The Biggest Lie About Capitalism — Mariana Mazzucato interview

[00:00:00] Speaker 1: by actually having goals whether it's on health and well-being climate uh you know preserving water across all our sectors that means the state has to be confident unless you have you know common good at the center then the way we interact with steel the way we interact with palantir the way we interacted with the so-called nissan deal at the time um it by design becomes a problem this idea that somehow regulation is bad for innovation is completely misplaced and the fact that today in space for example many astronauts are complaining that they can't see anything it's full of debris it's become a playground for the rich the state um is often giving water rights to whether it's pepsi cola anheuser-busch right drinks companies um and if they don't put in the contract in order to get the concession from the state that you're expecting something from the company then of course you'll get a parasitic contract if the state didn't actually create the right contract from the beginning it's part of the problem unless you know what the state is for to be driven by public purpose public value common good economics of course we're going to get very problematic contracts unless we have a different story of where wealth comes from and that collective value creation it's not surprising then that we get everything else wrong [00:01:08] Speaker 2: professor can you talk to me about the common good what do you mean by that sure so i mean that we [00:01:14] Speaker 1: have a lot of good washing because there's lots of goals that economies set themselves whether it's around reducing inequality achieving growth having you know combating the biggest problems of our time regarding water biodiversity climate change and yet the underlying economic theory that we use to do good in the economy is not good it's very corrective so we we even talk about public goods as corrections for something the private sector doesn't do so what i mean by it is going back to deep political philosophy in the times of aristotle where the common good was an objective not a correction so he talked about the telos the goal but where the police not the police but the police the community matters as much as the goal so the telos and the police and so i believe that within economic both theory and practice what we're missing is precisely that we don't have an objective outcomes oriented economy we're just correcting for market failures and we don't spend enough time in designing contracts in a pre-distributive way in other words from the beginning instead of waiting for redistribution to get all the relationships right along the way whether that's capital and labor public and private uh civil society organizations in the state we'd have very messy contracts which create problems and then we correct for market [00:02:30] Speaker 2: failures so can you talk about that a bit more in depth actually because i know that you'll do this day in day out but i you know that for some people would be the first time they're hearing this so correcting market failures and the concept of public good why is that different to to searching for a common good [00:02:43] Speaker 1: market okay so in economics we believe in markets i think often uh it's actually confused the the word the private sector of business is often confused with markets but we can get to that later the theory which i uh combat says that markets work great until they don't and when they don't we have to correct them now we might correct them due to what's called positive externalities in other words when there's something um good that we want to be invested in but the private sector doesn't invest in it because of and i don't want to go into too much technical terms here but due to the non-rival and non-excludable aspects of that good in other words you can't appropriate the profits from it because the spillovers are so great to get under investment then we expect the public sector to invest in that thing whether it's clean water defense systems basic research um the opposite are negative externalities when the private sector does too much of what's called a bad let's think of pollution not including the cost of pollution inside their uh uh kind of budgets and so we tax them say a carbon tax that's again the state correcting for a problem in the economy in how the market works so whether you're correcting for positive externalities like public goods or whether you're correcting for negative externalities through a carbon tax my point is you're always in correcting mode it means you're always too little too late you're always ex post not ex ante and also a bit depressed right because you're always thinking that something's gonna not work so i sometimes joke that i walk into governments as an economist and i come out as a life coach uh therapist because that kind of negative right that markets might fail and so we need government to correct for that and what's striking is that the word public good two words one is good is so corrective and so it's not even a theory of the public or of the good it's a theory of what the private sector is not doing that then creates a gap that's why you might hear even in big global circles like the united nations that we have a financial gap so the current estimate is that there's about seven trillion dollars in gaps for the financing of the sustainable development goals that every country including the uk signed up to in 2015. so if you're just filling a gap you get in your mindset that you just need more money as opposed to what kind of money you know do we need perhaps more patient long-term finance through say public banks instead of quick finance through how financial markets are currently structured even venture capital which is often celebrated for being high risk finance and one of my first books the entrepreneurial state i showed how actually it's not very high risk they come in after the public sector invested in the high risk capital intensive areas that means we shouldn't just talk about risk