Looking for the Needle in a Stack of Needles: Tracking Shadow Economic Activities in the Age of Big Data

Curated on Posted on by Stefaan Verhulst

Manju Bansal in MIT Technology Review: “The undocumented guys hanging out in the home-improvement-store parking lot looking for day labor, the neighborhood kids running a lemonade stand, and Al Qaeda terrorists plotting to do harm all have one thing in common: They operate in the underground economy, a shadowy zone where businesses, both legitimate and less so, transact in the currency of opportunity, away from traditional institutions and their watchful eyes.
One might think that this alternative economy is limited to markets that are low on the Transparency International rankings (such as sub-Saharan Africa and South Asia, for instance). However, a recent University of Wisconsin report estimates the value of the underground economy in the United States at about $2 trillion, about 15% of the total U.S. GDP. And a 2013 study coauthored by Friedrich Schneider, a noted authority on global shadow economies, estimated the European Union’s underground economy at more than 18% of GDP, or a whopping 2.1 trillion euros. More than two-thirds of the underground activity came from the most developed countries, including Germany, France, Italy, Spain, and the United Kingdom.
Underground economic activity is a multifaceted phenomenon, with implications across the board for national security, tax collections, public-sector services, and more. It includes the activity of any business that relies primarily on old-fashioned cash for most transactions — ranging from legitimate businesses (including lemonade stands) to drug cartels and organized crime.
Though it’s often soiled, heavy to lug around, and easy to lose to theft, cash is still king simply because it is so easy to hide from the authorities. With the help of the right bank or financial institution, “dirty” money can easily be laundered and come out looking fresh and clean, or at least legitimate. Case in point is the global bank HSBC, which agreed to pay U.S. regulators $1.9 billion in fines to settle charges of money laundering on behalf of Mexican drug cartels. According to a U.S. Senate subcommittee report, that process involved transferring $7 billion in cash from the bank’s branches in Mexico to those in the United States. Just for reference, each $100 bill weighs one gram, so to transfer $7 billion, HSBC had to physically transport 70 metric tons of cash across the U.S.-Mexican border.
The Financial Action Task Force, an intergovernmental body established in 1989, has estimated the total amount of money laundered worldwide to be around 2% to 5% of global GDP. Many of these transactions seem, at first glance, to be perfectly legitimate. Therein lies the conundrum for a banker or a government official: How do you identify, track, control, and, one hopes, prosecute money launderers, when they are hiding in plain sight and their business is couched in networked layers of perfectly defensible legitimacy?
Enter big-data tools, such as those provided by SynerScope, a Holland-based startup that is a member of the SAP Startup Focus program. This company’s solutions help unravel the complex networks hidden behind the layers of transactions and interactions.
Networks, good or bad, are near omnipresent in almost any form of organized human activity and particularly in banking and insurance. SynerScope takes data from both structured and unstructured data fields and transforms these into interactive computer visuals that display graphic patterns that humans can use to quickly make sense of information. Spotting of deviations in complex networked processes can easily be put to use in fraud detection for insurance, banking, e-commerce, and forensic accounting.
SynerScope’s approach to big-data business intelligence is centered on data-intense compute and visualization that extend the human “sense-making” capacity in much the same way that a telescope or microscope extends human vision.
To understand how SynerScope helps authorities track and halt money laundering, it’s important to understand how the networked laundering process works. It typically involves three stages.
1. In the initial, or placement, stage, launderers introduce their illegal profits into the financial system. This might be done by breaking up large amounts of cash into less-conspicuous smaller sums that are then deposited directly into a bank account, or by purchasing a series of monetary instruments (checks, money orders) that are then collected and deposited into accounts at other locations.
2. After the funds have entered the financial system, the launderer commences the second stage, called layering, which uses a series of conversions or transfers to distance the funds from their sources. The funds might be channeled through the purchase and sales of investment instruments, or the launderer might simply wire the funds through a series of accounts at various banks worldwide. 
Such use of widely scattered accounts for laundering is especially prevalent in those jurisdictions that do not cooperate in anti-money-laundering investigations. Sometimes the launderer disguises the transfers as payments for goods or services.
3. Having successfully processed the criminal profits through the first two phases, the launderer then proceeds to the third stage, integration, in which the funds re-enter the legitimate economy. The launderer might invest the funds in real estate, luxury assets, or business ventures.
Current detection tools compare individual transactions against preset profiles and rules. Sophisticated criminals quickly learn how to make their illicit transactions look normal for such systems. As a result, rules and profiles need constant and costly updating.
But SynerScope’s flexible visual analysis uses a network angle to detect money laundering. It shows the structure of the entire network with data coming in from millions of transactions, a structure that launderers cannot control. With just a few mouse clicks, SynerScope’s relation and sequence views reveal structural interrelationships and interdependencies. When those patterns are mapped on a time scale, it becomes virtually impossible to hide abnormal flows.

