The tax bill passed by the Senate in the wee hours of Dec. 2 will – if it becomes law – widen the gap between the rich and the poor at a time when income inequality is already approaching historic heights.
Initially, most U.S. households are likely to experience a modest tax cut under the Senate plan. However by 2027, the average family earning less than US$50,000 would pay about $250 more in taxes under the Senate plan, while the average family earning more than $1 million would experience a tax cut topping $8,000 a year, according to estimates from Congress’s own Joint Committee on Taxation.
Yet even those stark statistics understate the full impact of the Senate bill on long-term inequality in the United States.
In my own research, I examine the relationship between the tax system and inequality. In my view, there are two significant reasons why the bill’s impact will be even more dramatic – and even more regressive – than the Joint Committee on Taxation’s estimates suggest.
First, under a 2010 law known as the Statutory Pay-As-You-Go Act, or PAYGO, the revenue losses resulting from the Senate bill would trigger automatic cuts in federal spending.
The program that would be most affected by the automatic cuts is Medicare, whose budget would be slashed by more than $25 billion a year. Other programs that would experience deep cuts include vocational training for individuals with disabilities, block grants for foster care and Meals on Wheels and federal funding for historically black colleges and universities.
Because lower- and middle-income families rely more heavily on these programs than wealthier Americans, these spending cuts would amplify the regressive consequences of the tax-side changes.
In theory, Congress could forestall these cuts by passing legislation that waives the PAYGO law. But such legislation would require 60 votes to overcome a Senate filibuster, and it is far from clear that the votes in favor of waiver are there.
And in any event, a PAYGO waiver would not change the fact that the tax bill increases the federal deficit by more than $1.4 trillion over the next decade. Spending cuts to social safety net programs would likely have to come at some point, and when they do, lower- and middle-income families are likely to bear the brunt.
Broadly similar legislation passed by the House last month would trigger automatic cuts as well. Because the House bill violates Senate procedural rules, the final legislation is likely to resemble the Senate’s package more closely than the House’s version.
A long-term impact
The second reason why the Joint Committee on Taxation’s estimates understate the full impact of the tax bill on inequality is a subtle but significant change made by the Senate bill that would hit lower- and middle-income families hard over the coming decades. Much of the impact would be felt after 2027, while the committee’s forecasts look only 10 years out.
The rather technical change is a shift in the inflation measure that would be used to determine certain deductions and tax bracket thresholds going forward.
Historically, the federal tax code has used a measure known as the fixed-weight consumer price index to calculate inflation. Fixed-weight CPI measures the change in the price of a fixed basket of goods over time. The Senate bill switches to a measure known as chained CPI, which accounts for the fact that as the prices of some goods rise, consumers shift toward cheaper substitutes.
One example often used to illustrate the difference between fixed-weight and chained CPI involves Granny Smith and Red Delicious apples: If the price of Granny Smith apples rises, consumers will buy fewer of those and more of the Red Delicious variety. Fixed-weight CPI would continue to measure inflation based on Granny Smiths; chained CPI accounts for the fact that consumption patterns have changed.
From a practical perspective, the primary difference between fixed-weight CPI and chained CPI is that the former rises faster than the latter. According to the fixed-weight measure currently used by the federal government, prices have increased by 45.7 percent since 2000. According to chained CPI, the increase was 39.7 percent.
The bottom line: For lower- and middle-income families, switching to chained CPI means that the standard deduction and the value of the earned income tax credit, both of which are indexed to inflation, would be smaller than if the fixed-weight measure had been retained. This effect will become more dramatic with each succeeding decade.
To be sure, switching from fixed-weight to chained CPI saves the federal government money. The Senate bill uses this money to offset the long-term costs of corporate tax cuts. But because the change is so subtle, many Americans will not realize that they are – in effect – being asked to pay from their own pockets to pad corporate profits.
Rather than addressing the problem of rising income inequality, the Senate bill manages to speed up that trend while covering its own tracks.
Sometimes you run across a grimy, tattered dollar bill that seems like it’s been around since the beginning of time. Assuredly it hasn’t, but the history of human beings using cash currency does go back a long time – 40,000 years.
Scientists have tracked exchange and trade through the archaeological record, starting in Upper Paleolithic when groups of hunters traded for the best flint weapons and other tools. First, people bartered, making direct deals between two parties of desirable objects.
Money came a bit later. Its form has evolved over the millennia – from natural objects to coins to paper to digital versions. But whatever the format, human beings have long used currency as a means of exchange, a method of payment, a standard of value, a store of wealth and a unit of account.
As an anthropologist who’s made discoveries of ancient currency in the field, I’m interested in how money evolved in human civilization – and what these archaeological finds can tell us about trade and interaction between far-flung groups.
Why do people need currency?
There are many theories about the origin of money, in part because money has many functions: It facilitates exchange as a measure of value; it brings diverse societies together by enabling gift-giving and reciprocity; it perpetuates social hierarchies; and finally, it is a medium of state power. It’s hard to accurately date interactions involving currency of various kinds, but evidence suggests they emerged from gift exchanges and debt repayments.
Objects that occurred rarely in nature and whose circulation could be efficiently controlled emerged as units of value for interactions and exchange. These included shells such as mother-of-pearl that were widely circulated in the Americas and cowry shells that were used in Africa, Europe, Asia and Australia. Native copper, meteorites or native iron, obsidian, amber, beads, copper, gold, silver and lead ingots have variously served as currency. People even used live animals such as cows until relatively recent times as a form of currency.
The Mesopotamian shekel – the first known form of currency – emerged nearly 5,000 years ago. The earliest known mints date to 650 and 600 B.C. in Asia Minor, where the elites of Lydia and Ionia used stamped silver and gold coins to pay armies.
