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Alternative Finance: Power to the people?

Posted By E. Alex Floate, Friday, August 30, 2019

Alex Floate, a member of our Emerging Fellows program devotes his eighth blog post to the possibility of establishing an alternative finance. The views expressed are those of the author and not necessarily those of the APF or its other members.

 

Access to information creates an informed populace, makes people’s lives better and democratizes society. That was the idea behind the public library, and the mantra of idealists in the early days of the internet. Twenty plus years into that era we are still waiting on the full promise of a connected world. In the area of personal finance, we have seen small successes as banking, credit scoring, money and investment management have moved online. Increased access and information have been realized in these areas, and in some cases has brought investing and money management opportunities to people who never considered anything but savings account. However, these improvements have not brought life-changing experiences to most, and the economic paradigm we operate under appears to be more of the same, but with apps!

 

Where the most success has been achieved is with those who previously did not have access to mainstream banking or financial systems. Some of the early players, such as PayPal and Alipay created the means for moving money from one entity to another. Doing so allowed many who did not have conventional accounts to participate in the broader economy by having a cost effective alternative. Personal investing companies like Acorns are bringing saving and investing to the masses by stealthily increasing every transaction you make with your debit or credit card to the nearest dollar, then investing those extra pennies into exchange-traded index funds. The appification of finance is the first and most obvious sign that personal finance is changing, but there are bigger movements ahead.

 

Open banking is a new concept that relies on networks and the sharing of both personal and financial institution data across these networks. The goal is providing consumers with better information as institutions provide data about their services that conform to an unbiased and transparent standard. This allows for better competition between participating banks and institutions resulting in lower fees and borrowing costs for consumers. Conversely, institutions have access to the history of potential customers and allow them to more accurately configure and offer products based on the risk profile as seen through transactions, and not through 3rd party credit agencies.  

 

As the world becomes a global marketplace for finance, blockchain will be the technology that will facilitate it. Blockchain will be the means by which transactions are secured, trust is established, and value is traded. Currently we use intermediaries to reduce the risk of transacting with third parties, especially when crossing jurisdictions or borders. This raises the cost and complexity of those transactions which blockchain promises to reduce. This may even result in a complete remake of retail import/export chains as people are able to transact directly across borders. Additionally, blockchain coupled with open banking will elevate peer-to-peer lending to a level where nearly anyone with assets can participate in the capital income economy.

 

Empowering individuals is the promise and goal of personal fintech and alternative finance. However, as with any economic system there are issues and areas that the promise may not cover. How will the average person create value that can be leveraged across fintech and the web? Those with assets, products or services that are in demand will be poised to take the most advantage; those whose only asset is non-skilled labor will be left out. Although technology is just a tool, those tools enable humans to create and build better lives for the creator, owner and user of those tools. There is never any promise that a tool will bring universal prosperity, but we should be aware of the potential effects of any new technology. For these new financial tools and systems, we need to understand will they truly help the greater good, or just create another seemingly insurmountable divide in our society?

 

© 2019 E Alex Floate

Tags:  banking  Blockchain  finance 

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Could ‘cyber-humans’ have personal liberty?

Posted By Ruth Lewis, Tuesday, August 27, 2019

Ruth Lewis a member of our Emerging Fellows program inspects cyber-humans’ liberty in her new blog post. The views expressed are those of the author and not necessarily those of the APF or its other members.

 

Can we judge technologies to be helpful in promoting our personal liberty? Could they grant us physical or cognitive freedom to push the boundaries beyond our human limitations? Or may they actually undermine our liberty by inviting unwanted invasions on our privacy and coercion of our thoughts? What happens if the technology that we are considering is embedded within the body or the brain, effectively becoming part of our own bodies?

 

Wonderful advancements are currently occurring in the field of biomedical engineering, enabling people who suffer severe pain, limb loss, brain injury, neurological diseases or psychological conditions to be monitored and their conditions therapeutically managed. Symptoms of your bodily condition can be tracked through local or remote monitoring of sensors implanted within the body. With electrical stimulation applied automatically or manually as required. In today’s world these implants, called neuroprostheses, may save your life, or make life tolerable. These devices enhance the freedom of action of people who have limited or no mobility, giving them the possibility of aspiring toward an independent life.

