1 00:00:00,060 --> 00:00:06,990 Thank you very much for joining this webcast with Diane Coyle to talk about her wonderful new book. 2 00:00:06,990 --> 00:00:11,550 We've really got a fantastic opportunity to discuss her new book with Diane. 3 00:00:11,550 --> 00:00:20,640 It's a book which I think is overdue in the sense that economics really needs to think about whether it's fit for purpose and what to do about it. 4 00:00:20,640 --> 00:00:30,270 And the book is a wonderful and very easily accessible basis for thinking about these issues, so it's superbly written. 5 00:00:30,270 --> 00:00:37,530 It's, I think, will make sense to economists and economists alike, which very few things that economists write do. 6 00:00:37,530 --> 00:00:41,410 And so I encourage you to look at it. 7 00:00:41,410 --> 00:00:50,410 There's a click button underneath the images, which allows you to get a 30 percent discount through Princeton University Press. 8 00:00:50,410 --> 00:00:57,420 But it also is an opportunity to ask. Questions will leave about 20 minutes at the end for Q&A. 9 00:00:57,420 --> 00:01:09,450 So to put your questions and ask the question in the bottom right hand corner and if you have any things specific for Diane, 10 00:01:09,450 --> 00:01:16,320 I'm sure she'll get back to that. Diane is the Bennett Professor of public policy at the University of Cambridge, 11 00:01:16,320 --> 00:01:24,060 and she co-directs the Bennet Institute and heads research there under the themes of progress and productivity. 12 00:01:24,060 --> 00:01:30,480 She's written many books, and her latest was published on the 12th of October a few weeks ago. 13 00:01:30,480 --> 00:01:33,690 She's a director of the New Productivity Institute, 14 00:01:33,690 --> 00:01:42,870 a Great New Addition initiative in the UK to try and get to the bottom of why productivity has been slowing down and what to do about it. 15 00:01:42,870 --> 00:01:46,800 She's on numerous boards and trusts. 16 00:01:46,800 --> 00:01:55,980 She served as vice chair of the BBC Trust, a member of the Competition Commission, and on the Migration Migration Advisory Committee. 17 00:01:55,980 --> 00:01:58,170 Many, many different things. 18 00:01:58,170 --> 00:02:08,340 And she comes to Cambridge from having been a professor of economics at the University of Manchester and was she was awarded a CBE in 2018. 19 00:02:08,340 --> 00:02:18,510 Deans also been very involved with me in Econ dot org, and I want to thank her for her tremendous contributions as a as a trustee of that initiative. 20 00:02:18,510 --> 00:02:23,580 And no doubt we'll get on to discussing what it can add shortly. 21 00:02:23,580 --> 00:02:32,550 So let's begin by asking Diane why she wrote cogs and monsters, what the title means and what the book contains. 22 00:02:32,550 --> 00:02:36,030 Thank you for the very kind introduction and the invitation to take part in 23 00:02:36,030 --> 00:02:40,980 this conversation today and thank you to everybody who's who's listening in. 24 00:02:40,980 --> 00:02:46,500 I wrote the book because I'm a big fan of economics and it has many critics, 25 00:02:46,500 --> 00:02:51,480 and my feeling was that some of the criticisms were missing the mark and in particular, 26 00:02:51,480 --> 00:02:55,830 missing things that I do think need to change about economics today. 27 00:02:55,830 --> 00:03:02,970 And there are really three aspects of that. One is something that's been in the news much more since I started writing the book, 28 00:03:02,970 --> 00:03:07,800 and that's about the lack of diversity in economics as a profession. 29 00:03:07,800 --> 00:03:15,840 One is that about the very peculiar attitude we take towards values or ethical judgements when we're talking about economic policies. 30 00:03:15,840 --> 00:03:25,110 And then the third is my strong feeling that we need to change our benchmark way of thinking about the economy that instead of starting from 31 00:03:25,110 --> 00:03:35,940 assumptions that make markets the automatic way that you start thinking about solving economic problems and you add complexities to that version, 32 00:03:35,940 --> 00:03:44,130 we need to flip that and start with the complex world that we have now and figure out what kind of institutional 33 00:03:44,130 --> 00:03:54,840 framework and what role of first state and for markets should be involved in addressing addressing the challenges. 34 00:03:54,840 --> 00:03:58,500 So just to start with the first of those that diversity question, 35 00:03:58,500 --> 00:04:02,940 and these are all links with each other, so I'll come back to the way they linked later. 36 00:04:02,940 --> 00:04:09,120 But I think it's now pretty well understood that economics is a very male dominated subject, 37 00:04:09,120 --> 00:04:16,160 and the proportion of professors of economics or female is something like 15 percent. 38 00:04:16,160 --> 00:04:22,080 And it's somewhat higher at less elevated ranks of the academic profession. 39 00:04:22,080 --> 00:04:29,010 It's quite a bit higher in the government economic service, but also low in in areas like the city. 40 00:04:29,010 --> 00:04:35,250 And so there's something about economics that stops females applying to study it and staying in the profession. 41 00:04:35,250 --> 00:04:37,860 The pipeline gets narrower all the time. 42 00:04:37,860 --> 00:04:46,170 The figures are less good for people of colour and for people who come from low income or non-traditional academic backgrounds. 43 00:04:46,170 --> 00:04:50,310 But obviously they're pretty poor as well. 44 00:04:50,310 --> 00:04:59,720 And this makes economics like subjects such as computer science or mathematics or parts of engineering in it's very narrow. 45 00:04:59,720 --> 00:05:07,760 Social base as a as a discipline, and that's a problem because we are social science, we're meant to be studying society. 46 00:05:07,760 --> 00:05:11,090 And with a narrow social base, they're going to be questions that we miss. 47 00:05:11,090 --> 00:05:15,500 There's going to be data that we don't gather issues that we don't understand, 48 00:05:15,500 --> 00:05:23,000 and it should be a concern to the profession that so many people are selecting out of being economists. 49 00:05:23,000 --> 00:05:32,360 It has become much more of a concern. And so the American Economic Association, the Voodoo Economics Society, have initiatives to broaden that base, 50 00:05:32,360 --> 00:05:40,430 go into schools, sell the joys of studying economics and what's an important subject, all of which I completely applaud. 51 00:05:40,430 --> 00:05:48,950 But I would like economist also ask Is there something about the way we do economics that is putting off lots of people? 52 00:05:48,950 --> 00:05:53,540 And part of that is about the culture in some departments. 53 00:05:53,540 --> 00:05:59,960 It's quite aggressive and that has been well rehearsed in some research papers and in the media. 54 00:05:59,960 --> 00:06:06,800 And so that's something that can be changed relatively quickly if people want it to change. 55 00:06:06,800 --> 00:06:13,850 I don't think it has changed much yet. But then there are issues about what we think is important in economics that 56 00:06:13,850 --> 00:06:19,850 also affect people selecting out of the profession that I'll come back to. 57 00:06:19,850 --> 00:06:22,340 So that's so that's one issue. 58 00:06:22,340 --> 00:06:30,170 If we've got less than half the population being economists, we've got less studying less than half the questions that we ought to be. 59 00:06:30,170 --> 00:06:39,260 The second issue I pick on and pick up on in the book is the way that we insist often that we can separate positive and normative questions. 60 00:06:39,260 --> 00:06:46,910 We can separate objective questions of fact and evidence from questions of values and ethical choices. 61 00:06:46,910 --> 00:06:51,140 And you see that in the similes that economists use to describe themselves. 62 00:06:51,140 --> 00:06:56,930 Keynes said we should be humble like dentists. People often say economics should be like engineering. 63 00:06:56,930 --> 00:07:03,170 Esther Duflo, in one of her recent keynote speeches, said that we should consider ourselves to be plumbers. 64 00:07:03,170 --> 00:07:09,920 So all these are very humdrum, practical professions. And there's an objective situation. 