006Outburst of the black economy

Blue sky Policy Alert 006

FP7 themes health agro ict nano energy environment transport ssh space security
ERA goals mobility infrastucture rtd institutions knowledge sharing  joint programming  cooperation 
Author(s)Joe Ravetz, Rafael Popper, Rob Ashworth, Thordis Sveinsdottir
Contributor(s)David Alexander, Joe Ballantyne, Alastair Brown, Steve Connor, Tony Diggle, Pierre Rossel, Anna Sacio
ManifestationGradual development
Potential impacts in Europe
infrastructures
Moderate
people's lives
Minor
legislation & regulation
Critical
economy & business
Critical
defence & security
Minor
government & politics
Major
environment & ecosystems
Negligible
science & technology
Minor
Importance for EUMajor
Strategic attentionby 2030 Minor  by 2050 Moderate
Type of impactExtremely positive
Inspired byBrainstorming session and group discussions in the iKNOW Workshop in Manchester (February 2010)
Related to
Keywords, , , , ,
 

 

Wild card

National economies start relying on black economies of ICT (cyber crime), finance and carbon credit trading. Dependence on the aforementioned systems has left us vulnerable to the development of a black cyber economy including identity theft, software piracy, hacking/scams and counterfeiting. Also carbon tax evasion may grow and growing energy need vs. decreasing supply may cause a crisis on the energy market- driving it towards a black market system.

 

Surprises ("wild" scenario features)

What would be wild about this card would be the rapid decline of the above mentioned national and legalised systems. Also, this would mean that criminal activity goes global and solidifies into working systems equal to that of the legalised ones. The global CO2 market collapses and governments, businesses and individuals start trading CO2 credits on the black market rather than using the official legalised system. This wild card would also indicate a sudden decline in legality and belief in the legalised systems of the nation states. The rise in black market economy would benefit countries with weak legalised infrastructures and high levels of organised crime. These countries would consequently become bigger players in international politics. The outburst of black carbon economy would destroy the next round of global climate talks which would result in break down of communication about CO2 policy. Climate and environment protection would become organised by organised crime syndicates and these would start protecting the rainforests.

 

Possible interpretations

Possible interpretation of this wild card would be to that black economy systems are more profitable and effective than the traditional systems. A way of interpreting this wild card would also be to look towards claims of the failure of the nation system states to effectively respond to the needs of its people. An extremely positive interpretation would be that the power shifted from governments to other facets of society.

 

Key actors

Key actors related to this wild card, include:
  • Scanners or "early warners" such as police units that work on organised crime and crossnational police agencies such as Interpol and Europol.
  • Shapers (i.e. enablers/inhibitors) : organised crime syndicates, corrupt businesses, and environmental agencies and regulators.
  • Stakeholders positively or negatively impacted include governments, trade groups and international financial markets.

 

Potential impacts

One impact would be that no provision for social welfare or preparedness for disaster as there would be no taxes collected etc. This would therefore provide short term activity and income but long term vulnerability. Public governments go bust and black market syndicates take over systems of trade and business. Shift of power as tax havens and criminal organisations become more prominent as bases of power. Official climate change talks and initiatives would be halted and could result in break down of current CO2 legislation.

  • Policy actions

    Early actions: Incentives to help legal businesses and technology; Further steps to be taken in order to tackle organised crime; More flexibility for the police and legislative institutions in order to effectively fight criminal conduct; Climate policy needs to be designed to prevent criminal powers taking control of carbon trading.

    Early reactions: Governments need to respond quickly to this wild card and come together on an international level to ensure their power; Policy that aims to tackle crime needs to be strengthened.

  • Business actions

    Early actions: Focus on Innovation and alternative business models, technology and environmental solutions in order to strengthen legal ways of doing business.

    Early reactions: Continued focus on innovation and alternative business models, technology and environmental solutions in order to strengthen legal ways of doing business.

  • Research actions

    Early actions: Case studies of criminal activity and corruption; Research on black economy; Research into Alternative energy (e.g. alternative) to avoid energy crisis; Research into alternatives to black carbon economy; Develop a new branch of institutional / behavioural economics / freakonomics.

    Early reactions: Focus on how to bring things back to legality; Case studies of criminal activity and corruption; Research on black economy; Research into Alternative energy (e.g. alternative) to avoid energy crisis; Research into alternatives to black carbon economy.

 

Weak signals

Weak signals to indicate this wild card would be increasing signals of systemic corruption within governments and the financial sector. Increase in organised crime such as cyber crime, drugs, weapons trade along with human trafficking. Also there have been instances where governments and nation states have become almost bankrupt due to lack of financial regulation and legislation (examples: Iceland and Greece) leading to civil unrest, political crises and lack of confidence in government, politicians and the global financial system. A weak signal could be considered the immense size of economies built on illegal activities such as the drugs trade, human trafficking, illegal migration and terrorism. It is estimated that the black and grey economy in the UK can be worth anything from £53bn to £137bn a year according to Professor Talbot at the University of Nottingham, who gave his estimation in 2004. Governments seem to be ill equipped to tackle this economic activity and lack coordination and foresight in this area.

A weak signal for the rise of cyber crime is the increasing number of identity thefts in the wake of massive data collecting at the hands of governments, which is stored on computer networked machines. People’s data is frequently transferred between institutions on discs, which are easily lost, as many examples have shown in the UK. People also willingly post their personal data online where it is easily accessible to criminals. Increase in piracy, online scamming and sophistication of computer viruses and Trojans could also be considered a weak signal for this wild card.

Disclaimer: The wild card presented in this brief may not happen at all or in the near future. iKNOW is a new EU funded research project aimed to explore surprising events (wild cards) and emerging issues (weak signals) potentially shaping or shaking the future of Europe and the world.
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