Latest / Book Club with Jeffrey Sachs / Episode 4: Mariana Mazzucato, Mission Economy

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Episode 4: Mariana Mazzucato, Mission Economy · Book Club with Jeffrey Sachs

• 0:02
  SPEAKER_03: Hello, I'm Jeffrey Sachs.
• 0:04
  SPEAKER_03: Welcome to Book Club, a monthly conversation with world-leading authors who have written scintillating, inspiring, and remarkably important books about history, social justices, and the challenges of building a decent world.
• 0:19
  SPEAKER_03: In this episode, I will be speaking with Mariana Mazukato, professor of economics of innovation and public value at University College London.
• 0:29
  SPEAKER_03: She's the author of three highly acclaimed books: The Entrepreneurial State, The Value of Everything, and her new book we will be discussing today, Mission Economy: A Moonshot Guide to Changing Capitalism.
• 0:42
  SPEAKER_03: Mission Economy calls on us to take on grand challenges, stopping global warming, ending pollution, achieving the sustainable development goals, as missions like the famed moonshot of the United States in the 1960s.
• 0:57
  SPEAKER_03: Professor Mazukato argues persuasively that through mission-based approaches, we can tackle and solve great and pressing problems facing humanity.
• 1:08
  SPEAKER_03: It's really great to be with you.
• 1:10
  SPEAKER_03: Thanks so much for joining.
• 1:12
  SPEAKER_01: Thank you, Jeffrey.
• 1:13
  SPEAKER_01: It's been fabulous working with you over the years.
• 1:15
  SPEAKER_01: So this is great to be able to chat more informally.
• 1:17
  SPEAKER_03: Yeah, it's fun.
• 1:18
  SPEAKER_03: And I think the timing is right for thinking about a moonshot.
• 1:23
  SPEAKER_03: We are in the midst of travails worldwide, of course, with COVID, but we're also having a more far-reaching discussion about the kind of world we want getting out of this mess.
• 1:37
  SPEAKER_03: And maybe you could describe just to open it up, what is a moonshot?
• 1:42
  SPEAKER_01: What the moonshot was, the Apollo moon landing, the whole program, was something much bigger than that.
• 1:47
  SPEAKER_01: So in terms of the moon landing, the challenge was the space race, you know, beat the Russians, Sputnik.
• 1:52
  SPEAKER_01: That wasn't the moonshot.
• 1:54
  SPEAKER_01: The moonshot translated the broad challenges, and you're the one who reminds us all the time, are the SDGs, transforming it into a concrete goal, you know, getting to the moon and back, but also getting as many different sectors involved.
• 2:06
  SPEAKER_01: And this is where the word moonshot sometimes gets confusing.
• 2:09
  SPEAKER_01: You know, getting to the moon required innovation in aeronautics, electronics, nutrition, materials, the entire software industry in some ways was an outcome of that.
• 2:18
  SPEAKER_01: And what I really think we should be doing today, for example, around the climate challenges is turning those into moonshots.
• 2:24
  SPEAKER_03: The idea that Mariana is uh propounding and that I fully concur with is that government can provide a tremendous amount of leadership if it's dynamic and active.
• 2:35
  SPEAKER_03: And I want us to talk about NASA and the moonshot specifically, and uh just to tell you I was there.
• 2:43
  SPEAKER_03: I was seven years old when uh the moonshot was announced.
• 2:47
  SPEAKER_03: So I was there as a kid who loved uh the moonshot.
• 2:52
  SPEAKER_03: And so I listened to or watched every one of the Mercury, Gemini, and uh Apollo missions.
• 3:00
  SPEAKER_03: And to get us in the mood, Mariana, if you'll permit me, I wanted to listen to John F.
• 3:05
  SPEAKER_03: Kennedy, 1961, saying to the Congress, let's do something big.
• 3:12
  SPEAKER_00: I therefore ask the Congress, above and beyond the increases I have earlier requested for space activities, to provide the funds which are needed to meet the following national goals.
• 3:23
  SPEAKER_00: First, I believe that this nation should commit itself to achieving the goal before this decade is out of landing a man on the moon and returning him safely to the earth.
• 3:36
  SPEAKER_00: No single space project in this period will be more impressive to mankind or more important for the long-range exploration of space, and none will be so difficult or expensive to accomplish.
• 3:50
  SPEAKER_03: When he said that I believe that this country should adopt the goal before this decade is out of sending a man to the moon and returning him safely to the earth.
• 4:01
  SPEAKER_03: And then, Mariana, what I love about the speech is that he said nothing will be so hard or more expensive.
• 4:09
  SPEAKER_03: So almost the opposite of the typical politician.
• 4:13
  SPEAKER_03: So why don't you take it from there?
• 4:15
  SPEAKER_03: Because you describe beautifully the next phase.
• 4:18
  SPEAKER_01: Facilitating the word, I'm Italian, facile, you know, from Latin, easy.
• 4:23
  SPEAKER_01: You're not trying to make things easier for other people.
• 4:26
  SPEAKER_01: You're confronting the difficulty.
• 4:28
  SPEAKER_01: Climate change is hard.
• 4:30
  SPEAKER_01: Inequality today is hard to tackle.
• 4:32
  SPEAKER_01: We do it because it's hard, but it's important.
• 4:35
  SPEAKER_01: We need, you know, missions precisely to confront the challenges that we have.
• 4:39
  SPEAKER_01: And I think what's also so interesting, and I don't think people realize, but in both 1961 and still in 1962, these guys had no clue how to get to the moon.
• 4:48
  SPEAKER_01: Right?
• 4:49
  SPEAKER_01: So the level of innovation, experimentation, trial and error, and error and error, and the errors often, you know, led to death, was enormous.
