# Wheeler Institute for Business and Development

Data: 11-01-2025 21:45:59

## Lista de Vídeos

1. [Wheeler Institute for Business and Development | London Business School](https://www.youtube.com/watch?v=swzeWUHJqI4)
2. [Conducting rigorous research | London Business School](https://www.youtube.com/watch?v=fg3oeKfXXm8)
3. [Forging communities of practice | London Business School](https://www.youtube.com/watch?v=9bD1Ja1bT6U)
4. [Shaping business education | London Business School](https://www.youtube.com/watch?v=2aqozhwZVgI)
5. [Refugees across the Mediterranean | London Business School](https://www.youtube.com/watch?v=zaOQSRbQl1s)
6. [Saving lives and accelerating innovation in the pharmaceutical industry](https://www.youtube.com/watch?v=HReNtuwm5vU)
7. [Systemic cyber risk](https://www.youtube.com/watch?v=WA8q9J7nQPo)
8. [Increasing the follow-up rate of patients requiring emergency high-consequence treatment](https://www.youtube.com/watch?v=c2zmybUKq5k)
9. [Climate risk and its impact on financial markets | London Business School](https://www.youtube.com/watch?v=_Ad56iX4Gf4)
10. [Four MBA2020 students on Global IMPACT Programme | London Business School](https://www.youtube.com/watch?v=P9DGHJEFD2I)
11. [Development Impact Platform: Lusaka, Zambia | London Business School](https://www.youtube.com/watch?v=mBb3twRegHQ)
12. [Internships: Wheeler Institute | London Business School](https://www.youtube.com/watch?v=N2t4IBP1MmM)
13. [Global Impact Programme: Wheeler Institute | London Business School](https://www.youtube.com/watch?v=PMsl1cjh5uQ)
14. [Social Impact Week 2020 | London Business School](https://www.youtube.com/watch?v=nRpPHD6BD-I)
15. [Voice of the Village: Confronting the new normal](https://www.youtube.com/watch?v=cLM1HII8ILU)
16. [The power of purposeful business](https://www.youtube.com/watch?v=EQ6Y3xKl0KE)
17. [Can data-driven price-discount policies help in reducing malnutrition?](https://www.youtube.com/watch?v=r5bZm_Suk88)
18. [Rethinking Capitalism: In conversation with Esther Duflo and Abhijit Banerjee | LBS](https://www.youtube.com/watch?v=WhdCxOWbThc)
19. [Rethinking Capitalism: A fireside conversation with Rebecca Henderson and Ioannis Ioannou | LBS](https://www.youtube.com/watch?v=a1aVARVpxio)
20. [Education for all, occupational choice and business formation in Africa](https://www.youtube.com/watch?v=VLoDhpgMiXE)
21. [Rethinking Capitalism: In conversation with Thomas Philippon | LBS](https://www.youtube.com/watch?v=Qk2EXeBBqqA)
22. [Social Impact Week 2021 | London Business School](https://www.youtube.com/watch?v=RyeI5BANB2Q)
23. [Can data-driven price-discount policies help in reducing malnutrition | Wheeler Institute](https://www.youtube.com/watch?v=wOZPgEbrKLg)
24. [Health Equity: Implications for Developing and Developed Countries](https://www.youtube.com/watch?v=PSVcWEY0mZc)
25. [Rethinking Capitalism with Gita Gopinath | Register now | Wheeler Institute](https://www.youtube.com/watch?v=Fg5NkKIymx8)

## Transcrições

### Wheeler Institute for Business and Development | London Business School
URL: https://www.youtube.com/watch?v=swzeWUHJqI4

Transcrição não disponível

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### Conducting rigorous research | London Business School
URL: https://www.youtube.com/watch?v=fg3oeKfXXm8

Transcrição não disponível

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### Forging communities of practice | London Business School
URL: https://www.youtube.com/watch?v=9bD1Ja1bT6U

Idioma: en

I think we're Institute we want to force
communities of practice we want to bring
together top-notch academics that
conduct the Biggers academic research
thinking carefully and deeply about some
of the most profound challenges as the
world faces business leaders who are
conducting business on varying
challenging environments policymakers
that have to come up with policy
recommendations should actually take
concrete action bring them together
because we strongly believe that only by
bringing people together we can have
lasting impact communities we are lucky
that London Business School is one of
the world's leading business schools so
we are happy that our academic community
our student body consists of people
coming from many countries around the
world having very diverse backgrounds
and we believe that bringing those
different skills different experiences
can be a catalyst for action last year
the winner Institute for business and
development hosted at the London
Business School a two-day conference on
development in fragile environments the
first day we invited various academics
from the most prestigious academic
institutions and then on the second day
we brought those academics together with
policymakers with leading practitioners
from international organisations with
business leaders who do business on the
ground because all of those individuals
we believe have something to contribute
we have also noticed that an increasing
number of our students do not
necessarily want to work in consulting
or banking but they want actually to
work in the development field they want
to work in ethical business that not
only thing about maximizing shareholders
value but also doing good in the society
so we want to bring together this
vibrant community to learn business
school but also in other institutions
that we collaborate with plan to bring
this student body together with the
leading academic scholars thinking about
development broadly defined having a
business angle which we feel is missing
from the debate on how to tackle under
development
[Music]
you

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### Shaping business education | London Business School
URL: https://www.youtube.com/watch?v=2aqozhwZVgI

Transcrição não disponível

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### Refugees across the Mediterranean | London Business School
URL: https://www.youtube.com/watch?v=zaOQSRbQl1s

Transcrição não disponível

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### Saving lives and accelerating innovation in the pharmaceutical industry
URL: https://www.youtube.com/watch?v=HReNtuwm5vU

Transcrição não disponível

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### Systemic cyber risk
URL: https://www.youtube.com/watch?v=WA8q9J7nQPo

Transcrição não disponível

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### Increasing the follow-up rate of patients requiring emergency high-consequence treatment
URL: https://www.youtube.com/watch?v=c2zmybUKq5k

Idioma: en

I received a research funding from the
wheeler Institute for business and
development related to my project which
is on increasing the show-up probability
of the patients requiring emergency and
high consequence treatment as business
researchers and as the people who are
part of wheeler Institute we are trying
to solve the problems of the developing
world from different perspectives with
some interventions we are trying to
increase the show-up probability of them
so that we can prevent needless
blindness which is very possible to cure
the research in developing countries is
very important
first of all especially from the
healthcare setting healthcare
perspective I can say that many diseases
are much more prevalent in developing
countries I think with this project if I
reduce the amount of people who would
become blind just because of not coming
to their appointments and surgeries it
would be the biggest impact I can create
if the methods we suggest works in our
particular research setting we can also
apply it to in another countries in
another setting so that we can save many
lives
[Music]

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### Climate risk and its impact on financial markets | London Business School
URL: https://www.youtube.com/watch?v=_Ad56iX4Gf4

Transcrição não disponível

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### Four MBA2020 students on Global IMPACT Programme | London Business School
URL: https://www.youtube.com/watch?v=P9DGHJEFD2I

Transcrição não disponível

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### Development Impact Platform: Lusaka, Zambia | London Business School
URL: https://www.youtube.com/watch?v=mBb3twRegHQ

Transcrição não disponível

---

### Internships: Wheeler Institute | London Business School
URL: https://www.youtube.com/watch?v=N2t4IBP1MmM

Transcrição não disponível

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### Global Impact Programme: Wheeler Institute | London Business School
URL: https://www.youtube.com/watch?v=PMsl1cjh5uQ

Transcrição não disponível

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### Social Impact Week 2020 | London Business School
URL: https://www.youtube.com/watch?v=nRpPHD6BD-I

Idioma: en

[Music]
the social impact is becoming a central
part of the LVS journey and it's driven
by the increasing interest in the sector
from students and businesses this year
the social impact week will happen
between the 9th and 13th of March and
over the five days we're gonna have more
than a thousand key stakeholders between
alveus alumni students faculty partners
and companies social impact
characterizes a desire for businesses to
make a positive difference in the world
and at the wheeler Institute we seek to
apply business and expertise to social
and economic challenges in developing
economies we collaborate with a social
impact Club on this week as the
conversations our students are seeking
to have go beyond simply responding to
the changing expectations of business
but importantly to driving challenging
assumptions in changing mindsets of what
business can really achieve when they
come to social impact week students can
expect to be inspired by different
leaders in social impact the different
true preneur but they have achieved
social impact in many different ways
the social impact Club aims is to create
purposeful leadership want the students
to understand that it can have an impact
in their careers
no matter the career that they choose
and it can have an impact also as
consumers and become leaders of change I
am so happy that once again this year a
social impact Club has organized a
fantastic week of events for all of us
in our community and I hope that many of
us were participate and will find the
time to be inspired and to contribute
[Music]

---

### Voice of the Village: Confronting the new normal
URL: https://www.youtube.com/watch?v=cLM1HII8ILU

Idioma: en

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what's unique and exciting about
this initiative which we're launching
today not only
will you see graphs of the kind that you
see on this uh
on this slide on the right hand side but
you'll also hear the actual stories
of those who are affected who are
responsible for
those statistics that data so rather
than
an individual being a statistic no
matter how powerful the statistic or how
rigorous the statistic
it's it's important to be able to hear
directly
in a way that if i'm a government
government decision maker for example if
i'm
sitting in delhi and reading a report
from
from the government or from academia or
elsewhere too
often that has been translated so many
times and
and and analyzed and interpreted so many
times
that i'm not getting the direct insights
from the village now
digital makes it possible for all of us
to hear directly uh from those behind
the data those who are actually
experiencing for example
this incredible pandemic that has swept
the world
foreign
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online
is
essentially a rural innovation lab with
a focus
on driving truly inclusive progress
within rural india
it's a collaborative between three
organizations there's dharma life of
course
an organization that's working to drive
progress
through a entrepreneur network in rural
india
there's the wheeler institute at the
london business school
um and of course then we have certi
which is a design agency
that's leveraging human-centered design
principles to try and
solve real-world problems the local
relationships that dharma life has
through this entrepreneur network gives
us direct and immediate access
to the people who we are trying to solve
the problems for
this connectedness allows us to get
real-time insights
rich insights that allow us to finally
create impact at scale
dharma life through its network of over
16 000 entrepreneurs
has access to over 13 million
beneficiaries in over 50 000 villages
which basically means that the
understanding that we have the solutions
that we create
have the potential to reach millions of
people
and drive uh change
we formed this v4 village alliance in
the crisis to help respond to the
corporate situation on the ground in
rural india and use our network of
thermal life entrepreneurs to become a
crisis
response force extremely privileged to
have the support of everyone and
yeah it's still it's obviously you all
know the
situation in india at the moment is
difficult so we're doing our best to use
the entrepreneurs to
help respond and support the government
efforts
to to respond to this crisis the bmw
foundation
through its activities aims to
advance the sustainable development
goals of the united nations
2030 agenda we in
our work um connect and target
leaders who contribute to social change
with his idea to work through the
um with the entrepreneurs to
uh fight the impact of the
the pandemic we from the very beginning
thought it's it's a brilliant
idea and that it's just so important to
understand
what is happening not only in the big
cities but
in rural villages as for our role as a
foundation in
in this coalition we think it's
extremely important again
to share the insights and learnings not
only
here but also within our responsive
leaders
network and with other stakeholders and
partners
worldwide it's particularly
um good to be on a stage where
we're being led by the truly inspiring
entrepreneurs that are doing the
important work in the field
and we're very happy to be part of the
we for village alliance
transformers initiative we started in
univer five years ago a 40 million pound
commitment between univer
the uk government and ey
and we have used this to make over 50
investments at
um grant investments uh in over 11
countries
to support entrepreneurs to to grow
their business
we've now impacted over three million
people and we have an ambition to go
much much bigger
but of course covert 19 created a
challenge that we had to respond to and
we pivoted like
many of the entrepreneurs we've had to
pivot to to address that
with transform and we set up something
called survive and thrive
survive and thrive was a platform of
support both financial and business
support
for entrepreneurs on the ground so large
organizations finance organizations
corporate organizations can join
we would love to have many more
entrepreneurs part of the platform
we invest in impact entrepreneurs around
the world with the goal to create better
livelihood for people
in their regions we were particularly
impressed how dharma life
and its entrepreneurs reacted to this
crisis and we
really liked the approach first of all
to
deeply understand the problems the
challenges the needs of people
in the villages then to
spend time to think to reflect and to
develop
good solutions act fast but act
on the basis of data and on the basis of
knowledge
i think it's fair to say that dharma
life
and the dharma life entrepreneurs
changed a lot for the people in the
villages already and i'm sure and i'm
convinced dharmalife will go on
to change the life of people there and
we at the leo foundation we are
truly committed to support dharma also
in the future
for doing that
you

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### The power of purposeful business
URL: https://www.youtube.com/watch?v=EQ6Y3xKl0KE

