The great white e-bird has landed

This op-ed for The Times, written under New Labour at the turn of the century, satirises its infatuation with IT. That was then…

Has the Government fallen victim to a cargo cult ? Electronic commerce – the buying and selling of goods and services on-line – arrived in the UK years ago, courtesy of American computer companies and, more recently, the Internet. Then, in December 1998, Peter Mandelson’s Department of Trade and Industry announced that the Government’s goal was to make the UK a better environment for electronic trading, by 2002, than any other country on the planet, and that Tony Blair would appoint an ambassador-like Special Representative for the Digital Economy, or e-Envoy. Now Michael Wills, a more durable DTI minister, tells us that world e-commerce could be worth more than a trillion dollars by 2003 (The Times, 19 May). An e-commerce Bill is promised for the summer, and 90 per cent of routine buying by central government is meant to be electronic by March next year. Meanwhile, a select committee has ridiculed the DTI for being more concerned to clamp down on illegal transactions than to encourage the legal sort.

Like some alien but exotic freight, it seems, e-commerce has made the natives of Whitehall go wild.

There are, it’s true, plenty of e-commerce icons to get religious about. In America, eToys, an Internet retailer of children’s toys, just floated on the stock market for $7 billion (£4.3 billion). This is $1.3 billion more than Toys ‘R’ Us is worth, despite the fact that eToys doesn’t sell outside America and lost nearly all the paltry $30 million it made this last financial year. No matter: after books, CDs, travel tickets and financial services, everything from pharmaceuticals to clothes now appears tradable on the Net. But the problem with Government savages’ worship of e-commerce is not just the allure of dazzling share prices on Wall Street. While today’s fireworks can always lead to tomorrow’s fire sales, British sharebuyers can justly celebrate the recent performance of new e-commerce converts such as Dixon’s, WH Smith and BT.

The problem is that the Government does not know what its new God is. The DTI defines e-commerce as ‘using an electronic network to simplify all stages of the business process, from design and making to buying, selling and delivery’. This is fervour of a pantheistic stripe. To design, make and deliver a product or service is an expensive physical matter, in which information technology plays an increasing part. But e-commerce, the forecasts made for it and the stock market bets made on it, relates only to electronic transactions. For the government to lump the two together is to redefine industry as trade. That is a dangerous myth.

Napoleon lambasted Britain as a nation of shopkeepers; now the Government seems bent on vindicating him. Worse, its mentality has serious consequences for the real world of wealth creation. It is relatively easy to buy things over the Net, if you are connected, your browser is sophisticated enough, your credit card is good and your supplier can handle your post codes and phone calls (many American ones are none too hot at handling European communications). But to make, say, supermarket goods, and to pick, pack and despatch them so that they arrive in good condition at the right time, at the right place, and can be returned if they don’t – this is not a matter of electrons nipping back and forth. Praying on your knees to e-commerce is to ignore farming, manufacturing and transport.

There is more. Take music, one of Britain’s much-vaunted ‘cultural industries’. With the advent of a technology named MP3, it’s now possible to receive, over the Web, the music of your choice on a portable device little bigger than a credit card. That’s progress; but will the music conveyed be any better? Alan McGee, founder of Creation Records and a pro-government enthusiast for e-commerce, is not alone in bemoaning the lack of innovation in British rock music. In idolising e-commerce, the government appears blind to the poor content produced by many of this country’s creatives – and the poor content that dogs much of the Web itself.

As far as money today is concerned, e-commerce is more about businesses soberly sending invoices or purchasing requests over old, closed but effective IT networks than it is about consumers ecstatically buying a new song over the Web. But in its New Zeal, the Government prefers to cast out devils from the Web – fraudsters, pornographers and renegade members of the security services. When content is lurid, the Government is interested. Invoking Kosovans, small businesses and those not prosperous, powerful or technologically literate, Michael Wills insists that considerations of equality and social cohesion demand that, legislatively, Something Must Be Done.

It is a seductive argument, but industry is not impressed. Instead of partnership with the Government on quick, reliable ways of doing e-commerce, it is being offered a welter of red tape. There will be licensing schemes, ‘public-key’ decryption, more data protection, tighter control of intellectual property (though of course, this must be ‘affordable and accessible’ at the same time), and impenetrable legalese over ‘electronic signatures’.

A high-tech deity has indeed landed. But while weak economists in grass skirts are over-willing to bow down before it, cannibal regulators want to test the new power over a slow fire.