Tag: biodiversity

Categories
REBOOT World View

10 Takeaways From COP 26

It is difficult to understand what was truly achieved at COP 26.  After pre-weeks of media to COP 26 and then the concerted media campaign during the week of COP 26 how do we sort the wheat from the chaff or the greenwashing from the truth.

Fundamentally, there is still a long, long way to go.  COP 26 was not the breakthrough that was needed. Both the public and private sectors did not step up and demonstrate the urgency that was needed.

Here are my 10 key thoughts:

1. COP 26 was more than blah, blah, blah, as Greta Thunberg said; but, it fell far short of what was needed.  It was inevitable that we would fall short of 1.5 degrees Celsius, the question was really how far?  The best guess seems to be that the commitments added up to about a 0.3 degree Celsius improvement moving our current likely outcome tracking from +2.7 Celsius warming at 2050 to 2.4 degrees (per Climate Analytics Tracker or CAT).  In Climate Actions latest publication,  they noted that not only do the commitments fall short of the +1.5C target of the Paris Climate Agreement, there is no single country that has put short term policies in place to put itself on track to its net zero target.

2. Out of Glasgow, there is recognition that this push to improve commitments cannot just happen every 5 years.  This is a good move. They are now asking countries to each year look at ratcheting up their targets and actions.  For most countries, setting 2030 targets rather than earlier targets is also a way to delay the need to address the problem to the next leadership group whether in the political or private sector arena.  Given that the carbon emissions problem is a cumulative problem there should be a further goal of each country committing to a set of annual activities and targets; and, couple this with ‘naming and shaming’ of those that fall short.  Ramping up public pressure is fundamental to proper progress.

3. COP 26 recognised that it is vital to solve the biodiversity issue as part of the climate problem even though it has a set of other issues.  The reduction of deforestation pledge by 118 countries by 2030 is a start in the right direction.  This should be enacted much faster.  Nine more years of deforestation is a problem.  The devil will be in the detail of the agreement; including, the addressing of illegal logging and the need for reforestation.  The three regions of particular concern are the Amazon, the rainforests of Indonesia and the Congo Basin.

4. The announcement of GFANZ (Glasgow Financial Alliance for Net Zer0) having 450 organisations that manage $130tn of private wealth saying they will participate in the financing of the climate challenges is a good start.  Mark Carney has made good progress to pull this together.  The cynic would say that if there was $100tn of investment opportunities (the size of the climate challenge) that will add 2% per annum of economic growth and they were presented as good investment opportunities who wouldn’t want to be part of the club.  The key question is in reality will this result in large scale material changes in investment allocations and what will it also take to make this happen in terms of reporting, policy and regulatory changes, carbon tax, last mile of risk security, etc.  The reality is this is a step in the right direction; but, there is a long way to go.

5. COP 26 forgot the oceans which is the biggest carbon sink. Where is the equivalent pledge to deforestation for the Oceans.  What never seems to be included in the Net Zero discussion is that the goals required do not consider any indirect impacts of carbon emissions (including other GHCs) that are in carbon sinks on land and in the oceans.  Only a very small percentage of GHCs are in the air vs. absorbed in the land and oceans and their biodiversity. The melting of ice and permafrost, the warming and acidification of oceans, and the equivalent of ocean deforestation from over fishing are likely to release GHC’s into the air.  There are also other indirect sources of warming that have also not been considered.

6. COP 26 needs to get away from the sole narrative of clean energy and focus on the reality of a practical transition to clean energy. The coal and methane pledges are helpful but are really subsets of existing pledges that should already have been made or identified in terms of carbon emissions reduction to meet the 2030 targets that each country committed to.  Countries should be solving not just the optimal future state of energy provision but also the economics of transition vs. the related cumulative impact of emissions.  Optimal transition will require continued fossil fuel extractions (hopefully focused on the least climate damaging approach), being realistic on the ideal role of nuclear power and other credible low emission sources, and ensuring there aren’t economically disruptive shortages on the way.  Governments have a big role to play in this in terms of creating the right economics of alternative energies (through carbon taxes, subsidies, other policies) and their own commitments to ensuring the appropriate energy grids are in place to maintain steady supply.

