The electronic bureaucrat - Economist.com

Putting their services online should allow governments to serve their citizens much more effectively. But despite heavy spending, progress has been patchy, says Edward Lucas (interviewed here)

AT 6.15AM on a December morning the streets of central London are cold, dark and offer little for the omnipresent CCTV cameras to record. But outside the Indian High Commission 109 people are sleepily waiting for the visa section to open. David Robb and his friend are first in line, huddled in sleeping bags behind a windbreak since 3am, to ensure visas for a planned holiday in Goa. Nearly all his fellow-sufferers in the queue have booked their air tickets and sometimes their entire holiday on the internet, paying with a credit card. Those electronic signals move information almost at the speed of light—billions of times faster than the shuffling, shivering humans in the visa queue. “In this day and age? Bleeding disgusting,” is Mr Robb's pithy comment on the Indian visa system.

It is not just that the passport and its owner must be physically present. The £30 ($60) fee must be in cash; the visa form must be filled in by hand and authenticated with a signature and a photograph (a hard copy, not a digital file). The procedure has scarcely changed in 60 years. The 500 people waiting at 8.30am, when the visa office opens, should get their visas by noon, though on busy days stragglers may be told to collect it the next day. Applying by post is possible, but may take weeks.

Compare that with another queue forming in Grosvenor Square, a brisk 20-minute walk across London. Procedures at America's fortress-like embassy are even more stringent, requiring all visa applicants to present themselves in person, with no postal option. But here the procedure is backed up by intelligent use of electrons. Applications must be submitted online, accompanied by a non-refundable $131, paid electronically. In return, the applicant receives a confirmation e-mail, which includes a barcode with the information from the completed form. Printed out, it is also the entry ticket to the embassy, controlling outsiders' access to one of the main terrorist targets in London.

Inside, the barcode is scanned, putting the data onto the visa officer's computer. Fingerprints are digitally recorded. The visa itself, collected shortly afterwards, has banknote-style security features, plus a scanned picture of the applicant.

In some ways the differences are smaller than they seem. Under both systems, absurd questions are asked but the answers are never verified. India wants to know if you have relatives in Pakistan; America wants to know whether you were ever arrested for anything anywhere, and if so, why (your correspondent, detained several times by communist-era secret police, brazenly fibbed).

But in a few nutshells, visa services also illustrate some of the big issues about technology and government. First, processing power and good software can make government more user-friendly and sometimes also more efficient, but technology on its own cannot compensate for the mistakes of bureaucrats and politicians. Second, the state has to balance convenience against effectiveness, the outsider's time versus the taxpayer's money and the bureaucrat's effort. Technology may sharpen these problems or ease them, but it cannot eliminate them altogether.

Believers in technology's potential in public administration often speak of e-government, or of “transformation”. The practicalities are sometimes vague, but the big picture is clear: government not only puts its services online, but in doing so changes the way it works.

Most countries have got at least somewhere on this, chiefly in what might be called i-government: the provision of information. India's downloadable visa application form represents that stage. Progress is also being made on using the internet's potential for interaction. America's visa system goes some of the way by getting the applicant to key in the data.

The internet is also being used inside government to share data among departments. That is easier to do with non-citizens than with voters, who may be touchy about their privacy being invaded. The next stage will be to provide the whole service online. For visas, that would mean something printed out by the applicant, downloaded onto a smart card or even stored in a mobile phone (an example of “m-government”—same service, different delivery). At the same time, technology should also make it easier for politicians to connect with their voters (“e-democracy”).

George Markellos of PA Consulting, a British-based consultancy, says that government needs to start by making three big changes. First, it needs to personalise what it offers, rather like online shopping services which record customers' preferences, making their next visit easier. Second, it has to provide round-the-clock access. People want to deal with government not only in office hours, but also in the evenings and at weekends. And lastly, public services have to be as easy to use as anything the private sector offers. In the online world, government is competing for users' time and attention with beautifully designed sites that are fun to use. The government's offering, says Mr Markellos, “has to be massively attractive”.

Yet comparisons with the private sector get you only so far. Government rarely faces competition and public services seldom come at market prices. More often they are “free” or subsidised, and their use needs to be policed or rationed. The state provides its “customers” with defence, justice and roads, and usually some public services such as health care, education, pensions and transport, plus some support for the poor. But it is also the steward of scarce public resources and the preserver of public goods such as law and order. In keeping track of wrongdoers, actual and potential, being user-friendly is not crucial. New technology makes it easier to collect taxes but it does not make them any more welcome.

The state's role as a watchdog is something that the grumbling queues outside embassies have to bear in mind. Tough visa procedures undoubtedly deter businessmen and tourists from visiting, but the visa is the way that the state protects its citizens from undesirable outsiders. Similarly, issuing passports and driving licences is never going to be as easy as getting a loyalty card from a retailer.