 

Such current technologies are the basis for speculation about an evolution toward ‘cyber-humans’, when body and brain enhancement with intelligent implanted technology may be commonly available. This may be for therapeutic purposes, or to enhance and extend the brains’ cognitive or memory capacity. It may grant extraordinary abilities to see, hear, understand and communicate (even without voice). Enhancement may provide physical strength and endurance well beyond the means of a normal human being. The application for such devices, will grant the freedom of extra-human capabilities. When used for the greater good, they may overcome many help societal issues. However, with speculation, it is possible to imagine a number of future scenarios where the personal liberty of the individual with technologically intelligent implants may be challenged.

 

Imagine that you receive subliminal or overt messages into your brain implant that induce you to like or buy a new product, to influence you to behave a certain way or suggestions that may be against your natural inclination. This is not so far removed from current practices of media bombardment through broadcast or pop-up advertising, or even practices of ‘brainwashing’. With clever messaging, these inducements may be indistinguishable from your own ‘true’ thoughts. This manipulation of the mind may undermine your cognitive liberty to your own opinion, or against your ability to explore alternative points of view.

 

In another scenario, your implant may receive subliminal instructions to activate your limbs, causing your body to perform actions that were not of your own choosing. Would you be able to distinguish these actions as being incited from outside of your body? Would you be held accountable or even liable for your body’s actions if you were to perform a criminal action, when the instructions may have come from a foreign source? And how could you prove your innocence in such a circumstance, to prove no motivation, even if you had the physical means to harm other people or property?

 

In a third scenario, imagine that brain implants may provide significant uplifts in standard human capabilities, such as intelligence, memory, attractiveness or even inter-implant communication. Would you create a class of ‘sub-capable’ natural-form humans compared with the implant-enhanced? Would this mean that you should have the freedom or the right to be implant-modified, or alternatively to refuse modification, even if it meant that you may become part of the sub-class of ‘purely biological’ beings? And finally, after modification, would you have the right to turn off or even remove your cyber-modification, at a time or place of your choosing?

 

Technology itself cannot judge what is open or honest, what values are good and what are bad. These values must be defined within the ethics frameworks of the society that we live in, and then encoded within the rules of the technology. Our governance frameworks must above all anticipate and protect our established rights to liberty and self-determination, protect our privacy of thought and independence of deed, rather than recognise these factors afterwards.

 

Technology is to data what the human body is to the blood. Data and information exchange provide the lifeblood of the scenarios described above. In order to understand and analyse these scenarios, we need to understand how liberty will be affected by ownership rights to the data supplied to or extracted from the implants in body and brains of cyber-humans.

 

© Ruth Lewis 2019

Tags:  cyber-human  liberty  rights 

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Is automation the commons of the future?

Posted By Tim Morgan, Friday, August 23, 2019

Tim Morgan investigates automation as the new commons in his new blog post for our Emerging Fellows program. The views expressed are those of the author and not necessarily those of the APF or its other members.

 

Elinor Ostrom is the only woman to win a Nobel Prize in Economics. She showed how the combination of shared governance and social feedback loops create stable resource management systems. She identified eight design principles which every stable local common pool resource organization follows. These promote shared social management of an economic resource, preventing the so-called “Tragedy of the Commons” of resource depletion.

 

Modern computing infrastructure is founded on use of openly shared code and community created protocols. This Free & Open Source Software (FOSS) ethos quickly expanded with the rise of the Internet to include writing, art, music, videos, and designs. Each license legally protects copying, modification, and use; but only if the resulting works also stay under the same open license. This guarantees that selfish actors can be legally punished if they try to hijack the works. It creates in-toto a classic self-governing common resource pool, ala Ostrom.

 

The infinite copiability of digital knowledge promotes a set of social values which govern the growing global knowledge commons. They assure that its value is always accessible to anyone with network access. Because data is cheaply and infinitely copiable, strong feedback loops reinforce using knowledge technologies for problem solving. This increasingly seduces the private sector into greater dependency and sharing arrangements instead of traditional ownership. The Public sector similarly becomes more permeable and malleable as it becomes more interconnected.

