Matthew's Blog
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31 July 2008
Feedback on the New Enlightenment
Post your commentOne great thing about my job is the feedback I get from Fellows. I particularly enjoy being challenged. One of my fiercest critics has been Australian Fellow John Montgomery who thinks I am a soft headed, jargon spouting, leftie.
John and I have been sparring on and off since I joined the RSA. He has just sent me an essay entitled ‘A New Enlightenment’. It’s a powerful and basically reactionary piece (I say this not to be disparaging but because the central thrust is a call to react against modern ‘isms’ in favour of older certainties).
Sorry, John, but I can’t give you the full response the piece deserves (it’s the pressure of last minute work before my holiday).
However, the starting point for my disagreement is that the old truths haven’t simply been displaced by modern fashion but by more profound changes in the world and our understanding of it.
Globalisation, climate change, complexity, technology and the web, new science from quantum physics to neuroscience; these all challenge aspects of the Enlightenment world view.
Moreover the Enlightenment itself helped to unleash forces which have created a hollowed out sense of the good society and the good life, which would horrify the authors of the Enlightenment.
I wonder why right of centre thinkers like John want to lay so much blame for modern problems at the feet of a few French philosophers whose theories are unknown to the vast majority of citizens, and so little at the door of consumer capitalism and the hubristic myth of the separate autonomous self, all of which are ubiquitous aspects of modern life?
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30 July 2008
The path to civic innovation
Post your commentI have been spending time recently with some amazing social innovators. Last week it was Oli Barrett, creator of the Catalyst Awards among many other things. In just a half hour conversation Oli came up with some great ideas for Fellowship engagement.
On Monday it was Bobby Fishkin, another of the new breed of the hideously talented, young, ambitious American social technology pioneers.
What I got from Bobby, apart that is from an inferiority complex and a sneak preview of his exciting new web widget, was this:
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- The problem with social capacity is not an aggregate lack of
commitment, time or effort but that the available capacity is massively
under-utilised. We don’t use people’s skills effectively, we don’t
collaborate as well as we should and we don’t learn from what works (and
what doesn’t).
There are some amazing organisations trying to address some of this (for example Ashoka) but too much blood sweat and tears are still flowing down the drain.
- In countries, cities and neighbourhoods we aren’t combining social interventions effectively. Too much is marginal, short-term and disconnected. From sustainability to tackling social exclusion new ways of joining up interventions and innovations are vital if we are to get to a critical mass point.
- The RSA’s history is both a help and a hindrance. On the
downside we are trying to change a very established organisation. It’s a
bit like IBM going from selling computers to being a high level
consultancy (a process which nearly killed the corporation).
Where we used to offer Fellows status and membership of a club we are now offering membership of a network of thought leaders and civic entrepreneurs. Getting buy-in from Fellows to this new offer is the key challenge facing our new Director of Fellowship Belinda Lester.
On the upside the RSA’s brand, the willingness we meet when we ask people to work with us and our reasonably robust financial model mean we can stay the course.
In innovation failure is as essential to learning as success, but for new initiatives mistakes in planning or application can be fatal. The web is full of abandoned experiments in social innovation. Our new networks platform will have learnt important lessons from the too clunky nature of version one.
Talking to Oli and Bobby confirmed to me we are going in the right direction. It also underlined how far we have to go before we the RSA is genuinely a hotbed of innovation. But most of all I was encouraged by their willingness to offer us advice and support as we try to fulfil the new mission agreed by our Trustees and Council.
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28 July 2008
The era of investor activism
We are entering an era of investor activism. There are at least three broad shifts that will compel investors to enter the market as more than merely consumers.Post your comment
First, the failure of free markets to live up to claims made on their behalf. Milton Friedman and his mentor Freidrich Hayek told us that the market was free and fully rational. It turned out to be neither. The debacles of Russia and Argentina showed the folly of the first claim. Long tails and speculative bubbles put paid to the second.
Second, the growing realisation that central control cannot keep the City in check. Freidman and Hayek were right about this. Regulation, the product of a few bounded rationalities, can never out-perform the multiple mind of the market.
This second point is relevant to the current political situation. As the fall-out from the sub-prime affair continues, we are bound to get more and more calls for regulation. This is not necessarily a bad thing. Some regulation can be beneficial. But we would be kidding ourselves if we believed that regulation was the final answer.
The City is the very crucible of innovation. The men and women there, incentivised to create, will always be one step ahead of the regulators. As Michael Lewis describes in his book Liar’s Poker, mortgages were first packaged up and sold as bonds by a trader at Salomon Brothers, looking to steal a march on his rivals. It was a minor innovation that became a way of doing business. An army of independent watchdogs could not have stopped it.