• 4:57
  SPEAKER_01: And the fact that they were willing to experiment and make mistakes is just, again, so different today, where as soon as a civil servant makes a mistake, they're in the you know, front page of the Daily Mail or the equivalent newspaper in everyone's country there.
• 5:10
  SPEAKER_01: And you know, experimentation is key if you're a value creator.
• 5:13
  SPEAKER_01: It's not key if you're just pushing papers around or at best kind of redistributing the value that's created somewhere else.
• 5:19
  SPEAKER_01: So the idea that actually wealth creation itself is collective enterprise and all the different actors in both the public and the private sector need to be investing within their own organizations in the ability to create value, interestingly, was actually something that NASA was very aware of.
• 5:35
  SPEAKER_01: So the head of procurement, this guy Ernest Brackett, he had this really interesting concept.
• 5:40
  SPEAKER_01: He said, if we stop investing in our own kind of brain, our own research and development, then when we're interacting with private sector organizations, which they had to, this really was a public-private partnership, we won't even know how to write the terms of reference.
• 5:54
  SPEAKER_01: So he said, in order to prevent what he called brochuremanship, which is a word I love, you know, at the time they didn't have PowerPoint presentations from PWC and Deloitte.
• 6:03
  SPEAKER_01: They had brochures from companies that would come in and sell themselves.
• 6:06
  SPEAKER_01: He said, in order to prevent us getting captured by brochuremanship, we ourselves need to remain capable, dynamic, and invest within our brain.
• 6:15
  SPEAKER_01: And secondly, after the Apollo 1 fire, which was a tragic incident, three astronauts died, they went through a whole kind of inward digression where they said, maybe we don't have the right organization.
• 6:26
  SPEAKER_01: Because Gus Grissom, one of the three astronauts who died on January 27th, 1967, before the fire, he said, Jesus Christ, you know, how are we ever gonna get to the moon if we can't even talk between two or three buildings?
• 6:39
  SPEAKER_01: That's because he couldn't hear what was being said for Mission Control Room, and that was part of the problem.
• 6:44
  SPEAKER_01: There were many problems on that day, but anyway, that kind of lack of horizontal communication, each department kind of working in silos, we know is a common feature of government.
• 6:53
  SPEAKER_01: It's probably also a common feature of large private sector organizations.
• 6:56
  SPEAKER_01: But the fact that if you are a purpose-oriented, mission-oriented, big goal-oriented public organization, you also have an inward change in your culture, more horizontal communication, you need to be more agile, flexible.
• 7:10
  SPEAKER_01: This is a huge lesson today for public institutions.
• 7:13
  SPEAKER_03: It's stunning to think about when the first flights were taken.
• 7:18
  SPEAKER_03: There weren't, of course, even electronic boards to monitor the flight.
• 7:22
  SPEAKER_03: There was literally a model rocket on plastic on a uh on a wire that they were pushing with a stick physically in the first shot of to know where Alan Shepard was in this uh 15-minute flight.
• 7:40
  SPEAKER_03: They were using teletype.
• 7:42
  SPEAKER_03: And as has been often said, we have more computing power in our smartphones than NASA had available on site at Cape Canaveral for years.
• 7:52
  SPEAKER_03: So the drama of this is phenomenal.
• 7:55
  SPEAKER_03: The fact that I think it's estimated that 20,000 companies got together, 500,000 people, truly private sector, but led by NASA.
• 8:05
  SPEAKER_03: It's stunning.
• 8:06
  SPEAKER_03: So how could it be?
• 8:08
  SPEAKER_03: And I think it is one of the puzzles, and you've written a lot about this and thought a lot about this.
• 8:14
  SPEAKER_03: The U.S.
• 8:15
  SPEAKER_03: government had, for all its consequences, developed the atomic bomb in the Manhattan Project, one of the most phenomenal enterprises of applied science in history, absolutely incredible.
• 8:28
  SPEAKER_03: It had gone to the moon.
• 8:31
  SPEAKER_03: And then yet, despite that, a few years later, Ronald Reagan was saying uh you can't trust the government to do anything.
• 8:40
  SPEAKER_03: It's incompetent, the idea that government can't manage, can't lead.
• 8:46
  SPEAKER_03: How could we fall into that mode of thinking with this amazing uh history of accomplishment before our eyes?
• 8:57
  SPEAKER_01: So your question was about kind of the ideology, and I always again begin with what is even the market?
• 9:01
  SPEAKER_01: Like what do we even mean by capitalism?
• 9:04
  SPEAKER_01: And we shouldn't confuse markets with business.
• 9:07
  SPEAKER_01: Markets are outcomes of how we organize all the different organizations that create value, public organizations, private organizations, others increasingly important in the say nonprofit area, the Gates Foundation or the Wellcome Trust.
• 9:20
  SPEAKER_01: But how we govern these organizations and how they relate one to another determine the kind of outcomes we get.
• 9:26
  SPEAKER_01: If you have government institutions that at best, you know, at worst are scared to do anything, at best are there to fix market failure, so they actually have to wait for things to screw up before they come in, that's gonna give you a particular type of economy.
• 9:39
  SPEAKER_01: And if those relationships are, say, parasitic, right?
• 9:43
  SPEAKER_01: You know, you actually have, say, like we have in the health sector, where you have 40 billion spent by the US government on health innovation, the private sector comes in, which it should, and you know, can use that innovation, especially the high-risk, early stage government funding.
• 9:56
  SPEAKER_01: So the Pfizers of the world tend to come in a bit later.
• 9:59
  SPEAKER_01: And if we don't govern the patents in such a way that actually make sure that the innovations are accessible and that after the patents are up, there's more diffusion, if the prices of the drugs don't actually reflect that public contribution and so on, then that public investment isn't actually getting like its proper return.
• 10:17
  SPEAKER_01: And I'm not thinking just monetarily.