SynerScope’s relation and sequence views reveal structural and temporal transaction patterns which make it virtually impossible to hide abnormal money flows.”

How Civil Society Organizations Close the Gap between Transparency and Accountability

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In a research note in the current issue of Governance, Albert Van Zyl poses “the most critical question for activists and scholars of accountability: How and when does transparency lead to greater accountability?”  Van Zyl’s note looks particularly at the role of civil society organizations (CSOs) in demanding and using government budget information, drawing on case studies of CSO activity in eleven countries in Africa, Latin America and South Asia.  Accountability is achieved, Van Zyl suggests, when CSOs are active and closely engaged with legislators, auditors, and other formal oversight institutions.  But research is still needed on the kinds of engagement that are most likely to enhance accountability.  Read the research note.

'Hackathons' Aim to Solve Health Care's Ills

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Amy Dockser Marcus in the Wall Street Journal: “Hackathons, the high-octane, all-night problem-solving sessions popularized by the software-coding community, are making their way into the more traditional world of health care. At Massachusetts Institute of Technology, a recent event called Hacking Medicine’s Grand Hackfest attracted more than 450 people to work for one weekend on possible solutions to problems involving diabetes, rare diseases, global health and information technology used at hospitals.
Health institutions such as New York-Presbyterian Hospital and Brigham and Women’s Hospital in Boston have held hackathons. MIT, meantime, has co-sponsored health hackathons in India, Spain and Uganda.
Hackathons of all kinds are increasingly popular. Intel Corp.  recently bought a group that organizes them. Companies hoping to spark creative thinking sponsor them. And student-run hackathons have turned into intercollegiate competitions.
But in health care, where change typically comes much more slowly than in Silicon Valley, they represent a cultural shift. To solve a problem, scientists and doctors can spend years painstakingly running experiments, gathering data, applying for grants and publishing results. So the idea of an event where people give two-minute pitches describing a problem, then join a team of strangers to come up with a solution in the course of one weekend is radical.
“We are not trying to replace the medical culture with Facebook culture,” said Elliot Cohen, who wore a hoodie over a button-down dress shirt at the MIT event in March and helped start MIT Hacking Medicine while at business school. “But we want to try to blend them more.”
Mr. Cohen co-founded and is chief technology officer at PillPack, a pharmacy that sends customers personalized packages of their medications, a company that started at a hackathon.
At MIT’s health-hack, physicians, researchers, students and a smattering of people wearing Google Glass sprawled on the floor of MIT’s Media Lab and at tables with a view of the Boston skyline. At one table, a group of college students, laptops plastered with stickers, pulled juice boxes and snacks out of backpacks, trash piling up next to them as they feverishly wrote code.
Nupur Garg, an emergency-room physician and one of the eventual winners, finished her hospital shift at 2 a.m. Saturday in New York, drove to Boston and arrived at MIT in time to pitch the need for a way to capture images of patients’ ears and throats that can be shared with specialists to help make diagnoses. She and her team immediately started working on a prototype for the device, testing early versions on anyone who stopped by their table.
Dr. Garg and teammate Nancy Liang, who runs a company that makes Web apps for 3-D printers, caught a few hours of sleep in a dorm room Saturday night. They came up with the idea for their product’s name—MedSnap—later that night while watching students use cellphone cameras to send SnapChats to one another. “There was no time to conduct surveys on what was the best name,” said Ms. Liang. “Many ideas happen after midnight.”
Winning teams in each category won $1,000, as well as access to the hackathons sponsors for advice and pilot projects.
Yet even supporters say hackathons can’t solve medicine’s challenges overnight. Harlan Krumholz, a professor at Yale School of Medicine who ran a many-months trial that found telemonitoring didn’t reduce hospitalizations or deaths of cardiology patients, said he supports the problem-solving ethos of hackathons. But he added that “improvements require a long-term commitment, not just a weekend.”
Ned McCague, a data scientist at Blue Cross Blue Shield of Massachusetts, served as a mentor at the hackathon. He said he wasn’t representing his employer, but he used his professional experiences to push groups to think about the potential customer. “They have a good idea and are excited about it, but they haven’t thought about who is paying for it,” he said.
Zen Chu, a senior lecturer in health-care innovation and entrepreneur-in-residence at MIT, and one of the founders of Hacking Medicine, said more than a dozen startups conceived since the first hackathon, in 2011, are still in operation. Some received venture-capital funding.
The upsides of hackathons were made clear to Sharon Moalem, a physician who studies rare diseases. He had spent years developing a mobile app that can take pictures of faces to help diagnose rare genetic conditions, but was stumped on how to give the images a standard size scale to make comparisons. At the hackathon, Dr. Moalem said he was approached by an MIT student who suggested sticking a coin on the subjects’ forehead. Since quarters have a standard measurement, it “creates a scale,” said Dr. Moalem.
Dr. Moalem said he had never considered such a simple, elegant solution. The team went on to write code to help standardize facial measurements based on the dimensions of a coin and a credit card.
“Sometimes when you are too close to something, you stop seeing solutions, you only see problems,” Dr. Moalem said. “I needed to step outside my own silo.”