Coinage as commodity money owes its success largely to its portability, durability, transportability and inherent value. Additionally, political leaders could control the production of coins – from mining, smelting, minting – as well as their circulation and use. Other forms of wealth and money, such as cows, successfully served pastoral societies, but weren’t easy to transport – and of course were susceptible to ecological disasters.
Money soon became an instrument of political control. Taxes could be extracted to support the elite and armies could be raised. However, money could also act as a stabilizing force that fostered nonviolent exchanges of goods, information and services within and between groups.
In the past, as today, no society was completely self-sustaining, and money allowed people to interact with other groups. People used different forms of currency to mobilize resources, reduce risks and create alliances and friendships in response to specific social and political conditions. The abundance and nearly universal evidence of movement of exotic goods over diverse regions inhabited by people who were independent of each other – from hunter-gatherers to pastoralists, to farmers and city dwellers – points to the significance of currency as a uniting principle. It’s like a common language everyone could speak.
In my own excavation work in 2012, I recovered a 600-year-old Chinese Yongle Tongbao coin at the ancient Kenyan trade port Manda, in the Indian Ocean. Chinese coins were small disks of copper and silver with a hole in the center so they could be worn on a belt. This coin was issued by Emperor Yongle of the Ming Dynasty. He was interested in political and trade missions to the lands beyond the South China Sea and sent Admiral Zheng He to explore those shores, nearly 80 years before Vasco da Gama reached India from Portugal.
As the history of money has shown, currency’s impact is double-edged: It enabled the movement of goods and services, migration and settlement amongst strangers. It brought wealth to some, while hastening the development of socioeconomic and other distinctions. The same patterns unfold today with the modern relationship between China and Africa, now more intertwined and unequal than when Admiral Zheng He first brought coins from China in a diplomatic gesture, as a symbolic extension of friendship across the distance separating the two.
In our time, possession of cash currency differentiates the rich from the poor, the developed from the developing, the global north from the emerging global south. Money is both personal and impersonal and global inequality today is linked to the formalization of money as a measure of societal well-being and sustainability. Even as currency continues to evolve in our digital age, its uses today would still be familiar to our ancient predecessors.
During what was the 2017 Easter weekend for most of the world, North Koreans celebrated the “Day of the Sun”. It was the 105th birthday of the country’s late founding leader and “eternal president” Kim Il-sung (1912-1994).
Thousands of soldiers, military vehicles and, most notably, various ballistic missiles were paraded for the inspection of current supreme leader Kim Jong-Un (Kim Il-sung’s grandson).
But it wasn’t the parade that signalled North Korea’s belligerence; numerous other countries hold military parades to mark some significant occasion or another.
Instead, what was clearly aggressive was the presentation of a mock-up video of the country’s ballistic missiles destroying an American city during a national musical performance.
This video is the most visceral expression yet of Pyongyang’s intentions. Its telecast was likely timed to coincide with the expected arrival of the US Navy’s aircraft carrier, the USS Carl Vinson, and its accompanying fleet of warships in Korean waters.
On April 8, US President Donald Trump and other American officials told the media that the Carl Vinson had been ordered to make its way towards the Korean peninsula. The likely plan was to demonstrate American resolve in managing the crisis that North Korea’s nuclear weapons program has created.
Subsequent revelations that the warship was actually heading south for exercises with the Australian Navy at the time showed a series of blunders in internal communication. But the fact that the Carl Vinson has arrived off Korean waters two weeks later does not change the prospect of a military conflict between North Korea and the United States.
The key question is whether North Korea does have nuclear weapons that it can readily use against the United States and its regional allies, South Korea and Japan. It’s still unlikely North Korea has the current capability to launch a nuclear-tipped intercontinental ballistic missile that can destroy an American city.
North Korea’s scientists have yet to master the technology to build missiles that can traverse this distance and to construct warheads that can survive re-entry into the Earth’s atmosphere after space flight.
But years of testing has allowed North Korea to inch closer to getting right the extremely demanding science of building and launching viable intercontinental nuclear weapons. And this is why the United States is against further testing, to the point that the Trump administration seems serious about justifying pre-emptive strikes on the basis of further nuclear and missile tests.
What is of immediate concern is that previous tests have led to North Korea being able to achieve the relatively easier requirements of building workable medium-range ballistic missiles, with small enough warheads, to strike American bases in South Korea and Japan. These have about 80,000 US military personnel in total.
North Korea may already have as many 20 nuclear warheads that are small enough to be carried on its Nodong (or Rodong-1) medium-range missiles that can reach these bases. And the Trump administration seems to not want to risk the lives of American soldiers by assuming that North Korea doesn’t already have this nuclear capability.
The cost of that mistake would be the lives of not just 80,000 American military personnel but also countless South Korean and Japanese lives as well. In fact, a North Korean nuclear attack, which will likely develop into war, can be expected to create a humanitarian, environmental and economic catastrophe that will set back the international community.
But if China and other countries fail to stop North Korea building nuclear weapons, the United States will feel pressured to use military force to destroy whatever nuclear weapons and ballistic missiles sites it can locate by satellite surveillance.
The decision to divert the Carl Vinson to waters near the Korean peninsula may also be driven by new intelligence on North Korea’s nuclear threat. The challenge is that sending an American naval armada towards North Korea risks triggering the very nuclear attack against US bases that the Trump administration is trying to avoid in the first place.
This could explain why the administration said it was sending its naval vessels two weeks ago when it really did so later. It may have been to test North Korea’s attitude without escalating the situation by the actual presence of American naval forces that could trigger military action by Kim Jong-Un’s regime.
A worrying stand-off
Why would North Korea want to use nuclear weapons against American bases in Northeast Asia in the first place? It is helpful to remember that, technically, North and South Korea have been at war since 1950 (the Korean War ended in 1953 with an armistice rather than peace). And that the United States has chosen to provide military assistance to the South to help protect it from any aggression by the North.