7. We still need more discussion on adaptation not just carbon emissions reductions. It has been good to hear that there are now some more realistic discussions on climate that are appropriately also talking about adaptation.  The short to medium term economic benefits of dealing with climate change come from adaptation while the longer term benefits are from reaching Net Zero.  Developing and underdeveloped countries are primarily concerned about adaptation to deal with the economic consequences of extreme weather. The first things they need are economic assistance to social and economic development to help deal with the ravages of droughts, increased heat, floods, etc. resulting from climate change.  These include factors such as access to water, crops which are more resistant to the new climate reality they are facing, and access to 24/7 low cost energy ( and ideally low emission energy) for development.  Given that a significant proportion of those in extreme poverty are subsistence farmers specific targeting of assistance programs will be essential.

8. Carbon tax hesitancy.  It could be argued that the one thing that would indicate how governments are taking climate change seriously would be the agreement of a global carbon tax, or cap and trade, system.  This also includes dealing with addressing the issue of heavy subsidies on fossil fuels in many countries including the United States.  The shifting of the relative economics of alternative energies is vital to accelerating the investment in and adoption of new energy consumption habits.  There has been no apparent progress on a global carbon tax program.

9. Global North and Global South was not properly recognised in COP 26.  In the climate conferences, the Global North refers to developed countries; and the Global South are the developing and underdeveloped countries.  The Global North completely dominates both the emission of GHCs and the use of fossil fuels.  The global south has a small fraction of per capita consumption of energy; although, they do contain the large and growing proportions of the population.  These countries have primary priorities on social and economic development which involves growth in energy consumption before achieving net zero is even considered.  Very different programs of climate action should be targeted for common clusters of countries; rather than the chasing of universal agreement on a common set of actions.  Why do we keep chasing all countries to sign up to the same agreements?

10. The increased level of stakeholder activism and engagement needed to drive change was not properly incorporated into the conference.  There needs to be a much higher level of activism by stakeholders to drive change and hold politicians and private sector leaders accountable.  The activism needs to include the public voting out of politicians, the boycotting of companies and withdrawal of funds from irresponsible companies by investors and insurers.  In the same way that there needs to be activism there also needs to be proactive engagement of stakeholders in changing their own behaviours with respect to both the shift to Net Zero and addressing adaptation requirements.  This means that every individual, town, municipality, city, province, country and region, as well as every other organisation in any form, has the simple requirement of acting themselves.  This was completely missed at COP 26 as they tried to focus on newsworthy narratives vs. practical solutions.

As an optimist, I do think that we have the wherewithal to succeed.  To do this we need to face the truth, deal with reality, and stop greenwashing problems and challenges.  Transparency is essential, programs must be put on the ground and managed to time, results must be monitored, and actions must be taken against shortcomings.

Categories
REBOOT World View

Successful Societies

“It is not the strongest species that survive, nor the most intelligent, 
but the most responsive to change”, Charles Darwin

To address the three challenges, that I identified in the last blog – decarbonisation and biodiversity regeneration, inclusivity and fairness, digital privacy and collective truth – it is worth understanding where we are starting from.  Looking at the components of successful countries and societies is a good place to start.  Most comparisons of countries are focused on GDP per capita, the growth of GDP per capita, and the unemployment rate.  I think we all know that there is much more to life and a society than just these factors.  Income is important but there is also health, education, happiness, safety, freedom, fulfilment and purpose.

Lyndon B. Johnson said, ”The Great Society is a place where every child can find knowledge to enrich his mind and to enlarge his talent…  It is a place where the city of man serves not only the needs of the body and the demands of commerce but the desire for beauty and the hunger for community…It is a place where men are more concerned with the quality of goals than the quantity of their goods”.  The language may not be gender appropriate for today, but the idea of what makes a society is captured. 

Yet, as we sit here and watch what is happening around us we know it is even deeper than this.  It is the ability of someone being able to go to church or to teach a class and not have any risk of being attacked. It is the ability of someone of BAME origin or any gender to have equal respect, equal opportunity and equal justice. It is the ability of a young woman to be able to travel unintimidated on public transport late at night.  It is the feeling that you are safe at home and that your job is secure even though you may different political views.  It is not just freedom of thought but also freedom of speech.  