finance we should better understand why it is actually that we've required public money to invest in the early high risk capital intensive phase of technology and why is it then that by not admitting that we end up socializing risks and privatizing rewards but in the new book what i try to do is go beyond the entrepreneurial state which i wrote about in 2013 and mission economy which created some waves because you know governments like the current one in the uk took on some of the ideas and then and didn't actually follow through the current book says well it's not a coincidence that we're getting it wrong by design we're getting things wrong because we just think about doing good as correcting as [00:06:02] Speaker 2: opposed to an objective i wanted to ask you if you thought the common good was compatible with the american dream i mean you talk a lot about sort of you know yeah the individual yeah how does that work [00:06:13] Speaker 1: in you know in the states right so there's i think a misperception that the common good is just about like collective this collective that and not respecting the individual it's actually the opposite i believe that every individual has the potential to flourish and unless we invest for example in collective structures whether it's um health systems but also places like youth centers community centers where people feel valued i think it's very hard for those individuals then to flourish and i've seen this in my own part of london and camden where after years of austerity which affected mental health youth centers public libraries community centers and so many people fell through the cracks that is not good for an innovation economy it means that a big percentage of our population no longer has also self-worth and i really do believe that if you look at knife crime for example in london a lot of that has to do with self-hate if your own body has no value it's much easier to unfortunately kill someone else and so what are the collective investments that we need to allow individuals to thrive to allow their own creativity not some sort of collective creativity their individual creativity to flourish we seem to care about that for some when we talk about startups and entrepreneurs and not for a big chunk of our population which is literally not valued this by the way is why one of my most exciting new projects is on carnival looking at both the notting hill carnival but also the carnival in brazil across different cities as an example of immense collective creativity underfunded underappreciated often just talked about as a crime scene but even the value that is created in terms of social cohesion huge benefits to the people taking part of the steel bands and so on so little of that long-term value also gets reinvested back into the community whether it's the samba schools in rio or the youth centers again in notting hill so i really believe that we need to bring that innovation and value creation narrative to how we understand everybody's ability to become creative and to flourish and especially to debunk the kind of big state small state or individual versus collective that's what the book tries to do it was a fantastic phrase wasn't it [00:08:21] Speaker 2: mission-led a fantastic concept and it certainly has done rather well with slogans but you think [00:08:26] Speaker 1: it hasn't been fulfilled i mean i don't think it's due to the fact that um you know ministers or prime ministers or civil servants aren't trying i just think that it was meant to be disruptive it wasn't meant to be kind of mission washing and just a slogan and so what missions so now we're talking about the book i wrote in 2018 tried to do is to say let's stop talking about for example sectors right you know ai renewable energy the creative industries let's worry about problems and ask what it means for all our sectors and that means government needs to have much more confidence in terms of how it designs public-private partnerships to be outcomes oriented instead of subsidies guarantees tax incentives going to the moon for example was not just aerospace it required also all sorts of investments in nutrition materials electronics why because the astronauts had so many problems on board including how would they go to the bathroom what would they eat what would they wear and so that required government to have mission-oriented procurement which is often 20 to 30 percent of a government's budget to solve those problems in an intersectoral way with very good contracts with companies that were not just asking for subsidies but that were willing and able to work with nasa around these problems that's not what we often do we think of say climate just as energy that's just a sector the problem is how do you have sustainability across the whole economy including green steel green cement green agriculture given that something like 70 percent of emissions come from how we grow food and that means the government has to have a very confident relationship with business instead of just saying we're going to be business friendly how do you work with business to solve problems so you don't just open up you know [00:10:04] Speaker 2: your nhs database to palantir i want to come back to that can i can i stick on outcomes for one moment there because i mean an example that i think i've actually heard you talk about before is elon musk and the subsidies that were received for spacex and tesla yeah over in the us solar city and everything yeah i mean did that have a positive outcome on the common good do you think i mean well no so the the [00:10:26] Speaker 1: reason i wrote the book is to say the common good isn't just a word it needs to be a compass so that's the subtitle a new compass with five elements to help navigate uh global capitalism and the five elements are mish i'm sorry first is purpose and directionality what are we even trying to do if that's not clear that already opens us up to lots of problems second co-creation participation who decides what the missions are how do we make sure that this is much more participatory so we have