0:00

The National Women's Soccer League is

0:02

now on ION. Out in front

0:04

to Williams slips through. It's a

0:07

new Saturday night destination featuring the

0:09

best players in the world. Tisaszocchi

0:11

scores! See the full schedule and

0:13

find where to watch at ionnwsl.com

0:27

Hello and welcome to The Rest is Money with

0:29

me Robert Peston. And me Steph

0:31

McGovern. Now today's guest Marianna Matsukatu

0:33

might finally be able to answer

0:35

the question we are constantly asking

0:37

on this podcast. How do we

0:40

get growth back in the UK

0:42

economy? And that's because she's a

0:44

world class economist who advises policy

0:46

makers from Scotland to South Africa

0:48

talking about innovation-led, inclusive and sustainable

0:51

growth. She's worked for the World

0:53

Health Organisation, the EU. She's

0:56

currently an economics professor at University College

0:58

London where she is the founding director

1:00

of the UCL Institute for Innovation

1:02

and Public Purpose. Also her work

1:05

has apparently inspired Kia Starma's five

1:07

missions hasn't it? Which will form

1:09

the backbone of Labour's manifesto going

1:12

into this year's election. So

1:14

I think she's well placed isn't she to

1:16

tell us whether Rachel Reeves May's lecture speech

1:19

to the city had any plans

1:21

for the economy that she think will work. But we've

1:23

got lots to ask her on as well because she's

1:25

written loads of great books. We're going to be talking

1:27

about consultancy with her too aren't we? Yep she's

1:29

written this book called The Big Corn about

1:32

how the consultancy industry is way out of

1:34

control and is undermining the fabric of government.

1:37

She is basically a world

1:39

class brainiac and I

1:41

mean just so much to chat with

1:43

her about. Great

1:46

to see you Marianna and I

1:48

just want to start by asking

1:50

you about Rachel Reeves obsession with

1:52

the so-called fiscal rules, the rules

1:54

that control debt and deficit in

1:57

government, that's what May's lecture was

1:59

largely focused on, some

2:02

would say this massively boxes her in

2:04

when it comes to doing the things

2:06

that she also claims she wants to

2:09

do, which is to stimulate growth. What

2:11

did you make of it? So

2:13

the reason I think she's playing that

2:15

card, I think she's called it

2:17

secureonomics, right? To reassure the population

2:20

that progresses and the left and

2:22

labor know how to deal with

2:24

the economy, won't run the economy

2:26

into the ground, is

2:29

important if you want to reassure, but if

2:31

you don't have an economic narrative that follows

2:33

it, the problem is that it can look

2:36

a bit flimsy. So I think

2:38

what she should be talking about is that the

2:40

problem in the UK is we

2:42

have lagging

2:44

growth. That is a problem because

2:47

growth is an outcome of both public and

2:49

private investment. We have one of the lowest

2:51

levels of private investment, right? When I was

2:53

obsessed about public investment, we have one of

2:55

the lowest levels of private investment in

2:57

the OECD. So if bold,

3:01

strategic, I would call it mission

3:03

oriented public investment can catalyze and

3:05

crowd in private sector investment, that

3:07

will actually expand the economy. And

3:09

that's the denominator of debt to

3:11

GDP. So I think where

3:14

sometimes progresses in general and the labor party

3:16

in particular in the UK, get

3:18

a bit confused is that if you obsess

3:20

about the numerator, so some sort of fiscal

3:23

rule on the debt on the deficit, and

3:25

don't actually think about what is the strategic

3:27

role of public and private sector investment

3:29

and how to fund that, which will expand the

3:31

denominator, then you have this ironic situation, which

3:33

we saw in Southern Europe after the

3:35

financial crisis, where they obsessed about getting

3:37

the deficits down, so you can reduce

3:39

that you can reduce the deficit, but

3:41

increase debt to GDP. And

3:43

that's not hard to understand. It's just

3:45

basic math, x over zero, you might

3:48

remember is infinity. Well,

3:50

I mean, George Osborne made precisely that

3:52

mistake when he went for austerity back

3:54

in 2010. And so one of

3:56

the interesting questions is, given that there are

3:58

many on the left who recognize

4:00

the importance of stimulating growth.

4:04

Why it is that we still have

4:06

such a cautious labor party. So,

4:09

what you've just said about George Osborne, first

4:11

of all, is an important point because the

4:13

austerity that the UK faced after the financial

4:15

crisis, where we blamed public

4:18

debt instead of the private debt, which caused

4:20

the crisis, let's not forget that, it was

4:22

private debt globally that

4:24

basically burst, and that's what caused

4:26

the financial crisis, the austerity that

4:29

we experienced actually caused our social

4:31

fabric to wither. So, the cost

4:33

of inaction, when we cut everything,

4:35

social services, health services, transport,

4:40

public housing, public education, the cost of

4:42

inaction ultimately is greater than the cost

4:44

of action. In other words, to pick up the

4:46

mess that is caused by

4:49

that austerity actually costs the economy more. So, not

4:51

only is it bad for people, and planet, by

4:53

the way, because of course we need to make

4:56

our whole economy more sustainable and that

4:58

itself requires public investment, but what we

5:00

need to remember is forget

5:02

people and planet just the economics of it.

5:04

It will cost more in the long

5:07

run by just saving in the short

5:09

run. And that then, in

5:12

terms of what I would call the innovation economy, which

5:14

is not just strengthening the social

5:16

fabric, which is incredibly important. Why? Because

5:19

it costs more to imprison a young

5:21

person than to educate them, but the

5:23

innovation side, which means that we need

5:25

to be making those kinds of investments

5:27

that lead to productivity growth, so training

5:29

of workers, you know, stronger education systems,

5:31

science industry linkages, so on and so

5:33

forth, that also suffered. And that's what

5:35

I mean by this kind of lagging

5:37

public investment in the UK.

5:39

So, the problem is unless

5:41

labor again understands the lessons from that,

5:43

and again, 10 to 15 years of

5:45

austerity, which this country has experienced, then

5:47

ultimately it's also not credible that we

5:49

will actually achieve what they are now

5:52

talking about, which is growth, growth, growth.

5:54

They want to set up or strengthen

5:56

the growth and enterprise unit within the

5:58

government. That's all fine. But I don't

6:00

know any country, literally any country that

6:02

has achieved growth by talking about growth.

6:05

Yeah, so do does that mean then we

6:07

do need to borrow more in order to

6:09

invest? Sure, but don't forget

6:11

that the government is not

6:13

like a household, right? So households might

6:15

go bankrupt, right? Because if you're taking

6:17

on too much credit and you are

6:19

not, you know Expanding your ability to

6:22

create income in terms of the revenue

6:24

that coming into the household Governments are

6:26

different especially governments that have their own

6:28

sovereign currency, which the UK does we

6:30

have the pound and so as

6:32

long as you are creating money

6:34

and borrowing it for a

6:36

reason that is strategic which

6:38

will catalyze growth through that Dynamic

6:41

of public and private investment which

6:43

will increase physical capital human capital

6:46

technological and social change Then

6:48

it's fine because you are expanding productive

6:50

capacity if instead you just have helicopter

6:53

money so if you're borrowing and just

6:55

throwing money into the system in a

6:58

non-strategic way or for example how many

7:00

populist governments have sometimes just created income

7:02

and you know distribute it to the

7:04

population in a Redistributive kind

7:06

of way without actually creating the wealth

7:09

that can be redistributed then of course you'll have

7:11

a problem So the problem should

7:13

not be just looking at the number of

7:15

the debt to GDP ratio or

7:17

you know Whether or not government should borrow

7:19

the details matter So the structure of public

7:22

investment and its ability to catalyze

7:24

private sector investment is what matters So if

7:26

you borrow for that and if it works

7:29

it will pay itself back in the short

7:31

term though Wouldn't that weaken those in an

7:33

international level in terms of the pound and

7:35

you know the bond market and things because

7:37

you obviously like When this trust did that,

7:39

you know, cause you're cutting did this whole

7:41

thing about putting more money into the economy

7:43

It absolutely killed us on the international markets

7:46

and then ended up with not what they

7:48

did So don't forget that the deficit

7:50

is You know, how much

7:52

money government is spending Compared to how much

7:54

money it's actually bringing in through tax revenue.

