Category Archives: public policy

public policy

SPEECH: ‘Successful Sri Lanka in a sustainable world’

At the end of November, I had the honour of giving the Keynote speech at the Ceylon Chamber of Commerce Best Corporate Citizen Sustainability Awards 2017. I was there as an affiliate of Good Karma, a Sri Lankan consultancy I’ve had the pleasure of working with this year. You can read my speech below on why economic transformation is inevitable, the best way to win the future is to invent it; and, that Sri Lanka can choose to grow towards a sustainable future.

“Rather than burden our children with our mistakes, we can inspire them with our example.”

 

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10 things I learnt at Oxford Energy Day on ‘Growing Economies’

Last week I was at the annual Oxford Energy Day, which focused on Energy in Growing Economies. Here are ten things I learnt (any errors are mine!).

  1. ’Growing economies’: new name for ‘emerging economies’
  2. Bilions lack access to affordable energy, and that hurts their lives
  3. Decarbonised, Decentralised and Digitalised will make for Democratised energy systems – which we’re not ready for.
  4. Energy is not just electricity, and best to focus on final energy use, not primary production
  5. China assumes it will decouple economic growth from environmental impact
  6. India: a new emphasis on markets and clean energy
  7. Africa: big projects face challenges; distributed more viable; charcoal as quick win
  8. Energy access: from a development problem of basic services to an untapped market opportunity of commercial users
  9. Reaching the ‘under-serviced’ will be highly context specific, and that’s a two-way challenge.
  10. What to do: systemic view crafted for local action, aware of incumbency power.

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QUICK TAKE @IPPR #EconomicJustice launch: great content; worry about impact

Earlier today IPPR launched the interim report of the Commission for Economic Justice. Here’s my quick take on the report and the discussion around the launch.

The basic description of the ‘British economic muddle’ is familiar

While there are no surprises, IPPR and Michael Jacobs have all done us a favour by articulating things so clearly. In a nutshell:

– The economy is no longer raising living standards for a majority of people.

– That poor performance arises from deep, long-term weaknesses, especially:

  • World-lagging productivity in many businesses.
  • Low investment rate compared to peers, even adjusting for our service bias and even with as a world-leading financial sector.
  • Largest percentage current account trade deficit in G7, despite a surplus in trading services.
  • Current activity fuelled by growing consumer debt, in part driven by government refusing to borrow even though interest rates are at all-time lows.
  • We want public services but we’re not willing to pay for them.

– We face profound challenges and opportunities:

  • Brexit – a momentous change in our governance and trading.
  • Globalisation – challenge those trade imbalances.
  • Older population – proportionately fewer workers to finance pensions and healthcare.
  • Technological change – will the gains from automation go to owners, to consumers, to workers?
  • Environmental degradation – including the impacts of climate change.

All of this is supported by many graphs and much discussion. Fantastic.

My further sense from the discussion was just how strong the system archetype of ‘success to the successful’ is in the UK. If you own your home (as I do) then your wealth has gone up, and the ladder to join in has been pulled away from the rest. If you’re a productive business then you get the profits to reinvest further – something the weaker companies don’t do. London enjoys the positive feedback loops of being a world-leader, as does Cambridge and Oxford. Rest of the country? Not so much. Well paid or got a cushion of wealth? Then you can take risks with your career by moving or starting your own business. Don’t have that, then you, relatively, fall further back.

 

Recommendations: too technocratic to be a policy sea change akin to 1940s and 1980s

The report is right that fundamental reforms of this scale have happened twice in the last century: the Attlee government bringing in the Welfare State in 1945; and the Thatcher government overcoming stagflation by pushing free markets and so on.

Both of those were political earthquakes which profoundly realigned what was considered orthodox for the following generation. The recommendations, as they stand, are all good technocratic things to do. But, do they ignite and demonstrate an utter shift in the political economy?

  1. Put economy on stronger institutional foundations, driving more investment through greater certainty.
  2. More competitive through industrial strategy, supporting entrepreneurs and shifting financial and corporate governance.
  3. Wiring the economy for justice, promoting ‘good jobs’, a reformed tax system and spreading wealth more fairly.

Imagine the chant:

“What do we want?”
“Stronger institutions!”
“What do we want?”
“A strategic approach to industry!”
“What do we want?”
“Justice for All (the weaker of the early Metallic albums)!”