the voices especially of those who have not benefited from badly designed policies at the moment third is sharing rewards sorry sharing knowledge fourth is sharing rewards a fifth is transparency and accountability we don't know who's doing what who's getting what and why it's going to be very hard to have a common good economy so elon musk yes he benefited massively from an entrepreneurial state that took on all the risks before um tesla or again solar city or spacex did but that would be fine if we at least admitted it because we don't admit it and we allow him and others just to bash you know government as being one big bureaucracy and you know proposing themselves as wealth creators then what follows doesn't work so we don't end up getting the right kind of contracts which truly also socialize the rewards and very specifically with tesla what happened was that while we were killing ourselves here with austerity the u.s was smartly having a proper fiscal stimulus to the economy after the financial crisis and obama at the time wanted to direct that stimulus around greening the whole economy so he set up something called arpa-e which for example was trying to foster innovation and energy of the extent that darpa had done say with the internet this is a defense uh agency innovation agency in the u.s darpa arpa-e was emulating that for energy but also they gave out a lot of guaranteed loans so the doe the department of energy gave guaranteed loans to tesla but also companies like solyndra a solar company now what happened was that uh solyndra went bust and everyone knows that story because it became another kind of government bashing exercise saying government doesn't know what it's doing why is it investing in companies the same amount of money close to 500 million and a guaranteed loan went to tesla that was successful so that became a story how it was told of private sector success second um the contract was very ill designed they said to tesla if you don't pay back the loan we want three million shares in your company that makes no sense why would you want three million shares in a company that's not doing well but they should have said is if you do pay back the loan which they did in 2013 loan was received in 2009 uh the price per share went from uh nine to ninety had they said we will get three million shares if you're successful that difference nine and ninety multiplied by three million would have more than paid back the slender loss and the next round of investments so no again it's just always socializing risks privatizing rewards so unless we have the whole compass then you might say oh look actually the government did invest in this great company tesla isn't that what it's supposed to do no what it's supposed to do is not just fuel profits right but fuel an economy that's better designed to deliver for people and planet and if we don't allow the public coffers to reap any of the benefits back then we end up having this endless discussion about tax so because we don't see the state as an innovator and at best also by the way we only allow it to be an innovator on military industrial complex problems where money comes out of thin air then we don't get all the different elements correct so again the reason i wrote the book was to provide much more guidance on not just how to invest but how to make sure we govern the rewards so that all benefit so looking at that example and you know [00:14:07] Speaker 2: translating it to the uk is that the argument then for the green transition well the green transition [00:14:13] Speaker 1: shouldn't just be about energy and i do think that after uh starmer's government adopted the missions approach and i was you know happy they also cited the book mission economy um they set up these five missions and the net zero one was probably probably the one that was closest to what i had been talking about so missions are supposed to start with a challenge like climate change turn it into a very clear mission as clear as getting to the moon and back in a short amount of time but especially make it intersectoral as i said the moon would have not happened had we just thought of it in terms of aerospace and lastly use all the tools governments have whether it's procurement loans and so on to foster bottom-up not top-down experimentation towards mission accomplished so the growth mission wasn't correct right that's just growth everyone wants growth you don't have growth just by calling you know growth a mission growth is a result of actual public and private sector investment which in the uk has been low on both sides the opportunity and safer streets missions are very important goals but they didn't really put them at the center of an industrial strategy and um it wasn't very clear what they wanted actually from different sectors to achieve those goals the net zero one was important but it just ended up being about energy as opposed to sustainability so lula for example he's put the ecological transition he's the president of brazil at the center of government um as germany has and that has meant that the way in germany for example that they structure public loans it's conditional that the sector receiving the loan reduce carbon emissions so as an example the steel sector which all over the world including the uk is in trouble uh in germany unlike in the uk received support from the public bank conditional that it lower the material content of production they did that to repurpose reuse recycle across the whole supply chain that fosters growth right because it means you need to train your workers you need to invest you need to innovate towards a goal if instead you're just subsidizing or saving the steel sector you're allowing this kind of inertial situation where the public sector comes in just to save the day until maybe profits are up later and then we privatize the rewards so by actually having goals whether it's on health and well-being climate uh you know preserving water across all our sectors that means the state has to be confident and how it relates to whether it's ai or steel or