7:56

Yeah, what list trusted was just to say

7:59

we're gonna. Reduce tax immensely and

8:01

that will stimulate the economy. And financial

8:03

markets are actually quite smart. They know

8:05

that hasn't worked. If you just reduce

8:08

tax revenue that's gonna make the government

8:10

go into debt and that's very different

8:12

from what I'm talking about. Which having

8:15

a public investment program which you been

8:17

through bar which will catalyze economic growth

8:19

is done well. I repeat as done

8:22

while cause there's also old ways to

8:24

do that. Seven old industrial strategy would

8:26

have just been public borrowing to stimulates

8:28

say growth in particular. Sectors which might

8:31

have captured government by being considered strategic

8:33

sectors. And that leads to what economists

8:35

sometimes referred to as the picking winners

8:37

problem where government is just kind of

8:39

throwing money at particular A Sectors which

8:41

are deemed to be key are essential,

8:43

but then it's not actually creating transformation

8:45

and those sectors which ultimately is what's

8:48

required if we care about productivity. so

8:50

I just wanna dig into this about

8:52

there was this moment would survive be

8:54

knew I'd been immensely Flat advice which

8:56

is just armor says he's gonna have

8:58

these five missions because. You are

9:01

the economist who it is

9:03

written. Extensively. About

9:06

how governments need.

9:08

Missions. In order to

9:10

transform economies to provide the kamikaze

9:13

of lies that citizens feel they

9:15

deserve answers souls The longer term

9:17

challenges we face Bots You don't

9:20

think it's necessarily with all of

9:22

his missions, he quite get sick.

9:24

so tell us what you mean

9:26

by missions and why. For example,

9:29

he's gross. Mission isn't quite what

9:31

you meant rights. So I'll start

9:33

with the quick answer to the

9:35

last part of your question which

9:38

is. Growth is the results of

9:40

a mission oriented approach. If it's done

9:42

well, growth itself is not the mission.

9:44

So the reason I wrote the book.

9:46

Called miss and Economy a moonshot

9:48

guide to change in capitalism. Is

9:50

that on? Deeply convinced that we would never

9:52

have gotten to the moon today given how

9:54

we think about the role of the say

9:56

today. So when Kennedy made his speech she'll

9:58

remember He said we're. Because it's hard.

10:01

Not because it's easy already. That's totally

10:03

different. From any policy wonks papers.

10:05

Which is all about facilitating d

10:07

Risking the private. Sector He said we're doing

10:09

it because it's hard, which is. The opposite

10:11

of facilitating which means making something

10:14

easier. Home Italian society that is is

10:16

it's They had very clear public direction.

10:18

it was to the moon and back.

10:20

not just go to the moon and

10:23

blow up, come back since one amount

10:25

of time it required a huge amount

10:27

of private sector investment. There was four

10:29

hundred thousand people involved in many different

10:31

sectors, not just aerospace, Nutrition, materials, electronics.

10:34

The first thing they did was change

10:36

procurement. Have become a complete nerd about

10:38

procurement to that's a huge chunk of

10:40

government budgets and they changed it to

10:42

be outcomes oriented mission. Oriented procurements and

10:45

set of cost plus where you just

10:47

kind of giving out money to the

10:49

private sector to do things to police.

10:51

It was outcomes oriented six price but

10:53

with incentives for innovation, a quality. Improvements.

10:56

And they were so bold that they even put. Into

10:58

the contracts. No Access Profits Not no profits.

11:00

Because you don't get to the moon with

11:02

charities you need profits. Any good business? Good

11:04

government working together. That ended up

11:06

stimulating an immense amount of innovation because

11:09

they had this outcomes. Orientation to all

11:11

the homework problems The had to

11:13

be solved along the way. The

11:15

solutions to those homework problems: Goddess

11:17

camera phones for your blankets, baby

11:20

Formula software So imagine if we

11:22

apply that approach towards our climate

11:24

problems around Net: Zero health and

11:26

wellbeing problems in London Zero nice

11:28

crime Money. And. Rights Imagine if we.

11:30

Actually had an inter ministerial inter departmental

11:33

approach for civil to these problems Because

11:35

remember, climate is not just for the

11:37

Department of Energy well being and health

11:40

is not just for the Department of

11:42

Health Said inter departmental and intersectoral, all

11:44

those different sectors had to work with

11:46

government to solve all the homework problems

11:49

along the. Way the reason that that

11:51

cause. Growth and the system and of

11:53

just read the paper about this how

11:55

the multiplier literally the Keynesian multiplier is

11:58

greater when public investment as mission. oriented

12:00

because it again catalyzes solutions to all

12:02

these homework problems and gets us technology

12:04

as a result, not as a goal. Now

12:07

that means that the missions have

12:09

to be really clear, bold and

12:11

inspirational and catalyze intersectoral investment. So

12:14

by definition, growth as a mission

12:16

doesn't mean anything. You want

12:18

growth to be the result and you want different types

12:20

of economic metrics including productivity to

12:22

be monitored along the way, but the

12:25

key thing for example you need is a

12:27

treasury that even knows how to evaluate this

12:29

process. And I often say had

12:31

the moon landing been evaluated through a

12:33

cost benefit analysis for example, it would

12:35

have never started in the first place.

12:38

So the treasury's green book, okay, which

12:40

is the green book where it helps

12:42

to think about how do we then

12:44

evaluate whether public investments are getting us

12:46

the bank for the buck itself needs

12:48

to for example be thinking about these

12:50

dynamic spillovers across the

12:53

whole economy as solutions to the homework

12:55

problems. You know, a lot of

12:57

what you say I totally agree with

12:59

and you know, you can totally say

13:01

how if you're investing in infrastructure or

13:03

whatever it is and the long term

13:05

is going to bring you know wealth,

13:07

it's going to increase everyone's ability to

13:09

live a better life. My issue is

13:11

the people who are deciding what is,

13:14

what should be invested in don't

13:16

seem to know enough about the problems. So for

13:19

example, I know you talk about free school meals

13:21

and this is something I'm really passionate about. And

13:24

you know, we've seen this trial happen in

13:26

London with giving all kids free school meals

13:28

and it's gone really well. I've been to

13:30

various events in the northeast where I'm from,

13:32

which is heavily deprived area where there, you

13:34

know, you don't get free school meals there

13:36

unless you know, you have to fill out

13:39

various forms. It doesn't really happen. You

13:41

know, people have, there's a stigma around it.