This report will argue that technology can give politicians and officials a better idea of what the public wants and how to provide it, just as it has done in the private sector. But just as the private sector's adoption of new technology involved a number of pitfalls, some e-government ventures have been ill-starred. Citizens are right to be suspicious about technology that can make government all-encompassing, and they should demand a lot more of government as a monopoly provider of public services.

Technology on its own will not bring reform, but it can make changes easier, cheaper and more effective. The learning curve has not been nearly steep enough, but governments are getting better at buying and using computers and software. The benefits are mounting and the costs are coming down.

The benefits will be biggest in countries where officials and politicians are open to pressure and where the citizens are public-spirited to start with. E-government is no magic bullet, but it gives citizens and lobby groups more power to scrutinise government and highlight waste and dishonesty.

It's everywhere

Although hopes have been high and the investment has been huge, so far the results have mostly been disappointing. That reflects a big difficulty in e-government (and in writing about it): it touches on so many other things. What exactly is it that public organisations are trying to maximise, and how can it be measured? Ask the economists. What motivates officials and politicians to make government honest and competent? Bring in the political philosophers. And who decides on the highly contested trade-offs between privacy and security, efficiency and equity?

This report will explain that gloom, fear and optimism are all justified. It will look at the return on investment so far, the hoped-for gains and the neglected drawbacks of e-government. It will show how good leadership, openness and competition can bring spectacular gains, and how bad planning and political interference can make technology in government an expensive disaster. It will look at the dangers of government-run databanks and how to lessen them, and the way in which poor countries such as India may be able to leapfrog rich ones in their use of technology. It concludes by asking if e-democracy makes politics more participatory, or merely noisier. But it starts with an incontestable success: i-government.

Getting serious - The Economist

Computing: Virtual worlds are being put to serious real-world uses—and are starting to encounter some real-world problems

IT IS a typical example of the colonisation of a new frontier. A few intrepid explorers stake out some new, unexplored territory. Before long the first settlers move in and start to look for ways to make a quick buck. Their success attracts more settlers, and an unruly bonanza ensues; finally the policemen, lawyers and tax collectors show up. But the territory in question is not a new continent: it is the realm of cyberspace, where two developments suggest that virtual worlds are coming of age. The first is the emergence of commercial uses for virtual environments; the second is the advent of litigation and regulation.

Many of the serious uses of virtual worlds were on show at a conference held in September at Coventry University in England. Aptly, people could also take part in the conference by visiting an online re-creation of the university's Serious Games Institute, where they could chat with other participants and watch presentations. David Wortley, the institute's director, says half those attending did so this way. The focus of the conference was the application of computer-game technologies and virtual environments to real-world business problems.

<A TARGET="_blank" HREF="http://ad.doubleclick.net/click%3Bh=v8/3670/3/0/%2a/m%3B36321810%3B0-0%3B0%3B7057544%3B799-350/300%3B17002217/17020112/1%3B%3B%7Esscs%3D%3fhttp://www.economistsubscriptions.com/ecom517/global"><IMG SRC="http://m1.2mdn.net/711766/250x250_1.gif" BORDER=0></A>

With the popularity of virtual worlds such as Second Life and games such as “World of Warcraft” and “Sims Online”, companies, academics, health-care providers and the military are evaluating virtual environments for use in training, management and collaboration. Superficially, such uses look a lot like playing a video game. “The thing that distinguishes them from games is the outcome,” says Mr Wortley. Rather than catering to virtual thrill-seekers, the aim is to find new ways for people to learn or work together.

Blitz Games, for example, the firm behind “Karaoke Revolution” and other games, has applied its technology in a rather more serious field: the development of a medical-triage simulator. The idea is to use it to train paramedics, doctors and firefighters in prioritising care immediately after a disaster. “We are simulating the scene of an explosion on a high street,” says Mary Matthews of Blitz's TruSim division. Players observe the virtual patients and gauge their respiration, pallor, bleeding and level of distress; then they use this information to determine which of them is in greatest need, all against the clock. Each player's performance is scored according to an industry-recognised training protocol. Real-life exercises could achieve the same objective, but the simulated environment cuts costs and improves access.

The same technology can also be used to simulate the more mundane environment of an office. PIXELearning, a British company based in Coventry, has developed a simulator for a big international accounting firm in order to train interns who are fresh out of university. The role-playing simulator lets them develop their skills by interacting, for example, with a difficult client who is being aggressive on pricing. This is invaluable, says Kevin Corti, PIXELearning's boss, because it allows them to make mistakes before being unleashed on a client. Similarly, a big American bank is using PIXELearning's simulator for “diversity and inclusion” training.