Perhaps I’m being unfair on an interim report for a think tank, rather than the conference speech of the opposition leader. But if your lead-off recommendation is stronger institutions, you know you have an economist writing your report.

IPPR’s Director was very clear at the start that, if you don’t have a vision then change becomes directionless. One the first page of the summary there is a paragraph with a description of the economy we’re aiming for: dynamic, people flourish; better jobs; geographically balanced; economics rewards distributed fairly; decent house; within environmental limits; partnership between business, trade union and government sectors.

That’s quite a laundry list of Guardian-friendly desires. Who can say no to motherhood and apple pie? But also, who is compelled to act with a broad vision with such a technocratic way forward?

 

What alignment of social forces is realistically available to make this happen?

Which takes us to the substantive problem. I agree with the analysis. I imagine I will agree with the final recommendations. But, what will happen as a result?

I’ve no idea if Director of the Commission, Michael Jacobs, remembers but about a decade ago he gave a talk at the RSA on what made the reform of the 1940s possible (he was speaking about the need for something similar on climate change). His four preconditions:

  1. intellectual case (back then, Keynes)
  2. crisis (the aftermath of the WWII)
  3. public mandate (the Labour landslide)
  4. elite buy-in (apparently businesses liked the demand support of the Welfare State compared to the free market Great Depression)

Today, the IPPR report (and the work of the Resolution Foundation, plus Tim Jackson’s Prosperity Without Growth  and Kate Raworth’s Doughnut Economics) all make for the intellectual case. in the UK, Brexit will upend everything. That provides us with the crisis to take advantage of.

But the public mandate: Is the UK populace for economic justice, or do they want cultural security? It was striking that the two politicians on the stage couldn’t bring themselves to be pro-immigration. Even though more young workers makes us better off, many fear immigration. They blame it for lower wages and weaker public services (rather than, say, global labour markets for the former and austerity for the latter).

The opinion polls imply people are willing to take a financial hit to take back control of the borders. One thing is: we’ll see if that’s true when people take the hit (there’s often a survey gap in, say, willingness to pay extra for ethical products). Another thing: perhaps this is good news. It means n one can argue that economic cost-benefit is the true measure of a decision.

And on elite buy-in: are leading government and business figures One Nation Tories or do they wanting to complete Thatcher’s revolution? The General Election undermined the One Nation Tories on domestic economic policy. Many of the leading Brexiteers seem to want to use leaving the EU to deregulate and open up for more free trade. (The irony is that this reduces people’s control and will quite likely leave many people even further behind. But hey.)

Also, while there are many business people who are for economic regeneration and so on, how many are willing to voluntarily raise wages? Or give up the negotiating advantage of zero hours contracts? The rhetoric is strong but the business case – and evidence of business action – is weak.

Final thoughts

So, great content, worry about the theory of change. That worry is something I have with all sustainability and progressive activity – including my own. So, I’m far from having got all that solved. And I’d love to bring my insights on industrial strategy in, and to see if there are ways to move forward without relying on government buy-in.

Could some citizen activity or people-power initiatives start us off. So that, come the next election or the one after that, the social forces are aligned?

Let’s hope. And let’s hope by making that happen.

 

 

 

On advising the Cabinet Office on inclusive economy

My time advising the Cabinet Office on inclusive economy came to an in April, just as the General Election was getting going. There’s a limit to what I can say about my four months, because of normal confidentiality of working within an organisation. Below are some thoughts I can share with you all.

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Video: Industrial Strategy for a Sustainable World (April 2017)

Back in April I did a two hour session for London Futurists, a group for people who are interested in the future and maybe want to help shape it.  David Wood, the smartphone entrepreneur who runs the group, asked me to run a session.

For me it was a chance to try out my latest thoughts on industrial strategy for a sustainable world. I speak for about an hour, and then there’s another hour of questions.

In a nutshell, the talk gives a wireframe which I believe you can use to organise all of the economic elements of the transition to a sustainable world. You can look at the slides here.

Doubtless the talk is wrong about lots of stuff – my aim was to be wrong in useful ways!

I’ve had lots of feedback from the people at the talk, and others to whom I’ve given (shorter) versions. I’d love your thoughts too. Please comment below or get in touch in the normal way.

It’s clearly a work-in-progress but so far people have been finding it useful, especially to see how their work is a contribution to the wider change.