North Korea may have a very large army of about one million soldiers. South Korea effectively has half that number. Although the majority of South Korea’s able-bodied male citizens may contribute to a military reserve of a few million soldiers, mobilising them in time to respond to a conflict is another question and their role is often excluded from analyses.
As such, the American military personnel and the superior equipment, aircraft and ships that they operate provide the South with a better chance of avoiding defeat should war break out.
Pyongyang’s intention in using nuclear weapons would be to destroy these American bases to remove the advantage they give to South Korea’s national defence. This is why the threat of nuclear use, especially by a more brazen regime under Kim Jong-Un, needs to be taken very seriously.
Such is the current quagmire as the world waits to see how the geopolitics of the Korean peninsula will unfold over the next few months. And as strategists and policymakers scramble to find other approaches for halting North Korea’s growing nuclear threat.
The first part of the plan is to build new products to curb the spread of fake news stories. Facebook says it’s trying “to make it easier to report a false news story” and find signs of fake news such as “if reading an article makes people significantly less likely to share it.”
It will then send the story to independent fact checkers. If fake, the story “will get flagged as disputed and there will be a link to a corresponding article explaining why.”
This sounds pretty good, but it won’t work.
If non-experts could tell the difference between real news and fake news (which is doubtful), there would be no fake news problem to begin with.
What’s more, Facebook says: “We cannot become arbiters of truth ourselves — it’s not feasible given our scale, and it’s not our role.” Nonsense.
Facebook is like a megaphone. Normally, if someone says something horrible into the megaphone, it’s not the megaphone company’s fault. But Facebook is a very special kind of megaphone that listens first and then changes the volume.
The company’s algorithms largely determine both the content and order of your newsfeed. So if Facebook’s algorithms spread some neo-Nazi hate speech far and wide, yes, it is the company’s fault.
Worse yet, even if Facebook accurately labels fake news as contested, it will still affect public discourse through “availability cascades.”
These effects are exceptionally robust; they cannot be fixed with weak interventions such as public service announcements, which brings us to the second part of Facebook’s strategy: helping people make more informed decisions when they encounter false news.
Helping you help yourself
Facebook is releasing public service announcements and funding the “news integrity initiative” to help “people make informed judgments about the news they read and share online”.
This – also – doesn’t work.
A vast body of research in cognitive psychology concerns correcting systematic errors in reasoning such as failing to perceive propaganda and bias. We have known since the 1980s that simply warning people about their biased perceptions doesn’t work.
Similarly, funding a “news integrity” project sounds great until you realise the company is really talking about critical thinking skills.
Funding a few research projects and “meetings with industry experts” doesn’t stand a chance to change anything.
Disrupting economic incentives
The third prong of this non-strategy is cracking down on spammers and fake accounts, and making it harder for them to buy advertisements. While this is a good idea, it’s based on the false premise that most fake news comes from shady con artists rather thanmajornewsoutlets.
You see, “fake news” is Orwellian newspeak — carefully crafted to mean a totally fabricated story from a fringe outlet masquerading as news for financial or political gain. But these stories are the most suspicious and therefore the least worrisome. Bias and lies from public figures, official reports and mainstream news are far more insidious.
As of this writing, Facebook doesn’t even have an option to report misleading advertisements.
What is Facebook to do?
Facebook’s strategy is vacuous, evanescent, lip service; a public relations exercise that makes no substantive attempt to address a serious problem.
But the problem is not unassailable. The key to reducing inaccurate perceptions is to redesign technologies to encourage more accurate perception. Facebook can do this by developing a propaganda filter — something like a spam filter for lies.
Nonetheless, Facebook has a point. To avoid accusations of bias, it should not create the propaganda filter itself. It should simply fund researchers in artificial intelligence, software engineering, journalism and design to develop an open-source propaganda filter that anyone can use.
Why should Facebook pay? Because it profits from spreading propaganda, that’s why.
Sure, people will try to game the filter, but it will still work. Spam is frequently riddled with typos, grammatical errors and circumlocution not only because it’s often written by non-native English speakers but also because the weird writing is necessary to bypass spam filters.
If the propaganda filter has a similar effect, weird writing will make the fake news that slips through more obvious. Better yet, an effective propaganda filter would actively encourage journalistic best practices such as citing primary sources.
Developing a such a tool won’t be easy. It could take years and several million dollars to refine. But Facebook made over US$8 billion last quarter, so Mark Zuckerberg can surely afford it.
Its business, though, was not standard international trade. Avalanche provided a hacker’s delight of a one-stop shop for all kinds of cybercrime to criminals without their own technical expertise but with the motivation and ingenuity to perpetrate a scam. At the height of its activity, the Avalanche group had hijacked hundreds of thousands of computer systems in homes and businesses around the world, using them to send more than a million criminally motivated emails per week.
Our study of Avalanche, and of the groundbreaking law enforcement effort that ultimately took it down in December 2016, gives us a look at how the cybercriminal underground will operate in the future, and how police around the world must cooperate to fight back.
Just as regular businesses can hire online services – buying Google products to handle their email, spreadsheets and document sharing, and hosting websites on Amazon with payments handled by PayPal – cybercriminals can do the same. Sometimes these criminals use legitimate service platforms like PayPal in addition to others specifically designed for illicit marketplaces.
And just as the legal cloud-computing giants aim to efficiently offer products of broad use to a wide customer base, criminal computing services do the same. They pursue technological capabilities that a wide range of customers want to use more easily. Today, with an internet connection and some currency (bitcoin preferred), almost anyone can buy and sell narcotics online, purchase hacking services or rent botnets to cripple competitors and spread money-making malware.
The Avalanche network excelled at this, selling technically advanced products to its customers while using sophisticated techniques to evade detection and identification as the source by law enforcement. Avalanche offered, in business terms, “cybercrime as a service,” supporting a broad digital underground economy. By leaving to others the design and execution of innovative ways to use them, Avalanche and its criminal customers efficiently split the work of planning, executing and developing the technology for advanced cybercrime scams.