13:43

And yes, you can see that that is

13:45

an investment not a cost. Yeah, that's, you

13:47

know, if our kids are fed well, they're

13:50

going to perform better in school, they're going

13:52

to be better educated. And that's your point.

13:54

But my worry is that the politicians don't

13:56

think like that. So you've raised so

13:59

many important points. The Superbowl thank you

14:01

because it's a perfect example and it's also.

14:03

An example or sometimes it's the only

14:05

time that I talk about any other

14:07

football team except Arsenal are as so

14:09

Marcus Rochefort was yeah oh yes so

14:11

ago it landed there during cove It

14:13

in terms of highlighting again how important

14:15

free school meals were in his own

14:17

you know our upbringing but also how

14:19

it is should not be an option

14:21

right? This is an investment Again, the

14:23

cost of an accent even on that

14:25

is greater than the cost of acts.

14:27

And if kids are not getting a

14:29

healthy meal and healthy breakfast in the

14:31

morning they'll salon perform well. And

14:33

they won't become Pf productive members if you

14:35

want our society and of course we shouldn't

14:37

To think of productivity this care about the

14:39

wellbeing of the students. but how do you

14:42

than do. That what is a way. I mean

14:44

that. The way I've been thinking about it

14:46

recently is how do we create ambitions, run

14:48

the welfare state for example, around free school

14:50

meals and put it at the center of

14:53

what I called and my book. Ten years

14:55

ago, the entrepreneurial states so put social challenges

14:57

at the center of an innovation challenge? So

14:59

good. Example of how that's done well is

15:02

Sweet and Sweden. Currently they've actually adopted this

15:04

mission oriented approach. And their high

15:06

level challenge is having a fossil

15:08

free welfare state and they landed.

15:11

On the very specific, like school meals. but

15:13

it's not enough to say Free School meals.

15:15

They say school meals have to be innovative.

15:17

They have to be healthy. Tasty,

15:19

Much as I can be both

15:22

and sustainable. So the procurement okay

15:24

of the school meals becomes part

15:26

of the innovation budget right? because

15:28

companies and have to innovate and

15:30

minutes to create an ambitious high

15:32

quality. School me a dumpster. Get

15:35

on. Comedy Central is what you're saying. I Sustainable?

15:37

Yeah. Cook Carbon neutral? Yeah. In terms of

15:39

whole supply chain of the food chain. For

15:41

school meals, not forget that rank among males

15:43

who though it makes a big leaguers, restaurant

15:45

chain and the world in terms of the

15:47

number school meals or produce, I don't. If

15:49

you're member in the Nineteen eighties with the

15:51

whole budget cuts back then austerity. Reagan? thats

15:53

x Reagan said catch up as a vegetable.

15:57

The office and about were talking about his as we the.

16:00

Hot and and fully. And I remember Ice

16:02

of a shirt that had cats up on

16:04

one side, Reagan on the other businesses that.

16:07

Are So how do we transform ambitious

16:09

and around all public services public transport,

16:11

public housing, public meals and schools to

16:14

be part of an interface and economy

16:16

was actually cares about people and planet.

16:18

But the other point you raise which

16:20

is very important is how do we

16:22

actually get kind of bottom up participation

16:24

so it's not as if it's all

16:26

takedowns, ministers telling everyone was gonna be

16:29

guns and such. An example, there's the

16:31

work that have done in Camden Camden

16:33

Council where I live and work and

16:35

with Georgia Gould we coach share the

16:37

Camden Renewal. Commission and the idea there

16:39

was to nest this idea of mission

16:41

orientation and local places. so the housing

16:43

estates and com and we chose tense

16:45

and idea was that for. So we bring

16:48

people to the resident associations and the citizen

16:50

assemblies to the table touch the debate. What

16:52

is clean growth? What does that mean for

16:54

a community. Is so that's the cocreation side

16:56

and get as many different. Voices to

16:58

the Table voice matters as much

17:00

as the tokenistic consultation process, but

17:02

also. What is it me to put dignity?

17:04

self? Worth you were talking about that People

17:07

sometimes don't feel very good about themselves when

17:09

their does accessing here are you know, And.

17:11

How do we transform? For example, food

17:13

banks which are alive and well in

17:16

this country because of inequality is rising

17:18

into suit cooperatives Said the people who

17:20

actually benefiting from a system had agency

17:22

in designing the governance of that systems

17:24

And I can tell you in Camden

17:26

literally that the facial expressions of the

17:28

people running a food cooperative a Greens

17:31

Suit cooperative in a local housing estate

17:33

is completely different from the that the

17:35

feelings that people have right or wrong

17:37

when they go into a food bank

17:39

and so bring your a bar owner.

17:41

Cepia, it's about it ascends. Having said that you

17:44

are running the thing that yard it rather the

17:46

George. you're just the recipient of other people's terrorists

17:48

yeah exactly and that's you know than globally we

17:50

can look at this and terms of with called

17:52

sometimes energy communities the you might have a green

17:55

industrial strategy but what is it me to make

17:57

sure that the people who are actually creating for

17:59

example. Renewable energy whether it's the solar

18:01

panels on their bills or other forms

18:04

also that are part of the governance

18:06

structure of a green ecological transition. and

18:08

there's different conversations like that happening and

18:10

Brazil today, for example, where Lula has

18:13

put the ecological transition for thought the

18:15

center of the economy the ministry of

18:17

Economy, but also where the whole issue

18:19

of how the indigenous communities in the

18:21

Amazon. Has been a hurts by the

18:23

lack of a serious green ambition their

18:26

what is the me to bring those

18:28

voices to the table of Brazil's our

18:30

energy transition every. Can. I

18:32

ask you cause which we don't know

18:34

he thought to a gonna about but

18:36

it is really important Only been thinking

18:38

about these things for many years which

18:41

is really the cultural side of this

18:43

when I think about the moon shot

18:45

which I'm in Utah desert but exhibition

18:47

actually I mean Kings Cross about all

18:50

this and it's really moving and I

18:52

remember as a little boys seeing the

18:54

moon landings and is one of those

18:56

memories that just imprinted on me and

18:59

the thing that I mostly now reflects

19:01

on. Is just the

19:03

confidence that leaders had back

19:05

then we would just in

19:08

a world. Where leaders

19:10

were boulder when it came to

19:12

making these huge and I use

19:14

investment now in the broadest sense

19:16

of that. nights. Obviously we talked

19:19

a bit about how engaging communities

19:21

so that they feel an ownership

19:23

in projects is terribly important, but

19:26

we've also got failure right at

19:28

the top am. how do we

19:30

change that here? We're living in

19:32

this period of despair. If you

19:35

pull people, they say nothing's ever

19:37

gonna change. it's just you. Types

19:39

of, They have the unbelievable disillusionment

19:41

in the system. How do we

19:43

change that again? Really important lesson.

19:45

And I said that there's two dimensions of that

19:48

quests and one is that issue of. Boldness

19:50

encourage. It's really curious that

19:52

we only have that's that's

19:54

when it's related to issues

19:56

say of national Security War

19:58

A crisis. A crime. This

20:00

like coded I Health Pandemic where millions of people

20:02

were dying around the world. Or a war where

20:04

we actually care to wins. No one has ever

20:07

said. Oh, we're going to war for Saw. Oh,

20:09

there's no tax revenue. Sorry, we can't go now.