Ten Innovations to Compete for Global Innovation Award

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Making All Voices Count: “The Global Innovation Competition was launched at the Open Government Partnership Summit in November, 2013 and set out to scout the globe for fresh ideas to enhance government accountability and boost citizen engagement. The call was worldwide and in response, nearly 200 innovative ideas were submitted. After a process of public voting and peer review, these have been reduced to ten.
Below, we highlight the innovations that will now compete for a prize of £65,000 plus six months mentorship at the Global Innovation Week March 31 – April 4, 2014 in Kenya.
The first seven emerged from a process of peer review and the following three were selected by the Global Innovation Jury.

An SMS gateway, connected to local hospitals and the web, to channel citizens’ requests for pregnancy services. At risk women, in need of information such as hospital locations and general advice, will receive relevant and targeted updates utilising both an SMS and a GIS-based system.  The aim is to reduce maternal mortality by targeting at risk women in poorer communities in Indonesia.

“One of the causes of high maternal mortality rate in Indonesia is late response in childbirth treatment and lack of pregnancy care information.”

This project, led by a civil servant, aims to engage citizens in Pakistan in service delivery governance. The project aims to enable and motivate citizens to collect, analyze and disseminate service delivery performance data in order to drive performance and help effective decision making.

“BSDU will serve as a model of better management aided by the citizens, for the citizens.”

A Geographic Information System that gives Indonesian citizens access to information regarding government funded projects. The idea is to enable and motivate citizens to compare a project’s information with its real-world implementation and to provide feedback on this. The ultimate aim is to fight corruption in the public sector by making it easier for citizens to monitor, and provide feedback on, government-funded projects.

“On-the-map information about government-funded projects, where citizens are able to submit their opinions, should became a global standard in budget transparency!”

A digital payment system in South Africa that rewards citizens who participate in activities such as waste separation and community gardening. Citizens are able to ‘spend’ rewards on airtime, pre-paid electricity and groceries. By rewarding social volunteers this project aims to boost citizen engagement, build trust and establish the link between government and citizen actors.

“GEM offers a direct channel for communication and rewards between governments and citizens.”

An app created by a team of software developers to provide Ghanaian citizens with information about the oil and gas industry, with the aim of raising awareness of the revenue generated and to spark debate about how this could be used to improve national development.

“The idea is to bring citizens, the oil and gas companies and the government all onto one platform.”

Ghana Petrol Watch seeks to deliver basic facts and figures associated with oil and gas exploration to the average Ghanaian. The solution employs mobile technology to deliver this information. The audience can voice their concerns as comments on the issue via replies to the SMS. These would then be published on the web portal for further exposure and publicity.

“The information on the petroleum industry is publicly available, but not readily accessible and often does not reach the grassroots community in an easily comprehensible manner.”

A common platform to be implemented in Khulna City, Bangladesh, where citizens and elected officials will interact on budget, expenditure and information.

“The concept of citizen engagement for the fulfillment of pre-election commitment is an innovation in establishing governance.”

