The (Further) Shaming of Westminster

It's a feeble institution that allows itself to come to this.

OK, OK. But Absolutely No Fifth Runway

As Gordon Brown's wasteful, intrusive juggernaut grinds the blood and bones of yet another protest line into the political landscape, so the survivors must rush to the next defensive position.

But in the absence of any effective political opposition, it is wise to choose something that Gordon and his goons would be truly looney tunes to set their sights on. Something so inherently dangerous that New Labour will spontaneously combust in the attempt to achieve it. Because we all know now that as soon as the good citizens gather to defend their interests, New Labour acquires another target, and the Cavalry stays away.

Iraq turned out to be just another rut in the road for these automatons. And I'm sure they can squeeze in a fourth runway at Heathrow, if we don't mind the odd plane landing on the M4 by mistake.

But I reckon a fifth runway at Heathrow would put New Labour on collision course with the M25. Nothing could survive that.

How EU Law is Made. No, Wait, Unmade

You may recall my abortive attempt some time ago to launch a Quest for the Source of EU Legislation. Well, in that vein I now commend to you Simon Bradshaw's excellent post on Whatever Happened to Amendment 138.

A giant hat-tip to Hugh Hancock, creator of the "Save EU Amendment 138, stop extra-legal punishments and stop Three Strikes!" Facebook group, which seems to have done its job.

I've also added some long overdue blogs to the blog roll to help stay abreast of the subtleties. Perhaps I should also somehow find the time to help with the Free Legal Web initiative to create a window into all these shenanigans, but a client calls...

Understatement of the Decade

“Perhaps there is a disconnect between Europe and its people, between European Union institutions and the people.”

Michael Martin, Ireland's Foreign Minister, FT 13 June 2008

Politicians@LinkedIn

I was slightly taken abarack just now to see that someone in my LinkedIn network had added Mr Obama to their network. Having viewed the candidate's profile, I also see that other US politicians have created profiles. I was somewhat comforted not to have found profiles for Gordo or Dave, but concluded that this may be more to do with their own arrogance than any desire to spare people the dilemma of whether or not to add them to their networks.

I don't know about you, but I can't see myself adding a politician to my social network, unless they happened to be a trusted, real-world friend. And that's just it. As far as I know, none of my trusted, real-world friends are politicians (other than perhaps in the sense that they cope with daily cut and thrust of office politics).

I also reckon that to add a Politician to your social network is tantamount to drinking the Kool-Aid - it's never going to end well.

Waiting for Gordo

I'm no political activist, nor wedded to any political party. But I'm not apathetic. I prefer my politics 'unbundled' and simply want to ensure that I'm getting real value for my tax spend - that the root causes of social problems are solved efficiently.

Research tells me that I am not alone, but what tools exist to help us achieve this?

Needless to say, the government of the day is particularly untrustworthy when it comes to demonstrating value for all the money we give it. The opposition are generally at the opposite extreme. The various media are concerned only with what is “news”, which is to say what they believe to be immediate, significant and topical - usually the posturing of the main political parties. And only the PR-skilled, lucky or very persistent ever get their message into the news. Like politicians and those who hire lobbyists.

The rest of us have been pretty much left with the National Audit Office, which provides great ammunition for everybody to use. But the NAO quite rightly focuses on how the government is currently spending or promising to spend our money now, and can't ever be seen to be using its fact finding and reporting as a basis for 'campaigning' for change.

So, it's up to us as citizens to find other ways of keeping the pressure on. But how?

Charities and other 'pressure groups' often do a good job of including the humble citizen in their activities e.g. Scope, Cancer Research, Oxfam. Otherwise, it's self-help.

Of course, "self-help" could mean voting, and even swapping your vote at the next General Election. But while you're waiting for our beloved Prime Minister to call one, you could get an overview of the problems as the politicians see them (and comment on your MP's blog), share your views with others via social networks (Facebook, MySpace, Bebo etc), comments on blogs and email, participate with other vigilantes in our 'special relationship' with the US, sign up to a petition that proposes a solution to the root cause of your problem, write to the civil servants with your problem directly, or report an issue to your local council.

If there are other self-help measures, I'd love to hear of them.

