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Insights 18: 24 May 2019
Read: Eric Crampton writes on Newsroom about bottom-up and top-down approaches to conservation
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Why Huawei?
Dr Oliver Hartwich | Executive Director |
Earlier this year, I got myself a new smartphone. Its 7-nanometre processor is lightning fast, the triple camera takes stunning pictures, and the huge battery is still half full at the end of a working day. It is by far the best phone I have ever had.

No wonder Donald Trump is worried about the technological and commercial threat Huawei’s poses to US companies.

Okay, that is not how the US President justified his blacklisting of the Chinese technology firm this week. But that is the most plausible explanation of the presidential order.

For many years, the US government has been trying to stop Huawei’s meteoric rise, even putting pressure on other Western governments not to buy equipment for their 5G mobile phone networks from Huawei.

Most of these countries have been unconvinced and continue doing business with the Chinese. But Washington has consistently and stridently accused the privately owned Huawei as being a threat to national security by allowing the Chinese government to conduct global espionage.

The problem is the US has never presented evidence for this claim, nor has it ever been publicly proven.

That is not to rule out any such activity on Huawei’s part. However, we have no way of knowing. We can only either trust or distrust the US government and its intelligence agencies.

So should we trust the US government – or, more specifically, this US government?

As Daniel J. Ikenson, trade expert at Washington’s Cato Institute, put it: “President Trump has made a frivolity of the national security rationale for restricting trade.”

Ikenson rightly points out that Trump has previously justified import restrictions on steel, aluminium and cars on national security grounds. None of these cases, and with all relevant information publicly available, have indicated any genuine threats to security.

One might add that Trump has also abused the national security argument in his attempts to force Congress into providing funding for his great Mexican wall.

With such self-serving manoeuvering being the trademark of the Trump administration, why should the world believe its exhortations on Huawei?

A far more plausible explanation for Trump’s Huawei ban lies not in national security but in America’s escalating trade conflict with China. Telecoms and networking technology are crucial industries, and that makes commercially successful companies like Huawei top targets.

The real victim, however, is not Huawei. It is the global trade order under the WTO, technological progress, and consumers everywhere.

I will enjoy my Huawei Android phone while I still can.

Fighting the whack-a-mole online battle
Dr Patrick Carvalho | Research Fellow |
Last week, a group of 17 countries along with leading social media platforms signed Prime Minister Jacinda Ardern’s Christchurch Call “to eliminate terrorist and violent extremist content online”.

The non-binding three-page document is inspiringly pragmatic, combining aspirational actions without falling for heavy-handed (and misguided) regulations.

Kudos to the international initiative. There is indeed much to celebrate about such a concerted effort against the spread of online radicalism.

But we must not lose sight of the implementation hurdles ahead – and keep working for a safe and free online community.

Social media uploads of harmful content are not easy to detect. (Nor are there easy answers to philosophical questions about what constitutes objectionable content – and who decides it.)

The sheer number of social media users – Facebook alone has more than 2 billion active users – indicates the solution ultimately rests on more accurate computer algorithms.

Unfortunately, despite already impressive progress, state-of-the-art machine learning technology has a long way to go. Even in the face of flagrant violations of codes of conduct, such as livestreaming terrorism acts, our machines are still learning.

Until artificial intelligence catches up, a viable response is for online providers and governments to learn from past mistakes – which the Christchurch Call rightly alludes to. But this can only go so far, as ill-intended users will always have the first-move advantage.

Facebook, for instance, just introduced a one-strike policy, which temporarily bans users starting on their first offence. Had this policy been in place on 15 March, it would have prevented the terrorist from using his live account that day in Christchurch.

But such a rule still cannot prevent would-be terrorists from gaming the system in the future. Cognisant of Facebook’s new policy, rogue actors could simply fly under the radar on the social media in the weeks leading to their livestreaming of atrocious acts.

And even if technology improves and new codes of conduct minimise risks, there are still plenty of non-compliant online platforms to disseminate terrorism content.

All these hurdles might appear like we are fighting a losing whack-a-mole game. Such is the nature of the fight against online terrorism.

Still, we should not let those obstacles paralyse coordinated efforts, and we most certainly should not fall for easy-but-wrong populist responses.

In that sense, the Christchurch Call is already a clear win.

“Winter is Coming”
Dr Eric Crampton | Chief Economist |
Being an economist is great. But there is a downside. A lot of people wind up annoyed by some parts of fantasy worlds in books and movies, but economists get annoyed by very different things.

HBO’s Game of Thrones finally ended this week. The last two seasons brought increasing fan annoyance: the plotting and pace made far less sense than in prior seasons.

For those who haven’t followed, Game of Thrones largely takes place on the continent of Westeros, in a fantasy world with peculiar winters: they come with long and variable lags. A winter can last for months or years, and it can be years or even a decade between winters.

The motto of House Stark, traditional rulers of the North of Westeros, is simple: “Winter is Coming”. In other words – always be prepared. Winter could come next month, and it could last for years.

No spoilers here for those who are still catching up. I have other grievances instead to air.

If you grant the premises of that universe, some things make little sense. Westerosean technology seems largely comparable to our medieval times. But if winters can come at short notice and last long, food storage should be of paramount importance. Any kingdom with better food storage technology will be ready to take over all its neighbours as winter ends.

Competition among neighbouring states can drive technological development and is one of the more plausible explanations of why the Industrial Revolution centred in Europe with its several nation states rather than in unified China.

But Westeros does not seem to have figured out even canning – solved in our world by the 1700s despite our predictable winters. England had glass windows before the Norman conquest; heated glasshouses in Westeros could provide necessary nutritional complements to salted and preserved meats. But Westeros imports glass at great and difficult expense from Dorne instead of manufacturing it.

For that matter, where are the storehouses? Why is there no Master of Stores on the small council?

Unfortunately, many places do things that make little sense to economists, even in the real world. Policy creates housing crises and then tries to undo the harm by subsidising rents – which only makes things worse. Policy remains woefully underprepared for the next earthquake. And climate change policy is too often haphazard.

Perhaps we should end more of our policy reports with the simple reminder: “Winter is Coming”.
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