65 00:07:09,920 --> 00:07:15,980 You figure out what it is. You can look at the evidence and find the best thing to do. 66 00:07:15,980 --> 00:07:22,760 And I think this is really misleading. It dates back to Lionel Robbins essay on the significance of economic science, 67 00:07:22,760 --> 00:07:30,380 written at a time when logical positivism was the philosophical fashion and this insistence that only 68 00:07:30,380 --> 00:07:34,710 objective questions to which you could apply evidence allowed you to make meaningful statements. 69 00:07:34,710 --> 00:07:42,290 And this was carried over into economics and led to this protocol that we separate what is and what, 70 00:07:42,290 --> 00:07:46,490 what is and what ought to be, and we can address those separately. 71 00:07:46,490 --> 00:07:57,050 Milton Friedman emphasised this, and Keynes had taken the same position, so it's really deeply embedded in how we think about what economists do. 72 00:07:57,050 --> 00:07:59,120 And there's obviously something good about that. 73 00:07:59,120 --> 00:08:05,960 We we want to be impartial, we want to be objective and we want to use evidence as effectively as possible. 74 00:08:05,960 --> 00:08:15,470 But it means that we actually ignore the fact that quite a lot of the way we think about economic policy has values baked into it. 75 00:08:15,470 --> 00:08:22,730 We have this concept of efficiency, which rests on assumptions about people having fixed preferences, 76 00:08:22,730 --> 00:08:28,870 maximising the utility subject to budget constraint and a theory of improvement. 77 00:08:28,870 --> 00:08:32,660 Operator improvement is called that says things are getting better. 78 00:08:32,660 --> 00:08:35,990 If you can make one person better off and nobody else worse off. 79 00:08:35,990 --> 00:08:42,560 And so we rule out being able to comment on distributional questions and using the word 80 00:08:42,560 --> 00:08:47,720 efficiency is very confusing because it makes people think that it's like engineering efficiency, 81 00:08:47,720 --> 00:08:51,770 that it is a matter of fact. And actually it's not. It's an ethical concept, 82 00:08:51,770 --> 00:08:57,290 and we're hiding that in the way that we talk about something like cost-benefit analysis or or competition 83 00:08:57,290 --> 00:09:04,250 policy or any of those areas of policy where economic efficiency becomes one of the criteria. 84 00:09:04,250 --> 00:09:08,570 And the language confuses even the economists ourselves. 85 00:09:08,570 --> 00:09:16,520 I think we forget that actually, we are making value judgements all the time when we are talking about in public policy domains, 86 00:09:16,520 --> 00:09:21,170 what is it that's going to make things better? What are better economic outcomes? 87 00:09:21,170 --> 00:09:27,440 So I want us to combine the attempt at impartiality with a recognition that actually 88 00:09:27,440 --> 00:09:33,470 we're part of society and the way we approach evaluating challenges and policies, 89 00:09:33,470 --> 00:09:38,930 has ethics and bedded in it. And we need to talk about that more explicitly. 90 00:09:38,930 --> 00:09:43,790 The final area that I talk about in the book is what's the basic benchmark? 91 00:09:43,790 --> 00:09:53,510 How do we start thinking about economic policy challenges? And we have a set of theorems that tell us that if you make certain assumptions, 92 00:09:53,510 --> 00:09:59,670 constant returns to scale competitive markets, perfect information lack. 93 00:09:59,670 --> 00:10:08,310 Of externalities, goods that are rival, that is that if one person uses them, the other person can't, 94 00:10:08,310 --> 00:10:16,200 then you can show that market outcomes give you the best economic sense, the best possible outcomes. 95 00:10:16,200 --> 00:10:21,060 Now, of course, we know the world isn't like that. So we start with this benchmark and we add complexities. 96 00:10:21,060 --> 00:10:28,050 We say this assumption doesn't hold and therefore we need to address this particular market failure. 97 00:10:28,050 --> 00:10:34,710 And we've got this socialised into us from our undergraduate days and through graduate study that this is how we start to think about things. 98 00:10:34,710 --> 00:10:39,450 But the economy is nothing like where we start with the benchmark. 99 00:10:39,450 --> 00:10:47,670 Increasing returns to scale are everywhere. They always were in the old material economy, but even more so in the new digital economy. 100 00:10:47,670 --> 00:10:53,640 Asymmetries of information people some people know much more than others about a given context. 101 00:10:53,640 --> 00:11:00,000 Preferences shift all the time, or there'd be no advertising trying to change our preferences. 102 00:11:00,000 --> 00:11:06,000 There are pervasive externalities, environmental externalities, all kinds of other externalities. 103 00:11:06,000 --> 00:11:13,500 So I would like to start with a benchmark that says, here is the information environment for this situation. 104 00:11:13,500 --> 00:11:17,970 This problem that we're considering here are the power relations. 105 00:11:17,970 --> 00:11:22,290 These are the institute, the economic institutions that are involved. 106 00:11:22,290 --> 00:11:27,090 This is the structure of production and the economies of scale that we have here. 107 00:11:27,090 --> 00:11:28,830 Given this context, 108 00:11:28,830 --> 00:11:36,930 what kind of institutional framework would deliver better outcomes for people having thought seriously about what better outcomes mean? 109 00:11:36,930 --> 00:11:47,220 So I want us to flip that benchmark and think automatically about dynamics and social influences on each other and information sets and so on. 110 00:11:47,220 --> 00:11:49,260 So let's flip that benchmark. 111 00:11:49,260 --> 00:11:55,980 This means changing methods as well, because you can't solve those kinds of problems analytically the way that we're used to doing the economics. 112 00:11:55,980 --> 00:11:59,940 So we have to use, we have to introduce a much wider range of methods. 113 00:11:59,940 --> 00:12:09,720 But it also opens up to us a much wider range of interesting questions, from climate change to inequality to how to tackle power in digital markets. 114 00:12:09,720 --> 00:12:18,480 And if we do that, then to go back to where I started, then we have a version of economics that looks much more interesting. 115 00:12:18,480 --> 00:12:22,290 It's much more about the big challenges that we face in society today. 116 00:12:22,290 --> 00:12:29,430 It speaks to people's experiences, and I think it would be much more attractive to have a wider range of methods, 117 00:12:29,430 --> 00:12:41,400 a range of big questions that we can ask and a much more value rich and informed conversation about the economy as it is and not this 118 00:12:41,400 --> 00:12:50,730 sort of strange textbook economy and narrow range of methods that we so quickly get socialised into when we are trained as economists. 119 00:12:50,730 --> 00:12:58,510 So that's a quick nutshell summary in the book, and I'm sure you've got lots of things you want to talk about. 120 00:12:58,510 --> 00:13:00,790 Thank you so much. 121 00:13:00,790 --> 00:13:07,960 Yeah, there's so much in the book I do want to talk about, but let's just start about how we got to where we are with the economics. 122 00:13:07,960 --> 00:13:16,810 You know, it never used to be like that when you read what we regard as the sort of fathers or grandfathers of economics, Smith and Bill Marx, 123 00:13:16,810 --> 00:13:26,440 Ricardo, particularly male, and they were totally involved in the whole breadth of economics and the ethical basis of foundations. 124 00:13:26,440 --> 00:13:37,570 And yet we find ourselves today having lost all of that and basically having this engineering ambition or physics envy, as some might think of it. 125 00:13:37,570 --> 00:13:44,650 Some some have argued to me that this is basically power, that that it's a deliberate attempt by small groups of people to narrow it, 126 00:13:44,650 --> 00:13:49,060 to not talk about inequality, to take out the distributional questions. 127 00:13:49,060 --> 00:13:54,790 And there are some that almost talk about a conspiracy of the people that have grabbed hold of the 128 00:13:54,790 --> 00:14:04,030 key journals and creative economics as it is funded by by powerful lobbyists in the U.S. who wanted, 129 00:14:04,030 --> 00:14:14,560 you know, who want to basically pursue the Reagan revolution is a how do we explain this economics having got so lost and going 130 00:14:14,560 --> 00:14:25,830 down this this warren of a narrower and narrower and more and more male dominated more and more engineering approach? 