 

This growing automation-created knowledge commons is creating huge social, political, economic, and technological upheaval. We see authenticity and quality of experience replacing material ownership and cost as core product values. We see it using social pressure and economic engagement to solve problems like increasing ecosystem damage or socio-economic inequalities. We see it merging virtual and physical reality in the form of augmented reality, Internet-of-Things, haptics, robotics, A.I. knowledge assistants, and neural prosthetics. We see it spurring development of new materials, technologies, and processes for an emerging sustainable Circular Economy.

 

What we see is the emergence of an adaptive automation-enabled socio-economic system which uses all the levels of society together as an integrated whole. It is a new social ecology. It is rapidly iterating around its connections and knowledge space, trying to find complementary trophic-like flows between communities, institutions, markets, and the networks themselves via automation. Each sector is refocusing itself back into its core area of expertise in response. The Civic sector is increasingly refocusing on supporting families and local concerns. The Public sector is sluggishly refocusing on shepherding slower layers of society like infrastructure, public health, safety, and economic stability. The Private sector is reluctantly refocusing on creating customer value within a changing social context. The newest sector, the Social Commons, is emerging as the response mechanism for identifying and connecting areas of concern within the other sectors. It is the social governance arm of the global knowledge commons.

 

This rebalancing is moving civilization towards a biologically, socially, and technologically integrated system of systems. As each new sustainable niche evolves, we get closer to a globally sustainable whole. Our new global knowledge commons is not a single thing. It is an adaptive, integrated whole. Is automation the new commons? It is, but one we have never seen before. It is one that wants to look and act like nature itself: balanced, dynamic, adaptive, and evolving. It wants to be a new thing: an Abundant Commons.

 

© Tim Morgan 2019

Tags:  automation  commons  economics 

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Could the use of personal data decrease inequality?

Posted By Felistus Mbole, Tuesday, August 20, 2019

Felistus Mbole a member of our Emerging Fellows program inspects the role of personal data in decreasing inequality through her new blog post. The views expressed are those of the author and not necessarily those of the APF or its other members.

The one thing that defines the digital revolution we are in today is the enormous volume of personal data that is generated and collected each day. Data generation is growing at an exponential rate. This is supported by the ever-increasing computational power particularly in mobile devices. The use of smart devices is increasingly becoming part of our everyday lives. Through them, we are leaving a digital trail in almost everything we do. According to the Next Generation Data Analytics report, the big data market is expected to grow from USD 28 Billion in 2019 to USD 66 Billion by 2025. The trend is clearly upward. What does the continued generation and use of personal mean for economic inequality? Can the benefits of big data be made more inclusive?

The key drivers of the big data era are the growing number of mobile devices and related applications, and organisational shift from analogue to digital technologies. According to the World Bank, today more households in developing countries own a mobile phone than have access to clean water or electricity. Furthermore, close to 70 percent of the bottom wealth quintile in these countries own mobile phones. Businesses and governments are becoming smarter each day. They are developing algorithms which enable them to analyse big data and make predictions with a much greater level of precision than would be the case with huge national surveys. This is making decision-making easier.

Governments now have access to a mass of large-scale data sets, and new data sources on previously ‘unknown’ populations. They are using big data to cost-effectively make predictions that enable them to provide better services to their citizens. For instance, healthcare professionals can use big data to calculate someone’s chance of suffering from a given disease and thus provide timely or preventive treatment. Big data has been used to increase financial inclusion, improve education, respond to epidemics, and mitigate the impact of natural disasters. Businesses on the other hand are using data freely collected from individuals to provide services and products that are more targeted at their clients. Using algorithms, they can more accurately anticipate behaviour. They are driving our future behaviour. This form of surveillance capitalism is making data companies much more profitable and driving the inequality between them and the rest of society.

The role of technology companies in making connectivity work for everyone in future is likely to remain. Yet the reality is that business decisions on investments are driven by the need to optimise returns. Thus, despite the dividends highlighted here, a digital divide between the rich and the poorer in society who cannot afford the latest technology is likely to persist. The poor and the digitally excluded have less or incomplete data which makes them excluded from services whose design is informed by machine learning. Additionally, the algorithms can be discriminative and biased. For instance, health insurance services algorithms use historical data which could have biases. Credit scoring algorithms use residential location and type of work which could further entrench one’s economic situation. These could sustain the prevailing global inequalities.