Even so, I know it is far from the finished article. I’ve had thoughts since on where to improve and where to pivot. These will have to wait for another post! In the meantime, enjoy the talk and thank you again to David Wood for giving me the chance.

 

How will I tell if I have had a good sabbatical?

So, I’ve just started my sabbatical. I have three months ‘off’ — which I have chosen to be three months exploring how we can create systemic change in business for a sustainable future. This week has been about setting myself up. I’ve been trying to figure out what I want to achieve. When it finishes on Mon 16 May, how could I tell if I have had a good sabbatical?

The first evidence of a good sabbatical are the outputs associated with the different lenses I have: climate change, digital revolution, innovation policy, enabling business narrative and political economy (my meaning: the way we organise ourselves in society — the interplay of economics, law, politics and more that set the operating context for individuals and organisations, and are expressions of dominant beliefs in society).

On ‘bending the curve on climate change’ my hypothesis is that the ways we try to re-organise ourselves in the near-future to urgently address climate change are likely to become the vehicles we then use to address other sustainability challenges (like delivering the Sustainable Development Goals). For instance, much of the analysis of The Paris Agreement says that the surprisingly-ambitious outcome (working towards 1.5C) came from new forms in the negotiation process: Chinese appreciation of the impact of climate change; business-NGO-government high ambition clubs; a move from the negative framing of ‘burden-sharing’ to a more positive one of opportunity; and so on. Imagine if these continue, and start to be applied to other global, diffuse challenges like inequality.

So, I want to know more about:

– what features of a new political economy are emerging in order to address climate change?
– how could we nurture them, so they are stronger and more effective?
– what might the long-term consequences be, especially constraining our ability to address other important (but less urgent) challenges?

Also, as part of that I’d like to see what happens when I try to help a fabulous institution to act. I’m chairing a panel on the 17 March where various luminaries from across the university will be exploring the role of a university like Cambridge in the societal transformations required to bend the curve on climate. I’m seeing the university as a microcosm of the bigger picture. At the least, I’d like to know more about the barriers to prominent institutions playing a role that matches their potential with the scale of the problem, on the presumption that this will be useful data for others. Even better would be helping move the university forward at least a little how it helps society to address climate change.

When it comes to surfing the digital revolution to a sustainable future my hypothesis is that it is not possible to put the genie back in the bottle, that positive social, environmental and economic impacts are very possible, but will not just ‘magically’ appear. Instead we must be proactive in getting the best from the profound changes that come alongside the technological revolution. I have some handle on the hopes and fears (which will come out in an article in Forum’s annual compendium called The Long View in March). Less clear to me is what you would do to be proactive. What institutions, regulations, etiquettes, incentives and more would you use? How could you experiment with them starting now?

So, the output I’m going for here is a ‘concept note’ of what that programme of experimenting might look like, alongside more connections that can provide the insight into that concept note, and would be interested in using the analysis.

The output on pro-sustainability innovation policy is in many ways more straightforward. A friend of mine is a senior politician (not in the UK, and I’m not sure yet if I can say who). He has asked for an input into their manifesto. So, I’m going to be writing a report which is ready to use by at least that person, and I hope by other policy-makers plus others who are interested in fostering pro-sustainability innovation. My instinct — and we’ll see how true this is — is that many of the recommendations will also be applicable to large businesses, investors, technology transfer firms and more.

The enabling business narrative is a bit more uncertain because it depends on others. At the least I want to have a map of the different ‘narratives’ that are currently in plan (such as Volans’ Breakthrough Capitalism, or Alex Steffen’s Bottleneck Decade, or Forum-BSR-Shine’s Net Positive Project). Better would be to see if there is some coordination and connection between many of the different players to provide more coherence. But that means others wanting to play, which isn’t in my control.

The final lens — creating the political economy we need — is where the ends is the means and vice-a-versa. Given that I’m saying ‘political economy’ is the way we organise ourselves then how I go about my sabbatical is itself an expression of the potential political economy.

So, the second evidence of a good sabbatical, alongside these outputs, is that I have experimented with being the change I wish to see in the world. I want to try ways of creating those outputs that are the pre-cursors of the political economy we need. My starting point there — which I want to share soon — has already been well-articulated, I think, in ‘Embracing Complexity’. In one sentence the mindset is systemic, allows for emergence and therefore acting with and through others with a proactive attitude to change and learning.