20:11

We'll wait three years until seven. The remnants you

20:13

create a money to go to war. We've

20:15

always done that. Second, you want to win. So

20:18

the whole notion of things like outcomes are and

20:20

to procurements of course they're use. and what does

20:22

your want? Waxing Task Force An example of one

20:24

of your kinds of missions as you were because

20:27

you would argue that was pretty successful at. well,

20:29

no, it was not successful. If the mission

20:31

was that's an eight the world which during

20:33

a global health and damage should be the

20:35

mess and we ended up having vaccine Nationalisms

20:38

What worked for one country actually didn't help

20:40

Africa by the way. hard coded begun in

20:42

Africa, not in China, we would all have

20:44

been worse off. Sprites: A global health systems

20:47

matter during a global health pandemic. And if

20:49

you look at all the recovery funds that

20:51

happened post Co, but none of that has

20:53

gone to strengthening our global health systems and

20:56

the next pandemic. Unfortunately, we will have them

20:58

as the permafrost melts us new viruses. Will

21:00

come our way. Are we any more prepared?

21:02

Now than we were then. Now look at

21:05

the digital divide. All these young people who

21:07

stopped. Accessing their human right to

21:09

education during the lockdowns. Have we

21:11

saw that know increase the

21:13

preparedness? Of our civil Service so we don't

21:15

have to pay Deloitte one point five million a

21:17

day to do tests and trace. By the way

21:20

they sell that, It's not too surprising the had

21:22

no expertise and us to talk about that later.

21:24

Anyway, there's lots of different cell years

21:26

and covered that we absolutely did not

21:28

solved and on vaccines. The point is

21:31

not just a have vaccines we had

21:33

wealth. We. Ended up with eight different vaccines.

21:35

The point again is to vaccinate the

21:37

world and there something we haven't talked

21:39

about yet. The partnership between public and

21:41

private matters. In the moon landing they

21:43

were both. They said no access process they had

21:46

that outcomes. Or and to procurements. The

21:48

Astra Zeneca vaccine is an interesting example

21:50

where there was a bit more ambition

21:52

on the partnerships. Not because Astra Zeneca

21:54

want to, that because the Oxford University

21:57

publicly funded researchers have to remind my

21:59

Us call. colleagues, you know, Harvard, Yale,

22:01

Princeton, I grew up in Princeton, private

22:03

universities, Oxford, Cambridge, and many of the

22:06

best universities in the UK are public

22:08

state funded universities. Those researchers were bold.

22:10

They put conditions attached to the public-private

22:12

partnership. They said costs and prices must

22:14

remain low. The knowledge should be shared,

22:17

you know, issues around patent pools. So

22:19

that partnership, it's not just about this. There

22:22

wasn't political leadership. It was actually these researchers

22:25

themselves. Absolutely. And Pfizer is

22:27

a company I've been writing about actually for a

22:29

decade. I often tell my husband if I don't come home at

22:31

night, it was Pfizer. Have you seen

22:33

The Constant Gardener? Anyway, Pfizer is one

22:35

of the most financialized companies in the

22:37

world, spends much more in share buybacks,

22:39

for example, to boost stock prices, stock

22:41

options, and executive pay than in research

22:43

and development. Of course, they also spend

22:45

money on research and development, but they

22:47

have always refused to

22:49

actually partner in that kind of,

22:52

I would call it symbiotic, mutualistic

22:54

way that AstraZeneca, Oxford vaccine would

22:57

exemplify. That's what we

22:59

should be talking about. A modern

23:01

industrial strategy is not only mission-oriented,

23:03

but requires an ambitious symbiotic public-private

23:05

partnership instead of a parasitic

23:07

public-private partnership, which the UK has done

23:09

very well. So the question is then, how

23:11

do we solve these other hugely? I mean,

23:14

I would argue, you know, that the UK's

23:17

flatlining prosperity, rising inequality

23:19

is a crisis. Sewage

23:21

in our waters. Yeah.

23:24

It's a small crisis, but somehow we don't address them as

23:26

such. Exactly. And that's

23:28

the issue. If we don't

23:30

treat things as urgent problems

23:32

and time-limited, that we actually want to solve

23:34

those urgent problems in a short amount of time, again,

23:37

to the moon and back in a short amount of

23:39

time, winning a war in a short amount of time,

23:41

we only know how to do that through our kind

23:43

of military-industrial complex kind of thinking. My work has said,

23:45

if we know how to do it in war,

23:48

why don't we do it

23:50

in peacetime? It's not a

23:52

coincidence that Biden and his

23:54

policies brought up the Defense

23:56

Production Procurement Act in order

23:58

to fuel innovation. and investment

24:00

in vaccine production and personal protection

24:03

equipment production. And even Italy, where

24:05

I'm from, I have three citizenships, I keep

24:07

saying this country where I'm from, that country

24:09

where I'm from. So Italy, US, and UK

24:11

are my three kind of home countries. Italy

24:13

is not known for the speed of its,

24:16

you know, civil service and its government. And

24:18

yet, you'll remember that COVID struck northern Italy

24:20

first, and there was, you know, a lot

24:22

of deaths early on, and they woke up.

24:25

They did what Italy never does, which is

24:27

very quickly fueled, again, an outcomes-oriented industrial strategy,

24:29

which meant that 137 Italian companies produced the

24:33

personal protection equipment that was needed that, until

24:35

then, was all being produced in China. And

24:38

they did it through, again,

24:40

an outcomes orientation, which we tend to

24:42

only see during wartime. And they

24:44

didn't, by the way, just give it to their friends and family in pubs like they

24:46

did here. Yeah, because that

24:49

was obviously a big problem in all of this,

24:51

was the procurement side of things and, you know,

24:54

various dodgy contracts. So

24:56

how do you get that partnership, then, between

24:58

public and private, where it doesn't end

25:01

up being a situation like that? Yeah.

25:03

I mean, that, again, brings us back to that

25:06

example of school meals, that if it's just seen

25:09

as a contract without

25:11

ambition, it's much easier actually

25:13

to get captured and to introduce corruption. So

25:15

as soon as you say school meals have

25:17

to be healthy, tasty, and sustainable, all of

25:19

a sudden, that's going to require companies to

25:21

show that they know how to do that.

25:23

It's not just about creating, you know, ketchup

25:26

and calling it a vegetable. So

25:28

that's why also I really believe that

25:30

a challenge-oriented industrial strategy can do three

25:32

things. It can help solve problems, because

25:34

by definition, it's a problem-focused system. It

25:37

can help fuel that private investment that's

25:39

required, especially in a country like the

25:41

UK, which has low business investment. We

25:43

managed to create profits without investment because

25:45

we have a financialized form of corporate

25:47

governance, if you want to explain what

25:50

that is. And

25:52

three, it can actually ultimately then

25:54

help produce increases in productivity, which

25:56

is a key driver of growth.