In my analysis, I tried to look at successful countries and societies based on a simple composite ranking across a set of factors including GDP/Capita, Exports as a % of GDP, GINI coefficient, life expectancy, mean years in school, democracy index, gender inequality, homicides, and CO2 emissions per capita. On a GDP per Capita basis, the USA is 9th; and surprisingly, from a composite rank perspective, 25th out of the top 25 countries with the highest GDP per Capita (populations over 4 million people).  This jars with the American narrative we have been fed over generations; although perhaps not, when we watch with amazement the reducing presence of America globally, the polarisation of the country and its massive decline in global respect, especially in the last four years.  More specifically, this is reflected by America’s withdrawal from the Paris Climate Agreement and the World Health Organisation, the levels of social division, the growing gap between the haves and the have nots, the implicit caste system that still to some extent exists, the rapid rise of the public buying of arms and munitions through fears for their own safety and the conduct of the US Presidential Election.  Xi Jinping, Putin, Erdogan et al. are salivating as they watch the main symbol of democracy and prosperity in disarray and broadcasted around the world.  

The common thread across the top 25 countries in GDP per Capita is that they all have market economies and 23 of the 25 (excluding UAE and Kuwait) have democratic forms of government.  It is also worth noting that looking across other countries, there are no strong and progressively developing economies that don’t have market economies.

The top 10 countries (Switzerland, Norway, Sweden, Denmark, Ireland, Netherlands, Singapore, Austria, Finland and Germany) based on the composite ranking outperform as a result of having a much more balanced society.  As well as a high GDP, they have less inequality and higher levels of upward mobility, a higher life expectancy, a more educated population, a more effective democracy, better gender equality, lower homicide rates and are more environmentally friendly.  I would argue that these countries have been able to create an overall better balance between the role of the market economy and the state, and how they together contribute to the well being of their citizens.  

These top 10 countries also outperform across all measures (except CO2 emissions) vs. groups of upper middle income, lower middle income, and low income countries.  It should be no shock that these dimensions are all intertwined to create more prosperous and sustainable societies.

Definitions
Developed countries – Top 10 overall ranking – Switzerland, Norway, Sweden, Denmark, Ireland, Netherlands, Singapore, Austria, Finland, Denmark
Upper Middle Income – Selection of 5 countries – China, Turkey, Brazil, Botswana, Colombia
Lower Middle Income  – Selection of 5 countries – India, Indonesia, Nigeria, Egypt, Ghana
Low Income – Kenya, Bangladesh, Tajikistan, Rwanda, Ethiopia
Note: The data is based on simple averages across the countries

If you look at government spend as a percent of GDP across the country groupings in Figure 2-2, small government involvement in the economy is not a characteristic of advanced economies. More advanced economies do have higher rates of taxation and larger investments in the delivery of public services than less developed countries. Looking across the most advanced economies, there is no apparent clear model of the optimal involvement of a government.  Most of us intuitively believe that a well functioning market economy should create more opportunities, innovate faster, grow more quickly and therefore have more potential to create a better society across a range of dimensions. Perhaps less intuitive, is that strong delivery of public services and the creation of a well balanced society also appears to be an important contributor to economic performance.

So, what is the role of the government to help create a well functioning society.  Lee Kwan Yew, Prime Minister of Singapore from 1959 to 1990, stated, “the ultimate test of the value of a political system is whether that society establish conditions that improve the standard of living for the majority of its people.”  He always stated that the proof is in the pudding; rising incomes for the broad middle class, health, security and economic opportunity.  Today, I would argue that there should also be a concept of ‘no one left behind’ and an opportunity for all; which would be encapsulated by ensuring that there aren’t rising levels of inequality and there are increasing levels of mobility within a society.  In addition, most people would also add responsibility to ensure that society operates in a climate and environmentally sustainable way.  

Arguably the primary fuel behind the growth of the standards of living has been the development of market economies and the driving force of capitalism.  The personal rewards of taking risks and succeeding and of hard work has accelerated progress and built strong economic foundations to many economies. 

