Bio-Colossus 3-David Mach

Nevertheless, the topic is so popular on the block and strategists are looking for the best roadmap to create a biomedical matrix to compete in the new economic league. It is understandable, because as members of The Stockholm Network point out,

“Biomedical innovation, including advances in biopharmaceuticals, medical devices and diagnostics, is at the heart of human society, not least because this type of innovation helps to save lives and to improve the quality of life. Furthermore, it is one of the major drivers of the modern market economy”.

In From Test Tube to Patient –National Innovation Strategies for the Biomedical Field, authors offer several recommendations to those public policy officials who want to create or improve their opportunities to establish a proper environment for the development of the biomedical sector. We can summarize the main ones:

1. To set up a quality research and development infraestructure, in terms of human capital, technology and facilities.

2. To promote R&D in the biomedical field and to favour basic research and technology transfer.

3. To protect Intellectual Property and provide a legal framework which do not constrain the work with hard regulatory procedures or public intervention.

4. To promote private investment in R&D on the biomedical field. Authors believe public support should not restrain entrepreneurs and researchers free initiative.

I could add another one: do not think about celebrating any Copenhagen Summit over the global development of the biomedical sector.

Death and Taxes, by Curious Spider in Flickr

Taxes! Taxes! Everybody hates them but they are as necessary as the air we breathe. However, it is hard to know taxation is growing all the time, beyond the good or bad economic environment. Modern Democracy is a thirsty monster who always asks for more money, more civil servants, more resources. Although we constantly create new public needs to solve public problems, the middle taxpayer feels things could be better. In fact, citizens believe public budget should be managed more efficiently. It is not an easy task as officials  keeping the money depend on the increase of resources to survive. To play a political role is nowadays a professional career and no one wants to retire at 45. I would like, but I am not a politician. Therefore, the main problem is related to the impossible mission of cutting public spending when fiscal policy is managed by politicians who have to balance public interest and party commitment. Polls, popularity and reelection are in the core of the problem. The Social Market Foundation of the United Kingdom has analysed the issue in this country and finds that the fiscal policy projections Government makes is biased and cause serious deviations and mistakes in the British public finances.

“In the UK, fiscal policymaking has traditionally been highly centralised and discretionary, with all fiscal projections and decisions emanating from HM Treasury. The Government is right to argue that the global financial crisis of 2007-9 was an unforeseen external shock that caused the public finances to deteriorate. But it is also clear that excessively loose fiscal policy in the years preceding the crash has left the UK in a more difficult fiscal position than it might have been, and threatened the creditworthiness of the government”.

The authors of Forecasting Independence: Taking the politics out of fiscal projections think “that the most appropriate reform to the institutions of fiscal policymaking would be the creation of an independent Office for Fiscal Analysis (OFA), separated from fiscal decision-makers in government, that would undertake all official fiscal Statistics Authority, would ensure that it was entirely free from the risk or perception of organisational bias”.
The British case is so common all over Europe. The lack of realistic projections on the evolution of the public finances, specially during the crisis has contributed to a huge increase of the public debt. We will be paying for years. It is true that nobody previewed the dimension of the economic collapse, but it is also clear that a neutral analysis and decision making over the future fiscal situation could save several billions. Politicians must introduce the issue of fiscal neutrality in the policy agenda.

Kropotkin according to SergeyRod

We can decide whether to maintain our old and no perfect market economy or looking for new paradigms. It is not an easy task as Masters of the Universe prefer to live in cyclical crisis which is very profitable for them. If economy shows a positive balance, they win. If economy is going down to the Hell, they win. On the contrary, ordinary people do not perform very well. They are being pushed to run in a bigger wheel of consumption and debt that is causing domestic bankruptcy for generations. And do not mention the rampant public debt. May be capitalism is better than other economic systems and it is as old as the human society. However, it is raising its limits. Two years of recession after the happy wave of globalization are pointing out the real need to conquer other economic scenarios. We cannot be confident of politicians that think in the short time a make poll-government. In fact, they do not think anything. They apply the old receipts and highlight the poor debate between keynesians and libertarians. No one of these approaches is going to recover our prosperity.
As usual, we have to watch at the horizon and learn from the emergent trends that show other ways to path the way to economic progress. I think you should read the last report from the Copenhagen Institute of Futures Studies, which carefully analyzes the economic perspectives of the Internet Economy. In Anarconomy, they go far from the technological bubble of the 2000 and examine the successful examples of a reinvented manner of establishing economic and commercial relationships. Like good sellers of ideas, they use a contradictory brand to name the phenomenon, but it is not paper philosophy. It is real experience that happens at this moment, when I write this post to share my reflections with somebody.

