by Bell, D. R.
Cryptocurrency
In the story, the “sharing economy” operates on the foundation of a cryptocurrency called “D-coin.” It is modeled on the bitcoin and other blockchain-based cryptocurrencies currently in existence, such as XRP, nextcoin, mastercoin, bitshares, etc. One can debate the pros and cons of such systems and their potential, especially given the rather colorful history of bitcoin. But it is certain that blockchain-based systems provide decentralized trust and anonymity, can operate outside of the government’s oversight, and have no central point of vulnerability. Such systems can enable direct person-to-person exchanges, bypassing the banking middlemen. As such, they are arguably a powerful building block for an “alternative” economy.
It is not my intent to dive into gory details of blockchain technology. For those interested, The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order by Paul Vigna and Michael Casey is a good introduction. Numerous startups and significant investments into blockchain systems make it likely that cryptocurrencies may indeed become one of the disruptive technologies a few years down the road.
Is America an Oligarchy?
This was one of many such headlines after a published study “Testing Theories of American Politics: Elites, Interest Groups, and Average Citizen” by Martin Gilens from Princeton and Benjamin Page from Northwestern.
The study did prove what many already knew: money talks; elites have a disproportionate influence in Washington and dictate policies that do not necessarily benefit the majority.
To quote:
“The central point that emerges from our research is that economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while mass-based interest groups and average citizens have little or no independent influence .... When a majority of citizens disagrees with economic elites and/or with organized interests, they generally lose.”
They have also found that the positions of powerful special interests groups are usually different from the preferences of average citizens. It’s a small group of very high income individuals that shape our policies – to their benefit. This is what Gilens and Page called “Economic Elite Domination.”
Does this make us an oligarchy? The definition of oligarchy is “a form of government in which power is vested in a few persons or in a dominant class.” If we aren’t there, then we are close. Not sure we even needed a scientific study to prove it, but here it is: http://scholar.princeton.edu/sites/default/files/mgilens/files/gilens_and_page_2014_-testing_theories_of_american_politics.doc.pdf
Alternatives to Western Economic and Financial Systems
The story referred to SOFI (Russian Equivalent of SWIFT) and a Shanghai-based New Development Bank (NDB). As of the time of writing, these initiatives are in progress.
The NDB was formed in 2014 by China, Russia, India, Brazil and South Africa, with $100 billion in capital. It is based in Shanghai and is scheduled to start operating in 2016.
In 2014, some of the Western powers threatened to cut off Russia from the SWIFT banking transaction system.[1] During the same year, the Central Bank of Russia (CBR) launched a new SWIFT-style payment service aimed at moving away from Western financial dominance.[2] It was also reported that China and Russia are discussing a new interbank system to replace SWIFT.[3] In March of 2015, additional reports emerged that China’s International Payment System (CIPS) will be launched before the end of the year.[4] So, while the “SOFI” in the story is imaginary, the emergence of non-SWIFT banking network(s) from China and Russia appears to be fairly likely.
It is expected that in 2015 India and Pakistan will become full members of the Shanghai Cooperation Organization (SCO) that currently includes China, Russia, and four other Asian countries. With that, the SCO – that China is positioning as a non-Western inter-regional economic and financial cooperation block – will encompass the vast majority of Asia and close to half of the world’s population.
Inequality and Shrinking Middle Class
The American middle class that once was more than half of the country’s households has declined to about 40% of the households, mostly due to many falling into poverty. It is projected to continue to decline. Median income has been falling since it peaked in 1999. This is happening despite a growing economy and rising profits – because an increasingly larger share of the wealth flows to the top, especially the upper 0.1%.
In 2014, Emmanuel Saez and Gabriel Zucman from National Bureau of Economic Research published Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data.[5] Wealth concentration was high early in the 20th century, fell for fifty years, and started rising again thirty five years ago. While the relative wealth of the top 0.1% tripled, the share of the bottom 90% was cut almost in half. By 2012, these lines intersected: the top 0.1% of the US households had as much wealth as the bottom 90%. The top 0.01% – only 16,000 families – have more wealth than the bottom 130 million families.
Also in 2014, Michael Porter and Jan Rivkin from Harvard Business School published their The Economy is Doing Half Its Job study.[6] They found a troubling divergence in the American economy: while large companies and a minority of highly-skilled individuals prosper, small businesses and middle-and lower-class individuals are struggling. Their conclusions are blunt: such a divergence is not sustainable.
