Fred's Space

The 20th Century will be remembered as the American century. In 1900, Britain was the one truly global superpower in every way. At the turn of the millennium, it was the United States. Eight short years later, that’s changing. This month, Fareed Zakaria of Newsweek releases his new book The Post American World. It’s a great chronicle of how the decline in the relative standing of the US in the world community. As he says up front “This is not a book about the decline of America, but rather about the rise of everyone else.”

Zakaria isn’t the first to comment on the comparative rise and fall of nations. Paul Kennedy of Yale and the LSE wrote about it from a political & economic perspective in his 1987 book, “The Rise & Fall of The Great Powers: Economic Change and Military Conflict From 1500 to 2000”. Michael Porter of Harvard wrote about it from an economic perspective in a 1990 Harvard Business Review article. He later developed these ideas into a book. What makes Zakaria’s commentary so relevant is the historical context.

Britain’s power was predicated on a traditional model of imperial rule. As they saying of those days went, “The sun never set on the British Empire”. America’s power has been different. To be sure, the US has fought many times on foreign soil. Spectacular victories in two world wars were followed by a stalemate in Korea and a loss in Vietnam. Yet the Americanisation of Europe and Asia (to say nothing of Latin America) have been more cultural and socio-economic than political. Even in Japan, where Gen. Mc Arthur wrote the constitution for the new de-militarised nation, the Japanese seemed to Americanise their nation themselves and over time. They were not a colony later given “home rule” in the sense that Britain ruled India.

The emerging global culture of the late-20th century is distinctly American. It has all the hallmarks of US middle-class consumer society. It embodies the aspirations of the American dream – upward social and economic mobility. It has localised flavours – particularly in India and China – but it is surprisingly uniform across the emerging middle-class of an increasingly urbanised world. What began with Coca-Cola and hamburgers has become a global phenomena; a kind of Pax Americana.

This global form of the American Dream is under severe and increasing threat. The War on Terror and the terrorism that precipitated it is only one sign. American standing abroad is as low as it’s ever been. American economic and financial influence is waning rapidly. Their cultural leadership of the 20th Century is yielding to new forms of emerging culture. Most visibly, American consumerism is no longer the aspirational goal for many people. The excesses of American society – economic, social and political – are all too visible to the rest of the world now.

To be sure, Zakaria is right. China & India have accelerated past the US. Japan did almost as well in the years after the Second World War. Today, the US grows at 3-5%; China’s growth is at 10-12%. The way America overtook Britain in the 20th Century is the same as the way China & India will overtake America in the 21st Century: growth. Here’s a historical comparison of growth and a GDP forecast (in 2003 dollars) going forward to 2050:

The message is clear. Over the 50 years 2000-2050, American GDP is set to triple while China’s grows by 40 times to exceed America’s. In the same time, Indian GDP will approach that of the US and exceed Japan & Germany’s combined by over 250%.

Whilst America (and Europe) are under economic siege from China & India, this is only part of the story. In the two generations ahead, China & India will produce billions of new middle-class consumers. Together with the rest of the emerging economies in Brazil, Russia and elsewhere, this may approach 3 billion new consumers in the global market. Assuming UN population forecasts, this means an additional 30% of humanity will become middle-class, urban consumers – many for the first time in history. This is the essence of the issue Zakaria discusses: hyper-growth in socio-economic mobility.

The cultural, political and environmental dimensions of this are staggering. In a world of 9-10 Billion people in 2050, two-thirds to three-quarters may live in cities. 4.5-5.0 Billion of these may live middle-class consumer-society lives. Only 400-450 million of them will be American. Fewer than 700 million of them will be European. Many of the remainder will be Chinese, Indian, South American, Arab and African.

As Gandhi once said of the British in India, “300 thousand Englishmen cannot control 300 million Indians…”. Perhaps, in the same way, 400 million Americans cannot control 4 Billion other middle-class people…

White was always the colour of Christmas for me when I was a young boy in NYC and Western Europe. It certainly was when my father grew up in Northern Canada. Not so for my mother growing up in Egypt. It never has been for my wife or 4 nieces – all born and raised in Australia. When my family moved to London in the early-70s, snow at Christmas-time was rare. When we moved to Australia a couple of years later, the whole summer-time Christmas thing was hard to deal with. In some ways, it still is.