• 10:19
  SPEAKER_01: So the more you take away the confidence of the state and talk about its remit at best as fixing a problem and then get the hell out of the way, or facilitating, enabling, being a lender of last resort instead of an investor of first resort, that affects both the kind of capabilities you think you need within government, but also the confidence, and this is important, the confidence and the kind of security that you're gonna actually also strike a good deal for who?
• 10:43
  SPEAKER_01: For citizens, right?
• 10:44
  SPEAKER_01: Because I'm talking especially about democratically elected governments.
• 10:47
  SPEAKER_03: You touched on something very immediately relevant day by day right now that I think is worth mentioning for everybody listening.
• 10:55
  SPEAKER_03: We are, of course, in the race to immunize people all over the world against the virus that causes COVID-19.
• 11:04
  SPEAKER_03: And the lead vaccines, two of them at least, the one made by BioNTech and Pfizer, and the one made by Moderna are these new vaccine types called mRNA vaccines.
• 11:18
  SPEAKER_03: And these companies are, of course, producing them and making billions of dollars of market capitalization and massive profits on the basis of them.
• 11:28
  SPEAKER_03: And they are saying you see the power of the private sector.
• 11:32
  SPEAKER_03: But I think the point that you mentioned quickly and I want to underscore is where did those mRNA vaccine platforms come from?
• 11:43
  SPEAKER_03: They did not come from bioNTech, even less Pfizer, because bioNTech was the science part of that joint venture.
• 11:52
  SPEAKER_03: They did not come from Moderna, the two companies that are producing these mRNA vaccines.
• 11:58
  SPEAKER_03: They came actually from academic scientists at University of Pennsylvania, funded by the U.S.
• 12:06
  SPEAKER_03: government, funded by the National Institutes of Health, funded by the agency, the National Institute of Allergies and Infectious Disease, NIAID, led by Tony Fauci, our lead infectious disease scientist of the United States.
• 12:24
  SPEAKER_03: And it was many, many years of government funding that made this possible.
• 12:29
  SPEAKER_03: And indeed, it's only in the end stage that the two companies came in and with the financing of the NIH carried through the phase one, two, and three clinical trials to get this into operation.
• 12:46
  SPEAKER_03: So just to underscore your point in the most immediate context, these vaccines are produced by government scientific leadership and support of a scientific community, not a business community.
• 13:02
  SPEAKER_03: We need the business community.
• 13:04
  SPEAKER_03: It does important things.
• 13:06
  SPEAKER_03: But the idea that people have that, oh, it's business against the heavy bureaucracy of government is really a messed up idea.
• 13:16
  SPEAKER_01: But you could break down that point, you know, because the amount of public funding is again a point that I keep trying to reveal.
• 13:22
  SPEAKER_01: And specifically with the vaccines, the six vaccines, it's over$12 billion that governments have put in.
• 13:28
  SPEAKER_01: But then the other point is once we've admitted that there's both lots of public money, that high-risk, early stage, capital-intensive phase, that's why I called it the entrepreneurial state, because it's the high-risk stuff that tends to be what government does.
• 13:40
  SPEAKER_01: What does it mean to actually then govern it in the public interest?
• 13:44
  SPEAKER_01: In other words, when you have publicly funded medicines, the prices should reflect that.
• 13:50
  SPEAKER_01: We need to have a more continual way to think about things like outcomes-based budgeting.
• 13:54
  SPEAKER_01: But when we're just kind of pouring money in, as we are now, two trillion with the Build Back Better policy, the American Recovery Plan, but also another$4 trillion for the infrastructure plan, what does it mean to govern it to make sure that it actually reaches people, that we have stronger institutions, that we have better partnerships, that means much more than just flooding the system with liquidity or with public investment.
• 14:17
  SPEAKER_03: I think the notion that setting the terms of the deal, right, is so crucial.
• 14:23
  SPEAKER_03: Staying with the vaccine issue is not only how things are priced, but as you said, what is made available to whom?
• 14:30
  SPEAKER_03: Because now we need worldwide immunization.
• 14:34
  SPEAKER_03: The companies are saying, well, we don't want to share the intellectual property.
• 14:38
  SPEAKER_03: That's ours.
• 14:39
  SPEAKER_03: That's how the market economy works.
• 14:41
  SPEAKER_03: But it's a little naive.
• 14:43
  SPEAKER_01: Yeah.
• 14:44
  SPEAKER_01: But that shouldn't be a choice.
• 14:45
  SPEAKER_01: Why is that a choice?
• 14:46
  SPEAKER_01: They should be, you know, like this whole idea of conditionalities, all that government funding that you and I just talked about should come with strings attached.
• 14:53
  SPEAKER_01: You shouldn't be allowed to kind of abuse patents.
• 14:55
  SPEAKER_01: Patents are often too wide, they're too strong, hard to license, they're too upstream.
• 14:59
  SPEAKER_01: So what the World Health Organization's been calling for is a patent pool to foster kind of that collective intelligence that currently we need, not just for the vaccine rollout, which is also incredibly important in terms of solidarity and not having vaccine apartheid, which Dr.
• 15:12
  SPEAKER_01: Tedros talks about, in terms of the hoarding of the doses just in rich countries, but the knowledge creation mechanisms themselves.
• 15:18
  SPEAKER_01: How do you govern knowledge creation in order to really foster as much collective intelligence?
• 15:23
  SPEAKER_01: And the patents are often used to extract value, which is not really what they were there for.
• 15:28
  SPEAKER_01: They were meant to incentivize innovation, but you can govern them in such a way that does get the objectives we want.
• 15:33
  SPEAKER_03: Maybe you could say one word about what it means, as you said, to have march-in rights and what the government could do even in the immediate context.
• 15:42
  SPEAKER_01: Yeah, I mean, march in rights specifically, I mean, this is really interesting because you'll remember that what was it, 1982, there was the Baydol Act, which allowed something to happen which until then didn't happen, which is that publicly funded science, before then, the idea was it would just stay in the kind of open domain, right?
