WEBVTT - Which Jobs Are Really Worth Saving? 0:00:00.080 --> 0:00:03.440 They are closing every day, hotels all over so because 0:00:03.520 --> 0:00:06.880 it's it's they there is no demand, there is no tourism. 0:00:07.000 --> 0:00:09.600 So but I tell you, if I close, we have 0:00:09.680 --> 0:00:12.639 a lot of costs too, so of my So that's 0:00:12.640 --> 0:00:21.319 why I tried to to keep open. You Hello, and 0:00:21.360 --> 0:00:24.480 welcome to Steconomics, the podcast that brings the global economy 0:00:24.520 --> 0:00:27.639 to you. And you heard they're a hotel owner in 0:00:27.680 --> 0:00:31.040 the southwest of Spain confronting a question that businesses and 0:00:31.160 --> 0:00:34.240 governments are facing in every country in the world. Which 0:00:34.280 --> 0:00:37.920 hasn't got on top of COVID nineteen, Which jobs should 0:00:37.920 --> 0:00:41.800 we try to save and which are already lost? Our 0:00:41.800 --> 0:00:45.519 Spanish economy reporter Jeanette Newman has been spending some time 0:00:45.560 --> 0:00:48.000 on the front lines of the battle to save jobs 0:00:48.400 --> 0:00:51.680 in the ancient Spanish city of Cardi. She also found 0:00:51.680 --> 0:00:54.520 another Johnny Cash fan while she was down there, or 0:00:54.600 --> 0:00:57.760 will be revealed in a few moments later on. You 0:00:57.800 --> 0:01:01.120 will also hear the economist John k and Support Collier 0:01:01.560 --> 0:01:05.440 explain exactly why Greed is Dead. Could have fooled me, 0:01:05.840 --> 0:01:08.319 I hear you say, Well, you can listen to them 0:01:08.319 --> 0:01:12.039 explain their new book and decide for yourself. But First, 0:01:12.120 --> 0:01:31.800 here's janet That cacophony is coming from inside a factory. 0:01:31.800 --> 0:01:36.000 At a storied ship building on Spain's Atlantic coast, dozens 0:01:36.000 --> 0:01:39.560 of welders, riggers and engineers are piecing together five warships. 0:01:40.040 --> 0:01:44.319 It's their first big naval contract in years. For centuries, 0:01:44.400 --> 0:01:46.880 shipbuilding has been a vital part of the economy here 0:01:46.880 --> 0:01:50.040 in the Bay of Cadi's. The bay has a privileged 0:01:50.080 --> 0:01:53.440 position next to one of the world's busiest waterways, the 0:01:53.600 --> 0:01:56.720 entrance to the Mediterranean Sea through the Straight of Gibraltar. 0:01:58.400 --> 0:02:01.120 At its peak in the early nineteen these, this shipyard 0:02:01.120 --> 0:02:05.200 employed nearly four thousand workers. Demand was high for warships 0:02:05.240 --> 0:02:09.000 and oil tankers. Since then, South Korea and China have 0:02:09.040 --> 0:02:13.240 eclipsed Europe in Nadi ship building. Now the shipyard employs 0:02:13.280 --> 0:02:16.160 around six hundred workers, the same number it had in 0:02:16.200 --> 0:02:21.280 the eighties. Juan Carlos Carrascal oversees the factory at the 0:02:21.280 --> 0:02:25.720 ship builder called Nevantia. That's always looking for a more 0:02:25.800 --> 0:02:30.519 skilled people instead of a lot of my power, always 0:02:30.600 --> 0:02:40.200 under looking for efficiency. As I walk across the shipyard, 0:02:40.360 --> 0:02:43.600 I see black smoke rising in the distance. Hundreds of 0:02:43.639 --> 0:02:47.320 furloughed workers at a nearby aviation company are burning tires. 0:02:48.120 --> 0:02:52.080 They're protesting and pending layoffs triggered by the pandemic. Those 0:02:52.120 --> 0:02:54.600 desperate aviation workers lie at the heart of a debate 0:02:54.639 --> 0:02:57.600 in Europe about how to wind down programs that have 0:02:57.720 --> 0:03:03.919 preserved millions of jobs. COVID nineteen has upended the airline industry. 0:03:04.320 --> 0:03:06.760 We will no longer need to fly to attend every 0:03:06.760 --> 0:03:10.959 meeting in person. Some people think those protesters are fighting 0:03:10.960 --> 0:03:15.000 for an industry that might never fully recover. You could 0:03:15.000 --> 0:03:19.200 say they're the Spanish shipbuilders of their day. If that's 0:03:19.200 --> 0:03:23.080 the case, the argument goes, then Europe's governments and companies 0:03:23.240 --> 0:03:26.160 should rethink the need to keep spending billions to preserve 0:03:26.200 --> 0:03:29.919 such jobs. Yet others warned that pulling the plug too 0:03:29.960 --> 0:03:33.079 soon could lead along spells of unemployment for workers in 0:03:33.160 --> 0:03:36.640 heart hit sectors. That's something that many naval shipbuilders have 0:03:36.720 --> 0:03:40.560 also faced. Before we delve into that debate, though some 0:03:40.640 --> 0:03:43.600 contexts on how European governments have responded to the pandemic. 