Drawing a blank on Georgia

The controversy over the missing maps of Georgia, Armenia and Azerbaijan. Was it deliberate? Google

Google maps has been under attack this week from a variety of different parties for what was initially reported as the intentional
blanking of the maps of Georgia, Armenia and Azerbaijan from their database.

The Azerbaijan Press Agency reported that the information was "…removed from the server after the military operations were launched in South Ossetia."

As one might expect this drew harsh criticism from many quarters of the web.

Indeed, a quick visit to the appropriate latlong will reveal a startlingly barren strip of terrain.

Whilst a number of Countries in the region have map data which is greatly reduced in its detail, none are totally blank. The
satellite imagery available on the same site reveals that there’s definitely something there - so what’s going on?

As the blanking of maps might possibly be filed under ‘evil’, Google were rapid to deny the accusation via both its GMaps blog and
the official Google blog itself. Maps product manager Dave Marsh assured readers that Google certainly hadn’t blanked the maps in
response to the hostilities, “Data for these countries were never on Google Maps in the first place.” Marsh states that coverage of those
countries hadn’t been “launched” as yet as they weren’t satisfied with the map data available to them, essentially declaring the whole affair an issue of quality control.

Marsh finishes his post by reporting that the issue has generated a lot of feedback which they are going to learn from. Startlingly, he specifically states that Google Maps users have said they would, “..rather see even very basic coverage of a
country than see nothing at all.”

This was a position that he acknowledges, “..makes sense..”, assuring users that they were starting to prepare data for the blank countries forthwith. He closes by letting pointing users to the Google Earth application, which contains full details of Georgian roads and cities.

Even acknowledging that no deletion of cities has taken place, for a company whose mission is to, ”organise the world's information and
make it universally accessible and useful” this seems like at best like an extraordinarily poorly judged prioritisation. For the company who recently announced it has found a trillion unique URL’s showing surprise that users might prefer even basic information to a totally
blank map seems at least a little suspect.

Iain Simons writes, talks and tweets about videogames and technology. His new book, Play Britannia, is to be published in 2009. He is the director of the GameCity festival at Nottingham Trent University.
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Labour's investment bank plan could help fix our damaging financial system

The UK should learn from the success of a similar project in Germany.

Labour’s election manifesto has proved controversial, with the Tories and the right-wing media claiming it would take us back to the 1970s. But it contains at least one excellent idea which is certainly not out-dated and which would in fact help to address a key problem in our post-financial-crisis world.

Even setting aside the damage wrought by the 2008 crash, it’s clear the UK’s financial sector is not serving the real economy. The New Economics Foundation recently revealed that fewer than 10% of the total stock of UK bank loans are to non-financial and non-real estate businesses. The majority of their lending goes to other financial sector firms, insurance and pension funds, consumer finance, and commercial real estate.

Labour’s proposed UK Investment Bank would be a welcome antidote to a financial system that is too often damaging or simply useless. There are many successful examples of public development banks in the world’s fastest-growing economies, such as China and Korea. However, the UK can look closer to home for a suitable model: the KfW in Germany (not exactly a country known for ‘disastrous socialist policies’). With assets of over 500bn, the KfW is the world’s largest state-owned development bank when its size is measured as a percentage of GDP, and it is an institution from which the UK can draw much-needed lessons if it wishes to create a financial system more beneficial to the real economy.

Where does the money come from? Although KfW’s initial paid-up capital stems purely from public sources, it currently funds itself mainly through borrowing cheaply on the international capital markets with a federal government guarantee,  AA+ rating, and safe haven status for its public securities. With its own high ratings, the UK could easily follow this model, allowing its bank to borrow very cheaply. These activities would not add to the long-run public debt either: by definition an investment bank would invest in projects that would stimulate growth.

Aside from the obviously countercyclical role KfW played during the financial crisis, ramping up total business volume by over 40 per cent between 2007 and 2011 while UK banks became risk averse and caused a credit crunch, it also plays an important part in financing key sectors of the real economy that would otherwise have trouble accessing funds. This includes investment in research and innovation, and special programs for SMEs. Thanks to KfW, as well as an extensive network of regional and savings banks, fewer German SMEs report access to finance as a major problem than in comparator Euro area countries.

The Conservatives have talked a great deal about the need to rebalance the UK economy towards manufacturing. However, a real industrial policy needs more than just empty rhetoric: it needs finance. The KfW has historically played an important role in promoting German manufacturing, both at home and abroad, and to this day continues to provide finance to encourage the export of high-value-added German products

KfW works by on-lending most of its funds through the private banking system. This means that far from being the equivalent of a nationalisation, a public development bank can coexist without competing with the rest of the financial system. Like the UK, Germany has its share of large investment banks, some of which have caused massive instabilities. It is important to note that the establishment of a public bank would not have a negative effect on existing private banks, because in the short term, the UK will remain heavily dependent on financial services.

The main problem with Labour’s proposal is therefore not that too much of the financial sector will be publicly owned, but too little. Its proposed lending volume of £250bn over 10 years is small compared to the KfW’s total financing commitments of  750 billion over the past 10 years. Although the proposal is better than nothing, in order to be effective a public development bank will need to have sufficient scale.

Finally, although Brexit might make it marginally easier to establish the UK Investment Bank, because the country would no longer be constrained by EU State Aid Rules or the Maastricht criteria, it is worth remembering that KfW’s sizeable range of activities is perfectly legal under current EU rules.

So Europe cannot be blamed for holding back UK financial sector reform to date - the problem is simply a lack of political will in the current government. And with even key architects of 1980s financial liberalisation, such as the IMF and the economist Jeffrey Sachs, rethinking the role of the financial sector, isn’t it time Britain did the same?

Dr Natalya Naqvi is a research fellow at University College and the Blavatnik School of Government, University of Oxford, where she focuses on the role of the state and the financial sector in economic development

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