Economics

First of all, I’m a big fan of the _idea_ of open source hardware (OSH).  (For reference, an excellent compendium of the idea has been growing here at the P2P Foundation wiki.) The notion of a global OS design database, a distributed network of fablabs, and a market driven not by the price signal but by collaborative communication, is very alluring — especially to nerds.

But I have lingering doubts…Certainly the movement is increasingly technologically feasible, and likely to create some sort of fringe guild ecology over the next 10 years.  But from an economic and social viewpoint, much remains to be sorted out in any rigorous way.   I should clarify here that my goal is to critique the OSH movement’s ability to have a meaningful impact for the welfare of the world’s poorest, or to meaningfully change the ecological footprint of the global economy.  Key to this dual goal are speed and scale: the OSH economy must grow at least as fast as the ‘traditional’ economy, and preferably should outpace it by an order of magnitude.   In other words, how can the OSH community lay plans to grow revenues by 25% per year for the next 10 years?

And in sorting out whether OSH has legs, we need to think about whether it will be able to harness the three forces that drive successful product/service growth: a business model that keeps investment dollars coming in, keeps producers gainfully employed, and keeps consumers happy.  I’ll look into possible business models for OSH in a later post.

A growing chorus of international development professionals are recognizing the scale and the seriousness of the tax haven problem as it relates to international development.  The World Bank endorses [pdf] third-party estimates that show the illicit outflows of revenues from the developing world, facilitated by tax havens, dwarf the aid flowing in to those countries by a factor of 10.   And more recently, in an interview with Reuters, a top OECD official made a point to reiterate that negative effects of tax havens disproportionately impact developing countries. Find the link here.

As an MBA candidate with an international development background, I think that the damage done by secrecy jurisdictions is an overlooked ‘area of moral clarity.’  With regards to global poverty eradication, there is little debate that that resource-rich, governance-poor countries are prime targets for international organized crime.  The resulting industry for ‘corruption services’ is lubricated by tax havens.  While demand for corruption services may be difficult to staunch, the supply for these services is a really a question of international, and in some cases national, regulation.  Unfortunately these services are still big business in the developed world, with the UK, Singapore, Switzerland, and the US being the biggest offenders.

Until this question lands squarely on the regulatory agendas of the EU, UN, US, and ASEAN, the $80bn of aid money from the countries of the North is throwing good money after bad.  Until tax havens are recognized as accomplices in global corruption that drains tax revenue from the poorest nations, humanitarian aid will continue, perhaps inadvertently, to perpetuate aid-dependency around the world.

“To those who would tear this world down, we will defeat you.  To those who seek peace and security, we will support you.”

This was my favorite part of the speech.  It is a subtle, but significant, change from the rhetoric of convervative America.  It also shows that Obama has been thinking about soft power in planning his first couple of years.

The BBC offers this compilation of footage from around the world on election night.  Worth watching, especially as it grows more serious towards the end.

The BBC compilation of quotes is worth reading, too.  One of Obama’s key challenges will be his approach to global Islam.  The spokesperson of the Muslim Council of Britain is guardedly optimistic:

“Obama is seen as a person who will hopefully be more inclined to take into consideration the views of other people. We hope Obama will work with other countries.”

My take on the situation: Trust that Obama can’t be too overt about healing these particular wounds with Islam, given the continued strength of the ‘reptilian right’ here in the US.  He will ‘politely step away from’ the Bush coalition method over the next 18 months, but expect oblique, and forceful, soft power moves first: flashy steps towards global cooperation on the environment and the economy.