131 00:14:25,830 --> 00:14:28,020 It seems to me that it's a mixture of things, 132 00:14:28,020 --> 00:14:39,780 and there was certainly some intentionality on the part of free market economists to capture policy and the Pellerin Society, 133 00:14:39,780 --> 00:14:49,440 the Chicago economics department, I think, had a clear ideological or political agenda in the kind of economics that they did. 134 00:14:49,440 --> 00:14:55,890 And when I was a graduate student in the early 1980s, that was a very dominant in the real business cycle models. 135 00:14:55,890 --> 00:15:03,210 The assumptions about rational expectations had become quite quite dominant, and we were all very excited about it. 136 00:15:03,210 --> 00:15:08,910 But I think that that speaks to the other reason that the profession became this way, 137 00:15:08,910 --> 00:15:18,150 and that's actually that it's a self-fulfilling set of techniques that make that quite exciting if you can muster 138 00:15:18,150 --> 00:15:24,510 them and do give some really interesting insights and they've been good things as well as bad things about that. 139 00:15:24,510 --> 00:15:33,840 If you think about the recent Nobel prise and the empirical micro applied micro empirical approach, is it that recognised? 140 00:15:33,840 --> 00:15:41,580 That's been a really useful set of developments, I think, to have a logic of thinking about the microeconomic context. 141 00:15:41,580 --> 00:15:47,490 Lots of areas of social policy and developing the data and the techniques to understand that better 142 00:15:47,490 --> 00:15:54,420 has been the positive side of the trends that you know that you're alluding to in your question. 143 00:15:54,420 --> 00:16:00,390 But then I think it becomes a question of the sociology of economics and the reward structures, 144 00:16:00,390 --> 00:16:08,460 the fact that to be appointed and promoted into a good department, in a good department, you have to publish in these quite narrow range of journals. 145 00:16:08,460 --> 00:16:14,970 To succeed there, you've got to do quite a narrow range of techniques and addressing a certain kind of question. 146 00:16:14,970 --> 00:16:18,960 And the environment is a great example there because there are loads of economists 147 00:16:18,960 --> 00:16:27,240 doing fantastic work in environmental economics and ecological economics, but they haven't much been published in those top five mainstream journals. 148 00:16:27,240 --> 00:16:32,250 They've they've been published in field journals instead. And yet that top five is the gateway. 149 00:16:32,250 --> 00:16:39,360 And so there, I think it's not conspiracy. It's just the way this what some people call a priesthood of the profession has has developed 150 00:16:39,360 --> 00:16:45,570 and reinforces itself and cements its position that makes it quite hard to overcome. 151 00:16:45,570 --> 00:16:46,980 Yeah, that's going to be my next question. 152 00:16:46,980 --> 00:16:58,830 And, you know, I think you and and I and so many others that we work with on ordained economics departments for this reason and as our core, 153 00:16:58,830 --> 00:17:05,920 as I call homes and and and these narrow journals still do control. 154 00:17:05,920 --> 00:17:10,410 So so we are where we are and we don't like it. 155 00:17:10,410 --> 00:17:21,810 We think that economics can be and should be much more. Where do you see the sort of key signs of what can be done? 156 00:17:21,810 --> 00:17:24,630 In your book, you were diagnosed as the problem, 157 00:17:24,630 --> 00:17:34,780 but where do you see progress being made and where do you think the Israeli prospects of transforming? 158 00:17:34,780 --> 00:17:45,190 Well, in your introduction and you mentioned the Core Economy programme, and that's getting on for 10 years old and its origins, 159 00:17:45,190 --> 00:17:51,730 huge team of economists internationally developing this fantastic resource because 160 00:17:51,730 --> 00:17:57,790 we all felt that what people are taught as undergraduates matters a great deal. 161 00:17:57,790 --> 00:18:03,730 And you forget really, once you've been in economics for a long time, how weird it seems when you first start. 162 00:18:03,730 --> 00:18:09,340 What? Why are these strange utility cuts or what is the production function is very odd way of looking at the world. 163 00:18:09,340 --> 00:18:15,280 And then once you continue your studies, you get used to it very quickly and socialised into it. 164 00:18:15,280 --> 00:18:24,970 So the idea, of course, is as a first year programme that takes real problems, thinks about social structures and economic history, 165 00:18:24,970 --> 00:18:31,330 history of thought and empirical techniques, and puts those at the centre right from the start. 166 00:18:31,330 --> 00:18:35,170 And that's because a lot of people will only do undergraduate economics and that. 167 00:18:35,170 --> 00:18:41,650 But then we'll go onto very influential positions in business, in the city, in public policy. 168 00:18:41,650 --> 00:18:49,600 And we would we wanted the comic, the economics that comes to their minds to be a different version. 169 00:18:49,600 --> 00:18:56,110 So that's one of the answers. Obviously, it isn't. It isn't sufficient. 170 00:18:56,110 --> 00:19:02,110 There's a broader question about how universities overcome disciplinary silos. 171 00:19:02,110 --> 00:19:08,920 And I think many universities now recognising the big challenges such as climate change in the news so much 172 00:19:08,920 --> 00:19:16,810 now and recognise that they need interdisciplinary approaches so the structures are starting to shift. 173 00:19:16,810 --> 00:19:23,230 And I think that would actually help economics get out of its trap because economists are human. 174 00:19:23,230 --> 00:19:25,660 They're all interested in these really important questions. 175 00:19:25,660 --> 00:19:32,800 I think many of our colleagues in street economics departments are somewhat frustrated with the straitjacket they find themselves in, 176 00:19:32,800 --> 00:19:43,420 particularly younger people. And and this will give them a way of navigating around that and starting to address some of these interesting questions. 177 00:19:43,420 --> 00:19:49,840 Having said that, I don't think as a quick there's a quick solution and there's the old line about I think that there's almost certainly Keynes 178 00:19:49,840 --> 00:20:00,430 saying that it takes a succession of funerals to change the nature of discipline who was considered for those that are interested. 179 00:20:00,430 --> 00:20:05,740 Chloe Kong's website is C.A.R.E. Dash Econ dot org. 180 00:20:05,740 --> 00:20:11,140 Really worth looking at? Free online? Layers and layers and layers of interesting economic analysis. 181 00:20:11,140 --> 00:20:15,820 And also as a public policy. Dimensions fit and it's in multiple languages. 182 00:20:15,820 --> 00:20:27,040 So massive progress in making economics accessible and focussing on issues like climate change or inequality that are of of concern. 183 00:20:27,040 --> 00:20:33,320 So. It is the tool kit that economists. 184 00:20:33,320 --> 00:20:37,760 Need to have in order to be able to get into economics departments and so on. 185 00:20:37,760 --> 00:20:47,900 Part of the problem so you really increasingly have to be very good at maths in order to be an economist in the economics department. 186 00:20:47,900 --> 00:20:55,970 Is that part of what's limiting the gender diversity, but also the sorts of people that apply him and become successful as economists? 187 00:20:55,970 --> 00:20:58,370 Because people in the humanities, for example, 188 00:20:58,370 --> 00:21:09,530 find it very difficult to to get into economics is is do you think it's become over mathematical, over formulas? 189 00:21:09,530 --> 00:21:13,550 I think that's more of a problem in graduate degrees, I have to say. 190 00:21:13,550 --> 00:21:20,100 And girls that do at least as well at mass, at school level, as well as boys do. 191 00:21:20,100 --> 00:21:28,970 So that's not a barrier and the kind of algebra and calculus and the statistics that you do at undergraduate level. 