To date, cybercrime has offered high profits – like the US$1 billion annualransomware market – with low risk. Cybercriminals often use technical means to obscure their identities and locations, making it challenging for law enforcement to effectively pursue them.
In addition, the internet allows criminal operations to function across geographic boundaries and legal jurisdictions in ways that are simply impractical in the physical world. Criminals in the real world must be at a crime’s actual site and may leave physical evidence behind – like fingerprints on a bank vault or records of traveling to and from the place the crime occurred. In cyberspace, a criminal in Belarus can hack into a vulnerable server in Hungary to remotely direct distributed operations against victims in South America without ever setting foot below the Equator.
A path forward
All these factors present significant challenges for police, who must also contend with limited budgets and manpower with which to conduct complex investigations, the technical challenges of following sophisticated hackers through the internet and the need to work with officials in other countries.
The multinational cooperation involved in successfully taking down the Avalanche network can be a model for future efforts in fighting digital crime. Coordinated by Europol, the European Union’s police agency, the plan takes inspiration from the sharing economy.
Through those partnerships, various national police agencies were able to collect pieces of information from their own jurisdictions and send it, through Europol, to German authorities, who took the lead on the investigation. Analyzing all of that collected data revealed the identity of the suspects and untangled its complex network of servers and software. The nonprofit Shadowserver Foundation and others assisted with the actual takedown of the server infrastructure, while anti-virus companies helped victims clean up their computers.
Using the network against the criminals
Police are increasingly learning – often from private sector experts – how to detect and stop criminals’ online activities. Avalanche’s complex technological setup lent itself to a technique called “sinkholing,” in which malicious internet traffic is sent into the electronic equivalent of a bottomless pit. When a hijacked computer tried to contact its controller, the police-run sinkhole captured that message and prevented it from reaching the actual central controller. Without control, the infected computer couldn’t do anything nefarious.
However, interrupting the technological systems isn’t enough, unless police are able to stop the criminals too. Three times since 2010, police tried to take down the Kelihos botnet. But each time the person behind it escaped and was able to resume criminal activities using more resilient infrastructure. In early April, however, the FBI was able to arrest Peter Levashov, allegedly its longtime operator, while on a family vacation in Spain.
The Avalanche network was just the beginning of the challenges law enforcement will face when it comes to combating international cybercrime. To keep their enterprises alive, the criminals will share their experiences and learn from the past. Police agencies around the world must do the same to keep up.
President Donald Trump threatens people a lot. He menaces, he bullies and then he explains his words away.
As a scholar of American political rhetoric, I have paid close attention to Trump’s use of words. In particular, I’ve focused on something called ad baculum – or threats. Ad baculum is Latin for “appeal to the stick.” Demagogues typically use threats to prevent their opponents from thinking critically. Threats are useful because they are difficult to question or argue against.
As a presidential candidate, Trump frequently used threats in combination with another rhetorical figure of speech – paralipsis. Paralipsis is Greek for “to leave to the side” or, more colloquially, “I’m not saying, I’m just saying.” This combination allowed Trump to threaten and also not threaten at the same time – a threat with a wink that meant that he maybe didn’t mean it and shouldn’t be held accountable.
Candidate Trump was certainly menacing, but it was sometimes difficult to judge whether to take his threats either literally or seriously.
Trump has stopped using the “wink” of paralipsis since he became president. His threats are now more explicit, but just as hard to interpret.
Candidate Trump, a threat with a wink
For an example of candidate Trump using ad baculum threats with the wink of paralipsis, consider the case of Trump’s comments during a campaign rally in Louisville, Kentucky in March 2016. Numerous protesters interrupted Trump. In response, Trump menaced, “Get ‘em out of here.” He then looked on as members of the crowd forcibly removed protesters.
The protesters have filed a legal complaint against Trump alleging they were assaulted as a result of his speech. They argue, “Each time he said ‘Get them out,’ Trump intended for his supporters to use unwanted, harmful physical force to remove protesters.”
But, did he?
As the crowd began removing the protesters, Trump said: “And don’t hurt ‘em. If I say ‘Go get ’em,’ I get in trouble with the press, the most dishonest human beings in the world. If I say ‘Don’t hurt ’em,’ then the press says Trump isn’t as tough as he used to be, can you believe? So, you can’t win with these people.”
Trump’s lawyers attempted to take advantage of the plausible deniability of the paralipsis, arguing that “Mr. Trump explicitly said, ‘Don’t hurt them.’ Thus, even if some causal link could be inferred between Mr. Trump’s call to have the protesters removed and the actions of three people in the crowd, Mr. Trump’s directive not to harm anyone severed the connection.”
That’s the wink that made candidate Trump’s words difficult to judge.
A federal judge has ruled that it was “plausible” that Trump either intended to incite riot or did incite riot at the Louisville rally. The judge’s ruling means that the case can now go to trial. At issue, presumably, will be whether or not the rally crowd should have taken Trump’s threat seriously.
President Trump, just the threats
As president, Trump still holds rallies, but he seems to have lost much of the joy that he had as a candidate. His language is less ironic, as befits a president, perhaps, but it is also darker and even more menacing.
One thing that President Trump hasn’t moved away from is his use of ad baculum, or threats, to silence his opposition.
Consider these examples:
In January 2017, President-Elect Trump threatened Toyota with higher taxes:
In February 2017, President Trump threatened to withhold federal funds from U.C. Berkeley:
And, in April 2017, President Trump threatened North Korea:
Now that he has the power to carry out his threats, he uses their coercive power more directly. There’s still some ambiguity about whether he’ll follow through, but the threats themselves are more directly stated.
Understanding Trump’s threats
It’s noteworthy when a political leader uses ad baculum threats because they are themselves a form of violence and anti-democratic.