any sector and in the uk unfortunately and this has been kind of bi-political like how do you say bipartisan i was going to say across the political divide we haven't had i think a confident uh relationship with business and when labor came in because they were worried about getting accused of running the economy into the ground i don't think they turned that narrative on its head they didn't actually say look this isn't about being business friendly this is about working well with business on goals that really matter to a progressive government in terms of all the problems that people are facing [00:17:08] Speaker 2: yes yeah a very acute issue actually down in wales with port talbot with that transition there transition to cleaner energy that saw a lot of jobs go and none of that money refunded back into the state and the same actually as well i think nigel farage is now going to nationalize steel isn't he if he [00:17:24] Speaker 1: gets into but it's a constant back and forth nationalization privatization and as opposed to how do you govern this in the public interest or as i say here for the common good which i think is more clear in terms of what it means in the public interest and so even the example i just gave of of steel is not just about nationalizing or privatizing it's how do you make sure the government makes sure that the sector that gets even one pound of government money is becoming a better sector improving working conditions using energy efficient supply chains i worked in chile for example um during the previous governments um how do you say well during the previous government they now have had a new election um and for example lithium right that's needed across the world for batteries if we want to electrify our cities but the current way that we're extracting lithium from the ground is very wasteful on water so unless the government has a sustainability target it will end up just kind of overly you know using certain types of natural resources and not making sure that sector becomes a good sector in terms of again more inclusive and more sustainable so this is what i would expect from a progressive government to have goals around again equity around sustainability otherwise we're not going to have a planet to live on around making sure that we have innovation that sectors are reinvesting profits instead of just financializing profits through just giving out dividend payouts to shareholders or using share buybacks and using conditions like that working conditions reinvestment energy efficient supply chains in terms of how the government relates to all sectors in the economy um and i i wrote some papers on this and then i included it in in the book because that idea of sharing risks and rewards sharing knowledge becomes a way that government fosters a good relationship with the private sector and i talk about you know that we should become much more rigorous with our words so biologists when they use the word ecosystem they won't use it in a neutral way they'll say do we have a parasitic ecosystem predator prey mutualistic or symbiotic and they actually have mathematical equations to differentiate those kinds of ecosystems and i believe one of the biggest problems in the uk has been that we've had parasitic ecosystems so the business sector will benefit from a government subsidy tax incentive and so on but not necessarily do their part and it's not necessarily business's fault if government's not asking for anything like during covid we gave i think it was 600 million uh pounds bail out to uh easyjet then you know that's a government mistake during the same period france for example to the trains as well yeah yeah exactly whereas in france uh because renault and air france were partially in state hands they made sure that the support that those um firms got during covid were conditional that they actually invest in carbon reduction i mean it just sort of seems very [00:20:24] Speaker 2: straightforward doesn't it when you put it like that it seems sort of obvious it needs confidence and i think probably water as one of the utilities is an obvious example of that as well isn't it yeah then sort of you know the state does pick up for any mistakes that are made by the private sector [00:20:38] Speaker 1: yeah taxpayer dollars and it's quite striking because even there you can see different parts of the world that govern the water problem differently and it goes beyond nationalization or privatization the fact that 80 percent of industrial waste water is not recycled just means you have a really silly contract because the state um is often giving water rights to whether it's pepsi cola anheiser bush right drinks companies um and if they don't put in the contract in order to get the concession from the state that you're expecting something from the company then of course you'll get a parasitic contract so that's not about nationalization or privatization it's making sure that whether it's the companies benefiting from the water rights like drinks companies or the water utility before allowing them to you know have a private contract like thames water there should be very strong conditions attached to what that company needs to be doing for example um of course investing in the infrastructure so we don't end up with sewage as we have in our rivers and seas which is a crime but if the state didn't actually create the right contract from the beginning it's part of the problem so my work has never been about defending the state it's about saying unless you know what the state is for to be driven by public purpose public value common good economics of course we're going to get very problematic contracts [00:21:56] Speaker 3: happy sunday sean oh thank you i'm just back from mass and i feel refreshed i actually didn't go to [00:22:01] Speaker 2: mass today but i did want to watch the mass in italy you can watch them oh of course you can sometimes i like to really get in tune with my italian roots and so i'll use a vpn just to have a little look-see [00:22:12] Speaker 3: one of the streams of mass over there do