192 00:21:28,970 --> 00:21:37,970 And I don't think that's a huge barrier, but it's when you get into graduate school and find that you have to understand some topology, 193 00:21:37,970 --> 00:21:42,350 which has proved an equally general equilibrium theorems that don't actually mean anything. 194 00:21:42,350 --> 00:21:48,710 It's a neatness exercise and that kind of mathematics, I think, is over the top. 195 00:21:48,710 --> 00:21:54,230 Paul Romer has this word for it. He calls it messiness, which is maths that you don't need. 196 00:21:54,230 --> 00:22:02,480 It's sort of decorative. It's macho maths proving that you can you can do this stuff, but actually it doesn't illuminate the economic problems at all. 197 00:22:02,480 --> 00:22:09,500 But I do think a wider range of techniques ought to be recognised and as a bit of movement on big data, 198 00:22:09,500 --> 00:22:16,910 a number of economists are starting to look at a bodies of language as a source of data. 199 00:22:16,910 --> 00:22:24,590 So pattern databases, for instance, or the text of newspapers to understand what's happening over business cycles, 200 00:22:24,590 --> 00:22:30,410 and that's that's very appealing to economists who've been trained in this mathematical way. 201 00:22:30,410 --> 00:22:36,020 I'm now, as you said in a politics department and have learnt much more about qualitative methods. 202 00:22:36,020 --> 00:22:40,760 And it was a light bulb moment for me to realise that actually, that's data as well. 203 00:22:40,760 --> 00:22:42,770 It's just a different kind of data. 204 00:22:42,770 --> 00:22:50,090 And you have megabytes of data when you have transcripts of interviews and you can analyse that in a very systematic way. 205 00:22:50,090 --> 00:22:54,590 And I think we ought to be thinking about marrying the qualitative and quantitative much more, 206 00:22:54,590 --> 00:23:04,310 particularly for subjects like understanding productivity, where the data, the quantitative data you can get is quite limited. 207 00:23:04,310 --> 00:23:13,880 And or what you can deduce from that is quite limited, but you can learn more by marrying the econometrics that you can do there with case studies, 208 00:23:13,880 --> 00:23:21,350 going into businesses and talking to them and doing a tailor made surveys or transcripts of interviews, 209 00:23:21,350 --> 00:23:27,950 all of that would give extra insight to try to understand the causal links determining productivity. 210 00:23:27,950 --> 00:23:36,230 The economists of a couple of weeks ago had a front page, at least in the UK, saying Instant economics and talk, 211 00:23:36,230 --> 00:23:43,640 and then this feature article on what it calls the real time revolution in economics. 212 00:23:43,640 --> 00:23:46,550 I mean, my own sense that this was, well, that's very exciting. 213 00:23:46,550 --> 00:23:52,910 It's slightly overblown to think of this as a revolution that's a substitute for economic insights, 214 00:23:52,910 --> 00:24:02,700 but I'd be fascinated what you what you make of this? It worried me a bit, to be honest, the idea that. 215 00:24:02,700 --> 00:24:06,960 Somehow, you can understand what is going on in the economy instantly through having, 216 00:24:06,960 --> 00:24:13,730 I don't know, some kind of fantastic dashboard of real time indicators. I found it a bit reductive. 217 00:24:13,730 --> 00:24:19,730 And would worry that people would interpret the data that you could happen to get 218 00:24:19,730 --> 00:24:24,890 in that Real-Time way as a complete picture of what's going on in the economy, 219 00:24:24,890 --> 00:24:27,980 because some of the data that's really important is slow. 220 00:24:27,980 --> 00:24:34,400 You can't get real time data on the incomes of people who are living in poverty or on homelessness, 221 00:24:34,400 --> 00:24:38,390 which are big economic problems that we want to be able to tackle. 222 00:24:38,390 --> 00:24:45,440 So it is very exciting and there will obviously be a lot of insights for people looking at the business cycle, 223 00:24:45,440 --> 00:24:56,180 macro issues like interest rates from being able to access instantaneously transactions, data or satellite data tracking ships or whatever it is. 224 00:24:56,180 --> 00:25:01,340 But as a whole, that that's just quite a narrow part of what we want to understand as economists. 225 00:25:01,340 --> 00:25:07,910 And I would be a bit worried if all of the energy went into real time data without thinking about how 226 00:25:07,910 --> 00:25:14,390 does the data match up to the full picture that we want to understand is just bits of the jigsaw. 227 00:25:14,390 --> 00:25:18,200 Mm hmm. No, I agree with you. You're very effectively articulated. 228 00:25:18,200 --> 00:25:24,950 What I hadn't in my mind but felt uneasy about, and it's a study that's just garbage in garbage out. 229 00:25:24,950 --> 00:25:28,640 Masses of data don't give you insight. 230 00:25:28,640 --> 00:25:34,880 Although they do and and the article cites that they might help you to make better decisions on, say, when to raise interest rates or something. 231 00:25:34,880 --> 00:25:41,600 But that's because you have a model behind it already that that's a factor you you focus 232 00:25:41,600 --> 00:25:47,240 very effectively in the book on the digital economy and how that has new demands of us, 233 00:25:47,240 --> 00:25:56,600 but also raises very clearly the tensions between individual and society choices and needs. 234 00:25:56,600 --> 00:26:04,860 Could you could you say something about that? Yes, it's 25 years next year since I wrote my first book about the digital economy. 235 00:26:04,860 --> 00:26:10,100 So I have done a lot of thinking and research on this. 236 00:26:10,100 --> 00:26:22,040 And I mean, to give an example of the the kind of challenges it brings and thinking about individuals versus the collective, think about data. 237 00:26:22,040 --> 00:26:33,920 And we have a lot of public debate now about the privacy issues relating to data and a focus on on on personal data, 238 00:26:33,920 --> 00:26:37,880 which is being accumulated in large quantities by big tech companies. 239 00:26:37,880 --> 00:26:46,730 That gives them a market power advantage because they can use the data to improve the services and to raise more revenues, 240 00:26:46,730 --> 00:26:51,200 and that enables them to get more customers and get more data. 241 00:26:51,200 --> 00:26:58,130 And so they've got a positive feedback loop than they can entrench and increase their market position that way. 242 00:26:58,130 --> 00:27:06,590 And obviously part of the transaction, and I think people are probably pretty aware of this now is that we're giving over data in return. 243 00:27:06,590 --> 00:27:11,330 We're getting fantastic free services that we use a lot and value very highly. 244 00:27:11,330 --> 00:27:17,090 There's also the downside to that, which is concerns about loss of privacy. 245 00:27:17,090 --> 00:27:25,370 And there's another downside that's less often talked about, which is that the data that's accumulated and sits in corporate silos and can't 246 00:27:25,370 --> 00:27:31,070 be used by anybody else data is what the economic drag is and non-res look good. 247 00:27:31,070 --> 00:27:36,920 It's not used up and it's not depleted. If different people use the same data, 248 00:27:36,920 --> 00:27:46,160 it's a public good and we could get public benefit if other people were able to access some of the data that's now sitting in the corporate silos. 249 00:27:46,160 --> 00:27:55,550 Because data really isn't a piece of property like a book that you would buy and you could sell it to somebody else and hand it over. 250 00:27:55,550 --> 00:28:06,170 It's a crystallisation of part of relationship, and the valuable information that you get usually comes from comparison of different bits of data, 251 00:28:06,170 --> 00:28:10,820 even something quite personal, like my temperature or my heart rate. 252 00:28:10,820 --> 00:28:17,180 The information content of that comes from knowing what the population of what you saw or what the safe bounce of on that. 253 00:28:17,180 --> 00:28:24,440 And so in terms of the policy debate, I worry a bit that we're not teasing out the full complexity. 254 00:28:24,440 --> 00:28:30,530 We're focussing on one trade off, but there are other trade offs and we want to achieve different kinds of targets. 255 00:28:30,530 --> 00:28:35,990 We want data privacy and security, but we also want to get the social benefit. 