• 16:00
  SPEAKER_01: That you couldn't like patent it if it was coming out of a publicly funded science.
• 16:04
  SPEAKER_01: So the idea was that that was kind of impeding commercialization of science, and that was bad.
• 16:09
  SPEAKER_01: And so the Baydol Act actually allowed publicly funded science to result in patents, and many different companies actually were set up because of that.
• 16:18
  SPEAKER_01: So the whole biotech revolution that we call the biotech revolution from basically that period on, it wasn't actually that more knowledge was being created.
• 16:26
  SPEAKER_01: It was that more companies could actually start up, literally, from the patents that all of a sudden were being allowed.
• 16:32
  SPEAKER_01: Now, as part of that process, there was a recognition that we would have to then be careful, right?
• 16:37
  SPEAKER_01: This isn't actually about privatizing completely publicly funded science.
• 16:41
  SPEAKER_01: It meant to, at least initially the idea was let's just make sure it leads to more commercialization.
• 16:45
  SPEAKER_01: But the deal was in their head.
• 16:47
  SPEAKER_01: So if you read the Baydol Act, it actually has within it, it's a long act, that obviously publicly funded, you know, uh medicines, the price should reflect that.
• 16:56
  SPEAKER_01: So the NIH, for example, but it's not just the NIH, you also have the Veterans Administration, you have BARDA, bits of DARPA that do health innovation, should be able to control the prices, or the prices should reflect at least the fact that there was that public contribution.
• 17:09
  SPEAKER_01: So it's basically like a market cap on the prices of medicines that have a strong public funding base that's never been used.
• 17:18
  SPEAKER_03: You and I have both complained about a case, uh, another case against hepatitis C of Gilead, uh, which I've written a lot about uh also, where the company ended up charging 1,000 times the unit cost of the pill for something that it didn't develop.
• 17:39
  SPEAKER_03: It actually bought the technology.
• 17:41
  SPEAKER_03: Yeah.
• 17:41
  SPEAKER_03: And if you trace it back and back and back, this was NIH supported work by NIH.
• 17:48
  SPEAKER_03: That's also true for Remdesivir.
• 17:49
  SPEAKER_01: That's true for Remdesivir now, you know, the COVID direct.
• 17:52
  SPEAKER_03: Yeah, so all of this shows uh the point that you're making that the deal has to be thought through skillfully.
• 17:59
  SPEAKER_03: And maybe, Mariana, that is a good segue to the section of the book, Mission Economy, on good theory, good practice, because you list a number of highlights of what does it mean to have good practice.
• 18:12
  SPEAKER_03: You have listeners uh today from 60 or more countries, I believe it is.
• 18:18
  SPEAKER_03: Each one of them is going to be advising their governments, or maybe in government, or listening to their government, what are the good theory, good practices that you want them to know?
• 18:29
  SPEAKER_03: Of course, they need to read the book, this wonderful guidebook.
• 18:33
  SPEAKER_03: But uh, what are the uh the main good practices that are crucial for getting a good deal of an entrepreneurial state?
• 18:42
  SPEAKER_01: Thank you for allowing me to answer that question because it's so important now as it was also before, and especially in the future, if we finally get serious about the SDGs.
• 18:50
  SPEAKER_01: Uh, just really quickly, Marchin writes, the point is they're never used.
• 18:53
  SPEAKER_01: It's there in the law and we haven't used it.
• 18:55
  SPEAKER_01: So let alone the things we do need, and this comes to your question, which we don't have and what we should be kind of fighting for in terms of better policy.
• 19:01
  SPEAKER_01: But even when we have good laws, we don't use them when they're going against an ideology.
• 19:06
  SPEAKER_01: And so, really kind of uncovering the faulty assumptions behind the ideology is what I look at both in terms of bad theory, bad practice, and then good theory, good practice.
• 19:16
  SPEAKER_01: So I broke down the good theory bit into seven areas.
• 19:19
  SPEAKER_01: One is about value, you know, actually having an economic kind of approach and framing that explicitly recognizes that value is collectively created.
• 19:28
  SPEAKER_01: Even those people that talk about stakeholder value in the same breath about stakeholder value instead of shareholder value will still say business creates value and then should be sharing that value amongst different stakeholders.
• 19:41
  SPEAKER_01: And I always kind of stop them and say, no, stakeholder value needs to first of all admit that value is not just created in business.
• 19:48
  SPEAKER_01: It's also created by public institutions.
• 19:50
  SPEAKER_01: It's created by workers who need to be invested in instead of extracting so much value out of companies sometimes that human capital formation and training isn't brought forward.
• 19:59
  SPEAKER_01: The second bit is markets, you know, so a new approach to value is collectively created.
• 20:03
  SPEAKER_01: The second is markets, really understanding that markets are outcomes of how we govern the different collective actors, but especially how they relate to one another, means also that the kind of policy we need is not about fixing markets, but really actively shaping and co-creating markets to get us the objectives we want, right?
• 20:20
  SPEAKER_01: So if we want inclusive growth, sustainable growth, and within that actually tackle really important emissions, it can't be done just by kind of leveling the playing field and fixing markets.
• 20:31
  SPEAKER_01: We need to tilt markets in a particular direction and actively shape and create them.
• 20:35
  SPEAKER_01: But that's not about picking winners, you know, one technology, one sector, one firm.
• 20:40
  SPEAKER_01: It is about choosing a direction and then having a portfolio approach to get there, right?
• 20:45
  SPEAKER_01: So not putting all our eggs in one basket.
• 20:47
  SPEAKER_01: And that comes back to that point about solar, wind, different types of renewable energy, but you need to at least first make the choice to move somewhere.