0:03:44.880 --> 0:03:48.200 I spoke to Katrina Utama. She's a senior economist at 0:03:48.200 --> 0:03:52.160 financial services company Allians and Frankfort. When the pandemic hit 0:03:52.200 --> 0:03:56.000 Europe in the spring, Most countries wanted to avoid mass layoffs, 0:03:56.040 --> 0:03:58.400 so they put in place what are known as furlough programs. 0:04:00.040 --> 0:04:04.120 Furlough schemes allow employers to reduce their employees working hours 0:04:04.360 --> 0:04:07.600 instead of laying them off, and the government then steps 0:04:07.640 --> 0:04:10.560 in and replaces a large part of the lost income. 0:04:11.320 --> 0:04:16.800 In the range of sixty and why did European governments 0:04:16.880 --> 0:04:21.800 choose to do that. The idea is to retain human 0:04:21.839 --> 0:04:26.480 skills um and to allow for a quicker um snapback, 0:04:26.560 --> 0:04:29.039 let's say, of the economy, because the workers are in 0:04:29.120 --> 0:04:33.120 place and um um and are ready to go as 0:04:33.160 --> 0:04:38.280 the recovery starts to unfold. The results of furlough schemes 0:04:38.279 --> 0:04:41.080 in Europe are nothing short of remarkable. Um. At the 0:04:41.080 --> 0:04:44.280 peak of the crisis, around a fourth of Europe's workforce, 0:04:44.520 --> 0:04:47.560 or what we calculate as thirty five million jobs in 0:04:47.600 --> 0:04:52.680 the five largest economies alone, benefited from these schemes. Compare 0:04:52.720 --> 0:04:56.440 that to the US. American companies fired millions of workers 0:04:56.440 --> 0:04:59.279 when the pandemic had The government then stepped in to 0:04:59.360 --> 0:05:02.919 provide more generous unemployment benefits, but they didn't try to 0:05:02.960 --> 0:05:06.159 prevent mass layoffs in the first place. Why did Europe 0:05:06.200 --> 0:05:09.920 do things differently. There are a lot of reasons. For one, 0:05:10.320 --> 0:05:14.160 many European economies aren't very dynamic. Once a worker is fired, 0:05:14.440 --> 0:05:16.799 it can take a long time to find a job again. 0:05:17.800 --> 0:05:20.800 The furlough programs were meant to be temporary, but this 0:05:20.880 --> 0:05:23.039 crisis has turned out to be more of a slog 0:05:23.120 --> 0:05:27.200 than many expected. So Spain, Italy, France and Germany keep 0:05:27.279 --> 0:05:30.760 extending the furloughs. That leaves them in a tough position 0:05:31.200 --> 0:05:33.719 when and how do they pull back on their aid. 0:05:34.760 --> 0:05:37.440 There has to be this re calibration of UM, the 0:05:37.520 --> 0:05:42.200 labor market support UM to target in particular viable jobs 0:05:42.480 --> 0:05:46.240 and less so what we have coined zombie jobs, because 0:05:46.279 --> 0:05:49.720 we think that in some cases, and actually we say 0:05:49.760 --> 0:05:53.799 that about every fourth worker that is currently taking advantage 0:05:53.839 --> 0:05:57.760 of a furlough scheme is at risk of not returning 0:05:57.800 --> 0:06:06.400 actually to the office or to the work days. Francisco 0:06:06.480 --> 0:06:10.120 Rometo and Mariano Serrano understand all too well the risks 0:06:10.120 --> 0:06:13.640 that Katarina is talking about. Both were among the protesting 0:06:13.640 --> 0:06:17.159 aviation workers I saw in Cutty's. I spoke to them 0:06:17.200 --> 0:06:19.920 and their wives at a nearby restaurant. They have been 0:06:19.920 --> 0:06:22.920 on furlough since March. Now they might be laid off. 0:06:24.839 --> 0:06:28.279 Almost said, We're going to be just the beginning. We're 0:06:28.279 --> 0:06:31.520 going to be the tip of the iceberg. Francisco and 0:06:31.560 --> 0:06:36.039 Mariano work assembling airplane parts. Their company, Alesties, is one 0:06:36.120 --> 0:06:38.480 link in a chain of aviation companies in the region. 