256 00:28:35,990 --> 00:28:42,740 We want that to be shared widely. We want to address market power by big tech companies and create the conditions for market entry. 257 00:28:42,740 --> 00:28:51,080 So this is really quite a complex area and yet with a very generalised debate and quite a simplistic debate about it. 258 00:28:51,080 --> 00:28:58,580 So this is an area that I'm working on very actively at the moment trying to understand even could we put a value? 259 00:28:58,580 --> 00:29:04,400 Can we get a sense the scale of the potential benefits from making data more public? 260 00:29:04,400 --> 00:29:13,010 This tension between individual and societal interests associated with decisions and how 261 00:29:13,010 --> 00:29:21,590 economics doesn't externalise the spill-overs of these decisions is utopian in that context. 262 00:29:21,590 --> 00:29:32,270 But equally, I presume one can think about it in the context of energy and climate change or taking antibiotics and antibiotic resistance, 263 00:29:32,270 --> 00:29:40,130 or even whether we should wear masks or not. How we how we think about individual decisions and collective outcomes. 264 00:29:40,130 --> 00:29:44,510 Absolutely. And economics has logical individualism. 265 00:29:44,510 --> 00:29:50,030 We start with the individual and their choices, and then we add on the externalities. 266 00:29:50,030 --> 00:29:57,950 But actually, the externalities are cool because we live in societies and everything we do pretty much affects other people. 267 00:29:57,950 --> 00:30:05,210 So that's another example of wanting to flip our starting point and start with the social influence. 268 00:30:05,210 --> 00:30:09,320 And is that I mean, that flip is that is a revolution in economics, right? 269 00:30:09,320 --> 00:30:15,730 I mean, it would it would require a different framework and logical basis. 270 00:30:15,730 --> 00:30:24,070 It worked. It worked and and different kinds of techniques as well. And I think we're quite far from that. 271 00:30:24,070 --> 00:30:30,400 When I when I took, I've been talking about the book to colleagues who are economists, and very often they'll say to me, Oh, yes, 272 00:30:30,400 --> 00:30:37,120 but there's this fantastic paper that so-and-so did in econometrics addresses exactly this question, 273 00:30:37,120 --> 00:30:43,300 which sort of misses the point about changing the benchmark completely and the revolution that would involve. 274 00:30:43,300 --> 00:30:51,040 And I think, I mean, within economics is now such a vast field, and there's so many brilliant economists. 275 00:30:51,040 --> 00:30:55,180 Is there a group or a sub field that you feel comes closest to? 276 00:30:55,180 --> 00:31:01,150 Where you'd want is behavioural economics, for example, or environmental economics? 277 00:31:01,150 --> 00:31:07,450 Do you feel closer to where you would want the heart of economics to be? 278 00:31:07,450 --> 00:31:13,360 That's a good question. I'm not sure it's sub fields so much as parts of sub fields. 279 00:31:13,360 --> 00:31:20,440 I might add development economics to you, where scholars are more likely to think about issues of culture or religion, 280 00:31:20,440 --> 00:31:25,540 for example, which are obviously very important. 281 00:31:25,540 --> 00:31:37,240 But behavioural economics itself is a great example of some behavioural economists who are thinking very deeply about questions of ethics. 282 00:31:37,240 --> 00:31:45,490 And what does wellbeing really mean and what are the ethical implications of nudge policies, for instance, 283 00:31:45,490 --> 00:31:53,650 or the paternalism that involves and others who are actually treating it as like conventional economics, 284 00:31:53,650 --> 00:32:02,990 but with a slightly different set of assumptions? And so even within behavioural economics, I see that divergence in approaches. 285 00:32:02,990 --> 00:32:08,150 Would it be just economics, something that that sort of takes externalities pretty centrally? 286 00:32:08,150 --> 00:32:14,540 That's that's very true. Yes. But what's what's your answer to you up to that question? 287 00:32:14,540 --> 00:32:22,520 Well, yeah, I I think that it would require a very radical doing that one could do it pricing, for example, 288 00:32:22,520 --> 00:32:30,020 if you price carbon, that's what the Stern Stiglitz Commission says, which is something like $70 a tonne. 289 00:32:30,020 --> 00:32:36,950 Are you then somehow capturing social needs and create just load that on as a normal tax and an economics framework? 290 00:32:36,950 --> 00:32:42,110 Was this something more radical you need to do? To think about this. 291 00:32:42,110 --> 00:32:51,500 And that's sort of what what I what I can't get my head around because we don't know what the radical alternative is. 292 00:32:51,500 --> 00:32:59,600 So it sort of comes down to pricing externalities and valuing them properly. 293 00:32:59,600 --> 00:33:08,870 So I agree with that. But I would also think about Martin Wiseman's classic paper on prices versus quantities and sometimes actually 294 00:33:08,870 --> 00:33:17,120 quantity quantity regulation is a more effective tool than and of changing prices through attack through attacks. 295 00:33:17,120 --> 00:33:22,730 So there are some conventional bits of economics you could bring to bear and thinking about it. 296 00:33:22,730 --> 00:33:32,450 And I also think and and this is something which many economists feel uncomfortable with, that one needs a deep ethical basis. 297 00:33:32,450 --> 00:33:38,580 So, for example, you could say a wage below a certain amount is just not acceptable. 298 00:33:38,580 --> 00:33:45,750 You know, the discussions on living wages, for example, or regulation becomes a much bigger part of that. 299 00:33:45,750 --> 00:33:52,500 But you just won't allow it in society where you won't allow a certain level of pollution or you insist that everyone wears a face mask. 300 00:33:52,500 --> 00:34:00,120 I agree with that. And we've presumed since the Thatcher revolution that economic efficiency was the main value. 301 00:34:00,120 --> 00:34:02,370 But when you recognise that that's an ethical value, 302 00:34:02,370 --> 00:34:09,120 then you can have a debate about whether whether it is the top priority or whether other things should be top priority. 303 00:34:09,120 --> 00:34:15,730 Yeah, let's do this a lot more. I could come back to it with maybe one final. 304 00:34:15,730 --> 00:34:19,770 So your your titles of your chapters are so evocative. 305 00:34:19,770 --> 00:34:26,610 I encourage people who are writing books to look at some dance titles because most of the time is a body, 306 00:34:26,610 --> 00:34:35,460 but not as the one core policy in wonderland. I love that and I love the one rats and humans. 307 00:34:35,460 --> 00:34:40,860 So we've talked about rats and humans and the rationality and not the rats. 308 00:34:40,860 --> 00:34:47,630 But what? Why is the chapter called Policy in Wonderland? I can't remember. 309 00:34:47,630 --> 00:34:56,490 You talk about good policy not being sort of relevant to society and the mismatch between what economists are doing. 310 00:34:56,490 --> 00:35:00,990 It's kind of like and what's needed by policy makers. It's come back to my mind. 311 00:35:00,990 --> 00:35:10,800 So the image is the croquet game and Alice in Wonderland, where the mallet turns out to be a flamingo and the ball turns out to be a hedgehog. 312 00:35:10,800 --> 00:35:20,850 And so it's a reference to the frequent failure in policy economics to recognise that you're an operating as part of a system. 313 00:35:20,850 --> 00:35:28,620 You don't stand outside the system and your instruments are not given. There will be behavioural reactions to the changes that you make. 314 00:35:28,620 --> 00:35:33,060 And it sounds a really obvious point, and sometimes it's recognised in devising policies, 315 00:35:33,060 --> 00:35:41,790 but surprisingly often not including in behavioural policies and nudges or interventions that become popular, 316 00:35:41,790 --> 00:35:45,960 like removing the distinction between pavements and roads. 317 00:35:45,960 --> 00:35:53,550 They have an effect on people's behaviour for a while and then if what you just and you revert back to the original situation. 318 00:35:53,550 --> 00:35:58,170 So that's that's the source of that title. Yeah, good. 319 00:35:58,170 --> 00:36:04,380 Let's see what we have in the questions. So. 320 00:36:04,380 --> 00:36:08,880 How does ecological economics fit into the core econ approach? 