Examination of Witness (Questions 40 -
WEDNESDAY 2 FEBRUARY 2000
40. Can I bring you back to some of the issues?
A. These are the issues.
41. I have been to Sweden and I have seen forests
which have been decimated by pollution which has crossed the North
Sea from this country. In Liverpool there will be issues arising
that have come from London and vice versa, there is an interrelationship.
I would have thought that e-commerce, in many respects, is developing
stronger interrelationships in some areas. Freedom for the individual
A. I am a Nietzschean, in a sense, I believe
it is all down to power. All of the rest is sentimentality and
the only way you stop that is by power.
42. Professor, can we get away from philosophy
for a moment and into real problems? One of the things that is
said is that fifty per cent of credit card fraud came from the
internet but it is only two per cent of the business, in other
words trading e-commerce. How is this to be solved? Should you
not worry about it?
A. This is where the trusted third party comes
in. This is where strong cryptography comes in. What is government
doing? Government is actually enforcing weak cryptography so they
can snoop on what is going on for their own tax purposes.
43. One of the ways would be to license individual
firms which would be a very severe strict form of regulation.
A. Just today the American government has passed
a law saying that electronic signatures are now acceptable on
legal and binding documents, so they are already going down this
route. Part of the process is the electronic signature, the identity,
has to be acceptable and it has to be recognised. There has to
be some form of trusted third party to intercede, an agent, who
will recognise and guarantee the trader and what is being traded.
44. You believe this could be another organisation,
it need not have anything to do with government?
A. It need not have anything to do with government
at all. No. It could be Microsoft. In fact, that is why everyone
is so terrified of Microsoft, because they could actually put
themselves in this position. They could actually become it by
default, which is why the American government wants to break them
up. They have become far too powerful.
Lord Faulkner of Worcester
45. And because they are exploiting a monopoly,
that is the other reason why the American government wants to
break it up surely?
A. I am sorry, I do not understand.
46. The other reason why the American government
wants to break up Microsoft is because they are convinced that
its business practices are monopolistic.
A. There is only one monopoly in any country
and that is government. I do not see business as monopolistic.
The whole history of business is that these so-called monopolies
come and go but the monopoly of government goes on.
47. You would not regulate monopolies at all,
A. This is part of the standard, it is part
of business. The idea is that the attack on Microsoft is all well-intentioned
and is nothing to do with the lobbying of companies who are losing
out because Microsoft is winning There is so much hypocrisy
behind all this. It is like all the snide remarks in Britain about
Sky. He (Murdoch) took all the risks and then suddenly when he
wins "it is a monopoly, it is dreadful". When you take
the risks you should keep the rewards. What we are talking about
is the European view that anyone who takes a profit should have
it taken off them because it is not their property, it is the
property of the state.
48. I think in America the anti-trust regulations
are far tougher than those in Europe.
A. They are also arbitrary.
Lord Woolmer of Leeds
49. Good afternoon, nice to see you. I want
to touch first on where you finished there comparing the USA and
Europe. What, if anything, does government do in the United States,
however limited, which you think may be useful in this phase of
the development of e-commerce and communications industries?
A. To a certain extent they keep out of the
way. There is a sort of bipartisan agreement by both parties.
As long as the business actually pays money into the political
coffers then they leave them well alone. They only get involved
in extreme cases. They are not really sticking their nose in.
The idea of government piggy-backing on the back of e-commerce
to deliver government material for the benefit of society was
derived by Al Gore; this was his idea. I am not at all convinced
of that because what we actually see is information overload.
There is far too much of it, and the only people who find it of
value are the political insiders who actually have a commercial
reason for accessing this material. The vast majority of the population
treat this material like a party political broadcast. They just
block it off. There are a lot of statements that on the surface
look beneficial to society, like they talk here about giving political
information, making it available and transparent to all, but it
is not quite as straight forward as that.
50. I take that point but in the United States
does the government in any way regulate or do anything in relation
to the communications?
A. I come back to the idea of standards and
recognising the role and implementing the freedom of the individual,
keeping out of the way. Government is there to support the individual
against the mob. It is very libertarian on both sides.
51. Does that, for example, come down to any
regulation in relation to this issue of trust or in relation to
online contractual law, for example? Have there been changes in
the United States which
A. I do not want to give you the idea that the
American government is all virtuous, they just have a lot more
rabid individualists in the States who will not let government
get away with things. They tried it with the `Clipper Chip' and
are trying it again because the American government made cryptographic
software a munition and stopped it being exported. They are just
as likely as governments anywhere to try to interfere for their
own ends. The American constitution gives the individual an aggressive
position to actually take government on. Business is very much
52. Can I look at the question of the coming
together of, as it were, the content industries, the media industry
and the communications industries. There are the changes in the
communications industries and now the merger and coming together
of the content industries. Is there anything there at all over
time that you think should concern citizens at large or do you
think that is something that should be left simply to market forces
A. Concern or otherwise is irrelevant. Basically,
the forces are in place. Again, there is a misunderstanding of
these changes going on. It is a highway, with delivery mechanisms
creating these mega companies. The actual products themselves
are simply put on the highways. These mega companies are basically
laying the tarmac. What drives along the tarmac Take the
film industry, the entertainment industry, the sports industry,
they are classic examples of what I would call an information
industry. If you want to look at what is an information industry,
they are already there.
53. Do you think, for example, that the Chinese
government will take the same view about the hands-off and emerging
domination of American communications and media business?
54. So your view globally is very much an anglo-saxon
view, you are looking at the world sitting in London?
A. I am looking at the world very much as an
55. Do you think that the Chinese government
or the Indian government will take the laissez faire view
that you would? If you do not think they will, do you think that
in some way Europe is different from India or China in relation
to this area?
A. Again, transaction costs factor in. I am
not predicting the outcome, I am simply laying down the battlefield.
I am saying that this is where natural selection is going to take
place and different regions will pick up different approaches
to e-commerce, some will win and some will lose. We are not even
sure of the laws of natural selection because they are evolving
along with the entities themselves. We are now at that point where
decisions that factor into communities will actually force the
outcome. Those communities are not necessarily the communities
of today. We are still looking in terms of nation state countries
and looking in terms of Europe. I see a first world, second world,
third world break down of the world but it is no longer geographically
located. There will be first world, second world, third world
regions in what we today would call a nation state. The City of
London will be first world, the sink housing estates in Hull and
South Wales are third world. They are already third world, anyone
who goes there can see they are third world, third world without
Chairman: We have sink estates in London.
Lord Woolmer of Leeds
56. I was interested in your starting point,
this concept of the elite. Trying to get some sense of the scale
and size of the elite, the elite, by definition, are a minority,
I assume. What are the activities that you think the elite will
actually be undertaking that will generate them their elite status?
What is it that they will be doing that everyone else is not able
A. They will be approaching the whole version
of commerce and profiting from it. It is a battlefield and the
ones who win become the elite.
57. That is true of industry and commerce in
general. I am very interested in this term "elite" and
the concept of elite.
A. I use the term "elite" because
now the mass of workers are not necessary for business. What has
changed is the mode of production.
58. Who is going to buy the products if they
do not have a job or income?
A. That is not an argument.
59. Who are you going to sell the products to?
A. That is a flawed logic.
Let me explain the fallacy of that argument. That argument comes
from the industrial age, you could not have made that argument
200 years ago.
1 The witness subsequently drew the Sub-Committee's
attention to p 68 of his book, The New Barbarian Manifesto
(Kogan Page, 2000). Back