• 20:54
  SPEAKER_01: The third bit is about organizational capacity.
• 20:56
  SPEAKER_01: It's too easy to keep bashing the state for being inertial, boring, you know, just a bunch of rules.
• 21:02
  SPEAKER_01: Well, if that's what we think the state is for, just for picking up the mess, that's the kind of state we're gonna get.
• 21:08
  SPEAKER_01: One that hasn't actually thought about its intra-organizational governance, culture, risk-taking, portfolio approach, dynamic procurement instead of just handouts and so on.
• 21:18
  SPEAKER_01: So that kind of inward look at the kind of organizational capacity we need within the public sector means we need actually even just a theory of dynamic capabilities within public institutions, as ambitious as those that we have in the private sector, where you have MBA classes, you know, talking about strategic management, organizational science, decision sciences, organizational behavior, and so on.
• 21:38
  SPEAKER_01: We don't have that in MPAs, masters in public administrations.
• 21:42
  SPEAKER_01: We too often hear, oh, we need more finance for this, finance for that, finance for renewable energy.
• 21:48
  SPEAKER_01: Actually, there's plenty of finance out there.
• 21:50
  SPEAKER_01: We just have the wrong finance.
• 21:51
  SPEAKER_01: It's often impatient, exit driven finance, even venture capital, which is finance that's supposed to help us with startups and innovation.
• 21:59
  SPEAKER_01: The fact it is Exit driven and wants to exit through an IPO or a buyout in three or four years, has in some cases like biotech rushed the process, and we've ended up with lots of what Bill Ozonic and I have called PLEPOs, productless IPOs.
• 22:12
  SPEAKER_01: So patient long-term strategic finance is what we need, but also outcomes-based budgeting and outcomes-based finance.
• 22:19
  SPEAKER_01: Instead of saying, here's a pot of money, see what you can do with it, we need to start with what's the problem and kind of work backwards on what it means for finance, for deficits, for procurement, public-private partnerships.
• 22:30
  SPEAKER_03: Thank you.
• 22:30
  SPEAKER_03: Can I just underscore that?
• 22:31
  SPEAKER_03: Uh it's a point I've been also trying to make for 30 years, which is when you when you have goals, you budget for the goals.
• 22:39
  SPEAKER_03: You don't say I have a goal to have every child in school, now I'll raise the education budget 5%.
• 22:48
  SPEAKER_03: You say if every child is going to be in school, what do we need for that?
• 22:54
  SPEAKER_03: If we're going to get everybody immunized against COVID-19, what do we need for that?
• 23:00
  SPEAKER_03: If we're going to ensure universal access to digital and poor people can't pay, what do we need for that?
• 23:08
  SPEAKER_03: So mission-based budgeting starts with the mission and then sets the budget.
• 23:16
  SPEAKER_03: It doesn't start with the budget and then, as you said, see what you can do.
• 23:21
  SPEAKER_01: And I think it's and hope for the best.
• 23:24
  SPEAKER_03: And don't be surprised when you fall short.
• 23:26
  SPEAKER_03: If you want to go to the moon, you better budget to go to the moon.
• 23:30
  SPEAKER_03: That's why President Kennedy said nothing will be more expensive.
• 23:34
  SPEAKER_03: But he said, don't do this if you're going to stop halfway.
• 23:38
  SPEAKER_03: That's not our goal.
• 23:40
  SPEAKER_03: So this I think is a very important point that I want to underscore.
• 23:44
  SPEAKER_03: But please continue.
• 23:45
  SPEAKER_01: So three more.
• 23:46
  SPEAKER_01: Sorry.
• 23:46
  SPEAKER_01: This is very pedantic of me to go through all seven.
• 23:49
  SPEAKER_01: I could have just done one of them and tell them.
• 23:52
  SPEAKER_01: So the fifth one is about distribution.
• 23:54
  SPEAKER_01: You know, absolutely all, I mean, hopefully most of the people in your audience believe in, you know, progressive, not regressive distribution in terms of how we design our tax systems, but that's not enough.
• 24:04
  SPEAKER_01: We need to actually create wealth differently as opposed to focusing too much just on redistribution to achieve inclusive growth.
• 24:11
  SPEAKER_01: So this idea of kind of pre-distribution to actually get the conditions right in the first place, to make sure, as we were saying before, that we're not just sharing risks but also rewards requires a distribution and pre-distribution lens to how we create value, and that's one of the concepts I bring forwards.
• 24:27
  SPEAKER_01: The idea of partnership, you know, purpose-driven partnership, that's the sixth principle in that last chapter.
• 24:33
  SPEAKER_01: And the last one is on participation.
• 24:34
  SPEAKER_01: And this is really important, I think, because whereas the moon landing, the Apollo program, was, you know, kind of rightly, because it was basically a technology feat, top-down, you know, directed by NASA, you know, as Kennedy and a bunch of other white guys in the room determining things today for the SDGs, especially ones that have to do with sustainability, with inequality, with gender parity, with all 17 goals, the more we can get participatory structures, kind of co-creation and co-design to even decide what the missions are in the first place, the better.
• 25:05
  SPEAKER_01: So, for example, carbon neutral housing, what does it mean to bring citizens who live in the social housing to the table in terms of actually talking about sustainable living and the kind of things that they'd like to see in the places they're living?
• 25:17
  SPEAKER_01: And that requires a social innovation in areas like citizen assemblies.
• 25:21
  SPEAKER_01: In Spain, there's a huge cooperative called Mondragon with 87,000 workers in the Basque region there, and they have experience with co-ops and you know mutual types of organizations.
• 25:30
  SPEAKER_01: What can we learn from that experience in terms of this kind of co-design process?
• 25:35
  SPEAKER_01: And lastly, we should remember in terms of participation, labor, right?
• 25:39
  SPEAKER_01: I mentioned before trade unions.
