Posts filed under ‘economics’
The happiness question
Rebecca Nash writes:
If you’ve been following the ‘happiness debate’, you’ll know that policy makers are increasingly asking if it is potentially a better indicator of social progress than the economic measures represented by GDP. But diving into the happiness sciences you quickly find that it raises as many questions as answers: What is happiness? According to whom? Can it be measured? And if we can measure it, what will the policy response be to unhappiness? What practical steps can be taken to make people happier?
And another question from our end: What does happiness mean to business? Generating happy moods is nothing new to consumer goods manufacturers, where short-term happiness and consumption go hand in hand. But there are a number of potential happiness platforms which business can work from to create more sustainable happiness – building social justice, delivering meaning and value, employee satisfaction on organisational levels, and simply being associated with happiness in its pure form (but beware of ‘happy wash’).
In the research on this which I’m leading for The Futures Company, I’ve become really interested in ‘restoration’ – an approach to happiness which involves making people happy who once were not, and I think it produces challenges that matter to both business and government. When I attended a happiness panel earlier this year at the Institute for Contemporary Arts in London, panellists drew strong links between happiness sciences, psychotherapy, and opportunities to self-repair. Psychotherapist Phillipa Perry advised a laughing audience that, if we want to be happy, we should ‘choose our mothers very, very carefully’. She also gave us tips on how to be happier if early childhood didn’t give us the personal tools we needed for a happy life.
Perry’s take on happiness as something that needs to be re-learned drew some connections for me between what is happening on individual and broader social levels. It reminded me of a recent drivers scan we did for our Government 2020 project, a project on the future of government. One of the most influential drivers of change which emerged – to our surprise – was a trend toward anger, which shaped a few of the future worlds we brought to life. Happiness is more private (although the notion of ‘social wellbeing’ can give it a public face). Anger is evident and more public, and we’re seeing more of it, more often, in public protest, in generational conflict and in economic frustration.
A key challenge, then, for any organisation taking on happiness, is how to tackle other complex emotions – because as we’re seeing, if happiness goes public, so too can its opposite.
The picture at the top of this post is taken from Stephanie Price’s Borderline Personality blog, and is used with thanks.
The World in 2020
Andrew Curry writes:
I’ve been working on a Futures Company report on The World in 2020 for the last couple of months, and since I’ve end up doing much of the work in the evening I’m delighted to say that we’ve just published the summary edition, and the full version has just gone into production. The summary edition can be downloaded from our website, although registration is required.
The World in 2020 is the first in a series of ‘Futures Perspectives’ reports which we’re publishing over the next few months.
It takes a high level view of the big drivers which are shaping the world, and looks at some of the innovation spaces which may emerge as a result. Here’s are a couple of extracts:
The financial crisis of 2008 represented an ending, but not a beginning. We are in a liminal moment, betwixt and between, when there are more questions than answers, but when, increasingly, our assumptions about how the world works are open to challenge and interrogation. … Liminal moments such as this one can last a decade or more, before opinion coalesces around a new set of operating assumptions about how the world works.
Over the next decade, we’ll see much tougher resource constraints – energy, food and water, and resources will all be under pressure – as well as the continuing long economic shift towards Asia. Issues involving technology and inequality will also be influential. It will be harder to make money in the coming decade. As a result, businesses will have to rethink their approach:
The changing economic environment creates the dilemma of new yet alternative prospects for different types of customers. The emerging middle class across much of Asia and Latin America will be very different from the debt constrained consumers of Europe and the United States. Globally, the
costs of basics such as food and energy are likely to rise over the next decade, so discretionary income will be lower than some project. In the richer countries, the experience of recession will create demands for more social behavior from businesses.Business critic Umair Haque talks of the “meaning organization” that builds “authentic prosperity.” As he writes in a blog post, “An isolated notion of ’profit’ is obsolete: it’s an arid industrial-age conception of a currency-focused construct that’s built to trivialize everything but what a firm owes its ’owners’.