321 00:36:08,880 --> 00:36:11,430 All right, well, that's the question about core, 322 00:36:11,430 --> 00:36:19,260 but won't you take it as a broader question how you weight where you see ecological economics fitting in? 323 00:36:19,260 --> 00:36:27,270 I suppose this is a question about where do we stand, 324 00:36:27,270 --> 00:36:42,600 where should economies stand on economic growth and the and whether that is just the extent to which we recognise intrinsic value in the environment? 325 00:36:42,600 --> 00:36:46,830 And my view on this has always been that, of course, 326 00:36:46,830 --> 00:36:57,350 there's intrinsic value and we need to do a much better job of recognising typical tipping points in ecosystems or water systems and so on. 327 00:36:57,350 --> 00:37:06,210 And but having said that, if you don't apply the lens of economics to nature, you are putting an implicit value of zero there. 328 00:37:06,210 --> 00:37:11,460 And so I would always put a value or defend putting values on ecosystem services, 329 00:37:11,460 --> 00:37:17,040 for instance, bringing to bear the tools of economics on the environment. 330 00:37:17,040 --> 00:37:21,040 And when it comes to growth. 331 00:37:21,040 --> 00:37:29,550 There's a moral aspect to this, which is and the need for at a minimum, the need for honesty that if there's going to be zero growth, 332 00:37:29,550 --> 00:37:34,860 that's a request to many people to reduce their standard of living from where it is now, 333 00:37:34,860 --> 00:37:39,600 but also a misunderstanding about how growth has been changing. 334 00:37:39,600 --> 00:37:46,860 Because the material footprint of GDP growth and even the energy footprint has been declining in rich countries, 335 00:37:46,860 --> 00:37:52,020 including when you take account of imports, it's not just that imports. 336 00:37:52,020 --> 00:38:00,480 And that's because the economy is increasingly intangible. The value that we assign increasingly goes to intangible things. 337 00:38:00,480 --> 00:38:08,550 And if you take the example of vaccines, fantastic Oxford triumph and much of that was about ideas, 338 00:38:08,550 --> 00:38:14,940 not materials, and much of the work involved people sending emails to each other with genetic code involved. 339 00:38:14,940 --> 00:38:20,710 So if we're going to have zero growth, that means taking something away so that we can have vaccines. 340 00:38:20,710 --> 00:38:26,190 So how does how does zero growth accommodate innovation in the changing character, the economy? 341 00:38:26,190 --> 00:38:34,770 But it's a really important debate, and I would love to see more conversations between, you know, 342 00:38:34,770 --> 00:38:38,640 ecological economists and the more conventional if you like environmental economists 343 00:38:38,640 --> 00:38:44,550 because I think we stand a much better chance of getting the action we need, 344 00:38:44,550 --> 00:38:51,570 both by individuals and businesses and by governments if we understand those different perspectives, much better. 345 00:38:51,570 --> 00:38:56,610 Mm hmm. Absolutely. I mean, as someone who's worked a lot of developments, 346 00:38:56,610 --> 00:39:05,010 I get very nervous with these zero growth discussions because you basically condemning people to permanent lives, 347 00:39:05,010 --> 00:39:08,580 no matter what redistribution you do, 348 00:39:08,580 --> 00:39:18,060 per capita incomes would remain way below anything that we would ever regard as acceptable in many countries unless you have growth. 349 00:39:18,060 --> 00:39:23,460 And I also struggle to understand how you would transition to a zero carbon economy without new investment, 350 00:39:23,460 --> 00:39:32,460 which is very sizeable and purchase of new electric vehicles, for example, and electrical grids, et cetera. 351 00:39:32,460 --> 00:39:40,760 So I must say I've never. As much as I'm committed, I'm sure I'd like you to. 352 00:39:40,760 --> 00:39:50,510 To trying to reduce our ecological footprint, it doesn't to me, it implies zero growth, it might imply the opposite. 353 00:39:50,510 --> 00:39:59,930 I agree entirely, but I think it's also important to recognise and honour the emotional attachment to reducing the damage that we're doing to nature. 354 00:39:59,930 --> 00:40:10,400 Yeah. And you know, a question that has come up, which is related to this is as an ecological science student, 355 00:40:10,400 --> 00:40:15,110 I'm aware that discipline incorporated several economic models and methods to its core, 356 00:40:15,110 --> 00:40:23,300 and any such borrowing and models of methods happened before core economics and ecological sciences or evolutionary sciences. 357 00:40:23,300 --> 00:40:26,630 And we could see a healthy exchange between economics and psychology. 358 00:40:26,630 --> 00:40:33,870 So it's a question about the extent to which economics borrows from other disciplines and particularly the ecological sciences, 359 00:40:33,870 --> 00:40:45,480 have angles about economics and psychology. There's been long interplay between biology and economics. 360 00:40:45,480 --> 00:40:54,800 But Karl Marx drew from Darwin, actually, I believe, wanted to dedicate just capital to Darwin, but Darwin declined the honour. 361 00:40:54,800 --> 00:41:01,880 Game theory is another example of a lot of borrowing between. That was from economics to evolutionary theory. 362 00:41:01,880 --> 00:41:08,810 And what interests me about this is it really appeals to my sense that economics is a humans. 363 00:41:08,810 --> 00:41:17,350 And so. Ultimately, we will be aiming for consistency in the understanding of how humans behave across economics, 364 00:41:17,350 --> 00:41:23,560 psychology, evolutionary theory, biology all the way down to, you know, our basic biochemistry. 365 00:41:23,560 --> 00:41:27,820 So, you know, I'm not arguing for a single, unified science, 366 00:41:27,820 --> 00:41:35,640 but I think there can be really interesting borrowings at the borders between these different, these different human sciences. 367 00:41:35,640 --> 00:41:46,920 Coming up to science, neuroscience will be another one. Yeah, so in the context of your role as director of the Productivity Institute, 368 00:41:46,920 --> 00:41:51,670 so one of the theories about why productivity is slowing down is because. 369 00:41:51,670 --> 00:41:58,360 Knowledge is becoming too complex, and it's increasingly difficult to join the dots between all these different disciplines, 370 00:41:58,360 --> 00:42:02,530 which are becoming more and more siloed and deeper. 371 00:42:02,530 --> 00:42:10,480 Is that a problem we can be a journalist, can one really learn from neuroscience or learn from some other subject, 372 00:42:10,480 --> 00:42:16,000 which one has a very shallow knowledge of in a meaningful way? 373 00:42:16,000 --> 00:42:21,880 I think it's that old Isaiah Berlin distinction between foxes and had foxes and hedgehogs. 374 00:42:21,880 --> 00:42:29,720 If I've got the animals right and I can never remember which is which, but you need a few of both and there will be a team. 375 00:42:29,720 --> 00:42:41,330 Yes. Absolutely, a team. But but it's it's really interesting working at borders, I work a lot with engineers and computer scientists now. 376 00:42:41,330 --> 00:42:47,090 And the conversations that you have just incredibly hard work because you've got to 377 00:42:47,090 --> 00:42:53,000 learn language and understand the ambiguities that come from using the same word things. 378 00:42:53,000 --> 00:43:00,020 But it's also incredibly interesting and really informs just really influence work. 379 00:43:00,020 --> 00:43:07,070 Well, one example in my own research was looking at the price of telecommunication services and working with telecoms 380 00:43:07,070 --> 00:43:16,520 engineers to understand what the right volume unit was to apply to telecoms revenues and derive a price index for that. 381 00:43:16,520 --> 00:43:22,470 And we couldn't have done that without understanding better the engineering and how the compression was working. 382 00:43:22,470 --> 00:43:29,750 Hmm. And there's been a growing number of Nobel prises in these these interface fields, but they do ask questions. 