Idioma: en

[Music]
hello
everyone i'm elena katzbergchek
associate professor of strategy and
entrepreneurship at london business
school
it's my great pleasure to welcome you to
our webinar series
which are co-hosted by the center for
corporate governance and the wheeler
institute for business and development
so before we get started let me just say
a few words about our hosts and our
speakers today
so the wheeler institute has been
founded by
tony and maureen wheeler the founders of
the lonely planet
and at lbs the institute focuses on
supporting
cutting-edge research on the role of
business and addressing social and
economic
challenges in emerging and low-income
countries
now besides funding research and
informing
learning the wheeler institute also
organizes public talks and events
and today's events is the last of the
public talks of 2020.
now the center for corporate governance
has similar goals of using rigorous
research
to influence the practice of corporate
governance
which is a highly topical area
pertaining to
issues associated with responsible
business executive pay or
investor stewardship and the center
regularly engages with investors board
members company executives and policy
makers
bringing together the best of academic
and practitioner thinking so
welcome and today we're extremely
fortunate to have with us
alex edmonds and andrew hill alex
is a professor of finance at london
business school and academic director of
the center for corporate governance
alex is also known for conducting
extensive and
really impactful research on various
topics
in responsible business corporate
governance and executive compensation
his research has been broadly published
in economic and finance journals and
widely recognized with many academic and
practitioners awards and
his recent book in particular how to
grow the pie
how great companies deliver both purpose
and profit
maybe made it to the financial times
best business books of 2020.
in his book alex raises critical
questions regarding the purpose of
business and corporations what it means
how it should be defined and whether at
when
firms face a trade-off between their
purpose
and profit and clearly in these
difficult times of global pandemics
when companies are strapped for cash uh
when new fledgling ventures as well as
large all incumbents becomes
extremely frail questions around
corporate purpose
couldn't be more timely or more relevant
and so today alex will discuss some of
his questions and conversations with
andrew hill who is the associate editor
and
management editor of the financial times
he joined the ft
in 1988 and since then he had had a
tremendous
impact on the world of practice his
efforts and achievements being widely
recognized through the decade of
excellence award or the business
commentator of the year recognition
and so in just a minute from now alex
and andrew will
critically examine the case for
purposeful business using rigorous
research and
real life examples and my hope is that
through these conversations we can get
some insight into
what kind of practices work in advancing
both corporate purpose and profit and
then finally
i hope we'll get a deeper sense of just
how we can play our part too perhaps
as investors or citizens more generally
how we can put purpose into practice in
a more
effective way so before we jump in just
a few ground rules
so first alex will make the case for
purposeful business for about 10 minutes
um this will be then followed by the
discussion between alex and andrew and
then finally at the end we'll have the q
a
with the audience which will be
moderated by
andrew so please use the chat function
to submit your questions throughout the
session so you can start right from the
beginning um and if you tell us your
name and affiliation then we'll try to
mention those as well
so okay without further ado alex uh
it's a pleasure welcome and thank you
again
well thanks so much a length of a host
singer and thank you to the wheeler
institute for partnering with us
and also to andrew for for moderating so
um what i'm going to talk about is what
i mean by purposeful business
and this might be somewhat different to
what we
typically hear so let me share my screen
and talk you through
um a story an example from a while ago
so i'd like to take your mind back
all the way to 1978.
and um this is a scientist called
william campbell he worked for merck
and he had an uh what seemed to be a
crazy idea
so merck had this drug called ivamektin
which currently
was curing parasites in livestock and he
thought well there's this possibility
that maybe it could cure onco-psychiasis
in humans so you might think well what
is onkyocychiasis
well this was a really cruel disease so
it was a disease that was transmitted by
the female
black fly which used to fly around the
river banks in latin america
and africa and if there was a bite from
this black
fly it injected some larvae into you and
these grew into worms and these worms
could be up to
two feet long and these worms would
crawl underneath your skin
and for some citizens this was so
painful
that the only way to get out of the
itching and the pain
was to commit suicide so this disease
did lead to some people
unfortunately taking their own lives and
for those who survived
sometimes and often actually the the
worm would crawl up to the head and it
would cause
river blindness and so that was the
common name for oncopsychiasis
river blindness and this was something
which was just seen
as a way of life in many developing
countries
so once somebody turned in their late
20s or early 30s
they would just naturally go blind it
was just part of growing up
something that people expected to be
part of turning into an adult
so this was a really severe illness and
even more of a concern was that it
affected some of the
poorest countries around the world so
nearly 300 million people
were at risk of contracting river
blindness
and these were people who lived in
houses which are caked together for mud
they wore skirts woven from grass so if
you were merck at the time
would you ever even bother to develop
the um to try to develop this drug for
river blindness
not only was there a huge low odds of
succeeding
because drugs typically didn't succeed
across species
but even if it did succeed would they be
able to monetize it
when it was a disease suffered by some
of the poorest citizens in the world so
if you were a company which is
maximizing shareholder value
even long-term shareholder value you
might focus on some conditions which
were
affecting more the people in the
developed world
but that was actually not what merck was
about it had a purpose
and its purpose was about preserving
human life
they didn't really concern themselves so
much with whether the people affected by
river blindness would ever be able to
pay for treatment
so it took another scientist mohamed
aziz who decided to
launch some tests on this new drug for
river blindness
and those tests worked and those tests
worked
so well that the world health
organization
thought that the data must be wrong so
it showed that in senegal in 1981
that this disease cured river blindness
and it also didn't have
as the many side effects that you
typically have with anti-parasitic
medicine
so they kept on repeating more and more
tests and by 1987
merck was approved to use ivamectin
for humans but there was one additional
problem and that problem was money so
who would
pay for it why because again as i
mentioned uh this was something which
affected the poorest people in the world
and the governments
could not pay for this drug so what did
roy vagelos the ceo of merck decide to
do well he tried to look for many other
sources of funding
he looked for the us department of
international development
he looked at the u.s state department he
looked at the equipment of a
philanthropic foundations
but all of these sources of money they
said no
to it but then what i realized that
there was
one final source of money that he hadn't
tried
and that source was murk itself so in
1987 he launched this crazy scheme
at the time it was called the mectazine
donation program where
merck just funded uh the drug this was
not selling at cost
this was selling for nothing so he
launched the mechazand donation program
in october 1987 which said we will give
as
much as needed for as long as needed of
this drug
to anyone anywhere in the world that
needed it
and this is a drug donation program that
still exists today
it's the longest running disease
specific donation program that that
exists
and today there have been 2.7 billion
treatments given
it currently reaches 300 million people
around the world per year
and currently it's had a huge impact so
there's four countries where the world
health
organization has certified it as having
completely
eliminated river blindness and in many
other countries while there's not been
complete elimination
this has been something where they
significantly reduce the incidences
of what was an extremely cruel disease
now this might seem wishful thinking
because clearly pharmaceuticals
companies
need to also make money without money
they can't
invest in developing the drugs of the
future but the interesting coder to
this was that merc did eventually
benefit so a few months after launching
this uh mexican donation program
it won a couple of awards from
businessweek and fortune for being the
most admired company
and you might think well how does that
award help well this had a huge impact
on the reputation of work there would be
many employees who wrote them up saying
they chose merc over another company
which might have offered a better
financial package
just because they were inspired by the
possibility
of having a difference and making an
impact on the world
and indeed in most companies nowadays
it's human capital
which is the main asset and if indeed
the potential to serve a purpose
enables you to have an advantage in
recruiting scarce talent
that's something that helped work but
also you might think well
shareholders who should complain about
this because this free drug was coming
out of sheldon's pockets
but the shareholders recognized that
actually well in the long term
the reputational benefits the
motivational benefits
may well come back to improve long-term
shelter value
and so they didn't actually receive any
complaints even 10 years after the
launch of this program
and if you look at how the company's
performed since 1978
the average annual shelter return has
been 13
which is about 50 percent higher than
the s
p 500. now we obviously can't
claim causation here how do we know that
the mexican donation program
caused this higher return maybe merc
would have done even better had it not
launched the program
but certainly that statistic is not at
odds with the fact that actually purpose
might be consistent with long-term
shelter returns rather than
contradictory
now if you're skeptical you might think
well does this have anything to do
with purpose because even if your only
goal was
maximizing shareholder value maybe you
would have thought that
strategically let me do this thing about
launching this this drug
and making it freely available and then
i might benefit in the long term
but the problem with that is that's
really difficult to calculate the
long-term benefits
of launching a program like this right
it's really difficult to calculate
how many or more employees you're going
to motivate and attract
so instead what merck decided was as i
mentioned
our business is preserving and improving
human life and this is what drove them
and why use this example is it's quite
different from the corona violence
right the pandemic that we have right at
the moment is really severe
and everybody knows there's pressure on
a pharmaceuticals company to solve this
problem
and it's a problem which affects the
developing work developed world
as well as the developing world whereas
with river blindness
this is something there was no real
impetus there was no world pressure
for pharmaceuticals companies to address
that it was something which affected
some citizens which maybe many people
just forgot about
and yet merc thought that their their
role was not problem
solving it was not reacting to
a big public health crisis that
everybody wanted the industry to solve
it was problem finding let's think about
what are the problems that we can go out
and solve even if
there is not public pressure to solve
them and so before i hand back so this
is what i i
refer into my book as the pie growing
mentality
right so we often think about the value
that a company creates as being given by
a pie
and we think a responsible company is
one that splits the pie
fairly to make sure that not enough not
too much goes to investors in the form
of profits
enough goes to um stakeholders
and there are ways that you can do that
you can make sure you give money to
charity
you can pay your workers more than you
need to
you can make sure you pay fair tax
rather than reducing tax to the minimum
legally
possible all of those things are really
important and i absolutely do not want
to dismiss them
but what i want to do is to change our
thinking about
responsible business to say it's more
about growing the party so we absolutely
do want to
increase the orange create more value
for society
but the way we do that is not by giving
them a greater share of
what's what's already there so throwing
money at a problem by donating to
charity
or giving more in terms of taxes but
through innovation
through problem finding through some
crazy ideas
such as can we use this livestock drug
to address river blindness
and it's through these ways of
innovation that not only do we create
value for society
but also companies can be ultimately
more profitable
because that innovation even if solving
a social problem
was the main reason for doing it
ultimately might
end up benefiting so i would call a
purposeful business
as one that creates profits only through
creating value for society
so absolutely the final four words is
really important like we do want to
create value for society
but the important thing to note is this
is not unrealistic and the expensive
profits
because if we start with the idea of
let's try to use our expertise to solve
social problems
if you do that successfully then a
company might ultimately be profitable
and therefore this trade off what that
we think about between crawford and
purpose
while indeed it's not always resolved
that tradeoff is not a stock
as we often think when we realize that
profit can be a byproduct
of solving social problems yeah well
thanks so much for the attention and let
me hand over to andrew for the
discussion part
thank you very much uh alex and uh it's
great to be here thank you
olenka for the introduction um i you
mentioned uh she mentioned that uh
alex's book is on the best business
books of 2020
one of my few powers at the financial
times is to choose that list so i was
very happy to be able to
recommend alex's book as i have been
ever since it started coming out
um i just want to remind the audience
there are some 170 of you on the
call that we'd like to take questions
right from the beginning so if you've
already got things that you're burning
to ask
please do post them into the q a box
and i will try and weave them into the
conversation don't all wait till the
last five minutes
when there won't be time to address them
but
for the first part of this i'm going to
try and pose some of my own questions
and i mean leading on from that
wonderful merck example
um which is obviously in the book as
well i suppose
the question immediately arises of what
pharmaceutical companies are doing today
they've got this huge opportunity with
the vaccines that they've developed the
big bits of good news that have come
through in the last few weeks
and although as you mentioned that is
very clearly a developing country
problem
and therefore a profit-making
opportunity for those companies there is
a
a low income developed develop
developing country
issue as well which is you know will
they be able to distribute these will
they want to distribute these drugs
uh at cost or possibly even following a
merck example at below cost
and what's the trade-off i suppose that
they might have to make
uh in thinking about the reputational
advantages
versus potentially the profit downsides
of doing that have you given any thought
to that
alex i'm just interested to know how
that fits into your view of what
purposeful
pharmaceutical companies in particular
should be doing in this pandemic
yeah thanks very much andrew it's a very
difficult dilemma so
on the one hand we'd like to say well
these pharmaceutical companies should do
the right thing and make it available
at cost throughout the world but then
there is this commercial reality of
developing new drugs is really expensive
so there was one study which found that
the average cost of developing
and getting approval for a new drug is
three billion dollars so
without the profits from prior drugs you
won't be able to uh put the
the investment into launching new ones
but i think what is interesting here
compared to
the case of um the of riverblindness is
because this is a
developed as well as developing country
issue it affects the whole world
there might be some two-tier strategy
which is possible which might be to sell
it at cost
to developing countries where access is
really a challenge but then on the other
hand
to sell it at some reasonable profit to
developed countries
um because they're ones where
governments will be able to
um to to buy it at greater than cost and
i don't think
people would would begrudge that because
it is something which uh if
indeed this vaccine is working is going
to have a transformative effect
so i think that two-tier strategy would
number one have the reputational
benefits of ensuring that your goal is
to
serve human health rather than to make a
profit so that's why it should be at
cost to around the world
but also recognize the commercial
reality is that yes these drugs do need
to generate a profit
in order not just to give the money to
shareholders but because they need to
keep investing in the future
because we don't know what the next
challenge will be for which we need
um some some pharmaceutical cure i mean
uh chris hawes has actually asked the
question that i was going to ask off the
back of the merc
uh the merck example which is why aren't
there more examples like merck i mean
it's a great example but as you said it
dates from the 1980s
and we have had some attempts by
pharmaceutical companies to
shade this differently for different
drugs for different developing countries
i think notably with hiv aids but i just
wondered if there were
uh why you think there aren't more
examples given that the merk one is so
striking and the apparent benefits
so great to them yes i think yeah this
is a really good question as i think
there's two ways in which companies can
um serve society
one is by giving something for free and
all that cost and that that's really
beneficial in order to
um to give impact and that's not just
pharmaceuticals companies
you can have say unilever at the moment
giving 100 million euros
of food and sanitizer but i think if you
think the second way
that we can think about how to serve
society is through innovation
that is something where um i think there
are a lot of examples there so even if
you don't give the product for free
by developing this product sometimes
having some crazy ideas of
launching something which you would have
never thought possible that can be
something which which serves society so
another example from
the book is vodafone which decided to
launch empaysa
a mobile money service using expertise
and telecoms and again this is an
example of problem finding we've got
this expertise
and we recognize there's this issue of
financial inclusion within
kenya so let's deploy this now it's true
that that's something which is
monetizable where you need to you
you need to pay a small fee to use them
pays a service
but um that these benefit has been still
immense people found that within seven
years
two hundred thousand households got
lifted up by poverty so while i'll say
that there's not
the same examples of giving something
for completely for free
there are indeed examples of being
motivated by using expertise to solve
social problems
not thinking about is this something
which is going to make me as much money
as possible
indeed at the time that vodafone
launched and pays out its strategy
was to win spectrum license auctions in
the west
rather than develop problems solutions
to develop country problems yet they
chose
to do that even though that wasn't part
of the core strategy so i do think
there's more um
encouraging examples of this idea of
innovation
so let's just talk briefly about the
pandemic and what effect it's had your
book came out before the pandemic struck
clearly it's got some timeless uh and
many timeless
elements to it but i'm wondering whether
you think that the pandemic and the
consequences of the pandemic might be
an obstacle or an accelerant for the
kind of purposeful
business decisions that you describe
there
i mean in particular i'm thinking about
the pressures
that economic downturn imposes on
businesses
it might push them back to being pie
splitters to thinking about the ways in
which they can
husband scarce resources rather than
taking these
bigger longer term decisions like merck
did in the 1980s
where does that how does the pandemic do
you think affect
that kind of decision-making process so
i'm viewing it as a glass-half-full um
perspective so you're right there are
definitely some challenges and there is
this view that
if the pandemic means that resources are
really scarce then won't company just
focus
on their own survival rather than
serving wider society
but that's why i like this pie growing
idea because if we think about
responsibility as
splitting the pie differently that is
difficult in a pandemic because there's
some companies which just don't
have pi to split they just don't have
money to to be able to
um invest in certain initiatives but if
you think about
the um responsibility as growing the pie
as innovation
that's something which often just
doesn't cost you a lot but it's more the
mindset
of problem finding and redeploying your
expertise for example
mercedes um so they make their expertise
as precision engineering
it's normally used for formula one
engines and pistons but that's not
really helping right now
but what they chose to do is to redeploy
that expertise to make
cpap breathing machines which is a less
invasive alternative to ventilators
and the same precision you need for a
formula one engine
you need to make sure that is really um
right for for a breathing machine
and because what they had was already
the expertise in the human capital
they didn't really need to hire anybody
new um
it was not really costing them much in
order to come up with reverse
engineering the design and actually
it probably improved employee motivation
because these precision engineers were
able to
um use their talents to solve problems
rather than
sitting idle so i think often it's just
sort of the mindset
not always thinking about oh it's a
problem of of throwing money at
an issue which indeed is challenging
because money is as tight
but redeploying what you currently have
and to think about how we can use that
to social problems and i think that is
something which is empowered and so
obviously the pandemic's been really
really bad but
if there's a small silver lining from
the panemic
it's how we should rethink the notion of
responsibility
as a way of not necessarily splitting
the pie
and donating money which we can't do in
the pandemic but thinking as a company
what is in my hand right what is the
unique resources and expertise that we
have at our disposal
and how can we think creatively about
using them to solve why to serve um
wider society and there's been some
great examples of these pandemic pivots
where companies have redeployed their
expertise to solve the problems that we
have right now
richard sturdy asks i mean to what
extent do we think that
esg factors for investors will continue
to be important
despite all because of covet 19 and if i
can
expand on that i mean clearly esg
particularly in the us this last couple
of years has become a sort of enormously
important investment
strategy investors are interested in
what companies are doing
in environmental social and governance
areas
i mean again it does it strike you as
something that
will continue to be important or
is it in fact distorting to some degree
the decisions that companies and
investors are making by pushing them
into thinking
putting these decisions into particular
boxes
often frankly to make that sure that
companies stay in indices which others
will invest in
i mean have we got the cart before the
horse here on esg
yes i fear that we might have the cart
before the horse so it is something
which i think will continue to be
important and
if we already had this big trend towards
esg even before the pandemic so the
pandemic has certainly accelerated it
but even when things go back to normal i
think the the emphasis on the sg will
just only continue because it was a
trend that started beforehand
but is this a good trend or a bad trend
one might think because because i'm an
advocate of responsible business
i should be happy with this but my
concern is that these esg metrics may
not capture what i
truly think purpose and responsibilities
is about
so many of these metrics are on the do
no
harm aspect of responsibility so this is
make sure that you split the pie fairly
ensure that we don't emit too much
carbon or use too much water
or we don't have too much of a ceo to
employee pay gap but obviously again
those things are important we do care
about the division of the pie but i
again i i believe that the main
responsible action that a company can
undertake is to grow the pie is to
actively innovate
and that effect is often not captured in
standard esg metrics indeed sometimes it
might harm them so
i serve on the responsible investment
advisory committee of royal london asset
management
and one of the things we've recently
used is there's this new msci
warming tool which can evaluate your
portfolio and figure out which
stocks are contributing most towards
global warming which is obviously
something everybody here really cares
about
but what we found was that the worst
stocks were semiconductors
why because the manufacturer of
semiconductors um releases
perfluorocarbons
and that contributes even more to global
warming than carbon
dioxide emissions however semiconductors
have a
huge amount of good that they do in the
world they may well power the solutions
to global warming and beyond that right
if you have microchips or if you had
smartphones in developing countries you
can really transform
people's lives so smartphones would
allow people to access things such as
mpasa
rather than relying on on cash where
there's a huge risk of robbery
and forgery so i think if these esg
metrics focus too much on the do no harm
aspect
rather than they actively do good aspect
you might have some investors who are
pressured into
divesting from semiconductor companies
despite all the good that they're doing
so
what i think we should try to look at is
to look at this holistic perspective
of not only the harm that a company does
but also the value that it generates
now though indeed some initiatives to
look at this positive aspect
um there's one called impact weighted
accounts from from which
some people at harvard are developing
but the problem is that those
metrics are not very comparable across
different
companies because different companies
create value to society in different
ways some it's through telecoms
others it might be through financial
inclusion whereas the current esg
metrics of carbon emissions
is something that every company can
report so i think what this requires is
to is for investors and maybe society in
general because we obviously
evaluate companies by who we choose to
buy from to recognize that
there will not be some one-size-fits-all
universal metrics
in the instead however the company
creates value for society will be
specific to its own purpose
and and industry let me just ask before
we get
more deeply into lots of questions that
are that are coming in from the audience
i mean just relating this to low-income
countries and the and the areas where
the institute has
particular interest in what business
purposeful business can do
i mean in esg terms obviously there are
companies that are less far advanced
perhaps in some areas of governance
and environmental um
improvement but which desperately need
the support of investors in order to
make those steps
where does where does an esg lens or
indeed a purpose lens fit into how
companies in those developing economies
uh
improve from what might be initially
quite a low base on those
on those measures yeah this is a really
important question that we try to
wrestle with at royal london because
we're a global fund and we
want to invest in um developing
countries and there
we need to what we're trying to do is
not impose sort of uk
standards on foreign companies because
what we look at is for a company to be
best in class
compared to its peer group even if that
might not be
um something we'd look at from a western
standpoint for example in terms of
governance right one thing that i
write a lot about is the importance of
linking pay to long term performance but
in just other countries you just don't
have the culture of equity ownership
among management
you typically will have more cash
salaries and intrinsic incentives there
so it'd be
i think foolish to to require um
companies to
to adopt what we'd see as a western
executive pay model
so there what we asked for is not um
harmony
within the west in terms of the actual
um
the actual reality of how your
government structure is or how your pay
structure is
but just in terms of disclosure so um in
developing countries it may be that
you're not forced
to disclose executive pay some regimes
only require you to disclose for
aggregate across the top management team
but we would say
well even if you might not have similar
contracts to what we do
in the west you can still at least
disclose them and so it's more this
transparency that we care about
even though we don't actually require
the content of those disclosures
to be what we'd have in in in the uk or
the us
i think relatedly um to we also don't
want to have a third world
um standard on sort of developing
countries developed country standard
on um the emvs when we're looking at
emerging countries
why maybe an equivalent of mcdonald's
in the uk we might say well that's not
creating a lot of value for society
because um it's one where
maybe the quality of the food is is not
that high in terms of nutrition
but in a developing country where maybe
it's it's a luxury to be able to take
your family out for a meal
um then maybe a a restaurant which is
not so expensive that can add a lot of
value
there so we need to recognize that the
challenges that other countries face
are different from the challenges that
we face here right um zoe mcleod from uh
the charity sustainability first has a
question
she says they're currently running a
project called fair for the future which
works with essential service companies
from water gas electricity telecom
sectors looking at
purposeful business what can be done she
asked to incentivize more purposeful
companies for example
through regulatory frameworks and
government policy which as you've hinted
in that last answer
is clearly probably looms larger
actually in in low-income developing
economies where the government perhaps
has more
um uh remit across business
yeah so i'll answer this from the
government perspective so
what i've what i've tried to what i've
highlighted in in the discussion so far
is i do think businesses um have a large
role to play in addressing these
problems because businesses are
um innovative in in the way that that
merkel mercedes have done
but that doesn't mean that i'm getting a
complete free marketer who believes
there's no role for government i believe
there is a strong role for government
but this role is to ensure that markets
work better
um because there's a lot of examples
where there's market failure so
one way in which i think government can
help is to ensure that there's property
rights because without property rights
it's very difficult for outside
investors to
have shares in a company because they
could be losing through related party
transactions and tunneling and the like
so
strong property rights is something
where there's some cross-country studies
show that that's really strongly
correlated with economic development
another would be to ensure competition
because one of the forces which uh
push companies towards being responsible
is that if companies not
then employees and customers can walk
away but that's something where you
don't have that option if there isn't
competition
so anything they can do to ensure that
there is competition for example
reducing the
the power of large monopolies making
sure that they don't form through
mergers
and maybe on the other hand funding
small businesses i think is very
beneficial
and finally to to address externalities
so um
if there are indeed things that
companies do which um
which which destroy value for society
such as
um such as bad work poor working
conditions or child labor or modern
slavery
these are things where rather than
leaving it to market those are things
that just can be regulated out
so there are certain things where there
are minimum standards that if a
government doesn't
uphold them there could be a race to the
bottom where certain companies will try
to cut corners
and because they can do that they're
able to make short-term profits and
maybe distraught
drive more purposeful companies out of
business so i'd say these externalities
here
are also examples of market failure
where government should step in
right i'll take another question here
from uh max obisu macho koenig who's
asked
um he says he's more interested sorry he
or she i'm afraid i don't know the
agenda i'm more interested in
real economic empowerment examples of
purposeful businesses
as against the pure social investments
like the merck one do you have any
such examples for example big corporate
implementing preferential procurement
plans to smaller enterprises or
other ways of developing smaller
enterprises so they can be mainstreamed
in
significant businesses and i guess this
goes to a
wider question of that that the awful
word that's always used as ecosystem but
the wider network of businesses
in a supply chain that uh that gets to
be kind of um
uh improved and brought brought forward
by a larger business at the center
so any any other real economic
empowerment examples for the maximism
yeah i think this idea procurement that
you mentioned is is extremely powerful
so within the uk um in the ftse 100
the average csr spend of a company
is 10 million pounds the average
procurement budget
is 4 billion pounds so that is 400 times
what you spend on csr
so just this highlights how much power
there is in terms of of your procurement
budget so i know that that some
companies are taking this really really
seriously
and the advantage of this is several
falls so one of the things i i'm really
about is responsible investing and i
think that
through our role as investors we have a
lot of power to put our money in
what we would like to see in the world
but the problem with responsible
investing is that you can only invest in
publicly traded companies
as as a standard mutual fund and so on
whereas
if you're a company with a procurement
budget you can deploy that procurement
budget to any supplier be this public or
private so there's a
additional power to to um have some
transformative effect in this
um i i know this a bit more within the
uk rather than in the developed um
the developing world but there are some
um some initiatives such as the buy
social corporate challenge which some
companies sign up to
which try to ensure that what they um
that they're supporting
these uh small businesses with a big
mission so one example i know is pwc
they buy um their toiletries which are
used in in say the bathrooms from
the soap company which is the company
which um
employs partially sighted citizens and
other citizens who might not normally
find employment and this not only really
helps
um that company and the citizens thus
employed
but every time a pwc employee goes to
the bathroom and is reminded of oh this
is a
company which supports um some some
citizens in a really
important model that's something which
helps them i think in terms of
engagement so
even though that wasn't sort of the
calculation or instrumental
way reason for doing it it's another
example of how
an action taking to serve why to can
ultimately help
the companies a long-term performance as
well so
here's a question that goes to the heart
of something that we think a lot about
and possibly this is a developed country
obsession
more than a developing country one but
alan giles
asks is the logical consequence of your
thesis
that remuneration committees should
refocus
executive pay plans to be measured
solely
on creating value for science for
society or is there still scope in your
view for a more direct linkage
to the creation of shareholder value
thanks very much
alan i i think it's i would still stay
with the shareholder value model
so why is that it's just very difficult
to measure
social value so there's multiple
different aspects so
it could be the number of people that
you provide financial inclusion to of
your vodafone
there's the carbon footprint gender
diversity lots of these different
dimensions and the problem
is is that if you were to try to link
pay
to some of them you have this concern of
hitting the target and missing the point
for example we could
recruit um a particular people to the
board or the senior management team
who are ethnic minorities or or females
but not be concerned about a diversity
of thinking or a culture that encourages
um psychological safety in all of these
other aspects and that be that people
tick the box in terms of general ethnic
diversity
but actually don't have a diversity of
in terms of skills so
certainly companies should be measuring
those things but i think when you link
pay to that
there's a lot of potential unintended
consequences and there's evidence
linking
finding that in other fields for example
if you pay teachers according to test
scores
they start teaching to the test but what
i think is is valuable about the
shareholder pay model
is that there's a lot of evidence
showing that in the long term many
very many of these measures of social
value
end up improving shareholder value so
the merc was one example it was one
anecdote
but there's a lot of more rigorous
research showing that that's more
systematic
is that when companies serve wider
society ultimately shareholder value
improves
and there's a there's a very nice study
done by caroline flammer and
tima bansal which looks at what happens
when the company chooses to taipei
more to long-term shareholder value what
do you think happens to profitability
it drops but it only drops in the short
term it actually rises in the long term
but what else rises is innovation rises
so if we think about that being the main
way in which companies serve society
they're producing more patents and the
patents are better
but also measures of stakeholder value
go up the value that you create to the
environment communities and in
particular employees
so what that suggests is the best way to
improve stakeholder value
is not have explicit stakeholder metrics
because then the ceo might pursue only
those metrics being rewarded
but instead when her pay is tied to the
long term
she knows now that she's actually free
from having to admit
and meet quarterly earnings targets and
can just focus on creating value for
society
and somebody earlier asked earlier about
what are the barriers
to putting this into practice and i
responded by talking about the
government's role
but i think one of the values is indeed
just the focus on short and financial
targets
and if indeed a ceo is free to think
about the long term
then she's able to make these long-term
investments which ultimately improve
shareholder value as we've discussed
well i mean as you've touched on in the
answer to a few questions i mean i i
picture the
uh the case being made for this social
value and the long-term benefits and
obviously
some of the precedents that you've
mentioned tackle this but
you know the hard-headed cfo and ceo
particularly in difficult times like
we're now
entering um are are they not going to
say
show me the data i mean i'm a strong
believer that not everything that
can that needs to be managed can be
measured
but often the hard data overrides
the either the long term or the
unmeasurable or difficult to measure
parts of this i mean how would you make
the case to
a board that these long-term uh benefits
need to be taken into account
thanks well this is why i come to this
um question as an academic because you
might think well
why do i as a finance professor want to
care about responsibility because often
finance people are
these hard-headed businessmen business
women who who want to see the bottom
line impact
but this is what the research that i and
other academics have been doing for the
last 15 and 20 years
is to show that merck is not one
hand-picked convenient example
but to look at rigorous research showing
what is the long-term
impact of treating society well and
investing in stakeholders and also
trying to distinguish correlation from
causation because you might think
is it purpose that leads to profit
or maybe the opposite only once the
company is already profitable
canada indeed think about purpose and
there's indeed evidence suggesting it's
the former
so there was a business case for
investing in stakeholders
not just a moral and an ethical case
now you me you still might think well
that is something which is only in the
long term so
while the idea of growing the pie seems
attractive only in the long term
does invest in stakeholders pay off what
about in the short term when indeed
you've got quarterly earnings targets to
hit and maybe dividends to be paid but
this goes
to again the idea of trying to report on
some of these
outcomes that you're having beyond just
financial value
so if a company is able to say yes we're
not hitting maybe our quarterly earnings
targets
but that's because we are engaging in
these initiatives
to solve these particular social
problems then that's something that
investors
might be willing to to accommodate and
again i don't think this is wishful
thinking in my part
um when uh kraft made the takeover bid
for unilever what often happens in the
situation like that
is it's the company which then defends
itself and tries to persuade
shareholders not to accept the beard
but surprisingly here was the
shareholders who came out and defended
um unilever they said
we know what the true value of the
business is the true value is the
unilever sustainable living plan
which we believe will create a lot of
long-term value which is not captured in
craftsbeard
and because unilever had invested a lot
in terms of reporting the impact of this
initiative
then even though there was an attractive
20 immediate takeover premium had the
shareholders accepted
they chose to turn that down because
they recognized that long-term value of
the business
was beyond that so going back to your
point andrew about the ecosystem here
but what's important is not only for ceo
to be enlightened
but to make sure that you she also has
shareholder buy-in
because if so that will give her even
more freedom to think about long-term
rather than the
the need to hit these short-term
measures right um
julian marins from um london business
school
asks given that you advocate for growing
the pie how do you
reconcile this idea with looming
concerns regarding climate change and
overuse of
resources so he says he understands that
technology is often cited as a
possibility to grow the pie without
exhausting the planet
but is this feasible in the short run he
adds i guess we're talking about the
long run really here but uh
what do you think thanks very much
julian for the question and i think um
i do think it's feasible because i have
a different notion of the pie so
some people often view the pie as
financial
wealth and if so we can't really grow it
too much because we might
exceed some planetary boundaries but
importantly here the pie is
social value so financial wealth is only
one part of that it was only the blue
right the orange was um societal value
including
what would be called natural capital so
i think we should have
i'd like to have a different view as to
what wealth for capital is it's not just
financial capital but human capital
social capital and natural capital
and indeed what i would see is growing
the pie would involve
is contributing to towards inc
you say which will be powering some of
the solutions um to climate change ways
of indeed making production
um with with less use of resources or
less emissions so i would see that
as being part of growth and so growing
the pie is absolutely not just
growing the blue the profits but
thinking about how we can solve social
problems
yes profits are important but i see
profits as a byproduct
of solving social problems and one of
these problems is indeed climate change
so what a company should be motivated to
do is to
address those issues of natural capital
rather than just focusing on financial
capital
right i'll throw in a couple more
questions before we uh run out of time
but uh jay bansal's
asked two questions but i'll pick the
one that relates to vaccines because
interestingly he talks about kovacs and
organizations like the who
and gavi um which are trying to secure
coveted vaccines for developing nations
is their funding structure a sustainable
method
of tackling pandemics and i might kind
of that's a big
question to answer but the i might throw
in there
you know that the cooperation there with
businesses back to the issue of
how do you get the vaccines out to
developing nations
and those sorts of combinations where
you've got public private and
um charitable or donation-based
organizations
working together i mean how how strong a
structure
is that if you if you're trying to do
something on this global scale
yeah so i'm i'm sorry that you chose one
question where i don't have specific
expertise on those
specific funding models but what i can
say is that
um what is great is there's been a lot
of experimentation
not only in terms of innovation of
finding new drugs but innovation in ways
to fund research
and there's some really good academic
research which tries to look at
what funding structures might be the
most effective so
typically we funded research by funding
the input into research so
like as a professor you get a research
grant and that's something where
you you put it towards research that's
the same with companies they get
research grants
to fund the input but instead what um
what
some new measures look at is to fund the
output
of research which is if indeed um your
um
your research is successful then there
is indeed some subsidy towards
that and that makes sure that there's
only successful research that pays off
um so one thing i've put on my book's
website is
which is growthapi.net blog is that any
new paper
which has come out since i published the
book which is relevant for some of the
themes of the book
i try to summarize um for a general
audience
and there's indeed a really nice new
paper by michael cramer who just won
last year's nobel prize in economics
looking at a drug development scheme
which is an output-based one
and finding that it was a way of
actually encouraging um some drug
development there so i won't go through
all of the
details of that scheme just because
there's more questions but i just
encourage you to take a look at that
paper
which tries to look at um some new
models so sorry to not answer that
specific question it's just something i
don't have specific knowledge of
but what i would say is there's a lot of
research on
different types of ways of funding and
so that's one of the
ways that the blog of the books website
is trying to contribute is to
make some descriptions of those other
funding models
a shorter one and perhaps a simpler one
in some respects subhadra kunduri
writes uh how is corporate purpose
different from corporate shared value
corporate shared value is something i
wrote about
10 years ago about the first column i
wrote about management and
dealing with the sort of friedmanite
conundrum
um is are we talking about two different
things i might even throw in
sustainability and indeed csr
corporate social responsibility these
just all um
tend to get mixed together into the same
um
bucket yeah it's it's another good
question that there's a lot of alignment
between
purpose and csr sustainability and
shared value i would say there's a
couple of things which are different so
specifically with sustainability
so sustainability only means long term
and so you could be a company that
maximizes shareholder value
only and you could be said to be
sustainable because as long as we think
about
long-term shelter value that will still
cause us to treat our employees well
and to or solve some social problems and
so on so
why i think um what i'm proposing is
different from
long-term shelter value is that the
motivation is intrinsic
rather than instrumental we could
maximize long-term shareholder value by
treating our employees well but
only we would do that if we could
calculate that there is going to be some
some future benefit whereas the examples
that i've given of merck and vodafone
those are examples where you do this
without a calculation
you do this because your purpose is to
contribute towards human health
and then later on unexpectedly you you
get some benefit
with csr um that is often seen to be
something which is non-core
so that need not be linked to the core
business it could be you can have a
tobacco company
which donates a lot of profits in order
to um try to serve society whereas with
purpose
i think this is inextricably linked to
the core business
which is saying well how can you um
solve social problems through what you
do as a core business and indeed
some of the best things that companies
do to serve society are
not non-core csr initiatives such as
charitable donations
but using their expertise um in in wider
ways such as mercedes or vodafone or
um or merck so i think the important
thing about purpose
is it's linked to your core expertise so
we're nearly out of time so i want to
return to a challenge that elenka laid
down when she introduced us which was
um not only to talk about the practices
that work and we you've done
a lot of that and mentioned some
practical examples as well
but what can we do and i suppose the we
there is as
as individual as individual citizens
might be us with our pension plans
what can we do to harness the power of
purposeful business or more importantly
perhaps to encourage
purposeful business as individual
consumers citizens
shareholders possibly business people
ourselves
i think it's a great thing to end on i i
think the point i highlight is that as
citizens we probably have more power now
to affect companies than we did in the
past you might think well that's bizarre
because now companies are massive how
can we as an individual person
have any impact but indeed as as you're
saying um
andrew through your purchasing behavior
through who you invest in
um through even as an employee speaking
up so one example i have is
abdul durant who was a cleaner at hsbc
he actually got up at um the annual
meeting
and said i'm having to work on five
pounds an hour
i can't even afford to send my children
to school because
they can't afford the books and that
actually led to the chairman giving
a 23 pay rise to the cleaners nowadays
if a company's non-purposeful
the power that we have through customer
boycotts can can spread
hugely so this is not to say that we
should always boycott or start some
twitter
storm but this is to say that we have
the power to put our money into
companies that reflect what we'd like to
see in the world through um
things such as our investment positions
and our customer decisions
and also we have um tools and
information to support us so there's
apps such as
boycott or good for you where if you to
scan a buy
a bar code then this tells you whether
you it aligns with your value so you
press free satisfy
the values that you care about and you
can get information about that
and i don't think it's unrealistic for
customers to think that they're going to
base their choices
on those decisions because we already
are willing to pay more for organic food
or locally sourced food indeed now
companies are so customers are
willing to pay more for products that um
accord with their values
and i could just do a little a plug um
tom gosling and i just
recorded a podcast of lbs on this which
is called how can citizens make a
difference um
specifically on your your point andrew
is that it doesn't require you
to be the ceo of a company like roy
vagelos and think oh yeah let's give the
drug for free
i think ordinary citizens can do this by
our role as customers
investors and also employees but if
there are any ceos of multinationals or
mccall
please take roy vagilossa's example to
heart alex thanks very much for chatting
about this
i'm to hand back to alenka thank you for
all your questions that i've
many of which i've had to leave
unanswered uh but
uh thank you also alex for your insights
alanka over to you
okay thank you very much for your
excellent presentations and an
engaging discussion so what i wanted to
do is just to highlight a few things
um so overall you agreed a lot right you
agreed about
the need to grow rather than divide the
pie
escaping the trade-off between purpose
on one hand and then
shareholder value on the other hand and
um alex talked a lot about identifying
these really nice
instances in which firms and their
managers can create
long-term profits while also catering to
stakeholders
interest so for example by generating
intangible long-term benefits like merc
did in terms of reputational benefits
associated
with developing a free drug for river
blindness
so these are those amazing instances we
want to think about and we want to take
away from this conversation
as where the two kind of meet
and so growing the pie is possible so
clearly one takeaway from today i
thought is that
firms really can and should formulate
strategies for
advancing both right thinking about
shareholder
and stakeholder value because some would
argue
well not all profit is equal and some
businesses produce
more positive externalities than others
and so what we heard today is that firms
can sometimes do better than governments
and creating social value
and growing the pie so many businesses
like
merck are global players um and that
means that they can
internalize negative externalities more
or maybe alex was talking about how they
have more resources
to create value and they're just better
at it than
government or or ngos um
we also talked about how firms could be
better at
opening new markets serving unmet needs
and undeserved communities
or underserved communities come up with
new marketing or distribution methods
and really acting
as social entrepreneurs in lower income
countries and so i think this is
especially true now
in the times of global pandemics and we
talked about
how biotech and pharma are at the front
forefront of addressing the current
crisis
so in conclusion um growing the pie is
no longer debated i think
but what becomes apparent now i think is
that
well the biggest challenge is how do we
do it what are the best ways to proceed
to grow rather than divide um and so we
talked about
what metrics to use how to measure
social value
how to incentivize startups but also
large incumbents to innovate to create
social value
uh to be those social entrepreneurs and
what's the role of regulation and all of
that
do we want more or less regulation and
supporting
purposeful businesses because as we
heard today
the best practices are actually not
always clear
and so here's where andrew and alex i
think have given us
an incredible intellectual apparatus
to think more about these complex and
really difficult
issues so no doubt we live in very
interesting but also challenging times
and so
solutions may not always be as clear as
we would want them to be
but most importantly we as citizens or
investors
have a role to play um and so
we're extremely grateful for your
insights today
i think you left us with a lot to think
about
and so thanks to everyone for joining
the webinar webinar today
so thank you very much again and have a
great afternoon and stay safe

---

### Can data-driven price-discount policies help in reducing malnutrition?
URL: https://www.youtube.com/watch?v=r5bZm_Suk88