26:00

Rachel Reeves point that if she wants growth

26:02

and productivity in this country, the question is

26:04

how do you catalyze that private and public

26:06

investment? And by definition, you can't just be

26:08

giving contracts to random friends and family that

26:11

say, I'll produce some personal protection equipment because

26:13

they're not going to be doing it with

26:15

that strong innovation criteria that has to be

26:17

at the center of an outcomes orientation. So

26:20

what do you think then, just on that,

26:22

about the National Wealth Fund idea? Because isn't

26:24

that more linked to the government having the

26:26

financial gain from this, if the company does

26:29

well out of something that they invested

26:31

in? So more broadly, it's about public

26:33

finance. So the way this tends to

26:35

turn up in the world is through

26:37

public banks, which the UK is one

26:39

of the countries that doesn't have a

26:41

proper public bank. The German public bank

26:43

is called the KSW. Because Germany does

26:45

have an outcomes orientation, they made sure

26:47

that the loans provided from their public

26:49

bank were conditional on the sectors receiving

26:51

the loans, doing good for the country.

26:53

So the steel sector, which in the

26:55

UK, in the US, and in Germany,

26:57

asks for money, because steel is in

26:59

crisis. In Germany, unlike in the UK,

27:02

the sector received a loan conditional that

27:04

would lower the material content of production

27:06

in order to meet the carbon emission

27:08

targets, which it did through investment in

27:11

innovation and repurpose, reuse, recycle across the

27:13

whole innovation chain of steel, which required

27:15

investment also in training of the workforce.

27:17

Again, all these things we know also

27:19

increased productivity and growth. So having a

27:22

public fund is not a solution if

27:24

it's just throwing money into the system.

27:26

Potentially, that can also increase inflation because

27:28

you're just putting public funds

27:30

into the system without expanding productive

27:33

capacity. But that notion of conditionality

27:35

at the center of loans, grants,

27:37

guarantees, COVID bailouts that require innovation,

27:39

that's not currently the way the

27:42

UK economy works. And on the

27:44

COVID bailouts, it was really interesting

27:46

that EasyJet in this country got

27:49

a loan with no conditions attached,

27:51

600 million, whereas in France,

27:54

which tends to be a bit more

27:56

bold and courageous, they put conditions attached

27:58

to the loans during COVID. That recommend

28:00

to the airlines that weren't flying so

28:02

Air France. Car. Manufacturers Renault. They

28:05

had to commit to reducing their carbon

28:07

emissions the next five years in order

28:09

to get the government help which came

28:11

right away as you need that kind

28:13

of help right away because your plans

28:16

are flying during Kobe but it was

28:18

conditional. There was a contract signed so

28:20

that idea of having a new social

28:22

contract which pre distribute of li gets

28:24

the conditions right. Between capital labor public

28:27

and private is again what I think

28:29

a modern industrial strategy that creates inclusive

28:31

and sustainable growth. Muscle Attack. As

28:34

I went and got her break. Max is galore. smartass.

28:36

Guess we all a quick break. Kids

28:48

L A D, Headlights, bumpers, whatever

28:51

you baby needs. Ebay Motors has

28:53

it, and with Ebay guaranteed fed,

28:55

it's guaranteed to feature right the

28:57

first time in every time. Plus

28:59

at these prices you're burning rubber.

29:01

Not care. Him

29:12

access to money with my stepmom given time.

29:14

With me Robert Peston, But also

29:16

with us my ah, that we. I

29:18

mean this. You know it, just listening

29:20

to you and now fast tasks. I

29:22

was just innocent kids. Could you be

29:24

chancellor? Are you trying? Though

29:26

yet so good about. Some no say in

29:28

the other thought necessarily, but you know you've

29:30

got it. So it's and that. the other

29:33

big thing you talk about and this is

29:35

in your latest book. Isn't that the Because

29:37

is about consultants that you mentioned Delights: L

29:39

E S what are your thoughts and consultancy

29:41

Eat Don't necessarily think it works. The A.

29:43

Rabbit advice. On

29:47

So for salt the book is called

29:49

the Big Con How the consulting industry

29:51

has a weekend or businesses and Sansa

29:54

allies or governments and warped are economists

29:56

And that word in centralization we took

29:58

from a Tory conservative lord. Agnew who

30:00

on the back of seeing how. Much money

30:02

the Uk government had spent on consultants

30:04

and these are the big consultants: Mackenzie

30:06

Peter B, C, Kpmg and Deloitte. During

30:08

both breasts and Coburn said what are

30:10

we doing We are infantilizing or Civil

30:12

Services Crunchy wicked problems that they should

30:15

be Saw things were kind of your

30:17

outsourcing at to at companies that are

30:19

charging a salon and not even getting

30:21

the job done. Delight didn't get the

30:23

job dance and many other types of

30:25

companies that aren't necessarily consultants. If you

30:27

think back to G for us getting

30:29

the yeah or circle getting these contracts

30:31

where they. Sell miserably and whether it's

30:33

prison services or security during the London Olympics

30:35

where the government has to bring in the

30:38

military have yet to have allowed to see

30:40

for us, didn't So that's all threat outsourcing

30:42

of capacity from or civil service it's a

30:44

problem when we have hard jobs to be

30:47

done. It comes back to this point that

30:49

if we just see the public sector as

30:51

having to six the market failure which is

30:53

cut cut kind of economics speak were economists

30:56

try to sounds fancy so they say stuff

30:58

like that as opposed to helping to shapes

31:00

and create an economy. That delivers per

31:02

pupil and planet. That's we've already set up

31:04

the civil service, the sale. If we

31:06

see it's at it's ambition as just

31:09

putting bandages, fixing something instead of working

31:11

ambitiously with others said. The book

31:13

doesn't necessarily. It's criticize. Consultants

31:15

or advisers had teachers might consult

31:17

doctors and nurses. My consult if

31:19

a government has a mission around

31:21

cancer of course she beats. You

31:24

know, paying some leading doctors and

31:26

others to give them some. Advice:

31:28

We look at an industry A

31:30

very. Large industry this almost one

31:32

trillion of globally and and dollars.

31:34

That basically has a conflict. Of interest

31:37

rate helps when governments work with consultants. the

31:39

consultants don't In terms of this large industry,

31:41

not individuals, that industries don't have any incentive

31:43

to make sure that the government's any smarter

31:46

and the next round as and you won't

31:48

get that contract second actual value they're bringing

31:50

in Italian. with that we call it idea

31:53

seats that Friday or. It's

31:55

collective see the sense that there's not much

31:57

substance. Their that's the case of Deloitte. Deloitte

31:59

didn't. Have expertise and test and traced. Why

32:01

would the government has employed them to deliver

32:04

on a program that there is no kind

32:06

of legacy that they had ever done that?

32:08

So then the question is, why are government's

32:10

so stupid to be doing that? And the

32:12

answer is. Yes, again, you blame

32:15

civil servants as soon as they make

32:17

a mistake. Or as we embrace that

32:19

kind of underlying risk taking and

32:21

experimentation in the private sector. to.