383 00:43:29,750 --> 00:43:39,260 We have a little bit of time. If you post them in the Ask the Question section, I'll read them out of me. 384 00:43:39,260 --> 00:43:46,340 This interdisciplinary approach, of course, is what informs the Oxford Martin School, which is where I am. 385 00:43:46,340 --> 00:43:55,310 And certainly the view is that you can't solve a real world problem from a narrow discipline because all of them are highly interdisciplinary. 386 00:43:55,310 --> 00:43:59,030 But it does come down to having teams. 387 00:43:59,030 --> 00:44:10,640 What is the ambition of the Productivity Institute, partly to work in an adequately interdisciplinary way where it's needed? 388 00:44:10,640 --> 00:44:16,490 Another example might be the interface between political science and economics when thinking 389 00:44:16,490 --> 00:44:20,960 about what's the right level of government to be taking different kinds of policy decisions. 390 00:44:20,960 --> 00:44:29,780 And is the UK too centralised? And should more fiscal powers or decision-making powers be devolved? 391 00:44:29,780 --> 00:44:39,320 So it's partly that, but it's also importantly involving people around the country in the academic work, 392 00:44:39,320 --> 00:44:47,030 both to get academics to pay attention to the issues that businesses and local authorities and civic organisations and 393 00:44:47,030 --> 00:44:59,330 unions raise and have research questions that feedback the other way so that people in different parts of the country can, 394 00:44:59,330 --> 00:45:04,790 you know, identify a particular sector that's important to them or a particular barrier to productivity 395 00:45:04,790 --> 00:45:10,850 growth and get research commissioned to address that question and learn from that. 396 00:45:10,850 --> 00:45:21,050 In the east of England, around Cambridge, we've got, for example, great tech sector and biomedical sector, 397 00:45:21,050 --> 00:45:29,450 but also a very large agricultural sector and very important infrastructure sector with the ports and thinking about, 398 00:45:29,450 --> 00:45:34,460 for example, what's the impact of labour shortages in agriculture are going to be on productivity? 399 00:45:34,460 --> 00:45:41,690 And will the government's dream of a boost to productivity from a shortage of labour and able to be realised? 400 00:45:41,690 --> 00:45:44,270 And what would that take? What kind of investment does that involve? 401 00:45:44,270 --> 00:45:49,040 Those are the kinds of practical questions that we very much want to start addressing. 402 00:45:49,040 --> 00:45:54,650 So we have regional forums and they meet at these quarterly and commissioning their own research. 403 00:45:54,650 --> 00:45:58,970 And again, I think this is a sort of parallel to the work between disciplines. 404 00:45:58,970 --> 00:46:06,760 The work between different economic actors, including researchers, is also an important part of what we hope to contribute. 405 00:46:06,760 --> 00:46:11,110 Good luck with that. It's such a crucial question, which has proved rather intractable, 406 00:46:11,110 --> 00:46:17,920 so one one question that come in is can you please share your quick view on complexity economics? 407 00:46:17,920 --> 00:46:22,210 It's interdisciplinary, has been applied in policy, central banks and research. 408 00:46:22,210 --> 00:46:32,290 Is it the major system tool to flip economics or in the way he's suggesting or not as much as you would hope? 409 00:46:32,290 --> 00:46:42,370 I've only had a bit of exposure to it, and it's really it's really interesting to see how strong the empirical results are you 410 00:46:42,370 --> 00:46:49,930 that you get from applying the lens of complexity on employment and industrial structure. 411 00:46:49,930 --> 00:46:58,180 And one of the obvious takeaways from it is that you can't pick off economic problems one by one. 412 00:46:58,180 --> 00:47:03,160 If you're worrying about productivity, then you can't fix it by saying, Oh, 413 00:47:03,160 --> 00:47:11,050 we will just concentrate on one part of the economy or we will fix transport, and that's enough. 414 00:47:11,050 --> 00:47:18,370 This is a structural problem, and a big part of the policy challenge is going to be aligning enough policy 415 00:47:18,370 --> 00:47:25,600 changes and that you can change the kinds of outcomes that the the challenge, 416 00:47:25,600 --> 00:47:29,650 I think, is understanding. What's the theoretical model that's driving this? 417 00:47:29,650 --> 00:47:36,100 What's what are the causal relationships? It's a very strong, if you like, reduced from empirical results. 418 00:47:36,100 --> 00:47:38,320 And I find it very attractive. 419 00:47:38,320 --> 00:47:47,770 But I haven't myself figured out what I think the underlying causal story in the economy is is driving complexity results. 420 00:47:47,770 --> 00:47:51,730 So I'm in the territory of thinking we need to try lots of these different tools. 421 00:47:51,730 --> 00:47:57,520 Another one might be agent based modelling or qualitative methods, so let's try them. 422 00:47:57,520 --> 00:48:05,230 But I'm not ready to say there's any one thing that's going to be the answer to how we would economy. 423 00:48:05,230 --> 00:48:13,360 No, I agree with you and started a group here with John Farmer and others, which is doing complex economics and agent based modelling. 424 00:48:13,360 --> 00:48:23,200 And of course, with growing computer power, the ability to somehow simulate economies is growing and that that is exciting. 425 00:48:23,200 --> 00:48:27,010 But but the conceptual framework and where it will end up, 426 00:48:27,010 --> 00:48:32,980 I think is is going to be my view is going to be complementary to a lot of other other work going. 427 00:48:32,980 --> 00:48:38,950 And I also think it's incredibly useful to understand systemic risk, the nodes and networks and not analysis. 428 00:48:38,950 --> 00:48:43,000 So that's that's sort of the butterfly effect of globalisation. 429 00:48:43,000 --> 00:48:48,250 Understand pandemics or financial crises or cyber crises, I think complexities. 430 00:48:48,250 --> 00:48:52,270 Will you book your book about that in his written? Yeah, thank you. 431 00:48:52,270 --> 00:48:58,690 The butterfly effect of globalisation, but it's based on its complexity economics book. 432 00:48:58,690 --> 00:49:04,780 So another question is how is the political dimension policies of economics being integrated into this new economics, 433 00:49:04,780 --> 00:49:10,390 e.g. deregulation or laissez faire relationships to markets? 434 00:49:10,390 --> 00:49:20,740 How is? Yeah, what's the risk, I guess, between politics and the transformation of economics? 435 00:49:20,740 --> 00:49:26,800 So very interesting question. And you could answer that at two levels. 436 00:49:26,800 --> 00:49:34,450 One is that there's always a kind of interaction between events in the world and the way 437 00:49:34,450 --> 00:49:40,820 economists think about those events and the politics and the choices that politicians make. 438 00:49:40,820 --> 00:49:45,770 And there's a sort of cycle loop there that occurs. 439 00:49:45,770 --> 00:49:54,520 But the other way I've thought about this is that very often you hear economists recommending a policy and they tend to be called structural reforms, 440 00:49:54,520 --> 00:49:58,660 which is code for really difficult and nobody wants to do them. 441 00:49:58,660 --> 00:50:04,480 And the reason is that they lose politicians would lose the election if they implement this kind of reform. 442 00:50:04,480 --> 00:50:10,990 So, for example, pension reforms or Social Security rules often fall into this category. 443 00:50:10,990 --> 00:50:19,930 And to me, that's that's a copout. That's like saying, you know, this would be the best policy if only the politicians would implement it. 444 00:50:19,930 --> 00:50:23,380 Well, if they can't implement it, it's not the best policy. 445 00:50:23,380 --> 00:50:30,460 And I think those political economy considerations need to be embraced as part of the economic analysis. 446 00:50:30,460 --> 00:50:40,660 Yeah, that's right, and Bruce, I hope that answers your your question and the question from Susanna, how do you think changes in economic discourse, 447 00:50:40,660 --> 00:50:51,270 for example, moving towards multi disciplinary approaches might affect the value of emotional or correlated labour? 448 00:50:51,270 --> 00:50:54,690 That's a very interesting question. 449 00:50:54,690 --> 00:51:02,790 I thought a bit about unpaid labour, what is technically called household protection in the context of digital changes, 450 00:51:02,790 --> 00:51:10,620 because some of the technologies are moving activities out of the market economy into the household economy. 