Even weirder for me growing up were the Xmas trips abroad. When I was 9, we visited my grandfather in Uganda only a few miles from the Equator. A couple of years later, I spent Christmas in the Alps in Europe. In my teens, we spent a couple of December/January vacations near Cape Town, South Africa. Tropical and summer holidays just didn’t seem to belong at Christmas-time.

The weather all over the world has changed a lot over my lifetime. 40 years ago, summer and winter were very distinct and predictable seasons in the US, EU and Australia. There was a rhythm to the seasons and the calendar was the metronome. For the last 10 summers in Australia, water-shortage is the key theme. In Europe and America, heat-waves and storm seasons top the news. Last year – North & South – there was hardly any ski season at all.

The last time we spent Christmas in Europe was 2003. The summer prior, there was a heat wave that killed people in Paris. The Christmas prior to that, ski-fields in Switzerland at 2000m were brown. Late December and early January 2003 was a wonderful time to be near the Italian border in SW Switzerland. Over a metre of snow fell in one night. The resorts all turned on a great set of festivities in a picture-postcard surrounding. The colours of Christmas were all those of the traditional Northern holiday season.

Climate change and Christmas time are now colliding together. The UN Conference on Climate Change held in Bali this week is a major focus all over the world. There’s a particularly sharp focus on it here in Australia. The new federal government elected a week or so ago had ratified the Kyoto Protocol as its first act. The new Prime Minister leads Australia’s delegation in Bali. The new Minister for Climate Change and Water said on the radio this morning that this puts Australia in a position to lead in the discussions on a post-Kyoto treaty. In Bali, the announcement that Australia was ratifying Kyoto was met with thunderous applause.

Meanwhile, back in Switzerland, the bankers have made it very difficult for the tourism industry to invest in any primarily ski-oriented infrastructure below 2000m. It’s more than a reaction to a bad 2006/7 season; it’s the financial services side to climate change concerns. That makes the resorts with ski-fields 2500-4000m all the more desirable, both as a destination for skiers and an opportunity for investors and financiers. I wonder how long it will take before plowing vast amounts of money into marginal ski fields in Australia and New Zealand dries up.

The talk-fest in Bali and the decision of Swiss Bankers has more in common than Christmas-time. International commercial sentiment is hungry for certainty on the way forward on climate change policy and legislation. The insurance industry in the US is now a huge force to be reckoned with in this context. I guess Cyclone Katrina really brought the financial cost into relief for them. The human cost of a broken relief effort by the government agencies was certainly well-publicised by Al Gore and the media.

A post-Kyoto world will be another factor changing the colours of Christmas. The insane consumer spending in developed economies may be curtailed by cost factors of environment being priced into globally produced merchandise. Made in China could become carbon-anathema, for moral, social and political reasons, regardless of cost and price. President Bush must be feeling very isolated this Christmas.

For me, I hope there’s still snow at Christmas for some years to come somewhere where I can celebrate it as I used to when I was a boy. This year, we’re going back to a place I love. I remember it as a boy with all the hope and promise of Christmas morning. I have some very fond recent memories too – my 40th birthday and a trip 3 years ago. I’m sure I’ll bring back good memories from this trip too. A white Christmas is a privilege.

Technological innovation seems to follow a pattern: things that initially exist alone in isolation start to work together and end up working in a seamless way. This is true of almost all the technical advances of the last century or so. Cars, electricity, telegraph and telephones started their journey along this path in the late-nineteenth century. Radio followed closely behind. Household consumer appliances, like vacuum-cleaners and washing machines, came after that. Television, although "invented" in 1929, really didn’t take off until after the War. They started out being distinct, stand-alone things that became better integrated as they came into everyday use. For instance, radios & telephones are regularly fitted to cars; some even have TVs.

A whole host of technological innovations are now working together better, like TV over the 3G Wireless Internet onto a mobile phone with a computer in it. The common term for this kind of integration is "convergence". But there’s something much deeper behind all this – a fundamental change in the way that things in general work together. At the heart of all this is a profound kind of interoperability provided by digital technology – semiconductor hardware, standards-compliant software and ubiquitous high-speed communications. There are more computers in cars today than there are in the houses in which they’re garaged. An airplane, like the Airbus A380, has more software (about 1 billion lines of code) than most companies. More and more, all of these things are linked together by optical fibres, satellites and cellular networks that move a staggering amount of data around the world.

