After Scotland …Federal Europe?

So…Scotland remains in the UK but just under half the population want to leave.  This could be seen as the worst result. Like telling your spouse you hate them, but will stay together for the sake of the kids. That is not a basis for a very happy relationship. The worst thing about the last two weeks has been the uncertainty about the future, and that uncertainty is still there overshadowing any decisions businesses make in the future. The upside, from Scotland’s point of view, is that there will be a massive devolution of powers in their favour. All other separatist movements around Europe take note: the louder the wheel squeaks, the more grease it gets.

The independence debate has been cast a battle between emotion and reason: heart vs. head. The ‘yes’ campaign has made emotional appeals about Scottish tribalism while the ‘no’ campaign has marshalled economic arguments about currencies, bank debt and trade and political arguments about constitutions and EU membership. The two sides could be crudely categorised as an enfranchised local community swayed by populism and a distant metropolitan elite who believe that “nanny knows best”.

The situation has some parallels to what has been happening in Thailand in the battle between the red shirts and the yellow shirts. The red shirts are the numerically superior rural poor whose votes are strongly influenced by populist measures and pork barrel politics. The yellow shirts represent the well-educated urban elite who believe they know what is best for the country. They call themselves Democrats, but still struggle to accept the verdict of the majority because they believe it has been tainted by vote buying and corruption. Street protests by the two sides and government gridlock led to a military coup in May this year.

In 5th century Athens, the birthplace of democracy, there was no such conflict because there was no universal suffrage; only ten percent of the populace had the vote. Your views only counted if you were a land-owning male citizen over the age of 35. Slaves, foreigners, women and youths were all excluded. In fact, if you look for the modern state that most closely matches this ideal of Athenian Democracy today, the surprising answer is China. Some ten percent of the population are members of the Communist Party who conduct a vigorous internal debate before deciding on the future path for the country. What is more, when it comes to economic growth, the system seems to work.

Be that as may be, it is a mistake to view the aspirations of the Scottish nationalists as irrational emotionalism. In fact, there is a quite rational argument for Scottish independence and for all the other separatist movements throughout Europe, which can be summed up as ‘eliminate the middleman’, the middleman in this case being the traditional Nation State.

The essence of the conflict is right there in the name, conjoining the two different concepts into a single descriptive term. The word ‘nation’, from the Latin natio (to be born), implies an interrelated community; a tribe of interwoven families. The word ‘state’ derives from the word estate implying ownership, controlled assets, and power. The nation state faces the threat of being pulled apart into its catataxic components. There is a pull downwards into smaller regional units that better reflect communal identities. This gives a stronger voice to local cultures who feel disengaged from national level politics as evidenced by falling voter turnout across Europe. There is also a pull upwards towards a supranational entity, namely, the EU. Many of the world’s current problems are global in nature and cannot be solved on a national basis. Consider the following list: global warming, corporate tax dodging, banking regulation, global free trade agreements, the Ebola plague outbreak and the threat from Islamic terrorists such as ISIS. All these issues are best solved at a supranational level. A strong argument can be made that defence and security issues sit better at an EU level than a national one. The current crisis in the Ukraine is best countered by a robust response from the whole of the EU (or NATO) rather than by individual countries.

In this three level structure, the bottom level gives a greater degree of democratic representation while the top level gives better economies of scale and ‘safely in numbers’. What need therefore for the middle layer – the nation state – which fulfils neither function very effectively?

This vision of the nations of Europe being dismembered into smaller regional entities under the overarching umbrella of the EU has been regarded with horror by the UK with its tradition of strong control from Westminster. Since it is similar to the current German model of federated states or lander, it is often summed up by the phrase “Federal Europe“ .

What would such a Federal Europe look like? It may come as some surprise to find out that it already exists, at least in the minds of the bureaucrats in the EU’s office of statistics. If you go online to examine the Eurostat database you will find the EU has been gathering economic data on a federal basis since the year 2000. The UK has been divided into 12 federal regions (three of which are Scotland, Wales and Northern Ireland) under an EU devised scheme known as “Nomenclature d’Unités Territoriales Statistiques” which is normally shortened to the acronym NUTS (yes, really!).