Idioma: en

[Music]
so i'm tanisha
i'm currently an mba student at london
business school
prior to the mba i had a career in
healthcare
and in my final role i was a data
scientist and we were looking at how
we could use algorithms across the value
chain in pharma
i continue to remain interested in
healthcare especially
how you know different business models
are revolutionizing the healthcare
industry
and in that breath i'm also the one of
the co-presidents
of the healthcare club at lbs so
both personally and on behalf of the
healthcare club i'm really excited to be
here having this conversation with you
um so alp is a phd researcher and he's a
phd candidate
in management science and operations at
lbs
al has been conducting research into
some of the most pressing challenges
that are being faced in emerging markets
and before we continue further i'll
allow alp to introduce himself
and his work really quickly hi
thank you tanisha i'm very excited to be
a part of this talk and thank you for
for inviting me um i'm al singh i'm
at my fourth year and my phd at london
business school
um and this work is um is a joint work
with my advisor
professor kamelin ramdas and and ali at
its management science and operations
department in london business i'm
fascinated
by this welfare improvement problem of
the poor of the world
of the ones who are living in the most
underprivileged communities of the world
but i think this is a slightly broad
term so my particular
um research um strategy research focuses
on
um in in some sense combining a business
perspective
and the perspective of those who are
really studying their lives
and try to see pathways to improve the
efficiency of the goods and services
that are aiming to alleviate poverty so
um so far i've been working on two
sort of interrelated areas one is about
the
under the problem of information
isolation of people the poorer do not
have access to
sort of relevant um access to
information and markets so we're using
we're looking at the problem of mobile
phone usage
and looking at the data packages that
can help them bring
them to the market bring the pouring to
the information in a more efficient way
help them navigate in this digital world
which is very recently introduced to
them and my
other sort of stream of research which
is the focus today
is on the malnutrition problem and in
this project we're looking at the
um use of data analytics in very broad
terms
uh to help designing nutrition targeted
food policies and and mostly in
particular on
the food subsidy programs that's really
interesting and i think
both of those are tackling some of those
problems in emerging markets in really
different ways
um and that's so thank you for sharing
that but as you mentioned i think the
one that we're going to speak about
further today and you know personally
also really
excited to learn about um is your
malnutrition project
so could you speak a little bit more on
what exactly
is the problem that you are trying to
tackle there
um so in
overall the i think it's a big term to
use malnutrition so maybe i can
decompose it and a bit more specific
about it
so we're looking at the problem of food
subsidy design
and we're doing an experiment in india
so
what is a food subsidy a food subsidy is
a form of health is a form of aid
it can be in the form of cash it can be
in the form of vouchers
it can be in the form of food itself but
the main idea is to give some aid give
some help to the poor
to make food more affordable there are a
few things
about the malnutrition challenge in the
world that we're building on top so
i think one assumption that we should
talk about is on
is on the fact that we always think i
was thinking before starting this
research
we were thinking malnutrition is a you
know a mere repercussion of part
you know people simply don't have enough
money to afford food
and if this assumption is the only
reason that malnutrition
persists then perhaps we shouldn't put
too much focus on the malnutrition
problem
because if we solve the economic
development problem malnutrition
a problem will automatically be resolved
but this has not been the case and it's
called
a very interesting phenomenon called
south asian enigma it is on child health
um and what what researchers have been
shown is
taking africa as a benchmark in the last
50 years south asia economies is rapidly
improving but this comparatively
improvement economic improvement
had not equally translated itself into
nutritional outcomes so in other words
in some sense to some degree there are
some people who are getting richer
but not equally healthier and
how we're trying to address this problem
again is through food subsidies through
making an economic incentive through
making the food more affordable
and i i think this sort of gives us the
the idea that
besides the economic mere affordability
problem
there might also be something about the
inherent nature of the shopping dynamics
and then these law markets in the in the
poorer communities
that might be amplifying this small
nutrition problem malnutrition is a big
term it's a
it's an umbrella term then it's a very
asymmetric problem you know it's in the
form of
over nutrition in the united states it's
in the form of calorie intake in africa
and our research is particularly
designed for south asian countries
and the nutrition challenge here is a
very interesting one
unlike africa it is not a caloric intake
problem
it is called hidden hunger and what
hidden hunger means is
people do eat enough it's not a caloric
intake problem again but
it is it is a lack of certain essential
vitamins and minerals
so i think in lay terms it is not that
people eat less
but some people eat wrong so this is
this is a particularly difficult
challenge because you know it's
very hard to identify when you i think
when you imagine
malnutrition you you think about a kid
that is you know you can see its bones
and it's
very thin but this is not how
malnutrition looks in south asian
countries
you would see the body fat and
our our research is trying to you know
combine these two factors
because you know if the problem is not
on the caloric intake but it's sort of
on the dietary diversity
then it might be difficult to identify
which products we should subsidize
because you know um maybe i can give an
example like if you want to increase
calcium intake
one idea would say hey you know what you
should increase milk because it's full
of calcium
but i think in these environments you
might be a little bit more careful
because if you increa if you
make milk more attractive you might see
people consuming less of cheese less of
yogurt
so and this is a particular problem if
you want to increase the dietary
diversity
and this very problem is what we're
asking for we're trying to understand
the shopping behavior the grocery
shopping behavior
or the on the food choices in these
impoverished communities
and we try to design an algorithm
that answers a very simple question
which products we should subsidize
and by how much we should discount in
order to most efficiently and
effectively
improve nutrition in these communities
that's really interesting i think these
are some of the terms that
i hadn't heard associated with
malnutrition before and you're
absolutely right
when you when you think about
malnutrition for me personally i just
think of lack of access to food
and not you know this as you mentioned
the south asian enigma which is the
wrong kind of food
or you know the nutritional diversity
that you're talking about
so when you say that um you're trying to
you know identify and optimize the kind
of subsidies that you
um offer to these impoverished
communities to change some of those
behaviors
um when they do grocery shopping i think
you know that's
a very interesting and very intricate
problem to be solving
so could you could you talk more about
how exactly your research
is looking at this problem you know
we're all living in the environment i
think
in the ages where i think we all have
this experience you know you talk with
your friend
you say you are interested in you know
buying some some shoes
and in the very next day you open up
your instagram and then you see the very
same at reciting saying i hear hearing
some shoes
uh so i mean hoping no none of our apps
are listening to us how they do this
you know what opens the store is
is data analytics you know these these
companies these big big uh
you know amazon instagram all these uh
online advertisement companies
collect some uh very detailed data know
a lot of information about their
customers
and then has very very powerful
algorithms that help them identify
what would people be interested in in in
a conceptual level this is what we're
after this is what we
uh how we try to do um
we try to use data analytics not in the
very same algorithms but in a similar
fashion
that we try to understand the
consumption patterns we try to
understand the
elasticities price elasticity of how you
would react to price changes
so we we developed a model that answers
the question of you know simulates the
answer though if i change one product's
price by one unit
what happens to my overall shopping
basket it's not that the
i'm not interested only in the product
that i'm changing the price that i'm
subsidizing
i'm interested in the overall shopping
basket we try to use the same
trick same algorithms um on a completely
different problem that is
you know how has a lot of different
challenges so
uh we want to give some you know
analytic driven insights into this
malnutrition and food subsidy design
problem i think the challenges here is
twofold right one is you're working
with a group with a population that is
not as
you know in touch with the technology
you you can't actually get that data and
that feedback
really quickly the way you can in some
of these other examples that you shared
but it's also a completely different you
know economic
policy kind of environment given that
it's an emerging market
and it's an important community within
that so i'd be really interested to hear
what some of the challenges you might
have faced when you're conducting your
research
and you know whether you had the
opportunity to actually be on the ground
in person and experience that i think
you're absolutely right like
um this is what one sort of thing that
we would try to understand
the shopping dynamics might be very
different for various reasons
usually when we think about from at
least analytic sense we think about like
fridge filling shopping trips
uh people go to store buy some items but
the dynamics itself might be
shopping dynamics itself in these areas
might be very different
you know people are massively liquidity
constrained a lot of people are on daily
wage workers
uh the stores are much smaller so i
think from more pilot studies what i can
say
uh and this might be a bit more generic
but i think doing a field research
in the ground at least in my experience
in the slum community in india
um trust is a major barrier you know
it's not only you go and you ask people
questions
uh you also need to establish local
connections
uh network with the local stakeholders
uh and you know these people are
very humble they are working very long
hours in very physically and intensive
jobs
and they're still you know sharing some
of their times to you know uh help us do
our research perhaps i can share like
one other thing that i personally
experience you know you know i told you
that my previous research is on
smartphone usage and you can think about
it as a luxury you know if you have
malnutrition if you have tuberculosis
it's a luxury and i i spent about
like five months in in a slum community
in mumbai and you know during this five
months i was
interacting with people in a day-to-day
basis and i almost never met someone
that doesn't own or that doesn't share a
mobile device
but what is what is more interesting is
i met a lot of people
who are like lost their loved ones or
who were suffering
suffering from diseases like
tuberculosis or you know diarrhea or all
malnutrition so
um so i i think it's an important
question to have
why why they are in some sense
people are sacrificing from their
essential needs
and investing in something else it's not
necessarily smartphones it could be
weddings it could be funerals it could
be
completely something different you know
there are there are pioneering works um
uh by ester duffle and abhijit banerjee
uh
the 2019 noble economy florist they were
working on the iron deficiency problem
and they were looking at not only
changing the the type of food that
people eat
but they were changing the technology
behind it they are
making the salts iron fortified
to help i think tackle the anemia
problem
and uh they say the paper suggests it's
very very difficult to change habits
even if you give this iron fortified
salt to people for free
people are not going to consume it so i
think this is one of the uh
the challenges and uh we don't have an
immediate answer for it
um that changing habits is very
difficult but we put a
very special emphasis on this uh because
that's how we try to tomorrow like not
change anything that people consume
keeping the store shall not changing the
store shelf but try to do some tri-stage
incentives
in order to switch from something that
they are used to
into something else that there is i
think the the nuances and the
intricacies of this are
very interesting because as you said
when you think of calcium and you think
of where kids get their calcium from you
think milk and you think
that would be the easiest way to kind of
you know put that in their
shopping baskets um but i think that's
that's really interesting and i think
you said you know you're trying to
address some of these problems address
some of these challenges
and i'm just curious to know if there is
you know an end goal that you're trying
to achieve
um from this research from this project
that you'd like to see
um you know both maybe personally and
for the research itself
our goal in this research is to help
contributing to this area of improving
nutrition
and there's a whole body of work on this
uh it's not only governments usually
governments do these subsidies but
there are a lot of entities like
non-governmental organizations
inter-governmental organizations
um like united nations and enrolled food
programs in fact this is doing some of
those
uh subsidy-based subsidy type foodies i
i think what our
algorithm does is in sort of simple
terms is that
um give me your budget per person how
much you want to spend for
one of your um below poverty line
citizens
and tell me about your nutrition problem
like what is the thing that you want to
improve is it calcium is it protein is
it
um is it calorie and then my algorithm
will try to give you
based on our shopping behavior model
based on our understanding about the
dynamics of the shopping
model my algorithm would sell if you
have five dollars that you want to
allocate would say
oh reduce the price of meat by two
dollars
reduce the meal price by one dollar and
reduce the chicken
or almonds by by two dollars and based
on my
shopping models based on our
understanding about this
these consumption patterns this
portfolio of discounts
should be the one at least to our model
should be the one that most effectively
or like optimizes uh for your
nutritional goals so this is sort of
our our end goal is to create a decision
support tool
that helps policy providers using these
environments
so i think um you know when you talk
about optimization
when you talk about the the people and
the policy makers
i would imagine that if not malnutrition
if not only malnutrition then there are
other problems as well you know
either in india or in other kind of
developing markets emerging markets
where
your your algorithm your optimization
could be
applied and be really useful what was
your personal motivation and inspiration
to actually pursue this research and
this challenge
perhaps i can share one of like the
first things that i that i've
experienced
um again as i told you like i was doing
some work in on smartphones
and this was a field experiment so i
spent like this
some time in this environment and it was
with my advisor tomodini we were
um exploring the area we were talking
with people
and i i never forget there was this one
lady she was
barely in her twenties um and she has a
kid you know
very young age two five um
very young kids and she lost his husband
so i mean just by talking to her you can
definitely understand
she is in need for external health at
some point the discussion
came about like her kid and what she
does with uh you know
feeding her kid and she said very very
proudly she was telling us
no i feed my kid with milk every day and
you know we were
perplexed you know it's very unlikely to
see people feeding their kids with milk
every day
um it's it's it's not a
cheap product and she was particularly
even within the community
is on the side of more underprivileged
ones so we asked her like
how and like what what she does for it
and she told us her
tricks um she said
um you know i pour water in in my kids
milk
and you know it is it is if you think
about it it's very
it's a very powerful statement because
it's not only a idle practice
it's not that she's not improving uh her
kids calcium intake
this area is called the dumpster slump
so the whole settlement is booked built
on top and next to the dumpster
there is no proper water supply system
so people keep their water in big
barrels
often not even covering them and because
of that dumpster
the water is full of bacteria and
microbes so this area
the in this area like the disease like
tuberculosis in diarrhea and is very
prevalent
so without knowing she was pouring
external microbes and bacteria without
improving the calcium intake
content of her kid's milk and you know
you you go back home
and then you try to reap something about
it and then you see like
every kid dying under age five is dying
because of malnutrition
and diarrhea plays a big role in it and
i think after after reading that i
started like i want to do something
about it that like that's sort of a
personal motivation
uh and i think another thing that
sort of related to this is you know it's
it's a it's a leading cause of death
and but you know it's very different
it's not like cancer or stroke it's a
curable disease
you know for cancer and stroke how we
try to solve it these are big problems
you need to invest billions and billions
of dollars in
in research and development and billions
of billions of researchers hours and
efforts
to find a cure for the cancer but
malnutrition is a different one and you
need to do something
some changes in the structural level
that's sort of health preventing
happening so it is not that
only doctors or medical professions
should address this biological
or medical problem but there are also
things that
businesses or or policy providers can
and should do to help improving um this
challenge so this i think is
um is one reason that i'm i was very you
know motivated to
to do this and um as as business coming
from business background
i think we're the ones who study and
who's very interested in understanding
their consumers
uh dynamics their shopping behavior so
we're very motivated to you know bring
some insights from what we know
into this area where this sort of
questions are
less of a concern at least from the
policy provider's side
and so i think you know i think we've
covered the entire breadth of your
research and i've
learned so much about malnutrition and
emerging markets and some of those
habits in those economies so thank you
so much for sharing that
and it was such a pleasure to speak to
you today it's great to be a
part of this conversation i also enjoy
very much thank you thank you
you

---

### Rethinking Capitalism: In conversation with Esther Duflo and Abhijit Banerjee | LBS
URL: https://www.youtube.com/watch?v=WhdCxOWbThc

Transcrição não disponível

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### Rethinking Capitalism: A fireside conversation with Rebecca Henderson and Ioannis Ioannou | LBS
URL: https://www.youtube.com/watch?v=a1aVARVpxio