32:23

that's not surprising that a we

32:25

don't invest in those capacities. And

32:27

capabilities inside the civil service. but even

32:29

worse, when we have that capacity we

32:32

might not use. That's because were worried

32:34

that if a mistake as young. Made

32:36

them will be in the front page

32:38

of the newspapers. This is a very

32:40

important point because in Australia for example

32:42

where it's just came back last week's

32:45

they paid Mckinsey six million to do

32:47

their climate strategy. The actually had expertise

32:49

within government through an organization called see

32:51

a Sireau. It's like a of research

32:53

center with and government that actually has

32:55

really strong climate expertise. Why didn't they

32:58

use them for their climate strategies? That

33:00

Mackenzie Climate Strategy did not go down

33:02

very well and it's active. It was

33:04

full of holes but the. Problem is

33:06

not that Mckinsey than made a mistake. You

33:08

know everyone can make the mistake. That's a

33:10

whole point. But why do we have this

33:12

need if you want to rubber stamp a

33:15

government strategy with a consultant logo Because it

33:17

will go down kind of better with the

33:19

population as opposed to owning these decisions. And

33:21

the same thing is done in the private

33:23

sector, so you're telling us that was the

33:25

second. Is this back to the thing we

33:27

were to about earlier, which is a sense

33:30

to the failure of leadership. The leaders. Of

33:33

peter people who broke lately solicitous in

33:35

theory makes to their name just don't

33:37

want to do what leaders have traditionally

33:40

done which is take responsibility is. That

33:42

so that lack of leadership. But it's also

33:44

in the last sixty. Years What we've done

33:46

to the remit of government so it's at

33:49

the end of this new economy. Actually quoted

33:51

this guy called earnest Bracket he was they

33:53

had of procurement. He's the one who actually

33:55

got the or comes were answered procurement which

33:57

led to others innovations in the private sector.

34:00

He was in NASA, head

34:02

of procurement inside the National Space Agency, which

34:04

got us to the moon. And

34:07

he said, hey, this isn't about public

34:09

or private, but we inside NASA won't

34:11

even know how to work with the

34:13

private sector if we continue to do

34:15

what he saw was starting in the

34:17

1960s, which was to outsource to the

34:19

consultants a lot of the decision

34:22

making. And he warned NASA, he

34:24

said, if we continue, we will ultimately

34:26

get captured by brochure and government.

34:28

Which is endearing because they didn't have PowerPoints at the time.

34:30

They had these shiny brochures that a private company might bring

34:32

into NASA and say, we'll work with you. And

34:35

he said, we won't know which private sector companies to

34:37

work with. We won't know how to write the terms

34:39

of reference. We won't know how to write good contracts

34:42

with the private sector if we ourselves don't have brains.

34:44

So that kind of alarm bell, which is

34:46

similar then to Lord Agnew's alarm bell is

34:49

saying that we're infantilizing government, is

34:51

in fact what happened. We have

34:53

infantilized our governments, but it's not

34:55

because the DNA of the civil

34:57

service is not able to take

34:59

risks or we don't have leadership

35:01

because the DNA of a minister

35:03

is not about leading like an

35:06

entrepreneur. We've actually created

35:08

a system where, again,

35:10

the government see their role as

35:12

at best fixing market failures. The civil

35:14

service is scared to take risks. We

35:17

don't embrace that kind of experimentation,

35:19

trial and error and error and

35:21

learning from those errors. I'm

35:23

a big advocate through the institute that I

35:25

set up at a UCL University College London.

35:28

It's called the Institute for Innovation and Public Purpose.

35:30

And we work training civil servants globally in terms

35:32

of our education system, but also in helping to

35:35

set up, for example, GovLabs. In Chile,

35:37

they have a la boratoria de govierno, which is

35:39

a safe place within government to experiment. How

35:42

do you do outcomes-oriented procurement during COVID

35:44

or, you know, having

35:46

outcomes-oriented budgeting and so on? That

35:48

requires testing things out.

35:50

And if you're not allowed to test things

35:53

out, then that risk averseness is part of

35:55

the reason we end up having this overuse

35:57

of consultants. And lastly, I haven't said, and this

35:59

is very important. There's a huge conflict of

36:01

interest. You have to choose which side

36:03

of the street you're on, what instead we often have.

36:05

What can mean by that? Well,

36:07

an example would be that you're advising

36:10

or consulting both with McKinsey,

36:12

the climate strategy in Australia, and

36:14

with the biggest fossil fuel companies

36:16

and carbon polluters. You mean the

36:18

same consultancy firm? The same consultancy

36:20

company working both with the

36:23

regulators and with those that should be regulated.

36:25

This is common practice. The CWC,

36:27

it just came out recently, were working

36:29

with the medical device companies and

36:32

the regulators of the medical devices.

36:34

In South Africa, they were working

36:36

with SCOM, the Large State on

36:38

Enterprise for Energy, and the Treasury,

36:41

which is supposed to be... They're basically providing contradictory

36:43

arguments depending on who the customer is. They're on

36:46

both sides of the street. That, to be honest,

36:48

is not so hard to solve. It should just

36:50

be outright illegal. The bigger problem of what have

36:52

we done to our civil service that has made

36:54

it so risk-averse and we're not investing within those

36:56

dynamic capabilities is something much harder to solve, but

36:58

we must do it. I think I have an

37:01

example of where this has worked for my career.

37:03

I used to work for an engineering company. One

37:06

of the things they did, I worked in procurement as

37:08

part of my... It

37:11

was like an apprenticeship, so I did a stint in different

37:13

departments. One of the departments was procurement.

37:15

We worked out there was this company

37:17

that supply does that was working 24-7,

37:19

but still wasn't

37:21

producing enough of the product. What

37:24

they did is, and I think this is where your innovation point

37:26

comes in, is they got us

37:28

young students to see if we could

37:31

look at how this company, whether we needed

37:33

to find other companies to produce this product

37:35

or whether we could work within this

37:37

company to help them produce them faster. Then

37:39

that's basically what we did. There was a

37:42

gang of us who got trained in just-in-time

37:44

production, stuff called Six Sigma and all of

37:46

that. Because we

37:48

were at the lower end of the pay,

37:50

it didn't really matter whether we failed or

37:52

not on this. I ended

37:55

up working with the supplier company and we

37:57

did this whole Six Sigma project. It

37:59

worked. The company ended up been able

38:01

to produce. Face it was I can impel

38:03

a fan of a thing that sucks at

38:05

least in your garden Sundance They managed to

38:07

make them within his defy stay awake. So

38:09

this a close associate weekends and they were

38:12

producing enough but that came from there. The

38:14

company going to let their kids so what

38:16

of about awareness a half ago? it's a

38:18

read it and if I was like that

38:20

you know that kind of close your point

38:22

about if nobody's a more innovative and how

38:24

they think about yeah but where destinations going

38:26

to come from they could have for incremental

38:28

says that is run by the way that's

38:30

happening now globally. I was just this morning

38:33

before going on our with you speak into

38:35

the German government. They've actually tried to change

38:37

this over reliance on consultants by actually creating

38:39

an internal team of young bright people like.

38:41

yourselves last of us another. The

38:45

thing that worked about a thing was it was

38:47

young people he was the and half their the

38:49

way said my account a lot with the machine

38:51

love our you know you they didn't have all

38:53

of that Darpa has done in a dark as

38:55

why We have the internet right The internet and

38:57

everything and. Your smartphone that makes a

38:59

smarter, not stupid was actually publicly

39:01

financed. I read about this an

39:03

entrepreneurial states from organizations in the

39:06

public sector that were against outcomes.

39:08

Problem oriented, almost always military industrial.

39:10

Complex I said against how do we apply that

39:12

to social problems But what's interesting as than you

39:14

look. At Darpa which was one of those

39:16

organizations and the Defense Department's called the Defense

39:18

Advanced Research Projects Agency gotta see internet Why?

39:20

Because they had a problem to solve, they

39:23

needed to get the saddle as to communicate.

39:25

Internet. Was the answer Gps? Same thanks but

39:27

with than eighty The Cia got a touchscreen so

39:29

be careful when you touch. Us.