0:06:38.760 --> 0:06:44.880 Of course, their jobs are viable. Mariano says, well, we're 0:06:44.880 --> 0:06:47.760 thinking a matter of six months. If there's a vaccine 0:06:47.880 --> 0:06:51.800 in six months, eight months, things will keep working juice 0:06:51.839 --> 0:06:54.839 like always when things come back to normal. But what 0:06:54.920 --> 0:06:59.200 if the slowdown in aviation isn't temporary? Economists say one 0:06:59.240 --> 0:07:02.320 solution is to retrain workers who are laid off, to 0:07:02.400 --> 0:07:04.560 give them the skills they need to get jobs in 0:07:04.560 --> 0:07:07.960 a sector that is growing. I asked Mariano and his 0:07:07.960 --> 0:07:11.120 wife Manoli what they think about that. They shake their 0:07:11.120 --> 0:07:17.000 heads and laugh. I have that more courses, then, what 0:07:17.080 --> 0:07:19.040 can I tell you? I've done all kinds of courses. 0:07:22.480 --> 0:07:24.560 I tried to put away all the books he had, 0:07:25.080 --> 0:07:28.320 and they didn't even fit on the bookshelf. Francisco was 0:07:28.400 --> 0:07:30.240 sixteen when he began to work at one of the 0:07:30.240 --> 0:07:33.520 shipyards here. It was the nineteen eighties. Two years later, 0:07:33.720 --> 0:07:37.160 the ship builder announced the restructuring Francisco was out of work. 0:07:37.720 --> 0:07:40.960 He's had spells of unemployment since then. That's when he's 0:07:41.000 --> 0:07:44.120 done some of those training programs, building solar panels and 0:07:44.120 --> 0:07:48.920 wind turbines, learning to weld. Mariano agrees more training isn't 0:07:48.920 --> 0:07:54.480 what's needed. They both just want to keep their jobs. 0:07:54.480 --> 0:07:56.880 There's a ton of people in Cartage who are well trained, 0:07:57.040 --> 0:08:00.720 incredibly well trained. But the thing is that doesn't come 0:08:00.920 --> 0:08:04.280 with a key ingredient, which is industry. I want to 0:08:04.320 --> 0:08:08.080 emphasize that what God these needs is more industry. This 0:08:08.280 --> 0:08:20.080 doesn't need any more hotels or bars. Mariano raises an 0:08:20.080 --> 0:08:24.440 interesting point. The pandemic has upended the aviation sector, but 0:08:24.480 --> 0:08:27.640 other industries are bouncing back, and so were Germany and 0:08:27.680 --> 0:08:32.440 other European countries whose economies rely more on manufacturing. Places 0:08:32.480 --> 0:08:36.719 like Spain, where the economy is powered by services, hotels, restaurants, 0:08:36.760 --> 0:08:41.160 bars have been particularly hard hit. Most of the employees 0:08:41.160 --> 0:08:43.000 who are still on furlough in Spain work in the 0:08:43.080 --> 0:08:46.280 services sector. I wanted to know how companies and workers 0:08:46.280 --> 0:08:49.439 are faring as we head into low season. Tourism is 0:08:49.480 --> 0:08:52.720 important in this region. Hotel owner agrees to speak with 0:08:52.760 --> 0:08:55.120 me and Rota a town. That's a ferry right away 0:08:55.280 --> 0:09:04.760 across the Bay of Caddis. Once I'm there, I take 0:09:04.760 --> 0:09:09.480 a taxi. The driver is playing American country music. I've 0:09:09.480 --> 0:09:12.280 been in many taxis during my time in Spain, and 0:09:12.320 --> 0:09:16.240 I've never heard country music through face masks. The driver 0:09:16.320 --> 0:09:26.560 and I talk about our favorite singers as a classic. 0:09:28.679 --> 0:09:31.920 The wistful music seems to match the driver's mood. It's 0:09:31.920 --> 0:09:35.240 been a bad summer, he says. There haven't been many tourists, 0:09:35.679 --> 0:09:38.960 and trouble is brewing at the aviation companies. It's only 0:09:38.960 --> 0:09:42.199 going to get worse, he says. We arrived at the 0:09:42.240 --> 0:09:45.040 play at de la Lous. Hotel owner Stephen de Clerk 0:09:45.120 --> 0:09:48.400 comes out to greet me. The building where we meet 0:09:48.480 --> 0:09:52.600 was an abandoned nineteenth century tuna factory before Stephen's Belgian 0:09:52.640 --> 0:09:56.319 grandfather bought it and turned it into a hotel. We 0:09:56.440 --> 0:09:58.880 sit down in the restaurant. I asked him what's happening 0:09:58.920 --> 0:10:01.120 with his workers in the fur Low program known as 0:10:01.280 --> 0:10:05.520 edites in Spanish. They're starting to go to the again. 