Yet, capitalism without frameworks has never worked sustainably.  Unstructured accumulation of wealth and power leads to self destruction of a free market economy, exploitation of the masses, environmental damage, and inevitably social instability.  Since the 19th century, combinations of legislation, regulations, other frameworks and tax policy have been required to manage against the creation of monopolistic powers and the retention of competitive market sectors. Legislation has been required to deal with slave and child labour and to institute the concept of minimum wages.  Rules and requlations have had to be put in place to deal with city air pollution, water pollution, land waste, environmental destruction, the erosion of the ozone layer.  Extensive regulations have also had to be put in place to control financial markets.  Finally, consumer protection has required regulations and legislation for food and drug safety, minimum product warranties, mis-selling and misuse of personal information.  

So, let’s not kid ourselves that unbridled capitalism is in a societies interest.  The real question is – what is the right combination of the freedoms of a market economy and the participation of the government.   A lighter touch is always ideally preferred; however,  in most countries we are still a long way from having the right balance.  To move in the right direction and prioritise actions it is vital that there is clarity on what the social contract is within a society.  Societies are complex systems and there are no simple solutions.  Any individual initiative by either the market economy, the government or the public will inevitably have trade-offs and shortcomings.  The UN Sustainable Development Goals illustrate this complexity in living colour with 17 areas of focus and 169 subsidiary goals!  

Looking at the most successful societies gives us insights into what they have done and where they have been successful in creating their broad based societal success.  R. James Breiding’s book “Too Small To Fail” which focused on the innovative approach of smaller successful countries provides a number of good examples.  Examples include Finland’s transformation of their education system, Singapore’s low cost-high quality inclusive healthcare system, Denmark’s leadership in renewable energy, Israel’s building of a Silicon Valley style ecosystem, and the Nordic story on leading in gender balance. These are best practice examples that give guidance on better ways to move forward.  The challenge is to move towards these best practices globally and then well beyond.  

The three challenges are steeped in the historic practices of our take-make-waste culture, the singular focus on the maximisation of short term profitability and minimally regulated use of technology and data at the expense of the citizen.  Each country sits in a different place on the continuum of progress to solving these issues locally. But we should not forget that all three challenges need to be solved also at the global level.  Isolated examples of progress against climate will not solve this existential crisis! The context for progress is also now different.  There is urgency. There is a recognised need for a unified approach to tackling these issues. There must be an accelerated development and adoption of critical technologies.  And, there is a need, and a demand from the public, for a fundamentally more purpose driven, values driven and sustainability focused approach to how we live and how our societies operate. 

In the next blog, I want to talk about a framework for solving these issues and the social contract. 

#climate change #global warming #decarbonisation #biodiversity #species extinction #regeneration #rewilding #carbon sequestration #inequality #inclusivity #fairness #privacy #digital trust #cyber #mass manipulation #truth #social contract #Too Small To Fail @James Breiding #Sustainable Development Goals #SDGs #Paris Climate Agreement #WHO #take make waste

Categories
REBOOT World View

The Three Challenges

We have a choice!  Kneel before and be conquered or rise 
above and turn the challenges into opportunities.

In this third series of blogs, I will be exploring the three big global challenges that we need to address and the role and needs of the individual, the market economy and the state to solve them to move towards a resilient and sustainable world.  

As a backdrop to this, and with the most serious threat of climate change to achieve resilience and sustainability, we should see ourselves not as inheritors of the earth from previous generations rather as borrowers from future generations. Our burning platform is the threat to the lives of our children, our grandchildren and future generations. 

Overall you can look at where we are from two perspectives.  If you were a pessimist, you would say that even excluding what is happen to our climate and CO2 emissions our situation is disastrous. We have about 1 billion people in extreme poverty, of which most are in sub-Saharan Africa, and income and wealth inequality is growing not shrinking.  We have an exploding population that started at under 1bn people in 1800 that has reached 7.8bn today and could be as high as 11 bn by 2100.  The child mortality rate for children up to 5 years old is as high as 12% in some countries.  The life expectancy rate in Africa is about 63 years old which is dramatically below the top countries where the expectancy is over 80 years old.  About 13% of our population are illiterate, over 250 million children are out of school and learning outcomes are much lower in countries with low levels of GDP per capita.  The level of pollution and waste is continuously growing. We have been over exploiting our resources – energy and minerals.  We continue to destroy key forests especially in the Amazon for beef and soy, and in Indonesia for palm oil.  People are working too hard.  We have too many wars and too much terrorism. There is a large gender gap and real issues of racism.   And the list goes on.  