Rising East
Joe Ballantyne writes:
We’re experiencing a fundamental shift in the global economy, as wealth moves from West to East. As Asia and the Middle East assert themselves as the brightest prospects on the global landscape, in some ways we’re witnessing a return to the 16th–19th centuries, when the Chinese and Indian economies dominated world trade.
The scale of the shift is huge. In 1950, America was responsible for 27 per cent of the world’s GDP. China accounted for just 4.5 per cent and India, 4.2 per cent. Fast-forward to 2050 and the picture will look very different: forecasters say China will then be about to become the biggest economy in the world.
This economic shift, and the large implications for European businesses, was the subject of a recent report, Looking East, produced by The Futures Company for HSBC. The report included extensive analysis of the main drivers of change affecting the global economy to 2020, as well as a number of in-depth interviews with experts and businesspeople in a number of European countries.
It can seem as though this story is now a familiar one. But the research uncovered some striking findings, some of which go against the grain of popular conceptions about the rise of Asia. I was most struck, as we wrote the report, by these three:
- The ‘global financial crisis’ isn’t really global at all – it’s a manifestation of a longer term economic realignment. While Western economies stagnated through 2009-10, Asian economies are increasingly “decoupled” from the US, and have increasingly influential trade partners in other parts of the world – notably Africa and south America. China and India have continued to expand rapidly while Japan and several European economies have slipped into near-depression.
- Asia is no longer just a source of low cost labour – it’s increasingly a source of high value innovation. The model whereby the West does the research, development and design and the East took care of production is anachronistic. Lines have been blurred – as a result of a huge investment in education, countries like India and China are world leaders in areas such as software design and green technologies, and their multinationals are reshaping industries such as energy, steel and car making.
- There’s more than one way of running a successful economy. It’s easy to assume that the Washington consensus – open borders, economic liberalization, and free movement of capital, privatization – is the only way to run a successful economy. But these are largely a legacy of the ’80s, and an alternative model of ‘state capitalism’ developing in emerging economies. Companies are encouraged to exploit global capital markets and seek new opportunities abroad but are directed by the state and help to manage the domestic economy. This is most obvious in strategically important national industries: for example, 75% of the globally available crude oil reserves are in government hands. But it is also manifest in other industries: China Mobile, the world’s biggest telecommunications company, is listed on the NYSE, but controlled by a holding company owned by the government. In India, the central government has hundreds of state-run enterprises in diverse industries. Sitting behind the state capitalist model – in Russia and the Middle East as well as Asia – is the sovereign wealth fund, which invests globally for the benefit of the people but is managed and controlled by the state. These funds are increasingly active investors in the West.
The report – Looking East – was widely covered by (among others) the Financial Times, Wall Street Journal and Business Week and can be downloaded online (opens pdf), free of charge.The picture at the top of this post is from the China Digital Times, and is used with thanks.
15 October 2010 at 9:02 am thenextwavefutures Leave a comment
The future of payments
Andrew Curry writes:
I was invited earlier this month to speak on the future of payments at the Digital Money Forum in London, now in its thirteenth year and as provocative as ever. Of course, it’s a future that’s increasingly bound up with technology. My version is based on the work that’s been done by the historian of economics and technology, Carlota Perez (which I’ve blogged about elsewhere, at length) on long technology cycles.
We’ve seen five long technology surges, each of around 50-60 years, starting with steam, cotton and canals in 1771. The first half of the cycle, the installation phase, is driven by investment and finance capital. The second half, the deployment phase, is driven by production capital. And in between the two is a financial crash, when investment expectations get ahead of themselves.
In the current information and communications technology surge, we’re a few years into the deployment phase, when people start to do “new things in new ways” with technology. The smart phone and the tablet computer are archetypal deployment products, and digital payments will inevitably get caught up in the rush, as new applications emerge.