Idioma: en

[Music]
hello everyone and welcome to London
Business School wheeler Institute for
business and development rethinking
capitalism series thank you so much for
joining us my name is Yanni Serrano and
I'm an associate professor of strategy
and entrepreneurship at London Business
School I would first like to thank that
wheeler Institute for hosting us today
with the generous support of Tony and
Maureen wheeler the founders of Lonely
Planet lbs has established a Research
Institute that focuses on the role of
business in addressing social and
economic challenges in emerging frontier
and low-income countries but in addition
to funding research and informing
learning the wheeler institute organizes
public talks and events these evenings
event is the second of the wheeler
Institute public talks under the theme
of rethinking capitalism and therefore
thrilled to welcome a distinguished
professor but also a mentor and a friend
of mine to today's webinar
professor Rebecca Henderson now Rebecca
is definitely someone that needs no
introductions but I'll make some anyway
is Rebecca is the Joan and Nazi
MacArthur University professor at
Harvard University where she has a joint
appointment at the Harvard Business
School in the general management and
strategy units she's a fellow of the
National Bureau of Economic Research and
at HBS Rebecca teaches an award-winning
MBA class titled reimagining capitalism
today lebretia will be speaking to us
about the what I think at least truly
courageous ideas in her recently
published book that's titled reimagining
capitalism in a world on fire we have
asked Rebecca to make some opening
remarks before our far side chat so
Rebecca a very warm well welcome thank
you for joining us today
to share your ideas and insights in deed
for the world in in true fire thank you
over to you
Jonnie thank you very much I'm honored
and delighted to be here and it's a
pleasure to be able to talk about my new
book I've been asked to summarize it in
ahem
10 minutes
so that's 28 one-and-a-half hour
sessions when I teach it or more than
300 pages in the book all of them
exciting and dynamic but let me see if I
can give you the basic idea
capitalism is broken it is not working
as its supposed to
we have half the world's population
saying that capitalism is not working
for them 70 percent of the u.s.
population saying the system is rigged
against them in the US the bottom 50
percent haven't had a pay raise in
approximately 20 years and inequality is
significantly increasing everywhere else
in the world social mobility is falling
more and more people fear that their
children will not have a better life
than they do we are seeing a massive
crisis of exclusion all across the world
people feel people with black skins or
brown skins or who's simply different
from the ruling majority are protesting
that they are excluded that they are
abused we have a major environmental
problem the world is on fire when I
wrote the book California and Australia
were literally burning and there is a
significant risk of catastrophic climate
change submerging the world's major
coastal cities destabilizing agriculture
sending hundreds of millions of people
north in search of food and work don't
get me wrong I am a huge fan of
capitalism I teach at the London
Business School I think capitalism is
one of the greatest inventions of the
human race an unparalleled source of
innovation and productivity and
opportunity but it only works when the
free market is balanced by free politics
and a strong civil society my reading of
the literature in history and
development economics and political
science
is overwhelmingly that a stable
prosperous society a free society
requires three legs yes the free market
but also a capable transparent
democratically accountable government
and a strong civil society a voice for
labor independent judiciary and a strong
free media I think we have forgotten
this in the West over the last 20-30
years we got so rich and so prosperous
and it was so easy to say governments
the problem drown it in the bathtub
and I see where that's coming from I
have 25 years of major board experience
I understand that regulations are
sometimes a nuisance and that paying
taxes is not always fun but we need the
free market to be balanced by government
we need public goods we need a strong
social net safety net strong education
and health system to ensure that there's
real freedom of opportunity
we need decent labour legislation so
that the minimum wage is a living wage
so that there are decent benefits like
paid sick days off we need a strong
government to regulate pollution if you
can throw greenhouse gases out the
window for free why not it's a great way
to maximize returns we need a capitalism
that's run by the rules in which the
large firms don't set the rules in their
own favor and keep out entrepreneurial
firms or ensure that there's a barrier
to entry in their industry we need a
government that's not flooded with money
that reflects the will of the entire
population not just those with resources
so if that's where we need to go how do
we get there well the easy answer is to
say we need a massive political and
social movement to rebuild democracy
everywhere one of the scariest
statistics I came across in my work is
that only about 25% of people under
30 believed that democracy is essential
why do they say that they say that
because they look at the system they're
in and they say well I said they're
working for me let's try something new
half of Millennials say we don't want
capitalism we want socialism why are
they saying that I think they mean they
want decent health care but sometimes
they seem to mean they want state
ownership of the means of production so
how do we fix things in a world in which
governments are so broken first massive
social and political movement to rebuild
democracy as I said but the central the
beating heart of my book is the idea
that business has an important role to
play in rebalancing capitalism now I
know this is a bit of a crazy idea when
I was trying to sell my book to her one
of the major publishers in New York the
editor looked at me and said Rebecca
business saved the world
don't you read the papers and believe me
I know a great deal about what business
has done to destabilize the system we're
in and what they continue to do that is
perhaps not in the best interests of the
entire society but I think there is hope
there are five steps business can take
the first is to become Purpose Driven
not in the sense of throwing investors
out the window as I said I serve on
major corporate points I'm a big fan of
giving investors a decent return but I
think it's time to realize that making
money and giving investors a decent
return is a means to an end and not the
end in itself the end in itself is
building a healthy and thriving Society
business needs to relearn that it's an
old idea we always used to have a social
contract between business government and
labor and ordinary people business was
part of the mix yet starting you
sometime in the 70s we told business
just stick your head down and maximize
shareholder value even if the world
starts falling up around falling apart
around you even if the easiest way to
maximize shell the value is to trash the
planet push wages down to the bottom and
corrupt your local legislature so we
need to rethink the purpose of time
secondly we need to start to build
business models that not only create
profits but also address some of the
major social and environmental problems
we face my colleague Michael Porter
calls this creating shared value the
classic win-win and I can feel your
skepticism it's not everywhere it's not
for everyone
but in many industries we are seeing
firms build billion-dollar businesses on
the basis of the idea that you can do
both
the most successful IPO of the last 20
years was a soy bean burger company
trying to revolutionize the meat
industry a major source of emissions and
of poor health we've seen billion-dollar
businesses in solar and wind renewable
energy in many parts of the world is now
cheaper than fossil fuels even
unsubsidized someone like tests Elon
Musk has revolutionized the entire car
business by doing what he thought was
right all kinds of issues with mr. musk
but he is certainly driving
transformation and has built one of the
most valuable car companies in the world
at the same time so step one step one
develop a purpose step to create shared
value step three whoops if I do the
right thing as a firm that's great
I can make money the fact that I Purpose
Driven mobilizes my employees I might be
running a high road employment system
much more productive much more
innovative seems good but whoops it's
not enough even if every firm on the
planet pursued those opportunities that
can return money and do the right thing
we're not
problems solving inequality requires
really investing in education and health
and inclusion and wage legislation to
make sure the playing field is level
solving the environmental problems
require whoa let me say redoing the
transportation food systems rebuilding
cities retrofitting every house on the
planet massive transformation it's going
to require government involvement so
what can we do what can we do about
problems that we want to address but are
not there's no good business model as I
as a business owner three ideas first
get together cooperate particularly in
the food industry we're seeing things
like the roundtable for sustainable palm
oil the Alliance to reduce the purchase
of conventionally grown soya and beef
from the Amazon in the apparel industry
we're seeing the sustainable apparel
coalition there are hundreds of these
coalition's what they're trying to do is
solve a problem that is in the interest
of everyone in the industry in apparel
no major Western brand wants to be
associated with child labor or
environmental problems or abuse in its
supply chain none of them alone can
afford to move because it's expensive
and complicated but if every brand moves
together then they can make doing the
right thing
pre-competitive the industry benefits
consumers benefit the supply chain
benefits check the only problem is that
while cooperation is super important and
moves entire industries in the right
direction it tends to be unstable so
step four is okay we agreed to cooperate
but there's you know Fred and Mary over
here they're not pulling their weight
they're not interested they are what the
economists would call defective so how
do we make sure everyone cooperates to
do the right things easy to final ideas
one we rewire finance let me just leave
that but we got to rewire the capital
markets if this is going to work
and last but not least we fix the
democracy we address the problems with
our civil society I believe that
business has a strong economic interest
in rebuilding a balanced capitalism and
that both now and historically they have
been willing to exercise that interest
we are seeing hundreds of firms working
with state and local government to enact
regulations and policies that benefit
the entire society why because it's good
for business as well so we can reimagine
capitalism we must over to you yummy
yeah great thank you so much as you said
300 exciting pages of ideas and I'll do
my best in the time that we have today
to to cover as many of them as we can so
I would like to ask as we go along to
unpack some of those very important
issues for us now allow me to start with
a quote from your book which I really
love
you said managers view issues such as
climate change inequality and
institutional collapse as externalities
best left to governments and civil
society and then you argue that as a
result we have created a system in which
many of the world's companies believe
that it is their moral duty to do
nothing for the public good that's a
very strong statement I think but also a
statement that gives us sort of the
sense of the extent of the challenge
here so I would like to ask you Rebecca
to sort of unpack for us what are those
elements of the system that has these
have these negative implications on
companies to to to feel that they should
not do anything about public goods and
in other words where should we start
when we talk about fixing the system and
a bit of a provocative question are you
optimistic that the system capitalism
can fix itself oh no fair that's two
questions let me start with first where
should we start so
those you're working for a firm that's
never thought about these issues its
head down maximize shareholder value the
whole way where do you start first you
start with the short-termism problem
many managers have talked themselves
into believing that they will not
survive unless they maximize short-term
coordinate earnings right here right now
let's be clear they have a point
missing short-term quarterly earnings is
not a good thing
investors tend to think it means that
you don't know what you're doing and
sometimes it does so the problem is the
issue is how do we get firms to think
longer term two ways first we get them
to begin to think longer term you'll be
surprised by how many firms are not
routinely running three or four or
five-year strategic plans they really
are running quarter to quarter and my
belief is that just bad for business so
start to look out start to recognize the
opportunities second step learn to talk
about that to investors it is not true
that investors are routinely myopically
short-term if they were that would
provide an incredible opportunity for
investors who are willing to focus on
the long term they just clean up if you
can give a good story to an investor and
if you can support it with metrics and
milestones you can get the money you
want think of Amazon no money for what
was it seven years and hundreds of
millions in losses think of
pharmaceutical companies billions of
dollars in long-term R&D that doesn't
pay off the ten years investors are fine
with that why because they understand it
I had a friend once who was the chief
technology officer at a major company
whose name you know whose sales had been
falling for fifteen years and she said
Rebecca the market won't let me do
long-term stuff and I'm like like like
Sarah um your sales have been falling
for fifteen years you know it's all
about making the business case so short
termism is the first problem second
problem is many managers I think don't
fully understand the law they genuinely
believe
that they have a legal duty to maximize
shareholder value right here right now
under American law and we could talk
about details in other parts of the
world but under American law that's only
really true when I'm gonna get a bit
technical Revlon and you recall duties
are invoked there are these specific
circumstances when a firm is up for sale
when you gotta maximize shareholder
value the rest of the time care candor
and loyalty build a great enterprise
that's your legal duty so I think so
much of the short term bat value
maximization focus is a creature of
habit and of the fact that you know
people are paid that way but we back off
that that that can be done we can back
off sorry but we actually argue for the
role of corporate purpose so I guess the
natural next question given that you you
just highlighted this idea of
shareholder value maximization right and
often people cast these two views as
antithetical or running or in conflict
with each other
so I guess and also because corporate
purpose has a different definition for
every person that uses it basically so
could you share with us what is what is
corporate purpose in your view and how
do you see this transition happening or
if you want the link between corporate
purpose and shareholder value if
shareholder value a byproduct of purpose
is purpose something that you know some
would argue that companies use purpose
woman they're not doing well financially
so how do you see that these two
conceptually and practically linked the
shareholder value and the corporate
purpose idea imagine a world in which we
had a perfectly transparent well-run
government that was setting the rules of
the capitalist game so that if I
maximize shareholder value the whole
society would be better off this is a
world in which there's strong education
and healthcare there's really good labor
legislation so no one is going to be
pushed down by them with being low the
minimum wage we've got environmental
regulation that sets a carbon price we
have unions or a voice for labor that's
negotiating with powerful companies
so that Labour is is getting a decent
return we've got well enforced antitrust
laws so firms are you know busy
competing with each other in short it's
Denmark okay in such a world I don't
think there's that much conflict between
shareholder value and purpose there will
be occasional conflicts there always be
the temptation to try and walk the rules
in your own favor always be a temptation
to push a little hard but in essence the
problem we face is not shareholder value
as a problem if the rest of the society
is sort of kind of lost crumbled now we
can talk more about why that is part
it's the direct result of how businesses
behaved but if you could get that
balance right there wouldn't be the
conflict so what I'm suggesting in my
book is right now maximizing shareholder
value in the long term and here comes
the weasel word collectively that is if
you were thinking about the well-being
of the entire private sector no conflict
between having a purpose which means
rebuilding the society and focusing on
the democracy all that all the things I
talked about now you're going to say
well that's nice but I'm just a firm and
ret right for me right now you know I
can see all these great things I could
do but excuse me I have to make a living
to which there are two replies one is
that's the reality of where we are
that's why talk about cooperation that's
why talk about how having a purpose
increases productivity and creativity so
push that boundary as hard as you can
another potential reply is we'll change
the rules that govern corporations
let's tell companies that it's okay to
make a little less money if they fulfill
social purpose that's a huge debate on
its own let me just say that I think it
might be helpful and that for firms that
are already moving in this direction
adopting say a B corporate status if you
can that says you know my goal is to
change the world if you're going to
invest money and me that's you should
know that about me and here the metrics
I'm going to use I think that's a great
way to go but I do not think we should
turn to every corporation on the planet
and say hey your purpose is to do good
don't worry about these pesky
shareholders I think that would be a
mistake I'm I'm a hub a Business School
professor I think focusing on investment
returns is important so the Sun kind of
middle ground here with the end state
being let's fix the rules so that this
enormous conflict isn't as strong I
think I became the current times we
would really really have to leave our
imagination run wild to March in a world
where the rules actually work but I
totally understand your point that in
such a world you wouldn't be you know a
reconciliation if you like of the
shareholder value and the purpose idea
now if I'm if I'm reading your your
argument correctly then you're saying
well we don't live in that utopian world
perhaps but at the same time that does
not mean we cannot contribute towards
getting into that role and as you said
fixing the rules of the game however
here's my other question if it's so
obvious then right why are in companies
doing it already and I would use here
one or another of my favorite codes from
your book and and of course we all know
you've been you where the Eastman Kodak
professor at MIT for sometimes I think
that directly relates to that you you
write in your book that the key to this
puzzle I believe is to realize that the
embrace of shared value is first and
foremost an innovation and precisely an
architectural or innovation
architectural innovations change the
relationship between the components of a
system the system's architecture without
changing the components in themselves
could you unpack that for us a little
bit how do you think that these ideas of
of architectural innovation linked to
the firm's ability to or disability
sometimes to to adjust to to to purpose
and into this different world post you
know shareholder value perhaps we need
to build a just and sustainable world
I think we can do that and make a great
deal of money and there's a lot of
opportunity but it is a shift doing that
is going to require completely
rethinking how we do a whole range of
industries meet would be one how we
think that meat is produced by big
animals of bellow and walk around on
legs
no meat could read be produced in a
petri dish it would be exactly the same
physically it's being done now that's a
completely different structure for the
food industry electric vehicles sounds
easy just take out the internal
combustion engines stick an electrical
engine instead we'll wait a moment what
about autonomous vehicles
what about controlling all the cars in a
city so we manage the traffic moving to
electric what about using them as
batteries overnight as storage for our
renewable grid this transition is a
massive transition requiring real change
that's what I call architectural
innovation when it's no longer enough to
simply assume that all you need to do is
take the world for granted and just work
on fixing your bit an architectural
innovation is when everything is
shifting and it's scary as heck firms
faced with those kinds of transitions
tend to have three responses one it's
not happening we have very strong
mechanisms of denial and delay all of us
don't want to work - most of us don't
want to work too hard we don't want to
think that everything we know is
shifting second problem is not gonna
make us any money often a seriously
knee-jerk response completely missing
the point and last but not least okay
maybe it's happening maybe it'll make
some money but you know I am really busy
and I have the wrong people this is why
purpose is so important because when
you're focused on a greater goal you
have the energy and the creativity and
the relationship with your employees
necessary to get through the transition
so yes not easy not a walk in the park
absolutely possible but that's why it's
slow it's I mean Kodak when
bankrupt they couldn't understand the
transition to digital I wrote the book
because I don't want us to go bankrupt I
think everything I think we're on the
same page because I often refer to
sustainability not only as a disruption
but in fact the mother of all
disruptions because in a sense we a lot
of companies out there are lacking the
knowledge the skills and of course the
experience necessary and as much as many
people don't like to hear this what's
the outcome of every disruption a
certain percentage of companies are
going to be able to adopt and other ones
as you mentioned they're going to be
replaced by the Tesla's of the world the
impossible foots of the world and and so
on so yeah I mean I would love to hear
your thoughts if you think that listen
the disruption lends also it's an
interesting way of of looking at this
but let me pose a double question as
well link to that because we also know
that typically the financial markets
often have trouble actually evaluating
or understanding disruption themselves
so some would argue that you know can we
really count on financial markets to
support business through this transition
given that they themselves might not
understand it or another argument these
days is that they're greenwashing
themselves they Itachi is is g labels
and funds and so on so can we count on
to support and engagement of the
financial community with companies in
order to achieve this transition we can
count on the full support of a portion
of the financial community I would say
about a third of the world's financial
assets are already moving and they're
moving fast and here Yanni I want to
draw on your amazing work with my
colleague George Sullivan the work that
you and George and others in the field
have done to advance ESG and to be clear
about why they're so important is
completely path-breaking and and let me
just review why you know I sometimes
joke I did not understand
but accountants hold up the world
civilization I got accountants what kind
of boring no completely wrong I took for
granted financial accounts which are
another you know the absolute beating
heart of capitalism right but a hundred
years ago when P&G issued its annual
report it said in our revenues are
twenty million our profits are five
hundred thousand stockholders wanting
more are welcome to apply to our
headquarters in Cincinnati in person I
mean the financial accounts we take for
granted that allow investors to invest
in thousands of firms all over the world
took a hundred years to build so ESG
environmental social and governance
metrics are absolutely critical they
allow firms to communicate to investors
what they're trying to do and they allow
investors to find the firms that are
managing the disruption that are taking
the leap but of course it's done missed
I'm sorry is that overly technical
yesterday at the moment is in flux there
are all kinds of different metrics
finding something that is auditable
replicable and material in the sense
that it really hasn't a bearing on the
firm's performance that's super tough in
itself it's a major disruption right
accounting is being disrupted so I'm I'm
not worried it's only a third of the
world's invested capital it's on this
wavelength I think that's amazing the
fact that there are asset managers like
Larry Fink or chief investment officer's
like here in mizuna at the Japanese
pension fund saying we need ESG and we
need it now is incredibly powerful I
think there's another aspect of Finance
I'd like to talk about if you're up for
it which is this idea of universal
investors the idea and I can never
decide if this is really creepy or
really good news
I can never you know 15 to 20 people
between them control you name the number
80 percent of the world's assets I mean
it is really quickly and they I think
are increasingly coming to realize that
what we talked about is X
analogies are not externalities to them
if you run the Japanese pension fund 1.6
trillion in assets climate change is not
something you can diversify away from
it's one of the most important risks to
the value of your portfolio most of your
money's in passive funds you're not
going to make money by getting out of
Ford and getting into Toyota you're
gonna make money by making sure the
financial system doesn't crash and we
have the former governor of the Bank of
England saying he thinks climate change
presents a very significant risk of
causing the next crash we are living
through a pandemic a low probability
risk that everyone said was out there
and now it's here climate change is
going to be another major risk and
there's not going to be a vaccine and we
know it's coming so maybe the big
financial people will get together and
say you know we need to address these
issues they in a sense have the
collective interest of the whole economy
at heart so yes there's greenwashing yes
there are problems but I think finance
could play a major role in reimagining
capitalism so Universal ownership as I'm
sure you know it's a it's a an issue
that's been investigated a lot
especially in the finance literature
right all these big questions of whether
universal owners actually promote
competition or actually not and I think
the jury's still out but as far as I
know haven't seen maybe I'm running you
know behind my finance literature
reading list
I haven't seen much on universal
ownership and environmental social and
governance issues right so as you
mentioned these are quite powerful
layers in the global system not just of
the the the national but quite at the
global system and and theoretically it
makes sense because we're dealing with a
massive public goods problem a massive
collective action problem which is
precisely what it is so in your view
then given the power that they have are
you thinking about this more as self
regulation of these universal owners and
in general the financial industry or do
you see a combination of self-regulation
with government regulation and I
and add to that these are global owners
right so they we need to talk about
global institutions as well so how how
do you see this sort of the governance
therefore of the impact that the
financial community can have on this
issue so in my really utopian dreams I
see us managing to build global
institutions that have some degree of
democratic accountability that are built
up from democratically accountable
national institutions at the moment
those institutions are under enormous
stress and given that so many national
institutions are under stress I think
right now we cannot look to those kind
of global institutions although of
course they can be very helpful the UN
institutions like the PRI are making a
significant difference but now in the
short term I'm hoping for self
regulation self regulation in finance in
the interests of the economy and the
society as a whole at a global level
now Elinor Ostrom won the Nobel Prize
for exploring when and where you see
self regulation I think the good news is
you do see it it is possible it is
stable my leading example here would be
the International Chamber of Commerce
which is a completely voluntary self
regulatory body that essentially sets
the rules for all of global trade and
runs its own courts and adjudication
procedures for enforcing those rules so
we have an example of how business can
self-regulate at a global scale and as I
say because finance is so concentrated
which is partly creepy I think they
might self-regulate to address climate
I'm much less optimistic of their
self-regulating to address inequality
and social inclusion
I think they should because I think
inequality and social inclusion together
oppose a mortal threat to the long-term
health of our society and I don't think
anyone should want to end up living in a
walled compound with guards at the door
and the hoi polloi outside I don't think
that's healthy for anyone but will they
do it I don't know
and let's be clear we have to keep the
social and political pressure on why are
so many firms moving because their
employers have been insisting that they
do why are so many firms moving because
while very few customers will pay more
for sustainable goods they will switch
they will switch brands so I'm not
saying that business can save the world
I'm not saying this is a done deal but I
think if we keep on the social and
consumer pressure business will move
business
well everything we're talking about is
happening so yes to answer your question
I'm not sure I'm optimistic but I am
hopeful wonderful that's a fantastic
code I think I'm gonna use it as your
help we talked about self regulation and
regulation Rebecca and I'm a cognizant
that we need to switch to the Q&A as
well although I've been reading the
questions so some of them have
indirectly ask you as well so politics
is an area in which few academics dare
approach unless you are a political
scientist right let alone a Business
School professor it's a bit of a taboo
subject but you dare go there in your in
your book and very bravely so write a
strong thesis of your book I would say
is that and some would maybe call this
an oxymoron and is that business should
lobby to get business out of politics or
at least money out of politics right and
I understand the idea that you're
suggesting is that business should not
take an active stance on one particular
policy but essentially business should
support the political process right and
the Civic's of it all can you unpack
that aspect how do you envision this
role of business and and it's at the
intersection or within politics to fix
the system it's easiest to start by
focusing at the local level many cities
in the world have groups of business
people that talk regularly with local
politicians governors mayors and talk
about issues like the transportation
system the educational system the
healthcare system and so we have a
history at the local level nearly
everywhere of business engaging
with politicians in the interests of
broadly the social good historically
when societies have broken business
associations have come to the table with
representatives of employees and with
government and sat down and said well
this is not working if you think about
what happened after World War two in
Germany the country was in ruins the
German business association was tempted
to go back to we're in charge we run
everything that's how they were running
to nothing and could see that such a
course would lead to social breakdown
and probably take you nowhere
economically so there are these moments
historically where business as a whole
has realized that the system is in
balance and I don't say it in my book
but I believe and coronavirus has really
increased the strength of that belief
but we are approaching such a moment now
that our societies are cracking that
business has a strong self-interest
enlightened self-interest in addressing
these issues so while it sounds crazy
business should lobby to get money out
of politics it's happening business
should attempt to fix a democracy it's
happening we saw Twitter just today give
its employees a day off to vote it's a
small move it's a fundamental move just
as business leaders are stepping up and
saying it's unacceptable to discriminate
against LGBTQ ex policies and I think
they played a role in the recent
incredible Supreme Court ruling which
said you know you're right so business
should be stepping up when they see
voter suppression when they see jerilyn
during when they see an active attempt
to subvert the democracy and this is
hard but they should pull back their
money you know what got me walk writing
this in the first place was the fact
that firms were pumping hundreds of
millions of dollars into climate
denialism
and into climate denial as politicians
that felt to me morally completely
unacceptable but more importantly it
felts
stupid if we had addressed climate
change 15 or 20 years ago we would have
it nailed by now at a cost of two or
three percent of the economy slowing it
down has you know he's going to cause
untold harm on generations of people so
yes it's a stretch but I went there
because hey the world's on fire well
being at 31 degrees Celsius in London
today I can tell you that it feels very
close to being on fire but unless you
stand Thank You Rebecca I was great I
think bridge into the questions and
usually the questions are pouring in so
I'll try to share it or add you to pose
them to you in some sort of theme like
structure to make sure that we cover as
many of them as as possible so I think
some of the questions are if we start
with the last component when we talk
about politics and institutions a number
of our questions basically tell us that
look you talked about global
institutions but there is an obvious gap
between the Western world institutions
and the institutions in developing
countries is one thing to be a company
in Denmark as one of our participants
said and it's quite another to start
this in Sierra Leone so how do you see
this gap playing out between West
Western world sort of institutions more
developed institutions and perhaps in
less developing countries how do
companies navigate if you like those
institutional nuances as at when they
try to have this sort of impact that
you're describing we have some good
research evidence suggesting that
purpose-driven companies who hold
themselves accountable using things like
ESG metrics so it's not just talk it's
the real thing but these kinds of
companies when they engage in less
developed regions can make a positive
difference certainly on the industries
in which they work with but also perhaps
more broadly on the governor
this is a tricky issue right because you
don't want business fixing government
that's I'm saying is a no-no I want but
perhaps you do want business standing up
for democracy for freedom of speech for
real data for the independent judiciary
so one of my hopes is as we move forward
the large global multinationals will
begin carefully and appropriately and
transparently to engage with local
institutions and to be a positive ally
in trying to develop what the
development economists call inclusive
institutions into institutions that can
really raise the economy in society you
know in a powerful way that's my hope
clearly lots of other things need to
happen clearly issues very enormous lis
between different countries but that's
the general direction in which I hope we
might we might move so I think we're
getting a lot of questions related to
Corbett 19 Rebecca passes as expected
and there are basically three three
issues here so people are asking look we
have seen government's respond in
particular ways and we see you know the
European Union is already arguing I'm
arguing about the green new deal we're
as well say the less Green Deal of the
US it's also another right you know a
two trillion dollar fiscal package right
so government's had adopted a set of
reactions that covered 19 companies have
and NS is often tell to my students as
well we are going through a period where
literally the world is watching right
you have just capital tracking corporate
responses you have to value labs you
have so many other companies that are
paying very close attention to how
companies are responding and of course
there is the potentially behavioral
changes that we as individuals are
experiencing through the crisis so given
corporate responses government responses
and impact of individuals if you were to
assess to value it take all of those
things together would you be more or
less optimistic
that indeed we can reimagine capitalism
now that we have this crisis which is a
know a mini testing ground if you like
about given all these responses what
would you say to that
Cobin 19 makes me more optimistic it is
a terrible event hundreds of thousands
of people are dying millions of people
have lost their jobs
firms are shuttering many of us I think
deal with moments of despair and
isolation it's a really tough time it's
easy to see how things could get worse
it turns out by the way that humans are
hard-wired to focus on negative
possibilities because those are the ones
that hu on the savanna so we tend to
focus on everything that can go wrong
that's who we are
but I actually think there's a silver
lining here kovat has highlighted the
weaknesses of capitalism like with an
enormous spotlight suddenly inequality
is not just a word it's essential
workers who have to keep working because
they don't have health care or savings
suddenly climate change is not just a
mumble mumble it really makes it
viscerally real how many millions of
people the burning of fossil fuels kills
every year because sudden you can see
the margins and your lungs feel clearer
it has completely torpedoed the idea
that free markets can work without
government I mean like Wayne our moment
government turns out to be really really
really important and to be able to
generate trillions of dollars and you
really hope you have a good one so I
think all that works for us and I think
there's another more subtle aspect which
is we've all been unsettled we're all
thinking about the world in a new way
when I talked about this work and this
book six months ago I would tiptoe up to
the idea of systemic change and business
means to work on rebuilding democracy
I'd spend most of my time working about
climate change and you can make money
focusing on climate change because to do
anything else everybody would just like
glaze over that has changed people want
to talk about changing the system
they understand completely what I mean
when I say we need a capable trans
democratically accountable government so
I hope I hope I hope COBIT has a silver
lining
I'm personally very sad to say but I'm
not as optimistic but you definitely
increased my degree of optimism with a
dancer Rebecca because if you do throw
the parallels you know this week with
Kovac we had public buy-in and
understanding and that climate and when
it comes to climate change not only do I
have to deal with the problem but we
have to deal with climate change denier
and funding of pseudoscience and stuff
like that but perhaps this is this is a
strong wake-up call for all of us about
the the challenges ahead now a couple of
the questions that came in related to
the the theme we touched upon which is
that is this idea of the financial
markets and and people basically have
questions about the specifics but Allah
allowed me to kind of bring them a bit
summarizing a bit so there is you know
should we demand more transparency from
asset managers about their engagements
should we demand more transparency about
their proxy voting practices in other
worlds in other words what can we do to
make essentially the investment
community better stewards of capital
right and I'm sure you're aware the UK
has if not the were world leading a
stewardship code for the investment
community so what can we do to enhance
if you like that sense of stewardship by
the investment community two things
first we can insist on transparency we
want to see everything or at least a
summary who are you talking to what are
you talking about how are you voting
secondly we can vote our dollars our
personal savings should be in
responsible funds again or ESG oriented
investments an enormous fraction of the
world's wealth is about to change hands
as an older generation dies and a
younger generation inherits those of us
who are fortunate enough to be in that
generation not me my father
bankrupt but those of us who are
fortunate enough to be in that
generation must insist you know as we
talk about business doing the right
thing there is no substitute for
businesses customers insisting they do
the right thing so transparency and
retail and pressure pressure from asset
owners right so I would like to ask you
one more question Rebecca we didn't
touch it through our conversation but I
think is a fascinating one and if only
we had more time
clearly you are one of the world's not
only leading researcher and voices on
this issue but one of the leading
educators on these issues so if you were
to stay take a step back and reflect on
what do you think is the role of
business education then and business
schools perhaps in in terms of
accelerating this saving of capitalism
or this reimagining of capitalism what
could these educational institutions do
in order to avoid the world on fire or
put out the fire in that sense yeah
you're super kind I'm just a researcher
and just a teacher all of us are just
individuals doing what we can I talk in
the book about the temptation to despair
to think that individuals can't make a
difference and I think one of the things
we can do as educators is really double
down on the idea that changing the
entire structure of the world's economic
system is going to take all of us and
all of us matter so of course I think
MBA education is important I taught my
course reimagining capitalism because at
Harvard we write cases and I was hoping
not only that it would make a difference
to the students at Harvard but the
students at business schools across the
country
but I'm so aware that there are hundreds
of business schools moving in this
direction that there are thousands of
academics like us trying to talk to
their students about the business
possibilities that exist raising the
question of cooperation as a way to deal
with externalities talking about the
fact that a strong capital
requires us from government in a strong
civil society so at Harvard we
definitely are trying to make a
difference we have more than 300 cases
on shared value I was asked to take over
the required course in leadership and
corporate governance and so we're
opening all these questions with the
students what is the purpose of the
corporation we try hard not to tell them
what we think it's all about what do you
think and really opening the questions
should you respond to these issues you
know do this case study is this guy
saving the world or has he lost his mind
I mean you know those those are the
kinds of cases we're trying to teach but
while watching out of the window I want
to just reflect on you know everyone
who's thank you everyone who tuned in we
can all feel so small particularly now
when we're all shut away from each other
but we we can change the firm's we work
out so many of the stories about
sustainability have a hero CEO but in
reality many firms switch because
someone on the ground said you know we
could cut our waste in half and make
money we could raise how much we pay to
our entry-level employees and they would
be more productive and we would be
better we could recruit at different
places and get more diverse more diverse
employees and by the way diverse people
are going to be half the workforce in 20
years and we should start recruiting
them because we're going to be selling
to them too so people can make a
difference as employees they can make a
difference as customers where you spend
your money makes a difference as
citizens vote vote organize organize I
have a friend who started a group called
mothers out front at her kitchen table
she says you would not believe Rebecca
20 angry mothers talking about climate
change that show up at the hearing after
hearing and make a nuisance of
themselves and have done the homework we
are passing legislation and there in
eight states
I mean local groups real organization
huge difference and last but not least
yes your own behaviorism
important it's important because you
want to be internally consistent at
least I do I don't want to talk about
this and then do egregiously stupid
things but because we know social
behavior works that way if you don't fly
or you choose to fly less your friends
will fly less the research is quite
clear on this point so there's lots that
we can do and let me close just saying
one thing any and then I will stop I
don't think this is a done deal
we may not succeed in stopping climate
change fast enough to arrest serious
damage or in fixing inequality in our
lifetime or in solving the
hundred-year-old problem of racial
inclusion that's not a reason not to try
I can promise you that working on these
issues is a road to hope and to joy it's
super hard but I need the most amazing
people thousands of people are trying to
drive change and that's where the future
is that's where our kids are going we
have to make this work Rebecca that was
a brilliant ending and a very heartfelt
ending as well so thank you so much for
that and allow me to say that it was
truly an honor and a privilege to have
you today and to talk about this this
book the book is already out and I would
highly recommend to everyone to read it
and it's a in addition to of course a
great reading I thought it was also a
fantastic call to action exactly what
Rebecca just told us and as you said
Rebecca you know nobody is an extra in
this in this fight nobody is an extra in
this attempt to imagine the system and
hopefully put all of us on a path and
they more as sustainable or and more
responsible future so thank you so much
again for sharing your with us your
views your insights your experience in
this fast evolving very hugely important
topic and I really hope that very soon
not only do we have you back but we can
be even more optimistic about not only
how we put out the fire but how do we
rebuild after putting out the fire so
thank you so much
and Rebecca thank you you're welcome
thank you very much for having me here
I really enjoyed any pleasure
[Music]
you
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you

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### Education for all, occupational choice and business formation in Africa
URL: https://www.youtube.com/watch?v=VLoDhpgMiXE