The economy of the future will be digital. Based on the current trajectory, big data and machine learning is likely to increase. As the revolution of big data and artificial intelligence takes root, there will be loss of jobs. The poor in society who do not have the requisite digital skills to engage in this big data economy are likely to be disadvantaged and excluded economically. This could increase global inequality. The digital divide between the richer and the poor could be closed by addressing the non-digital or analogue elements behind it. Adapting the skills of workers to the digital economy, the nationalisation of data, and effective regulation of business to ensure digital inclusion would help address this digitally driven inequality.

© Felistus Mbole, 2019

Tags:  data  inequality  technology 

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Ought poverty necessarily lead to exploitation?

Posted By Esmee Wilcox, Friday, August 16, 2019

Esmee Wilcox takes a new look at poverty and exploitation in her new blog post for our Emerging Fellows program. The views expressed are those of the author and not necessarily those of the APF or its other members.

 

Talk of exploitation and poverty reminds us of the worst of sexual crimes, human trafficking and gang violence.  However, the absence of access to commonly held resources, and the consequential lack of agency are perhaps more ubiquitous experiences with interest right across the political spectrum. OECD reports on declining social mobility. Mainstream economists describing opaque but intentional market interventions that obscure the drivers of structural inequalities.  Populist movements berating the unequal ‘burdens’ of social support put upon the middle classes.  These all raise questions about purpose. Taking this discussion out to 2050, we might be asking very different questions about what poverty means, the choices we have to make, and ultimately, who gets to choose?

 

By 2050 more of us may be living in more precarious circumstances, with fewer assets such as insurance or meaningful currency to smooth the impact of economic and environmental shocks.  In these circumstances there may be more interest in universal socio-economic support mechanisms instead of activated or conditional ones.  Our atomised view of resilience shifting as our taken for granted capital disappears.  Our interest increasing in access to richer education that enables agency in public life. Socio-techno movements that question market interventions becoming more influential.   The absence of effective governments organising at the national level may lead to place-based communities holding and developing their social capital and assets that necessitate an economically inclusive approach to function.  Low or absent incomes might be more ubiquitous as more of us experience shocks that push us into this bracket.  Where there is a reciprocal relationship between the social capital, with agency in-built, and the human capital required in the self-organising of these systems, this might redress traditional capital inequalities that lead to exploitation.

 

The solidarity required in this future goes counter to political philosophy that individualises people’s capacity to leave precarious circumstances. That sees self-reliant communities as motivated, organised ones, decoupled from any precondition of ownership or influence over assets.  That courts low-income hard-working families by distinguishing them from elites and poor.  Who, through disproportionate political influence and access to resources, bear responsibility for under-investment, wage stagnation and lower their quality of life.  The extension of this political dynamic out to 2050 might be an acceptance of the consequences of enviro-economic shocks as self-determined.  Less acceptance of divergent circumstances, reducing the pool of who gets support.  The data about the myriad of perceived choices – consumption patterns, pro-social and risky behaviour, responses to genome profiles – reflecting a deterministic, causal view of complex circumstances.  The dominant political system codified and entrenched in the gate-keeping AI’s values.

 

In spite of this narrative about individualism, there is some evidence that citizens’ views about welfare policies are more mixed and influenced by a rich history of social attitudes, experience of distributive policies and expectations of governments. This might give us more hope of a space where inclusive social movements could expand.  Who gets to hold, organise, and make use of local community assets – as resources that are key determinants of health, education and wealth – might be a less controversial space to move to shared agency.  However, if we are to imagine a system where poverty need not lead to exploitation, it must also disrupt the personal realm: individual agency equated with current capital assets exchanged for the collective ability to produce.  In the transition to this type of future, what might influence access to other life-course determining assets such as education?

 

© Esmee Wilcox 2019

Tags:  agency  exploitation  poverty 

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How can we solve problems without a solution?