One of the likely effects is the fragmentation of devices, rather than convergence (we may use a digitally enabled key to get into our house, or a card or fob s a store of value, but we’re unlikely to leave them lying on a table during a meeting). We should expect fragmentation of currencies as well; local currencies such as the Lewes pound work much better when they don’t have to be printed. There are already viable currencies within every online multi-player game (and one of the things I learnt at the Forum was that Chinese workers employed to dig virtual gold in online games earn more than Chinese gold miners who dig the physical commodity, and in much better conditions). One of the other speakers talked about the emergence of currencies backed by units of energy consumption. This isn’t hypothetical.
This potentially represents that same sort of democratisation of production that we’ve seen in other sectors, ending the monopoly of the banks (mostly the commercial banks) on credit creation. This thought seemed to cause some nervousness in the audience at the Digital Money Forum, and the questions turned quite quickly to fraud and regulation, although potential fraudsters in an energy-backed currency would be doing very well to steal a fraction of the money that Bernie Madoff took from his investors.
What’s standing in the way? The banks, who aren’t trusted, and the mobile operators, who aren’t particularly interested in payments, at least not in the rich world. It seems likely that the market will need its own ‘iTunes’ moment, when an outsider steps in to create a decisive disruptive change.
The image above is courtesy of Flickr user Bohman, and is used under a Creative Commons licence with thanks.
Cautious consumers, building buffers
Andrew Curry writes:
We’ve just published our latest report on the post-recession consumer, and the headlines are that although people are still concerned about the state of the economy, and are behaving cautiously as a result, there is less panic about the economic outlook than was shown in our previous research. But this is partly because people have changed their behaviour – the UK savings rate is now 8% (it was close to zero for most of the last decade, and even negative in 2008). As Futures Company Director Fran Walton said at the client launch, “People are building a buffer for what might lay ahead for them.”
A couple of insights from particular sectors are striking. The first is that people seem to have changed their grocery shopping behaviour – the proportion agreeing that ‘I am shopping at several shops to get the best prices, rather than doing one big shop at the supermarket’ increased from 22% to 36% between January 2009 and November, when the field research was done for the latest report. And there’s evidence that people are looking to spend less when they go out. There’s a more detailed summary of the data in WARC (subscription required).
News of the client launch event turned up in an unlikely place – Claire Myerscough’s Media Week in Brand Republic. She works for News International, and this was her take on the research:
Learn that consumers are still less trusting, with 53% worried about the price of petrol and 43% planning to spend less over the next 12 months. The mood of uncertainty is in line with our research: things have improved since this time last year but we are not out of the woods yet.
The Reconstructed Consumer is available as a paid-for report. For more information please contact Jennifer Childs on 020 7966 1824.
19 February 2010 at 6:49 pm thenextwavefutures Leave a comment
Taxing pollution not people
Andrew Curry writes:
I was fortunate enough to be invited earlier this week to the launch of the UK Green Fiscal Commission‘s report in London, on shifting to taxes on pollution – and in particular on carbon emissions – while reducing at the same time taxes on people (income tax and national insurance). The Commission proposed a substantial shift, increasing ‘environmental’ taxes from 5% to 20% of the tax base over 10 years, although the overall effect would be neutral in terms of total government revenues.
The report‘s been two years in the making, directed by the environmental economist Paul Ekins, and had the support of some heavyweight commissioners, including Lord Turner, who spoke at the launch. Our former colleague Michelle Harrison, now at TNS-BMRB, was a member.
The conclusions can be spelt out in a few lines. Environmental taxes are effective in changing behaviour, and efficient to administer. They create jobs (around half a million to 2020) at only a fractional cost to economic growth, and they are also, almost certainly, essential if we are to have a hope of meeting the tough carbon reduction targets in the Climate Change Act.
Size – or at least scale – matters. In his comments Lord Turner argued that only “a radical change” would work, both because it meant that people would be able to see the reductions in their income tax bills, and so that there were sufficient long-term incentives for people and businesses to think it worth changing their behaviour and purchase decisions.
