Power to the people – or a disaster waiting to happen?
In December 2010 I threw together a PowerPoint rant – as I thought at the time – which I did nothing with, as on reflection I felt perhaps it was somewhat exaggerated. Now I am not so sure. (You can see a copy on this blog)
Perhaps it is time to start a blog to give a voice to some of my concerns and hopes in respect of the dramatic changes taking place in some countries – and how they can be a force for good or bad. I hope I will get many reactions, and perhaps even we can influence matters to the former rather than the latter!
By way of introduction, I am chairman of two not-for- profit organizations, one in Europe and one in USA, but both geared to the same aim of improving the ways in which governments raise and spend money and reducing the high levels of fraud and non-compliance that are currently endemic in that process. This started five years ago, when we were asked to try to help the EU cut out the $150 billion per annum VAT losses to fraudsters and cheats; that is just on VAT!
I cannot claim enormous success; indeed, the EU’s insistence on unanimity of all 27 countries’ agreement to any tax-related change drives me to a glass of a decent red wine from time to time. However, in our search for solutions we talked with many organizations. One introduction from the IMF led to me attending the initial African Tax Administrators Forum two year ago – and that led to a far more promising involvement with tax departments that actually wanted to create change.
Tax collection is one side of the coin; what governments do with the money is the other. And what the people think of the process is very important; I think what we are seeing today is just as much how a government portrays itself as what it does.
There is no question about how communications need to take place; the web and mobile phones rule the waves. While television and print media are still important, they have less of an impact on the young than Twitter and Facebook. And the same methods are about to change the way in which money flows; banks will have a decreasing role that will be taken up by mobile phone operators and specialist e.processors. Will that be for good or bad? We are back to the same question I raised three months ago; it all depends on the way governments set up the systems and how they market them.
I won’t go on too long about what we see as a ‘solution’ to the tax and benefits problem – that can come in a later post. What I believe we are seeing in Egypt, and likely to happen as other countries hopefully move towards democracy of one type or another, is that replacing one dictator does not bring a change for the massive number of young people who are unemployed. What is scary to me is that the people are staying in the streets; they found strength against government from being able to communicate with each other in a rapid manner. What will they do when the new government does not resolve the unemployment?
With somewhere around 50% of the world’s population being under 25, this is not a problem that will go away quickly. The unemployment is particularly centered on the young, so the solutions need to focus on them as well. I have a few ideas, but really they will not deal with the underlying lack of new jobs in the majority of the world. We have reached this stage of development where mass production is so sophisticated that people just get in the way most of the time.
Back to the rant; of course it is not a ‘real’ forecast, but what I would say is that the action to control mobile phone payments is at least as urgent as I suggest in it. If central banks do not exercise the central clearing rules when they are issuing licenses, the telcos will be entitled to set up their own accounting structures internally. The disaster I suggest will be a direct result of that failure.