Front Page News: April 6, 2015

Good morning Pine Tree Republic citizens! In our Front Page News features, I share 3-5 of the top news stories from the past week and discuss the broader global context in which they occurred. Each post concludes with questions to follow in the coming days and weeks to better understand how today’s news shapes tomorrow’s world. As always, please share your thoughts on these and other stories of the week in the comments section.

This week’s stories include record drought in California, a Chinese-led international development bank, challenges to the political order in the United Kingdom, and a new artist-led digital streaming service.

1. California’s Drought Goes from Bad to Worse“, by Ivan Semeniuk (Globe and Mail)

Source: Huffington Post

Source: Huffington Post

The Story: On April 1, California Governor Jerry Brown imposed mandatory cuts of 25 percent in the water that municipalities can use. Far from being an April Fool’s joke, the cuts reflect an extreme drought that has been building up across the state over the past several years. The statistics are stark – over most of the past year, the state received 60 percent less rainfall than it typically receives for that period. Meanwhile, because of low precipitation and hotter temperatures, the amount of snow on the state’s Sierra Nevada Mountains was only 5 percent of its normal level as of April 1. With this natural reservoir of water all but decimated ahead of the state’s hot summer, agricultural and domestic users will have to increasingly rely on the state’s groundwater sources – which, in many cases, are themselves becoming dangerously depleted. Consequently, activities and products requiring large amounts of water – from maintaining lawns and golf courses to growing water-intense crops – are likely to become increasingly scarce.

California’s Central Valley is the largest U.S. supplier of a wide range of food crops, cereal crops,  vegetables, fruits and nuts. And whether it’s tomatoes, grapes, strawberries, or melons, it all depends critically on water.”

Context: Given California’s prominence in American political, economic, and social systems – not to mention global systems – its worsening drought will likely lead to a multitude of spill-over consequences. California’s farmers are already struggling with dwindling water supplies, and will likely be the target of future restrictions if the drought continues to worsen. This is leading to higher prices for crops and cattle feed, which, since California’s is a top agricultural state and exporter, will be passed on to consumers across the United States and the world. As has been previously documented, higher food prices disproportionately affect societal groups that are already living on the margins, thus further increasing societal strain and instability. But California’s importance is not limited to serving as a supplier of food; it is also a destination for a large proportion of America’s legal and illegal immigrants, many of whom start out in water-intensive industries, such as agriculture and landscaping. With these industries facing increasing financial challenges, the drought may start reshaping human migration patterns, with more people choosing to move to other U.S. states, or returning to countries of origin – potentially increasing the strain on governments who have not properly prepared for this influx. At the same time, California’s perpetual budget crises will likely be saddled by further costs associated with installing emergency water measures and managing the increasing epidemic of wildfires plaguing the state and the broader region. California is often said to be at the forefront of American trends, and this may indeed be a warning bell of how climate change will be reshaping the Western United States in the near future.

2. “Ottawa Misses Deadline to Join China-Backed Asian Infrastructure Bank“, by Kim Mackrael (Globe and Mail)

Source: oroyfinanzas.com

Source: oroyfinanzas.com

The Story: China is launching a new international institution known as the Asian Infrastructure Investment Bank (AIIB), envisioned as a significant source of funding for development projects across the vast range of Asian economies. The country had set a deadline of March 31 for other nations to join the Bank as founding members, giving them a role in shaping the structure and rules that will govern how it operates. While over 40 countries have signed on as founding members, including Germany, France, and the United Kingdom; other countries, including the United States, Canada, and Japan, have declined to join at this point, possibly over concerns regarding how much influence China will have in how the bank’s funds are disbursed. While there may be future opportunities to join the AIIB once the structure and governing rules are clarified, some experts worry that missing this week’s deadline will limit the extent to which Canada will be able to help shape this emerging institution.

It’s a very fluid game today. Everything is changing very fast and there’s a lot of uncertainty. So if someone stands still, then already they are losing, because others are moving forward.” – Yves Tiberghien, Senior Fellow, Asia Pacific Foundation of Canada

Context: China’s leadership of the AIIB poses an interesting foreign policy challenge for Canada, and indeed many other Western nations. While Canadians have deservedly taken pride over their country’s important role in building the international institutions that have shaped the post-World War II era, including the United Nations, World Bank, and International Monetary Fund, these organizations were largely shaped by similar Western, industrialized countries. Now, as China and other Asian countries are gaining influence in the world economy and international politics, the international institutions of the future are bound to increasingly reflect the perspectives of these developing countries. This is clearly a challenge for the United States, which is used to “calling the shots” when it comes to large, international initiatives; but it is also unclear what role Canada should play in this evolving international order. The AIIB has the potential to powerfully influence the political and economic development of Asian countries through its lending power, so Canada’s absence from its governing body is notable. As Kim Mackrael points out, Canada may yet benefit economically and politically by joining the bank once it has been further developed, but this would represent a marked shift from its traditional role as a builder of international institutions. It is also worth noting that the government’s silence on this question may be a reflection of former Foreign Minister John Baird’s recent departure from government at a crucial time for Canadian foreign policy, as he was believed to be on of the key Conservative Party leaders advocating for a closer relationship with China.

3. “Once-Fringe Parties Set to Play Kingmakers as Britain Heads to Polls“, by Mark MacKinnon (Globe and Mail)

Source: CNN

Source: CNN

The Story: The United Kingdom kicked off a 40-day election campaign this past Monday, with the traditional mainstream Conservative and Labour Parties now sharing the stage with special interest political parties, including the Scottish Nationalist, UK Independence, and Green Parties. For the first time since World War II, there is a distinct possibility that one of the mainstream parties will need the support of at least one of the special interest parties to form a governing coalition, with the potential to significantly alter the United Kingdom’s international policies. In particular, the Scottish Nationalist Party, which advocates for Scotland’s independence from the U.K., and the U.K. Independence Party, which advocates for the UK’s independence from the European Union, seem best-positioned to garner enough votes to play a “kingmaker” role in the next government.