The technicalities of such taxes are fairly well understood. Their implementation is more about political will (which is why the panel also included a cross-party array of politicians). So I was also struck by the public opinion data (polling by BMRB), which was largely in line with our research into environmental and ethical attitudes, but was more positive than some would expect. 51% were in support of “green taxes”, and 32% against, but these percentages changed sharply, to 77% in favour and only 9% against, when people were asked about “green taxes” which were offset by other tax reductions.
But some deliberative research, also carried out by BMRB, identified some of the barriers. People were more likely to advocate environmental taxes if they believed that climate change will effect them personally, and there are still significant levels of scepticism in the UK. There was, unsurprisingly, little faith that overall tax bills would not increase – even before the current ‘race to the bottom’ on tax and public expenditure. And although neutrality should mean that there are likely to be as many winners as losers, most people – with an ingrained sense of pessimism about paying tax – thought they would be worse off personally after the tax shift. But fairness also mattered.
The politics of tax are notoriously difficult: “winners nod, while losers scream”. And from the window tax onwards, tax changes are littered with unintended consequences. The Treasury is generally sceptical about them. But if there is an opportunity, it is in the early days of a new government. And all of the politicians on the panel were optimistic that a new Chancellor of the Exchequer of their particular stripe would be keen on the idea – despite the risks. We’ll find out next year.
The picture is from Flickr user JustUptown, and is used under a Creative Commons licence with thanks.
29 October 2009 at 5:04 pm thenextwavefutures Leave a comment
Grant Park’s tipping points
Editor’s note: Walker Smith, who runs The Futures Company’s Yankelovich division in the United States, has sent a long post reflecting on the 40-year context of Barack Obama’s Presidential victory this week. The conventional wisdom is that blog posts should be short and pithy. But we think that from time to time it’s better to give an argument the space and time it needs to unfold. Walker’s short essay is one of those occasions.
Walker Smith writes:
Barack Obama’s victory on Tuesday night was not unexpected. Three weeks out, political pundits knew that Obama had a lead that has never been overcome in modern political history. (Horse race political junkies will enjoy my favorite campaign resource, www.fivethirtyeight.com.) The real drama came an hour later when Obama took the stage with his family to honor this historic moment in his moving victory speech.
Chicago’s Grant Park, the scene of the victory rally, is a beautiful, expansive park bordering Lake Michigan that to this day still stirs up grueling memories for Baby Boomers like me, of the police violence at the 1968 Democratic National Convention. The question that hangs over Barack Obama’s election is whether it really does represents the end of a 40-year cycle of deep political and cultural division, even though his electoral victory was built on effective party-political organisation rather than cutting across party-political lines.
Recession and sustainability
Courtesy of the Transition Island Blog
Andrew Curry writes:
We’ve been thinking quite a lot recently about the impact of recession on consumer behaviour, and I was asked by Radio 4′s Beyond Westminster to join a panel discussion about this, which is broadcast tomorrow (Saturday 9th – if you missed it, you can hear it on the website for another week).
The other panellists were Chris Leslie, of the New Local Government Network (and a former Labour MP), and Jeremy Leggett, who runs one of Britain’s largest solar energy companies, solarcentury, and also wrote a fine book, Half Gone, about the end of the oil economy.
It’s difficult to summarise the flavour of a fifteen minute discussion in a few lines, and I wouldn’t want to spoil the programme, but some themes seemed to emerge:
- The upwards shift in oil and energy prices is a step change not a blip (a Dutch energy consultancy recently estimated that the floor price for oil had reached $110/barrel).
- In the short term this is reducing car use, but hurting the poorest hardest, mostly through the cost of their domestic energy bills (the poorest tend not to own cars).
- In the longer term, however, the government has to make a choice between orchestrating a full-scale shift to renewable energy sources, or trying to muddle through with conventional energy (Leggett is a member of the group which wrote the recently published The Green New Deal, which linked energy innovation, climate change response, and financial reform).