you know what they also have over there is a 24-hour live [00:22:17] Speaker 2: stream of padre pio's grave wow can you watch that from anywhere i don't think so i think you have to [00:22:24] Speaker 3: be in italy oh well there you go yeah so if you want to watch that you could choose nordvpn as well [00:22:30] Speaker 2: perfect yeah you can do that by going to nordvpn.com forward slash joe sunday because it's your sunday service joe sunday that's right if you were to take out a two-year plan you can get four months free and if you hate it in your first 30 days you could you get all of it back you get all of it [00:22:49] Speaker 3: back oh come on this is a deal impossible to turn down yeah and now for the rest of your sunday if [00:22:56] Speaker 2: you're going down the pub if you're going down the park if you're going anywhere with a non-secure wi-fi service perhaps it's a good time to lock into a vpn yeah yeah protect your data out there you don't know who's looking it might be us we might be looking i'm always looking at your data always wherever you are it's something quite uncomfortable isn't there about using a an insecure wi-fi network who's having to browse on this what if you're abroad what if you're staying in someone else's home what if you're staying in a hotel whose wi-fi is that what are they getting and what are you looking at that you're worried about other people looking well you don't even have to be worried [00:23:34] Speaker 3: about what you're looking at it could be any of your personal information just taken out you know [00:23:38] Speaker 2: well i'm using my online banking people don't need to know that's for me secret me god and my bank especially on a sunday a joe sunday that is usually when i check my uh online bank account on a joe sunday i just think what on earth have i done the night before yeah yeah yeah yeah certain [00:23:58] Speaker 3: time of the night where i go oh i'll get it i'll line up i'll get it that probably is already on a sunday that usually happens to me on the early hours of the sunday oh really i just sort of move my going [00:24:10] Speaker 2: out time a bit earlier oh have you i'm like a mid-afternoon i'll depart from the house and then [00:24:14] Speaker 3: i can come back before midnight oh that's nice i like that yeah it's quite nice really you know in tune with the licensing laws and all that well that's right and then you're also going to be up bright and early for mass on sunday like i was today but i tell you what i'm going to be out and about [00:24:27] Speaker 2: watching the football this week if you know what i'm going to be using when i'm in those pubs at vpn a nordvpn nordvpn.com forward slash joe sunday get the four months free on the two-year plan [00:24:41] Speaker 3: and you can wipe it if you're not happy in the first 30 days there's also a link in the description of course so if you need any more information just go down there and you'll see it there's an addiction [00:24:53] Speaker 2: arguably in this country to those quote-unquote parasitic contracts i mean even if you look at sort of a marker of success in manchester which is the nationalization of the buses they're not actually nationalized they are right in part you know it's sort of like very blair pfi yeah um i mean why are [00:25:09] Speaker 1: we so like a lot of social housing right that in theory it's social and public but it's being managed by companies that have shown not to care and in a position with developers yeah interesting but also like circo g4s i mean what's absolutely striking is that they keep getting the contracts after failing miserably you might remember in the london olympics where g4s was supposed to deliver security failed i mean how hard is that going to the moon is hard delivering security for the olympics it's it's a challenge it's complex but they failed so the the government had to send in the military uh look at the um record that circo has on prisons terrible and you know prisoners deserve a certain kind of treatment that they're not getting and there's a rise in deaths for example amongst youth offenders and prisons due to the very bad way in which prisons are being managed so unless you have again a compass and i talk about these five different elements as needing to navigate how the state interacts with the economy then you end up with a very messy situation which by the way costs if we talk about costs the state much more to pick up the mess after uh climate scientists often talk about this that the cost of inaction doing nothing is greater than the cost of action but it's also true with all social problems it costs more to imprison a teenager than to properly educate and invest in all their social and economic determinants of well-being so many young people are failed and even you know those committing crimes not all of them but many of them are victims if you look at how they were brought up just the systems that have failed them and investing in those systems and not seeing them as a cost but an investment not only for the human beings in question but also for the economy it actually costs less it was referenced actually [00:26:53] Speaker 2: in the alan milburn report i don't know if you saw it that came out last week yeah about young people yeah they're not in work or it's heartbreaking yeah very much um in that light can you talk to me about palantir do you do you imagine that that's a will that be a healthy relationship for the uk [00:27:10] Speaker 1: to hand over the nhs data to a to palantir well well we've seen that in general the degree to which the uk is overly reliant on us tech companies by the way with some of the technology actually haven't been developed here just think of deep mind right was developed in this country and then sold off for pennies actually to google um then we end up also with a huge issue around sovereignty which might not be an issue during good times but as we saw during covet or during energy crisis unless you have sovereignty in these essential services and goods then you have a problem whether it's personal protection