Idioma: en

[Music]
my name is timber machinetta
and i am an mba student at lbs
class of 2021 i am also the president of
the lbsf
club and i'm originally from zimbabwe
just to talk a little bit about the
africa club the african club is a
diverse student-run club
that aims to increase awareness while
championing business and investment
as well as development and career
opportunities across the african
continent
uh i'd like to introduce uh professor
elias
who is an economics professor here at
london business school
so hello to you elias thank you tamba
thank you for taking the time um tell me
a bit about your research
and what your main research interests
are
thank you timba so over the past decade
i would say
together with my colleague stelios
mihalopoulos at brown university we have
been working in various
aspects of african development initially
our focus was on the colonial and
pre-colonial origins examining for
example
the impact of the artificial border
design or the impact of ethnic
specific features related to political
centralization
but more recently we have been trying to
understand
inertia persistence that tend to
characterize and define development in
the continent
and to be even more specific over the
past couple of years we have been
working
uh again together with stevies
michalopoulos sebastian holman alberto
alazina
and torsten walter uh trying to
understand
the expansion of education trying to
understand
inertia in educational intergenerational
mobility
and we have various projects try to
understand
why for example the recent expansion of
education
in africa has been quite heterogeneous
across space
across religious affiliation across
ethnicity
on that note what's the purpose of that
research
and and i know there's a project that
you're currently working on around
examining the success of school
expenditure in terms of economic payoff
what's some of the uh the drivers behind
uh behind that uh that topic
yeah so let me just give an overview of
this a more specific project
that we have initiated and the receiving
supports from the wheeler institute for
business and development at lps
so we want
to do in this paper in this project at
least four things
first we want to map the expansion of
schooling infrastructure across
more than 25 or more african countries
cis independence so effectively we want
to have to provide the research
community to policy makers to business
school students
to the general public a detailed dynamic
mapping that will record
where schools for example were built in
zimbabwe
starting sometime in the early 60s going
over till
the most recent period this as you can
imagine is a very complex
project data is hard to assemble quite
often even the statistical agencies do
not have this
this information but as my great
colleague
torsten figueredo walder has done
for his uh for his own research
we believe that this project is feasible
so we have already completed the mapping
of school construction for at least 15
countries so far
and we are quite optimistic that in the
past couple of months we'll be able to
have at least
as i mentioned before 25 to 30 countries
now second with the new data handy where
we will know
the exact location of let's say a new
school in mozambique or
in malawi or in ghana we will link this
with educational attainment of boys and
girls who were born
and grew up in those regions during the
relevant period
and this will allow us to assess what is
the
impact of school construction programs
and there have been some very bold and
ambitious programs implemented by
african governments in the past on that
on educational attempt
third we want to further understand
what's happening here so we'll try to
assess which
exactly policies are successful
in increasing the supply of schools and
we will look for
among others on the comp
loss on compulsory primary educational
attainment
that various african countries have
initiated in various
points in time some of them especially
those implemented or announced in the
sixth and seventies were not
particularly successful
some more recent ones have been more
successful and we will try
also to assess what is the role of the
ethnic or the original
background of the leaders or the key
ministers
on the expansion of schools in their own
if you like ethnic homeland or
a or perth region and fourth
we will try to examine whether there are
complementarities
of school construction with other
infrastructure
and this we believe is quite important
for policy making so
one concrete test that we plan to
to implement is for example do
schools have a bigger effect in areas
for example that are connected to the
transportation network system
are schools more effective when those
programs take place close to the
capitals or in areas where
they are more specializing relatively
speaking in services
and manufacturing this will believe is
going to be quite
important to shed light on poverty trap
dynamics which have defined
policy making in africa going to the
late colonization period
and that's that's that's a great um sort
of like you know um overview of the
research that you're doing
and and i'm glad that it's it's fairly
comprehensive because
i think sometimes you know some of these
issues are looked at in isolation which
leads to maybe
uh slightly skewed views of of the
impact of um
some of the school construction programs
that have gone on in the past so that's
uh
something that's uh that i'll be
interested in finding out later on
um why is this such an important topic
to you
if i can get a response to that yeah so
let me make a remark about your first
point you're absolutely right many
actually african scholars say and
researchers have worked on particular
educational reforms or about
particularly school schooling
construction programs in one country or
in one region or in one particular
setting
our ambition here is to be broader
and understand heterogeneity and
actually african countries in the past
have not been particularly successful in
implementing those very ambitious
programs but in more recent times they
have been more
successful so we want also to understand
this employing a very comprehensive if
you like big data
approach we are actually quite
passionate to understand
dynamics say in africa growth
and education wise this has been as i
mentioned before
one of my core research areas and i
think
we can learn a lot about successes
and failures say in africa in this
project looking on education which is
a core aspect for the future of africa
now second when and this is actually how
we discuss those issues at the london
business school
you know going back in the 60s when
africa turned independent
there was euphoria and great optimism
about african growth prospects and
opportunities
vis-a-vis asia so actually at the time
you know if i was to criticize my
colleagues or policy makers in
washington and london and brussels
there were optimists about africa
pessimism if anything about asia
and then the next half century we saw
actually a reversal if you like of these
views
with asia doing super well
industrializing and you know growing
from rugs to riches
while africa has been left behind
because in the sixth and the seventies
to paraphrase chinook
things fell apart so i think now we have
seen
two decades now of robust african growth
what
some people have called as the african
growth miracle and i think now there is
more confidence
among african entrepreneurs business
people
people policy makers about africa's
future
and we have been trying to understand
those
growth dynamics as they happen
and the way people think about africa at
least the uh
non-africans which is actually a problem
of research more generally
is that you have a lot of growth
potential
for example from infrastructure from
education which in spite of the
considerable improvement still
there is a lot of space for educational
improvements across the continent
both quantity and quality
but at the same time you have the
specificism
coming from you know the devastating
impact of colonization and even the
preceding slave trade period where
africa was exploited
by europeans so initially our research
was mostly on the
adverse effects of colonization and the
pre-colonial features
now we move more to the contemporary
issues where policies are in the hands
of africans
to put it this way and see how they can
move
their countries their regions
forward interesting interesting
perspectives um
to what extent does your research take
into consideration some of the
things and i know you've touched on this
i just want i i guess to
to to dig a little bit deeper there uh
but yes to what extent does your
research take into consideration the
nuances around
access to education pre-independence
and so for example i'm currently in
south africa at the minute
um and uh spent my day yesterday
at the apartheid museum which is based
in in
in durban which talks through some of
the history uh
a complex history for a country like
south africa for example fairly
developed within the context of
the african continent but still it has a
very complicated and complex history
both in terms of access to
education pre-independence and then the
impact that's had on those
generations which effectively formed the
first leaders
of some of the independent african
countries
post-independence
that's a great question let me say how
proud i am
that every year with my colleague rajesh
chandi we visit
johannesburg with 80 mba students for
the global business experience
johannesburg and actually our very first
visit is at the apartheid
museum which is such a humble
and amazing place to understand the
historical impact of
of the apartheid regime so there has
been a lot of research in my field in
economics
trying to quantify the impact of
events related to colonization like
apartheid which you know characterized
many other countries in zimbabwe
where you come from and not to say or
mozambique where i have
some related projects looking at the
civil war and
that affected uh mozambique there so
we know that such policies have
lasting effects actually very a
persistent effect
uh and nowadays actually the part of
research that i am working on is trying
to understand
why there is such high persistence
now in the companion work titled in the
generational mobility in africa with
sebastian studios and alberto actually
we look at exactly these issues so we
match
children to parents we know the
education of children
and their parents so we try to construct
measures of educational mobility that
reflect for example how likely it is
for example a boy or a girl born in a
particular
region and let's say in zimbabwe has
to complete primary schooling at least
primary schooling
although her father and mother had not
completed primary school so this would
be a measure of
educational upward mobility and then we
can also map
downward mobility which would reflect
the likelihood that you know a boy or a
girl
is actually quite high for example in
sudan whose parents
had completed primary schooling failed
to complete primary school
and a key finding which to us was
actually
quite flabbergasting was that we know
actually we document sizeable
cross-country differences but there are
huge differences
in the same country across regions so
for example in ghana or if i was to go
in the sahel
very low levels of upward mobility in
the north
relatively high upward mobility rates in
the south
which linking it to the project i just
mentioned earlier
it seems that educational reform for the
expansion of education for example in
ghana or in nigeria
the gains have not been distributed
quote-unquote equally across space
and we have companion work looking
across religious affiliation or ethnic
affiliation
so i think and going to your question
given the legacies which are actually
quite devastating
given the exploitation that europeans
did in the continent
during colonization and the preceding
period of colonization
actually now i think we need to
understand what's the role of policies
and how those policies could either lead
to convergence
or as we show it's actually quite
alarming is that
in spite of the progress there are still
considerable
inequalities across regions ethnicities
and religious lines
and i think this is something very
interesting because
many people who you know they may see
some statistics saying oh you know
educational improvement education is
going up in ghana or in zimbabwe
which is true it's the good news but if
you go more
you know granular you see considerable
enlarged
inequities in this expansion which if i
was to draw an analogy they're not that
dissimilar from what we see in the u.s
and the rich countries
but then we sit mostly on income and you
know tertiary and postgraduate education
in africa we see it also at primary
education and secondary education
moving on a little bit um what is the
wheeler institute
grant allowing you to focus or at least
if you can contextualize the benefit of
having
a the wheeler institute back uh research
that you're
that you're carrying out yes so
this project is in many of those
projects are very data intensive
and we have to go to colonial archives
to map education
at independence we have to analyze and
process
censuses that african countries
implemented post-independence
plus we need to contact the ministers of
education and perhaps other agencies to
jail
reference geolocate schools that for
example were built
in zimbabwe in 1971. so this is like
extremely data intensive
project so the grant of the wilderness
allows us to recruit
very talented and very bright research
assistants
some of them specialists in their
respective countries
so with considerable let's say
experience working in malawi or working
in burghina faso
then contacting the statistical agencies
or the ministers of education to get
the necessary data and then of course
clean them geoprocess them
and eventually being able to get the
input
that stelius and torsten
and i will conduct the economic analysis
now you talked about
some of the benefits of research such as
this uh for example for policy makers
um is is are they any other you know
sort of like you know
benefits beyond beyond policy makers in
other words i guess my question is you
know
what do you hope this research will
achieve
as a lasting impact
well first i think that this project the
way i view it is that we need
a big data approach let's record
well what has been happening in the
continent
let's record well or you know with the
best available data
what are the outcomes and try to have a
more sound approach
not only to policy making but also you
know to businesses
so be able to inform policy in a more
sound and scientific way we see more and
more of that happening in the rich club
of nations
i think we need more looking on africa
and some other middle-income
countries so this is the first if you
like a big
objective second i think and that's how
i view myself as a researcher here is
that
we can plant the seeds for a lot of
subsequent research
so in our research for example we will
not be able to addre just because we
have the pan-african
perspective we will not be able to dig
into you know the curriculum if you like
what's been taught
perhaps the language of instruction
which could be quite important
subjects etc etc but then researchers
from malawi from zimbabwe from guinea
who jump in or other researchers in in
global educational
institutions and try to shed more light
on those same aspects so
we view this as providing like the
backbone for a big thing
let's try to understand african growth
and let's try to understand education
because we know that education is the
engine of growth it's one of the key
engines of growth
and moreover it is an engine of
opportunity
from a geographical point of view
we've talked about africa and how this
is very much a pan-african
focused uh research are there any other
countries or regions
that would benefit from this research or
at least where this research would be
relevant and applicable
that's a great question now so far
there have been quite a few studies
looking at the effect of a
school construction projects for example
there's great work by esther duflo
last year's nobel laureate looking in
indonesia in the 70s and the 80s
so policy makers have used insights from
other continents and other countries to
apply them in africa
there have been now more and more some
case studies like the one you mentioned
in your introduction so now i think we
want
to put everything together and examine
among others whether there is
heterogeneity so in other words
if we build schools do we see an overall
increase in education
or we see a bigger or smaller effect for
let's say boys or girls
and how about some boys and girls in
some
communities which are you know perhaps
adhering to religion a versus religion b
or whether they are close to the
capitals with good infrastructure or
further away more report
more remote more agriculture
specializing so i think that
putting a lot of data together
will be actually quite important for
policy makers
but also for researchers and in the
community more generally to understand
what is the impact of those important
reforms
on the concept of at least education and
the impact of education in africa's
development
fred swanika who's a night ghanaian
entrepreneur founded the
african leadership academy having
identified leadership as a primary
ingredient for sustainable economic
development in africa
now his approach uh appears more
forensic in the sense that
um it's weighted on the dynamics of many
african countries
different perhaps from school
construction as a proxy of education
success and future economic
economic payoff now i know you touched
on
the extent to which the research
approach that you're taking is very
pan-african and therefore
uh would be would be really really
difficult to get into some of the
granularity around you know specific
impacts and implications on a
country-by-country basis
but i guess what i wanted to find out is
with the approach that
a fred swanika kind of entrepreneur is
taking
uh what are some of your thoughts
on on on on i guess the
the the balance between the broad based
approach that takes a
more continental uh pan-african review
and maybe something that's
a little bit more forensic and uh and
and targeted
uh around specific uh challenges or at
least
some specific development challenges
that exist within
african countries yes so
thanks for your question and again let
me say that with a lot of business
school
mbas we also visit the african
leadership academy a fantastic
institution
in the suburbs of joburg which is
extremely inspiring to see so on the
issue of leadership
this is a fascinating topic more
generally but also in the african
framework as well and as you know africa
has been quote unquote defined
by those big leaders so kruma mandela
and herrera marcel so
every in every and those could be quote
unquote more
you know good like madeline could be
like mobutu which is
more like the villain type no
clearly leadership matters we don't have
that much research in my domain
in economics but increasingly so we have
exciting research showing that the
personality of individuals matters and
you know thinking about south africa
clearly the personalities of fredericton
clerk and the nelson mandela
mandela not to say this one tutu and
others were crucial
in the transition i think the same
applies to zimbabwe to some extent
now however and here is a researcher
talking who have been working on african
development and on institutions and
political economy in general
i think that africa and there's some
good news here
should try to build more on institutions
develop its own state capacity which
will make the continent and particular
countries
less dependent on the particular a
leader
because we have seen many quote-unquote
good policies being reversed
by some other big man
or we have seen you know individuals
who were clearly honest and decent and
wanted to promote development
some of their policies being you know
very detrimental and you know julius
nereda comes to place
some super good policies and clearly a
great vision
but some policies which have been very
uh detrimental
to the growth of tanzania people so my
short answer is that clearly leadership
is important
and we know that secondly i think africa
now should feel more confident
to further invest in institutions and on
some policies that
the majority if you like or the only
majority of the people agree on and i
think education should be
and most likely is one of them
i think i think i agree with you in the
sense that decoupling
uh our politics from our institutions
for example would benefit the african
continent
i think the challenge in some respects
is that
presently many african countries the the
our history
has led us to position with our politics
and i'm thinking about i guess my own
country in this case
our politics is deeply entwined within
the making of the institutions and the
policies and so on
so to a certain extent that that process
of decoupling is um
is a process like like like many things
uh but yes i think i think ultimately
a position where a country is
independent necessarily from the
character yeah the charisma and the
personality
of its leader would would be beneficial
in the long run
yeah if i was to to to jump on that you
know
at the london business school when in
the world economy elective i
i have like two lectures on institutions
then we start with congo
and then i have a photo of king global
ii of belgium
who was the institution in congo for
something like three decades
there was no constitution no laws
whatsoever it was like
institutions was him then effectively
mobutu was something very similar
now we talk and it's great that you're
in south africa
we talk about the personality of madiba
and
declared and others but they came
together and they have
created an amazing constitution for the
people
of south africa so you have one case of
very bad leadership very personalized
that you have another case of good
leadership
that understood that for long-run
process and the opportunities of people
we need to design a very good
supreme lord i'm wondering if you could
comment on this very recently the
ie business school in spain recently
made available
a case study on uh group
a nigerian-based conglomerate needless
to say that
the availability of the case sparked
plenty of debate amongst us
students at the london business school
african club
i'd like to get your thoughts on um you
know just
recognizing that you you have a specific
area of focus within your research
but i'd like to get your thoughts on you
know just current levels of research
academic cases centered around african
protagonists and that's just you know
just a general
uh view uh based on at least your your
experience
working and and researching around
africa
yeah so again let me have a couple of
remarks here
first let me start with research uh
up until i would say the mid 2000s
there were very very few academic
papers looking on african countries or
issues related to africa there were very
few
and even fewer being published in the
most prestigious journals where
they would have a bigger impact both in
the research community and on policy
this has clearly changed
over the past 10 to 15 years so we see
more and more exciting research
about various africa related issues
one strand if you like comes from the
researcher have mostly contributed
more historical or big policy
but we also have the revolution in
development economics
thanks to mike kramer esther duflo and
abigail banerjee and their team
last year's nobel laureates through
developing randomized controlled trials
mainly taking place in africa examining
a plethora of relevance to the people
issues like you know
what happens when you lower the class
size what happens when you give kids the
opportunity in school
to monitor with a smartphone whether the
instructor and the teacher shows up
in class to tackle absenteeism so have
those two if you like
research strands which are becoming in
the profession way more important
there are many young researchers working
on these issues
and i think what is also a great success
is that now the young generation of
researchers is not
only in the ivy league schools or the
top business schools
you see more and more researchers from
africa and this is something that we
definitely need
as a research community so this is the
first if you like
a change which is clearly the case in
research now on teaching
and on case studies i think that we also
see
something like that perhaps not as
striking but we clearly
see that and why we see that first of
all because
more and more first of all the continent
has been doing well
not everywhere but there have been
pockets of very robust and strong growth
now this means that there is a lot of
interest
for investment for business for
entrepreneurship which of course makes
you know people who write cases or who
study economics and business to
to pay close attention what's happening
third we have some remarkable
success stories of african entrepreneurs
like fred swaniker
that you mentioned on the educational
front and many others
for example our london business school
alum
and nick hughes founder of embezza who
is also affiliated with the wheeler
institute
there have been many cases written about
the success of the besa
a pioneer in a very competitive global
industry like telecom
that came from kenya rather than from
the uk or germany or the us
and i think that we will see more and
more
this as the eyes of international
investors in the international
business community is now also a bit on
africa
and we will see more successful
entrepreneurs and businesses
flourishing and coming out of the
country just wanted to get your thoughts
on this
to what extent given the dependencies uh
for access to information
for research and academic cases to what
extent do case studies in the case of
you know academic case studies that are
used
to what extended case studies uh
self-serving for some of the
protagonists
for example if you're doing a case on a
particular firm working within a
particular continent
africa dangote in this case to what
extent are you able to separate or is
the researcher able to separate i guess
self-serving information and and
presenting i guess a balanced
view around the topic or a a particular
firm in its interests
well that's a great question let me
start with the caveat you are
asking this question to a researcher who
has never written a case
himself okay so let me start
with this caveat second i use
some cases for lecturing and for
teaching
the cases i use for africa are mostly
related to
policy for example i'm using a great
case study by laura alfaro of hps
looking at how botswana
has dealt with its diamonds which is a
success story
and actually based on institutions
rather than on leadership so
actually if anything uh in the beginning
it was thanks to good leadership that
they set up the good institutions and
then
which one actually is an african success
stories especially when
with the use of their natural resource
in this case
diamonds so as i mentioned
before writing a case is is always
challenging for
for the instructor of whoever writes the
case because there's this delicate issue
especially when it's at the firm level
you know how much
you can tease out the role of the
personality of
of the manager for example or the leader
or the
policy maker from that of of the case
which i understand it's a difficult
thing to do
and so my only comment here is that when
you read the case you know
just don't have like distance to be
super critical
to whoever right because it's a very
delicate
delicate issue how to write a good case
cases i think are very useful because
they allow students and actually
instructors like me
to be in the in the shoes
of of the policy maker and i think this
is
the real benefit of that but then once
we have
this you know we should try to abstract
and think what's the bigger picture here
and for this we need always many cases
or you know many examples
so going back to to the project where we
started we believe that you know
let's have many countries many settings
and see where it worked when it didn't
work and perhaps leadership or
management you know play their own
no more questions i just wanted to make
a comment i think you made a in in
giving your answer you talked about
botswana and how good leadership led to
the creation of like
good institutions and to a certain
extent i think that's the path that for
many african countries you're trying to
get to where you get
good leadership which might not
necessarily be the liberating leadership
and and i think there's a distinction at
least for me as an african that
you know fighting a wharf of lib of
independence is very different from
developing a country for
the future so you know those those roles
and the kinds of leaders that you want
for those
different tasks might end up being
different
however what you find i think for a lot
of countries that is that
the first governments that we inherit
post-independence are the people who
were fighting for freedom
and might not necessarily be the best
people to you know
reimagining and creating a vision for a
country that you know goes on into the
future
that's it for questions for me um so um
thanks actually for taking the time and
having this conversation was very
very good to discuss on these uh topics
and areas of interest from me anyway as
an african with you so thank you very
much
professor elias for taking the time
thank you
[Music]