The third reason for the rise in investor activism I pointed out yesterday. It is the catalogue of mismanagement attributable to that once-storied British institution, the joint stock company.What does the rise of investor activism mean for companies?
In his recent RSA lecture, marking the launch of our project Tomorrow’s Investor, David Pitt-Watson heralded the arrival of the new regime.
Companies, however, can be excused if they are not so sanguine. They need to distinguish between engaged activist investors, who may tell them uncomfortable truths they don't want to hear but have the long-term interests of the company at heart, and 'drive-by activists', who may whisper seductive tales of optimising shareholder value but whose real interest is in extracting cash from the company now, even if that leaves it debilitated and unable to cope with tough times in the future.
Investor activism can also be tricky ethically. Hugh Fearnley-Whittingstall’s attempt to improve the lives of Tesco chickens, for example, splits people down the middle. We discussed this at the Tomorrow’s Investor deliberative forum; about half the participants supported the “rights” of chickens, half the “right” to cheap food. There are no easy answers on ethical questions.
One way to get around - or at least ameliorate - this issue is to have broad participation from across the population. Then, hopefully, companies will behave in the interest of the many, rather than the few.
This more general citizen activism is what we are currently investigating in our Tomorrow’s Investor project. Check out the web page for more details.
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24 July 2008
The End of the Corporation
The idea that the multinational corporation would one day replace the state as the focus of global power was always a silly one.Post your comment
The people who put it about believed that markets could survive and thrive outside the state. But they let their beliefs get in the way of looking at the facts.
When the "Washington Consensus" was put into practice - in Russia, in Argentina and, most recently, in Iraq - it was a disaster. The lesson was clear: markets need the support of institutions, above all the state.
The demise of the neo-liberal dream has been accelerated by the utter incompetence that resulted in the credit crunch.
However, as Jonathan Guthrie notes in today’s FT, recent defeats by no means spell the end for the joint stock company. He writes:"Companies will endure as a means of marshalling people and capital. No other organisations set prices as efficiently or pursue market experiments so single-mindedly."
In part, at least, this is true. Companies, the wealth-generating engine of any economy, will be around for a while yet.
But I wonder whether they are, in truth, efficient at marshalling people and capital.
Adam Smith, a Fellow of the RSA, disliked the idea of the joint stock company. Once managers take control of capital, he said, they will act in their own interests. The shareholders will forget to manage their investments.
Today, it could be argued, Smith’s dystopia has come to pass. The capital investments of millions of ordinary people are being controlled by what Paul Myners, speaking at the RSA, called "a self-appointed managerial elite". This group works for itself, not the investor. Excessive remuneration is only the most visible sign of this dislocation.
The RSA’s new project, Tomorrow’s Investor, is investigating these issues. We held a deliberative forum here on Saturday with 24 ordinary investors - people who have invested in the stock market mainly through their pensions.
Around 70 per cent of the UK equity is owned by pension companies and other funds. Yet, by and large, people have little consciousness of their role as owners.
Like the political system, the financial system relies on active involvement from ordinary people. Managerial capitalism is good for no-one: it reduces profits for business and diminishes value for the shareholder.
Tomorrow's Investor is investigating the role citizen investors should play in the economy. The Washington Consensus had a name for this: "democratic capitalism". It may turn out to be the best thing that failed ideology ever produced.
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23 July 2008
Getting regulation right
Post your commentA final point gives me a chance to link this discussion to Daniel Finkelstein who is writing some fantastic stuff at the moment. Like our greatest ever modern political essayist, George Orwell, Danny is at his best criticising his own side.
Today he is attacking the Conservatives for failing to champion the progress made using law and order which he says came originally from right of centre politicians like Michael Howard.
I wonder whether Daniel would also agree with me that another danger with the Conservatives is their apparent support for professional self regulation in the public services.
As I said earlier, we need better, more outcome based, less intrusive, regulation but that is different than simply handing power back to the professionals and producers.
Attacking regulation is an easy hit but if the Conservatives dismantle the centre’s capacity to tackle under-performance not only will they will be going back on many of the reforms of both Thatcher and Major, but they will only end up having to reverse the policy in the face of a public intolerance of failing services.
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23 July 2008
Do school children and students know how to research?
Post your commentThis was the question raised last night at the RSA, where Encyclopaedia Britannica were sponsoring a talk. Their Managing Director, Ian Grant, emphasised the difference between ‘search’ (a list of results) and ‘research’ (a broader and deeper process of inquiry).
The debate featured a spat between me and Professor Stephen Heppell, one of the world’s leading commentators on learning and technology. Stephen is profoundly critical of the way Government is running our schools. Indeed, he asserted that every example he had seen of innovation and experimentation in schools had been a success, if for no other reason than that it couldn’t possibly be worse than what it replaced.