0:10:05.760 --> 0:10:08.520 They're going back, They're going back to the editors. Stephan 0:10:08.600 --> 0:10:10.680 had just closed one of his hotels the day before 0:10:10.720 --> 0:10:14.800 we met. Occupancy was only a fifteen percent. They're closing 0:10:14.880 --> 0:10:18.440 every day, hotels all over so because it's it's they 0:10:18.720 --> 0:10:22.040 there is no demand, there's no tourism. So but I 0:10:22.160 --> 0:10:24.120 tell you, if I close, we have a lot of 0:10:24.200 --> 0:10:27.920 costs too, So so that's why I tried to to 0:10:28.080 --> 0:10:31.240 keep open. Hotels that are closing and more workers in 0:10:31.280 --> 0:10:33.880 the furlough program, I mean less tax revenue for the 0:10:33.920 --> 0:10:38.040 Spanish government and higher costs. Remember, the state is paying 0:10:38.080 --> 0:10:41.160 a large portion of the salaries of furloughed workers. That 0:10:41.240 --> 0:10:44.240 puts Spain in a bind. The country already had a 0:10:44.400 --> 0:10:46.520 huge pile of debt and a big deficit when the 0:10:46.559 --> 0:10:50.360 pandemic hit. That limited its ability to offer financial support 0:10:50.440 --> 0:10:53.880 to companies and workers. At the same time, though, Spain 0:10:54.000 --> 0:10:56.480 had to respond decisively because it was one of the 0:10:56.559 --> 0:11:00.480 hardest hit countries in Europe. Further complicating things is the 0:11:00.520 --> 0:11:05.200 fact that the Spanish economy isn't very dynamic. Economists talk 0:11:05.200 --> 0:11:09.320 about creative destruction let companies go bankrupt, for instance, because 0:11:09.360 --> 0:11:13.160 people will create new ones, but in Spain created destruction 0:11:13.720 --> 0:11:16.880 usually just ends up meaning destruction. The labor market in 0:11:16.960 --> 0:11:20.920 particular does not rebound quickly. Stuff And says the employment 0:11:21.120 --> 0:11:25.240 laws are very strict and very and not flexible for 0:11:25.360 --> 0:11:28.400 the company. So Spain couldn't really afford to act decisively, 0:11:29.000 --> 0:11:31.640 But at the same time, it couldn't afford not to 0:11:32.040 --> 0:11:35.040 because the damage would have been even worse. Stephan is 0:11:35.120 --> 0:11:38.400 frustrated about what this fiscal predicament means for him. The 0:11:38.480 --> 0:11:42.560 Spanish furlough is less generous than in some other countries. 0:11:42.800 --> 0:11:45.800 I looked to German and to Belgium and and and 0:11:45.920 --> 0:11:49.800 the area. The economy goes well, much better than in Spain. 0:11:50.280 --> 0:11:52.439 And like I told the Germany is helping and with 0:11:52.679 --> 0:11:57.120 rites until aimed aimed of twenty one, and Belgium too, 0:11:57.280 --> 0:12:01.080 So I think these countries are they're doing it better 0:12:01.200 --> 0:12:03.959 than us. Spain's program is said to expire at the 0:12:04.080 --> 0:12:07.440 end of January. Stephen says many hotels will go bankrupt 0:12:07.480 --> 0:12:10.679 if that happens. We are demanding that it will be 0:12:10.760 --> 0:12:13.959 a standard at least at March one. And why is 0:12:14.000 --> 0:12:16.559 that important? Because we started the new U seed. The 0:12:16.600 --> 0:12:20.400 season starts for us in the area starts around March April. 0:12:20.800 --> 0:12:24.200 So if if we keep that until March, maybe, if 0:12:24.400 --> 0:12:27.760 if if God's help us, well, we will have a 0:12:28.720 --> 0:12:32.000 kind of a normal situation next year. So that's we are. 0:12:32.600 --> 0:12:36.040 We're we're praying now for that, and we're trying to 0:12:36.600 --> 0:12:39.800 work for that. Leaving the hotel, I can see the 0:12:39.840 --> 0:12:44.920 shipyard cranes towering along the shoreline, a reminder that jobs, industries, 0:12:45.040 --> 0:12:49.599 and economies don't always bounce back as expected. Europs for 0:12:49.720 --> 0:12:52.760 low programs were meant to be temporary. The crisis has 0:12:52.800 --> 0:12:56.000 proved to be anything but, so the programs have been extended. 