---

### Rethinking Capitalism: In conversation with Thomas Philippon | LBS
URL: https://www.youtube.com/watch?v=Qk2EXeBBqqA

Idioma: en

[Music]
good evening everyone I am Ellen a
professor of economics at the London
Business School welcome to this wheeler
Institute event the winner institutes
have been created thanks to the support
of stony and Maureen wheeler who are the
founders of Lonely Planet it is a
Research Institute focusing on the role
of business in addressing social and
economic challenges in the frontier
low-income and emerging economies this
evening the event is the first of a
series which is about working in
capitalism so welcome and we are
extremely fortunate to have with us
today two mahi people and the Martin
walls
Tama is the professor at NYU Stern and
he is recipient of multiple academic
awards in macro economics and finance
Kumar also a distinguished career in the
policy world he was in particular a
senior economic advisor to hold French
Minister of Finance in 2012 and 2013
I actually met tomorrow a long time ago
when he was a student at MIT I remember
the French expects community in
Cambridge Mass having very interesting
and heated discussions at the time
comparing the European economy and the
US economy and interestingly such
comparison played a very important role
in Tamar's fascinating new book which is
the great reversal how America gave up
on free markets and this is the book
we're gonna discuss today in that book
to mark paints a picture of the u.s.
pegged with monopolies and oligopolies
and this is very much in contrast with
the European Union being better able to
guarantee competition in product markets
who would have thought what a great
reversal in heat but to ask too much
tough questions well so very privileged
to have Martin work with us today
since everybody in which Martin scholar
and est
he doesn't need any introduction really
everyone knows the sharpness and
analytical power of his mind when he
discusses important economic issues he
brings sanity and clarity in the world
that needs it more and more by the day
so I just want to mention that that
Martin actually worked a pretty glowing
review of Thomas books but I'm really
hoping that Martin and Tamar will today
find some very interesting things to
disagree about so that we have a great
discussion finally my colleague jilted
by Martinez professor of economics who
is an expert in technological change and
who happens to be also to my students
will moderate the Q&A and explain the
ground rules over to usually back thank
you all and good evening everybody
or afternoon or morning depending where
you are I'll add my welcome thank you so
much Tom ah Thank You Martin for joining
us today
so the ground rules are as follows
tomorrow we'll give an overview of the
book for about 15-20 minutes and then
followed by a discussion between Martin
and Tomas finally at the end we'll have
a Q&A with the audience which I'll be
moderating so please throughout the
presentations throughout the discussion
post your questions on the Q&A function
and I'll put those to Tom on to Martin
and if you'd like to tell us your name
and your affiliation we'll try to
mention those as well
ok that's it for me so without anything
further tomorrow it's a great pleasure
welcome and thank you again well thank
you very much for having me it's a
pleasure to see everyone I wish I could
be there with you physically but I know
we're going to have a great discussion
nonetheless I shall do my best
I learned to disagree with Martin
although it is not always easy for two
reasons one is that usually agree with
Roy rights and two is whenever I
disagree he happens to be right most of
the time nonetheless I'll tell you about
the book so the
to tighten the great reversal to some
extent animals already mentioned a
little bit the motivation so when I
arrived in the US 20 years ago he was
striking that the US had more consumer
friendly markets than the neuropath when
we say competitive market what we really
mean is consumer friendly this is
followed form of foreign economies the
market is competitive if consumers have
low prices and lots of choices that's
exactly what we mean and it was tracking
me so in the US you could get cheap
internet connections you could get cheap
laptops computer equipment all kinds of
electronics you could buy a cell phone
the cell phone plan was cheap and you
could fly to conferences because
airlines were competitive and airline
tickets were cheap enough that even me
as a student you know I could afford it
so that was the u.s. twenty years ago
where actually I met Ellen for the first
time in in Cambridge Massachusetts and
the book is called the greater Russell
because this has changed so let's start
with one of the prime example the cost
of Internet access at home so this shows
you the broadband cost per month for the
same speed right so for the same quality
of product as you can see every country
in the world is somewhere between 30 and
40 dollars per month so France Korea
Germany the UK Japan all of these
countries Italy Spain all of them are in
this ballpark but the u.s. is twice as
high as everybody else
okay so literally if you're a u.s.
household and you want to have a
broadband connection at home you think
twice what the same household would pay
in London or in Manchester okay so that
is a big change in fact it's a reversal
because the u.s. used to be cheaper now
how did that happen well in a telecom
industry over the past 20 years there's
been a wave of consolidation in
increasing markups so mm that's a sweet
spot that's where I got arrived in the
US as you can see concentration and
markups are very low so markup is in
green
read the mark-up is you can think of it
mostly as a profit margin like how much
they're making for each unit of revenues
and it is as gonna buy what 40 per 40
percentage points which is a very large
increase concentration measure on the
right is your eight that's the market
shell the top eight films this is very
volatile for many reasons but you can
see there is a clear upward drift by
about 20 percentage points overall this
20 or 30 over this sample period so very
large increase in concentration a very
large increase in profit margins and a
very large increase in prices so what is
it just that they come in this way or is
it more broadly true in the u.s. well
let's do mat let's look at the entire
non-financial business sector and this
is the profit margin so it's profitable
value-added it used to fig flipped wet
around 7% of course profit models are
cyclical every time there is a recession
profits tend to go down faster than GDP
so profit of a very odd that tends to go
down the few patients that you can see
tended to occur around 7% now they still
frequent but around the higher mean of
something like 10% so again a sharp
increase in profit margin that's for the
entire non-financial business sector
concentration is harder to measure
correctly because we don't always have
the same level of granularity that we
would like so these are proxies using
industry codes Brooke here I break down
by manufacturing in green non
manufacturing in red as you can see in
both cases an increase in concentration
by about something like 6 points maybe 7
pounds to give you a sense because the
baselines 1.2 it's a little bit like if
you had an industry typically that had
for large firms
20 years ago today in the should have 3
large firms
that would give you a sense of what
happened for the median industry so
these facts are not that controversial
although they are measurement issues
that we can come back to what is very
controversial is what they mean is the
interpretation and you know at the risk
of simplifying a bit I'm gonna call them
good and bad concentration these are the
two polar interpretation the good
concentration is when you think that the
increase in concentration that you see
is happening because firms are already
very good that were already industry
leaders have just become even better ok
so then as a consequence of that their
market choice is gonna grow you're gonna
measure higher concentration but it's
not really a bad thing it just means
they they are just getting better maybe
they are running faster than the rest
therefore their productivity is going up
and so is the productivity of your
industry so maybe everybody's benefiting
from it typically it comes together with
a lot of intangible investment when you
see that in the data if the bad
concentration explanation is exactly the
opposite it says that none of the reason
these films managed to maintain such
high profit margins and market shares is
because they are preventing entry they
are preventing competition and therefore
you don't expect any good outcomes and
in fact under the bad concentration
hypothesis you would expect high prices
and low productivity it's not how to
find example of both in the u.s. clearly
if you look at the retail and wholesale
trade sectors they'll if they fit very
well the good concentration story if you
look at telecom Airlines and healthcare
they fit quite well the bad
concentration story but you know what
about all the industries in between are
they more or less in the good camp or in
the bad cap ok so that's what I'm trying
to do and once we understand that we can
start asking questions about technology
of this policy is there something we can
do about it or is that some unavoidable
consequence of technological change
so just so that we all agree on the
basic principle this is an example of
good concentration from the perspective
of consumers
so Walmart entered the market I started
to grow very quickly in the 1980s its
market share went from essentially zero
to sixty percent over a span of twenty
years
that's an amazing growth it was all
driven by innovation by investment in
information technology just-in-time
inventory management in fact many of the
technologies that are used today in
retail around the world were invented or
pioneered or developed at least improved
by Walmart but as Walmart expanded its
profit margin in Green was flat if
anything slightly falling but that's
telling you is that every 1% increase in
productivity that was achieved by this
new technology was passed on as a
one-person drop in prices for consumers
that's why it was a good deal that's why
this is the kind of concentration that
we think is good concentration it
doesn't mean that it doesn't hurt it
doesn't mean it doesn't put many other
businesses out of business it doesn't
mean it doesn't have potentially you
know difficult consequences on the labor
market sure it can but at the very least
it brings improvement lower prices and
higher standards of living to consumers
the other thing that's interesting with
Walmart is it also exemplifies the way
capitalism is supposed to work because
by the early 2000 when Walmart is at 60%
of its market and people start to worry
about antitrust issues with Walmart the
fact that it's becoming too dominant
there's too much market power and maybe
actually we should do something of it
maybe we should have an antitrust action
against korma right at the time where we
started to worry about it
the solution came from the market itself
in fact in the name of Amazon who
entered that space from a completely
different perspective from the online
retail space and started competing
successfully with Walmart so in fact we
never had to do something drastic and
völva because competition was created by
the capitalist system this is how it's
supposed to work my main claim in the
book is that this is not working like
that dream so I go through all kinds of
measurements of competition in the US
and I show that whether you look at
profit margin prices
investment in intangible asset
productivity growth investment entry
turnover at the top of industries all of
these points toward the fact that
there's been less competition in many
industry now if you look at the data
very broadly with all these proxies at
the same time you can construct an index
of good and bad concentration the one
called intangible pc1 so it's the first
bulk of data based on intangibles it's
because it loads heavily on intangible
it tells you this is concentration but
it comes together with intangible
investment and fast for acute evil and
as you can see it's increasing in the
90s and then it's kind of flat so I'm
not saying is disappearing I'm not
saying that there is no industry today
that goes through this good cycle of
concentration they are they are always
some but what is striking is that the
other type of concentration the one
where we don't see all the good stuff we
don't see the productivity the low
prices and stuff like that
this has become relatively more
important in recent years and today it's
actually more prevalent than the green
type okay so that's my main claim about
the u.s. at this point you want to ask
yourself well is it more technology or
is it more policy is that something we
should be doing it's not a tricky
question obviously because you know we
don't know exactly what's driving this
concentration and it's very hard to
disentangle technology from policy
because typically the to move together
that's why Europe is especially
interesting because there are some
industries in fact most industries while
you're up in the u.s. use the same
technology if you think about the
telecom industry there are lines
essentially all the transportation
industry all the consumer good pretty
much the technology is exactly the same
in Europe and in the u.s. now that's not
exactly true for the big tech firms
because Google and Amazon is different
but Google and Facebook are purely
American companies we don't have the
equivalent so I'm gonna forget about
Google Amazon for the next three or four
slides I'm excluding them from the other
IDs I'm looking at all the industry that
have the same types of firms on both
side of the Atlantic and I'm gonna see
whether the aversion is the same in
Europe and it's not
it's part because Europe has tried to
push to make its market more competitive
over the same period of time so starting
in the late mid to late 90s as we move
toward a single market we start to
implement product market reforms Sophia
Mao is a product market freeform index
and this is telling you that at the peak
run mm we have one major reform per
country per year
what's the PM our reform well here's a
one of my favorite example the telecom
reform in France so this is when we
introduced a false competitor in an
industry that we used to be dominated by
three incumbents so throughout the 2000
we have three major wireless carriers
and classically hopefully they will
charge the same price there's a fourth
entrant free mobile who's asking for a
license got the net gets denied it's
licensed under heavy lobbying by the
incumbent and then in 2011 the regulator
give free license a bunch of spectrum
for the connector when they enter they
enter exactly had half the price of the
income of the incumbent we are providing
the unlimited texting voice and you know
Bertram gigabytes of data for 20 euros
per month free so for 40 euros per month
sorry free enters at 20 euros per month
so half the price and within two years
the incumbents had to match right
because they were losing customers so
that what that means that even if you
did not change your cell phone plan then
the price on your mobile mobile plan
would essentially be divided by two in
two years so that's a huge improvement
in your philosophy
that's all because of entry so that's
what is opted of PML if you create the
pms over time it looks like that so this
is an index of the level of regulations
on the level of you know regulation that
hurt competition in Europe for would be
the worst a zero will be the best and
every Green Dot is a conf in Europe the
US is a red line you can see that the
first vintage of data we have from the
second half of the 90s every country in
Europe has more regulation
anti-competitive regulation than the
u.s. except for one country and I'm sure
you can guess yes this is the UK right
the UK was the only country in Europe
with a traditional free-market
and you know if you follow from one
vintage the next may be you I wouldn't
blame you for not noticing much because
it doesn't change very quickly but if
you curate over 20 years you see it's
always move in the same direction by the
other sample every country in Europe is
about the same as in Europe in fact if
anything slightly less regulated and so
that's the that's what happened in
Europe and then consumer so what were
they so lower prices thanks to that so
if you look at the markup changes so
this is the markup the surprise
qualitative to unit cost of labour
it's about flood shall study declining
in you know it's increasing in the u.s.
it's increasing and my based on this
analyzes my estimates my best estimate
is that prices in the US about 7% too
high
so 7% too high that's about three
hundred dollars per month per household
it's about six hundred billion dollar of
consumer spending per year which you put
12 months and all the households
together and it corresponds to a waste
of a trillion dollar private GDP in the
following sense suppose you took the
economy as it is today and you made it
as competitive as it was 20 years ago so
you would get rid of this extra seven
percent distortion then standard
macroeconomic model predict that private
GDP would go up by about one trillion
dollars and on top of it because you
would push down profit margins you would
push up labor income so labor income
would go up by in fact more than a
trillion dollars profit would go down by
a quarter of a trillion and labor income
would go by a trillion and a quarter so
the main beneficiary would be the middle
class for the middle class for people
who earn around fifty thousand for
households earning about $50,000 per
year that will be a ten percent
improvement in the standards of living
so what happened well I'm sure we can
come back to what happened in Europe
happy to answer any question there is a
paradox of course it's weird but it
happened like
in Europe but I'm happy to explain that
afterwards um the u.s. is more
complicated I don't think I have a full
understanding of what happened why it
happened when I can point to a couple of
proxy explanations and the main one is
lobbying which is if you think about
what is it that change in mm together
with all these negative evolutions well
clearly lobbying did okay so this is the
abrasion of lobbying in the US and now I
have data going back further I can show
that it was quite stable as a share of
GDP for instance in the 90s and late 80s
but somewhere on 2000 it start to
increase a lot and which levels that are
about two or three times higher than
Europe okay so no being is not something
firms do for fun they do it because they
have a definite goal in mind okay and
usually this goal is to influence
regulations regulators or policy makers
in their favor and for whatever reason
started doing more with no mm and they
started to be more successful in the
2000 this is how you sustain a system
where prices are high profit margins are
high you may get a bad deal and somehow
the policy maker don't do anything so we
said 15 to 20 minutes so I'm done and
I'm happy to answer any questions and
that was a very good summary of some of
the conclusions and I know Elaine is
going to be desperately disappointed but
I gave it a very favorable review
because I thought it was a very good
book and so I'm gonna have to work quite
hard to find points of really big
disagreement I think before we go into
sort of some of the issues I think will
be very very useful because it's so
fascinating if you elaborated your view
on why and how the political why the
political economy of competition policy
in Europe evolved in the way did and and
was special about the relationship
between the member states that drove
this after all very surprising outcome
it's 20 years ago or 25 years ago the
idea that the whole EU would become so
much more competitive would have seemed
almost like a joke so what you think
yeah so it's striking that if you read
the papers the books written at the time
nobody saw it coming I don't think I
would have seen it if we had been
writing at the time for sure so the
product is as follows suppose you take
18 countries which as you saw in the
data right except for the UK none of the
other ones had the traditional free
market and by n3 market is an ecosystem
right free market means that the the
protocol system supports independent
regulators and the other parameters are
there to enforce free market by being
tough on competition so none of the
countries in Europe had this tradition
of free markets now you put 18 of them
or depending whether time twelve or
fourteen or let's say 18 you put 18 of
them around the table and you ask them
to design institution for the EU
now think about it and you know what's
the first thing that comes to mind well
I think most of us would or intuition
would be well they're probably gonna do
the same thing they were doing at home
just gonna on the latter scale okay so
that's the basic the theory of the EU as
being some kind of average of
pre-existing conditions and what's
striking about each institutions is that
to a large extent this is not true
the EU institution is not the average of
the Member State institution that is not
true for the ECB and it is not true for
the digicomp so what's the game why is
it that it's like that I think the
answer is that countries understand that
once you played the game at the ear
level the game is different so if you're
if you're the Ministry of Finance and
friends and you deal with French issues
then you want to keep your power that is
you want to have the right to influence
your drills to influence industrial
policy so you don't like regulators to
tell you what to do there is no
controlling force to that except of
course you I comfortable to citizens so
they're going to vote if you do a really
bad policy that out then they're going
to vote you up but at the margin you
gotta balance it now if you do the same
thing at the EU level you still have
your desire to influence the EU okay
every country would love to influence
the EU in their in their favor in that
direction obviously but they understand
that there's a controlling force which
is the other countries could team up and
influence the you against them that did
not exist at the local level that did
not X is at the members that one that's
only on the EU phenomena and so what
happens is that if you know you're gonna
be in a union with eighteen or twenty
eight members then it becomes even more
important for the referee to be
independent if you know you're gonna win
the game you might you're happy to bribe
the referee but if you're going if you
in a game with other people and you
can't predict the outcome then you want
the referee to be fair and independent
and so that's what happened the French
were worried that the Germans could
influence the Commission against them
the German were worried that the French
would be able to impress the Commission
against them the order of motor
countries were worried of joining a
union with two large countries who could
you know team up and influence the
regression in their favor and so if they
were to agree
on anything you would have to be over in
the parent referee which is exactly what
they did for the digicomp and by the way
that tilt what they did with the ECB for
the same four associate the same reason
which is that's how we solve the paradox
of the new my opinion so the the result
I mean one way I was thinking about this
after discussed this before but in a way
it suggests that there is a competition
benefit to having a political dissent
rolla politically decentralized cetera
that if ve you had a had the federal
government that many people want then
the logic would suggest it would might
well be captured in the way that your
argument suggests the US federal
government has ultimately been captured
yep that's that's one of the example
where the lack of some lack of political
unity can be a good thing in these guys
it's an interesting it has an
interesting resonance for people who
know the debate about the Renaissance in
Europe and why is that Europe was the
invented modern capitalism one argument
that historians have given is precisely
the lack of a centralized power yes I
mean it's it's what they are all furious
but one of the interesting theory for
China versus Europe in explaining why
Europe you know became so much richer
than China you can't explain that based
on technology with the Chinese were if
anything more advanced and bureaucrats
they had better writing they had better
everything the state was running more
more efficiently so based on this you
would prick China is the one who
shouldn't become much richer and some
what happened in Europe and one argument
we'll give is that precisely the fact
that all of these local kingdoms we are
fighting against each other so if you
have a good idea and your local King
doesn't like it and try to put you in
jail well you can move to the next
Kingdom and that means that good ideas
could not be trapped
technological improvement could not be
trapped inventions to not be trapped and
that's why a Europe became richer so
that's one of the example where maybe
not having the fully centralized power
can be a good thing would the
implications that be in your view if
we're looking to the future that even
though there's now a lot of discussion
in Europe in the context in the last few
years and continue now that we need more
than Europe neatly you I can't use the
word we' anymore that the that you need
more industrial policy you need economic
champions you need more protection
against foreign competitors that
actually this is very unlikely to happen
on your analysis because the French
would say well if there's going to be a
national and European Chairman it'll
probably be a German company and we
don't want that and vice-versa
but maybe against that you could argue
well actually they might agree to grade
an Airbus in every in every major
industry and that would be pretty bad
how stable in other words do you think
is the competitive equilibrium that you
describe actually years yeah so I think
it's been tested but not free tested so
if you think about the thing that could
make it less less stable one clear was
the UK actually because it's very clear
that one of the reason we have pro
market institutions in Europe is that
the UK was very much at the center of
the negotiation when these institutions
were created that's very clear now you
might ask us a well if the UK leaves now
where does it leave Europe I mean now
we're going to revert to old fashioned
policies
I mean it's who knows my own my own
guess is no it's not because it's a DNA
issue it's like it is in the DNA of the
you know and that's not going to change
you would have to change the treaty and
they will never be agreement so I think
that's fine the one that worries me more
is actually China and I know that's all
worried at you you write a lot about
because China is so large and powerful
that it scares the heck out of many
people and it can push them to adapt
very silly policies I mean we know
policymakers and to make city policies
when they are scared or and in the case
of China there are reasons to be worried
but there is also a host of lobbyists
ready to use these reasons to push for
bad policies so to some extent we had an
early test of that in the Siemens
Alistair merger
you know enlightenment prevailed so I
think to me is a very strong test that
but it's not guarantees not foolproof I
think on the other hand that it would be
useful to have a bit more of an
aggressive trade policy at the Europe I
think that there are issues with trade
agreements and the lack of reciprocity
in public market and I I wouldn't mind
it you to be more assertive in that
dimension like I'm worried sometime that
if we are not assertive on the trade
side we're going to think of it as a
second best solution to start to curtail
competition to create national champions
and I think that would be bad calm I
don't see it as a big threat right now
but it is a threat if you go back in
history I was reminded one of the first
folks on political economy I read with
seven Schreiber's with the TV America
which is talking about the Chinese
equivalent of that so it has been a
recurrent theme in Europe indeed for
quite a while that you're falling we're
falling behind whoever the technological
leader of the moment is and that leads
to these strong temptations towards
Industrial Policy and the creation of in
this case European champions that's true
although the thing with the u.s. is that
to some extent the fact that we were
falling behind
let us to think about it what is that
they are doing right and thankfully at
the time where we asked ourselves that
question in the 90s we saw the u.s. as a
place of free market and we thought
maybe free market is a good idea so I
think
the value in looking at what other
countries are doing the the travel with
China is that money is a bit less
applicable and also I am there is
another dimension to that which is you
know we shouldn't think that China is
right is gonna continue smoothly forever
like I think there's also an excess team
ISM about I mean there is no China
didn't change the law of gravity if they
crack down on private enterprise if they
come back with state-owned enterprises
and they prevent you know private
entrepreneurs from innovating they will
go back to slow growth you know it's
just that is not going to happen
overnight and in the meantime much
damage can be done I actually think it's
already happening but that's another
subject we can we can forget that let's
turn to the US side of your story so the
US was seen I think for pretty good
reason as a highly competitive economy
for most of the 20th century actually
after the the trust-busting at the early
20th century this wasn't the big problem
that FDR was trying to deal with the
failure of any sort of welfare provision
and of course the Great Depression so it
sort of really surprising that as it
were suddenly from your the this point
of view in the last 20 years that of a
lobbying exploded and your your story
and competition eroded so rapidly so
what's the political economy explanation
of this probably the alberto al the
senior questions is we are mourning his
death i just thinking about this um
what's a political economy that
transformed America in your story is
these are ideas that these the product
of ideas of ideas about competition
ideas about put the political power of
companies about put corporate donations
and well to what you attribute this
extraordinary turnaround
very good point in fact I because of
writing the book I did spend more time
talking to a girl to elizena
in recent years it was always a pleasure
and amazingly insightful little did I
know that the last time we talked to him
so I think that so first of all let's be
clear that made people who have been
looking at anti-trust don't think that
this is the phenomenom of the 2000 they
think it goes back to the seventies in
fact they think it's it's a slow erosion
of antitrust and out following book and
excess trust in market from the Chicago
School clearly unwarranted in some
aspect so they think of it as something
that starts in the 80s and start with
essentially teaching generations of new
judges how to think in a way that
concludes the murderer always okay and
monopoly power is nothing to worry about
because if profits are highs that
competition is going to solve the
problem for you I think it has given so
they think that this kind of mind
washing is too strong but this kind of
influence under the ideology of judges
has started in the 80s and then what we
see today is just the long-term outcome
of that I think there's some truth to
that some other industries it's clear
there are some shocks so I still I'm
still puzzled by September 11th to be
honest I think we underestimate the
shock how deep it was I mean in some
proxy sense it's obvious that he had a
huge impact on the airline's so the if
you just want to understand why Airlines
went from 84 with a huge increase in
market power well clearly the trigger
point was 9/11 so that's clear but it
also had it shook the political system
to a large extent and it allowed a bunch
of laws that would have been unthinkable
in the u.s. parallel to be put in place
I think probably there is something
there but it's how to be sure because I
don't know how to test these ideas but
what do see in the data is somewhere on
that period of time we see
edition of pro competition policies
across the board and the only question
today is you know can we go back in
terms of going back that would seem to
be two requirements first the
transformed political environment rather
difficult to wish though you could
possibly change ideas and then a change
in the operation of political institute
of regulatory institutions in an
environment where you don't have this
competition among governments that you
describe in Europe can you imagine any
way that those two things could happen
and if so what the regular with the
regular tree institution the end of the
this look just like the Europeans is
that actually the right way to do this
well there's there's many ways to be to
be very pessimistic in when you think
about these questions the best way to be
pessimistic is to think that he has to
start in Washington because if you think
of us we start in Washington then you
know it's a non-starter so the reason
I'm not fully pessimistic is because I
don't think it has to start in
Washington I think for for different
reasons the first one is within the US
you seem you see some improvement at the
local level at the state level you see
governor's trying to simplify their
codes remove some licensing requirement
that had been piled up for the past 20
years and they understand it's better
for their citizens
I think states still compete to some
extent for good institutions so I think
that at the state about there is more
room there's also less ideology if you
look at the the it's very striking that
the order of generation of Republicans
although it is the one that are left the
one the one that I left in power i
extremely ideological extent which is
kind of scary but it's not true of the
slightly younger generation many of them
on issues of climate change or
inequality
well there are console
they are Republican but they are not
ideologically blind okay so I think that
there is much more room there for what
used to be the for me at least key
feature of the u.s. which is the
pragmatic middle core approach where we
can reach across the aisle to just get
something done okay so to me that was
the hallmark of the u.s. I think that
can be regained not in Washington
anytime soon I agree with that but at
the state level where Washington's going
to become a big issue is the Supreme
Court because I think it's hard to
imagine a sustainable solution without
some kind of regulation of campaign
finance and campaign finance ought to go
through the Supreme Court so that part
is very huh the second reason I'm
slightly optimistic is because the u.s.
I mean what happened in Europe was used
to shuns but also a lot of watching
whether all neighbors do like a lot of
benchmarking like you know every time we
talk about the labor market in France we
start by talking about Denmark you know
every time we talk about pension reform
start by talking about Sweden every time
we talk about how to bring young people
the skills required to be successful in
the labor market we stop by talking
about Germany so that's actually
happening and I am beginning to see a
bit of that in the u.s. in the debate
about the health care system finally you
know the first argument is look look
let's look at what happens in other
countries and people are more aware of
that the telecom when I give my books in
the u.s. usually this the price of
telecom is something that people are
acutely aware of they know they are
getting ripped off I mean when they paid
300 when you paid two or three hundred
dollars per month for your telecom bin
that is just for having broadband and
say one or two cellphones yes you think
it's crazy and people are aware of it so
I think that that's kind of a good stuff
and hopefully you know I do believe we
have we have room for you know it's not
cookie stud cooperation internationally
it's just you know useful competition
here's another example I guess that's an
even better you know think about two
great examples of the u.s. helping the
EU and the Europe in the US if it was
not for
small bunch of kids you're running an
NGO and letter for the California
regulator we would still be killing
people in Europe with diesel engines
okay the diesel gate was entirely
uncovered in the US and why not in
Europe
pure corruption of course everybody knew
they were to spread to look the other
way
with utter corruption at the EU level in
fact in every member state and the true
scam from from from the US okay so great
in that case it's obvious that EU
citizen benefited greatly so probably
good but we didn't pay for any of that
and we got the information thanks to the
guys on the flip side if you think about
regulation of data privacy Internet
giant's the US has done nothing in the
past ten years because of corruption or
because of glue being shown to be polite
but this isn't about the regulator of
the about the British and nothing has
happened Europe doesn't have the same
issue so we try to do a few things so
when now there themself want to you know
try to improve their legislations at
least they can get inspiration from
Europe and they can also see what didn't
work in Europe so you don't do the same
so I think it's kind of cross you know
exchange of ideas I think it's useful
again here my main main issue is China
because I don't know if we can do that
with China that's a certainly a very
interesting question which I'll put
aside from one moment now
when you present this in America I
imagine that will well I want to explore
this but imagine okay is sort of push
back which was sort of say well this
isn't basically a fairy story and we're
we are more productive here we are
productivity growth has not been great
but it's certainly match that of Europe
recently and that's continued to be true
after the financial crisis we're the
country with all the great new global
companies you just listed a whole slew
of them and none of which existed thirty
years ago we remain the land of high
innovation what's coming out of Europe
they're all dead old companies and so
really it's a fairy story isn't it
Thomas yeah so when you give the book in
the u.s. you're two types of you have
two types of reaction the people who are
mostly consumers and workers they say
yeah that's right that's exactly what
are my expenses every time I buy
something it gets ripped off thing that
matter no not like you buy a past I the
supermarket yeah that's cheap okay but
if you buy if you want to get again
access to Internet travel energy cost
health care to be just to keep your
family healthy they know they are
getting a horrible deal and they can't
afford it so the convincing is actually
very easy to some extent when you talk
to people who are more like CEOs then
it's about it's more mixed then it's
then you get more granular you get okay
is that true for that industry not that
industry for people who know the telecom
industry I think there is no doubt
that's easy Airlines I think after a
while the people are convinced to then
the big issue is the big tech and but
they are I think I'm totally happy to to
to argue that the u.s. is going to
remain at the leading edge of tech with
or without China over the over the next
20 years my point is just that you know
the u.s. used to have a system where
with three pillars knowledge center
university private research lab I an
ecosystem for nurturing companies with
funding and access to a single market
immediately and very competitive market
that give pochomil a good deal these
three pillars where are the greatness of
the US economy they just lost one pillow
they still have to sew the two is better
than one in Europe so I think in that
Sunday still the minute but it could do
better so you're one of the points then
is you would still go to Europe and say
look the u.s. still has some pretty damn
good things and you should be trying to
get them oh yeah
we successfully copied their their
antitrust and and now we need to do the
same thing for universities private
research labs and and found for markets
let's talk about because it's such a big
subject conversation I have these
discussions almost every week at the FT
on tech but I mean one could think I was
interested in you repeated this very
into discussion of good competition good
concentration and bad concentration so
is it clear which side the tech firms
lie because I would have thought that
sort of both yes I think I I don't think
anybody could argue that they're all on
one side or on the other I think that
first of all there is very little doubt
that the way they got there was mostly
good in the sense that you know they
they just there is out competed there
there will be competitors initially so I
think the reason we have Google Facebook
and these other guys and I'm assuming
particular is because it just got it
just showed that they were better than
the rest so that's the way they got
there now how they are staying there
that's a lot more controversial
I think the way they are staying there
because now they are spending a lot on
lobbying they are fighting every
regulation that could you know have an
impact on what they do and they do a
bunch of you know well from Keylong
acquisitions to making sure that you
know they have a reputation for for
getting rid of any kind of would-be
competitor I think that's what they do
today to prevent competition so to make
it look as if there are natural
monopolies I don't think the ominous one
more please I think it's a market where
naturally the firms have to be loud but
I think the idea that they are natural
monopolies I think it's too strong
beyond that I think you have to go from
by film for instance I actually have a
much more bullish on Amazon that I am on
Facebook
I think Amazon if you look at the big
picture
it's mostly value-added I mean I think
maybe you could make the case that they
did cheat on did they skip taxes they
cheat on their taxes like every big
company does I think that's a shame I
think it's a global problem we should do
something about it but by and large you
know they operate in two businesses
retail and and the cloud the retail is
very competitive the amounts are not
that high and the reason they are
successful is because they are done good
the cloud is still competitive so I
think that you could have a question
Marcus you know how many competitors do
we need to keep the cloud competitive
two three four I don't know but if you
look at Google I think it's hard to look
at the Google if you have to look at the
entire online advertising market without
seeing a massive conflict of interest
especially if you like me you come from
the fountain market side and you look at
what they do did their own auctions so
look something like you know like you
would do for trading stocks or bonds but
they run an auction but they can advise
and passive in the auction at the same
time like that just makes no sense this
is kind of conflict of interest to me is
very problematic so I think that's where
I would like to see margin now that
suggests a number is going to come that
you see the solutions as regulatory for
big tech now there are other people who
think a crucial element is preventing
acquisitions particular acquisitions of
potential competitors if you there's a
long list you can think of whatsapp
Instagram so lots of them that have been
so naturally just be stopped in fact
they should be forced to disgorge these
companies the some proposed
comprehensive break ups and then there
are people who who are talking about
detailed behavioral regulation what
where do you fall or is it actually
going to end up firm specifically
because they really are operating in
quite different markets
I think it's gonna end up being from
specific I think that the pragmatic
approach there is pretty to try a bit of
everything I think most people think
most people who know this market
understand that the antitrust tool is
very very blunt it's also very slow and
you know so even if today you tried how
to break up to separate say Instagram
from Facebook you would take many many
years the HD outcome would be very
uncertain doesn't mean it's not worth a
try just means you don't want to put all
your eggs in the same basket you can't
just rely on in honor antitrust so I
think you I would fire all of them I
would try to do some clear antitrust
based on principle that either market
dominance or the fact that if you're
running a platform a marketplace you
cannot also operate in that marketplace
as a as a bi or cetera so that seems
like to be principally are pre sensible
we could try to apply that and for
separation if if needed
oh just regulate them you know that like
we do internal markets which one is
gonna end up being successful I do not
know but I I don't think that is
potentially a solution without doing
both okay in some case files on if you
want to slow down the ayahs ition going
forward I think we all agree that needs
to happen that's going to be antitrust
on the other hand on tetris is very slow
and very blunt so the only way to keep
to keep up with what they are doing is
some form of regulation so I think you
need to do both I don't think there's
much much doubt about that one of the
points you make in the book which we
which I thought was very interesting is
that these companies which we think of
as such colossi are not actually more
dominant than the super big companies of
the past could you discuss that and
because you know you sort of people
think there's something about google
which is unique and different and but
you talk about General Motors and she
said explain that point yeah let's say
all right right now to Rogoff argument
this time is different you know it's a
very dangerous sentence or it's mostly
wrong yeah I think by the way that might
that's the one thing in the book that
might age a little bit because of kovat
because all of the data i looked at was
pre Kovic so let's you know let's keep
that in mind yes certainly yes yes it
had a very large composition effect
there so maybe I would have to revise
that chapter but yeah what I did was
think when I'm pretty sure people
overestimate the extend these firms are
great there's no question they are great
the question is are they great by
historical stand out and so what I did
is I looked at all the top firms in the
US for the past 50 years they get by
 and if you look at the top
firms of the 50s or 60s the names are
going to change now General Motors or
electrics AT&T Procter and Gamble and
IBM 70s but if you look at this set top
five firms in the economy at any point
in time they share very similar features
to Microsoft and Google today they are
the extent to which they are more
productive by the rest the extent which
they are more profitable than the rest
the extent with the market value is
higher than the rest that's all the same
essentially and again until coffee'd if
you looked at the market value of the
top five firms in the US he was ten
possible stock market that was to 1980
it was true in 2019 the names changed
except for one Exxon Mobil
which is there throughout every
otherwise they all change but you know
it's like ten possible stock market so
it's big but it's not unprecedented big
so I think that's the usual you know
biased people have in mind they always
think that whatever we do today is so
much smarter and greater than what our
grand turns but doing that is not true
they were just as smart as we are and
you know they are they were just as
innovative and in fact if you look at
the data in terms of real outcome if
anything they were doing better
like the time period of GE and GM
productivity growth was faster and in
fact thanks to these companies they were
they were the seem to have been better
maybe not so much at inventing new stuff
but at spreading it throughout the
economy that's that seems to be true now
couvade has increased the concentration
so now I think today yes they are higher
than than than the average and the other
difference of course which is not
related this is the old Colossus colossi
employed a lot more people than these
guys yes and that's tried in significant
in terms of the social effect of these
businesses that's true but there is one
exception Amazon Amazon does employ a
lot of people controversially I've liked
him before we end I'd like to turn to a
sector which I thought a lot about and
you have which is finance and in the US
case it's a complicated story but
certainly in banking the market has on
most of the measures I've seen become
notably more concentrated over time and
the financial crisis accelerated that
the u.s. of course has a lot biggest
what's called shadow banking I know what
you call it financial intermediation
outside the banking sector so there
would seem to be more competition there
the Europeans are much more Bank
dependent but they have lots more of
them but they seem many of them very
financially weak but they're maybe
that's shows there's a real competition
the Americans would say certainly Jaime
dam would say well we are so big and
profit because we're so great I have so
I have an interest and my interest is is
is the the banking sector in the u.s.
dangerously concentrated and what are
the implications of that in your view in
either direction for financial stability
which is one of the concerns people have
they're obviously also the concerns and
you have very interesting material on
this which I'd like you to explore on
profitability in the financial sector
which as far as I can see seems to be
quite a general phenom
but maybe it's more the us so I just
like you to in the last five minutes to
explore your perception of what's going
on in finance which is in some ways in
your book pretty horrifying so I think
finance also exemplify some of these
this trend I think that if I think about
the u.s. wonderful system today if I am
a small or medium sized company or if I
am a large company I probably want to be
in the u.s. rather than Europe I will
have better funding opportunities and I
would have title spread on the other
hand if I'm a consumer a household
there's absolutely no doubt that I'm
much better off in Europe like the
quality of services and the cost of
services as a 4 for households is much
higher in Europe I think it was already
to some extent true a little bit before
the crisis but you know back Britain
banking has become very competitive in
Europe and in and very not non
competitive in many respects in the US
and very antiquated - like we think of
the US as the place where IT system work
better but that's true except for retail
banking it's yeah it's really readable
and I think the only reason is lack of
competition now if you trace it back
they haven't benefited the same to the
same extent as Europe of what we know
called free banking or the fact that you
know some of these FinTech firms on the
retail side are really competing with
the banks to try to provide good
financial services for cheap and in
Europe that's been encouraged by the
regulator to status and successfully I
would argue actually and so that now as
a consumer I get I got a pretty good
deal in the u.s. they killed they that
means the big banks successfully killed
all of the attempt to meaningfully
increase FinTech competition by
essentially preventing any kind of data
sharing so that's so that's cruffin
other surprising if you had told me 20
years ago that banking lobbies would be
more successful in
u.s. than in France I would have not
believed you because I the way I grew up
in France was like the banks had such
close proximity with the politicians and
they always get their way that's not
true anymore
and I think that's also to a large
extent because of the fact that we
transfer regulation to the ECB and in
its arms and regulation you know like
the rule in Europe now is the head
regulator of any kind of large bank has
to be from a different country
the Hendra got off of pen paper by
cannot be French that we get off
Santander cannot be Spanish I think
that's just extremely healthy and so
that's on the other hand if you look at
transformed markets then clearly the US
is better even for consumers so the one
place where as a consumer much better
than in Europe is asset management I get
asset management product are extremely
cheap super efficient so as the Vanguard
effect I'm still waiting for the
Vanguard effect in continental Europe
the UK of course is a bit better in that
language so it's a mixed bag of the
tooth and I think it's one of these
places where both side of the other they
could learn from the other if they were
so inclined do you think the regulation
at the last question do you think the
regulator's could finance is really
important because it has the stability
aspect and the concern and the
efficiency and the it's a very
complicated sector do you think that
regulators in both sides have been so
concerned about stability that they've
sort of forgotten about competition
since the crisis and I don't think that
that I don't think that's I think the
one that I've forward on what
competition is because they've been
lobbied to forget about competition
because in Europe if anything you would
think in Europe we had more of an issue
financial stability and yet we have you
know if you look at profit margins on
banks they are not very high consumers
get a good deal so I think I think it's
fine on the unconference ability I mean
maybe it's too early but honestly I
think we should be proud of ourselves I
mean we can always need peak and say oh
maybe we really should have put the
capital ratio to 20 percent of 16
percent but on the other hand think
about it like
just ten years ago we had the major of
Funchal crises now we have kovat we're
gonna have a recession of the other 10%
like probably the biggest macroeconomic
shot ever and we don't have a food one
financial crisis and this is thanks to
the reform with putting per since 2010
so at least on that one I think we can
be very proud of what we've done we I
mean as a community of regulators and
academics writing on these topics I know
we can always be you know we always a
condition of saying oh we should have
done more
and I agree there's plenty of stuff I
would change at the margin that would
finish the banking Union here and and
it's not perfect but on the other hand
if you take a look at the big picture if
you had told me okay now you know we in
film in 2011 okay 10 years later we're
gonna happen
huge micro economic shock how likely is
it that you will not create the
functional panic another I and yet we
are here and there is no financial panic
and I think honestly it's an achievement
well I hope it lasts but it certainly
makes me realize that we're very very
fortunate that we didn't have kovat in
2006 that would have been a pretty
spectacular and disastrous mess now I
think I've exactly exhausted
my time in this very interesting and I
think pretty embracing conversation I
think we've really elucidated I haven't
gone into health because it's so sweet
generous American and so completely
insane have been so I haven't gotten
that but yeah the main topics we've
covered so I'm gonna hand over I think
to your Sabre who's going to moderate
the discussion now are the questions
from the the audience yes thank you
Martin Thank You Tamar for a wonderful
discussion since we're all stuck at home
and I both have lots of free time I'm in
a lobby you both maybe start a podcast
or something so we can continue to talk
about health and everything else so I
expect to be lobbied Martin and
awareness that said we have lots of
fantastic questions
on the QA let me start with a question
from our very own red s Chandi and it's
a question that we talked about the
regulatory approach we talked about
murder policy this is a little bit of
question about the kind of private
sector approach to fixing this so Rajat
asks if I'm an entrepreneur seeking to
compete against entrenched incumbents in
a particular industry in the US what
should I do
given the situation you've described
assuming I can't hire an army of
lobbyists you go you go find another
place to enter I mean like mostly that's
what they do you just give up now of
course it's not completely true so I
think that it depends a bit on the
industry in the telecom case I think if
you say you you think you have a better
technology or it's a cheaper way of
providing no fiber and broadband access
to household you can stop you can try to
enter slowly that some in fact some new
companies are trying to do that but if
you don't get help from the regulators
it's very hard if you think about the
wireless business it's very impossible
because you can't enter with a small
wireless network you have to come Jesus
to enter with the coverage for the
entire country so if you don't have a
leg up from the regulator that's
impossible now in some other sectors I
think I think the recipe is always the
same which is you you try to find a good
product what I found why some is more
what the VC referred to as the kill zone
which is that there are there is a set
of activities that they will not fund
because they know they will interfere
too much with the existing big players
and so they don't want to compete
head-on so I think that's the main issue
ok so related to this but maybe zooming
out more of a big picture question and a
few questions in the queue and I have
touched on this so in the book you write
that one of the lessons you took said
you were surprised to learn how fragile
free markets are and this begs a
question and I think it's a big topic
nowadays is this fragility an intrinsic
feature of capitalism that sort of
Doom's capitalist systems to eat
themselves from the inside out or is it
the case that for instance and you guys
touched in this a new discussion that
for instance Europe has created a better
type of capitalism and perhaps there's a
way to fix capitalism relate to that
what is this how does Chinese capitalism
fit into this big picture yeah I think
the reason is fragile it goes back to my
Colson's idea of the logic of collective
actions which is you know it's the fact
that an outcome is desirable and might
be better off for everybody does not
mean it's gonna prevail because to make
it prevail all the beneficiaries we need
to coordinate and it might be difficult
if it's a small gain for a large number
of people they will have no incentive to
coordinate and so the correct direction
will fail and in fact if another
scenario exists that would benefit many
fewer people but a lot more per capita
then they might be able to coordinate
and impose it so I think that's the core
of the issue and that's the logic of
collective action is with the key issue
now we design institutions to be able to
counter some of these issues
my takeaway is that institutions of
course we've known that for a long time
obviously that institutions matter a
great deal but I think in that case it's
the fact that in the market decisions
are one among many and competition is
also some kind of public good subject to
the same you know logic of collective
action issues so we all have an interest
in having competitive market but none of
us individually would have versions that
if to do anything by ourselves so that's
why you need to protect free market and
what that means to me is keep the
regulator's independent I didn't fully
appreciate that Angela but the book I
think having
in the parent regulators that can engage
with market participants because you
need to share the information it's not
as if lobbying is evil lobbying is
necessary you need lobbies to explain to
make the case for the industry that's
normal so that's democratic but the key
is the regulator I need to have enough
of a backup and and support from their
politicians and citizens that I think
I'll remain strong and independent I
think that's the key and I just add two
little points well one is quite big I
saw it I mean I I am an immense admirer
of man's roles and so I agree with
everything my new quite well but of
course this idea that competition that
capitalism or the market economy will
eat itself is very prominent in Adam
Smith's Wealth of Nations so right at
the founding of capitalism he talks
about conspiracies against the public
and the even broader point and Douglas
knows a lot about this is the use of the
political system any political system
try democratic of to critique whatever
by well-connected people who have wealth
may be created in the market in order to
buy monopoly positions it's pretty well
as ancient as the market system they
were doing it in ancient Rome we have
some quite good stories on that though
yeah I mean a pure market system which
is operates independently of political
processes in a neutral way completely
neutral way and doesn't exploit its
resources incumbents don't exploit
resources in many ways to protect
themselves
Isabeau idea they out but it's not it
one has to fight for it I think when
it's to fight for it in every generation
he doesn't that's one of the great
mistakes of the libertarians to think
the capitalism just is all on its own
and will continue to be that without
effort and of course the problem is that
the political system
work against you and yet you have to use
it so related to this and we talked you
talked about this a little bit both in
the presentation and a discussion but
quite a few people when I dig into this
a little bit more so Richard Porter's
for instance asks you know what happened
in the US
how did competition policy go so badly
off the rails it seemed to be working in
in the past firms were deterred from
even trying anti-competitive M&A does
Europe not have lobbyists should we
expect Europe to follow the path that
Martin has described or is this
decentralization either going to break
Europe or save it from these from this
we can all agree a bad outcome so the
first thing is I I want to be honest
that I don't have a full story for the
u.s. I have a full story for Europe
because it's slightly easier to
understand because there's a clear
timing there is once you create a single
market it's such a momentous event that
you know there's a before and after so
you can clearly sumit appeared
understand deeply what's going on and
then your full explanation the US stays
no obvious breaking point apart from
maybe you know September 11 that had a
big impact on popular market the
airlines and a big impact on the
protocol system maybe created some new
dynamics I think the more plausible
story is that it was a long time coming
and it was a consequence of the Chicago
School I mean at some point is a saying
ideas matter
they just don't matter next year the
matter over the next 20 years so that's
what we saw and I think that explains
part of the aversion in the u.s. now
whether for Europe its kind of we're
gonna follow the same path that's
already I hope not
I don't think so for two reasons one is
I don't think the u.s. is gonna get
stuck there I think the u.s. is gonna at
some point get back to its sensors and
people it's about making consumers happy
so at some point you think there would
be some kind of you know political
majority in favor of that the only
tricky question there if you think about
it carefully is that it is you can reach
when the distribution of wealth becomes
cued enough you can reach a point where
the wealth weighted median voter doesn't
like competition anymore because if you
get so much of your wealth from the
stock market study from dividends or
share buyback then lack of competition
mostly hurts labor income you could have
a lot of wealth in the hands of people
who actually don't benefit from from
competition and even though clearly
would benefit GDP so that disconnect is
possible so you have to be careful there
but I think my sense is the u.s. is
gonna go back to a more sensible policy
in the future and in Europe they are
again that's the develop had with Lu Jia
Xing LS many times it's you could argue
that every system is gonna get corrupt
just a matter of time so we are ten
years behind the US and in ten years
will be just as corrupt that's one you
and the other of you is that maybe not
because we created a set of institutions
that are their own logic and are gonna
prevail I think they are not foolproof
this entity they could be undone but I
think they have a strong logic and as
long as we keep vigilant I think it's
likely to stay that way I hope one needs
all the good I'm at the moment I'm I
mean I pray that we you is going to work
in all respects because it's the last
bit of human civilization as far as I'm
concerned and so that really matters to
me
so I'm Thomas is right and did you ask
about China
I was about to actually yeah well okay
now I think I'd like to hear mountains
view about China because China China us
revelry is something that's been read
write writing about you know I think
it's to me is the big unknown it's the
big story so let me ask about that and
you can both tell me what you think so
indeed the this conversation about
market powers in the shadow of this
enormous giant rising and not only is it
an enormous power but also with some
justification it's been accused of not
necessarily favoring a level playing
field for its own firms
and so is it naive to think that Europe
in the u.s. can keep fighting the good
fight if it's not a fair fight
globally I'll tie the same with a with a
question on a QA about South Korea which
is often held up as an example of a
country that did great things through
creating national champions so is is it
naive to think that Europe in the u.s.
should fight the good fight while not
necessarily everyone is following those
rules
well this there are two questions there
both and I think I'm one of the most
profound questions there is how far can
the success of broadly speaking the East
Asian economy so that's Japan Korea
Taiwan and now China be explained by
successful industrial policy and this
would then get us into a an hour long
debate but my own view is not that much
which doesn't mean not at all and the I
mean one of the most obvious points is
lots of the things they focused on and I
give you a lot stories failed colossally
so there's a real survival bias
obviously the ones they promoted which
turned out to be world success like
Samsung Electronics which is just one
firm out of enormous number well we
turned out to be spectacular in line
with their comparative advantage in the
competitive advantage of the firm it's a
tremendous success but who remembers
fifth generation was it fifth generation
computers and high-definition TV and
lots of Japanese failures so I think I'm
fairly persuaded by the people who think
that the government's played role they
did some very important things but you
can't say that Japan became Japan
because the government's chose to chose
the winners quite a well there are many
examples and the China case is I think
even more striking this the view I'm
gonna give you is the view of all the
Chinese economies I know and respect
I don't think anybody has done work like
Thomas on China if they have I've never
seen it so I really don't know but my
purse very strong view of China is that
it was the opposite that it's great
success was the opening up of the
markets to foreigners which the Japanese
or Korean suppose didn't do the the the
success of the creation of a completely
new private sector none of these firms
existed 30 years ago none of them they
were all operated essentially outside
the system
the credit system didn't support them
they nobody really planned for them they
exploded and if you look at the growth
of the Chinese economy over the last 30
years it's overwhelmingly dominated by
new predominantly private firms well the
state sector track dramatically and the
great companies you know you think of
the tech alibaba's and so forth but had
nothing to do with the state but the ten
central Lee's work and I've been to
these firm talk to the people creating
them they they they were operating
outside the system it was
anarcho-capitalism them a most extreme
kind now
then of course it was so and there were
many reasons why it was so competitive
by the way many many reasons but one of
them was just the economy is growing so
fast and so quickly that every industry
was opening up and they were all new
players because there weren't any others
in the play didn't exist before but then
of course the state realized what was
happening and I see mr. XI I've written
about this often and that be a long
discussion it's the state striking back
across the board and I think he's gonna
kill China I think because China is a
monster with the immense numbers of
hard-working enterprising brilliant
people killing it will take quite a bit
of work but I think there's lots of
evidence that's that's what he's doing
he's monopolizing the economy he's
turning the private sectors into
monopolies he's doing it with the state
enterprises but of course that doesn't
mean that China won't become the biggest
economy in the world because even if
it's got half the productivity of the
u.s. in Europe it
be as big as them both together that's a
reality so I have a very strong view
that this view that we're competing with
the Chinese state is wrong we should be
if you like if you're a European
American well you should be praying
you're competing with the Chinese state
but probably you would really have
trouble if you're competing with the
private sector of China
that's sensation I think I must agree I
mean from from reading many books and
talking to people involved in the
process I think that you could make the
case that the most competitive private
sector in the world was the Chinese one
in the 2000 exactly I mean if you think
cutthroat capitalism had a meaning these
people we are not sleeping I mean if you
look at the hours worked that is the
extent of competition and some time you
like dirty tricks to steal ideas workers
everything somewhere in between 2000 and
2010 in the Chinese private sector it
was amazing I think it's just pure and
in the private competition even could
say even exists to some extent and I
think that's what drove the growth and
if I think that I tend to agree with
Martine that you know the law of history
haven't been repelled like you know the
same thing that doomed the USSR if you
repeat them in China they're gonna do in
China as well it doesn't work you can't
have the ramen run the economy so the
problem is then let me ask the other
since Martine so reality and so the
first hand for the question let me talk
about the second half
what yes it does create a huge political
economy problem in Europe and the US
there's no question about that here in
Washington a language that is exactly
the same I heard in Europe 20 years ago
which is the language of national
champions - the language of big firm
saying you have to let us alone because
otherwise you you can't expect us to
help you against the Chinese unless we
have a big fat monopoly at home and I
think that's very wise because I think
it's wrongheaded this is the historical
evidence shows that the best firm to
compete globally are the ones who start
by having a fiercely competitive market
at home I mean talking about $0.10 and
Alibaba they were engaged in the
fiercest of all complete
and then they warned in their home
market there they were really good at
exporting it because they had become so
fit so I think that that argument is not
true that you need big fat mother please
at home to compete globally but it's an
easy argument and therefore it tends to
win politically and on top of that you
have the thread war issues which is not
going away but not only that I think is
only going to intensify over the next
year that's the main one thank you both
so sadly we have time for one last
question and not certainly we have time
for this is our last question but I
wanted to ask on a topical note you
touched on it how is this covert crisis
going to shape market power and
importantly how is the policy response
to the college crisis going to shape
market power so obvious every recession
tend to kill more small firms than big
firms this one is no exception in fact
this one is very even more that way
so there is a danger that you're gonna
have a lot of SMEs failing and not
brought back to life once we exit the
lockdown while the big firms they can
tap liquidity in all kinds of markets
and therefore they are more likely to
survive so that in and of itself means
there's gonna be a tendency for higher
concentration right there but I don't
think it's a foregone conclusion in the
sense that I think policymakers can do a
lot if you look at many of the programs
implemented in in Europe in in Germany
mostly and actually many of the other
countries in Europe France and Italy got
directly inspired by Germany they have
rolled out programs to just make sure
the SMEs don't fail and I think that can
be quite successful so that's the first
line of defense the second line of
defense is that you know you want to
make sure the don't the the big front
don't get a free pass after the crisis
is over that's gonna plow differently I
mean clearly you can already see that
you know Lufthansa and air force of
treated very differently from
easyJet
Ryanair that's clearly a bike band
competition now I think it's I think
it's a pity on the other hand I think
Ryan Ryan and easyJet are strong enough
that they're gonna be fine but you could
already see there that there's a you
know return to programs that don't work
come manufacturing it's a little bit of
the same issue potentially but these are
I think temporary issues and I'm not too
pessimistic on the tech side it's a bit
different well the textile I think they
get the stakes are very high because it
so happened that this recession is the
one that benefits the firm they were
already strong before and - just to
visualize that it's not obvious imagine
that instead of having a physical virus
biological virus we had a you know a bug
in the information system right an
electronic virus that would have brought
down the Internet in various ways when
killed I would have hurt the business
model of Google and Amazon more and it
would have made the business model of
mom-and-pop shops and small restaurants
better right so it's not inevitable but
in these particulates that it so
happened that the shock was a shock that
totally was very big but much weaker or
much more benign if sometimes and
positive shock actually for the business
models of firm that were already
operating online so that creates a
conundrum x-force which is another
family we're already dominant before
they're going to be one more than me not
as we exit what can we do about it I
think to me two things first make sure
that zoom is not a target okay so we are
using zoom right now zoom is a brilliant
company this the product is obviously
fantastic ever loves it and you know
it's clear that this company needs to
remain independent and start to compete
with the big guys that's one thing and
the second thing is you know let's push
for faster digital transformation in the
rest of the economy I think that you
know now every single CEO of every
single medium-sized company understand
that it's critical to have a very good
you know online system so they could
can operate efficiently online and with
a little bit of help they can do it so I
think instead of in that case I think we
can we can exit at the top by just
helping the rest of the economy Ketchum
thank you tomorrow
on that note I'm afraid that's all we
have time for thank you so much
Martine and Toma and sorry told it for
all the questions we didn't get to but
I'll put them to your speakers in the
upcoming podcast on that note I'll hand
over to thank you very much amazed when
you didn't push back on the certificate
of trauma you know on the banking
regulation side but okay the end of the
discussion at the last minute that's
cool that's cool and I was quite
impressed that you are both less trained
and didn't talk at all about Greg's it
and the effect on the future of British
competition is the UK gonna fall on the
US side or is when you take on a fall on
the European side I think that that
could be a great topic for for another
day butt-naked I think well it was
really super to continue you have given
us I think the right intellectual
apparatus to think about the coming
months in fact because I do live I was
pointing out we live for thirty
Darwinian moment to some extent so
there's gonna be rapid shift in market
shares and it's not here but we develop
a skill ability where given the amount
of subsidies that we are seeing being
poured in the in private companies by by
governments so in order to think that
rule I think we we learn to love tonight
and yeah extremely grateful and they
said again thank you so much that was
great have a good evening
and they say to everyone
right
[Music]
you
you