39:32

But the point is then look at those. Organizations The

39:34

A: Why did someone wants to work inside Darpa

39:36

and not and some sort of tech? Company and

39:38

it was actually the internal culture and they

39:40

bring in people for five years Since a

39:43

be crazy be. Naughty. You will actually be

39:45

promoted based on how much risk you're willing

39:47

to take and how much economy white impact

39:49

your successes have. So if you're just playing

39:51

it safe you get fired. They want people

39:53

to come in and yell yeah in the

39:55

Uk they tried to do this now with

39:57

idea or of i was pronounced everything they're

39:59

telling my. ARIA, right, which is

40:01

the UK version of DARPA, and actually a friend

40:03

of mine, Elon Gurr, is running it. But

40:05

it doesn't make any sense to have an ARIA

40:08

unless you have problems to be solved. And

40:10

if the biggest problem we have here is

40:12

things like Brexit, it's not going to work.

40:15

The reason DARPA worked, it was linked with

40:17

big, bold problems that had to be solved,

40:19

bringing in people, often through secondment for five

40:21

years, telling them to take those big bets

40:23

on big problems that needed to be solved,

40:25

measuring their success based on that kind of

40:28

risk-taking, and linking that with things like procurement,

40:31

right, which then allowed some small companies that

40:33

were getting funded to scale up, not just

40:35

starting up. I've never understood why we obsess

40:38

about startups. It's scaling up that matters. And

40:40

for that, you need these demand-side levers, which

40:42

bold procurement policy in the US has always

40:44

helped to foster. So the US

40:47

is just ridiculous that we have described

40:49

it as a market-led model. It

40:51

is the most interventionist of all

40:53

countries, besides communist countries. And

40:56

it did that through a decentralized

40:59

network of active, problem-based public agencies.

41:01

And they talked Jefferson, but they

41:03

acted Hamilton. I mean, I think

41:05

in fairness, they are

41:07

trying to do that with ARIA. I just think

41:09

the funding is way too small for starters. And

41:12

they're not quite ambitious enough in terms

41:14

of the problems they're trying to solve.

41:16

Well, ARIA is, but the government isn't.

41:18

So unless the government actually has big,

41:21

bold problems, you don't need an ARIA. What's

41:23

the point of having an ARIA? It's not like,

41:25

you know, Dominic Cummings actually once brought me into

41:27

down-and-street, said, love your work, come in, we need

41:29

geeks in government. I was like, dude, that is

41:31

not the problem. Like, you're not going to get

41:33

geeks in government by saying we need geeks in government.

41:35

You're going to get geeks to want to work

41:37

with government if you have crazy problems that you say,

41:40

come and help us. That's why Obama

41:42

was able to get Steve Chu, a

41:44

Nobel Prize-winning Chinese-American physicist, to become

41:46

the Minister of Energy. He would

41:48

have preferred to say in Stanford,

41:51

had the objective been, I'll come and

41:53

help stimulate innovation in the tech community. He'd be

41:55

like, yeah, right, whatever. I'll do that on the outside.

41:57

What Obama said is we're going to have, while the UK is out.

42:00

they're doing austerity and Europe is too. We're

42:02

going to have an 800 billion stimulus program

42:04

after the financial crisis. We're going to direct

42:06

it towards greening our economy." Then

42:08

the Tea Party got in the way, but that was the ambition. They

42:10

ended up then using their loan programs

42:13

to fund companies like Tesla, which at the time

42:15

would not have gotten off without

42:17

that. And this guy, Steve Chu, was at the center

42:19

of it. And the first thing he did was to

42:21

set up ARPA-E, which is like an

42:23

ARIA for the energy transition. He would

42:26

have never come in to do that had

42:28

it been come in and fix a market failure. It was

42:31

help us steer a big, bold recovery.

42:33

And this is what Rachel Reeves and the

42:35

Labor Party need to realize. First of all,

42:37

you need a big, bold investment program. It

42:39

needs public and private sector investment. You need an

42:41

active civil service. But the best

42:43

way to do that is also to make

42:45

it ambitious in terms of what the role of government

42:48

is. Can I just ask you

42:50

on a kind of human level? You mentioned

42:52

various kind of politicians and people you've worked

42:54

with over the years. Does it do your

42:56

editing when they don't listen to you? Well,

43:00

first of all, being a woman on

43:02

the progressive side of the political spectrum

43:04

where governments actually do do what or

43:06

try to do, I'm lucky. What

43:09

I've written has actually, in Europe now we

43:11

have a mission-oriented instrument. $30 billion in the

43:13

Horizon program is for the missions because of

43:15

the work I did. So if

43:17

governments are trying to do what you've done and you

43:19

even go in the media, you get a lot of

43:21

hate. Right? I mean,

43:23

just like I'm sure we know also that women journalists.