The poster-child of reliable interoperability is the telephone. Even electricity has not attained that level of service. The ability to call from one phone to another anywhere, any time is taken for granted by billions of people worldwide. Email is nowhere near as dependable. Instant messaging and various other communications tools are far behind that. The ability of computers and their software to talk to other computers and their software is a long, long way behind that. The more advanced the technology becomes, it seems, the harder it is to get it to work together. That’s why there is such a booming industry in "systems integration" and "enterprise application integration". Getting email to work as well as telephones is still a goal for many. Getting software in general to work together as well as telephones, remains a lofty goal which need a lot of work for a long time.

While the opportunity seems insurmountable, getting software to interoperate is also enormously attractive for many reasons. Digital hardware, software and communications have become pervasive in the developed world over the last 2 decades. It is being adopted aggressively in large scale in some of the emerging economies, like China and India. In coming decades, some 3 billion additional consumers are forecast to join the digital revolution. Personal computers, digital TV and radio and a host of other devices will connect more than half of humanity over the next generation, much as mobile phones do today. As these consumers become more affluent, they will likely consume more digital services. As the telecommunications networks become more widespread and capable, more services will be provided. As more of these communications facilities become wireless and higher speed, many of these services will be available to mobile devices, much as Internet-access services today have become more wireless and faster.

The Changes in the Living Room and changes in pocket devices are a harbinger of this change, but getting an HD video off a digital camera (or phone) and onto a HD TV screen at home just isn’t easy yet. For enterprises, Web Services standards are the beginning of getting software in general to work together, but getting a doctor, an insurance company, a pathology lab and a pharmacist to collaborate on a person’s healthcare is almost impossible today. There’s some promising work going on in supply-chain integration now, but I can’t easily sign-up to an integrated ERP, CRM & supply-chain solution that just works with my trading partners. Most concerning, I’m not convinced that the 1 billion lines of code on the Airbus A380 all work together inside the airplane just yet.

When I can email my HD video from my seat in a future airplane to my Mom on the ground and be confident that she can watch it on her TV, I’ll be more convinced that things work together better. When my health record in Australia shows up in a doctor’s office in a ski-resort in the US or Europe, I’ll feel better. When the systems integration business starts shrinking, I’ll know something good is happening. I hope all of that happens before I die…

Men’s clothing has always had lots of pockets. We carry our keys, wallets and, these days, our mobile phones in them. More recently, there’s been a few more digital gadgets in these pockets: music players, cameras, a wireless email device and the odd smartcard or two.

Some folks have rationalized these gadgets into a fewer number of more capable devices. The phones with camera, music player & wireless email capabilities, the so-called smartphones, are really getting around. Phones that you can watch television on are beginning to become popular. Phones with GPS navigation facilities are starting to emerge. There are many more of these sorts of things to come, like Apple’s iPhone.

More and more, these pocket devices talk to your car. Many cars come with a wireless link to a phone so you don’t have to plug and unplug it every time you get in and out.  An iPod-integration kit can let you control you pocket music player from you car audio system. Some cars allow a whole raft of devices to be plugged in at once and are fully incorporated into a vehicle-based voice-recognition system.

Some cars even have a digital wireless key which recognizes you as you approach, opens the door and adjusts the seat, mirrors and sometimes the steering wheel to you personal settings. Some pocket devices, like smartcards and proximity cards, talk to things like building security systems, credit card machines and to your PC. Many television set-top boxes have smartcards in them. These digital identity & access control devices provide strong security with convenience.

Some of the payment-card people are taking things one step further. Points-of-sale are fitted with a proximity reader that lets you pay for things in a shop by putting a card close by. Some furniture manufacturers are going in another direction, letting you change the battery in a range of handheld devices by placing them on an area of a desk or table without plugging them in. Both these things present the ultimate convenience of being able to do things without appearing to have done anything at all.

Almost all these handheld devices get services from some network or another – the phone network or the Internet, the electronics payment network or the electricity network. Some plug into a cradle that attaches to you PC which in turn plugs into the Internet. Increasingly these networks are becoming wireless, high-speed and available in a growing number of places.

In the not too-distant future, a pocket device will become so capable that it will be your portable electronic life – a wallet, keys, phone, HD (video) camera, email, payment and all-round useful thing. The challenges are to make them as easy-to-use as their everyday components are. Advances in touch-based interfaces will be helped by better voice-recognition. If it knows who and where you are, services on the network can help it become much more useful. Security & privacy of the device itself will be helped by incorporating strong biometric authentication & authorization technologies.