0:12:57.000 --> 0:12:59.360 It's likely that the scars from the pandemic will be 0:12:59.440 --> 0:13:12.920 deeper than we expect. Your Jeanette Newman, Bloomberg News. You 0:13:13.000 --> 0:13:15.920 could hear they're our short term crisis over jobs and 0:13:15.960 --> 0:13:19.880 the cost of government support packages has also been forcing 0:13:20.000 --> 0:13:23.800 Spain to confront long term choices about the direction of 0:13:23.880 --> 0:13:26.840 the Spanish economy. The same could be said of Europe 0:13:26.880 --> 0:13:29.959 and the US generally. Now. Two people who think that 0:13:30.040 --> 0:13:33.160 kind of debate is long overdue are the economist John 0:13:33.240 --> 0:13:36.280 k and Support Collier. You may know John. He's been 0:13:36.320 --> 0:13:38.960 a columnist for the Financial Times for many years. It's 0:13:39.000 --> 0:13:41.199 also my first boss a long time ago at the 0:13:41.240 --> 0:13:46.079 London Business School. He's written many excellent books, mainly about economics, 0:13:46.480 --> 0:13:50.880 including most recently the book Radical Uncertainty with the former 0:13:50.920 --> 0:13:54.880 Bank of England Governor Lord Mervin King. So Paul Collier's 0:13:54.920 --> 0:13:58.480 known more for his contributions to development economics, though more 0:13:58.559 --> 0:14:02.800 recently he's written modest book called The Future of Capitalism. 0:14:03.360 --> 0:14:06.840 We had an online conversation recently convened by the Royal 0:14:06.920 --> 0:14:10.080 Society for the Arts in London about their new book 0:14:10.480 --> 0:14:14.000 Greed Is Dead, which for an economics book, contains a 0:14:14.080 --> 0:14:18.440 surprising amount of political philosophy. I started by asking John 0:14:18.760 --> 0:14:24.760 why they wrote it. So, Paul and John, thank you 0:14:24.920 --> 0:14:28.520 very much for talking to me. John, let me start 0:14:28.600 --> 0:14:31.120 with you just to get more of a sense of 0:14:32.560 --> 0:14:37.000 what this book's about and perhaps how why you decided 0:14:37.160 --> 0:14:41.280 to write it. Yeah, this book originated Stephanie in our 0:14:41.400 --> 0:14:45.960 lunch we had in Arrest Thai restaurant and Oxford called 0:14:46.000 --> 0:14:51.800 the Giggling Squid for some incomprehensible reason. And I was 0:14:52.800 --> 0:14:56.360 as I've just recently finished the book you describe on 0:14:56.520 --> 0:15:00.520 Radical Uncertainty, while Paul, as you will, also mentioned and 0:15:00.640 --> 0:15:04.520 written The Future of Capitalism, and we were talking and 0:15:04.680 --> 0:15:07.400 I really I was aware that what I wanted to 0:15:07.520 --> 0:15:11.320 do next was to write a book about something about business, 0:15:12.240 --> 0:15:17.800 emphasizing that the presentation of business essentially as a group 0:15:17.880 --> 0:15:21.280 of individuals who happened to find it convenient to get 0:15:21.360 --> 0:15:26.080 together every day and work together, failed to recognize that 0:15:26.200 --> 0:15:30.320 successful businesses, particularly the knowledge businesses we have in the 0:15:30.400 --> 0:15:34.960 twenty per century, are made up of essentially communities of 0:15:35.080 --> 0:15:39.080 people were able to solve problems together. That seemed to 0:15:39.120 --> 0:15:41.760 me a much more powerful way of thinking about business 0:15:42.080 --> 0:15:45.960 than the reductionist approach which has dominated economics for last 0:15:46.000 --> 0:15:49.480 fifty years. And Paul was interested in many of the 0:15:49.560 --> 0:15:53.360 same issues, but from the rather different angle of communities 0:15:53.400 --> 0:15:58.040 of place. So, um, what is the community of place? 0:15:58.960 --> 0:16:03.040 We're hard wired for community, Stephanie. He said, we were 0:16:03.920 --> 0:16:06.280 drawing a lot on philosophy in the book, but we're 0:16:06.320 --> 0:16:11.200 also drawing a lot on modern evolutionary biology. And the 0:16:11.360 --> 0:16:15.840 news from modern evolutionary biology is really very good for 0:16:16.000 --> 0:16:19.080 people who believe in communities, both communities of work and 0:16:19.320 --> 0:16:23.440 communities of place. We're very distinctive. Mammals were designed, were 0:16:23.560 --> 0:16:30.000 hardwired to bond to each other and for mutuality, for reciprocity, 0:16:30.840 --> 0:16:37.040 for pro sociality. The big bad idea that we aim 0:16:37.160 --> 0:16:43.920 to demolish in modern economics is that notion that greed 0:16:44.480 --> 0:16:49.880 is good, which came out of the idea that humans 0:16:49.960 --> 0:16:55.000 were basically economic. Man were gredient, selfish, and greed was 0:16:55.080 --> 0:16:58.400 therefore the fuel which got people up in the morning 0:16:59.040 --> 0:17:02.640 and and fueled capitalism. If that was the fuel, greed 0:17:02.760 --> 0:17:07.280 was good, well it isn't. It isn't the fueler capitalism. 