The aim of this project is an increase in child engagement in governmental budgeting and policy formulation in Mwanza City, Tanzania. This project was selected as a wildcard by the Global Innovation Jury.

“In many projects I have seen, children are always the perceived beneficiaries, rarely do you see innovations where children are active participants in achieving a goal in their society. It was great to see children as active contributors to their own discourse.” – Jury Member, Shikoh Gitau.

A ‘watchdog’ newsletter in Kenya focusing on monitoring the actions of officials with the aim of educating, empowering and motivating citizens to hold their leaders to account. This project was selected as a wildcard by the Global Innovation Jury.

“We endeavor to bridge the information gap in northern Kenya by giving voice to the voiceless and also highlighting their challenges. The aim is an increase in the educational level of the people through information.”

Citizen Desk is an open-source tool that combines the ability of citizens to share eyewitness reports with the public need for verified information in real time. Citizen Desk lets citizen journalists file reports via SMS or social media, with no need for technical training. This project was selected as a wildcard by the Global Innovation Jury.

“It has become evident for some time now that good technical innovation must rest on a strong bedrock of social and political activity, on the ground, deeply in touch with local conditions, and sometimes in the face of power and privilege.” – Jury Member Bright Simons.”

Democracy in Retreat

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Book by Joshua Kurlantzick (Council on Foreign Relations) on “The Revolt of the Middle Class and the Worldwide Decline of Representative Government”: “Since the end of the Cold War, most political theorists have assumed that as countries develop economically, they will also become more democratic—especially if a vibrant middle class takes root. The triumph of democracy, once limited to a tiny number of states and now spread across the globe, has been considered largely inevitable.
In Democracy in Retreat: The Revolt of the Middle Class and the Worldwide Decline of Representative Government, CFR Fellow for Southeast Asia Joshua Kurlantzick identifies forces that threaten democracy and shows that conventional wisdom has blinded world leaders to a real crisis. “Today a constellation of factors, from the rise of China to the lack of economic growth in new democracies to the West’s financial crisis, has come together to hinder democracy throughout the developing world,” he writes. “Absent radical and unlikely changes in the international system, that combination of antidemocratic factors will have serious staying power.”
Kurlantzick pays particular attention to the revolt of middle class citizens, traditionally proponents of reform, who have turned against democracy in countries such as Venezuela, Pakistan, and Taiwan. He observes that countries once held up as model new democracies, such as Hungary and the Czech Republic, have since curtailed social, economic, and political freedoms. Military coups have grabbed power from Honduras to Thailand to Fiji. The number of representative governments has fallen, and the quality of democracy has deteriorated in many states where it had been making progress, including Russia, Kenya, Argentina, and Nigeria.
The renewed strength of authoritarian rule, warns Kurlantzick, means that billions of people around the world continue to live under repressive regimes.”

New Field Guide Explores Open Data Innovations in Disaster Risk and Resilience

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Worldbank: “From Indonesia to Bangladesh to Nepal, community members armed with smartphones and GPS systems are contributing to some of the most extensive and versatile maps ever created, helping inform policy and better prepare their communities for disaster risk.
In Jakarta, more than 500 community members have been trained to collect data on thousands of hospitals, schools, private buildings, and critical infrastructure. In Sri Lanka, government and academic volunteers mapped over 30,000 buildings and 450 km of roadways using a collaborative online resource called OpenStreetMaps.
These are just a few of the projects that have been catalyzed by the Open Data for Resilience Initiative (OpenDRI), developed by the World Bank’s Global Facility for Disaster Reduction and Recovery (GFDRR). Launched in 2011, OpenDRI is active in more than 20 countries today, mapping tens of thousands of buildings and urban infrastructure, providing more than 1,000 geospatial datasets to the public, and developing innovative application tools.
To expand this work, the World Bank Group has launched the OpenDRI Field Guide as a showcase of successful projects and a practical guide for governments and other organizations to shape their own open data programs….
The field guide walks readers through the steps to build open data programs based on the OpenDRI methodology. One of the first steps is data collation. Relevant datasets are often locked because of proprietary arrangements or fragmented in government bureaucracies. The field guide explores tools and methods to enable the participatory mapping projects that can fill in gaps and keep existing data relevant as cities rapidly expand.