• 25:40
  SPEAKER_01: Trade unions got us some of the best social innovations we've ever seen in capitalism.
• 25:45
  SPEAKER_01: The weekend, not bad, the eight-hour workday, the fact children don't work in factories.
• 25:50
  SPEAKER_01: And so there's something about bringing labor's voice as well as you know, the students, Fridays for the Future and so on, to the table in the co-creation phase and not just after the fact to defend workers against things like what's going to happen with employment as some sectors kind of dwindle away.
• 26:08
  SPEAKER_01: So that's the just transition movement, which is very important.
• 26:11
  SPEAKER_01: But the concept of the just transition, as important as it is, making sure workers kind of transition along and don't just get left behind, that's kind of reactive.
• 26:20
  SPEAKER_01: We need a proactive approach where different voices, and labor's voice is what I'm highlighting here, is genuinely at the table to even talk about the future of particular uh parts of our economy.
• 26:30
  SPEAKER_01: And so that participation bit, I think, needs a lot of thinking.
• 26:33
  SPEAKER_01: And I think it's actually the hardest bit.
• 26:35
  SPEAKER_03: Could we uh spend the uh remaining precious minutes applying these principles to the European Green Deal, which you are playing a major role in helping to get underway?
• 26:47
  SPEAKER_03: I think the European Green Deal is extremely important because it is a holistic approach to the range of environmental challenges from climate to land use, biodiversity, and so forth, circular economy, pollution.
• 27:01
  SPEAKER_03: So it's very ambitious.
• 27:03
  SPEAKER_03: It's an important role model, I think, for other parts of the world.
• 27:07
  SPEAKER_03: I was delighted when President Biden brought 40 world leaders together, including European Union Commission president uh Ursula Vanderleen, to discuss essentially a worldwide Green Deal approach.
• 27:23
  SPEAKER_03: What have you seen so far of the European Green Deal?
• 27:26
  SPEAKER_03: What do you recommend to the listeners to take from it for applying in the national or regional circumstances where they may be living?
• 27:36
  SPEAKER_01: So, first of all, I think one thing that people might not know is that it's a really historic moment in Europe because the European Recovery Fund called NextGen EU is extremely different from the recovery fund we saw after the financial crisis, where the conditions attach, and these are public-public conditions, not public-private, the conditions attached for the member states to get access to European Commission money was they had to cut their deficits.
• 28:01
  SPEAKER_01: This time, the conditions are you have to have a strategy.
• 28:04
  SPEAKER_01: A strategy on what?
• 28:05
  SPEAKER_01: Climate and digitalization.
• 28:07
  SPEAKER_01: So all the 27 member states have had to literally, as we speak, they're submitting these plans to the European Commission.
• 28:14
  SPEAKER_01: And this itself is amazing.
• 28:16
  SPEAKER_01: Forget the fact that some of these countries might have the wrong plans or they might not be implemented, just the fact that the conditionality is on investment instead of cutting your public budget.
• 28:27
  SPEAKER_01: That's a big change.
• 28:28
  SPEAKER_03: And important, I think, just to underscore green and digital.
• 28:31
  SPEAKER_03: So I just want to say that.
• 28:33
  SPEAKER_01: Absolutely.
• 28:33
  SPEAKER_01: Climate change targets, and they can be of different types.
• 28:37
  SPEAKER_01: They can be about changing how steel is produced, how much cement is produced, but especially city-level, regional level policies, you know, carbon neutral cities.
• 28:45
  SPEAKER_01: This is incredibly important.
• 28:47
  SPEAKER_01: And the other one was the digital divide issues.
• 28:49
  SPEAKER_01: There's a separate plot for health.
• 28:50
  SPEAKER_01: And I had worked for about three years with the commission trying to argue that they had to stop thinking just about random sectors, think about these missions.
• 28:58
  SPEAKER_01: And the example I actually gave was to start with, you know, the climate change SCG 13, turn it into a really ambitious objective, 100 carbon neutral cities by 2030, and get as many different sectors across Europe involved.
• 29:11
  SPEAKER_01: So real estate, mobility areas, food, social sectors, construction, you know, and so on and so forth.
• 29:17
  SPEAKER_01: And then the bottom-up projects that would be galvanized by actually changing how European policy was structured, in particular innovation policy, procurement, and so on, would bring in all sorts of interesting things like carbon neutral urban food industries, citizen carbon ID cards, and so on and so forth.
• 29:34
  SPEAKER_01: But then the next step was how do you make sure that this kind of green mission-oriented approach isn't just about your innovation policy, but is at the center of European growth and kind of that directed growth.
• 29:45
  SPEAKER_01: Then COVID happened, and now we have a recovery scheme.
• 29:48
  SPEAKER_01: But just the fact that very soon, actually, the Commission brought this idea of kind of the Green Deal outside of a silo of just like the Department of the Environment within the Commission or within member states' departments to the center of European growth.
• 30:02
  SPEAKER_01: This idea that growth has not just a rate but a direction, and European directed growth was going to be around the European Green Deal, that as well was really important because it's not that governments don't talk green, it's just that it often remains a peripheral bit of what they're doing.
• 30:16
  SPEAKER_03: With COVID, the good dynamic in the midst of the crisis was the idea we are going to have to build forward in a better way.
• 30:25
  SPEAKER_03: Exactly.
• 30:26
  SPEAKER_03: It didn't push aside the European Green Deal to say, well, that no longer applies.
• 30:31
  SPEAKER_03: It actually reinforced the idea that as we end the pandemic, where are we going to be?
• 30:37
  SPEAKER_03: Are we going to be adrift or are we going to be heading someplace?
• 30:41
  SPEAKER_03: And so I think the fact that the European Green Deal doubled down on the importance of it was really important in the COVID pandemic context.
• 30:50
  SPEAKER_01: Absolutely.