Posted By Robin Jourdan, Tuesday, August 13, 2019

Robin Jourdan checks the possibility of solving insolvable problems in her new blog post for our Emerging Fellows program. The views expressed are those of the author and not necessarily those of the APF or its other members.

 

Labor and environmentalism are often portrayed at odds with democracy and capitalism. Is labor environmentalism compatible with democracy/capitalism? For over a century, labor championed an evolving environmental movement. Labor promoted conservation of the national resources and opposition to industrial exploitation of public lands for profit. Since World War II, labor union members linked the dangers of pollution in the workplace with the contamination of the surrounding communities. Labor unions were also essential organizers of the first Earth Day. Earth Day has grown to become the largest nonspiritual celebration. More than a billion people take part every year, stirring policy changes.

 

By joining forces, labor and environmental organizations had increased business regulation to protect workers. Until the mid-1980s. Industry's response exposed workers by using claims that lost profits could result in layoffs or complete shutdowns. Such assertions change the conversation for workers and union representation. This results in pitting jobs directly opposite to safety, health and environment. Today's business hostility and centralized government ambivalence create a formidable front to environmental quality. A response is birth of the green labor movement. Itself a new model, it holds promise to disrupt political alignments.

 

Union environmentalism that protects members from unsafe conditions has risen. This outcome has also benefitted the natural environment as a byproduct. Increased use of machine workers, especially in dangerous and hazardous situations may result in a whole new thinking. Globally today, nine out of 10 people worldwide breathe polluted air. The United Nations Environment is focusing on tackling the growing yet overlooked threat of air pollution. To a large extent, this a response to accelerating carbon emissions via increased energy demands, especially in China, India, and the US.

 

Beijing has shown what is possible to reduce air pollution and are increasing their actions and ambition for the next 20 years: a model for others to follow. World Heritage sites will face heightened threats; especially crucial to nations who value their long heritage. Going forward, leadership will be judged on its capacity to resist temptations to manipulate the system, versus commitments, met as a proactive and responsible role model. A wildcard is recently surfacing in the US as a group of young people have begun lawsuits over climate change inaction.

 

Today's technocrats can take advantage of their ability to consider and grow in the face of issues such as proper workforce planning for health issues. As the number of active workers declines, elderly non-workers' health issues will increase similarly.

 

New Environmentalists, new hope? Global leadership who take on fighting inequality, including that induced by climate change, will be rewarded. Efforts reversing climate change will be challenged by a more significant influence of urban areas. Ignoring climate change will come at a cost in the Trillions of dollars antithetical to capitalist goals.

 

Is labor environmentalism compatible with democracy/capitalism? Approaching tipping points at work in today's short-termism world can provide specific incentives. For an economic incentive market truth offers the highest reliability. For example, in the future, holding jobs hostage over environmental concerns will diminish as AI and machinery take over dangerous front-line work and lowering costs. This change could cause the market into a full-court press protecting Spaceship Earth. Problems without solutions may be only a temporal issue. Given additional information and evolution, even the toughest solutions can be found.

 

© Robin Jourdan 2019

Tags:  change  environment  society 

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Will the offline world really matter anymore?

Posted By Paul Tero, Thursday, August 8, 2019

Paul Tero a member of our Emerging Fellows program envisions the future of offline world in our social affairs. The views expressed are those of the author and not necessarily those of the APF or its other members.

 

As we consider what life could be like at the half-way point of this Century, it is instructive to step back and view the flow of history. It is through an appreciation of how human affairs have changed, and what has driven those changes, that we can grasp what lies ahead. That we can begin to form answers to the questions at hand.

 

Questions such as: will the offline world matter in 2050? Will the teenage grandchildren of today's teenagers interact with the physical world as is currently the case? Will the limitations of our physical world be overcome by then? Will the digital realm be a greater source of influence than the temporal?

 

Prior to recent times, our lives were centred on the world of the atom rather than the world of the bit. It was solely in physical spaces that we built relationships, grew economies and exercised political influence. From the villages of the agricultural age to the cities of the industrial age, domestic, business and government activities were conducted exclusively through analogue means.

