Our economic system is currently rigged against our longer term economic, environmental and social needs – we need your ideas to help shift the rules of the game and transform our future. How can we go beyond the churn and change of short term political cycles to meet the needs of tomorrow’s world? How can businesses transcend the drive to maximise short term profit and shareholder returns? How can we all reflect on the needs of our community and future generations before we splurge?
For the final challenge of the Citizens’ Economic Council, we’re crowdsourcing your ideas on how we can shift the incentives within our economy to meet the needs of tomorrow. Our citizens defined a sustainable economy as one that took a long term view accounting for economic, environmental and social concerns. But take a few recent examples – the Volkswagen emissions scandal, the US’s withdrawal from the Paris climate agreement or the huge subsidies still given to fossil fuels. Time and time again quick profits trump longer term environmental and social concerns (excuse the pun).
We believe that moving to a more sustainable system that protects people and planet for generations to come requires a shift from our current consumer economy into a citizens’ economy. The lonely consumer who can’t see beyond their next spl(urge) must be transformed into active, engaged citizens reflective of current and future needs. To realise the potential of a citizens’ economy we need changes to happen across the whole spectrum of our society.
Take the challenge:
Making today's economy work for tomorrow
As a starting point I have outlined four big shifts from short term to longer term thinking. We’re looking for ideas that speak to one or more of these.
Shift #1 – Governments outline long term strategic and sustainable goals which protect people and planet
Our citizens, deliberating through the RSA Citizens’ Economic Council, were fed up of the constant churn and change that comes from short term political cycles. We want to see more continuity in government policy which protects people and planet in the long term. Too often our politics are marred by ‘quick win’ policy making which often places some of our most pressing social issues into the ‘too difficult box’. Trump’s withdrawal from the Paris climate accord to boost jobs reeks of short-sightedness. But there are other examples of governments trying to get this right. In the devolved government of Wales, the Wellbeing of Future generations Act recognises environmental, economic, social and cultural needs as interconnected and that decisions today must have a positive impact in the long term future. What ideas do you have to ensure government policy looks out for our long term interests?
Shift #2 – Businesses value environmental and social outcomes on a par with economic needs
Businesses are often stifled by the perception that they need to maximise shareholder value and search for quick profits. Lynn Stout argues this belief isn’t a legal reality and puts the drive for profits down to executive compensation packages which reward short term returns, as well as to activist hedge funds which benefit from speculation. In these cases it’s corporate practices which are pushing companies to cut corners in search of profit. This happens all too often with disastrous consequences for people and planet; just consider the examples of BP’s Deep Water horizon oil disaster or the Bangladesh factory collapse. But other companies are setting standards – showcasing best practice in creating stakeholder value; workers on boards, B corps and Community interest companies are all great examples of new models of corporate governance that change the incentives within businesses, recognising wider social and environmental concerns. Many of us have heard of triple bottom line accounting. How can we make this the standard and how can we change the way businesses are incentivised? Would a carbon or polluter tax change the rules of the game?
Shift #3 Financial institutions such as banks and pension funds are a key enabler of a thriving and sustainable economy
Financial institutions are stewards of our money, and wield significant power when they make decisions. They can choose to opt for a sustainable and more secure economy; or a short-term economy that puts profit over people. They have the capability to enable a thriving and sustainable economy – or to place the reality of such an economy at great risk. Banks and pension funds often hold large swathes of capital in industries such as oil and gas and housing which generally guarantee a stable return. In the 1990s and 2000s deregulation incentivised banks to lend at an unprecedented scale, but against assets such as housing leading to housing bubbles or credit derivatives which benefited investors – very little of this lending had a positive impact on the real economy, and arguably placed the lives of generations at risk through the subprime mortgage crisis and the 2008 world financial crash
If we are to value environmental and social outcomes as well as financial returns on investment we need to do things differently. Triodos bank is a great example of how the power of finance can be used to support sustainable projects which benefit people and planet. Our own Fellow led projects are testing new models of community savings banking. The RSA has argued that in order to tackle climate change we need to divest in fossil fuels and reinvest in renewable energy. In November 2016 Waltham Forest became the first UK local authority to divest its £753 million pension fund from fossil fuels. How can we shift the incentives of our big financial institutions in order to value longer term social and environmental outcomes?
Shift #4 – A citizen’s economy, that meets the needs of all and future citizens
Look down at the cotton shirt you are wearing and take a moment to imagine all the people that have collaborated to bring that shirt from the field to you. We are inherently interconnected to everyone and our environment, something which is too often neglected by the view of a society made up of isolated and passive consumers, who only have eyes for the cheapest deal. The Citizens’ Economic Council process demonstrated many things, including how a deliberative process with citizens has the potential to value much beyond our our immediate self-interest. Pope Francis’s powerful 2015 encyclical to 1.2billion Catholics called for a radical change of hearts and minds on how we view the environment and poverty. He recognises that the environment goes far beyond being a purely economic issue and is one that touches all aspects of our lives. How can we change how we view ourselves and our role in our communities? How can we shift power back to people and our communities so they can use resources based on what they value and in everyone’s long term interests?
This list isn’t meant to be comprehensive. There are undoubtedly many more shifts that are needed. We need your ideas! What policies and incentives are needed to bring about a citizens’ economy for tomorrow’s world? How can we match today’s incentives with tomorrow’s needs?
How can I submit an idea?
Sign up to the RSA Ideas platform to submit your ideas in response to our challenge online. You have until the 17th July to submit your idea.
Take the challenge:
Making today's economy work for tomorrow
Find out more about the RSA Citizens' Economic Council
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Submitting this proposal, would appreciate any feedback: https://docs.google.com/document/d/1EF-Y2LZknP2FBNIMHnQYVRUV5iEu4hpFjvMpcymh3NI/edit?usp=drivesdk
More background: https://docs.google.com/document/d/1Uc_xQpLLEmxY1-6GIFerrzMVAFwgVQz66wdDUjHJi4M/edit?usp=drivesdk