Mobile phones basically haven't progressed since the Nokia 1110

It's the pinnacle of phones. Why try harder, asks Jacob Strauss.

There is a woman looking at me. I see her in the corner of my eye as I browse through t-shirts in a clothes shop. A glance over to her tells me that it’s not me but the thing in my hand that is inviting this attention. Her tone is of callous sarcasm; “nice phone”.

I may not be used to hearing this from complete strangers, but the general sentiment of this comment is often directed at me and my Nokia 1100. People regularly offer remarks when they see the strange old-fashioned device, usually something along the lines of how this isn’t the ‘90s anymore.

Like most phones from that early era of mobile technology, the Nokia 1100 does not have many of the features that we expect from something that fits in our pockets today. It doesn’t have a camera, access to the internet, a music player, a GPS, a touch screen or even a colour screen. But while smartphones boast all of these things and much more, I still think that the classic Nokia represented the peak in development of mobile phones.

The universally recognisable Nokia 3210, released in 1999, was the first mobile not to have a visible external aerial on the handset. This feat of technology may seem unimpressive now, but it created a phone that was actually “mobile”. We now had a pocket-sized device with which we could make phone calls and send text messages. Since this day – the golden age of mobile phones – all other technological advances have only really equipped the archetypal Nokia model with unessential extras.

The classic Nokia may not be able to do everything a modern phone can, but it does what it does very well. Firstly, they are incredibly reliable. When smartphones crash, they crash hard. A friend recently spent a whole day trying to bring his new Nokia Lumia back to life after it decided to stop working, but even after two separate trips through the washing machine and countless drops onto hard surfaces, my Nokia is still in a perfect working condition.

On top of this, classic Nokias have amazing battery lives (I charge mine about once a week), all the necessary apps (Calculator, stopwatch, alarm clock and reminders. You don’t need any others), and, for entertainment, Nokias offer the best game there is: Snake.

That list may appear small in comparison to what a smartphone offers, but I can’t see how much, if anything, the mind-blowing technology that has been piled into our phones has done to improve our lives. In fact, they’re worse than nothing: smartphones have an actively negative influence.

Smartphones make communication and entertainment so easy that real-life social interaction becomes the hard option and thus declines. And, as we can all testify, even when a smartphone-owner is reluctantly drawn from the virtual world into a social situation, their attention is constantly sucked back by beeping alerts and flashing lights.

Despite this dependence, outside the dark recesses of today’s youth, there aren’t many who would argue that their smartphone constitutes a necessity for life. When I present my argument against the superiority of the smartphone to people, their response is generally something like “but it just makes life easier, doesn’t it?” This, to some extent, I can see. Why carry around a camera, an iPod and a phone when you could own one device that operates all these functions? Who needs to own and know how to read maps when you have something in your pocket that will direct you anywhere? What could be more useful than having the internet – the entire accumulation of human knowledge – at one’s finger tips at all times?

So yes, maybe smartphones do indeed make life easier. But how easy do we want life to be? The day when we can fulfil all human activities – eat, sleep, earn, shop, reproduce and excrete – without leaving our high-tech toilet chair is not a day towards which we strive. Without some challenges, there isn’t much left.

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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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