0:17:07.960 --> 0:17:12.359 The fueler capitalism is our ability to work together around 0:17:12.400 --> 0:17:17.720 a common purpose and to imagine and create. So we're 0:17:17.960 --> 0:17:24.720 very well designed both for communities of purpose, whether they're 0:17:25.400 --> 0:17:29.120 per communities of work or community of place, and we're 0:17:29.200 --> 0:17:31.879 very well designed for radical uncertainty because if you're if 0:17:31.880 --> 0:17:34.680 you're in a world radical uncertainty, you need to work 0:17:34.720 --> 0:17:38.960 out what to do. And we're hardwired for creativity. We're 0:17:39.160 --> 0:17:45.680 very imaginative. And so the fuel of capitalism is not greed. 0:17:47.240 --> 0:17:54.280 It's that collective common purpose and imagination and creativity. And 0:17:55.200 --> 0:17:59.920 when we say greed is dead, the normal responses to say, 0:18:00.200 --> 0:18:04.919 but look around you. The world is it's absolutely saturated. 0:18:04.960 --> 0:18:08.600 Increase as saturated in greed is actually the first the 0:18:08.680 --> 0:18:13.240 opening sentence of greed is dead. What we mean by 0:18:13.320 --> 0:18:19.240 greed is dead is intellectually the pillars that built the 0:18:19.400 --> 0:18:25.840 notion greed is good and now untenable, and so that's 0:18:26.840 --> 0:18:30.320 why we're saying greed is dead. We are now at 0:18:30.440 --> 0:18:36.680 peak greed because gradually these ideas will filter through. So 0:18:36.800 --> 0:18:39.880 let me turn just to pick up on John's queue 0:18:39.960 --> 0:18:46.160 of communities of place. Um, we need communities of place 0:18:47.320 --> 0:18:51.440 because so much of our public policy and our lives 0:18:52.080 --> 0:18:56.600 are lived in place. Our politics isn't very heavily dependent 0:18:56.680 --> 0:19:03.679 on place, and what's happened recently is big spatial divides. 0:19:04.640 --> 0:19:08.080 We've seen it in Brexit, which was basically a mutiny 0:19:08.160 --> 0:19:12.399 of provincial Britain against London. We've seen it with Trump, 0:19:12.520 --> 0:19:17.360 which was basically a mutiny of provincial America against the metropolis. 0:19:18.440 --> 0:19:25.040 And so rehealing that that's what's really needed in the 0:19:25.800 --> 0:19:30.399 community of place, restoring community of place. Let me pass 0:19:30.480 --> 0:19:33.600 back to John, because we've got lots of ideas about 0:19:33.880 --> 0:19:37.320 how to do it. You know, we're learning a lot 0:19:37.480 --> 0:19:41.680 about this interaction of communities and place and work in 0:19:41.760 --> 0:19:47.800 the current in the current crisis, we um, the three 0:19:47.880 --> 0:19:52.440 of us are able easily to this productive conversation together 0:19:53.000 --> 0:19:56.840 over zoom. We're able to do that because actually we've 0:19:56.920 --> 0:20:00.720 met each other in real life quite frequent in the past, 0:20:01.800 --> 0:20:04.240 and quite a lot of businesses are discovering to their 0:20:04.320 --> 0:20:10.440 surprise that they can conduct business reasonably well over zoom 0:20:10.560 --> 0:20:14.480 and other online aids like that. Would they be able 0:20:14.560 --> 0:20:18.440 to do that if people hadn't been able to meet 0:20:18.520 --> 0:20:22.840 each other, work together, talk to each other, form relationships 0:20:22.960 --> 0:20:27.680 with each other in the past, I doubt that. Can 0:20:27.840 --> 0:20:30.960 you know the community of place which happens in the 0:20:31.040 --> 0:20:35.920 office can be conducted online because it is a community 0:20:36.040 --> 0:20:44.359 of people who are used to working together. Did you 0:20:44.480 --> 0:20:48.480 come away hopeful after writing this book? Because one could 0:20:48.520 --> 0:20:50.840 read it as saying, yeah, we really are in a 0:20:50.880 --> 0:20:54.920 bad way and I can't see a way out. We're 