• 30:51
  SPEAKER_01: And but what's interesting, on the one hand, there's a European plan and there's a European recovery and there's a European Green Deal.
• 30:56
  SPEAKER_01: But then what I'm observing is differences, heterogeneity, between how different governments are actually tackling it.
• 31:03
  SPEAKER_01: And in France, you know, France is not perfect, but one thing they did that I thought was very good is, you know, President Macron during the European recovery said very quickly, we're not here just to bail out business, but to help it transform in a green direction.
• 31:15
  SPEAKER_01: So there was very strict criteria attached to the bailouts that both Renault got to the car manufacturer and Air France.
• 31:23
  SPEAKER_01: They had to commit to lowering their carbon emissions in the next five years to get part of the French national recovery.
• 31:28
  SPEAKER_01: In the UK, we didn't do that.
• 31:29
  SPEAKER_01: There was a massive bailout to EasyJet, no conditions attached.
• 31:33
  SPEAKER_01: In Austria and Denmark, one of the conditions was you have to stop using tax havens.
• 31:37
  SPEAKER_01: And if you want to keep using them, fine, but guess what?
• 31:39
  SPEAKER_01: You ain't getting a penny, a euro, right?
• 31:42
  SPEAKER_01: So this idea again of kind of a new social compact at the center of both public-public, right?
• 31:49
  SPEAKER_01: So European money given to member states only if they have a climate strategy, but also public-private, you only get a subsidy guarantee, loan, bailout, recovery if you transform, that can be actually a win-win strategy if we all care about achieving sustainable growth.
• 32:03
  SPEAKER_01: But that's why that conversation, participatory conversation, about what are we even trying to do?
• 32:08
  SPEAKER_01: You know, what does build back better actually mean?
• 32:10
  SPEAKER_01: What are our goals?
• 32:11
  SPEAKER_01: That's why it's so essential.
• 32:12
  SPEAKER_01: It's not just about politically correct talk, it's actually central to how you then organize the economy.
• 32:17
  SPEAKER_03: One thing that I've seen, and I think it's been extremely powerful, Europe's adoption of the Green Deal really has opened eyes around the world.
• 32:28
  SPEAKER_03: One very specific reason was that Europe said we're going to put on border taxes so that you can't import into us goods that are made with carbon-intensive technologies.
• 32:39
  SPEAKER_03: In other words, other countries, you're going to have to clean up your act.
• 32:43
  SPEAKER_03: But I think the model of the European Green Deal has had a worldwide galvanizing effect because here was a group, complicated group, 27 countries, all aligning around goals, aligning around these missions, aligning around a budget to put it into place.
• 33:00
  SPEAKER_03: And it wasn't soon after that President Xi Jinping announced at the UN General Assembly, okay, China is going to decarbonize by 2060 latest.
• 33:12
  SPEAKER_03: And in the Chinese system, when the president said that, it got incorporated uh into the 14th plan.
• 33:19
  SPEAKER_03: Suddenly, as I'm sure you noticed, all of our Chinese colleagues are working on strengthening this decarbonization pathway.
• 33:27
  SPEAKER_03: So it's been very exciting.
• 33:29
  SPEAKER_03: Then Japan, then Korea, now the United States under President Biden.
• 33:33
  SPEAKER_03: So we are seeing, I think, truly a wave of the entrepreneurial state taking a shape right now, a new era after what in our countries, US, UK, uh, had been uh the Reagan-Thatcher anti-state philosophy that lasted basically for a 40-year period.
• 33:56
  SPEAKER_03: Yeah.
• 33:56
  SPEAKER_03: But I think I really feel we're in a new era.
• 34:01
  SPEAKER_01: I definitely think so, and I hope it lasts, and we don't get what I'm already starting to hear.
• 34:05
  SPEAKER_01: It's like, yeah, we're doing it now, but then we got to pay it back, right?
• 34:08
  SPEAKER_01: And then you get another way of austerity, which is just blanket and actually undermining the social fabric, which made this particular health pandemic even worse than it had to be.
• 34:17
  SPEAKER_01: You and I are in different councils, but one that I'm extremely proud of that's just beginning, is one that Dr.
• 34:22
  SPEAKER_01: Tedros has asked me to um set up for the World Health Organization.
• 34:26
  SPEAKER_01: It's called the UN Council on the Economics of Health for All.
• 34:30
  SPEAKER_01: And there the logic is, you know, people have talked about health and the economy, but often it was like, invest in health because it's good for the economy.
• 34:36
  SPEAKER_01: What happens when you say health for all, right?
• 34:39
  SPEAKER_01: That's the mission.
• 34:40
  SPEAKER_01: It's not just health, you know, this blanket thing.
• 34:42
  SPEAKER_03: Well, that is uh precisely SDG3.
• 34:45
  SPEAKER_01: Exactly.
• 34:45
  SPEAKER_01: And then you backtrack and say, what does it mean for the economy, right?
• 34:48
  SPEAKER_01: So what does it mean again for budgeting, outcomes-based budgeting, which as you say, you've worked on?
• 34:52
  SPEAKER_01: What does it mean for the design of procurement?
• 34:54
  SPEAKER_01: What does it mean for the design of public-private partnerships, and so on?
• 34:57
  SPEAKER_01: So again, the economy is there to fuel solutions for goals.
• 35:01
  SPEAKER_01: That's just a very different logic.
• 35:03
  SPEAKER_01: And you know, one of the interesting things about China is that there's a little country, right?
• 35:07
  SPEAKER_01: China's huge.
• 35:08
  SPEAKER_01: There's a little country called Denmark.
• 35:10
  SPEAKER_01: Well, guess what?
• 35:11
  SPEAKER_01: Denmark is the number one provider of high-tech green digital services to China.
• 35:17
  SPEAKER_01: And China's spending, I I almost just said China like Trump did.