451 00:51:10,620 --> 00:51:15,930 And one example might be doing your travel agency yourself online. 452 00:51:15,930 --> 00:51:19,290 Save time working in and travel agents. You save the fees that you pay to them. 453 00:51:19,290 --> 00:51:25,740 You've got more choice and you can tailor it better to yourself, but it's your labour that you're putting into doing that. 454 00:51:25,740 --> 00:51:32,220 Another example of those automatic checkout machines in the supermarkets now where they have gone from a sort 455 00:51:32,220 --> 00:51:39,630 of low tech kind of capital equipment and paid labour to a somewhat higher tech kind of capital equipment, 456 00:51:39,630 --> 00:51:43,530 an unpaid labour, which is ours because we're doing our own checkouts. 457 00:51:43,530 --> 00:51:51,090 And you can see with Amazon stores, that's evolving even further to higher tech, physical and intangible capital. 458 00:51:51,090 --> 00:51:55,140 And no labour, because you don't need to checkout, you just walk out with it. 459 00:51:55,140 --> 00:52:01,980 This is really interesting evolution to track in terms of who's bearing the burden of labour 460 00:52:01,980 --> 00:52:07,440 and where to the financial rewards go and what's what are the other factors of production, 461 00:52:07,440 --> 00:52:18,660 the capital assets that need to make that happen. So that's a very indirect way of saying we don't think enough about unpaid labour haven't done, 462 00:52:18,660 --> 00:52:24,450 obviously, since GDP was created in the production boundary was set to exclude unpaid labour in the home. 463 00:52:24,450 --> 00:52:29,160 And there's quite a debate about whether that should be done in the late 1940s and early 1950s. 464 00:52:29,160 --> 00:52:38,370 And the pandemic, of course, has raised this question again, making even clearer as if we ought to, you know, if we needed it, 465 00:52:38,370 --> 00:52:47,430 how important the labour of care is and how much that gets taken for granted in policy decisions that are made. 466 00:52:47,430 --> 00:52:53,190 I don't know if there'll be a fundamental change in views about it and the 467 00:52:53,190 --> 00:52:58,560 statistics that help us understand unpaid labour in the home are a bit patchy. 468 00:52:58,560 --> 00:53:04,230 I would like to see regular time use survey so that we can track this much better and 469 00:53:04,230 --> 00:53:10,050 think about how we might want to assign value to all of that labour that people are doing. 470 00:53:10,050 --> 00:53:15,600 And it will become more important as the population, ages and more care is needed. 471 00:53:15,600 --> 00:53:18,180 But we just don't really have the statistics to do it yet, 472 00:53:18,180 --> 00:53:27,300 so I keep urging anybody I talk to is just tickle circles or indeed the Treasury who finance the onus that to say that we need this, 473 00:53:27,300 --> 00:53:32,880 we need much more. We need much more investment actually in collecting data to understand what's going on in the economy. 474 00:53:32,880 --> 00:53:36,750 So it's a public good and it should be part of our national infrastructure. 475 00:53:36,750 --> 00:53:45,160 And you make that point in your great little book called GDP a brief, a brief by the fiction of history or something. 476 00:53:45,160 --> 00:53:51,620 I recommend that book, which talks about what we measure and what we don't. 477 00:53:51,620 --> 00:53:56,580 The. And there's no other questions. 478 00:53:56,580 --> 00:54:05,940 So that's just sort of go the full circle to to when we started with with your book, which is. 479 00:54:05,940 --> 00:54:19,480 Economics today, what it is and needs to be. And if if if you could wave your magic wand and make economics change. 480 00:54:19,480 --> 00:54:30,990 Well, the three things you would do if you were the head of an economics department and you and and had real power to hire and to fire. 481 00:54:30,990 --> 00:54:37,560 Gosh, that's the difference which never occurs in the real world, of course. Just good question. 482 00:54:37,560 --> 00:54:42,570 So I think one thing that economics departments could do would be to talk to 483 00:54:42,570 --> 00:54:48,630 each other enough that they can break out the tyranny of the top five journals. There are fantastic other journals. 484 00:54:48,630 --> 00:54:54,510 Other disciplines have a list that they recognise as the best ones, but it's much bigger. 485 00:54:54,510 --> 00:54:57,510 Why can't we have a top 20 list? That would be a really good change, 486 00:54:57,510 --> 00:55:04,470 and we could include the top environmental and development and health economics field journals that would immediately, 487 00:55:04,470 --> 00:55:11,850 instantly broaden the work that gets recognised in the economics departments. 488 00:55:11,850 --> 00:55:19,870 Another. Thing would be to really police culture in seminars and in classrooms, 489 00:55:19,870 --> 00:55:27,250 because there just is a very aggressive kind of culture in some in some departments and some seminars. 490 00:55:27,250 --> 00:55:33,550 I remember going to a conference in Toulouse a very long time ago and with psychologists and cognitive 491 00:55:33,550 --> 00:55:40,630 scientists and economists and the economists piled into each other in and other speakers in their usual way, 492 00:55:40,630 --> 00:55:47,140 interrupting being quite aggressive. And the psychologists applauded politely whenever anybody spoke, 493 00:55:47,140 --> 00:55:53,620 it was eye opening to me that you would applaud people after a conference presentation and things have moved on since then. 494 00:55:53,620 --> 00:55:59,980 That was a long time ago, but there's still that the culture needs the culture needs policing and particularly, I think, 495 00:55:59,980 --> 00:56:05,680 when it comes to PhD students and particularly those who might be less confident, you know, 496 00:56:05,680 --> 00:56:11,410 whether it's women or people from low income backgrounds, that there's a lack of confidence. 497 00:56:11,410 --> 00:56:19,210 They're doing a page. It's really hard and you've got to nurture those students and make sure that they exist in a welcoming culture. 498 00:56:19,210 --> 00:56:23,430 That's two things I can't think of a third. Maybe you could think of a third yourself. 499 00:56:23,430 --> 00:56:31,430 And the third is I'd vote for you to be the head of the department because that's I mean that that's really going to happen. 500 00:56:31,430 --> 00:56:39,040 Are we going to have different sorts of people who do fight these battles more more aggressively? 501 00:56:39,040 --> 00:56:47,680 This has been wonderful. I encourage you all to get this book and the 30 percent discount today through Princeton University Press. 502 00:56:47,680 --> 00:56:58,000 Just click on this green toggle underneath images, and it remains for me to thank Diane. 503 00:56:58,000 --> 00:57:08,300 I enjoyed this very much, and I hope you did too, and that the participants did and also encourage you to look at the Oxford School website. 504 00:57:08,300 --> 00:57:09,970 This has been recorded. 505 00:57:09,970 --> 00:57:19,030 I should have said at the beginning before people ask the question, so I hope everyone's comfortable with that and send it to others. 506 00:57:19,030 --> 00:57:24,400 But also look at the many, many other really excellent talks on the Oxford on School website. 507 00:57:24,400 --> 00:57:26,440 The events coming up all the time, 508 00:57:26,440 --> 00:57:34,720 including one that I'm chairing in a few weeks time with Azeem Azhar on his new book Exponential, which is very, very interesting. 509 00:57:34,720 --> 00:57:40,060 Not an economist, but someone who really understands very deeply where technology is growing. 510 00:57:40,060 --> 00:57:46,780 So if you're interested in maths, encourage you to look at that and of course, to look at Diane's material, 511 00:57:46,780 --> 00:57:53,050 which sheds much, much needed light on the problems of economics and how we can solve them. 512 00:57:53,050 --> 00:57:59,620 Thanks so much to you for participating, and thanks so much, Diane, for writing the book and for being with us today. 513 00:57:59,620 --> 00:58:07,817 Thank you. I really enjoyed that conversation and thank you, everybody. It was by lots of great comments in chat as well.