Cisco, an American network-equipment giant, is using virtual worlds to improve internal collaboration, says Christian Renaud, the company's “chief architect of networked virtual environments”. Such environments are used to host meetings and to create virtual workspaces for employees who may be part of the same team but spread out over half a dozen countries. The hope is that the use of virtual worlds, rather than more structured forms of communication such as e-mail or conference calls, will make serendipitous meetings more likely and interpersonal networking easier. Holding business meetings in a simulated environment is not quite as glamorous as the depictions of virtual reality found in science fiction. But it makes a change from the usual drab meeting rooms.

Here comes trouble

It is not just office workers who are taking their first steps into virtual worlds. So too are lawyers, as disputes in such environments spill over into real-world lawsuits. Such disputes often concern the trade in virtual goods and services, which are bought and sold for real money. In some countries lawsuits over virtual goods are already common. Unggi Yoon, a judge in the Suwon District Court in South Korea, estimates that Korean courts have heard nearly 300 cases of fraud and more than 60 relating to hacking in virtual game-worlds. Similar fights have broken out in American courts, too. So much for escapism. “I have heard from other players that the element of fun in the game has been diminished by thinking of all these legal issues,” says Sean Kane, a virtual-worlds specialist at Drakeford & Kane, a law firm in New York.

Real-world trade in virtual items is allowed in virtual worlds that are intended to simulate reality, such as Second Life and Entropia Universe. And it has been going on for years among players of “massively multiplayer online” role-playing games such as “World of Warcraft”, “EVE Online” and “Lineage II”, even though such trading is banned in many game worlds, since it upsets the competitive balance if some players buy weapons or armour rather than earning them in the game. “We don't allow real-money trades in our games because we think it creates an unfair advantage to those who are trying to play the game as it was created to be played,” says a spokesman for NCsoft, the maker of “Lineage II”.

In practice, however, preventing trade in virtual items is difficult, and several dedicated trading platforms have emerged to enable players to buy and sell in-game items. One of the biggest, IGE, based in Hong Kong, is now being sued by a “World of Warcraft” player who claims it has spoiled his online fun. Mr Kane says the value of virtual items traded hit $1 billion in 2006. Dan Kelly, the boss of Sparter, a trading platform based in Menlo Park, California, says that figure will double this year.

With such large sums at stake, it is not surprising that other unpleasant aspects of real life are starting to appear in virtual worlds too. In May two players were banned from Second Life for depicting sexual activity between an adult and a child. Eros, a company that sells sex-related add-ons in Second Life, filed a lawsuit in July against an inhabitant of the virtual world for selling unauthorised copies of its SexGen bed, which facilitates sex between in-game characters. “When you have a community that is an extension of Newark, eventually you will have the ills of Newark going on,” says Edward Castronova, a virtual-worlds expert at Indiana University. Some people think the very nature of virtual worlds can inspire bad behaviour. Such environments provide “anonymity along with a lack of social recourse,” notes Gus Tai, a venture capitalist at Trinity Ventures in California's Silicon Valley.

Second Life
Just like the real world in some respects—but not others

Bad behaviour is not the only problem. The growing value of commerce in virtual worlds has provoked interest from the taxman, too. Governments in America, Britain and Australia have all said they are considering a new tax on real-world profits from virtual trade. Mr Castronova is aghast. “Monopoly is not a very fun game if I have to pay a tax every time I buy Boardwalk,” he says. South Korea actually imposed such a tax in July.

One way to deal with unwanted activity, in virtual worlds as in the real one, is to decriminalise and regulate it, rather than trying to outlaw it altogether. That is the approach taken by Sony Online Entertainment (SOE), the company that runs “EverQuest II”, a fantasy world of dragons and busty blondes. It found that some 30-50% of customer-service calls concerned scams relating to real-world trade in virtual items. So it divided the game world in two and made trading legal in one part but not the other; players can choose which to play in. As a result, says Greg Short of SOE, the share of calls relating to scams is now less than 10%.

Despite these problems, things are not really so bad, argues Dan Hunter of New York Law School, who is writing a book about the social significance of virtual worlds. “If you look at the numbers, there are so few events of fraud and problematic activity,” he says. Robin Harper of Linden Lab, the firm behind Second Life, agrees. “Social networks, online auctions, classifieds and even the internet itself have all encountered issues of appropriate content, taxation and the use of intellectual property,” she says. “If anything, we are proud that against this backdrop, there are relatively few disputes.”

As with any novel technology, virtual worlds bring new opportunities and new problems. The embrace of virtual worlds by companies for mundane uses on the one hand, and by scam artists to get up to no good on the other, points not to the shortcomings of such environments—but to their increasing maturity and potential. “I don't think this is the end to fun and games,” says Mr Kane. “I think it's only the beginning.”