The optimist would say, yes but.  Yes, there are lot of challenges in the world; but, on almost every dimension we have made significant progress and therefore we should be confident that we can solve the issues that lie in front of us.  Despite population being 8 times larger now vs. in 1800, world GDP has grown by about 100 times.  In that same period, life expectancy has increased from about 30 years to over 80 years in many countries.  The share of population in extreme poverty has dropped from about 90% in 1820 to 44% in 1980 and is now below 10%.  The average work week was over 60 hours in the late 1800s and is now below 40 hours.  In terms of education, in 1800 about 87% of the global population were illiterate, in 1980 it was 30% and now it is only 13% of the population. School enrolment and attendance is improving every year, as well as mean years of schooling and learning outcomes. Our death rates from pollution, disease and homicides are all dropping.  Our farming yields in grain production have allowed us to cover all the needs of a growing higher income population without needing additional land since the 1960s.  We have been successfully covering off our increased consumption of fish since the 1990’s with fish farming. Our shift in use of energy use from wood to coal, to oil, to natural gas, to nuclear and now to clean energy sources has helped reduce our pollution rates per kilowatt hour.  Just since 2010, solar energy generation has increased twentyfold with wind energy generation tripling.  With technology and asset sharing we are dematerialising our spend.  Our levels of gender bias are reducing. Almost everywhere people’s lives overall are improving.  The optimist would summarise this by saying on virtually every part of our life there is a clear long term learning curve of progress and there is no reason for this to not continue. 

Although the positions look diametrically opposite giving us a perspective of two different worlds, both sets of facts are true.  It is all about which lens you look through at the world.  We have made significant progress however there is still a lot of work to do to make the world a better place.  Solving these issues is not just a matter of economics and technology.  Its complexity is like creating a beautiful symphony, it requires getting a lot of different musicians to play their instruments in an orchestrated way.  The musicians in this symphony, or actors in this play, are us as individuals, the market economy, the state and the third sector.  We should remember as individuals we are consumers, we are participants in the different sectors and if activated we are voters that drive our political systems explicitly or implicitly.  

No matter which lens’ you look at our situation, there are three big challenges in a peaceful world that need to be significantly progressed to continue our slow climb towards a better place – Shangri-la. If we don’t address them with the right urgency we could be on the slippery slope to an inferno.  We are at an inflection point!

I think of myself as an activated optimist. We can solve the problems in front of us if we have the will and commitment, because we do have the wherewithal.  To a large extent we already have all the knowledge and capabilities we need; and, for the areas we don’t the technologies and solutions are in sight.  Sitting back and naively expecting these challenges to be solved and with the right urgency is irresponsible.  Taking the view that these challenges are all someone else’s problem and they will solve it, is misconceived.  Everyone can contribute at a minimum by being more thoughtful in their consumption of food and energy, generation of waste and participation in recycling programs, and involvement in their community and society.  

So, what are the challenges.  Firstly, and with urgency, global warming and collapsing biodiversity.  These are two highly interconnected issues and effectively part of the same family of challenges.  Global warming is well documented and confirmed to be largely human driven by virtually all scientists.  It can be measured in terms of CO2 parts per million (including equivalents for GHG gases such as methane) and the short term impact can be felt in terms of average increase in temperature vs. the industrial average temperatures and the level of weather extremes.  We are now sitting at CO2 levels of about 415 ppm (part per million), with the world having fluctuated between 150 ppm and 300 ppm for over a million years.  Also, up to early 20th century we have been in a unique 12,000 year period of climate stability – seasons, weather and temperature predictability – that has provided optimal conditions for the human race to spread around the world and develop.  Slowing down climate warming also helps to significantly reduce the release of C02 and other GHGs from what will occur from melting ice, melting permafrost and warming oceans.  The land, oceans, and ice are large carbon and methane sinks that hold multiples more of these gases than currently exist in our air.  