Personal sat nav

Hot-footing it between meetings in the central areas of most cities can be a real heart-in-the-mouth experience if you aren't sure of your route. I found myself stuck the other day and used Walkit. I plugged in the two post codes and ended up with a series of alleys and cut-throughs in central London that I'd never have worked out on the fly. You even get a calorie burn and the satisfaction of knowing how much CO2 you saved against alternative transport.

EU Regs Won't Catalyse Cross-border Markets

The European Commission's plans to regulate to create cross-border consumer markets will only limit innovation and growth. Faciliating solutions to more practical problems inhibiting the organic growth of markets would be more helpful.

The European Commission recently announced its decision to propose new EU consumer rules in an attempt to create cross-border retail markets in the EU. The member of the European Commission responsible for consumer policy, Mrs Meglena Kuneva, said:

“I am convinced that consumer policy is uniquely well-placed to help the EU rise to the twin... challenges of growth and jobs and reconnecting with its citizens... The Commission’s vision is to demonstrate by 2013 to all EU citizens that they can shop from anywhere in the EU, from a corner shop to a website, with confidence and equal protection. And we will also show to all retailers that they can sell anywhere on the basis of a single, simple set of rules.
We are a long way from those goals now…”

A long way indeed.

A study by the European Consumer Network on cross border complaints pointed to problems with delivery (46%) and defects or lack of conformity with description (25%) as the two main problems.

Furthermore, Eurobarometer discovered in October 2006 that while 27% of EU citizens shopped online in 2006, only 6% made a cross border purchase online. It also found that consumer perception is focused on more practical concerns: "... it is harder to resolve problems such as complaints, returns, price reductions, guarantees etc” (71%); “there is a greater risk of falling victim to a scam or fraud” (68%); “there is a greater chance of having delivery problems with goods or services” (66%); “there are more problems returning a product they bought at a distance within the "cooling-off" period” (65%). From a business standpoint, “the biggest perceived obstacle to cross-border trade is the insecurity of transactions (61%)… potential problems with resolving complaints (57%)… difficulties in ensuring after-sales service (55%) and extra delivery costs.” A further 43% of respondents cited language differences as an obstacle to cross-border trade. Such issues may point to problems with enforcement of existing laws and contracts, but not to any fresh regulatory opportunities.

Similarly, a May 2007 study by Civic Consulting reveals that efforts to construct a single European market for consumer credit by introducing a new consumer credit directive are flawed. According to the consumer organisations and national banking associations who were polled, “the main [non-regulatory] barriers hindering selling of consumer credit products in other EU Member States are different language and culture; consumers’ preference for national lenders; credit risk for lenders – no access to creditworthiness information; problems related to tax, employment practices etc.; difficulties to penetrate local market; different consumer demand in different Member States; lack of consumer confidence in a brand; differing stages of development of consumer credit; and lack of adequate marketing strategies.” The study concluded that “a single market for consumer credit cannot be expected to be created by harmonisation of legislation alone, and this is a long term rather than a short or medium term perspective.” As such, “the supply side of the market… does not expect increased demand and therefore economic growth from the proposal.”

In short, the European Commission is proposing a regulatory solution for problems that have no regulatory solution. And worse, for those of us who do share an ambition to create cross-border markets, is that, ironically, regulation in this area is likely to stifle innovation and constrain growth rather than promote it. As has been observed by Marsden et al. (2006) in connection with the reform of the TV Without Frontiers Directive, prescriptive regulation tends to cause markets “to develop towards more closed and concentrated structures”. This is because larger participants can afford compliance costs, lobbying efforts and have the bargaining strength to shift liability onto suppliers and consumers in a way that smaller market participants cannot – “hence, incumbents and regulated actors have incentives to drive up regulatory costs in other parts of the value chain”. Complex regulatory regimes may also either avert venture capital investment from attempted innovation in the regulated activity or ensure that it “will only flow to those companies considered to have the ability to ‘play a good game’ with the regulators”.

If the European Commission must play a role in creating cross-border retail markets, then it should help foster solutions to the real obstacles, bottom-up amongst market participants, not pose new ones.

How we view and use money

Simon Gleeson of Clifford Chance has written a very concerning overview of the shortcomings in the Financial Services Authority’s review of how the retail financial services that it regulates are distributed to consumers.