equipment or data services which are really as people say the new oil i think there's a [00:27:51] Speaker 2: problematic metaphor there but anyway do you mean like the sort of well astrazeneca did with their [00:27:55] Speaker 1: vaccine or not quite that yeah exactly so i mean so should i go to that or palantir but anyway well yeah i mean i'm glad you brought it up i've just written a whole article about it so with um with covid we should remember that the goal the goal was not the output it was the outcome it was not vaccines it was vaccines that were accessible globally even we should have cared that everyone in africa was vaccinated even if we don't care about humans which we should uh the vaccine came back right it comes back to bite because it's a global pandemic so by making vaccines that were not producible in africa that was a problem and only one vaccine yes well we call it the astrazeneca one but it was oxford university and astrazeneca that collaborated on a vaccine called the vex revia vaccine it was because the oxford university taxpayer funded researchers said hold on we're researchers we're getting money from the public purse and we care about the public meaning people let's make sure that the contract with astrazeneca is conditional and sharing the knowledge and keeping price and costs low so it can be accessible in africa and we don't we don't end up having to send over expired vaccines out of charity which is what ended up happening in many parts of the world so that idea of starting with what is the goal and then structuring the innovation collaboration to be goal mission oriented that was a good example of trying to do that and with palantir the problem is what's the goal what is actually the goal of the government in terms of what it's trying to do with that company ideally not just one company by the way you don't want to put all your eggs in one basket but you might say we want to work with ai companies to solve you know x y and z and you make sure that the contracts are again outcomes oriented in that particular case we've opened up the nhs database to palantir and i think the contract is first of all it's not very transparent that's the fifth element of the common good compass but also how do we make sure that it is designed in such a way that not only respects respects privacy but is also um again transparent in terms of conflicts of interest and we know there's many conflicts of interest with the tech companies which um even with some of the recent um uh coverage of tony blair's letter and his own conflicts of interest in terms of the positions he's putting out and yet the huge amounts of funding he's received from larry ellison and others we really need to begin with the position of what is the goal being sought whether it's in the health system whether it's in how we treat the hydrological cycles or water and how are you going to work with different companies to solve the problem with very transparent contracts and with conditions that in this case for sure have to do with privacy but also making sure that the government ultimately is also more able to think and govern about you know ai in the future whereas if all the knowledge remains in the companies the government just like in the book that i wrote about consultancies becomes overly um reliant on the private sector to do pretty basic things like when we paid deloitte 1.5 million a day for test and trace which by the way they failed so uh that lesson wasn't learned [00:31:09] Speaker 2: there's an amazing uh videos that emerged of sort of randox like piling up all of these test kits and [00:31:15] Speaker 1: oh yeah yeah yeah yeah i mean it was it was absurd so what i always say is any contract that government has ultimately should make sure that there's learning at the center how you know how do we govern ai for good and not for bad well it's very hard to govern something of all the top talent is actually going into five companies and the reason they are is the salaries that are being paid by um the tech companies in the u.s are you know multiples of what people would earn either in a university or even in a public lab like darpa or nasa the space agency but where did that money come from if you look at the extent of tax evasion massive or in the case of amazon exploiting the workforce or also how the stock market currently interacts with many of these companies which uh in the early stages benefit from what i would argue a financialization basically of how we think about growth and many companies that in the beginning have very uh high um or sorry low price earnings so so sorry high price earnings so low earnings high stock prices and how speculation in clean tech biotech nanotech internet ai today the way we've set up this almost mismatch between finance and the real economy which then builds bubbles and allows lots of funds to be raised for companies which ultimately their own innovation and this is the point i've been making on and on was driven by early stage high-risk capital intensive public investment even large language models early speech recognition it was all in that particular case darpa funded by the us taxpayer if you don't then from the beginning start questioning what's happening with the data how is privacy being protected how do we make sure again the public purse is refunded also in terms of the taxes paid by these companies which ultimately have relied on tax dollars and then didn't pay into the tax system it's quite remarkable how little taxes paid by companies that relied so much on public investment then we're again creating this mess which is really hard to solve later and i think one of the things that's not talked about enough is this kind of hemorrhaging of talent from universities both public and private and public labs and i think it's almost impossible to govern ai for good if you don't also have some of the kind of you know key innovators inside the public sector as we used to have i mean can you even govern it at all though i [00:33:41] Speaker 2: think you know a lot of the stuff that i'm reading of from