Goldman Sachs Rakes In Profit in Credit Crisis - New York Times

For more than three months, as turmoil in the credit market has swept wildly through Wall Street, one mighty investment bank after another has been brought to its knees, leveled by multibillion-dollar blows to their bottom lines.

And then there is Goldman Sachs.

Rarely on Wall Street, where money travels in herds, has one firm gotten it so right when nearly everyone else was getting it so wrong. So far, three banking chief executives have been forced to resign after the debacle, and the pay for nearly all the survivors is expected to be cut deeply.

But for Goldman’s chief executive, Lloyd C. Blankfein, this is turning out to be a very good year. He will surely earn more than the $54.3 million he made last year. If he gets a 20 percent raise — in line with the growth of Goldman’s compensation pool — he will take home at least $65 million. Some expect his pay, which is directly tied to the firm’s performance, to climb as high as $75 million.

Goldman’s good fortune cannot be explained by luck alone. Late last year, as the markets roared along, David A. Viniar, Goldman’s chief financial officer, called a “mortgage risk” meeting in his meticulous 30th-floor office in Lower Manhattan.

At that point, the holdings of Goldman’s mortgage desk were down somewhat, but the notoriously nervous Mr. Viniar was worried about bigger problems. After reviewing the full portfolio with other executives, his message was clear: the bank should reduce its stockpile of mortgages and mortgage-related securities and buy expensive insurance as protection against further losses, a person briefed on the meeting said.

With its mix of swagger and contrary thinking, it was just the kind of bet that has long defined Goldman’s hard-nosed, go-it-alone style.

Most of the firm’s competitors, meanwhile, with the exception of the more specialized Lehman Brothers, appeared to barrel headlong into the mortgage markets. They kept packaging and trading complex securities for high fees without protecting themselves against the positions they were buying.

Even Goldman, which saw the problems coming, continued to package risky mortgages to sell to investors. Some of those investors took losses on those securities, while Goldman’s hedges were profitable.

When the credit markets seized up in late July, Goldman was in the enviable position of having offloaded the toxic products that Merrill Lynch, Citigroup, UBS, Bear Stearns and Morgan Stanley, among others, had kept buying.

“If you look at their profitability through a period of intense credit and mortgage market turmoil,” said Guy Moszkowski, an analyst at Merrill Lynch who covers the investment banks, “you’d have to give them an A-plus.”

This contrast in performance has been hard for competitors to swallow. The bank that seems to have a hand in so many deals and products and regions made more money in the boom and, at least so far, has managed to keep making money through the bust.

In turn, Goldman’s stock has significantly outperformed its peers. At the end of last week it was up about 13 percent for the year, compared with a drop of almost 14 percent for the XBD, the broker-dealer index that includes the leading Wall Street banks. Merrill Lynch, Bear Stearns and Citigroup are down almost 40 percent this year.

Goldman’s secret sauce, say executives, analysts and historians, is high-octane business acumen, tempered with paranoia and institutionally encouraged — though not always observed — humility.

“There is no mystery, or secret handshake,” said Stephen Friedman, a former co-chairman and now a Goldman director. “We did a lot of work to build a culture here in the 1980s, and now people are playing on the balls of their feet. We just have a damn good talent pool.”

That pool has allowed Goldman to extend its reach across Wall Street and beyond.

Last week, John A. Thain, a former Goldman co-president, accepted the top position at Merrill Lynch, while a fellow Goldman alumnus, Duncan L. Niederauer, took Mr. Thain’s job running the New York Stock Exchange. Another fellow veteran trader, Daniel Och, took his $30 billion hedge fund public.

Meanwhile, two Goldman managing directors helped bring Alex Rodriguez back to the Yankees, a deal that could enhance the value of Goldman’s 40 percent stake in the YES cable network — which it is trying to sell — while also pleasing Yankee fans. The symmetry was perfect: like the Yankees, Goldman, more than any other bank on Wall Street, is both hated and revered.

Robert E. Rubin, a former Goldman head, is the new chairman of Citigroup. In Washington, another former chief, Henry M. Paulson Jr., is the Treasury secretary, having been recruited by Joshua B. Bolten, the White House chief of staff and yet another former Goldman executive.

The heads of the Canadian and Italian central banks are Goldman alumni. The World Bank president, Robert B. Zoellick, is another. Jon S. Corzine, once a co-chairman, is the governor of New Jersey. And in academia, Robert S. Kaplan, a former vice chairman, has just been picked as the interim head of Harvard University’s $35 billion endowment.

Since going public in 1999, Goldman has been the No. 1 mergers and acquisitions adviser, globally and in the United States, with two exceptions: in 2005 it came in second in the United States rankings, and in 2000 it lost the top spot globally. In both instances, Morgan Stanley took the lead, according to Dealogic.