Biodiversity comprises the genetic, species and ecosystem diversity that has developed and helped created this stable environment.  It is also what has created the environment for effective carbon sequestration in the land and sea.  We are now running at an unprecedented loss rate of flora and fauna which is affecting our food supply, carbon sequestration and environmental stability.  The current rate of diversity loss is estimated to be 100 to 1000 times the naturally occurring extinction rate.  David Attenborough effectively describes this in his latest book and documentary, “A Life on Our Planet”.  The solutions include shifting to regenerative farming, regenerating fishing stocks in the seas, and rewilding land and seas. 

The second challenge is inequality.  Inequality manifests itself at one level in terms of the extremes in distribution of income and wealth, and the shortfall in the basic necessities of life – food, shelter, clothing, health and education.  However, it also is reflected in freedoms, our access to opportunities, and our rights to safety, security and equal justice.  Unfortunately, the absolute levels of inequality are significant both within and across most countries and continue to persist.  It is no wonder that there appears to be rising social unrest across many countries, LGBTQ+ and BLM movements and many other areas of social concern. Clearly, our market economies and governments have not been effectively addressing these issues.  A focus on these issues and adjustments to how governments and market economies operate can solve this situation. There is global consensus that this is a critical issue that must now be solved.  

The third challenge is digital trust and mass manipulation.  At its base level, this is about privacy and the need for enlightenment and truth in a society.  These components are key drivers of freedom, transparency and trust.  For a period now we have seen increasing levels of theft of private information, expansive monitoring and surveillance (accelerated during this pandemic), rising populism and increasing distrust of governments.  We just have to look at the US elections, and other recent elections, to see evidence of this.  

The digital world has provided us with some amazing levels of progress and benefits; but, unfortunately it can have a dark side.  This includes the program to monitor, manipulate and control the Uighurs in China and the building of their overall digital social credit system.  The Western world has a somewhat equivalent system that gathers all forms of data to make credit evaluations of individuals; good and bad behaviours are judged on risk, reliability and trustworthiness of individuals with respect to financial transactions.  The dark side also includes the targeted delivery of fake news to drive votes in democratic elections as is shown in the movie ‘The Great Hack’ describing the use of social media in the US 2016 election and the Brexit vote, among others.  A growing number of countries have tech ops groups to drive misinformation and manipulate election outcomes among other clandestine objectives. The targeting and selection of news/fake news comes from intimate analysis of people’s use of social media.  The ease with which you can micro target the delivery of real or fake information through social media to shift people’s thinking and behaviour is growing.  The fragmentation of truth, the growth of conspiracy theories, a missing common base of facts and increasing levels of misinformation for a population will cause growing problems.  Democracy has been an essential component of social progress across the world and needs to be protected.  The value of democracy has not been helped by the shambolic display of US 2020 presidential election; thankfully, it appears that is has held up this time.   As well as an economic recession we now appear to be in a democratic recession with rising populism and the growth in power of China; 

Extensive problems are caused by  the social media companies (Facebook, Twitter, Instagram, etc.) which are driven by their advertising business models which are fed by building addictive dopamine generating behaviour for billions of users.  Their success is based on gathering every conceivable piece of information about you and combining it with AI to serve you content and create the desired outcomes/behaviour shifts that provides a return to their clients for the money they spend on the social media site.  You are the product and the information they have on you includes – every piece of content you generate, every piece of content you look at and for how long, the web of friends and people you interact with, likes, follows, comments, reactions to content you look at and is served up to you, every website you visit, all the times you are on each site, GPS coordinates, etc., etc., etc.  At the same time, there is very little control and no direct responsibility for the content they serve you, which may also be content from foreign trolls and bots, conspiracy and extremist groups, and false advertising.  The implications on the individual of social media addiction, misinformation, distortion of the real world, breach of personal privacy and freedom is significant and the accumulation of this across whole societies is extremely concerning.  

