Indicators (CFI) and the
Calvert-Henderson Quality of Life Indicators, a
joint venture with the Calvert Group of mutual funds
here in Washington, DC.
As our economies
dematerialize, naturally it will be harder than ever
for governments to hype goods-based GDP-growth in
the global economy without also measuring toxic
wastes, resource-depletion, dirtier, shrinking water
supplies, polluted air, unsafe streets, drugs,
money-laundering, poverty and global epidemics.
The ActivMedia study has
already picked up the flight to "quality-of-life"
where 80 percent of their respondents dream of
living in rural areas and spending more time with
family and friends�less time commuting to or living
in urban areas. As the new "quality-of-life
indicators" become more ubiquitous (as in hundreds
of cities around the world, e.g. in the USA,
Jacksonville, Florida, since 1983), the
services-based Attention Economies will come into
focus.
Already the USA economy is 70
percent services (not yet fully reflected in
GDP).Let�s look at the dimensions of this Attention
Economy in the USA: For example, tourism is now the
largest industry worldwide, representing 10 percent
of global GDP.
To this we can add
entertainment (movies, videos, music, performance,
software, multi-media, including online Internet
games, etc.); education (headstart, kindergarten
through 12, high school, colleges, corporate and
government training); health and urban services (the
US healthcare sector which is some 15 percent of
GDP, drug remediation, daycare, psychological
counselling and other needs are growing); politics,
federal state and local government services (while
the federal government is shrinking most funds are
simply re-allocated to state and local levels).
Overall government
expenditure percentage of GDP remains at some 33
percent while US campaigning for elected office is
ever more costly. Lastly, we can include
advertising, marketing and information-management,
as well as the growing personal human development
and spiritual/religious activities, and the unpaid
volunteer economy (some 89 million Americans
volunteer at least 5 hours per week), tracked by the
Washington-based think-tank, the Independent Sector.
When the US economy is
re-classified to fully reflect the growth of such
attention-based services we can see the growth of
the electronic "attention sector" as part of this
new pattern (see WIRED, December, 1997). Of
course, this new Attention Economy still is based on
energy and raw materials�but their use has been
subject to continual improvements in efficiency and
minimization of material components over the past 15
years�with no end in sight.
As more citizens and
businesses move into cyberspace�with the speed that
ActivMedia has documented�what are some key and
broader implications?Let�s start with electronic
commerce.
Most companies assume that
money-based transactions will be the "holy grail"
through better security, encryption systems, credit
card handling, and e-cash systems. However,
electronic commerce does not require
money-based transactions, but could lead to pure
information-based transactions, i.e. high-tech
barter.
The implications of this are
clear: money and information are now equivalent�we
are already off the money and gold standard and on
the info-currency standard worldwide. Of course,
banks are terrified of all this, because they thrive
on money-based scarcity. Banks understandably are
trying to reintroduce scarcity into cyberspace
transactions via their debit and credit cards.
Yet today, billions of dollars
of services and goods are bartered each year in the
USA by corporations and individuals on pc-based
electronic trading networks�while between 15 and 25
percent of all world trade is in barter. The
implications for the world�s central bankers are
clear: if they don�t improve their currency issuance
and monetary management and control
operations�through overhauling the Bretton Woods
institutions and making credit widely available, not
just to their cronies in governments and
corporations�then they will be bypassed by pure
info-based transactions.
Today�s state-of-the-art
computer-based markets in cyberspace can make such
info-based, high-tech bartering efficient with
minimal transaction costs. Developing countries will
no longer need to earn foreign exchange but can
trade all their commodities among themselves--doing
three, four, five and six-way trades with the
computers keeping the audit-trails as to settlement
agreements (which is what money is and does).