Take a look at the map below. It shows the federal regions of Europe (NUTS 1) scaled by GDP. In other words, the size of each region corresponds to the size of its economy while the colour shows the average annual growth rate from 2000 to 2011. There are some interesting points to note:

1. The UK’s growth rate looks poor relative to the rest of Europe. These figures are denominated in Euros and Sterling’s 20% devaluation in 2008 made a big negative impact.
2. Things which are small tend to be green. In other words, smaller regions tend to grow faster. This may be because a common market tends to drag up laggards and is further exaggerated by the fact that EU development funds tend to be channelled to impoverished regions.
3. It’s not just Scotland. There are a lot of other regions that would like to be independent in Europe. All regions with an established separatist movement have been outlined with a purple border.
4. Many of these proposed breakaway states are larger economic units than existing EU countries (eg Latvia, Slovakia, Luxembourg with bold black borders) which offers some support for their viability.
5. The names of the regions have in some cases been changed from a dry bureaucratic definition to something more culturally resonant. For example, South West England becomes Wessex, Romania Region 1 becomes Transylvania and North Region Poland becomes Pomerania.

Map of Federal Europe

It is easy to dismiss such a map as a bureaucratic fantasy dreamt up by statisticians who wish the untidiness of the real world could be neatly filed in appropriate pigeon holes. The dividing lines are arbitrary and in many cases merely drawn to create administrative units of similar size. The resistance to any such devolution from existing nation states would be so great as to be almost insurmountable. Many powerful entities invested in the current status quo would have much to lose. But at the same time, countries who decry the encroachment of the ‘unelected’ EU as an offense against democracy may find the same argument turned against them. After Scotland’s surprising vote, how many other European countries will allow an independence referendum? And if they do not, will their democratic credentials be tarnished?

There is another way of viewing the data that avoids the artificial segmentation of bureaucratic regions. This is to go one level deeper and look at cities rather than regions. Cities, particularly in a service economy, are the true engines of economic growth. A few decades ago, it was the common view that manufacturing industries caused clustering because of the requirement to have parts suppliers in close proximity. In contrast, it was thought that service industries, freed from the drudgery of the daily commute by teleconferencing, the internet and mobile communications, would spurn the cities in favour of a better quality of life in the countryside. In fact, the opposite has happened. The service sector, particularly in high tech, clusters together in cities to a greater extent than manufacturing does. This is mainly due to a happy blend of convenience and hedonism. For the service sector, the people are the product so meetings with clients and suppliers are even more important. In cities, meetings are easier to organise (convenience), there are great restaurants (hedonism), and internet connections are much faster (both!).

If you look at the second map, you will see a map of Europe by city, this time based on population. The size of each circle is proportional to the number of people living in the greater urban zone (both the city and its suburbs). Any urban centres with less than a million people have been omitted. In this view, London and Paris are in a dominant position while Brussels and Amsterdam are showing the fastest growth. Turkey is not currently part of the EU, although if it is admitted at some time in the future it would make a major impact.

CityState

These two maps, then, show two possible futures for Europe. One where increasing devolution favours smaller regional communities and one in which a post-industrial Europe echoes its pre-industrial, medieval past with powerful city states playing the dominant role. Or maybe it might be both. Either way the outlook for the traditional nation state does not look too rosy.

Barcelona’s Human Towers

I visited Barcelona for the first time this summer. The city has everything: fantastic food, great museums, Gaudi’s astonishing architecture, vibrant night life and, best of all, miles of sandy beaches. But this sybaritic urban magnet has a dark past. Situated at the fault line between France and Spain, the city has been fought over and occupied by many different armies over the centuries. Founded by the Carthaginian general Hamilcar Barca (father of Hannibal ‘of the elephants’), it was conquered by the Romans in the 1st Century BC, followed by the Visigoths (5th C), the Moors (7th C), the Carolingians (9th C) until finally coming under the unified Spanish crown in 1469. Barcelona backed the wrong side in the the War of Spanish Succession and the city was sacked in 1714 when the Bourbons defeated the Habsburgs and then ended up on the losing side yet again in the Spanish Civil War (1936-39). It suffered greatly in the subsequent period of General Franco’s rule and it was not until 1977 that Barcelona finally regained a degree of freedom when Catalan autonomy was restored.

This history of suffering at the hands of more powerful neighbours has bred a strong sense of local identity. Catalan culture, with Barcelona at its centre, has been forged through centuries of resistance to external oppressors and, as a result, is community oriented, suffused with a self -reliant creativity and an independence of spirit. This is evident in the very fabric of the city, composed of 10 different districts each with its own distinct character. Different neighbourhoods compete with each other in a rolling series of cultural festivals, in which local idiosyncrasies are expressed almost on a block by block basis. When I visited, the Grazia barrio was having its local festival. Turning a corner, I came across a sight that is such a perfect physical encapsulation of Catalan culture that it received UNESCO protection in 2010. It was a tall tower, built not of brick or stone but of people.