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### Social Impact Week 2021 | London Business School
URL: https://www.youtube.com/watch?v=RyeI5BANB2Q

Transcrição não disponível

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### Can data-driven price-discount policies help in reducing malnutrition | Wheeler Institute
URL: https://www.youtube.com/watch?v=wOZPgEbrKLg

Idioma: en

so we're looking at the problem of food
subsidy design
and we're doing an experiment in india
i'm fascinated by this
welfare improvement problem of the poor
of the world of the
ones who are living in the most
underprivileged communities of the world
but i think this is a slightly broad
term so my particular
research strategy research focuses on in
in some sense combining a business
perspective and the perspective of
those who will studying their lives and
try to see pathways
to improve the efficiency of the goods
and services
that are aiming to alleviate poverty
there are a few things uh about the
malnutrition uh challenge
um in the world that we're building on
top so i think one assumption that we
should talk about
is on is on the fact that we always
think i was thinking before starting
this research
we were thinking malnutrition is a you
know a meal repercussion of part
you know people simply don't have enough
money to afford food
and if this assumption is the only
reason that malnutrition
persists then perhaps we shouldn't put
too much focus on the malnutrition
problem
because if we solve the economic
development problem malnutrition
a problem will automatically be resolved
but
this has not been the case and it's it's
called a very interesting phenomena
called south asian enigma
it is on child health um and what what
researchers have been shown is
taking africa as a benchmark in the last
50 years south asia economies is rapidly
improving
but this comparatively improvement
economic improvement
had not equally translated itself into
nutritional outcomes
changing habits is very difficult but we
put a
very special emphasis on this uh because
that's how we try to to model it not
change
anything that people consume keeping the
store shall not changing the store shelf
but try to do some tri-stage incentives
in order to
switch from something that they are used
to into something else that they use
trying to understand the shopping
behavior the grocery shopping behavior
or the on the food choices in these
impoverished communities
and we try to design an algorithm
that answers a very simple question
which products we should oxidize
and by how much we should discount in
order to most efficiently and
effectively
improve nutrition in these communities
what our algorithm does is in
sort of simple terms is that um give me
your budget per person how much you want
to spend for
one of your um below poverty line
citizens
and tell me about your nutrition problem
like what is the thing that you want to
improve is it calcium is it
protein is it um is it calorie our end
goal
is to create a decision support tool
that helps policy providers using these
environments so it is not that
only doctors or medical professions
should address this biological
or medical problem but there are also
things that
businesses or or policy providers
can and should do to help improving
this challenge coming from business
background i think we're the
ones who study and who's very interested
in understanding their consumers
uh dynamics their shopping behavior so
we're very motivated to you know bring
some insights from what we know
into this area where this sort of
questions are
less of a concern at least from the
policy providers
you