He suggests that the proposed three tiers of advice, coupled with EU-driven changes to the test of what is appropriate, will increase the cost of products, leaving the “mass market” with only the Sunday newspapers to help them invest. Which means they won’t.

To be fair, the FSA says it has an open mind on the proposals, and the initial consultation doesn’t end until December.

But the most troubling aspect of the review is that it proceeds from the perspective of whom and what the FSA regulates, and not in terms of how consumers want to use money. As consumers, we don’t think about who is regulating the different ways we use our money. We just expect it to be able to use it as we wish, without complex, artificial or costly barriers being placed in our way.

There is already very little focus on providing more usable, transparent and cost-effective financial services from the consumer's standpoint, because that would seriously impact bank profitability that is already under pressure. For example, according to Uswitch, figures for RBS Group, as at March 2007, showed that retail profits rose 1.5% (about 25% of group profits) against a rise of 14% in retail write-offs (69% of all write-offs).

Witness also how UK banks have actually gone to court to defend fees that consumers and regulators have long complained are too high; and their grudging agreement to speed up electronic payments, only in the face of competition inquiries.

Of course, over the past decade consumers have seized upon usable Internet technology to disrupt traditional supplier-determined experiences in travel, music, retailing, betting/bookmaking, games, telephony, TV and so on. Social lending and micro-finance are established elements of this rapidly evolving trend, which will surely reshape banking, insurance, asset management and pensions in due course - provided that regulation does not get in the way.

For a further catalyst, look no further than the current credit crisis. The inability of banks to understand who owes what to whom so that they can confidently lend to each other again is illustrative of how badly transparency is lacking. The savers' run on Northern Rock shows that consumer feel it too, and are prepared to act when they consider that someone is less than transparent about what is being done with their money.

So it is now more critical than ever that the FSA views the financial services market not from the perspective of the institutions and products that it regulates, but in terms of how consumers want to use their money transparently and cost-effectively, and what is needed to help them do just that.

Why "Pragmatist"?

A pragmatist is simply someone who acts in an informed way to control his or her personal environment, using a combination of theory and practice. Or as John Dewey put it, "intelligent practice versus uninformed, stupid practice". As a lawyer working on innovative solutions to consumer problems, I see plenty of examples of both types of practice.

A pragmatist does not slavishly follow rules, or political dogma, or "positive thinking" or the herd. To do so would assume a world that is somehow ordered, whereas almost all significant events in history are Black Swans - surprise events that have a huge impact and which we rationalise by hindsight. Rules and dogma can turn out to be badly wrong. The herd is eventually caught out. So it's dangerous to follow. Instead, we must rely on experience and critcial thought to minimise our exposure to the downside of these surprise events, and maximise our exposure to the upside.

The combination of theory and practice that qualifies as "intelligent practice" involves trial and failure. It involves being sceptical and "contrarian". It encompasses the aggressive "tinkering" of entrepreneurs - facilitators - who have helped us wrest control of our own life experiences from the one-size-fits-all experience offered by the established music labels, book publishers, retailers, package holiday operators, banks and political parties. These facilitators make the difference between us 'raging against the machine' in a lone, fragmented way and acting together as individuals in a highly concentrated fashion. And this giant, boundaryless online community of practising individuals and facilitators characterises the "architecture of participation" that lies at the heart of "Web 2.0".

It's perhaps no surprise that the rise of Web 2.0 has coincided with a decline and low levels of trust in our institutions, and findings that "the level of alienation felt towards politicians, the main political parties and the key institutions of the political system is extremely high and widespread [yet...] very large numbers of citizens are engaged in community and charity work outside of politics. There is also clear evidence that involvement in pressure politics – such as signing petitions, supporting consumer boycotts, joining campaign groups – has been growing significantly for many years".

In other words, it may be that institutions are being marginalised by people pragmatically engaging with each other in their own digital communities, not only for retail purposes but also political, environmental, health, and economic reasons.

Big questions arise.

How do the institutions get it so wrong? How do facilitators succeed where institutions fail? How can we bridge the gap between what institutions say is right for us, and what is actually right for us personally? Could today's successful facilitators become tomorrow's institutions? Are today's institutions doomed? Or can they respond, re-organise and align themselves with how "we" individual citizens and consumers behave?

I explore these questions here, and look forward to discussing any thoughts or comments you have along the way.