0:20:54.960 --> 0:20:57.880 not saying we can't see a way out, but we've 0:20:57.920 --> 0:21:00.320 been going in many ways in the wrong direction. For 0:21:01.520 --> 0:21:05.040 in recent decades in the business area, we went badly 0:21:05.080 --> 0:21:10.880 in the wrong direction. With the fifty years since Freedman 0:21:10.960 --> 0:21:14.920 wrote that notorious article, the social responsibility of business is 0:21:15.000 --> 0:21:19.520 to maximize its profits. The social responsibility of business is 0:21:19.560 --> 0:21:22.879 actually to produce goods and services that people want, to 0:21:23.000 --> 0:21:27.480 provide satisfying employment, to meet the needs of the communities 0:21:27.520 --> 0:21:31.520 in which business operates. That's the social responsibility of business, 0:21:32.520 --> 0:21:35.600 and I'd contrast that on the one hand to the 0:21:35.640 --> 0:21:39.639 social responsibility of businesses to maximize its profits. But in 0:21:39.760 --> 0:21:43.399 the other the social responsibility of business is not to 0:21:43.520 --> 0:21:48.280 do good social responsibility of business is to do good business. 0:21:48.680 --> 0:21:51.960 And that's true of all the other communities we're talking about. 0:21:52.680 --> 0:21:55.960 As far as business is concerned, I think that the 0:21:56.080 --> 0:21:59.080 pendulum is at least swinging back in the right direction. 0:21:59.760 --> 0:22:02.240 It's got a long way to go before it gets 0:22:02.359 --> 0:22:06.520 to the central position it was in fifty years ago, 0:22:08.000 --> 0:22:13.119 but we are now getting a fairly satisfactory reaction to that, 0:22:14.000 --> 0:22:17.760 and that's what business needs. And business needs to stop 0:22:17.840 --> 0:22:22.879 describing itself in ways that actually are actually both repulsive 0:22:23.440 --> 0:22:26.600 and do not correspond to the reality of what successful 0:22:26.680 --> 0:22:30.159 business is actually like. I thought I was wonderfully bracing 0:22:30.200 --> 0:22:33.199 in the book that you point out that any company 0:22:33.320 --> 0:22:37.760 that's really tried to implement that very individualistic business model 0:22:38.400 --> 0:22:42.399 has tended to do extremely badly. Yeah, it's almost funny 0:22:42.480 --> 0:22:45.560 the extent to which that is true. Classic, of course, 0:22:45.720 --> 0:22:49.440 was Burst Earns, which was the business that had a 0:22:49.560 --> 0:22:53.000 sign above its trading floor saying we make nothing but money. 0:22:54.000 --> 0:22:57.600 And what happened towards in the long run they turned 0:22:57.680 --> 0:23:01.600 up or not to make that either. I've been writing 0:23:01.640 --> 0:23:04.000 a little piece for myself on called The Fall of 0:23:04.080 --> 0:23:08.080 the Icons, which runs through how the businesses which we 0:23:08.119 --> 0:23:12.120 would have regarded as paragons of good business fifty years ago. 0:23:12.640 --> 0:23:17.960 I see I Marks and Spencer in this country, General Electric, Sears, 0:23:18.160 --> 0:23:23.040 Roebuck in the United States, one after the other. These 0:23:23.119 --> 0:23:28.040 businesses have been damaged by essentially this individualistic approach to 0:23:28.119 --> 0:23:32.080 what businesses are like. And there are just so many cases. 0:23:32.720 --> 0:23:36.719 The most extreme case is actually Deutsche Bank, which has 0:23:36.840 --> 0:23:42.600 moved from being h the bank that was the powerhouse 0:23:42.680 --> 0:23:48.439 of financing German industry, into an essentially a failed US 0:23:48.600 --> 0:23:53.320 hedge fund. And for that to happen in twenty five 0:23:53.440 --> 0:23:59.200 years is a quite extraordinary and entirely negative achievement. I'm 0:23:59.200 --> 0:24:02.880 going to go back to question, are we hopeful greed 0:24:03.040 --> 0:24:06.639 is dead? Is a prediction. It's a very hopeful book, 0:24:07.160 --> 0:24:09.440 and it says we're at pete greed and why we 0:24:09.480 --> 0:24:16.639 are at pete greed because gradually ideas filter through, ideas matter, 0:24:17.440 --> 0:24:22.400 and the ideas on which peak on which greed was founded, 0:24:23.280 --> 0:24:29.240 these individualistic ideas turn out to be just wrong that 0:24:29.520 --> 0:24:32.920 they are against