Goldman, of course, has made its share of mistakes. It took among the most serious write-downs in the third quarter on loans that were made to private equity firms, totaling $1.5 billion. The firm runs one of the largest hedge fund operations in the world, but its flagship funds — funds whose investors include marquee Goldman clients and employees — have had two years of abysmal performance. Clients are expected to redeem billions of dollars of capital at the end 2007.

But Goldman’s absence from the mortgage debacle and the strong performance of its other businesses made up for the write-down associated with the loans. The firm reported $2.85 billion in profit in the third quarter, up 79 percent. Mr. Moszkowski estimates that investment and commercial banks in the United States have taken $50 billion in write-downs related to mortgages, with more coming; Mr. Blankfein said at a conference last week that he expected to take none.

Goldman’s business is built on taking risks, both for itself and its clients. In recent years, Goldman has established the largest private equity and real estate fund complexes in the world. That has led to natural tensions with private equity clients who sometimes complain, but never publicly, about Goldman’s common insistence to team up with them for a piece of the deal.

“Goldman has done the best job of any firm in the U.S. or world competing with their clients but doing business with them,” said one client who asked not to be named because he does business with the firm. “They’ve managed to get their clients to live with it.”

Still, this bottom-line approach has turned off some Goldman veterans and clients. They see the firm’s desire to advise, finance and invest — a so-called triple play — as antithetical to Goldman’s stated No. 1 business principle of putting clients first.

And there is little question that its success in trading, investment banking and servicing hedge funds — many of the traders come right from Goldman — allows the firm a bird’s-eye view on trends and capital flows in the market.

Numerous Goldman investment bankers, former and current, voice the view that Mr. Blankfein’s approach — using Goldman’s investment banking business to develop principal investment opportunities for the firm — creates a brand intended to feed Goldman’s profits rather than relationships. But this harking back to the firm’s golden days as a pure advisory firm does not find much sympathy at Goldman these days.

“I have little patience for these people who talk of the last days of Camelot,” Mr. Friedman said. “Principal investing has been an important and useful business. If you want to be relevant you have to anticipate where the world is going.”

Mr. Blankfein, at the conference last week, echoed that sentiment. “While the integration of our investment banking operations with our merchant bank was somewhat controversial at the time, we felt these businesses were mutually reinforcing,” he said.

Money soothes a lot of concerns, of course, and Goldman has had plenty to spread around. Through the third quarter, Goldman’s $16.9 billion compensation pool — the money it sets aside to pay its employees — was significantly bigger than the entire $11.4 billion market capitalization of Bear Stearns.

Goldman executives and analysts assign much of their success to smart people and a relatively flat hierarchy that encourages executives to challenge one another. As a result, good ideas can get to the top.

But the differentiator that has become clearest recently is the firm’s ability to manage its risks, a tricky task for any bank. Checks and balances must be in place to turn off a business spigot even as it is still making a lot of money for a lot of people. In a world where power gravitates to the rainmakers, that means only management can empower the party crashers.

At Goldman, the controller’s office — the group responsible for valuing the firm’s huge positions — has 1,100 people, including 20 Ph.D.’s. If there is a dispute, the controller is always deemed right unless the trading desk can make a convincing case for an alternate valuation. The bank says risk managers swap jobs with traders and bankers over a career and can be paid the same multimillion-dollar salaries as investment bankers.

“The risk controllers are taken very seriously,” Mr. Moszkowski said. “They have a level of authority and power that is, on balance, equivalent to the people running the cash registers. It’s not as clear that that happens everywhere.”

For all its success on Wall Street, it is Goldman’s global reach and political heft that inspire a mix of envy and admiration. In the race for president, Goldman Sachs executives are the top contributors to Barack Obama and Mitt Romney, and the second highest contributor to Hillary Rodham Clinton. Mr. Blankfein has held a fund-raiser for Mrs. Clinton in his apartment and has come out publicly in her favor.

Another member of Goldman’s influential diaspora is Philip D. Murphy, a retired executive who is the chief fund-raiser for the Democratic National Committee.

All of which has made Goldman a favorite of conspiracy theorists, columnists and bloggers who see the firm as a Wall Street version of the Trilateral Commission.

One particular obsession is President Bush’s working group on the markets, an informal committee led by Mr. Paulson that includes Ben S. Bernanke, the chairman of the Federal Reserve; Christopher Cox, the chairman of the Securities and Exchange Commission; and Walter Lukken, the acting chairman of the Commodity Futures Trading Commission.

The group meets about once a quarter — privately, with no minutes taken — to ensure that government agencies are briefed on market conditions and issues. The group is currently examining the extent to which the packaging and distribution of mortgage loans contributed to the crisis. It also recently completed a study recommending that hedge funds not be subject to further regulation; the group’s fund committee was led by Eric Mindich, a former Goldman trader who now runs a successful hedge fund.