43:25

So just to say, the point is not

43:28

just to have these great stories. It's

43:30

also about how do we make sure

43:32

that we have alliances that go

43:34

against what has been called the merchants of

43:36

doubt, right? There's a lot of skepticism in

43:39

the system. And when you have someone like

43:41

myself and others with a

43:43

positive narrative, an optimistic narrative, we can

43:46

do better. There are these problems that

43:48

don't think they're deterministic. There are outcomes

43:51

of how we've designed our system. Then

43:53

those who are happy with the system as it

43:55

is, will do their best to discredit

43:58

you. So just to put it out there, because that's That

44:00

really is the biggest battle. Then I

44:02

tend to work with governments. I'm currently working with

44:04

Barbados, simply because the prime minister, Mia Motley, is

44:06

an absolute hero. And I just feel so lucky

44:08

to be able to talk to her weekly and

44:11

to go to Barbados because it's also

44:14

a great country. But the ambition that

44:16

she has both for changing the international

44:18

financial architecture, especially having a

44:20

green and blue industrial strategy. She

44:23

wants to make Barbados the most

44:25

sustainable island, large ocean state, not

44:27

small island. Again,

44:29

the ambition, which means changing how hotels

44:31

work instead of an extractive machine. How

44:33

do we make sure they are investing

44:35

within their own workforce to create green

44:38

supply chains throughout the whole tourism

44:40

industry? So anyway, Barbados, Colombia,

44:42

very interesting. But Brazil

44:45

really is where a lot of my energy

44:47

right now is because it's a new government,

44:49

relatively new, after a pretty

44:51

horrific experience that they had with

44:53

Bolsonaro. But it's hard. None of

44:55

this is easy. Again, that interdepartmental

44:58

way of thinking of the ecological

45:00

transition. How do you think of growth

45:02

as an outcome of actually stimulating public

45:04

and private investment in agro business, in

45:06

the biodiversity, in the Amazon, not just

45:08

protecting the Amazon, but making it at

45:10

the center of an innovation strategy? All

45:12

these things, to me, are fascinating. So

45:14

I tend to work with governments also

45:16

where I can learn, humbly,

45:18

shutting up a bit, listening to the civil

45:20

servants that have come in through

45:22

an honor of actually working

45:25

with an administration that cares to put,

45:27

again, people and planet at the center of a

45:30

growth strategy. And you have got, you've talked about

45:32

the hate, but you've also got some quite high

45:34

profile fans, including the

45:36

pope, I understand. Yes. Well,

45:40

when I wrote, OK, this is back some time, the

45:42

value of everything. I'm not sure how he got a

45:44

hold of it, but he then gave a speech in

45:47

Argentina saying, capitalism is all messed

45:49

up, but hey, there's a book. So

45:53

that kind of woke me up to the fact

45:55

that this pope, Pope Francis, had actually read some

45:57

of my work, and that was immediately interviewed about

45:59

that. Then people said have you met him

46:01

as and know but I'm very glad he

46:03

is really my lox. Ah but then he

46:05

invited me to be a part of his

46:08

Academy of lice and I was happy cause

46:10

of Life Right? And if you think of

46:12

how the Vatican and and the religious right

46:14

has thought about life that hasn't exactly been

46:16

progressive sense that he got a lot of

46:18

critique for that the extreme right wing of

46:20

the Catholic church, especially in the Us at

46:22

all. How can you put us atheist abortion

46:24

as the matter where they got that they

46:26

just figured she's on the left, she must

46:28

love abortion and loves. Being atheist anyway, they

46:31

made that up. He then gave. A couple

46:33

speeches where he reminded everyone. He

46:35

said i've put my the analysts a cat

46:37

the on the tatami of life because her

46:39

economics as economic for humanity and the funny

46:41

thing is I haven't visited him and he

46:43

told me some nice things and then he

46:45

waved his finger and he said in spanish

46:47

but the tommy you're not that religious. And

46:51

then I just met him recently two weeks. Ago

46:53

because I have presented some work on the common good.

46:55

that's actually my new book I'm reading on the economics

46:57

of the common good. I gave him a paper I

47:00

wrote on at and he again you said some complimentary

47:02

thanks and then looked him in sense but you do

47:04

have four kids they tell me. If

47:07

I would be more said about

47:09

Axis of Over Three out almost

47:11

out it's I'm subbed Obsessed Good

47:13

of plot. the thought probably from.

47:15

Mexico, Massage. One of the things

47:17

that seven are both very worried about

47:20

is as as we go service, you

47:22

bind us. Revolution How we prevent the

47:24

super normal profits that are likely to

47:27

be generates was just how we make

47:29

sure that this industrial revolution helps people.

47:32

Are not just increases inequality and you know,

47:34

how do we stop? All. The

47:36

revenue guy right to the top to a

47:38

few owners. yep and again to. So I

47:41

have to have a project on this called

47:43

Algorithmic Rents. So the old rents in the

47:45

system where it you know from the landlords

47:47

witch the physiocrats were reading about in the

47:49

seventeen hundreds they talked about the sterile system

47:51

and yep, Landlords to. The money out of

47:53

the system not reinvesting. modern day rants are

47:55

done to the financial sector, the the pharmaceutical

47:57

industry. and through these companies we called the tech And

48:00

on the big tech side, this project I

48:02

have called Algorithmic Rents looks at how the

48:05

algorithms themselves are designed are part of that

48:07

rent seeking. So Shoshana Zuboff has written about

48:09

this in Surveillance Capitalism. She says, you think

48:11

you're searching Google for free? Well,

48:13

guess what? Google is searching you for free.

48:16

So how do we tackle the design

48:19

of the algorithms in, again, a pre-distributive

48:21

ex ante way, as opposed to always

48:23

thinking that these processes are neutral and

48:25

we're going to pick up the pieces

48:27

at the end? That does not work. No,

48:30

I agree with you, which is why we got to sort it now.

48:32

We've got to sort it now, but we also have to...

48:34

I come back to this talent issue. I

48:36

can't overstate how much

48:38

that's a problem. If all the deep

48:40

knowledge about AI used to

48:42

be a bit distributed, yes, in the private sector,

48:44

but also in our top universities and public

48:46

labs, like it was with the internet, again,

48:49

DARPA, a public laboratory, basically, got us

48:51

the internet, then we have

48:53

a problem. And these excess profits,

48:55

these rents in the system that

48:57

are paying huge salaries to researchers

48:59

who then leave Stanford, leave Cambridge, and go

49:01

work for Microsoft or Google and OpenAI and

49:03

so on, that is part of the problem.

49:06

But the question we have to be asking

49:08

is, where did that money come from? Imagine...

49:10

I mean, this is why I should also

49:12

write something about philanthropies. We currently have a

49:15

system where corporate governance is one

49:17

of the Amazon model. Watch the

49:19

Ken Loach film on this. Amazon drivers

49:21

have to pee in bottles, right, because

49:23

of how stressful their work is. Amazon

49:26

doesn't pay tax. We know that. They

49:28

also have a very financialized model. So that

49:31

creates excess profits in the system, rents. Then

49:33

they put 1% of that, if that,

49:36

into a foundation called the Bezos

49:38

Earth Fund, which then works with the United

49:40

Nations on climate change. I mean, that is

49:42

not a good way to tackle our global

49:44

problems. How do you tackle it from the

49:47

start, making sure those excess rents are not

49:49

there in the first place? Once Amazon pays

49:51

their workers well, improves working conditions, and pays

49:53

their tax, let's see how much is left

49:56

over to then put into a foundation. Then

49:58

of course we need good foundations. which

50:00

there are many in the world, to work with

50:02

good government and good business to solve our problems.

50:04

But these excess rents that we have in the

50:06

system have to be tackled from how do

50:08

we produce value in the first place in

50:11

a good way, as opposed to allowing that

50:13

and then, you know, draining out the top

50:15

talent from our universities because you're being given

50:17

millions instead of an academic salary. Well, there's

50:20

a lot we can chew through there, isn't there?

50:22

Thank you so much, Mariana. It's been totally fascinating.

50:24

And I think, you know, everyone's going to go

50:26

away thinking about it. I

50:28

thought this was going to be a

50:30

quickie. Lots

50:32

of strands, you know, for everyone to think about

50:35

and we'll definitely have you back. Thank you.

50:37

It's been a pleasure. Amazing. Thank you. Thank

50:39

you. Well,

50:45

that was an amazingly gripping, wide ranging discussion. What

50:47

did you make of it? Yes, she's amazing,

50:49

isn't she? I think fundamentally, I just want to

50:51

be her. She's so articulate,

50:53

isn't she? She's just bilingual. She

50:55

pretty much knows every single political

50:58

leader in the world. And

51:00

they all come to her for advice. Yeah,

51:02

including the Pope, which is a

51:04

cracking story. No, but I think fundamentally,

51:07

it's really refreshing to

51:09

hear someone who I agree with in terms

51:11

of, you know, I do think we need

51:13

to put money into investment on our infrastructure

51:16

and things in order to get growth. And

51:18

that's where it'll come from. And, you know,

51:20

that whole idea that growth isn't the mission,

51:22

growth is the outcome. That makes

51:25

sense, doesn't it? She's completely right about

51:27

that. But

51:29

the simple point seems to me to

51:32

be the one that one has to

51:35

not let go of, which

51:37

is we need leadership

51:39

and we need those people,

51:42

whether the top of governments or

51:44

the top of public sector, to

51:46

be less scared of failure. And

51:50

to take more risk. A bit like us, really. I

51:52

think we take enough risk, don't we? I mean, we're

51:54

out there every week saying things that many people think

51:57

are done, but we're sticky to our gums. Yeah,

51:59

we're sick. and we'll have more

52:01

coming your way soon but that's it from us on

52:03

the Rest Is Money send us your thoughts [email protected]

52:07

or you can contact us on our social media pages

52:09

as well but that's it from us bye bye see

52:11

you next week