In a world of many billions of these kinds of devices, the provision of services over the networks will change dramatically. Nokia has some great concept videos of how this might look on YouTube. It’ll encourage many service providers across and between industries and governments to re-focus on customers’ wants & needs rather than their own views of how to provide goods and services. It will also take social networking to the next level.

This kind of collaboration and cooperation is the next productivity and convenience revolution. It will save so many people from moving from place to place so much, which has to be good for the planet. It will empower a younger generation to have influence over an older generation, which has to be good for the future. It will also speed things up without making everyone feel so frantically rushed and tired all the time. That’s got to be good for us all.

At the World Economic Forum meeting in Davos last month, Bill Gates predicted that the Internet would revolutionize television within the next 5 years. The basic premise for this forecast is the merging of PC, the Internet and TV. The results could range from targeted advertising to highly interactive experiences on the big screen in your living room.

Over the last decade or so, the widespread growth in digital multimedia has certainly changed many forms of audio-visual content. Consumer digital photography, digital music and more recently digital video have replaced their analog counterparts: CDs replaced vinyl records in the 1980s, DVDs have largely replaced video tapes and camera-phones have replaced wet-film cameras.

Over the last 5 years, a single product has emerged as the worldwide leader in digital music: the ubiquitous iPod. Increasingly you see them plugged into the sound-system. Apple’s iPod & iTunes online music/video store have transformed the music business and is now making serious inroads into the TV and film business. It’s possible to hook some iPods up to your TV but not many do that – more on that below.

By far the most visible addition to living rooms for years is the widescreen digital television. In the last 12 months, dramatic price reductions have seen plasma and LCD flat-panel televisions selling at ever-reducing prices. Many of these have a stack of boxes with them: digital TV set-top boxes, DVD player/recorders, hard-disc recorders and so on. Most of these have their own remote-controls and their own arcane user-interfaces.

PCs have been talking to TVs for some time – in games consoles. More developed and mature consoles like the Playstation and Xbox are essentially general-purpose computers – but their main purpose was to play games. They also extended gaming online. Now, Playstation 3 and Xbox 360 are special-purpose gaming and home-entertainment consoles. Support for better and sharper video devices like BluRay and HD-DVD to support standards like 1080p TruHD are the key improvements. For now, the TVs that do those things justice are still expensive and hence rare.

In the early 1990s, Microsoft began making technology investments in digital video under the code-name "Tiger". Since then, Microsoft has commoditized the home-entertainment computer with Windows XP Media Center Edition – a way to control the TV, digital music, digital photos and so on. Home Theatre PCs (HTPC) are made by a variety of other companies. Now, some versions of Windows Vista include the Media Center functionality. Apple TV, to be released in March 2007, is a simpler, cheaper and more integrated hardware & software offering – basically an iPod for your TV. The user-interfaces on these newer HTPCs are dramatic improvements on the stack of consumer-electronics boxes. They also have one (and only one) remote control! Expect to see more HTPCs in living rooms.

Unsurprisingly, Apple TV is highly integrated with Apple’s iTunes. Not to be out-done, Microsoft has partnered with others to put movies and music online in certain geographies (Telstra for movies and Sanity for music here in Australia). Equally unsurprising, Microsoft’s Vista and Xbox 360 interoperate at a much higher level. For example, a traveling Dad can use his Vista computer in a distant hotel room to play and Xbox games with his children on their living room TV at home.

While some TV has been "streamed" onto the Web to be viewed on a PC, a few providers are putting entire cable TV services directly onto the Broadband Internet to be viewed on a TV. Among others, Microsoft has a technology platform for telcos and pay-TV companies to do this. Recently, at the Consumer Electronics Show in Las Vegas, Gates announced that this service would be available on the Xbox 360. Currently this is a limited service offered by only 5 companies in the marketplace with another 11 companies working with Microsoft towards it. Also, there is some acrimony between Microsoft and their key partner, Alcatel, on this technology.

IPTV does more than change the way TV is carried down a cable; it makes TV much more 2-way. That changes the landscape for exiting services like video-on-demand and interactive TV. It also enables new services like much more targeted advertising and the melding of TV with computer-based visualization services. It will change the Broadcast-based business model of the television industry. Telcos, cablecos, media conglomerates and IT firms will all participate in this new ecosystem.