 

It is without question that we are in a period of transition. The balance is shifting from the physical to the digital. For although the online world is ubiquitous, we are still beholden to our physical world. Even though the domain names and the virtual properties they represent sell for millions, the power and opportunity that is afforded through the ownership of real-estate is even more significant. Even though a cadre of eminence grise wield the power of social media in commercial and political spheres, we still respond through our presence at the checkout or the ballot box. And even though the value of digital services is rising, our nations’ export earnings still tend to be dominated by that which can be carried in ships.

 

Given that the trees of tomorrow are todays seedlings, that the systems of tomorrow and the way things will be nascent today. What do we see around us? Today our social and retail transactions are dominated by ever-present digital transaction. And, as we grow more comfortable with its safety and ease, tomorrow digital transactions are more than likely to become ubiquitous in all other aspects of our lives such as our domestic, employment, health, romantic and spiritual affairs.

 

Today, most of us are generally free to live our lives free from statutory manipulation. But as we see administrations around the world learning to leverage digital tools to achieve social outcomes, opposing voices may well be reduced to obscurity. For even the phenomena such as the growing Tech-Lash or the various uprisings coordinated through social media will surely fade into impotence as the State develops and controls the digital-only narrative to maintain political control.    

 

And so, in the time ahead, it is conceivable that our lives may well be centred on the world of the bit rather than the world of the atom. It is more than likely that it will solely be in virtual spaces that we build relationships, grow economies and exercise political influence. Where we are headed, transitioning from the cities of the current information age to megapolises of the coming intelligence age it is quite reasonable to assume that all domestic, business and government activities will be conducted exclusively through digital means.

 

From our vantage point from which we have surveyed the sweep of history, we can indeed be confident of one thing. That the life that the teenage grandchildren of today's teenagers experience will be vastly different to our current reality. We can be sure that the offline world won’t be as ascendant in our social affairs. Nor as influential in the ebbs and flows of economic decisions and transactions. And finally, neither as significant for those actors that gain and wield political power. The dominance of the offline world is set to wane.   

 

© Paul Tero 2019

Tags:  digital economy  offline world  power 

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Has an Aging Population Impacted Corporate Shareholding?

Posted By Charlotte Aguilar-Millan, Monday, August 5, 2019

Charlotte Aguilar-Millan inspects the impact of aging on corporate shareholding in her blog post for our Emerging Fellows program. The views expressed are those of the author and not necessarily those of the APF or its other members.

 

Corporate shareholding is affected by what ideologies generational cohorts have. In the current year, 2019, we see Baby Boomers, those born between 1946-1964, at their peak corporate shareholding. This is because they are now at, or near, retirement age. Once retirement age hits, corporate shareholding starts to unwind as individuals cash in shareholding for retirement income. This is likely to peak for Boomers in the early 2030s. With this peak enters a new phase of corporate shareholding by Generation X, those born in 1965-1976, but more prevalently by Millennials, those born in 1977-1995. However, with this new phase of investing comes a different ethos. 

 

The term “ESG” - environmental, social and governance - was first coined in 2005 as a result of growing expectations that Corporates need more transparency and a documented moral compass. These new requirements ensured that Corporates had to demonstrate transparency including how they are responding to climate change as well as how they treat their workers. From 2005, this has grown to represent roughly 25% of all investing activities. Corporates have incorporated ESG into their operating model. An example of this can be seen from Tomás Carruthers, former CEO of Interactive Investor, who launched “Project Heather” in 2018. His aim is to build the first regulated investment exchange to be focused on businesses that are making measurable positive social and environmental impact.

 

The rise of ESG investing has not meant that the format of investing has remained consistent. Public trust between generations is in decline. Where Boomers were happy to select individual stocks from a stock exchange, Millennials do not invest in this manner. With the average age of homeownership increasing, in the UK it is currently around 32 years old, the point at which a Millennial can start investing in stocks and shares has shortened by a decade to their previous generation. As a result, Millennials seek to locate trustworthy investments given they have a shorter period than previous generations to save for retirement.

 

The growth in private equity is providing Millennials with this platform. Private equity backed companies in America grew by 300% between 2000-2018 while individual stocks declined by 43%. Millennials see that with private equity, an opportunity is given to smaller companies for growth without the time and expense drain of becoming listed. This in turn can stimulate the economy with innovative ideas that might not be realised without funding. Millennials have also seen the rise of the “unicorn” within private equity where a company is valued at over $1billion making it an enticing return opportunity. 

