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The non-entrpreneurial state: HBR on China

3 May

I’ve blogged before on the role of the state in economic development  – see my posts of 3rd and 9th of October last year. Specifically, I’ve referred to Mariano Mazzucato’s book on The Entrepreneurial State. It has some good stuff, but I’ve always had this nagging doubt that the case studies it uses are too US-centric – too US military spend-centric in particular. It certainly doesn’t seem to work so well in the UK – across the pond, they get (and the world gets) the iPhone; we get Concorde and British Leyland.

My unease is beefed up by an article in the March HBR (“Why China can’t innovate” – see http://hbr.org/2014/03/why-china-cant-innovate/ar/1). The authors point out that the role of the state in enterprises (“scour the company’s board for the real boss”) is a real brake on innovation. Their last sentence is worth quoting in full: “The problem, we think, is not the innovative or intellectual capacity of the Chinese people, which is boundless, but the political world, in which their schools, universities, and businesses need to operate, which is very much bounded”.

I hear that Mariano Mazzucato is adviser here to both government and opposition. I hope, as they look at her ideas, they consider why The Entrepreneurial State works better in some institutional contexts than in others.

 

Sen on Poverty – the tolerance of the intolerable

23 Jan

Amartya Sen

 

Amartya Sen was lecturing last night at the LSE on this topic – sold out, as you might expect (2,000 enquiries in the first hour, apparently). But you could also watch a live webcast which worked well – check the LSE video site – http://goo.gl/Kqs6w7 – for the replay

He looked at possible reasons for why we tolerate poverty – ignorance, a belief it is impossible to remove it, and self-centredness (“no obligation”) and found all of them lacking. Of most interest to me were his illustrations from India, and the contrasts between India and China.

I had three key takeaways. First, on ignorance: Sen described how the Indian media ignored extreme poverty because they were “controlled” by the middle classes, in the sense that they pandered to the interests and obsessions of the middle class to ensure their advertising income. Hence little reporting of extreme poverty in India. So my thoughts turned to William Wilberforce, the crusader against the slave trade. I realised, perhaps for the first time, that part of his greatness was to rub the noses of the society of his day into what slavery really meant so that the elite that made the laws could not simply ignore it. I suppose the modern equivalent is “Benefit Street” and forcing politicians to live rough for a bit.

Second, the need for “balanced growth” – not in the sense necessarily of balance between sectors, but in the sense of balance between public and private provision. You need to grow healthcare and education as much as business if your economy is to thrive. A malnourished workforce is not that productive.

Third – think quantitatively about poverty and policy. In the Q&A session, Sen dealt with an argument that “India’s greatest problem was employment subsidies” – and simply showed that this was unlikely given their small cost, and that the much greater cost of utility subsidies to the middle classes were much larger. Avoid dogma and stick to facts and reason was a good message to put across.

 

 

 

Innovation. the Big Society, and the “dazzling goose”: tea at the House of Commons

26 Nov

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Tea at the House of Commons was quite a treat (after you got through the 45 minute security): cream scones & champers at 4 o’clock seems a pleasant way to encourage democratic participation.

And the raison d’être? – Chi Unwurah, Labour’s Shadow on the Big Society, was sponsoring a Ford Foundation session on Financial Governance for Innovation & Social Inclusion (#fgisi), very ably chaired by Mariana Mazzucato.

The speakers were a motley crew. They have an entirely legitimate concern about value extraction rather than value creation by parts of the financial sector (i.e. theft to the man in the street) and a focus on the role the state can play in fostering innovation (lots of good examples from US and elsewhere). Their main link seems to be Ford Foundation funding – while there was a call for a co-ordinated policy response to the issues they were raising it’s difficult to see how this would work in practice.

It’s often the one-liners I take away from these events. This time, I thought the best one was from Ngaire Woods. “Beware the dazzling goose” she said – referring to the financial sector, and its ability to dazzle politicians with its complexity and promise of taxable capacity. She (and others) also had some good suggestions as to what sunglasses to wear: try seeing it collectively with others (e.g. the EU, now even the Swiss) who are less dazzled. And keep the rules to regulate it simple.