Over the past few years, we have witnessed and are witnessing a pronounced flourishing of free content and services on the internet. This free content is created and distributed by the users themselves in voluntary networks accord- ing to rather anarchic principles: Wikipedia, open source software, books, music, films, and design, which the creators make freely available, are all examples of this phenomenon. All of this challenges and supplements traditional commercial companies by offering non-commercial alternatives. This is the anarconomy. In the future, anarconomy will move from the internet and radically change economy in the physical world.

The report studies the evolution of open source a open content  and argues that their collaborative basis is not an obstacle for some people making a living of it. You have to remember that successful business like Google have and anarchist framework in the strategy they apply. Property rights are losing space in the market and giving a role to free licensing. It does not destroy the economic principle of ownership. In fact, it is promoting a different approach to the creation of value.

Intellectual property rights are so central to the modern economy that it can be hard to imagine a world without them. However, it isn’t impossible. In fact, we have an example of anarconomy – open, decentralized development and interchange of knowledge products – which has worked well for centuries, namely the universities of the world.

The example of the old universities is worth also for current economics. But where is the benefit? “In a future without intellectual property rights, professionals must increasing- ly make a living on unique solutions and experiences – things that can’t easily be copied or mass-produced”.
Authors draw two possible scenarios in 2025. In one of the them, Rebels versus Cartels, champions of property rights achieve a highly regulated Internet, where people can only operate if they have a legal license to do so. In the other, The Age of Empowerment, the free exchange of products and knowledge is the dominant practise in the virtual and the physical economy. What do you believe? What do you prefer?

1. The military balance is complex. There is not any other superpower, but the world’s Sheriff has to compete with new players: new nuclear countries, strong poverty, uncontrollable terrorists and a decay of the US miltary forces. Examples of complexity: “During his first six months, the U.S. has suffered more combat casualties than his five predecessors at the outset of their terms. The armed services also have grown considerably in cost, eating into the post-Cold War peace dividend.” “Peace and security depends not just on common defense but on the political and economic stability of individual countries. Conversely, abject poverty is a security challenge as well as a humanitarian one”.

2. Climate change is not a joke. “The concentration of greenhouse gases is creeping upward toward a level that scientists believe will cause the increase in the mean temperature of the planet to trigger a perfect storm of irreversible and catastrophic consequences unless somehow checked or countered”

3. The nightmare of the weak economy. “The fall-off in productive output, spending, and employment is the worst – by far – since the Depression. Most experts believe the unemployment rate will continue to rise for the rest 2009. Unlike previous recent downturns, virtually no region of the U.S. has avoided job losses. Nearly all American homeowners have experienced significant declines in the value of their homes. Public debt as a percentage of GDP has now exceeded even Reagan-era levels, thanks to recent years of high debt and the massive spending of the stimulus package”.

4. A honeymoon with voters, at the moment. “Confronted with such ironies, dilemmas, and stresses, how does the public feel its government is doing? Remarkably, so far, so good. Obama’s first six-month job approval numbers are impressive. But he should note that several of predecessors also got the benefit of the doubt—for a while”. “Obama’s ability to sustain that optimism and trust will depend on his ability to nudge the more objective indicators in the right direction”.

What do you think about that? I do not watch any positive scenario in the in the horizon. Optimism will be short.

Eternal Return According to Darkahla

The mistake of fueling the economy with public monetary resources is showing his real face. It does not stimulate the system. On the contrary, the only thing which is increasing is public debt, a bill we will paying for years. Economists from the Heritage Foundation have released a report on the matter. They point out that Keynesian policies Governments are implementing all over the world are ineffective and are another new proof of the perils of growing public budgets, as it happened in the 1960s and 1970s. The key findings of the paper Keynesian Fiscal Stimulus Policies Stimulate Debt-Not the Economy are:

• “The federal government has poured extraordinary amounts of fiscal stimulus into the economy two years running, yet unemployment continues to rise with the national debt. This recent experience with Keynesian deficits is fully consistent with past episodes at home and abroad”.
• “This is no longer an experiment in economic policy. The results are in: Keynesian stimulus does not work”.
• “Keynesian stimulus fails because government must borrow money to finance deficit spending. That borrowing reduces the savings available for domestic investment, or increases the savings imported from abroad along with a similar increase in the net imports of goods and services”.
• “Total demand is unaffected, so total output is unaffected”.
• “The counterargument that borrowing to finance Keynesian stimulus soaks up and cycles “idle” savings back into productive use is invalid for an economy supported by a modern financial system”.