 

For markets to expect Millennial’s investing strategies to be the same as that of the Boomer’s is complacent. Millennials have grown up with a higher scepticism and lower trust environment than their previous counterparts. They are not expecting a golden retirement. Instead, they look to impact investing to create an ethical environment. With an aging population brings forth a new phase in those accumulating and investing wealth. This in turn will have a significant impact on corporate shareholding.  

 

© Charlotte Aguilar-Millan 2019

Tags:  aging  economics  shareholding 

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Will Fintech Change the World of Finance?

Posted By E. Alex Floate, Thursday, August 1, 2019

Alex Floate, a member of our Emerging Fellows program checks the possibility of changing the world of finance by means of fintech in his seventh blog post. The views expressed are those of the author and not necessarily those of the APF or its other members.

 

Fintech was coined as a phrase in the early 21st Century that described the internet enabled finance technology that began to appear. Later it came to describe the whole of the financial technology sector, and a buzzword analogous to ‘invest in us – we’re on the cutting edge’. Others then began to see fintech as a gateway to a post-capitalist system in which fintech will democratize finance and save the world in the process. These enthusiasts were literally banking on fintech igniting the forces of creative destruction that would bring down the old order of labor, land and capital and replace it a distributed tech model based on individuals, information and abundance.

 

Creative destruction is a concept dating back to Marx that capitalism will continually destroy the existing order to create new value and wealth. Creative destruction is caused by innovation which undermines the status quo, and de-values anyone or anything that continues following the old order, including skills, desires, function and capital. During Marx’s time this was the new industrial barons destroying the value and wealth of the landed gentry through commoditization. More recently technology entrepreneurs have unseated the established industrial conglomerates by expansive use of information.

 

Obsolescence and replacement are not confined to direct replacement of the new technology but can endanger whole systems. For example, the inefficient neighborhood grocery store within walking distance of its customers fell prey to the technology of the auto; it was now easy to drive to efficient and cheaper supermarkets. Now we see even those supermarkets and stores falling prey to the technology of the internet. Creative destruction in action. Is fintech a technological revolution causing the next evolution of capitalism?

 

That is the hope of those who see fintech as the democratizing influence on finance and capitalism. The use of fintech allows individuals around the globe access to information, platforms, cheaper capital, and stores of value without needing expensive intermediaries or even beholden to any one currency. By breaking the back of the old finance system, the new decentralized one will be distributed across the population. Fans of Austrian economics will rejoice as fintech skirts around regulations and allows individuals to choose where they access and store capital, at what interest rate they want, and in whatever electronic currency that best suits their needs.

 

But, fintech fans appear to underestimate the reaction that vested interests of governments, financial institutions and current technology leaders have in either blocking, slowing or hijacking this new round of creative destruction. Governments especially will see this new order as a threat that previous iterations of change lacked, as it will challenge their ability to regulate and exercise financial authority over their own economies. We are already hearing the mumblings about regulation of Bitcoin or attempts to thwart Facebook’s plan to create a digital currency. The fintech wars will truly be unleashed once a digital currency appears at enough scale to challenge the largest currencies. That most likely will be the Rubicon that needs to be crossed before governments fully assume a war footing.

 

Before that occurs though, the most likely scenario is an alliance of current financial powerhouses, tech companies and both groups pocketed lawmakers stepping in to create conditions that allow much of fintech’s promise to be purchased and assimilated. Until then fintech will be a race, not a war, to see how fast it can advance. The race will be to provide people the power of its promise before a behemoth financial Borg assimilates it and leaves the people as powerless as they were before.     

 

© 2019 E Alex Floate

Tags:  Economics  Finance  Technology 

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Will liberty evolve with governance?

Posted By Ruth Lewis, Tuesday, July 30, 2019

Ruth Lewis a member of our Emerging Fellows program checks the possibility of evolving liberty with governance in her seventh blog post. The views expressed are those of the author and not necessarily those of the APF or its other members.