- Shifting to renewables will take investment, which probably isn’t going to come from taxation but could – without going into the economic theory here – come from market incentives and from encouraging people to save more, which would be good for the long-term stability of the economy.
Some of the evidence suggests that people are ahead of the politicians here. But it will still take some political courage to act on this – a quality which seems sadly lacking from British politics at the moment.
Blind spots on globalisation
Joe Ballantyne writes:
Back in the late 90s, and even more recently, globalisation was all the rage. Some people thought this was a jolly good thing and it would make us all rich and free, while others thought it was a really bad thing. which would lead to greater poverty and environmental damage. Either way, almost everyone agreed that we were careering towards a brave new globalised world, ruled by the free flow of capital between nations, and characterised by global institutions and global flows of people and goods.
Fast forward a decade, however, and things start to look quite a bit different. Countries like India, Russia and China are much wealthier and more powerful than ten years ago, the expansion of international groupings such as the EU seems to have all but halted, and the ongoing drama of the credit crunch suggests that financial deregulation has reached its limits. Protectionism is a recurring theme in the Democrat candidates’ contest in the US, and the chief executive of Deutsche Bank was recently quoted as saying that he “no longer believes in the market’s self-healing power” – and when the head of a major bank starts saying that financial markets need some sort of state intervention, you know something’s up. The public seem to think so: most of us admit a growing suspicion around the role free markets in the economy.
So how did the global theorists – from both the left and the right – so misjudge globalisation? There’s a whole thesis to be written on this, but some pointers could be:
- Many of them were working in internationally-focussed institutions such as universities or global banks – which probably blinded them to the attitudes of the majority who weren’t globetrotting, post-national types.
- Many of them had come to believe the widely canvassed idea that financial power will always trump state power – where as in fact, nationalism is a tremendously strong driver of domestic politics and therefore of political change.
- The Brits in particular lived in a country which had probably gone further than almost any other towards developing a ‘post-national’ identity, embracing the market and minimising the role of national symbols such as the monarchy, religion and so on. But what happened in Britain wasn’t replicated elsewhere.
One of the things we say in futures work is that if the filters you see the world through are too strong, they act like the blinkers on a horse – and create blind spots which make it harder to see signs of change. It’s interesting to think of other blindspots our assumptions about the world might create for us.
The picture was taken by David Eppstein.
What to read in 2008?
Andrew Curry writes:
The most recent issue of The Wire, WPP‘s in-house paper, has a feature on ‘What to read in 2008′, a collection of recommendations from individuals working for businesses across the world. I blogged a while ago on my contribution – about Thomas Homer-Dixon’s The Upside of Down. If there are themes from the other contributions, they are about the emerging economies, especially China, and about marketing and management.
WPP Chief Exec Sir Martin Sorrell’s choice is the two working papers (99 and 119, opens in pdf) from Goldman Sachs which, in his words, “describe the shift in wealth from west to east”. (The more recent Working Paper 134 , also pdf, is an update). The other two Chinese selections – from people working in Asian markets – look at China “as a country, not just as a market”. The Search for Modern China locates China within its cultural and political history, while China: The Fragile Superpower is subtitled, “How China’s internal politics could derail its peaceful rise”.
On management, the idiosyncratic Rory Sutherland (of Ogilvy) praises Discover Your Inner Economist, while bemoaning the fact that “It is a disgrace to marketing and research disciplines that economists are now writing more interesting books than we are”. David Muir, at WPP’s Channel Practice, commends as a management primer Team of Rivals – a history of how President Lincoln managed a cabinet whose members disliked each other and coveted his job.
And as always in such lists, there are some quirkier recommendations. The arguments in David Maister’s Strategy and the Fat Smoker, about strategy and change, are both “irrefutable and wonderfully personal”, while Very Thai is a cultural journey into modern Thailand – pictures and text – which offers “new ways of exploring your own, or a new culture”.