The third and final evidence of a good sabbatical is that more change is happening. The outputs are being used (even if to say “not that, but this”). There are the first signs of impact One person reading, thinking, talking, connecting, writing is not enough — any more than 70 people. The impact will come being a catalyst with and for others.

Which leads to my invitation. If you are interested in any part of this — if you have insights, want to do something, are already doing something relevant, know someone I should connect with, have a suggested piece of reading, whatever — then do get in touch.

If you have better ideas on what I should achieve in the next 3 months then let me know. I’d love to help you, in our attempts to create a sustainable future.

“If I had £1m to spend on a more resilient economic system I would…”

A couple of weeks ago Friends Provident Foundation asked me to finish this sentence “If I had £1m to spend on a more resilient economic system I would…” in a filmed interview. That’s not out yet, so here’s the 10 ideas I gave them.

“If I had £1m to spend on a more resilient economic system I would…” do 2 sorts of things: (1) address shocks that we can anticipate, and (2) grow our ability to bounce back better from shocks we can’t predict.

(By the way, below are the 10 ideas, organised under those two headings. I try to preface each idea with a diagnosis (“Right now…”) to set up the rationale. The ideas are informed by The Community Resilience Lab and Global Dashboard’s Brookings paper “Confronting the Long Crisis of Globalization: Risk, Resilience and International Order”.)

 

Let’s start with the shocks we can anticipate.

There are price shocks: energy, raw materials, and food. For each of these there are more people, more prosperous in more places driving demand, while supply is constrained by the natural world and societal/industrial bottlenecks. What can we do?

Idea 1: invest in assembling s network of player who can address the financial barriers to investment for resilience in:
-clean, secure energy supply
-reducing energy demand through efficiency
-get more value from using less physical stuff by creating the infrastructure for a circular economy

Idea 2: scope out how to shift to a diet that is less exposed to price shocks and also healthier (probably – less meaty).

Another shock we can anticipate is extreme weather events. This is a big, big deal but I hope the recent floods mean that government will address this.

 

Now let’s look at growing our ability to bounce back better. Think of Detroit. Why did it struggle over the last few decades? Because of a lack of diversity. It relied on 3 big companies in only one industry. When the industry changed, the risk and resources for response were both too concentrated. Therefore, we need to distribute risk and the ability to respond more widely, in order to bounce back better.
Right now – complex challenges tend to go up to senior leaders because organisations are arranged in hierarchical silos. Therefore we need to create shared awareness of the need for resilience at a senior level.

Idea 3: a ‘Leaders for the Future’ course. Mix together top civil servants (especially from the Treasury) with business people and beyond. Help them push the ability to respond further down their organisation.
Right now – UK towns are at the whim of globalisation and the sheer economic density of London.

Idea 4: Pick a medium-sized town to pilot ‘being resilient’. Throw a lot of resources at it, as a pilot that you can learn from and then scale.
Right now – assembling the necessary coalitions for specific challenges is expensive and slow.

Idea 5: provide core funding for semi-permanent platforms that are ready for co-ordinated action when the need arises.
Right now – risk of failure is usually carried by the weakest member of a supply chain (e.g. the smallholder producers of tea, rather than the multinationals).

Idea 6: create financial products that distribute risk according to who benefits and has the resources to respond, not according to who can dictate terms.
Right now – investment professionals are blind to the systemic risk presented by climate change. Our pensions could be wiped out, unless we take action.

Idea 7: get behind the carbon bubble / divestment campaign.

Idea 8: invest in making climate change a consideration in the ‘macro-prudential’ analysis that financial regulators are now focussing on.
Right now – the UK does not have the requisite variety of industries. We’re too dependent on The City for economic growth and tax take,

Idea 9: get behind efforts to create more entrepreneurs, especially ones which are have ideas that could mean we have fun within environmental limits.

Idea 10: get behind efforts to grow the ability to adapt in the young and the less-skilled (and therefore, more exposed) worker.

 

Finally, it’s also worth bringing resilience into your investment decision.  In practice that means:
-create a portfolio that create medium-term options
-learn as you go, and kill what’s not working
-leverage in the resources of others

 

No idea if Friends Provident Foundation will take any of these ideas. We’ll see!