---

### Health Equity: Implications for Developing and Developed Countries
URL: https://www.youtube.com/watch?v=PSVcWEY0mZc

Idioma: en

[Music]
it is a pleasure today
to welcome you all at london business
school wheeler institute for business
and development
event today we will be discussing
alongside chevron colombios khan and
kamadas about
health inequality implications for
developing
and developed countries this is going to
be
the fourth event of the london business
school winner installed development that
we
organized in this year earlier in the
year we hosted esther duplo and abigail
banerjee and we discussed about the
implications of covet and the pandemic
in africa and low-income countries and
emerging markets
then alongside nick hughes and leonardo
advancement we delved
into issues related to africa we had an
optimistic agenda
but all dependent on how africa would
cope with the pandemic
today we are digging more in those
explorations
and we will look on vaccinations and we
couldn't be more happy and privileged to
have with
with us to global experts and we will
discuss two interrelated issues related
to vaccinations
our first guest today is chef then
columbia's khan
professor of economics and finance at
the university of maryland at college
park
chevrolet in the past has worked at the
university of houston
after obtaining where she worked for
many years after obtaining her ph.d for
brown
she has held visiting positions of the
european central bank where we first met
and also the international monetary fund
sherman also serves as editor and
associate editor at the american
economic review and the journal of
financial economics
and most importantly for our discussion
today schedule has been
engaged in the past year in very
fascinating topical and policy available
research
that tries to assess the role of
vaccinations
for example as we will discuss today of
low-income countries
on rich air countries an issue that
sadly
was not much looked by the g7 the
european union in the us
until we will be joined with our
own economy around us my great colleague
from the operations
research and management area uh camarlin
serves as professor
at the london business school and she
also worked in the states
after obtaining her phd from the wharton
school
most importantly camellini who is taking
a very practical and hands-on approach
on vaccination and more generally on
health and she has worked on various
health related
aspects from an operations research
which is suddenly overlooked at least in
our profession
economics and both camelliamy and
children have been working also with
researchers or with policymakers in the
world health organization and other
international institutions
on very topical issues so sherman and
kamalini
i know that you're very busy thanks a
lot for taking the time
and being with us today
some rules you can use the chat or post
questions
and we have budgeted a lot of time for
questions and from the floor
so i will collect the questions and i
will post them
after half an hour roughly speaking with
sheldon and kamalini this webinar will
last for one hour
so uh chef nam i want to start our
discussion with you
because i think a couple of weeks ago
you released
an academic paper that received a lot of
attention this is not
something that happens typically in
economics that
explores the implications for rich
countries and the world economy more
generally but let's say for countries
such as the european union japan
the us canada of not vaccinating or
partly or partially vaccinating a low
income countries and we know
that there is considerable inequity in
the distribution of vaccines
and many people in the uk in greece
where i'm currently located
in the us where we live complain about
slow vaccinations
and process about mistakes perhaps of
the administration
but we tend to forget that many
countries don't have
any access or very limited access i
would kindly ask you to give us an
overview of your very fascinating
research
thank you you can share your screen your
slides if you have any that you can use
great thank you so much uh elias for
having me here it's a pleasure to be
here and
indeed let me uh share
my slides so that i can show you a
couple pictures
uh this this paper as you just mentioned
uh that we did on the economy case for
global vaccinations
is joint work with my colleagues at
coach university in turkey
uh jan chuck macasselwald said johnny
tash and moan methyldrum
and we we also started exactly from this
this this type of
thinking like as you said earlier is
like like look i mean you know we are
uh in nitty-gritty of this thing in
advanced economies but emerging markets
and the old economy they don't even have
the vaccine
so how should we think about such a
world such a world with inequitable
vaccine distribution and basically you
know we would like to start from the
point that
you know we know that there has been
huge
loss of life and life rules due to kovit
and now vaccines put us in this
uplifting mood that
you know end this site we are going to
stop this pandemic but of course the
thinking is very kind of specific right
we just vaccinate our citizens
and we are going to stop pandemic in our
country
we want to make the point in this work
that we do live in a global world
you know the world is connected through
many linkages and given these entire
collections
global interconnection between countries
even you vaccinate
everyone in a given country say u.s you
are still going to suffer economic costs
because of these linkages and
specifically
in the paper we focus uh on these costs
we put numbers on these
on these costs and we ask three
questions what is the economic impact
of not vaccinating poorer nations on
richer nations
how much global cost rich nations are
going to bear
even they achieve universal inaugulation
in their own populations
and then which sectors rich economies
are especially vulnerable so that's
going to
get into the granularity of the data and
to show you uh
to you know prove you that it is really
even you eliminate the pandemic as a
rich country in your country you will
still have
several sectors very vulnerable due to
these global linkages and that will
increase your economic cost and then
we really want to push the debate to
this economic side because
i you know presented the paper first
time in a press conference with dr
ted ross who press conference on january
26th with dr tedros
and he also started uh the conference
like that he said like look there is the
moral side
ethical side of sharing the vaccines but
there is also this economic side it is
in the best interest of advanced
economies
to make sure there is an equitable
global vaccine distributions and and
and then he introduced me to present the
economy case
and let me tell you how the economy case
works and how we come up with these
numbers so
we we want to match the sector
heterogeneity in the epidemic
to sexual heterogeneity in the
production so we already know now that
services sectors are hit much
harder than the manufacturing sectors
right this is the story of close
restaurants clothes gyms and
movie theaters and all that so we think
a model that is
sectoral that can match that sectoral
heterogeneity in the epidemic to
sectoral heterogeneity to the fact that
you know u.s construction sector buys
still
you know from uh china and glass from
brazil
and that type of linkages at a global
level so if you
think our model in a picture it will be
for any given sector there will be covet
and the top part of this figure tells
you the demand story
because people are sick people are going
to demand less and that's the close
restaurant story but also foreign demand
for that sector's output going to go
down that's the tourism story if you
will which is something that is going to
that affected countries like greece and
turkey a lot so that gives you the
demand side determination of output so
this was actually done in our previous
paper from may 2020 and the bottom part
of this figure gives you the supply side
story because kovit is about a demand
shock and a supply shock at the sector
level
that tells you look you have to take the
epidemiology into account
to understand what is going on in that
sector you have workers some of them can
telework like you and i we are doing
right now
so we might have a lower infection rate
but some workers are going to be on site
and depending on how close they work
with others like doctors versus
you know agriculture workers
depending on that proximity physical
proximity as we call it you are going to
have a higher infection rate
that gives you a sector labor supply
shock and that is going to be combined
with domestic and foreign intermediate
inputs you buy
as in the example of u.s construction
sector buying a lot of
inputs although itself is an untradable
sector that gives you the supply size
store and these two is going to give you
the
output in that sector now i just showed
you one sector so you have to think this
in a
world stage right in a global stage that
one sector
is going to be linked to many sectors so
if you look at this red
pink orange network figure on the right
here
that's going to be all the linkages
between sectors for example construction
sector here
that might be buying less input from
outside
that's why it is light pink as opposed
to this coca and petroleum product
sector which is dark pink
almost red okay but the point is these
sectors are all linked to each other so
it doesn't matter if you buy directly
your inputs or you sell directly or
output to other
country sectors but how you are
connected to other sectors in the
economy
and now think this sector linkage is
embedded fully
on the left-hand side figure which is
the blue figure that is the linkages
between countries and you see
larger countries are going to be shown
with bigger boxes here like us
and the darker blue is going to be open
more open countries that more trade each
other and
that countries that need more inputs to
produce from
each one of the other okay and that's
kind of the color coding and the links
are showing the the extent of the trade
between countries both in terms of
intermediate
and final goods and here the boxes
around the countries are going to assume
they are vaccinated so we are going to
assume
all advanced economies are vaccinated
sometime in 2021
and the the poor countries uh poor and
mid income
emerging markets and the economies are
not going to be maximized
we are also going to assume china to be
vaccinated as as shown here
so basically this is the exercise we use
this information of
sectoral and country linkages globally
to capture the global trade and
production network
so that we can calculate the cost and
the advanced economy like u.s
even it achieves universal inoculation
how u.s can be still hurt
economically because of these linkages
shown on the slide when other countries
are not vaccinated
okay and again the the sexual
heterogeneity in terms of
uh you know having been being able to
telework or how close you work to others
is going to be very important
for example here the first bar here is
agriculture and fishing
you see that the teleworking the pink
bar is low because you can't do your
agriculture and fishing job by emails
and the phone but
proximity shown with the gray bar dark
gray is also low because you don't work
close with each other
whereas a sector like health and social
work shown at the end here
is has low television capability because
you can't do much by emails and the
phone
and high proximity right you need others
close by to work with so this is going
to be extremely important in terms of
sexual infection heterogeneity and how
that is going to be
linked to sexual production so the
question we ask
okay how much global and local
amplification can we get from a health
shock
affecting demand and supply in a given
sector
uh through the input output linkages
globally
so we are going to work out two cases
one case where we say no ipn
that means you don't allow this
amplification channel to
international production and trade
network and the other case when we say
ipn you
allow amplification through
international production and trade
network
in both cases we are going to allow
allow demand to go down with infections
we have a full epidemiological model
here so infections are going to
affect consumption preferences directly
both domestic and the foreign side
but in two cases we will first show you
no amplification where you only use your
own labor to produce you don't buy any
inputs from other countries
and the other case we allow that and we
can show you how high you can go on
these economic costs
but the first case scenario work out the
labor supply chart
the second case scenario will allow this
full application
where u.s car industry as happening now
have to stop car production
because they cannot buy the chips from
asian countries and that was actually in
the news
recently where the car production is now
actually completely came to a stand
still
in us so the way vaccination enters to
this story is by eliminating these
shocks so your demand
is normal thanks to the vaccination and
your workers are not sick
so your labor supplies back to normal
you don't have the sick workers problem
let me show you our baseline numbers and
then stop so
we work both scenarios no amplification
through international exports and
imports
and amplification through international
export and imports basically
uh under three different scenarios the
first two scenarios
shown in the first block and the second
block here is going to assume
immediate full vaccination in advanced
economies
early in 2021 and no vaccination
whatsoever in emerging market and
developing economies
the difference between these two
scenarios we are going to also introduce
endogenous lockdowns
in emerging market and develop is when
infections come to a level
so that their icu capacities are
breached so they have to put locked out
and this is actually happening right now
as of
as we speak and the final scenario which
which is our baseline which we think a
realistic scenario there is going to be
full vaccination
by mid-2021 in advanced economies and in
fact
byzantine administration just announced
in the us by may 2021
all adults can be vaccinated and for
emerging market and developing economies
there is some vaccination but not at all
all the way by early 2020 okay and we
will allow also endorsing smackdowns
given that you know the cases are going
to be very severe in
emerging markets and the old economies
they are going to lock down their
economy so when we look at these cases
actually when you have full
amplification
through this global uh production and
trade network that i showed you
the global cost is 4 trillion but i want
to focus on this number in orange here
49
49 of that 4 trillion global cost
is going to fall on advanced economies
even they achieve full vaccination by
the summer of 2020. okay so half of the
cost is borne by
advanced economies and if somehow there
is nothing happening on this global
supply chain
the cost goes down to 2 trillion but
still 21.7
of that is paid by advanced economies
countries that achieve
full vaccination in their own economies
and these numbers are not small right
they
correspond from one to almost three
percent of
pre-pandemic gdp of advanced economies
let me stop here and then
uh maybe i can show you more once you
have your questions
thank you this is truly fascinating i
have many many questions
i'm sure that the our friends who are
watching us will have more
so let me postpone
the questions i have uh let me turn to
come again
what is important both for economic
terms as sheridan's work shows but more
generally i would say also from an
ethical viewpoint
uh seems to crucially depend on how we
can do vaccinations but not only
vaccinations
vaccinations is one part of the bigger
health
intervention i guess agenda and you know
that you have been working a lot for
example on testing
on a group appointments so i want to
start
by asking a question what can be done
also on the testing side or other
like health interventions
thank you elias i want to say
first of all that shebnam it was
fascinating to hear learn
about your work and you are clearly
putting
showing the cost of what will happen
if we don't have health care equity and
it is
huge huge costs and
i want to share what i think health
equity is
first of all i feel that health equity
is achieved
if equal or better quality
can be offered at much lower cost
and a lot of my focus is on how
can that be done as opposed to you know
what you've already shown
is how huge the cost is the economic
cost if it is not
done and as elias pointed out i have
been
doing some work on testing if you think
about testing
overtesting in particular there's
basically a trade-off
that all countries are facing on the one
hand you have
tests like the rtpcr test
which is they are expensive
they are slow in the sense it is a lab
test it requires sample to be delivered
to the lab and then
the result has the sample is processed
in the lab
and they are accurate tests
or on the other hand you have these
cheap pregnancy test type of tests which
is called a lateral flow
point-of-care test they are quick they
are cheap
but they are inaccurate so there is
this trade-off here and in terms of the
numbers
huge amounts of money are being spent on
testing so
in about october the uk
government decided that 43
million was going to be 43 billion was
going to be spent on testing
billion us joe biden has recently
announced that
revamping of testing 50 billion dollars
are going to be spent
and the question is is there a way to do
the testing and these
advanced economies without spending
those
huge amounts of money
my perspective
based on the work i've been doing with
multiple researchers is that there is
a way to achieve high accuracy
at much lower cost and uh
i'll share with you uh
some of the reasoning behind it and
why in fact instead of wasting the
inaccurate tests
you could do much better by combining by
combining i mean that
for a particular patient in a particular
instance
give them two tests so think about if
you had a fair coin and you tossed it
you would think that chance of heads is
50
but what is the chance you get two heads
right
it's 25 and what is the chance you get
three heads
goes down so similarly if you had a
cheap test which is
you know as good as a coin toss there's
a 50
chance that you get a false
signal like a false negative
but if you repeated the test or you took
two different cheap tests
that's uh signal is becoming stronger
there would only be a 25
chance that you get a false negative for
instance and similarly if you did three
it is becoming even uh a stronger signal
so this is a very simple mathematical
idea
and this idea can have profound
implications
for how we are doing testing this uh
simple idea we published uh my
co-authors on this
are sanjay jain who is an economist at
uh
oxford and uh lord ara dazzy he is a
surgeon at imperial
and um he was in the labor government
parliamentary under secretary to help
and i want to share with you how this
idea can be used
so if you think about combining tests
one thing is that if you want to combine
two tests
then you need some way to combine them
which
you can call a classic classification
rule so consider
on any test there are two aspects to
accuracy one is sensitivity which is
if you have covet what is the chance
that the test will pick it up
and in fact even those cheap tests uh
which
just to give you a sense of the cost um
an expensive test in the uk is a hundred
pounds
in the u.s is a hundred dollars even if
it's being bought by an institution or a
big organization
the chief tests are 1 10 or less the
cost so it could be 10
or pounds even less than that but cheap
tests
are better than a coin toss usually
let's say you have 60
percent sensitivity specificity is
if you don't have covet what is the
chance that the test will tell you
correctly
you don't have it so you've got these
two numbers
now if you did only one test it's simple
right it'll either come out plus or
minus
but if you got two tests there are four
outcomes
so then you have to decide which outcome
if you get plus plus should i call that
a plus
what about if i got plus minus so
what kind of logic is usually used is
you think about which costs are bigger
for example if you're worried about
false
negatives so if around if you're
thinking of an
uh a doctor sitting in front of an
elderly patient who may have
diabetes asthma some other comorbidities
the false negative is very costly
because that patient is probably going
to end up in the icu
potentially ventilator it could be life
and death for them
and so with the two tests you would say
well i'll believe any positive
so that is called the any rule and if
you're doing that
then the only way that you could get a
false negative is if both the first test
and the second test were a false
negative
and that goes down that probability
but on the other hand if you are in a
situation where the false
positive is costly so this could be a
young individual
who is not living near any elderly
people and who is
earning and is sending money home etc
uh you don't really want to uh declare
them as a positive
so here you would say well only if
doubly positive
i'll call it a positive so that is
called an and rule
and it gives you very few false
positives
but the problem is look at the false
negatives
much more false negatives and similarly
with the any rule
fine you get less false negatives but
way more
false positives so this is ending up to
be again a trade-off over here
but now if you say i'll go and do three
cheap tests because i'm thinking like
this
you can say that we have a hundred
dollars or pounds for one rtpcr
if you've done two cheap tests that's
only twenty
twenty dollars three cheap tests will be
thirty dollars so let's see what you can
do with three cheap tests
you can in fact break this trade off
you'll actually have eight possible
outcome sequences
just like if you were tossing three
coins you could get plus plus plus plus
plus minus etcetera etcetera minus minus
minus
but then how do you classify right so if
you take the extreme kind of versions
of believe um like only minus minus
minus
is going to be a negative or if you say
any kind of plus is going to be a
positive
you are not going to get better than the
individual tests because those are very
stark
trade-offs but then you could say well
i'll do majority rule
majority rule can sometimes work but in
fact if you think of the number of ways
you can classify eight outcome sequences
it's 256 possible classification rules
because for every outcome sequence you
have to decide
plus or minus two to the eight that's a
lot and majority rule is one of those
sometimes it's good but suppose that out
of those three tests
two of them are pretty bad tests and
they are very correlated with each other
in their outcomes
and the third test is a really good test
and tends to not be correlated with
those two
so then majority rule will not help you
over there
in that instance so what we have done
in follow-on research and this work is
done
with sanji jen and
jonas jonasson who is a lbs phd
now at mit and 13 co-authors
from imperial and our imperial
co-authors are
epidemiologists immunologists
virologists some surgeons etc
we've developed basically a data-driven
methodology
that generates optimal classification
rules
and by optimal what i mean is that there
will be no
other classification rule which can
improve both the sensitivity and the
specificity that one is getting
from using one of our rules so there
will be a trade-off you might get better
on one but you'll get worse
on the other and with this type of
method
basically you can take those same three
tests
and you can tailor to very different
types of patient populations
if you are seeing a patient who is that
type who has a very high cost of false
negatives
you can choose one classification rule
if it's an intermediate cost of false
negatives you could choose another if
it's a low cost
and a high cost of false positives you
could choose a different rule
all of that from three tests and
70 cost saving because remember we
started with 100 pounds and we've
still got 70 pounds in the pocket and
these tests are also much faster
it's usually 20 to 40 minutes
45 minutes to get a result and paddle
testing is very possible here
and furthermore these tests are much
easier to do
even in developing countries you don't
require
major labs much easier to
develop these tests and to run the test
and get the result
so basically we are arguing save on
those expensive pcrs
spend on clever use of rapid tests to
increase health equity
i think it's really fascinating because
it shows you know how very simple
statistics and some clever applications
can
save money and at the same time be
efficient
i'll come back to you commonly
discussing more generally about the
vaccinations and
more generally about other health
interventions but i really want to go
back to to share them
you did a great job summarizing your
paper but it went really fast in the end
so i would ask you if you can clarify
exactly the various
scenarios and i'm particularly intrigued
and i think an open question is about
the sector of implications that you
mentioned before
so which sectors in rich countries will
be affected the most
and what about the other way around
which sectors in emerging markets
perhaps
will be affected the most and i think
also i don't know whether you have
addressed this in your paper there's
also an ethical
issue i guess and let's say that you
have a small economy let's say in africa
that has a manufacturing capacity
do you really want to vaccinate those
people because
those will generate a positive spill
over let's say of an american or a
chinese or a european firm
or the elderly so i think it's great
that you stress how economics and ethics
can go handy
typically we think of the other way
around but i would ask you if you can't
please to elaborate on those issues
okay so sure uh again just
i have to say it's fascinating come on
in what you guys were doing i never
thought of uh
you know uh kind of thinking about
pathways so it is really really amazing
um but just going back to what we do and
uh what elias asked so let me first okay
show you
maybe with maps right because that's
going to make it uh clear so this is
this is the map of the world and the
here the we
plot percent gdp losses uh
with the um pandemic and also relative
to a controversial of
vaccinating everyone so imagine you
vaccine everyone so you go back to the
world in 2019
versus vaccinations are inequitable
so the color coding here is you know
darker shades are
going to be the highest highest laws
highest cost countries obviously all
emerging markets and developing
countries you know you see here uh south
america africa
so they are going to be in that group uh
now the
the point here is again we always want
to know
the cause on the advanced economies
that's why you see that we do it country
by country but we don't even put the
costs down here on
the orange and reds because they are
going to have the highest cost right
turkeys here
but for example if you focus on uh us
here right so
in terms of say u.s vaccinate everyone
rest of the world is not vaccinated
and in this case rest of the world is
still sick and us of course uh sells
the rest of the world right right rest
of the world is in recession and u.s
exports are going to go down so if you
only think in terms of like exports lost
export earning then the cost is you know
135 billion
okay you see so so you know it is
something but
you know not maybe that high you might
think and then you know here so
the five billion you know europe is
going to be some of these
these numbers here but i would like to
show you the second map you see now
everything gets caught
darker everything is now almost orange
and of course still you know africa
latin america emerging markets and
developing economies are
like with the highest cost but now the
advanced economies gets darker colors
their cost is increased because the
second map has this
full amplification through global trade
and production network so if this
incorporates when u.s
cannot buy the chip from taiwan then the
car manufacturing in u.s is going to
slow down and now the us cost you see
from 135 billion goes up to
671 billion okay so that adds up
we add up these on all advanced
economies and that's how we come
to you know they are almost paying 2
trillion off the 4 trillion cost in this
case
now this is very important exactly
because of that sectoral dimension why
you know i go from this lighter color to
darker colors when i allow full
amplification through trade networks
exactly that sector heterogeneity as you
are asking let me try to illustrate this
with these two figures so here
i'm now plotting this cost at the sector
level
on the maps i did it at the country
level and the numbers i always showed
you before it was at the country level
now this is at the sector level and i'm
going to separate the vaccinated
advanced economy sectors
these are one digit sectors on the left
and unvaccinated emerging market and
open economy sectors on the right i plot
the same sectors
uh on the y-axis x-axis in both figures
are going to be
gdp laws relative to a case where
everybody's vaccinated and you go back
to pre-pandemic gdp okay
so the first thing and the color coding
is tradable sectors are blue
non-tradable sectors are in pink
the first thing i want to show you first
of all huge heterogeneity so
here i'm plotting these box plots where
you know every bar with the lines show
you all the countries
you know so these dots are going to be
extreme outlier countries here but every
you know uh observation is a country
so it shows you the the country at
urgenity but more importantly when you
look at unvaccinated emerging markets
and
economies uh areas exactly as you are
referring to we see a typical ranking of
the sectors right what do i mean with
that the highest loss sector
even with the country heterogeneity is
going to be in the bottom
accommodation and food services right so
there are going to be countries
in accommodation and food services that
are losing 60
of the output in those services sectors
versus
something very low given with this
vertical
uh black line here that's going to be
the maximum loss
in an advanced economies in this sector
right why is that because that
those economies are now vaccinated but
basically in this figure on the right
you see a sectoral ranking
from like highest laws in accommodation
and food arts and entertainment
you know so basically the services
sector are still going to have the
highest laws
with the country to regenerate in and
vaccinated countries now you go to the
vaccinated advanced economies
you know you mimic this minimum loss
given here with this vertical black line
and accommodation and food services
right when you go to the advanced
economies
now they are vaccinated that means their
economies are open so the restaurants
are open gyms are open
and if you look at the accommodation and
food arts and entertainment this hard
hit sector
when domestic pandemic is going on this
loss is very similar it's very small
here right
we look at country heterogeneity so and
then we highlight two countries us
in uh purple blue diamond and
netherlands in orange triangle
so these vaccinated country losses are
going to be
positively correlated with openness and
netherlands is a more open country
than u.s so the triangle is going to be
ahead of uh the diamonds and netherlands
are going to have higher
losses in those sectors but overall
those type of service sector less is now
smaller
in vaccinate advanced economies look at
the sectors with largest losses now in
these vaccinated advanced economies
that's going to be agriculture and
fishing the bottom sector wholesale and
retail
transport and storage and transport and
storage on wholesale and retail they are
actually pink right they are
non-tradable sectors
but they are linked to other tradable
sectors and they buy a lot of inputs
internationally that is the store of car
manufacturers in the us
and also the whole you know now the
transportation and retail sector in the
us is also having a very hard time right
and this is u.s here so u.s losses
in these sectors can go as high as 15
percent of the output of those sectors
and that's what is going to give you the
losses
in u.s which is a country that is going
to be full of vaccination
by uh by mid-2021 so this again shows
the importance of
how you know through your global
linkages in certain sectors that are
really linked to the global economy
in terms of demand and production as a
country like you as shown in purple
diamond here you can lose a lot
because you are large and you are an
important partner in that global
trade and production network so even you
vaccinate all your countries so
this is how we make the economy case in
the paper that no economy is an island
your sectors are connected to other
sectors in other countries
and until every economy recovers no
economy recovers basically through these
impacts
thank you actually let me ask you a
geeky question before i move to kamalini
so do you allow also for stealing of
some
so i was thinking of tourism for example
so
think about the mediterranean one could
argue that you know if the northern part
of the mediterranean
is vaccinated perhaps they steal
tourists from the
do you allow for these things or not yes
no this is exactly i mean so we
love it through the demand side so like
if you know say greece
vaccinates everyone and turkey not okay
so then
the demand for tourism is going to be
higher in greece so tourists will go to
greece and not to turkey so that's going
to be incorporated in this
demand channel in that sector that
demand is just not going to normalize in
turkey as long as turkey vaccinates
everyone right i mean or there's
widespread vaccination as opposed to
greece let's say
finishes widespread vaccination before
turkey this is definitely going to be a
lot through the demand side yeah
thank you so many i wanted to ask you
more generally about
a health care provision and i know that
you have been working for something like
seven
years with the ireland eye hospital in
india like in one of the biggest
hospitals
in the world and you have been pushing a
lot for group appointments
so i would like you know your insights
how how can we think more generally in
emerging markets and
lower middle income and frontier
economies about these issues
and but before i do that i i got an
interesting question from majority
parishia
which i want to keep the time shortly
for the question but it
strongly relates to your point about
about testing
so the question that the uh andrew is
asking is
okay we describe a case where we have
one pcr test with 100
cost and three quick tests rapid tests
with ten dollars cost each
but how about this technique of using
pool sampling
with the more accurate pcr tests so can
you please
take both questions something perhaps
with a second
definitely the pool sampling is a very
excellent idea and there are countries
like germany
has been doing a lot of cool sampling
and
in fact uh with the colleagues at london
business school uh ali hour
and a phd student uh tong wong we are
starting to look at some models
uh looking at food sampling so the the
idea in pool sampling essentially is
that
in the first stage you pull together
a bunch of patients and if the test
comes out negative
then all of them go scot-free if the
test comes out positive then you have to
decide
on a second stage to either divide in
half
and do polls or go to individual testing
there's certainly a benefit over there
from food sampling and i think it is
again
an approach that is not being used
enough
we i think that these are the types of
approaches repeat testing
pool testing we definitely need to do
more on those because you can get
as good accuracy
at much less cost
so i see that you are viewing more as a
complement
to your idea of multiple rapid tests
rather than a substitute
yeah and you know all of these
approaches have
[Music]
some uh there could be some places one
thing is easier to do than another
so i i think that we need to use every
such approach that we can
i wouldn't call them substitutes and
going to the second uh question that you
asked about i also want to
uh reflect on that map which shepnam
showed which is again you know the one
with all the dark colors on it with
africa and the other developing
countries being even darker but the
whole world becoming dark
and that is about vaccination and
if we can't get vaccinations fast enough
to those parts of the world
we do also have some other things that
we can do which is
uh educating people on uh
how to not get quickly infected for
instance
and also dealing with all of the other
types of
care issues which have become ignored
because all
doctors have paid attention to covet
and you mentioned the advent i hospital
this is in fact the biggest eye hospital
in the world and they are doing two
thirds of the eye volume of the nhs
at one hundredth of the cost they are a
hospital that cares deeply
about health equity their goal is to
eliminate needless
blindness the reason i got to know
arvind
is because i had learned about a model
called
group appointments shared appointments
in the us in fact the cleveland clinic
has been doing these for 20 years
and the idea is that if you have um
multiple people who have a particular
disease
rather than see them one-on-one if you
see five or six of them at once
you can give each one
a one-on-one appointment in front of
other patients
so you don't get the private appointment
but you do get the full one-on-one
attention
diagnosis and prescription and
it can obviously save cost for the
doctor because they don't repeat stuff
but the patients some patients are shy
they get to hear somebody else ask
questions
which are relevant to them they get much
more information etc
arvind uh in fact uh
worked with us with uh nasty sonmez who
was a phd student at lbs and ryan viewer
at harvard and two doctors at art when
we ran a huge trial
of shared appointments for glaucoma 1000
patients and found that they are very
effective they improve
compliance to medication they improve
engagement
satisfaction knowledge etc advent
happens to have been a who collaborating
center
for 30 years and
when the pandemic came i want to
share my slides now when the pandemic
came
interestingly delhi medicine
and you said uh shebnem that you know
teleworking
is not very possible in healthcare
because there's a lot that you can't do
remotely
nonetheless delhi medicine has
absolutely
rocketed 500 percent or more increase in
different parts of the world
in telemedicine and smart telehealth
can help to bridge the health divide
because
this is an example from india and this
is work i did with dr samya swaminathan
chief scientist at the who
this particular example is the indian
government
there are a large number of villagers in
india who do not have
a smartphone what they have done is they
have built these
uh village centers where you have a
healthcare worker
this person with the plus on their cap
they have a smartphone so a villager can
go to
meet a healthcare worker who has a
smartphone and through that phone they
can talk to a generalist
and then if needed they can also talk to
a specialist this has been done in
about 30 000 villages and there's a plan
to massively
massively escalate this and this is
bringing equity because these people
otherwise had no access
to care and interestingly kovid
has allowed telemedicine which has been
around for 15 or 20 years to massively
escalate because now there is no other
opportunity people are doing it here's
where our thinking
was that while this is great there's a
huge shortage today of telemedicine
capacity
great shortage therefore if you decided
to do
virtual shared appointments
that would massively multiply
tele-health capacity
so think about those same villagers in
the villages
and naturally they cannot come near any
other villager during covet
however however they could connect into
a shared appointment
with that generalist and so now you have
a villager in four or five different
villages they are all seeing each other
on their healthcare workers screen and
they are also seeing the generalist
doctor
and they are getting their problems
sorted out
this is going to allow shorter weights
when you do shared appointments the
cleveland clinic
has massively reduced weights and
300 improvement in productivity they've
been seeing for years they actually
offer shared appointments in every
specialty
but most other hospitals don't want to
try it out because they say
what are you talking about i see
patients one-on-one
whereas in a crisis people are willing
to try things
and this shared appointments virtually
is also taking off now in the cleveland
clinic and some other institutions are
starting to show interest in it and in
fact hopefully
even past the pandemic this idea can
work
past the pandemic you can get groups of
patients in the same village
coming together now when you do that
all kinds of auxiliary providers from
local towns
may see that oh now there's enough
business opportunity
here that um a pharmacist or a
nutritionist
or a physiotherapist they might show up
around that time of the shared
appointments and the patients would be
better off
there's business and there is much
better use of that deli medicine
capacity so this is
an idea which even within the developing
world
you know we've talked earlier and
shebnam you've shown very clearly that
gap between the developing and the
developed world but in fact with
healthcare there are huge gaps even
within the developing world this can
certainly
this kind of approach can help to reduce
that inequity
thank you kamalini so actually as you
rightly point out
that there is considerable inequities
within
emerging markets and low-income
countries actually there's a lot of
research in economics showing that
the lowest level of development overall
the highest the regional
inequities for example clearly this is
the case coming from our own research
in africa and so i think perhaps in an
extension
and her team or others could look more
and zoom
ketogenic within those very big emerging
markets like for example nigeria brazil
so the question is you know will this be
something short-term or
more long-term it's a very good question
one thing about shared appointments
which is known because they have been
around for 20 years even though most
people haven't heard of them
is that when people experience a shared
appointment
they are very likely to want to come for
another one now obviously there's been
selection also because certain people
chose
into it but our hope is that
with the pandemic some of these shackles
are being broken
now telemedicine has been around forever
e-learning
and uh e-teaching has been around
forever but none of us were doing it and
now we're all doing it
so hopefully i'm not sure what
what is the response of the students
here so you know
i'm hesitant to extrapolate
the experience coming from academia here
now iceland i think is raising a point
that actually is
is effectively what connected and put us
together
sheldon and camille that you know how we
can think perhaps more creatively and
combine
vaccinations with testing ice beam is
raising the issue of
mutation so perhaps the vaccines are not
so successful
okay coping with the values in mutation
although i think so far they are
so perhaps more generally you know how
we can combine
those two instruments and perhaps more
instruments
like some form of treatment or whether
you have any views or thoughts on that
yeah no i fully agree and i just want to
clarify so the way our numbers
work is you know you you you control the
pandemic in your country with
vaccinations
of course it can be done with other
needs in fact we have china as part of
also the vaccinated group although we
know that you know china is nowhere
uh close to being all the students are
vaccinated right so
the the idea is like you know what you
do
vaccines plus others or just other type
of interventions that
somehow that is effective in stopping
the pandemic in terms of normalizing the
demand
and eliminating the the labor supply
shock right so as long as you're
successful in that
all the numbers and the maps is still
going to work right so so
uh that that darker color you know so uh
the reason why emerging market and
development economies like darkness is
because they have pandemic ray
raging right we start with infection uh
numbers end of 2020 and we project the
disease so so if you somehow cannot
control disease in your country
you're always going to be the darkest
color the interesting thing is like you
know the advanced economy is getting
darker also even they control the
pandemic because of
other people in other countries being
sick right but if you use
other means then the vaccines by all
means please definitely do it and then
control the pandemic in your country
that is definitely good for you but it
is good for
others too so that's that's the you know
you know the point point of the paper
and
going back to uh one of the issues that
elias raised right okay
how do we then maybe combine the ethical
and the economic thing
we can actually if you look at the coax
initiative right now
started distributing for a vaccines for
a global equitable distribution they
started with ghana and kenya
and i believe they started with kind of
the the you know the poorest country who
has nothing
type of approach right but we can
definitely try to combine this let me
also make sure i give it to countries
that are like
very central in this global network and
going to affect
a lot of producers for example taiwan in
fact taiwan actually
recently appealed to germany because
many sectors in germany now has to stop
production because they cannot get
things from
taiwan asking for vaccines right so we
can definitely bring this
dimension in two so try to combine the
economics
with the ethical because articles is of
course always going to go with let me
just
give to the country first who has like
nothing no vaccines whatsoever
which we should do but i think both
together
is going to help you know reducing the
inequality
and bringing out the maximum economic
gain right if you
also would like to bring the economic
side of the story
i agree with that i think definitely
both
all approaches need to be used hand in
hand vaccination
testing care delivery and with the
uh testing uh the uh
so because vaccination rollout cannot
happen instantly it's gonna take time
the testing definitely needs to go in
parallel the the infection testing
there could potentially even be room for
the antibody testing because
again there the science is still not
fully clear on how long the
you know once you have antibodies how
long the protection lasts but as that
science developed
i could imagine that the antibody
testing could be useful also in
prioritizing that if you have
good strong antibodies perhaps you could
wait a little longer to get
the vaccine actually we have five more
minutes so i
i i want to have the privilege of asking
two unexpected questions to both of you
in the following sense so you have been
doing very fascinating research
for many years publishing in top
journals having an impact in their
respective fields
and nowadays with your research you are
expanding you are talking with policy
makers
listening with international
organizations so
what is say what is your feeling for
example sherman let me start with you
clearly during the past year there was
not much interest
i would say both from the eu and the u.s
administration
or vaccinating low income and frontier
economies
and nowadays i think it's going to be
part of the next g7
agenda a lot referring to your work how
does it feel and you know
how hard it is to break the top
policy circles now this is this is the
best thing about this the research right
so
uh i mean i feel like i'm going to lose
my mind in pandemic
i'm an extrovert so being locked down is
like not good for people like me so i'm
like okay i have to work
and i realized you know this type of
work can have an impact and then it did
so
i am super happy about that we are all
very happy about that now i think
you are right i mean not just our work
we need many many you know
papers like that and also international
institutions right like institutions
like
imf world bank or ecd they they run
in the forefront of this right so they
are global into their multilateral
institutions so
the message we are giving with our work
is like look globalization might have
amplified the pandemic of course we are
talking about a virus
that spreads through through traveling
right but globalization is also the only
solution only solution of the pandemic
this is
this is the thing that you want to
underline and now i think uh
you know the institutions are also
pushing it you know there's our work
more people are working on this and and
as you are pointing earlier as a u.s
administration and eu they're also
coming around and they're understanding
the importance
in this we are all in this together and
we are in this globalized world i mean
i also see all this rhetoric now and
narrative let's push back
in the globalization all that i hope we
don't go down that way i mean
this is not something we have been
living in a global world in the last 30
years it's not something you can just
reward overnight so we make it's better
we make the best use of it and we use it
to our advantage to solve the pandemic
what is also your view actually i'm
trying to teach my nine-year-old son
and my seven-year-old daughter like
tossing coins
but going from that and you know
blending them
i guess a little bit more math on the
operation side
you know how do you convey this you have
to work a lot with the world
health organization specialist there so
what's your experience
i think that it's true that being locked
down has been very difficult during the
pandemic
the thing that has fascinated me is how
people from
very different disciplines have been
coming together
to work on problems and
sharing data sharing ideas etc
and also um so you know for instance
and i i uh i'm doing some other work
locally
where uh we want to do some testing and
virtual shared appointments
and there is a doctor in the university
of uh ucsf
university of san francisco she's an aid
specialist
dr diane havler very famous aid
specialist she has switched all her
attention
to covet testing and doing mass testing
for covid in the poorer neighborhoods of
san francisco i
basically called her out of the blue
and she was very happy to talk to me and
share all the kinds of things she was
doing and
this is very touching that people can
share
and find the time uh you know she spoke
to me at i think 5 30 am
her time on on a busy day
it's also i think
something to uh feel happy about that
people are reacting in different parts
of the world
to where they are seeing good ideas from
different sources
because everyone is scanning very
broadly to see
and there are some institutions and
people and organizations who would be
more willing to try something out and
now
they are doing it at an even larger
scale scanning
internationally across disciplines to
find solutions
i i hope that that continues past the
pandemic not just for healthcare but for
other problems because there's a lot of
power in
joint thinking to solve major problems
thank you i don't want to add anything i
fully subscribe to you and your
and children's remarks and with this a
positive note and let me thank you again
for taking the time and being with us
it was a pleasure at the london business
school at the wheeler institute for
business development to host you
uh thank you all for joining us and
we look forward to seeing you in one of
our future
events so thank you all very much for
being with us thank you chef
and thank you thank you
thank you
[Music]

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### Rethinking Capitalism with Gita Gopinath | Register now | Wheeler Institute
URL: https://www.youtube.com/watch?v=Fg5NkKIymx8

Idioma: en

[Music]
capitalism is
broken it is not working as it's
supposed to
we have half the world's population
saying that capitalism is not working
for them
70 of the u.s population saying the
system is rigged against them
we vastly overestimate how much poor
countries rely on the generosity of rich
countries
aid is like a fraction of a small
fraction
of most developing countries budget
but we are not in normal times we are in
times where the rich countries
have felt the need rightly to borrow
tons and tons trillions of euros and
dollars
and pounds to sustain themselves i think
capitalism is one of the greatest
inventions of the human race
an unparalleled source of innovation
and productivity and opportunity
but it only works when the free market
is balanced by free politics
and a strong civil society
you

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