As mentioned elsewhere in the commentary, extreme economic inequality is proven to lead to political inequality, or “oligarchization” of the political order. Similar, although not as extreme, trends appear in other developed countries. The global inequality is getting worse.[7] The last time such wealth disparity existed was during the 1925 – 1937 period. We all know the upheaval that followed. Perhaps it’s no accident that many hedge fund managers are buying airstrips and farms in remote places, thinking that they need a getaway.[8]
How will the emerging Internet-based and robotics technologies affect the rising inequality? Past industrial revolutions disrupted existing economic models but benefited societies in the end. However, there is no guarantee that the outcome of the ongoing technological revolution will be the same. Unlike in earlier economies, in the digital age even a small relative advantage often leads to an absolute domination – “winner-takes-all” markets. So far, the result has been acceleration of inequality: in just the past ten years, the wealth share of the top 0.1% jumped over 50% while that of the bottom 90% dropped by 25%.[9] Technology is bringing about a very different world and the question is whether we’ll adapt our policies to benefit everyone or continue with the status quo where more and more people lose ground and face a possibility of another upheaval. Erik Brynjolfsson and Andrew McAfee raise these issues, and warn of consequences of not taking action, in their bestselling The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies, with their website found at http://www.secondmachineage.com/.
China’s Ambitions and China – Russia Connection
China’s ambitions to become a superpower to rival and eventually overcome the United States are well known, as are their plans to make the Renminbi the reserve currency of the world. These issues have been extensively referenced in The Great Game.[10] The importance of the US dollar’s reserve currency status can’t be overstated, as it requires other countries to carry the US dollars for international transactions and puts the US into the enviable position of being able to print dollars to pay for tangible goods from abroad. By the same token, both China and Russia expressed desire to remove this advantage from the US by creating trading exchanges based on other currencies.
Since The Great Game’s publication, China has continued promoting use of the Renminbi in global commerce, both by making it one of the five top payment currencies of the world[11] and by concluding multiple bilateral currency swap agreements and establishing Renminbi hubs outside of China.[12]
The future China – Russia alignment was hypothesized in both The Gre
at Game and The Metronome.[13] This trend has accelerated in 2014, partly driven by geopolitical tensions between Russia and the West and the conflict in Ukraine. A $456 billion gas deal, cooperation on advanced weapons, high-speed rail, satellite navigation systems, large infrastructure projects, Chinese investments in Russia, the already-mentioned Shanghai Cooperation Organization – they all point to this major Eurasian alliance taking shape quickly.[14]
China has been solidifying its claims to the South China Sea and the East China Sea, conducting land reclamation projects, planning airstrips and harbors, etc. One motivation is vast energy resources in the area.[15] [16] But there is also expressed desire to establish these waterways as “Chinese” and put an end to the American domination of the area.
This, in turn, coincides with the Chinese long-stated plans for Taiwan’s “reunification.” This is the most likely flash point for the US – China conflict. In describing Chinese plans for taking Taiwan and the US possible response; some of the references used for this aspect of the book include: “The Chinese Navy: Expanding Capabilities, Evolving Roles,” http://www.amazon.com/dp/1478268875, 2012
“Air-Sea Battle,” Center for Strategic and Budgetary Assessment, http://csbaonline.org/publications/2010/05/airsea-battle-concept/, 2010
“Hard ROC2.0: Taiwan and Deterrence Through Protraction,” Center for Strategic and Budgetary Assessment, http://csbaonline.org/publications/2014/12/hard-roc-2-0-taiwan-and-deterrence-through-protraction/, 2014
Surveillance
Some of you may have seen The Minority Report directed by Steven Spielberg.[17] In the year 2054, criminals are apprehended before they have a chance to commit a crime and people’s movements are continually tracked in order to advertise to them and keep them under surveillance. While pre-crime does not look feasible anytime soon, potential for the constant surveillance has almost arrived. As alluded here, the surveillance has both business (“to sell you things”) and security (“to make sure you don’t do bad things”) components. But these components are not entirely separate as businesses routinely share the information they collect with the government: “Thousands of technology, finance and manufacturing companies are working closely with U.S. national security agencies, providing sensitive information and in return receiving benefits that include access to classified intelligence...” [18]
“Microsoft has collaborated closely with US intelligence services to allow users' communications to be intercepted, including helping the National Security Agency to circumvent the company's own encryption...” [19]
And many more.
Anything you do with Google-provided services (search, e-mail, maps, etc.) will be combined into targeted advertising. This is not to single out Google – all companies are trying to collect as much information about you as they can. Google just happens to be, by and large, better at it.
The government snoops on phone, email and text records of virtually every US citizen – with the forced cooperation of US telecommunications companies. The PBS program United States of Secrets describes how the government spies on its citizens and how technology companies feed into the dragnet.[20] According to some of the NSA technologists interviewed by PBS, it was possible to protect the privacy of the citizens by anonymizing the data – however, the NSA chose not to do this.
In 2007, there were estimated 30 million surveillance cameras in the US. The number is certainly much higher now. The size of the smart surveillance and video analytics global market is estimated at $13.5 billion in 2012; it’s expected to reach $39 billion by 2020.[21] But now, we are coming to the Age of the “Internet of Things,” where internet-connected devices will monitor every aspect of the environment. By 2024, the setting of this story, there will be billions of internet-devices that people wear or have in their homes. Iris scanners, as portrayed in The Minority Report, are being built into inexpensive devices including smartphones. “See-through-clothing” terahertz imaging, which is already familiar from airport security checkpoints, is coming to police scanners near you.