For example, Adolf Hitler used threats of force strategically to silence opposition. He described his technique in “Mein Kampf”: “It was simply stated that we were the masters of the meeting, that consequently we had the authority, and that everyone who would dare to make only so much as one interrupting shout, would mercilessly be thrown out by the same door by which he had come in. That further we had to reject all responsibility for [the safety of] such a fellow.”
Trump obviously isn’t Hitler, but threats – whether used by totalitarians or by presidents – are always coercion.
Threats are anti-democratic. As philosopher Hannah Arendt notes, they are force, not persuasion: “to command rather than persuade, were pre-political ways to deal with people.” Arendt wrote that such threats relied upon “uncontested, despotic powers.”
As Trump concludes his first 100 days in office, he struggles with public opinion that sees him as either ineffective or as untrustworthy. A recent Washington Post/ABC News poll found that only 41 percent of Americans think that Trump has the right judgment to serve effectively as president. Only 38 percent of Americans think that he has the right personality and temperament, and just 43 percent of Americans think that Trump can be trusted in a crisis.
Not only are Trump’s threats coercive and anti-democratic, but, as it turns out, they aren’t very effective in helping him to get his agenda passed. Perhaps President Trump might find that he can accomplish more in office if he begins to persuade, rather than threaten, his opposition.
This controversial move was welcomed by commercial rhino breeders, who argue that legalising safe, sustainable horn removal from living animals could prevent wild rhino poaching. But animal preservation groups have warned that any legal trade would have the opposite effect.
Poaching has indeed reached new heights this year. On March 7, a rhinoceros was killed in the Thoiry zoo, near Paris, and its main horn was sawed off and stolen. This is the first time a living rhinoceros in a European zoo has been killed for its horn.
That same week, in South Africa, 13 rhinos were found dead in a single day, decimated by poachers.
Only 62 rhinos were poached across Africa in 2006. The following year this figure shot up to 262 animals, then 1,090 by 2013, 90% of which were killed in South Africa.
Rhinoceros are divided into five separate species. Africa (mainly South Africa, Namibia, Kenya, and Zimbabwe) is home to white rhino (around 20,400 specimens, 18,500 of which are in South Africa) and the black rhino (5,200 specimens, 1,900 of which are in South Africa). As their names indicate, the Indian rhino (3,500 specimens living in India and Nepal), the Sumatran rhino (250 animals) and the Javan rhino (only 50 animals) are found in Asia.
Depending on its age and species, an adult rhinoceros can have up to a few kilograms worth of horn, the white rhino being the best endowed (up to 6kgs). Indian and Javan rhinos have only one horn, while the other three species have two.
In 2015, a total of 1,342 white and black rhinos were poached across the continent. Over the last few years, as many (or more) rhinoceros have been killed in South Africa than are naturally born in Kruger National Park and on private farms put together.
Bogus medicinal properties
Rhino horn, highly valued in China and Vietnam, is used in traditional Asian medicine to treat fevers and cardiovascular disease. More recently, it has been prescribed as a cancer treatment and an aphrodisiac.
While there is no scientific evidence for such medicinal properties, these unfounded beliefs are feeding soaring Asian demand for powdered rhino horn. Prices are skyrocketing: up to US$60,000 a kilo, which is more expensive than gold.
In truth, rhino horn is simply a formation of keratin, a protein found in human nails and animal claws, with a few amino acids and minerals, phosphorus and calcium.
Controlling a lucrative criminal market
Criminal trade in wild animals constitutes one of the world’s largest illegal markets, according to the UN, along with drugs, counterfeit products and human trafficking. Each year, it affects tens of millions of specimens of animals and plants.
With support from Interpol, Europol, the World Customs Organisation and the United Nations Office on Drugs and Crime (UNODC), CITES applies the ban on rhinoceros-horn trading. Using a system of permits and certificates delivered under special conditions, CITES regulates the market for rhinos and about 35,000 other wild species, categorised into three groups according to the level of protection required.
The white rhino, which is not necessarily threatened with extinction, is an appendix species II for South Africa and Swaziland, meaning the trade there must be controlled in order not to jeopardise the animal’s survival. For all other African range states, the white rhino is listed on appendix I: all trade of this endangered species is forbidden, except for non-commercial purposes such as scientific research.
Appendix III contains species that are protected in at least one country, which has sought assistance in controlling their trade.
Prior to the 2000s, and up until 2007, pressure on consumer countries (Yemen, Korea, Taiwan and China) to stop the rhino trade helped reduce poaching activity, leading to an increase in the African rhino population.
Likewise, there is still demand in China and Hong Kong for wealth-signaling objects made of rhino horn, such as libation cups and jewellery.
Where, then, do all these horns come from? According to UNODC, today the major shipments of rhino horn originate primarily in South Africa, followed by Mozambique (where rhinos are gone, but poachers have dipped into stocks at South Africa’s Kruger National Park), Zimbabwe and Kenya.
Both the United Arab Emirates and Europe have served as trading routes. In 2011, the Czech government discovered that some of its citizens were selling trophies they had hunted in South Africa to Vietnamese traders. Some 90 rhino horns were also stolen from museums and auction houses across Europe between January 2011 and June 2012 by the Irish Rathkeale Rovers, a gang since dismantled by Europol.
The import of trophies
Though the international rhino horn trade has been forbidden since 1977, CITES recognises some exceptions. It allows, for instance, limited hunting of Appendix II and I species, including, under exceptional circumstances, of endangered white and black rhinoceros
This allowance recognises that well-managed and sustainable hunting is actually consistent with and contributes to conservation efforts. It provides both livelihood opportunities for rural communities and incentives for habitat conservation. And it generates benefits that can be invested in conservation.
It also demonstrates that effective conservation, management and monitoring plans and programs are in place in a number of African range states, meaning that some populations are recovering enough to sustain limited off-takes as trophies.