A movement towards standardizing IPTV is well underway. IPTV services will become available. Much more Home Theatre integration will come. Within the 5 years that Gates talked about in Davos last month, a single box underneath a large oblong screen with one remote control could be a commodity consumer item that controls all home communication – TV, Internet & telephony. These services would all come down a single wire or a piece of fibre. They could even become wireless in time. One thing is for sure: the PC & TV will become much, much close to each other. Together, they’re going change the living room.

I’m astounded by the increase in public awareness on climate change over 2006. It’s hardly a new subject. Discussed and debated continuously since the early 1960s, climate change is now driving change in perceptions and attitudes that are simply amazing. Business leaders have joined to chorus in the last decade. Even some prominent conservative politicians are now "greening" themselves.

The Kyoto Protocol celebrates its 10th anniversary next year and the Earth Summit at Rio its 15th. It’s no longer an informal thing. The United Nations Framework Convention on Climate Change (UNFCCC) – the agreement that was started at Rio and principally amended at Kyoto – was entered into force (became international law) 12.5 years ago. Kyoto itself was became law last year. So what happened in the last year or so to raise the global consciousness on this issue, particularly global warming?

Well there have been some popular books & movies in the recent past that have made the subject very accessible. On the film side there’s a broad spectrum of releases: from Al Gore’s "An Inconvenient Truth" to Rolland Emmerich’s "The Day After Tomorrow". On the literature side, there’s an outstanding book by Tim Flannery called "The Weather Makers". There’s a bunch of other sources on David Suzuki’s site.

Significantly, a report was published overnight commissioned by the UK Treasury on the economics of climate change. Its author, Sir Nicholas Stern, is a former chief economist & VP at the World Bank, an academic at the London School of Economic and a graduate of both Oxford and Cambridge. Sir Nick (as he’s known) briefed environment ministers from the 20 worst greenhouse-gas-emitting countries on the report last month. The numbers are scary but the upside hopeful: spend 1% of world GDP now and for some time to come and avoid a global catastrophe. The downside is that inaction for a decade or two could produce irreparable global damage.

A key message of the review is that economic & environmental sustainability need each other. It’s not the economy or the environment, it’s both in a mutually-dependent way. If the science and the economics are right, then maybe a Sir Nick has removed the last viable argument for inaction. "Pro-growth and pro-green" chanted Sir Nick’s boss, Gordon Brown at the launch event of the report at The Royal Society.

The UN also has some bad news today that basically says greenhouse gas emissions by industrialized nations got worse than expected 2000-2004. They do all the right diplomatic things and urge strengthening of measures in those member states going forward. The US (in particular), China & India seem to be responsible for over half of these emissions. None of these are obligated by treaty to do anything. The US has not ratified Kyoto (and neither has Australia) and is unlikely to until some major changes in government, either in the Congress or when President Bush leaves office. China & India, though signatories of Kyoto, do not have the obligations under that treaty carried by the developed nations.

The problem is not multinational – it’s global. Maybe the Stern Review’s multidisciplinary approach – starting from science going onto the economics and other social sciences – shows the way. But the issue is fundamentally a moral one. We (the world community) need do the right & good thing and secure a sustainable future for coming generations: environmentally and economically. To continue business-as-usual is to do the wrong and bad thing. If Sir Nick is right and it costs 1%, surely it is a small price to pay to head-off some terrible consequences, particularly for those living in coastal areas. If we have to trade in carbon to save the planet, so be it…

The solutions will be interdisciplinary too. Markets & capital have always followed technological innovation. This is a classic example of an opportunity to do well by doing good. Not just political will but effective action now (and for some time) from the private sector are needed. The urgency is striking and no longer in doubt. There is no longer time to delay, particularly with single-discipline or national debating exercises. Already, the lag in the effects of the worse-than-expected greenhouse gas emissions from 2000-2004 ensure that things will get worse before than can get better.

Maybe the raised awareness of climate change this year will show up where it’s most needed – in the US congressional elections, in boardrooms, in the policies of the two emerging giants (China & India) and in average consumption patterns of the more affluent people. The UK has demonstrated thought leadership here; it now needs to demonstrate leadership by actions. We, the developed world, are already on shaky moral ground if we try to lecture the developing world – especially China & India – about environmental responsibility.