GeoNode: Mapping Disaster Damage for Faster Recovery
One example is GeoNode, a locally controlled and open source cataloguing tool that helps manage and visualize geospatial data. The tool, already in use in two dozen countries, can be modified and easily be integrated into existing platforms, giving communities greater control over mapping information.
GeoNode was used extensively after Typhoon Yolanda (Haiyan) swept the Philippines with 300 km/hour winds and a storm surge of over six meters last fall. The storm displaced nearly 11 million people and killed more than 6,000.
An event-specific GeoNode project was created immediately and ultimately collected more than 72 layers of geospatial data, from damage assessments to situation reports. The data and quick analysis capability contributed to recovery efforts and is still operating in response mode at Yolandadata.org.
InaSAFE: Targeting Risk Reduction
A sister project, InaSAFE, is an open, easy-to-use tool for creating impact assessments for targeted risk reduction. The assessments are based on how an impact layer – such as a tsunami, flood, or earthquake – affects exposure data, such as population or buildings.
With InaSAFE, users can generate maps and statistical information that can be easily disseminated and even fed back into projects like GeoNode for simple, open source sharing.
The initiative, developed in collaboration with AusAID and the Government of Indonesia, was put to the test in the 2012 flood season in Jakarta, and its successes provoked a rapid national rollout and widespread interest from the international community.
Open Cities: Improving Urban Planning & Resilience
The Open Cities project, another program operating under the OpenDRI platform, aims to catalyze the creation, management and use of open data to produce innovative solutions for urban planning and resilience challenges across South Asia.
In 2013, Kathmandu was chosen as a pilot city, in part because the population faces the highest mortality threat from earthquakes in the world. Under the project, teams from the World Bank assembled partners and community mobilizers to help execute the largest regional community mapping project to date. The project surveyed more than 2,200 schools and 350 health facilities, along with road networks, points of interest, and digitized building footprints – representing nearly 340,000 individual data nodes.”

Social Media as Government Watchdog

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Gordon Crovitz in the Wall Street Journal: “Two new data points for the debate on whether greater access to the Internet leads to more freedom and fewer authoritarian regimes:

According to reports last week, Facebook plans to buy a company that makes solar-powered drones that can hover for years at high altitudes without refueling, which it would use to bring the Internet to parts of the world not yet on the grid. In contrast to this futuristic vision, Russia evoked land grabs of the analog Soviet era by invading Crimea after Ukrainians forced out Vladimir Putin‘s ally as president.
Internet idealists can point to another triumph in helping bring down Ukraine’s authoritarian government. Ukrainian citizens ignored intimidation including officious text messages: “Dear subscriber, you are registered as a participant in a mass disturbance.” Protesters made the most of social media to plan demonstrations and avoid attacks by security forces.
But Mr. Putin quickly delivered the message that social media only goes so far against a fully committed authoritarian. His claim that he had to invade to protect ethnic Russians in Crimea was especially brazen because there had been no loud outcry, on social media or otherwise, among Russian speakers in the region.
A new book reports the state of play on the Internet as a force for freedom. For a decade, Emily Parker, a former Wall Street Journal editorial-page writer and State Department staffer, has researched the role of the Internet in China, Cuba and Russia. The title of her book, “Now I Know Who My Comrades Are,” comes from a blogger in China who explained to Ms. Parker how the Internet helps people discover they are not alone in their views and aspirations for liberty.
Officials in these countries work hard to keep critics isolated and in fear. In Russia, Ms. Parker notes, there is also apathy because the Putin regime seems so entrenched. “Revolutions need a spark, often in the form of a political or economic crisis,” she observes. “Social media alone will not light that spark. What the Internet does create is a new kind of citizen: networked, unafraid, and ready for action.”
Asked about lessons from the invasion of Crimea, Ms. Parker noted that the Internet “chips away at Russia’s control over information.” She added: “Even as Russian state media tries to shape the narrative about Ukraine, ordinary Russians can go online to seek the truth.”
But this same shared awareness may also be accelerating a decline in U.S. influence. In the digital era, U.S. failure to make good on its promises reduces the stature of Washington faster than similar inaction did in the past.
Consider the Hungarian uprising of 1956, the first significant rebellion against Soviet control. The U.S. secretary of state, John Foster Dulles, said: “To all those suffering under communist slavery, let us say you can count on us.” Yet no help came as Soviet tanks rolled into Budapest, tens of thousands were killed, and the leader who tried to secede from the Warsaw Pact, Imre Nagy, was executed.
There were no Facebook posts or YouTube videos instantly showing the result of U.S. fecklessness. In the digital era, scenes of Russian occupation of Crimea are available 24/7. People can watch Mr. Putin’s brazen press conferences and see for themselves what he gets away with.
The U.S. stood by as Syrian civilians were massacred and gassed. There was instant global awareness when President Obama last year backed down from enforcing his “red line” when the Syrian regime used chemical weapons. American inaction in Syria sent a green light for Mr. Putin and others around the world to act with impunity.
Just in recent weeks, Iran tried to ship Syrian rockets to Gaza to attack Israel; Moscow announced it would use bases in Cuba, Venezuela and Nicaragua for its navy and bombers; and China budgeted a double-digit increase in military spending as President Obama cut back the U.S. military.
All institutions are more at risk in this era of instant communication and awareness. Reputations get lost quickly, whether it’s a misstep by a company, a gaffe by a politician, or a lack of resolve by an American president.
Over time, the power of the Internet to bring people together will help undermine authoritarian governments. But as Mr. Putin reminds us, in the short term a peaceful world depends more on a U.S. resolute in using its power and influence to deter aggression.”