I have spelled out the
implications of all this in Chapter 9 of my book,
Building a Win-Win World entitled "Information:
the World�s New Currency Isn�t Scarce" and my
"Introducing Competition into Global Currency
Markets" with co-author, Alan F. Kay, founder of
Autex Inc., the first computerized system for
securities traders (FUTURES, May, 1996,
Elsevier, UK; Contents Direct: cdsubs@elsevier.co.uk).Another
major implication of global electronic markets is
the continuing growth of currency trading (now at
$1.5 trillion daily�with some 90 percent unrelated
to the trade of goods and services in the real
economy).
Politicians in all countries
bemoan their resulting "loss of national
sovereignty," as well as loss of control of domestic
fiscal and monetary policy, eroding budgets, and
tax-evasion. Yet most governments voluntarily ceded
this national sovereignty in the 1980s when they
deregulated banks and financial sectors and later in
January, 1995, set up the World Trade Organization (WTO).Thus,
to regain some of this lost national sovereignty
will now require international agreements to set up
new "Bretton Woods-type" global mechanisms to
protect investors in financial cyberspace.
A new "global Securities and
Exchange Commission (SEC)" is needed to harmonize
securities markets and their regulations�full
disclosure, accounting protocols, safeguards against
money-laundering, insider-trading, bear raids, and
the kind of speculations that helped bring down even
the Hong Kong dollar and still threatens even
well-managed currencies like Brazil�s real.
And although Thailand, Malaysia, and Indonesia were
rife with cronyism, corruption, unsound banking,
real estate bubbles�as were Korea and Japan�the
World Bank and the International Monetary Fund (IMF)
had known about all this for decades and turned a
blind eye in all the heady GDP growth.
Indeed, civic society groups
had pointed out all these problems for decades�as
well as those of child labor, sweatshop wages, and
conditions and reckless despoiling of the
environment and natural resources. Today, the IMF
will use some $100 billion of the world�s citizens
tax monies to bail out these corrupt old regimes.
This raises a clear issue of what economists call
"moral hazard." This is similar to the moral hazard
created on Wall Street after the 1987 crash when the
US Federal Reserve obligingly bailed out traders and
investors with a flood of liquidity provided�as with
the S & L bailout�by taxpayers.
Such taxpayer bailouts of
investors and imprudent bankers are creating
increasing public anger in many OECD countries,
including Japan, still reeling from their bailout of
their jusen (i.e., Japanese Savings and
Loans).As the ineptitude of central bankers and the
corruptions of "crony capitalism" are revealed, I
expect a shift to "safe haven," high-tech barter
transactions both locally and globally. Local
currencies and p-c-based trading systems are
flourishing in the USA, Canada, Europe, Australia,
and New Zealand. Indeed, I have used them as leading
indicators of the incompetence of central banks and
macro-economic management authorities in many
countries.
Let us now look at the
taxation issue more closely. At the global level,
tax-evaders are catered to by increasing numbers of
"financial brothels"�usually small, island countries
and regimes deliberately offering anonymity, dummy
corporations, money-laundering, and tax-havens.
Internet-based commerce and intranet-based trading
make all of this easier. Nation-states, now with
chronic budget deficits due to tax-losses from
deregulation, are breaking up. Some futurists, like
my friend John Naisbitt, predict that there will be
about 1,300 countries in a few years.
The continued growth of
electronic commerce into today�s autonomous global
casino will continue to erode the power of
governments while also denying them the tax revenues
they formerly received from domestic bricks and
mortar commerce. On the national and micro-level,
the tax issue will involve a fight for equitable tax
treatment between traditional bricks and mortar
businesses and those in cyberspace.
There are already two kinds of
Web-based businesses: those which link and empower
existing bricks and mortar retailers (such as those
in the jewelry business linked on the
Colorado-based, worldwide POLYGON Network)�and those
which bypass bricks and mortar retail businesses
(such as bookseller, Amazon.com). When the Clinton
administration, prematurely pandering to the
"digerati sector," announced that it would not tax
transactions on the Internet�it must have heard an
instant chorus of complaints from state governments
and the bricks and mortar businesses across the USA,
which might thus be condemned to penury.