There is no evidence that the conduct of the group is anything but above board. But to some, the group’s existence adds more color to the view that Goldman is indeed everywhere — much as J. P. Morgan was in the early years of the 20th century.

“Goldman Sachs has as much influence now that the old J. P. Morgan had between 1895 and 1930,” said Charles R. Geisst, a Wall Street historian at Manhattan College. “But, like Morgan, they could be victimized by their own success.”

Mr. Blankfein of Goldman seems aware of all this. When asked at a conference how he hoped to take advantage of his competitors’ weakened position, he said Goldman was focused on making fewer mistakes. But he wryly observed that the firm would surely take it on the chin at some point, too.

“Everybody,” he said, “gets their turn.”

Whose language?

By Michael Skapinker

Published: November 9 2007 02:00 | Last updated: November 9 2007 02:00

Chung Dong-young, a former television anchorman and candidate to be president of South Korea, may be behind in the opinion polls but one of his campaign commitments is eye-catching. If elected, he promises a vast increase in English teaching so that young Koreans do not have to go abroad to learn the language. The country needed to "solve the problem of families separated for English learning", the Korea Times reported him saying.

In China, Yu Minhong has turned New Oriental, the company he founded, into the country's biggest provider of private education, with more than 1m students over the past financial year, the overwhelming majority learning English. In Chile, the government has said it wants its population to be bilingual in English and Spanish within a generation.

No one is certain how many people are learning English. Ten years ago, the British Council thought it was around 1bn. A report, English Next , published by the council last year, forecast that the number of English learners would probably peak at around 2bn in 10-15 years.

How many people already speak English? David Crystal, one of the world's leading experts on the language and author of more than 100 books on the subject, estimates that 1.5bn people - around one-quarter of the world's population - can communicate reasonably well in English.

Latin was once the shared language over a vast area, but that was only in Europe and North Africa. Never in recorded history has a language been as widely spoken as English is today. The reason millions are learning it is simple: it is the language of international business and therefore the key to prosperity. It is not just that Microsoft, Google and Vodafone conduct their business in English; it is the language in which Chinese speak to Brazilians and Germans to Indonesians.

David Graddol, the author of English Next , says it is tempting to view the story of English as a triumph for its native speakers in North America, the British Isles and Australasia - but that would be a mistake. Global English has entered a more complex phase, changing in ways that the older English-speaking countries cannot control and might not like.

Commentators on global English ask three principal questions. First, is English likely to be challenged by other fastgrowing languages such as Mandarin, Spanish or Arabic? Second, as English spreads and is influenced by local languages, could it fragment, as Latin did into Italian and French - or might it survive but spawn new languages, as German did with Dutch and Swedish? Third, if English does retain a standard character that allows it to continue being understood everywhere, will the standard be that of the old English-speaking world or something new and different?

Mr Graddol says the idea of English being supplanted as the world language is not fanciful. About 50 years ago, English had more native speakers than any language except Mandarin. Today both Spanish and Hindi-Urdu have as many native speakers as English does. By the middle of this century, English could fall into fifth place behind Arabic in the numbers who speak it as a first language.

Some believe English will survive because it has a natural advantage: it is easy to learn. Apart from a pesky "s" at the end of the present tense third person singular ("she runs"), verbs remain unchanged no matter who you are talking about. (I run, you run, they run; we ran, he ran, they ran.) Definite and indefinite articles are unaffected by gender (the actor, the actress; a bull, a cow.) There is no need to remember whether a table is masculine or feminine.

There is, however, plenty that is difficult about English. Try explaining its phrasal verbs - the difference, for example, between "I stood up to him" and "I stood him up". Mr Crystal dismisses the idea that English has become the world's language because it is easy. In an essay published last year, he said Latin's grammatical complexity did not hamper its spread. "A language becomes a world language for extrinsic reasons only, and these all relate to the power of the people who speak it," he wrote. The British empire carried English to all those countries on which the sun never set; American economic and cultural clout en-sured English's dominance after the British empire had faded.

So could China's rise see Mandarin becoming the world's language? It may happen. "Thinking back a thousand years, who would have predicted the demise of Latin?" Mr Crystal asks. But at the moment there is little sign of it, he says. The Chinese are rushing to learn English.

Mr Graddol agrees that we are unlikely to see English challenged in our lifetime. Once a lingua franca is established, it takes a long time to shift. Latin may be disappearing but it remained the language of science for generations and was used by the Roman Catholic church well into the 20th century.