Focus on Migration: A tech ‘wiki’ site could improve lives

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Max Martin in SciDev: “Wikipedia is probably the best example of a website that allows users to share and edit information in real time. But several other sites based on the ‘wiki’ model provide a sharing platform specifically for technologies that could help improve lives in the developing world.
One such site, Appropedia, is aimed at collaborative solutions in sustainability, appropriate technology and poverty reduction. Appropedia has had 50 million hits since its 2006 inception and is getting a facelift that will allow it to reach more people.
Such a one-stop information point offers tremendous scope for informing people on the move about green, low-cost and locally owned technologies. A website like Appropedia could function as a clearing house for information on technologies that could make life easier for migrants who are forced to travel and live rough in poor settings — as long as the information is reliable.
For example, displaced people building new homes after a disaster has struck face many choices over the materials they use, as I’ve written previously. The wiki site could be a place for them to swap experiences and learn what has worked for others in different settings.
It could also host advice for people on the move about affordable transport, healthcare and humanitarian aid locations, plus tips for staying safe while travelling in unfamiliar territory and what to pack when camping out in the open.
It could also help channel relevant innovations from other settings to migrants. For example, some villagers in flood-prone areas of Bangladesh grow crops on ‘floating gardens’ made using bamboo-pole rafts lined with soil water hyacinths and cow dung. [1] A local group in India’s frequently flooded Bihar state has shown how to make a life jacket using just plastic bottles, sticky tape, fast-drying cotton and thread. [2] Both of these concepts could be useful for other peoples affected by floods and a dedicated wiki could help disseminate know-how and review the technologies’ safety, reliability and suitability for different locations.
Of course, an information wiki for migrants must offer reliable information. This could be achieved by involving a specialist agency or a consortium of humanitarian groups who could invite experts and local practitioners to review and edit posts.”

Tim Berners-Lee: we need to re-decentralise the web

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Wired:  “Twenty-five years on from the web’s inception, its creator has urged the public to re-engage with its original design: a decentralised internet that at its very core, remains open to all.
Speaking with Wired editor David Rowan at an event launching the magazine’s March issue, Tim Berners-Lee said that although part of this is about keeping an eye on for-profit internet monopolies such as search engines and social networks, the greatest danger is the emergence of a balkanised web.
“I want a web that’s open, works internationally, works as well as possible and is not nation-based,” Berners-Lee told the audience… “What I don’t want is a web where the  Brazilian government has every social network’s data stored on servers on Brazilian soil. That would make it so difficult to set one up.”
It’s the role of governments, startups and journalists to keep that conversation at the fore, he added, because the pace of change is not slowing — it’s going faster than ever before. For his part Berners-Lee drives the issue through his work at the Open Data Institute, World Wide Web Consortium and World Wide Web Foundation, but also as an MIT professor whose students are “building new architectures for the web where it’s decentralised”. On the issue of monopolies, Berners-Lee did say it’s concerning to be “reliant on big companies, and one big server”, something that stalls innovation, but that competition has historically resolved these issues and will continue to do so.
The kind of balkanised web he spoke about, as typified by Brazil’s home-soil servers argument or Iran’s emerging intranet, is partially being driven by revelations of NSA and GCHQ mass surveillance. The distrust that it has brewed, from a political level right down to the threat of self-censorship among ordinary citizens, threatens an open web and is, said Berners-Lee,  a greater threat than censorship. Knowing the NSA  may be breaking commercial encryption services could result in the emergence of more networks like China’s Great Firewall, to “protect” citizens. This is why we need a bit of anti-establishment push back, alluded to by Berners-Lee.”