I have a great deal of sympathy for Stephen’s analysis and even more for his progressive vision for schooling. We fell out when I asked how a more devolved, innovative, child centred approach could ensure success in ‘average’ schools.
My argument was that while visionaries like Stephen tell inspirational stories about what is possible when great schools and teachers aim higher, policy makers will always be obsessed with how systems ensure steady improvement at the average and action to tackle under performance.
I am all too willing to recognise that the current structure of school and student appraisal could be improved, but that doesn’t mean we don’t need a system. The goal is systems that are light touch, that encourage local adaptation (as with the RSA’s Opening Minds curriculum framework) and that provide useful information to practitioners and students as well as to regulators.
The themes of this discussion were picked up again this morning in the debate about the Government’s plan to give doctors an annual competence test.
I remember from my own time in Whitehall shocking statistics showing massive variations in costs, treatment rates, and performance of hospitals, departments and primary care practices. So I support the initiative but – returning to yesterday’s theme – it is important to avoid the obvious dangers in a policy like this.
The first is over-regulation leading to a loss of autonomy and blind conformism – this is what some critics mean when they warn of the danger of ‘defensive medicine’
This is certainly what seems to have happened to much teaching practice over the last decade.
The second is a system which is easy to manipulate, leading to doctors being rated not on their actual performance but on their ability to do well in the competence test. This is what some local authorities would say has happened over time with the star rating system for council services.
This second problem should be seen as an endemic weakness reflecting the powerful impact of Goodhart’s Law which states that the relationship between two performance variables will start to disappear as soon as one is used at a proxy for the other.
The oft-cited example here is that the relationship between academic excellence and having articles in refereed journals started became weaker as soon as the Research Assessment Exercise used the number of articles as the basis for scoring academic performance.
Not only did lots of Journals of questionable quality spring up but academics tended to focus on low value, specialist, incremental research, just about good enough for a journal, rather than bigger bolder more accessible work that took longer to pay off and with a higher chance of failure.
So, however good the new system for doctors it will need over time to be continually reformed as these various policy tendencies take effect.
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22 July 2008
Nudge Fever
Post your commentFollowing Richard Thaler's speech here last week about his book Nudge I have had several calls from journalists. As is often the case with policy fads there is now something of a backlash as commentators realise that ‘nudging’ is really no more than a set of clever techniques and not quite the new paradigm implied in some quarters.
The most widely touted example of a nudge proposal was George Osborne's advocacy of a recycling reward scheme modelled on Recycle Bank a highly successful
Recycle Bank is an impressive scheme overseen by an NGO which works in partnership with local councils to pick up recyclable rubbish and then hand out reward vouchers redeemable in local stores to those who recycle. From what I can ascertain the scheme starts from the assumption that there is no existing municipal scheme so that any recycling that takes place is a direct consequence of the scheme.
This is important because were there to be any existing scheme – as there is in the vast majority of UK local authorities – then this example of ‘nudge’ comes up against a classic problem with policy based on financial incentives; the dead weight. Osborne asserts that the policy is redistributive because:
‘While the poorest households were previously the least likely to recycle, as soon as they start receiving a financial incentive for recycling, they typically become amongst the most likely households to recycle’
This may be true once the policy is in place but at the point of implementation the scheme would involve rewarding those who are already recycling.
If, as Osborne tells us, the current recyclers tend to be better off the first effect of implementing the scheme is to give middle class families a reward for something they were already doing for free. The dead weight problem doesn’t necessarily kill a policy. The Government’s Educational Maintenance Allowance to disadvantaged 16-18 year old who stay on at school has been seen as a success despite a huge dead weight cost.
Recycle Bank has the feel of a neighbourhood NGO initiative (albeit one that is taking place in hundreds of places), so arguably it’s not the kind of scheme people might be inclined to fiddle. But given how many people are hostile to any type of government, a local authority scheme would have to address another classic policy conundrum.
How do you get the incentive right; just big enough to change behaviour but not so big to encourage cheating (people nicking each other’s recycling or putting bricks at the bottom of their bin). If this sounds cynical, remember the ill-fated Individual Learning Accounts (ILAs) which foundered when rogue training companies were set up to farm people’s ILAs splitting the proceeds between the bogus trainers and bogus trainees.
I remain a fan of nudging but policy making is complex and policies that look clever on paper and work with college students can founder when they are taken up by citizens and those on the lookout for a quick buck.
In an echo of the strange world of quantum mechanics the moment a policy is implemented it changes the context for which the policy was devised and is therefore bound to produce unexpected and sometimes perverse outcomes.
To end with another issue with incentives; if everyone takes up the scheme they quickly come to see the ‘reward’ as an entitlement. And if they then are refused the reward because they fail to recycle they see this as a punishment. In other words, if the policy of rewarding is too successful is comes to feel like the policy of fining it was supposed to replace!