These challenges can be translated into the need to focus on three things.  Firstly, decarbonisation and biodiversity regeneration.  Secondly, inclusivity and fairness. Finally, digital privacy and collective truth.  The first two challenges are well covered off by the UN Sustainable Development Goals (SDGs).  The third challenge is recognised and looked upon with increasing concern around the world and is highlighted by the World Economic Forum as one of the key risk factors we are facing.

There are three critical issues to solve in addressing these challenges.  Firstly, ensuring there is clarity on the potential solutions for each of the challenges.  This concerns having clear solutions that will drive us to address the challenges within the required timeframes.  Inevitably, this will be a combination of existing solutions that are already in place but not pervasive enough; existing technologies that are proven but only in early stages of rollout and need to cycle through further generations of development to increase their effectiveness and drive down their cost position; and, emerging technologies and applications that are in sight to be available within the next 10 years or so. 

Secondly, to be clear on roles of the individual, the market economy, the state, and the 3rd sector to drive the implementation of solutions.  This is very much about finding the right approach that does not disrupt the ongoing innovation and development that has progressed us to where we are today.  Probably, the most critical issue is to find the right balance between the role of the state and the reliance on the market economy and capitalism.  Within the state there are the supra-national activities and then the roles of the government at the state, regional and local levels.  Within the market economy, investors, asset managers, and corporate boards and executives all have vital roles. And, there is also an important role of the individual as a member of the public, a consumer, a worker/contributor, and a voter who has a stake in the outcomes.  Finally, there is also the 3rd sector which includes charities, voluntary and community organisations, social enterprises and cooperatives, advocacy groups, think tanks, private research institutes and large philanthropic organisations.  We are seeing a growing role of philanthropic groups, such as the Gates Foundation, that are focused on large global problems including health, education, poverty and now climate change. 

Thirdly, implementing the incentives and checks and balances to ensure progress is being made to time.  The most critical challenge in this regard is to maintain a focus on the actions and time frames agreed in the 2015 Paris Climate Agreement which is to try to keep climate warming below 2 degrees centigrade and targeting 1.5 degrees.  We are already well behind the goal as we are currently trending towards a 3+ degree Celsius outcome, so there is a lot of work to get back on track.  These incentives, checks and balances need to be keeping the pressure on each set of participants to meet their responsibilities, solve how to make adjustments, and have back-ups to shortfalls. 

I think we have a pretty good idea of what we could do for ‘Decarbonisation and Biodiversity Regeneration’ and ‘Inclusivity and Fairness’.  The challenges have been understood, potential solutions have been identified and quantified, and the goals have been set within the 17 UN SDG’s and the Paris Climate Agreement.  What is missing is a well thought through program accompanied by the commitment, mobilisation, resourcing, incentivisation and monitoring that is required to ensure we meet the goals within the timeframes identified. 

‘Digital Privacy and Collective Truth’ perhaps sits as a different type of problem given that is likely viewed more at a national level and within the purview of each country’s political system; yet, it sits within the global scope of the internet and the global footprint of the large social media companies.  Privacy and the need for facts and truth are a human right, they are also vital for the effective long term development of a society; however, cyber and all its manifestations are also seen as a new form of, cross border and internal, warfare and mass manipulation.

I will be exploring in more depth, these three challenges – decarbonisation and biodiversity regeneration, inclusivity and fairness, digital privacy and collective truth – along with the roles of the individual, the market economy and the state in subsequent blogs. 

#climate change #global warming #decarbonisation #biodiversity #species extinction #regeneration #rewilding #carbon sequestration #regeneration #rewilding #inequality #inclusivity #fairness #privacy #digital trust #cyber #mass manipulation #truth @David Attenborough @Gates Foundation @Bill Gates

Categories
Covid REBOOT

Post Covid

“Follow the leaders”, sculpture by Isaac Cordal, Berlin, Germany April 2011  
Also known as “politicians discussing climate change”

Blog 4 on Post Covid disruption, resilience and innovation.

This blog will explore the role of the government and how it needs to change to be effective in the ‘living with Covid’ or ‘post Covid’ world.  