Though bringing these rhinoceros-hunting trophies (including horns) hunted in South Africa home as personal property is authorised by CITES, their sale is not. Trophies may then be exported to certain African countries under specific conditions (a non-detriment finding by the exporting country is required beforehand).
Between 2006 and 2011, 1,344 hunting trophies, including African rhino horns from both species [were legally exported](https://cites.org/sites/default/files/fra/cop/16/prop/F-CoP16-Prop-10.pdf (page 5) as personal property. They mainly came from South Africa, where just under 75 trophy-hunting expeditions were organised prior to 2006, and to a lesser extent, Namibia. Vietnam was the top importing country, ahead of the US, Spain and Russia.
After a sudden upsurge in requests for hunting permits from Vietnam, where it was discovered that rhino horns had been illegally sold, South African authorities in 2012 put an end to permits for Vietnamese nationals.
Opening the market?
As demonstrated in last week’s South African court case overturning the ban on the rhino trade, some countries are showing signs of restlessness under the current CITES regime.
Swaziland, for instance, would also like to see change. During the last international meeting of CITES signatory parties in late September 2016, this small country submitted a proposal to allow limited regulated trade in white rhino horn. It has a small population of about 75 white rhinos living protected in parks.
Between 1988 and 1992, an intense period of poaching wiped out 80% of Swaziland’s rhino population. This left it with a large stock of horns that it would like to be able to sell. The proposition was voted down by the majority of CITES countries.
Now, South Africa’s legal U-turn could open a new avenues for the rhino trade. Most South African farmers believe that the ban only encourages poaching and that they themselves could fulfil Asian demand by providing horns from living animals.
Farmers know how to cut the horn with a saw so that it will grow back, a painless procedure for the animal that is put under anaesthetic for around 15 minutes. Protecting rhinos on ranches costs them millions of dollars as they face raids from poachers.
The current poaching crisis differs from a prior crisis in the 1990s in two ways. First, the illegal rhino horn trade has been taken over by organised crime groups because it is less severely punished than other illegal trades (although this is changing thanks to new legislation introduced in most countries).
Then there’s the skyrocketing traffic to East Asia, which reveals the region’s ever-growing demand of miscellaneous African animal products for traditional Asian medicine, from rhino horns to elephant ivory and, now, the skin of domestic African donkeys
What can be done?
Conservation groups should remain resolute at this critical juncture.
It is now up to Asian authorities to raise awareness and discourage the use of rhino horn. China has already taken steps in this direction and, in November 2016, Vietnamese authorities burnt a stock of rhino horn.
Still, some say it will take a generation to change attitudes. Can the planet’s remaining 30,000 rhinoceros survive until then?
The history of gold trading can be traced back hundreds of years while bitcoin, a digital currency that uses encryption and works independently of central banks, has been around for less than ten.
But the cryptocurrency is now starting to challenge gold as the investment of choice. Its meteoric rise is such that on March 3 2017, bitcoin overtook gold for the first time, trading at US$1,290 compared to US$1,228 for an ounce of gold.
All the gold that has ever been mined would easily fit under the legs of the Eiffel Tower – in fact, multiple times. Gold’s scarcity is one reason for its value. Another reason is that it’s a very nonreactive metal so it doesn’t tarnish, which is important if you’ve invested millions and don’t want it to slowly deteriorate.
Most governments keep some of their funds in gold (as the video below explains). But although gold is seen as a safe haven in times of crisis, it is still subject to the usual market fluctuations of any commodity. Once the bitcoin reaches its full potential (all bitcoins are mined) the value will be much more stable.
What is bitcoin?
Bitcoin is a virtual currency used for electronic purchases and transfers. It has recently been gaining popularity and a growing number of businesses, including WordPress, Overstock.com, and Reddit, now accept it as a form of payment. Microsoft already accepts bitcoin payments through its Windows 10 and Windows 10 Mobile platforms, while those shopping online at Shopify may use bitcoin as payment.
Bitcoin is also moving outside the virtual space; what may be the world’s first bitcoin store, House of Nakamoto, opened early this year in Vienna. There, people can buy bitcoins for euros, and vice versa, from a dedicated bitcoin ATM. Drinkers in Cambridge can pay for beers at a pub called The Haymakers.
The number of bitcoins is capped at 21 million. As of March 2017, there were almost 16.2 million circulating. The supply of coins grows steadily because of the way bitcoin is programmed. Each “miner” (“mining” is lingo for the discovery of new bitcoins – anyone with computer knowledge and access to blockchain software can act as a miner) introduces new coins to the supply at a rate of around 12.5 coins every ten minutes.
Even as far back as 2013, bitcoin was worth almost as much as gold. And, at the end of 2016, the total value of bitcoins in circulation was US$14bn.
A good investment opportunity?
Investment in digital currencies, such as bitcoin, has emerged as an alternative to traditional forms of money and created a niche that’s driving major innovations in the financial sector, such as peer-to-peer lending, and digital wallets. As traders gain confidence in alternative forms of money and payment mechanisms, bitcoin is seen as a possible investment alternative.
In fact, bitcoin exhibits similar features to gold – limited global supply, maintaining value and hedging against global market volatility. Such is the exuberance in bitcoin investment that it actually outperforms the precious metal, generating an annual return of 155% compared to gold’s annual loss of 6% during the same time period.
Even though Bitcoin seems a profitable investment tool, its value can be as volatile as the value of the gold, depending on the perceived risk of owning bitcoin as a commodity. Bitcoins are encrypted for security purposes, but while the coding identifies the currency itself, it does not identify its owner. If someone hacks the miner system and gets a secret bitcoin code they will eventually become the rightful owner.