Barcelona’s “Castellers” compete in teams marked by different coloured shirts to see who can build the tallest ‘human tower’. At first, there is nothing to see. A crowd packed together and milling around in a urban square. Then a few hands go up, wrists wrapped in cloths of the appropriate team colour. More hands go up and then clasp together to form a rigid unit, and soon there are a hundred or so people locked together making a solid circular platform of humanity. Then, magically, a tower begins to arise spontaneously from the crowd. Men in groups of 3 or 4 standing on each others’ shoulders form the bottom stories. Crawling up their backs come the women and children adding new layers to the tower in turn and supported at the base by the pushing of the crowd. Then, at the end, an infant with elven grace scrambles to the very top to make a final flourish to the attendant judges.

  Castellers in Barcelona

The photos I took don’t do it justice. Seeing this human tower arise majestically from the massed populace, you are struck with a deep and resonant communal emotion. The same feeling in your gut as at a football match or rock concert but with a greater sense of purpose and a more satisfying consummation. This human edifice is a tangible expression of the will of the many as one; a spontaneous stalagmite of flesh; a priapic obelisk of collective zest.

Culture is a bottom-up phenomenon. It arises from below and can not be imposed from above. This is the truth to which Barcelona’s human towers bear testament. It is also a truth that many corporate organisations struggle with. Senior managers who want to change a corporate culture from above, often find the task close to impossible. New policies can be written, new procedures and guidelines can be published but they are more often than not ignored. These sort of prescriptive rules are only scratching the surface. One layer beneath this are the ‘core values’ to which an organisation subscribes, expressed in a corporate vision or mission statement. They often express banal sentiments such as ‘customers first’ , which ring hollow when you observe what is actually happening at the coal face. If you were to spend a morning sitting on a typical sales desk you might soon learn that doing a profitable deal is more important than customer satisfaction and that meeting this quarter’s sales target is more important than long term performance. These are the tacit assumptions, learnt from the peers and colleagues sitting next to you, that truly define corporate culture; it’s all about what is happening at the bottommost rung of the corporate hierarchy.

Part of the problem with the whole concept of corporate “culture management” is the assumption that it can actually be managed. In this paradigm, the company is viewed as a machine, with the manager as an engineer. Culture is seen as a mechanical part of an organisation that that can be reengineered and manipulated at a manager’s whim. Workers who resist are clearly either too ‘stupid’ to follow simple instructions or suffering from some sort of psychological maladjustment.

This mechanical model, the corporation as a perfectible Swiss watch, is deeply flawed. Culture is not something that a company has, it is something that the company is. So the appropriate paradigm is not a mechanical one but a biological one. Viewed from this perspective, workers who resist prescriptive policies are not psychologically ill, but creative problem solvers who have found an optimal pathway through a series of conflicting environmental pressures. Much as cells evolve in a Darwinian way in response to their surroundings, workers synthesise the conflicting messages from different parts of the organisation (HR, compliance, immediate boss, top management, customer support, etc) to come to a unique resolution that optimises all those inputs.

This is true both at the organisation wide ‘macro’ level and also in the microcosm of information security. Professor Angela Sasse, who runs the Information Security Group at UCL, has been exploring these ideas in a number of influential papers* which examine the conflict between the “top down” policies imposed by Information Security departments and “bottom up” user activity. She advocates a new approach to cyber protection which she terms “Shadow Security”.

A good example of this issue is corporate password policy. A common complaint from a company’s information security department concerns ‘stupid’ users who can’t remember their passwords and so write them down on post-it notes and stick them to the bottom of the screen. Corporate policy mandates long passwords made from a combination of numbers, symbols and capital letters which should be changed on a regular basis. The problem is that human memory does not work that way. The more frequently we do something the better we remember it, and we remember things with meaning better than a random string of symbols and numbers. A typical response from a user is “I was forced to change my password every month, so I had to write it down to remember it”. The user has found a workaround that resolves the conflict between an unrealistic corporate directive and the fundamental job requirement to do work on PCs. Some company’s are requiring bid bonds to protect them and the buyers.

The unintended consequence of the password change policy is to actually reduce computer security. Far better, in Professor Sasse’s view, to observe what users are actually doing and then build information security policy around that. One definition of stupidity is continuing to do the same old thing while expecting different results. This password problem has been the bane of information security for the last 30 years. So maybe it’s not the users but the information security department that is being stupid. Surely it’s time to try something new…