It is this complexity plus the importance of underpinning schemes like these with a high level of public buy-in that leads me to conclude that such ideas work much better at the local level. That’s why the Conservatives are arguing for their policy to be a council initiative. However English Council areas are so big that to many residents the town hall is as distant and oppressive as
Changing behaviour is hard. Nudging is a useful technique but it doesn’t abolish the classic dilemmas of policy making.
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18 July 2008
Delivering the New Enlightenment
Post your commentThe RSA’s ‘new enlightenment’ mission seeks to combine thought leadership, social engagement and innovative forms of collaboration.
We have some way to go still until we are delivering on that mission. In particular the activities and support on offer to Fellows outside London too often falls short. We are investing significant resources in addressing this failing and our best regions and local organisations are working hard to transform the face of the RSA outside London.
But we do have days here at John Adams Street that offer a window into the future. Yesterday was one of those days
At lunchtime over 200 people attended a fascinating talk by Nudge exponent Richard Thaler, a speech that will soon be available on RSA Vision. Thaler's ideas are having a big impact in policy making circles, being quoted in a recent speech by David Cameron. And they are very relevant to the RSA's big idea of ‘closing the social aspiration gap’.
In the evening we had an excellent event to launch our new Tomorrow's Investor project. David Pitt Watson, who is leading on the project and is Chair of Hermes Equity Ownership spoke and there were powerful responses from Paul Myners, Chair of the Personal Accounts Delivery Authority, Penny Shepherd, Chief Exec of the UK Social Investment Forum and Jasmine Birtles the finance journalist and author.
There followed an excellent debate about how better to inform and empower the two thirds of us who hold shares directly or indirectly. On Saturday we will be holding a citizens jury to examine these questions with a group of ‘ordinary’ small investors.
Last night also saw a really lively network event jointly organised between RSA and Teach First. The event came up with some good ideas for initiatives, there were generous offers of support for these initiatives and some of Teach First Fellows alumni asked to join the Fellowship.
I hope that by this time next year networks events of this kind are happening regularly in every part of the country and that they are baring fruit in new initiatives and real social impact for the RSA. The RSA nationally is developing an ever higher and stronger brand the challenge now is to make this the case wherever we have a presence.
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17 July 2008
Britain's social recession
Post your comment
How do we get people to live differently in ways which are better for them and better for society?
This has become the political question of our time. It is something I address in my piece about David Cameron in this morning’s Guardian, where I argue that the Conservative idea of civic renewal overseen by a ‘post-bureaucratic state’ is interesting but not yet convincing. It was an issue that surfaced at a Progress seminar this morning addressed by James Purnell and Tony (Lord Anthony) Gidddens. It featured in today’s RSA Thursday with Richard Thaler.
Encouraging people to work together to build a better future requires a certain degree of public hope and aspiration. In my Guardian piece I drew on statistics I heard yesterday from Roger Liddle - a leading policy advisor to the European Union. Social pessimism is rife in the countries of the old Europe; France, Germany and the UK in particular. Here are their respective agree and disagree scores for the three predictions for the next twenty years:- ‘People’s lives will be better than today’: UK 36 – 56, F 27 – 64, G 20 – 68
- ‘People will earn less because of competition from rising economies’: UK 62 – 32, F 68 – 27, G 69 – 27
- ‘The gap between rich and poor will be wider’: UK 83 – 14, F 89 – 10, G 90 – 9
This extreme level of social pessimism is accompanied by a rejection of structural explanations of disadvantage. Whilst there is growing resentment at the very rich, people are more and more inclined to say that the poor have only themselves to blame. This is not fertile territory for developing a new agenda for social solidarity and action.
The figures on expectations of growing inequality are particularly stark. One of the other points made by Roger Liddle is that education - which many progressives hoped would be a driver of social mobility and inclusion - has actually become a major driver of social polarisation. The reason for this is simply that the wages available to those lacking higher education are falling, and will fall even faster now hard times and higher unemployment rates are here again.
Making education a force for inclusion and opportunity will require more than a further cranking up of an increasingly problematic standards agenda. We need to ask what education is for and we need a system which is not about finding our whether children are able but how they are able and how their abilities can be developed
(For more on this take a look at the RSA's Progressive Education campaign.)
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16 July 2008
Thanks Danny
Post your commentThanks to Danny Finkelstein for some kind words in his column today.
It’s especially pleasing to be praised by Danny – he is one of the leading thinkers in this area at the moment and has done a lot to push forward the revolution his column talks about. While I was preparing my speech I found this post of his – on the five sexiest ideas in politics – especially useful. One of the best starting points for anyone interested in this sort of thing.
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