As for English fragmenting, Mr Graddol argues it has already happened. "There are many Englishes that you and I wouldn't understand," he says. World Englishes , a recent book by Andy Kirkpatrick, professor at the Hong Kong Institute of Education, gives some examples. An Indian teenager's journal contains this entry: "Two rival groups are out to have fun . . . you know generally indulge in dhamal [a type of dance] and pass time. So, what do they do? Pick on a bechaara bakra [poor goat] who has entered college." Prof Kirkpatrick also provides this sample of Nigerian pidgin English: "Monkey de work, baboon dey chop" (Monkeys work, baboons eat).

It is unlikely, however, that this fragmentation will lead to the disappearance of English as a language understood around the world. It is common for speakers of English to switch from one or other variantto a use of language more appropriate for work, school or international communication. Mr Crystal says modern communication through television, film and the internet means the world is likely to hold on to an English that is widely understood.

The issue is: whose English will it be? Non-native speakers now outnumber native English-speakers by three to one. As hundreds of millions more learn the language, that imbalance will grow. Mr Graddol says the majority of encounters in English today take place between non-native speakers. Indeed, he adds, many business meetings held in English appear to run more smoothly when there are no native English-speakers present.

Native speakers are often poor at ensuring that they are understood in international discussions. They tend to think they need to avoid longer words, when comprehension problems are more often caused by their use of colloquial and metaphorical English.

Barbara Seidlhofer, professor of English and applied linguistics at the University of Vienna, says relief at the absence of native speakers is common. "When we talk to people (often professionals) about international communication, this observation is made very often indeed. We haven't conducted a systematic study of this yet, so what I say is anecdotal for the moment, but there seems to be very widespread agreement about it," she says. She quotes an Austrian banker as saying: "I always find it easier to do business [in English] with partners from Greece or Russia or Denmark. But when the Irish call, it gets complicated and taxing."

On another occasion, at an international student conference in Amsterdam, conducted in English, the lone British representative was asked to be "less English" so that the others could understand her.

Prof Seidlhofer is also founding director of the Vienna-Oxford International Corpus of English (Voice), which is recording and transcribing spoken English interactions between speakers of the language around the world. She says her team has noticed that non-native speakers are varying standard English grammar in several ways. Even the most competent sometimes leave the "s" off the third person singular. It is also common for non-native speakers to use "which" for humans and "who" for non- humans ("things who" and "people which").

Prof Seidlhofer adds that many nonnative speakers leave out definite and indefinite articles where they are required in standard English or put them in where standard English does not use them. Examples are "they have a respect for all" or "he is very good person". Nouns that are not plural in native-speaker English are used as plurals by non-native speakers ("informations", "knowledges", "advices"). Other variations include "make a discussion", "discuss about something" or "phone to somebody".

Many native English speakers will have a ready riposte: these are not variations, they are mistakes. "Knowledges" and "phone to somebody" are plain wrong. Many non-native speakers who teach English around the world would agree. But language changes, and so do notions of grammatical correctness. Mr Crystal points out that plurals such as "informations" were once regarded as correct and were used by Samuel Johnson.

Those who insist on standard English grammar remain in a powerful position. Scientists and academics who want their work published in international journals have to adhere to the grammatical rules followed by the native English-speaking elites.

But spoken English is another matter. Why should non-native speakers bother with what native speakers regard as correct? Their main aim, after all, is to be understood by one another. As Mr Graddol says, in most cases there is no native speaker present.

Prof Seidlhofer says that the English spoken by non-native speakers "is a natural language, and natural languages are difficult to control by 'legislation'.

"I think rather than a new international standard, what we are looking at is the emergence of a new 'international attitude', the recognition and awareness that in many international contexts interlocutors do not need to speak like native speakers, to compare themselves to them and thus always end up 'less good' - a new international assertiveness, so to speak."

When native speakers work in an international organisation, some report their language changing. Mr Crystal has written: "On several occasions, I have encountered English-as-a-first-language politicians, diplomats and civil servants working in Brussels commenting on how they have felt their own English being pulled in the direction of these foreignlanguage patterns . . . These people are not 'talking down' to their colleagues or consciously adopting simpler expressions, for the English of their interlocutors may be as fluent as their own. It is a natural process of accommodation, which in due course could lead to new standardised forms."

Perhaps written English will eventually make these accommodations too. Today, having an article published in the Harvard Business Review or the British Medical Journal represents a substantial professional accomplishment for a business academic from China or a medical researcher from Thailand. But it is possible to imagine a time when a pan-Asian journal, for example, becomes equally, or more, prestigious and imposes its own "Globish" grammatical standards on writers - its editors changing "the patient feels" to "the patient feel".

Native English speakers may wince but are an ever-shrinking minority.

Singapore's graduates leap into work

As the job market becomes more competitive, MBA graduates need to "sell themselves," to clinch top jobs globally.

Michael Melcher, a New York partner with Next Step partners, who has conducted training workshops with a number of Ivy League universities, says focusing on soft skills can add value to a student's appeal.