What, then, is pushing the investment value of bitcoin? One driver is increasing demand from developing countries, especially Brazil, Russia, India, China, and South Africa. These countries are experiencing economic distress and weakening currencies, making their local currencies unpredictable and volatile. As a result, it’s becoming increasingly popular to use bitcoin as a natural hedge against paper currency.
Another contributing factor to the rise of bitcoin is the possibility of a trade war between US and China. US President Donald Trump has indicated that he may impose 45% tariff on Chinese imports. This may lead to a weakening yuan, and capital outflow from China as investors will resort to more stable currencies such as euros.
The hike in bitcoin’s price during financial troubles is also a testament to its increasing attraction as a hedging tool.
Bitcoin is not just getting increased interest from tech-savvy individuals and banks such as Barclays, BBVA, Commonwealth Bank of Australia, Credit Suisse, JP Morgan, State Street, Royal Bank of Scotland and UBS. Governments are also lending support to the cryptocurrency.
The Australian government plans to reduce tax on bitcoin transactions. Current treatment of the digital currency under the goods and services tax (GST) law means that consumers are “double taxed” when using it to buy anything already subject to GST. The government plans to change this.
Meanwhile, the UK’s chief scientific adviser has said that governments should use bitcoin’s underlying technology – blockchains – to help with taxes, benefits and passports.
Taking its cue from bitcoin, the US government is planning to launch a legalised cryptocurency called Fedcoin, which can be exchanged for a physical dollar. Bitcoin is not considered legal tender because it is not backed by any government.
Bitcoin pricing is also motivating the much anticipated establishment of the first bitcoin exchange-traded fund (ETF) in the United States. An ETF is an investment company that has no restrictions on the amount of shares it can issue.
The approval of a bitcoin ETF would make the cryptocurrency more attractive to risk-averse institutional investors as it would allow an easier way to gain access to bitcoin than buying it directly.
Such is the dominance of bitcoin that the Bank of England issued a white paper on the subject, investigating the possibility of central banks minting their own cryptocurrencies.
Bitcoin’s appeal, compared to gold, comes from two factors. First, it can be used as a easy medium for payments (for a limited but growing number of transactions), which gold cannot replicate. And with their limited supply of 21 million, bitcoins are likely to attract higher demand compared to gold.
The debate over the supremacy of gold versus bitcoin will continue. What we can say with certainty is that we cannot use gold to buy bitcoin directly but bitcoin can be used to buy gold. You can decide which you prefer.
Late in 2016 Senegal’s Banque Regionale De Marches announced the launch of the eCFA Franc; a cryptocurrency for the countries of the West African Monetary Union – Senegal, Cote d’Ivoire, Benin, Burkina Faso, Mali, Niger, Togo and Guinea-Bissau. This and similar innovations mark the coming of age of a new generation of applications – an Internet of Intelligent Things – that could provide a new infrastructure for economic development across Africa.
The Internet of Things is a network of physical devices, vehicles, buildings and other items. They are equipped with electronics, software, sensors and network connectivity so they can collect and exchange data. There’s wide enthusiasm about spectacular innovations such as Intelligent refrigeratorsand driverless cars. But a quieter revolution is underway in everyday systems and facilities, such as financial services.
More broadly, the new Internet of Things has the potential to compensate for Africa’s legacies of underdevelopment. The key here is the development of the blockchain from a fringe concept into a mainstream digital innovation.
The blockchain and Africa
The blockchain, mostly known as the technology that underpins digital currency Bitcoin, is an almost incorruptible digital ledger of transactions, agreements and contracts that is distributed across thousands of computers, worldwide.
It has the potential to be both foundation and springboard for a new developmental infrastructure.
New blockchain platforms such as Ethereum are supporting the development of distributed applications. These “DApps” can provide accessible ways to use the blockchain. They act like “autonomous agents” – little brains that receive and process information, make decisions and take actions. These new capabilities will have widespread implications when linked to cryptocurrencies through “smart contacts” that are also securely recorded in the blockchain.
DApps provide a practical and affordable means of making Things intelligent and able to interact directly with other Things. They can be programmed to take data-informed actions without human intervention.
These innovations will have particular benefits across Africa. Economic growth is underpinned and enabled by appropriate financial services. Early internet-based innovations such as Kenya’s M-PESA have clearly demonstrated the appetite for accessible, Internet-financial services. But many small and medium businesses are still restricted. Their owners usually can’t access standard loan financing. Banks will not extend credit facilities without traditional title deeds to land and buildings, or a conventional payslip.
Don and Alex Tapscott have shown in their recent book that the new blockchain can be “the ledger of everything”. A house can become an intelligent entity registered on a secure, distributed database once it’s tagged with a geospatial reference and sensors that monitor its continuing existence.
The owner of the asset can, through an Ethereum-based smart contract, secure a loan to expand a start-up enterprise. Intermediary arrangements become unnecessary. Economist Hernando de Soto has suggested this could create “a revolution in property rights”.
Water and energy
Property and financing aren’t the only areas where the new Internet of Intelligent Things has the potential to compensate for Africa’s legacies of underdevelopment.
Economic growth also depends on affordable and reliable services like water and energy. Water is an increasingly scarce resource in many parts of Africa. This is particularly true in cities. Rapid population increases are making old precepts of urban planning redundant.
Technology can help. Autonomous agents positioned across all aspects of water reticulation systems can monitor supplies of potable, storm and waste water. These “little brains” can take appropriate actions to detect and report damage and leakage and close off supply lines. Smart devices can also monitor water quality to detect health hazards. They can regulate and charge for water consumption.
Similarly, for the supply of energy, smart devices are already being deployed across conventional and ageing power grids in other parts of the world. In Australia, for instance, intelligent monitors detect when an individual pole is in trouble. They then report the fault and call out a repair crew. They can also communicate with other poles to redirect the supply and preserve the grid’s integrity.