the grain of the new evidence from 0:24:33.080 --> 0:24:38.360 evolutionary biology. There against the grain of the evidence from 0:24:38.440 --> 0:24:43.159 business performance. They're just not how we are designed to 0:24:43.400 --> 0:24:48.640 work well together. And those ideas will gradually filter through, 0:24:49.520 --> 0:24:54.120 and you see it in a tidal wave of new 0:24:54.480 --> 0:24:59.600 books basically all along a communitarian theme and by some 0:24:59.800 --> 0:25:03.720 very influential people across the board. And so I think 0:25:03.880 --> 0:25:10.280 intellectually we are already comfortably past pepe greed. Those ideas 0:25:10.320 --> 0:25:12.960 will take a decade to filter through, but they will, 0:25:13.240 --> 0:25:17.320 And of course COVID as an accelerator, because COVID is 0:25:17.359 --> 0:25:21.920 a splendid example of the need to come together. Just 0:25:22.160 --> 0:25:26.719 look around Europe. The most successful country as far as 0:25:26.760 --> 0:25:32.280 I can see as Denmark. It's had about the lowest 0:25:32.560 --> 0:25:37.080 economic hit and about the lowest mortality hit. So it's 0:25:37.119 --> 0:25:39.680 not even set it up as a trade off. Do 0:25:39.840 --> 0:25:42.000 we save the economy or do we save people? It 0:25:42.080 --> 0:25:47.880 save both. Why has it done that because repeatedly over 0:25:47.920 --> 0:25:53.960 the decades, Denmark has demonstrated an ability to work together 0:25:54.920 --> 0:25:58.800 for a common purpose. That's why on all the indicators 0:25:59.480 --> 0:26:02.200 the subject give indicators of well being and happiness, the 0:26:02.280 --> 0:26:06.359 objective indicators of lifestyle, it comes out as top in 0:26:06.400 --> 0:26:10.000 the world, and so along comes this new crisis of 0:26:10.119 --> 0:26:15.680 COVID and Denmark, unlike a number of other countries, has 0:26:15.720 --> 0:26:21.639 a very modest leader, a very ordinary person, very humble person, 0:26:22.880 --> 0:26:29.520 single mother. When she says we people listen, I think 0:26:29.920 --> 0:26:33.200 a lot of people would wonder for those countries that 0:26:33.400 --> 0:26:36.520 have gone down the individualist route, that have trashed many 0:26:36.600 --> 0:26:40.160 of these institutions and find it with social media particularly 0:26:41.080 --> 0:26:45.840 harder and harder to have single conversations around important matters 0:26:46.280 --> 0:26:50.960 and constructive dialogue. Are you not concerned that we now 0:26:51.080 --> 0:26:54.240 have taken away the levers in those societies to get 0:26:54.320 --> 0:26:56.480 back to a better equilibrium, that we might in fact 0:26:56.560 --> 0:26:59.920 be trapped on a bad and a bad equilibrium where 0:27:00.160 --> 0:27:02.400 without any of the tools to be able to go back. 0:27:02.720 --> 0:27:05.080 I think that's right. I think that there's a real 0:27:05.160 --> 0:27:07.320 worry there. And one of the things we trace in 0:27:07.359 --> 0:27:12.640 the book is the way that the organization of political parties, 0:27:12.680 --> 0:27:18.879 the historic organization, essentially collapsed after communism collapsed. What we 0:27:19.040 --> 0:27:23.640 need is actually a rebuilding of political parties and political 0:27:23.720 --> 0:27:27.560 institutions around about some of the ideas we've talked about. 0:27:28.000 --> 0:27:32.200 The question which you posed right at the beginning, which 0:27:32.280 --> 0:27:35.440 is the question of what are economists doing writing about 0:27:35.520 --> 0:27:39.840 political philosophy? And the answer to that, and my answer 0:27:39.880 --> 0:27:42.239 to that certainly is I don't think we've anything new 0:27:42.320 --> 0:27:46.800 to say about political philosophy. But what has happened is 0:27:46.880 --> 0:27:51.320 that over the last half century, economics became associated with 0:27:51.520 --> 0:27:55.640 a particular political philosophy that was at odds with how 0:27:56.160 --> 0:28:00.760 successful business and economy is actually operated. And we're trying 0:28:00.840 --> 0:28:05.560 to redress that. So thank you both very much, Support 0:28:05.600 --> 0:28:15.120 Collier and John Kay, thanks for listening to Stephanomics. We'll 0:28:15.119 --> 0:28:17.240