The Telematic Society

Roger Williams looks to learn lessons from the past, to help plot the future of our industry 

THE TELEMATIC SOCIETY, A CHALLENGE FOR TOMORROW, was written by the now deceased James Martin and first published in 1978 under the title, The Wired Society. From 1978 until 1986, I managed Venture Capital funds in the U.S, culminating in my own fund. The Telematic Society was, in part, my bible during that time. I paid $16.02 for the book and I have no doubt that it was the best investment of my life.

Here is a prediction from the book; remember this was written in 1978: “The pocket terminal has an almost endless range of applications. It can access many computers and data banks via the public data networks….The public regard it as a companion which enables them to find good restaurants, display jokes on any subject, book airline and theatre tickets, contact medical programs, check what their stockbroker has to say, send messages, and access their electronic mailbox.”

Martin wrote this six years before the first mobile phone the Motorola DynaTAC 8000X – was purchased in 1984. Although, a facsimile machine existed, home computers were unheard of and the Internet was something that was born from research scientists at Universities in the USA and UK, including Tim Berners-Lee, exchanging information and not born as a public resource until 1990.

It shows that forecasting big things, like the smartphone, can be done. What it doesn’t show, is that predicting the timing is impossible. With this proviso, I am going to give you three big predictions:
■ Universal income, that is people being paid without being employed, will become the norm in Western society.
■ Robotic, computer controlled electric cars and trucks will completely replace self-drive, combustion engine cars and trucks.
■ Leisure activities will be the focus of peoples’ lives and self-education will become a driving force and a cause for division in society. Shooting any living creature will cease as a sport.

I suspect I will not live long enough to see all of these but in the shorter term, there are more pressing changes.

Eurozone growth is falling. In the first quarter of this year, it is down from 0.7 per cent in the three months to December last year to 0.4 per cent. This slowdown mirrors the UK which had growth of 0.1 per cent in the first quarter, down from 0.4 per cent in the final quarter of last year. Both the Eurozone and the UK can point to the cold weather and early Easter as factors.

There is little comfort to be gained from the continuing high unemployment in the Eurozone which was a stubborn 8.5 per cent in March,

unchanged from February and over twice that in the UK or U.S. Within the Eurozone, there is a wide spread of economy activity. Germany has unemployment of 3.4 per cent while Greece exhibits 20.6 per cent. This does not appear to insulate Germany; a Dusseldorf think tank has said that the economic outlook for Germany is deteriorating with alarming speed: “The danger of recession has increased markedly.”

Moves by France’s President Macron to get German support for a Eurozone bailout fund akin to the International Monetary Fund, speaks volumes about the trouble brewing.

In the UK, the Governor of the Bank of England, Mark Carney warned that interest rates might not rise in May, although rates are on the way up he cautioned that the precise timing was in doubt. This, in part, must be because of the poor retail sales, which were down 1.2 per cent in March compared with February. His comments weakened the pound against both the Euro and the Dollar.

Can We Do This?

The U.S Federal reserve is continuing to drain liquidity as it contracts its balance sheet removing the effect of quantitative easing at a rate of $30 billion a month in April which will rise to $50 billion a month in September. This, coming at a time when US companies are repatriating funds following the new U.S corporate tax code, is draining the pool of dollars available for global lending. To put it in perspective, it is estimated that U.S companies had $2.5 trillion of funds offshore and that offshore dollar debt now totals some $25 trillion. This unprecedented level of U.S dollar debt means that the world financial system is more sensitive than ever before to moves in U.S rates and the value of the dollar.

In this environment, America is still benefitting from its self-sufficiency in oil and gas, removal of the oil glut and a $73 oil price and also the estimated impact of the tax reform. Its economic adversary China is fighting substantial falls in economic activity, delayed effects of credit curbs and an estimated 12 per cent fiscal deficit. The U.S is waging economic war and, having exported its some problems by having huge balances of non-resident dollars, it can manage its economy in a way that is beneficial domestically but damaging to China and its other trading partners.

This is not a benign world economic environment and for the UK gun trade, is not helped by the changing nature of the high street. Outside of the big cities, the towns in which there are sporting gun shops, are seeing their retailers and bank branches closing. Cash machine numbers are falling as branches close and banks are paid less for each transaction. Retail shop are acting as loss-leading showrooms for Internet selling.

In this environment it is important that all businesses ensure they have the correct system to accept payments. Internationally, there is increased volatility in exchange rates, regulations and sanctions. Don’t be caught out by see-sawing currencies or suddenly imposed sanctions. Avoid trade with counties heavily involved in armed conflict in the Middle East especially if they are sanctioned by the U.S or EU.

At a UK level, do not have just one bank. The problems of the TSB are a warning to all customers that it is not sensible to have just one banking relationship. Increasing growth of computer- banking, focus on Internet-banking and removal of branches has meant that you need a working account in reserve, should your main account fail. Both Lloyds and NatWest have had regional systems problems and you need to be prepared for a problem in accessing your funds and in accepting payments.

Banks at their best are fair weather friends and at their worst can destroy your business. Make sure you have an alternative.

Lastly, cash is increasingly becoming a burden for retailers. Outside the major cities, you may end up in a long queue at the post office to pay it in. The last thing you want is even more incentive for thieves to break-in to your premises. Furthermore, with falling numbers of cash machines and branches, customers with cash will be fewer. Make sure you can accept credit and debit cards and, the wider the range you accept, the more likely you are to win the sale. It will also enhance your online business.

Keep your systems up-to-date and ensure your cyber security is up-to-date. A security company, EEF conducted a survey of approximately 170 manufacturers in the UK and 48 per cent said they had been impacted by a cyber attack. If you are a retailer, discuss security with your card service provider and understand your risks and what they will cover. All businesses should regularly, review insurance cover for both fraud and cyber attack. Be prepared.

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