In parallel with conventional supply systems, new digital technologies can enable full integration with renewable sources of energy and the intelligent management of supply at the household level. The new blockchain is designed for secure peer-to-peer transactions combined with incorruptible contracts between multiple parties. Individual households can manage their own supply and demand to incorporate self-generated energy. A house equipped with a simple windmill and a roof made up of photovoltaic tiles could sell surplus power to a neighbour in need. They could also buy from another house to meet a shortfall.
Such microgrids are already in development. The combination of ubiquitous and affordable bandwidth and low cost autonomous agents could bring affordable energy to communities that have never enjoyed reliable electricity supply.
A new infrastructure built up in this way could be a springboard for economic development – from small enterprises that would have the resources to take innovations to scale, to significant household efficiencies and increases in consumer purchasing power. As has been the pattern with previous digital technologies, costs of production will fall dramatically as the global market for intelligent things explodes. That which seems extraordinary today will be everyday tomorrow.
So what’s standing in the way?
It’s not the technology that’s holding Africa back from embracing the Internet of Things. Rather, it’s the established interests in play. These include state enterprises and near-monopolies that are heavily invested in conventional systems, local patronage networks and conventional banks, and the failure of political vision.
What’s needed is effective public policy and business to ensure that the potential of this next wave of digital innovation is realised. Government and civil society innovators need to be directing much of their attention here.
This is why the West African Monetary Union’s cryptocurrency initiative is encouraging. It’s a step towards the future that Don and Alex Tapscott envision; a move towards an Internet that’s driven by the falling costs of bargaining, policing, and enforcing social and commercial agreements.
In this new space integrity, security, collaboration, the privacy of all transactions will be the name of the game. So too will the creation and distribution of value. And that’s great news for Africa.
The tech revolution is coming to advertising. Chatbots are replacing humans, big data threatens our privacy, and the blockchain is linking it all together. In our series on tech and advertising, we’re taking a look at how the industry is being reshaped.
While technology has been making more devices “smart”, and we carry phones with all sorts of sensors, these haven’t yet been systematically applied to advertising’s central problem – engagement. The blockchain, however, will make advertising much smarter.
Traditional advertising – think of posters on bus stops and TV commercials – is easy to ignore and its effectiveness is hard to measure. Even online advertising has problems measuring engagement. But with the blockchain, advertisers will be able to tap into the data in our devices, automatically pull together multiple sources of information, and even offer rewards to consumers.
What is the blockchain again?
Think of the blockchain as a kind of a public spreadsheet. This spreadsheet is stored simultaneously on a bunch of different computers and is encrypted.
When someone transfers a Bitcoin (or anything else you’re trading on the blockchain) the transaction is verified by all of the computers, encrypted and added to the spreadsheet, where everyone can see. The encryption and transparency are what make the system secure.
Bitcoin and other cryptocurrencies, such as Ripple XRP and Ether, sit on top of the blockchain. They can be used as currencies, transferred between people just like normal money. Or they can be used as a kind of token, the transfer recorded to signify when something has been exchanged.
A computer program known as a smart contract has evolved out of this system. It can execute specific actions when predefined conditions within the blockchain are fulfilled – such as automatically paying a farmer when crops are delivered. But smart contracts could also have huge implications for advertising.
Advertising is going to be more complex
Advertising in the age of blockchains and smart contracts will be something more like an ecosystem. Information and value will flow and be captured in numerous directions. Using smart contracts, many different entities and data streams will be brought together.
Let’s imagine Jane sees an advertisement for a pair of shoes on her smartphone. The advertiser asks that, in exchange for Bitcoin, she reveal her identity by turning on her camera and taking a selfie. She must also allow the advertiser to access her SIM and verify with the phone company that it is indeed Jane who owns the phone. The advertiser would also like to know where Jane is located using the Google Maps application on her phone.
Individually, none of these actions are new. What will be new is having a smart contract to tie it all together.
At the initiation of this advertising effort, the parties involved in the smart contract are Jane, the advertiser, the phone company and Google. A predefined reward (in the form of Bitcoin) promised by the advertiser will be released to Jane only once all parties fulfil their part of the contract. Jane must take a selfie and send it to the advertiser, the phone company must confirm with the advertiser that Jane indeed owns the phone used to take the selfie and Google must release Jane’s location to the advertiser.
There are a few implications from this example.
Consumers like Jane will now be empowered to choose whether they want to give up their privacy in exchange for something. Jane could choose to block Google Maps from revealing her location, for example.
Advertisers will know exactly how consumers interact with their ads. By specifying actions for Jane to perform, like taking a selfie after watching an ad, advertisers will overcome the crucial problem of not being able to verify whether people are actually paying attention.
They will also know whether consumers have adhered to every part of the agreement. If Jane does not allow Google Maps to reveal her location, the advertiser will be aware of this and may release only some of her reward. This is an efficient and cost-effective method of piecing together the profiles of customers.
Finally, the blockchain will enable advertisers to capture value they could not previously, because they could not track or measure interaction with ads.
For example, let’s say the advertiser’s request is more ambitious, and Jane decides to reveal she is using a cab from company X and dropping by cafe Y to pick up a latte before going to the shoe store. The original advertisement has now generated value not only for the advertiser but also for those other entities.
Using the blockchain means all parties will have access to information about what happened. The advertiser could collaborate with other companies like cab company X and cafe Y to boost business. They could even demand those companies chip in to cover the costs.
A few years off
At this point we must go through a reality check.
While some parts of this picture are already being experimented with – Nasdaq has built a marketplace to buy and sell advertising on a blockchain, and others are building the tokens to sit on top – technologically and politically we are still sorely lacking.
There are also many digital blind spots that, like missing links among security cameras, allow some actions to go unobserved and unaccounted for during the advertising process.
But it is possible that in the future, once the infrastructure and our societies have caught up, every digital device will be connected to a blockchain-like system so that all digital actions are accounted for. When that happens, advertisers won’t know what hit them.