These will make our lives more convenient and possibly safer. They will also destroy whatever little remains of our privacy as the data they collect will add to the giant pool of information that will be collected and analyzed in order to sell you things, to protect you and – if needed – to bring you to justice. But what would be so bad about increased convenience and protection? Well, if you are an average American you commit three felonies per day[22] – unwittingly, of course. Life is complex, technologies changing fast, the laws don’t always keep up. There is no place to hide; under constant surveillance, everyone is a criminal.
This does not mean that the government is an evil, ill-intentioned force, ready to strike at you. That’s not the point. Every government always asked its citizens to trust it without question because it has the country’s goodwill at heart. But even best intentions do not guarantee good results. If there is one maxim that held through the ages, it’s that power corrupts. And giving someone ability to completely track our lives is to hand them an enormous power. Privacy is precious because it’s integral to liberty. Is free speech even possible in the absence of privacy? We would be well advised to remember what Benjamin Franklin said 260 years ago: “Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety.” And would likely lose both.
MAIN CHARACTERS OF THE TRILOGY
Characters are arranged alphabetically by first name.
Alejandro
A friend and associate of Oleg Khmelco and a member of a prominent Mexican mafia family, Alejandro helps David and Maggie to escape their pursuers in The Great Game. Alejandro serves as their host when they return to Los Angeles in 2024 in The Outer Circle. His intentions towards Maggie are not entirely innocent.
Boris Mosin
The Russian President in 2024. When becoming aware of the Chinese plans to retake Taiwan, faces the choice of continuing to play a second fiddle in the alliance with China or taking a more independent position.
Brian Tice
The US Vice President in 2024. Trails both Dimon and Kron in the electoral campaign.
David Ferguson
Computer engineer and an innocent bystander that in The Great Game gets caught up in a struggle between superpowers. Together with Margarita (Maggie) Sappin, he ends up searching for the “Schulmann file” (research into insider trading behind the 2019 financial crisis). David and Maggie end up publishing decoded parts of the “Schulmann file” in 2022 and go on the run to Mexico. Together with Maggie, David returns to the US in 2024 in The Outer Circle following the discovery of additional names, in particular that of John Dimon, a leading presidential candidate.
David Weinstein
Son of Anya Weinstein. Anya was Pavel Rostin’s girlfriend before Pavel met Karen Baker. Anya helps Pavel in The Metronome. Thanks to the money that Pavel left his mother, David is able to come to study to the US. In The Outer Circle, he gets involved in the Jeff Kron’s campaign and helps with the information that David Ferguson and Maggie Sappin bring.
Ivan Mershov
A Russian military officer, Ivan meets Pavel Rostin in The Metronome because Ivan’s father was friends with Pavel’s father. Ivan is an uncle of Oleg Khmelco. By The Outer Circle, Ivan rises to be the head of SOBR, the Special Rapid Response Unit of the Ministry of Internal Affairs. Through Vitaly Mershov, Oleg reaches to him for help.
Jeff Kron
At the beginning of The Metronome, Jeff is serving a life sentence for the murder of John Brockton, a murder he did not commit, although he did blame Brockton’s financial shenanigans for destroying his family. Jeff gets released thanks to Pavel Rostin. He ends up marrying Jennifer. Jeff gets involved in politics and becomes a prominent politician.
Jennifer Rostin-Kron
Daughter of Pavel Rostin and Karen Baker. Jennifer marries Jeff Kron, the man who’d been released from jail thanks to her father. Supports Jeff in his political activities, she herself becom
es a prominent political figure in The Outer Circle.
Jim Brobak
First appears in The Great Game as the head of the FBI’s Dallas office. His friend John Platt helps David Ferguson and Maggie Sappin to find the Schulmann file. Brobak assists them with escaping pursuit. John Platt is killed and Jim Brobak gets demoted to a regional office in New Mexico. In The Outer Circle, Brobak helps David Ferguson to gain access to the data on John Dimon that David had been searching for.
Joe Maxwell
The outgoing US President in 2024. Faces the choice of either supporting his VP or a representative of a third party.
John Dimon
A populist American politician and a frontrunner in the 2024 election.
Jonathan Schulmann
Appears indirectly in The Great Game. The SEC attorney that investigated the financial crisis of 2019 and discovered planning and participation by high-ranking figures from China, Russia, the US, and other countries. He was assassinated on Nemzhov’s orders. His file survived thanks to Suzy Yamamoto.
Kai Liu
As the Chinese Premier in 2024, he faces difficult problems with a restless population. In favor of taking a military action to retake Taiwan, but only if the chances for success against the US Navy are overwhelming.