 

‘Corporate Social Responsibility’, ‘Sustainable Development’, ‘Socially Responsible Investing’.  I am often struck by these sorts of labels that imply an intention to work towards a better world.  But have they become weasel words, marketing-driven subjective descriptions that may be co-opted by those without an obligation or a plan to implement firm or agreed objectives? How can we promote or evolve human rights or liberty universally, or create a governance framework to allocate responsibility that can be clearly understood and delivered?

 

Human rights and liberty may evolve in the future though the use of global standards, long-term commercial goals and non-financial societal measures. This view focusses on the social accountability of the individual entity – a person, corporation, government or NGO for their own actions and is in line with the human rights paradigm of self-governance. Within this type of governance framework, the behaviour of the entity is observed and measured to ensure accountability. Liberty may evolve with honest governance that provides education, a robust and enforced justice system, and which upholds free speech.

 

A normalised common good for a community may develop where that community can be defined as ‘Earth’. We refer to all citizens of our planet as a global community, with all inhabitants enjoying equal human rights. The problem comes when human rights, as benefits or interests imposed by government or international rules, clash with human responsibility.

 

Responsibility is related to a duty or obligation for moral or legal purposes, and is assigned to you as a role. Moral responsibility or duty are concepts from a time before the Enlightenment, when civic virtue and social values were pre-eminent.  Duty ethics implies living by a set of rules, according to your duty to the society that you live in. This world view defines each person’s place in a hierarchy, whether as a ruler, religious leader or supplicant. These ethical theories are more powerful when considering a governance system that will care for a common good, such as our environment, or a social institution such as a culture or country.  The cultural aspect of the welfare of the community is dominant, over the rights or wishes of the individual.

 

Within a governance system that is respectful and nurturing to the individual and community, duty ethics can promote liberty.  However, in some cultures past and present, the governance system may be more concerned with enforcement of a defined duty within a social hierarchy, and may suppress individual liberty or exploit a person or a community for the ‘good’ of the hierarchically superior state.  Where this happens, there may be no recognisable individualism or recognition of human rights, as it is beyond the duty paradigm.

 

How do we morally reconcile egalitarian concepts of liberty and human rights with hierarchically-based duty and moral responsibility to ensure universal and equitable governance? This question underpins many global challenges that we face today, including care of our environment, responsible development of technology and natural resources, improving the living conditions for third world communities or ensuring inhabitants of our world are free to choose their own religion, lifestyle or family groupings.

 

The solution is to carefully integrate both liberty and duty ethics with an equal recognition of both, for the healthy functioning of the individual within the society that they live in.  Equitable governance will promote both liberty and duty in both a rational and a spiritual sense, looking at both short to long term development, and taking account of both high and low-level issues, complexities and inter-relationships.

 

Governance where the governed have input in shaping the governance and policy development process is a difficult process of finding consensus and reconciling many different points of view. The key is to follow an agreed framework that is able to benefit and validate all of these viewpoints within open and honest channels of communication, with a consideration of societal or collective normative values for the common good, truth and values.  Example frameworks that have been developed for this type of framework include ‘Communitarianism’ and ‘Commoning’.

 

An immediate need is common governance of the world’s natural environment.  A purely liberty-based view of governance based on ‘human rights’ may look to exploit the ecosystem for economic growth.  This may subsume all other considerations, including our duty to protect nature or our responsibility to preserve the world’s ecology for future generations.  The common and integrated view of environmental governance based on equivalent ‘rights’ and ‘duty’ allocates custodianship of countries and corporations for natural resource development, and specific responsibility for any social and ecological damage caused by economic production or consumption. This custodianship includes the duty of current generations to conserve the global environment for future generations. There are signs that future legal international frameworks will normalise explicit intergenerational environmental responsibility in equal measure to the legal status of human rights to ensure accountability for externalities of economic development, together with defined plans for delivery.

 

Technology can be used as an enabler of open and honest channels of communication and facilitate the transition from the extremes of individualistic liberty and hierarchical duty to a framework of the common good and universal governance. But how can technology judge what is open or honest?  And what if the technology includes artificial, autonomous systems or augmented intelligences that need to be factors within the framework of defining the common good?

 

© Ruth Lewis 2019

Tags:  governance  liberty  rights 

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