• 35:22
  SPEAKER_01: Anyway, China's spending over$2 trillion on greening every single sector and its economy.
• 35:27
  SPEAKER_01: And Denmark is servicing it.
• 35:29
  SPEAKER_01: And if you look at how that occurred, how this like hub of you know really dynamic startups that have produced these innovative green digital services, often that came from city-level policies, you know, actually having a goal for green Copenhagen, and that it wasn't just let's get a bunch of startups to just create gadgets, but to fuel solutions for something the country was demanding, right?
• 35:49
  SPEAKER_01: So that market creation, that itself is something I think we really need to learn about for industrial strategies.
• 35:54
  SPEAKER_01: So industrial strategies shouldn't be about just kind of random categories of firms like startups are good or random sectors, you know, name your top sectors, but focus on problems, get all your different sectors to innovate towards that.
• 36:06
  SPEAKER_01: And of course, if you are an SME, you're gonna get extra help, but not because you're an SME, but you're kind of picking the willing along the way, and you get help because you'll you're part of the solution.
• 36:15
  SPEAKER_03: And it's a great example, Denmark, for many, many reasons.
• 36:19
  SPEAKER_03: A good one for us to close on because it shows that moving in the green direction wasn't some heavy burden and heavy cost and each your spinach uh homework to do, that it was an assignment.
• 36:30
  SPEAKER_03: It ended up creating a very dynamic export sector, another uh even higher level of prosperity, but in an utterly sustainable way.
• 36:41
  SPEAKER_03: So there's something very good in this mix that we have been talking about.
• 36:45
  SPEAKER_03: The hour sped by very fast, Mariana.
• 36:48
  SPEAKER_03: I'm so grateful.
• 36:49
  SPEAKER_03: But the the reason is your energy, your clarity, your leadership is so crucial and timely.
• 36:56
  SPEAKER_03: And I'd like to remind everybody Mission Economy, a moonshot guide to change in capitalism, is really an important book for everybody.
• 37:06
  SPEAKER_03: So, Mariana, let me thank you very much.
• 37:08
  SPEAKER_03: Congratulate you for the wonderful book and wonderful leadership.
• 37:12
  SPEAKER_03: Thank you, thanks so much.
• 37:14
  SPEAKER_02: Imagine knowing that you're handing your children and grandchildren a country that will lead the world in producing clean energy technology, and will need to address one of the biggest threats of our time.
• 37:28
  SPEAKER_02: That's what we'll do.
• 37:29
  SPEAKER_02: Began with the heart of the plan.
• 37:32
  SPEAKER_02: It modernizes transportation infrastructure.
• 37:35
  SPEAKER_02: The American Jobs Plan will build new rail carters and transit lines, easing congestion, cutting pollution, slashing commute times, and opening up investment in communities that become connected to the cities and cities to the outskirts where a lot of jobs are these days.
• 37:53
  SPEAKER_02: The American Jobs Plan will lead to a transformational progress in our effort to tackle climate change with American jobs and American ingenuity, protect our community from billions of dollars of damage from historic superstorms, floods, wildfires, droughts, year after year, by making our infrastructure more secure and resilient, and seizing incredible opportunities for American workers and American farmers in a clean energy future.
• 38:23
  SPEAKER_02: Skilled workers like one we just heard from, building a nationwide network of 500,000 charging stations, creating good paying jobs by leading the world in the manufacturing and export of clean electric cars and trucks.
• 38:43
  SPEAKER_02: We're going to provide tax incentives and point-of-sale rebirths, re-rebates to help all American families afford clean vehicles of the future.
• 38:54
  SPEAKER_02: The federal government owns an enormous fleet of vehicles which are going to be transitioned to clean electric vehicles and hydrogen vehicles right here in the United States of America by American workers with American products.
• 39:08
  SPEAKER_02: As we saw in Texas and elsewhere, our electrical power and power grids are vulnerable to storms, catastrophic failures, and security lapses with tragic results.
• 39:20
  SPEAKER_02: My American jobs plan will put hundreds of thousands of people to work, hundreds of thousands of people to work, line workers, electricians, and laborers, laying thousands of miles of transmission line, building a modern, resilient, and fully cleaned grid, and capping hundreds of thousands of literally orphan oil and gas wells that need to be cleaned up because they're abandoned.
• 39:48
  SPEAKER_02: Paying the same exact rate that a union man or woman would get having dug that well in the first place.
• 39:56
  SPEAKER_02: We'll build, upgrade, and weatherize affordable, energy efficient housing, commercial buildings for millions of Americans.
• 40:04
  SPEAKER_02: American Jobs Plan is the biggest increase in our federal non-defense research and development spending on record.
• 40:11
  SPEAKER_02: It's going to boost America's innovative edge in markets where global leadership is up for grabs.
• 40:18
  SPEAKER_02: Markets like battery technology, biotechnology, computer chips, clean energy, the competition with China in particular.
• 40:34
  SPEAKER_03: Next month I will be speaking with Dr.
• 40:37
  SPEAKER_03: Robert Lustig about his groundbreaking book, Metabolical.
• 40:42
  SPEAKER_03: Professor Lustig explains that eight pathologies underlie chronic disease.
• 40:48
  SPEAKER_03: He documents how processed food has impacted each of these diseases over the past 50 years in a way that is ruining our health, economy, and environment.
• 40:58
  SPEAKER_03: Dr.
• 40:59
  SPEAKER_03: Lustig proposes an urgent manifesto and strategy to cure both us and the planet.
• 41:06
  SPEAKER_03: Thank you for joining in the conversation.
• 41:08
  SPEAKER_03: Please subscribe, rate, and write a review on whatever platform you listen for your podcast.
• 41:16
  SPEAKER_03: I would love to hear your thoughts as we continue to develop the series.