The report examines monetary policies different governments have applied in the last forty years and argues that all the time emerge the same result. Economy does not recover because of the public spending. Public debt becomes the main obstacle to return to a healthy economic environment. The sad conclusion of the paper is that officials do not want to learn from the past. Today they are taking the wrong decisions and tomorrow will do the same. As the author, J.D. Foster, writes

“Bad policy ideas rarely go away forever. Circumstances change, memories fade, political fashions come and go. The current global experiments with Keynesian fiscal stimulus will fail as they have failed before. Unfortunately, the price of learning this lesson yet again is an unnecessarily prolonged recession, a weaker recovery, and millions more lost jobs—and, of course, the massive increases in public debt”.

Soft power by Cinderellusion in Flickr

When the EU began its big enlargement, many people thought it was rising the new superpower, also in military terms. USA was not going to be the only policeman on the block. However, leaders of the EU have preferred to maintain the influence in the field of soft power. As Charles Grant, Director of the Centre for European Reform, says, “although the Union is respected for its prosperity and political stability, it no longer loooks like a power in the making”.
Grant makes his reflection in the essay Is Europe doomed to fail as a power?, which also includes a response by Robert Cooper, member of the staff of the EU’s High Representative, Javier Solana. The Director of CER argues that the difficulty of setting up an agreement betweeen the 27 members states is one of the reasons which explain why the EU never will become a superpower. EU members are devoted to multilateral approaches. They conform a community of interest that is not able to give up their individual objectives. They have a minimum of common rules for the foreign policy, but they are not oriented to act as the United States, Russia or China, which usually apply a unilateral focus to the international relations.

So a crucial task for Europeans is to try and convince these powers that they can best achieve their national objectives through multilateral institutions. However, if the EU is weak and divided, Europeans will have little scope to shape the new global system.

The author asks about the capabilities of the soft power. We should not minimise the attractiveness of the model the EU shows. Europe leads the world in many ways, but may be its example is only valid in peaceful times. What happens if the environment turns bad, even very bad? Mr Cooper says that the European Union is not a state and cannot behave as a state. Therefore, he cannot make unilateral decissions as soon as possible. You have to make an agreement between 27 and it takes time. This weakness is patent in crisis situations, when decisions have to be made very fast or when it is necessary to set up a big amount of military resources. Perhaps we must be happy enough with the current status of soft power. It is almost impossible to conquer another position, at least while we need a complete consensus.
However, both authors think it is possible to work for better scenarios. According to Charles Grant, it is convenient “to implement the foreign policy provisions of the Lisbon Treaty and stop trying to build the EU Defence with 27 countries”. There are also different speed in military matters. Robert Cooper believes that the EU model is correct as “the world does not need another great power in the 19th century mode. The EU represents the aspiration for a world governed by law. This reflects the nature of the European Union, itself a community of law. And one way or another it is the direction in which almost all our external policies point”.

What happens if the rule of law does not work? Read the essay and draw your own conclusions.

I Have read an article of Blundell in The Sunday Times that was recommended in the Atlas Foundation newsletter. Mr Blundell is going to leave the IEA at the end of the year and may be he wants to insist in the core ideas that guided his management style. According to him, independence, economic and intellectual independence, is a key element if you want your institute playing a serious role in politics. This is not a public relations office neither a social club. It is a political actor which does not belong to any party or corporate interest.  I put a paragraph here but I think it is better to read the full piece:

The secret of success in the think tank world is independence. Being your own man is crucial, especially with think tanks playing an increasingly central role in policy making. On that front they have taken over from the universities. Here are the rules I’ve tried to stick to

• No corporate money tied to projects either explicitly or implicitly
• No taxpayer funds
• No FTSE 100 company to give more than 2% of budget
• No corporate sector (eg oil, banking, pharmaceuticals) to give more than 5%

Good luck, John.

However, think tanks should be another different project. Sometimes I miss the thinking of the founders of the first think tanks, like Robert Brookings or Russell Sage, who believed on the need to provide society a clear and scientific roadmap to solve the public policy challenges. When they set up their institutes, they did not care only about their personal interests. They pursued the search of excellence in policy planning because they thought it was a necessary step to conquer prosperity for everybody in a more complex society. They knew also a big crisis in a situation when there was not a Welfare State. It is a huge difference if we compare to the current crisis. May be they were idealists as they were very confident on the application of scientific method to the political issues. But their intellectual framework is also now in the core concept of what is a think tank. I share their view.