"I've worked in a lot of top schools in the US and Europe, and most of the MBA students need a fair bit of work. Most of them have made huge investments, time and money to get a MBA degree. But most do not know how to market themselves," adds Mr Melcher.

"So we need to work on their soft skills, to help them tell their story to the employers in a convincing manner. At the end it doesn't matter whether you come from Asia or the US, you need to transcend your local levels, and be able to have a global impact."

This is especially true to the MBA students coming out of Singapore, who are a blend of local and foreign graduates. Even though the buoyant economy coupled with a tight labour market has brought about good employment opportunities, the universities admit it is important for their business schools to find quick job placements for their graduates. As a result a lot of resources are channeled into preparing students to be market-ready.

"MBA is an investment. The opportunity costs are high especially for full-time students who quit their jobs. They are looking for a return on investment (ROI), a career progression or a career switch. Thus, through the career services we equip them with soft skills to assist them," says Ms Tan from the NTU business school.

Ms Tay from NUS agrees: "It is who you are and not what school you come from that matters. What we do at the careers services is create an environment where we can prepare our students to be ready for the market. Whether the economic times are good or bad, every company wants the best candidate for the job. We give the students the grounding to articulate their abilities when they meet an employer."

Housewives and contract workers have little savings

CHANGES to the Central Provident Fund will help CPF members retire with more money - but what about those with little or no CPF savings?

Several MPs raised the plight of this group when debating impending changes to the CPF.

For example, housewives, the self-employed, contract workers and odd-job labourers have little or no CPF funds. These groups need extra help from the Government in their old age, said MPs.

Dr Lim Wee Kiak (Sembawang GRC) said some in this group would not be able to afford longevity insurance, which the Government intends to implement.

The plan is for CPF members to set aside a small sum to buy an annuity plan that pays a modest amount when they reach 85, when their CPF savings are likely to have run out.

Dr Lim suggested the Government help co-fund the premiums of people with little or no CPF savings.

Older odd-job workers who did not make regular CPF contributions are another group to be concerned about, said Mr Inderjit Singh (Ang Mo Kio GRC).

Labour MP Halimah Yacob (Jurong GRC) suggested the Government top up housewives' CPF accounts so they can pay for the scheme. 'There are many without the Minimum Sum and women, as we know, live longer than men,' she said. However, she added, she hoped women would not be charged higher premiums.

Dr Ahmad Magad (Pasir Ris-Punggol GRC) suggested giving bonuses to mothers who work part time, so they can top up their CPF.

S'pore will have world's 4th oldest population by 2050

BY 2050, the population in Singapore could be fourth oldest in the world - after Macau, Japan and Korea.

But Singapore is also one of the very few countries tackling the issues of retirement and an ageing population head-on, said Manpower Minister Ng Eng Hen yesterday.

Singapore is greying, and the signs are showing.

He recounted that it is no longer a novelty to meet residents who are in their 80s and 90s during his constituency visits. Foreigners from younger Asean countries are also quick to note the ageing population.

A recent United Nations study confirmed these impressions. It projected the median age of Singapore's population to be 54 years by 2050, behind Macau (56), Japan (55) and South Korea (55).

Said Dr Ng: 'Singaporeans must come to terms with our longevity, both individually and as a nation. And the quicker we do this, the better.'

This means tackling the ageing problem the same way as other national issues - by thinking long term and acting quickly before a problem becomes unmanageable.

The goal, Dr Ng said, is to put in place a better and sustainable Central Provident Fund system that will help Singaporeans save enough for their full lifespan.

But not all Singaporeans recognise they are living longer. Some even think the higher life expectancy has to do with the elderly being 'farm folk' who were born overseas, and not Singaporeans born here, said Dr Ng.

A fact they have to consider is this: There will be fewer working people to shoulder the burden of supporting the elderly.

In 1960, 23 people aged 15 to 64 supported one person aged 65 and above. Now, it is eight people - and by 2030, it will be four people.

While many countries realise they are ill prepared to deal with a population that is ageing, 'not all have been able to act to avoid the impending crisis'.

Some have debated the issue for a long time. Reform commissions such as in France, Ireland and the United States have spelt out what needs to be done.

But in the case of the Irish, its commission failed to agree on a conclusion; China admits it needs to move faster; and pension reform in Italy has been a major stumbling block for successive governments even after 20 years of deliberations.

Then, there are countries that want to postpone the solution to the next generation. Britain, for instance, intends to move its state pension age to 68 - but only by 2046.

Singapore cannot afford to wait so long, Dr Ng said.

'We should not pass these problems of an ageing population to the next generation... Far better to make adjustments now, while we are able and have time on our side. If we wait and are ill prepared, then the consequences for Singaporeans when they are old and dependent will be more painful.'