The election seems likely to confirm a long-term drive by British voters away from the two main parties and toward movements such as UKIP, the SNP and the Green Party that were once considered the political fringe.”

Context: At first blush, this election seems like a classic example of the hypothesis that Europe’s national and trans-national forms of government, with their wieldy bureaucracies and difficulties in mediating conflicting demands from diverse demographic groups, are ill-equipped to govern in the 21st century. On the one hand, the British parties that have typically sought to focus political power at the national and European levels – the Conservatives, Labour, and Liberal Democrats – are slowly losing support from a British electorate that sees lacklustre European economic growth and an inability to solve the world’s grand foreign policy challenges (including the United Kingdom’s involvement in the troubled Iraq War). Meanwhile, political parties that are challenging this arrangement, either by advocating for independence from the UK (the Scottish Nationalist Party) or independence from Europe (the UKIP), have shot up in popularity since the last UK election in 2010. This also comes on the heels of French regional elections the previous week, in which the far-right Front National party enjoyed its best ever results in local elections.

However, to take these polls at face value and predict the weakening of the UK and EU would underestimate the resilience of these political systems. Canada faced a somewhat similar situation in 2008, when the separatist Bloc Quebecois party nearly swept election results in Quebec, forcing the Conservatives into an uneasy loose “coalition”. By the next elections in 2011, the Bloc had nearly been wiped off the map. To be sure, results in each election were largely influenced by individual political personalities and inter-party politics, but that in itself suggests that challenges to the established state order may not be as deep-seated as they initially appear. In the United Kingdom, the relative electoral success of either the SNP or UKIP may paradoxically undermine their ultimate goals by forcing existing systems to adapt. If the SNP were to earn a place at the governing table and influence government policy, it might unwittingly demonstrate that Scotland can exert greater influence within the UK federation. If the UKIP were to be part of a governing coalition with the Conservatives, the questions it raises about the legitimacy of the European Union (along with challenges to the EU across the continent) may spur EU institutions to rethink how they can better reflect evolving concerns among its member states. In any event, the upcoming UK elections may serve as another wake-up call that the post-World War II European order must adapt to survive the next 50 years.

4. “Jay Z Reveals Plans for Tidal, A Streaming Music Service“, by Ben Sisario (The New York Times) and “Jay Z’s New Streaming Service: A Tidal Wave or A Ripple on the Beach?” by Josh O’Kane (The Globe and Mail)

Source: Billboard.com

Source: Billboard.com

The Story: This past Monday, entertainment mogul Jay Z announced plans for his new music streaming service, called Tidal. Competing with the likes of Spotify, Google, and (soon) Apple, Tidal will offer music enthusiasts access to digital music content as part of a tiered subscription model. However, Jay Z’s proposal differs from his competitors in three main aspects: (1) musicians themselves, including megastars Kanye West, Taylor Swift, and Jack White, will be part owners of Tidal; (2) there will be no free trial version of Tidal; and (3) Tidal will offer a basic subscription for typical compressed audio quality, and a premium subscription for CD-like audio quality. As Josh O’Kane notes in his article, Monday’s announcement of this new model was short on details, but several music industry insiders are already betting on Jay Z’s successful business track record to shake up the digital music industry.

 Jay Z’s plan is the latest entry in an escalating battle over streaming music, which has become the industry’s fastest-growing revenue source but has also drawn criticism for its economic model. Major record labels, as well as artists like Taylor Swift, have openly challenged the so-called freemium model advocated by Spotify, which offers free access to music as a way to lure customers to paying subscriptions.”

Context: While a story about the digital music industry may seem out of place for Front Page News, this story is illustrative of an important broader shift in how we access and consume digital information, whether that information comes in the form of news, video, or music content. In just a few short years, each of these industries have evolved from selling tangible products in stores (think of newspapers, DVDs, and CDs), to downloading specific content online for free or a small fee, to a “streaming” model where users pay a monthly subscription fee to access a broad database of content (whether it comes in the form of news website subscriptions, Netflix, or music entertainment sites e.g. Spotify and Tidal). On the one hand, this shift simplifies the task of individual consumers by aggregating a large amount of content in one place; on the other hand, it also concentrates the power to control who has access to what content in the hands of a very small number of digital streaming companies. In the old “tangible” system, the information that an individual could access depended on a host of different entities, including competing record labels, owners of shops large and small, a multitude of radio stations and newspapers that had different tastes and biases, and a host of other influencers that made the distribution of information inefficient, but also highly variable (e.g. a music store in Seattle would feature different music than a music store in New York). In the “streaming” system, access to content is largely controlled by a very small number of streaming companies, each of which use their proprietary algorithms to decide the content that will be featured for each individual. On the surface, Jay Z’s Tidal service is an attempt to ensure that this system benefits artists by giving them a stake in controlling this distribution system, but it is as yet unclear whether only the most well-known artists will reap the most benefit, or whether lesser-known artists will also have an ownership stake in Tidal. An even greater unknown is how the shift to a streaming model across multiple industries will affect the diversity of content we access, and who ultimately controls this access.

Questions for Discussion:

  • What are some potential consequences of California’s drought, both for the state and others that depend on it?
  • How should Canada position itself in a world in which institutions will likely be increasingly influenced by Asian and other developing countries?
  • What does the potential rise of special-interest parties in the United Kingdom hold in store for the future of Europe? How resilient are Europe’s institutions?
  • How does the transition to a “streaming” model for digital information affect the type of content we access?

I look forward to reading your comments and perspectives on this week’s news.

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