Select Committee on European Union Minutes of Evidence

Examination of Witness (Questions 40 - 59)




  40. Can I bring you back to some of the issues?

  A. These are the issues.

  41. I have been to Sweden and I have seen forests which have been decimated by pollution which has crossed the North Sea from this country. In Liverpool there will be issues arising that have come from London and vice versa, there is an interrelationship. I would have thought that e-commerce, in many respects, is developing stronger interrelationships in some areas. Freedom for the individual too.

  A. I am a Nietzschean, in a sense, I believe it is all down to power. All of the rest is sentimentality and the only way you stop that is by power.

Lord Skelmersdale

  42. Professor, can we get away from philosophy for a moment and into real problems? One of the things that is said is that fifty per cent of credit card fraud came from the internet but it is only two per cent of the business, in other words trading e-commerce. How is this to be solved? Should you not worry about it?

  A. This is where the trusted third party comes in. This is where strong cryptography comes in. What is government doing? Government is actually enforcing weak cryptography so they can snoop on what is going on for their own tax purposes.

  43. One of the ways would be to license individual firms which would be a very severe strict form of regulation.

  A. Just today the American government has passed a law saying that electronic signatures are now acceptable on legal and binding documents, so they are already going down this route. Part of the process is the electronic signature, the identity, has to be acceptable and it has to be recognised. There has to be some form of trusted third party to intercede, an agent, who will recognise and guarantee the trader and what is being traded.

  44. You believe this could be another organisation, it need not have anything to do with government?

  A. It need not have anything to do with government at all. No. It could be Microsoft. In fact, that is why everyone is so terrified of Microsoft, because they could actually put themselves in this position. They could actually become it by default, which is why the American government wants to break them up. They have become far too powerful.

Lord Faulkner of Worcester

  45. And because they are exploiting a monopoly, that is the other reason why the American government wants to break it up surely?

  A. I am sorry, I do not understand.

  46. The other reason why the American government wants to break up Microsoft is because they are convinced that its business practices are monopolistic.

  A. There is only one monopoly in any country and that is government. I do not see business as monopolistic. The whole history of business is that these so-called monopolies come and go but the monopoly of government goes on.

  47. You would not regulate monopolies at all, would you?

  A. This is part of the standard, it is part of business. The idea is that the attack on Microsoft is all well-intentioned and is nothing to do with the lobbying of companies who are losing out because Microsoft is winning— There is so much hypocrisy behind all this. It is like all the snide remarks in Britain about Sky. He (Murdoch) took all the risks and then suddenly when he wins "it is a monopoly, it is dreadful". When you take the risks you should keep the rewards. What we are talking about is the European view that anyone who takes a profit should have it taken off them because it is not their property, it is the property of the state.


  48. I think in America the anti-trust regulations are far tougher than those in Europe.

  A. They are also arbitrary.

Lord Woolmer of Leeds

  49. Good afternoon, nice to see you. I want to touch first on where you finished there comparing the USA and Europe. What, if anything, does government do in the United States, however limited, which you think may be useful in this phase of the development of e-commerce and communications industries?

  A. To a certain extent they keep out of the way. There is a sort of bipartisan agreement by both parties. As long as the business actually pays money into the political coffers then they leave them well alone. They only get involved in extreme cases. They are not really sticking their nose in. The idea of government piggy-backing on the back of e-commerce to deliver government material for the benefit of society was derived by Al Gore; this was his idea. I am not at all convinced of that because what we actually see is information overload. There is far too much of it, and the only people who find it of value are the political insiders who actually have a commercial reason for accessing this material. The vast majority of the population treat this material like a party political broadcast. They just block it off. There are a lot of statements that on the surface look beneficial to society, like they talk here about giving political information, making it available and transparent to all, but it is not quite as straight forward as that.

  50. I take that point but in the United States does the government in any way regulate or do anything in relation to the communications?

  A. I come back to the idea of standards and recognising the role and implementing the freedom of the individual, keeping out of the way. Government is there to support the individual against the mob. It is very libertarian on both sides.

  51. Does that, for example, come down to any regulation in relation to this issue of trust or in relation to online contractual law, for example? Have there been changes in the United States which—

  A. I do not want to give you the idea that the American government is all virtuous, they just have a lot more rabid individualists in the States who will not let government get away with things. They tried it with the `Clipper Chip' and are trying it again because the American government made cryptographic software a munition and stopped it being exported. They are just as likely as governments anywhere to try to interfere for their own ends. The American constitution gives the individual an aggressive position to actually take government on. Business is very much more powerful.

  52. Can I look at the question of the coming together of, as it were, the content industries, the media industry and the communications industries. There are the changes in the communications industries and now the merger and coming together of the content industries. Is there anything there at all over time that you think should concern citizens at large or do you think that is something that should be left simply to market forces to unfold?

  A. Concern or otherwise is irrelevant. Basically, the forces are in place. Again, there is a misunderstanding of these changes going on. It is a highway, with delivery mechanisms creating these mega companies. The actual products themselves are simply put on the highways. These mega companies are basically laying the tarmac. What drives along the tarmac— Take the film industry, the entertainment industry, the sports industry, they are classic examples of what I would call an information industry. If you want to look at what is an information industry, they are already there.

  53. Do you think, for example, that the Chinese government will take the same view about the hands-off and emerging domination of American communications and media business?

  A. No.

  54. So your view globally is very much an anglo-saxon view, you are looking at the world sitting in London?

  A. I am looking at the world very much as an evolutionist.

  55. Do you think that the Chinese government or the Indian government will take the laissez faire view that you would? If you do not think they will, do you think that in some way Europe is different from India or China in relation to this area?

  A. Again, transaction costs factor in. I am not predicting the outcome, I am simply laying down the battlefield. I am saying that this is where natural selection is going to take place and different regions will pick up different approaches to e-commerce, some will win and some will lose. We are not even sure of the laws of natural selection because they are evolving along with the entities themselves. We are now at that point where decisions that factor into communities will actually force the outcome. Those communities are not necessarily the communities of today. We are still looking in terms of nation state countries and looking in terms of Europe. I see a first world, second world, third world break down of the world but it is no longer geographically located. There will be first world, second world, third world regions in what we today would call a nation state. The City of London will be first world, the sink housing estates in Hull and South Wales are third world. They are already third world, anyone who goes there can see they are third world, third world without the sunshine.

  Chairman: We have sink estates in London.

Lord Woolmer of Leeds

  56. I was interested in your starting point, this concept of the elite. Trying to get some sense of the scale and size of the elite, the elite, by definition, are a minority, I assume. What are the activities that you think the elite will actually be undertaking that will generate them their elite status? What is it that they will be doing that everyone else is not able to do?

  A. They will be approaching the whole version of commerce and profiting from it. It is a battlefield and the ones who win become the elite.

  57. That is true of industry and commerce in general. I am very interested in this term "elite" and the concept of elite.

  A. I use the term "elite" because now the mass of workers are not necessary for business. What has changed is the mode of production.

  58. Who is going to buy the products if they do not have a job or income?

  A. That is not an argument.

  59. Who are you going to sell the products to?

  A. That is a flawed logic[1]. Let me explain the fallacy of that argument. That argument comes from the industrial age, you could not have made that argument 200 years ago.

1   The witness subsequently drew the Sub-Committee's attention to p 68 of his book, The New Barbarian Manifesto (Kogan Page, 2000). Back

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