tony blair recently you know his argument very much is actually you can if you get ahead of this you can be in control of it you can legislate for [00:33:51] Speaker 1: it sure and you can drive innovation i mean what happened and say the life sciences sector um in food if we had unregulated it then we would first of all be dead because we'd be taking medicines and eating food that kill us and the fact that there were smart regulations meant that those companies in both food beverage you know and health care had to innovate in order to make sure that we had you know uh that we were putting into our bodies things that weren't killing us so this idea that somehow regulation is bad for innovation is completely misplaced and the fact that today in space for example many astronauts are complaining that they can't see anything it's full of debris just shows how unregulated the space sector is where it's not clear what the mission is it's become a playground for the rich to basically again play on the back of taxpayer-funded early stage research um and or that it just becomes kind of a pet projects you know do we go to mars do we do this do we do that as opposed to how do we work together between the global space stations and the private sector actors in a way that emulates what we did back in the day in the 1960s where what's really interesting and i wrote about this in mission economy nasa was so confident of its role it also made sure that the companies weren't abusing the public sector so they had no excess profits not no profits no excess profits but i call rents in the contracts the idea was you're benefiting from nasa investments we're benefiting from you we're going to work with all sorts of private sector actors to help us get to space but we're going to do it in an outcomes oriented way very clear mission and you're not going to earn more than your contribution to this collective effort and that's why one of my books called the value of everything i talk about collective value creation and in this book the common good economy i bring these ideas together the entrepreneurial state mission economy collective value creation but add the fact that unless we relate to each other and that all the contracts embody this idea of what we're even trying to do from the start then you end up stuck in this fixing the mess later and as you say it might get so later that you can no longer govern the process so what are you advocating for do you want a [00:36:06] Speaker 2: public register do you think if someone has been a private company has been allotted a huge sum of money by the government you should be able to trace it online or that well that's a good point in terms of [00:36:16] Speaker 1: transparency and accountability but the first thing is are we clear on why companies are even receiving subsidies and so on so unless it's unless you have you know common good at the center then the way we interact with steel the way we interact with palantir the way we interacted with the so-called nissan deal at the time um it by design becomes a problem because it almost only then becomes a question of stimulating uh profits instead of stimulating investment towards solutions to a problem and by the way this this you can even see with gdp many people say gdp is problematic and it is however even with basic gdp figures you can divide it up by income so profits wages interest and rents you can divide it up by on the demand side consumption investment government spending and you can do it on the product side national income and product accounts i won't bore you with the details but the point is even just with basic gdp you will see that the labor share of global income is at one of the lowest levels it's ever been that means the profit share the capital share is very high and yet the investment share has been falling so we've ended up with a system where profits are rising but investment is falling so then the question is how can that be how can that be that um that you know profits are rising while investment is falling where are these profits coming from so this idea that we've ended up with a very financialized corporate sector where something like seven trillion dollars has been used over the last 10 years just to buy back shares to boost stock prices stock options and executive pay that should be something that a progressive government whether it's a labor government a democratic government in the u.s should really be focused about not just about the deficit the debt you know big state small state but how do you interact with business so profits are reinvested in such a way that we improve working conditions create more sustainable supply chains and also really driven by innovation you know creative destruction and not just kind of extraction which again whether you're thinking of thames water carillion the circus the t4s's but also very large energy companies like exxon very large pharmaceutical companies like pfizer in each one of these cases you could use them as a case study where that relationship with government and the business sector was too extractive and i would call too parasitic using again biological metaphors that it's not clear [00:38:44] Speaker 2: what the state is getting back for that public subsidy well even in the you know the case of jp morgan potentially moving to tower hamlets with enormous business rate cuts right uh in order for them to be [00:38:56] Speaker 1: the sort of the hub of europe yeah or goldman's act which after being bailed out um you know then went on to present itself as this high risk uh investment bank and we saw who bore the risks uh without any proper return actually to the public purse besides getting paid you know back what they uh lent the company so unless it's all of this is a company by a new story that's why i began the value of everything with the native american quote that storytellers ruled the world unless we have a different story of where wealth comes from and that collective value creation it's not surprising then that we get everything else wrong [00:39:32] Speaker ?: Thank you.