As global financial markets
are now in a new domain of volatility due to
real-time electronic currency trading, I expect that
the roiling of equity and band markets will also
continue. Taking down all the "firewalls" between
the world�s economies was bound to create these
real-time interactions�rendering IMF bailouts less
effective in any case. Traders thrive on all the new
volatility. Alan Greenspan�s "jaw-boning" is no
longer enough to prevent the new roller-coaster
rides in the global casino--since he too has pointed
to the preponderance of market players who now
benefit from the volatility.
I expect an acceleration of
the efforts of G-7 and G-8 leaders to cobble
together a rudimentary "global SEC" and adopt new
Bretton Woods-type institutions like the
International Bank for Environmental Settlements
that may emerge from the United Nations Conference
of the parties to the Climate Convention of 160
nations now taking place in Kyoto, Japan. This new
Bank would securitize carbon credits and debits
between nations and create an electronic derivatives
exchange for environmental commodities, including
water and biodiversity.
I also expect central bankers
to wise up and stop sitting around the same table in
the global casino with profit-maximizing currency
traders speculating on large margins. The central
banks may decide that their role as protectors of
their nations� currency demands that they set up
their own FXE with the United Nations (UN) and the
Bretton Woods institutions as a "public
utility"�with specifically designed state-of-the-art
electronic trading systems and audit trails.
These could be designed to
capture information on money-laundering and
speculative movements while offering systems for
user-fees and circuit-breakers�instead of reliance
on now ineffective open-market buying operations and
the domestic recessions they engender. There is no
reason central banks cannot manage their currencies
and financial markets as closely as they manage
their sovereign bonds. Chile has shown how some
restrictions on "hot money" work well�and many now
point to China�s limited convertibility of the
yuan has provided some insulation from Asia�s
woes.
Lastly, new global systems of
political risk-management are now possible, which
can reduce the world�s military budgets�by employing
insurance instead of weapons. For example, the
Global Commission to Fund the United Nations, of
which I am a Commissioner, has proposed the United
Nations Security Insurance Agency (UNSIA), a
public-private-civic partnership between the UN
Security Council, the insurance industry and the
hundreds of civic, humanitarian organizations
worldwide which engage in conflict-resolution and
peace-building. Any nation wanting to cut its
military budget and redeploy its investments into
its civilian sectors could apply to UNSIA for a
peace-keeping "insurance policy." The insurance
industry would supply the political-risk assessors
and write the policies. The "premiums" would be
pooled to fund both properly-trained peace-keepers
and a rapid-deployment, on-line network of civic,
humanitarian organizations "on the ground" to build
trust and confidence.
The UNSIA proposal is now
backed by several Nobel Prize winners, including Dr.
Oscar Arias and other leaders, is taught at the
London School of Economics and other major
institutions. UNSIA was debated in the UN Security
Council in April, 1996, the first time that body had
considered the need to bring civic humanitarian
organizations into peace-keeping operations.
Finally, I expect that global
public access TV will become a reality. Citizens in
Mediocracies and Attention Economies are already
sick of much of the content of online and broadcast
media. They demand more useful content and coverage
of community problem-solving, higher quality
entertainment, education, and children�s
programming. For example, WETV, a Canadian-based
public-private-civic network with a state-of-the-art
multi-media backbone is now in over 30 countries
with such "Global C-Span" programming and growing
through program-bartering and partnering with
similar media.
Funded by the humanitarian aid
programs of seven countries, it is now opening some
ownership to private investors and will endow
participating civic groups with stock options to
incentivize their audience-building outreach. Such
creative hybrids are typical of electronic and
Internet-based companies and can open up new
grassroots, multi-cultural communications far beyond
the reach of the Internet alone (still unavailable
to most people in the world).
I found the ActivMedia results
fascinating and useful. In spite of the dangers of
the global casino and today�s Internet users� myopic
preoccupations with traditional marketing and the
naivet� of cyberlibertarians (who have forgotten
that they are free-riders on a taxpayer supported
public resource), I am, on balance, bullish on the
global promise of cyberspace. |