Unbundling the nation state

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The Economist on Government-to-government trade: “NIGERIAN pineapple for breakfast, Peruvian quinoa for lunch and Japanese sushi for dinner. Two centuries ago, when David Ricardo advocated specialisation and free trade, the notion that international exchange in goods and services could make such a cosmopolitan diet commonplace would have seemed fanciful.
Today another scenario may appear equally unlikely: a Norwegian government agency managing Algeria’s sovereign-wealth fund; German police overseeing security in the streets of Mumbai; and Dubai playing the role of the courthouse of the Middle East. Yet such outlandish possibilities are more than likely if a new development fulfils its promise. Ever more governments are trading with each other, from advising lawmakers to managing entire services. They are following businesses, which have long outsourced much of what they do. Is this the dawn of the government-to-government era?
Such “G2G” trade is not new, though the name may be. After the Ottoman empire defaulted on its debt in 1875 foreign lenders set up an “Ottoman Public Debt Administration”, its governing council packed with European government officials. At its peak it had 9,000 employees, more than the empire’s finance ministry. And the legacy of enforced G2G trade—colonialism, as it was known—is still visible even today. Britain’s Privy Council is the highest court of appeal for many Commonwealth countries. France provides a monetary-policy service to several west African nations by managing their currency, the CFA franc.
One reason G2G trade is growing is that it is a natural extension of the trend for governments to pinch policies from each other. “Policymaking now routinely occurs in comparative terms,” says Jamie Peck of the University of British Columbia, who refers to G2G advice as “fast policy”. Since the late 1990s Mexico’s pioneering policy to make cash benefits for poor families conditional on things like getting children vaccinated and sending them to school has been copied by almost 50 other countries….Budget cuts can provide another impetus for G2G trade. The Dutch army recently sold its Leopard II tanks and now sends tank crews to train with German forces. That way it will be able to reform its tank squadrons quickly if they are needed. Britain, with a ten-year gap between scrapping old aircraft-carriers and buying new ones, has sent pilots to train with the American marines on the F-35B, which will fly from both American and British carriers.
…
No one knows the size of the G2G market. Governments rarely publicise deals, not least because they fear looking weak. And there are formidable barriers to trade. The biggest is the “Westphalian” view of sovereignty, says Stephen Krasner of Stanford University: that states should run their own affairs without foreign interference. In 2004 Papua New Guinea’s parliament passed a RAMSI-like delegation agreement, but local elites opposed it and courts eventually declared it unconstitutional. Honduras attempted to create independent “charter cities”, a concept developed by Paul Romer of New York University (NYU), whose citizens would have had the right of appeal to the supreme court of Mauritius. But in 2012 this scheme, too, was deemed unconstitutional.
Critics fret about accountability and democratic legitimacy. The 2005 Paris Declaration on Aid Effectiveness, endorsed by governments and aid agencies, made much of the need for developing countries to design their own development strategies. And providers open themselves to reputational risk. British police, for instance, have trained Bahraini ones. A heavy-handed crackdown by local forces during the Arab spring reflected badly on their foreign teachers…
When San Francisco decided to install wireless control systems for its streetlights, it posted a “call for solutions” on Citymart, an online marketplace for municipal projects. In 2012 it found a Swiss firm, Paradox Engineering, which had built such systems for local cities. But though members often share ideas, says Sascha Haselmayer, Citymart’s founder, most still decide to implement their chosen policies themselves.
Weak government services are the main reason poor countries fail to catch up with rich ones, says Mr Romer. One response is for people in poorly run places to move to well governed ones. Better would be to bring efficient government services to them. In a recent paper with Brandon Fuller, also of NYU, Mr Romer argues that either response would bring more benefits than further lowering the barriers to trade in privately provided goods and services. Firms have long outsourced activities, even core ones, to others that do them better. It is time governments followed suit.”