As I have talked about in other blogs, the context to talk about the governments role is against an individual centric world, which is not a company or government centric view.  Individuals are the building blocks of societies. As depicted in Figure 4-1, from the individual in the centre there are concentric circles going out for the economy, society and the environment.  Defining the social contract between individuals and their societies, or countries, sets the parameters within which the different actors must operate and the goals they must strive to achieve. The actors are the market economy, the government, the 3rd sector, and the public themselves. For a longterm sustainable world there must also be a social contract with the earth. We must live within the resource constraints and operating system of the earth to keep it in balance – clearly an area where we are currently failing at on most fronts. Finally, this model implies that the sum of the country/societal models rolls up into an aggregated view which then ideally operates sustainably from an earth and climate viewpoint.

Figure 4-1

The role of the government (the state) that I refer to is against the the model of advanced countries, which are both democratic and market economy driven.  Against almost any set of comparative measures analysing country performance, these two factors are key descriptors of success.  It is worth noting Winston Churchill’s famous quote on democracy, “No one pretends that democracy is perfect or all-wise. Indeed it has been said that democracy is the worst form of Government except for all those other forms that have been tried from time to time”. The majority of what I discuss would apply in different forms to all countries.

To start, one of the key questions is what is government for?  Lee Kuan Yew, Prime Minister of Singapore from 1959 to 1990, stated, “the ultimate test of the value of a political system is whether that society establish conditions that improve the standard of living for the majority of its people.  He always stated that the proof is in the pudding; rising incomes for the broad middle class, health, security and economic opportunity.  Based on the United Nations Sustainable Development Goals (SDGs), I would overlay onto this the concept of social inclusiveness on core human rights.  These rights would include minimum rights related to income, shelter and food; equal access to quality health and education; equal treatment, rights and opportunity; and, freedom of speech and movement.  
 
Based on this definition, we can all see shortcomings in our own countries.  This pandemic along with other challenges, including economic, the ‘black lives matter’ and ‘me too’ movements, and the climate and environmental challenges bring to light shortcomings.  
 
It is worth looking at what the roles of the government are in the advanced countries (Figure 4-2).  Broadly, there are three different sets of activities.  The first set are core roles typically linked to the base functioning of a country.  The second set are government roles associated with the provision of public services to individuals.  The final set are roles linked to the goal of contributing to the development and stability of the economy and protection of the environment.  Not all advanced countries effectively cover all these roles.  For example, the US does not have universal healthcare and the provision of education to all children is highly imbalanced.

Figure 4-2

Effective government is complex and challenging at the best of times.  We all worry about whether or not the government is focused on the right things, whether or not they are spending their money wisely against the priorities they have set, and what is the true impact of their spend versus the rhetoric we hear.  

As I see it, and have noted before, the strategic framework that I set out for businesses is also the same framework for the government (Figure 4-3).  This is required of a system based framework.

Figure 4-3

For each role of the government, it ideally should be able to define the economic, social and environmental impact they want to achieve, the delivery model for achieving the impact and the way that it is financed fiscally and/or through debt financing.  Wouldn’t it be great to have a government report card against each of its roles so that there was clear accountability!

The pandemic has affected all parts of the governments in most countries in profound ways.  Healthcare, welfare and education systems have been deeply affected, tested and come up short in many ways.  Public transport systems usage has collapsed. Police forces and the military have been asked to perform different tasks. The levels of economic support provided and demanded are at unprecedented levels. The level of cross border cyber attacks have grown.  The need for multi-lateral coordination has increased.  And, the list goes on!

As we move, to ‘living with Covid’ and, hopefully then a post-Covid world, reverting to governments previous modus operandi will not be adequate in most countries.  There are also other large disruptive factors that have not been effectively addressed; these include, climate change, social fairness and growing geo-political tensions; and in each country, they will have their own additional lists, such as Brexit for the UK.  All of this creates a complex cocktail of challenges for governments to focus on going forward.

There are four overall areas for the government to think about (Figure 4-4).  Firstly, their role in the welfare of the public, their key constituent. This includes being ready for the next equivalent pandemic, making sure that at all times normal medical treatment can be provided, and solving how to continually improve the quality of healthcare services with an ageing population and tight financial requirements.  

There are big concerns over the quality and impact of education during Covid.  There is a lot of work to do in understanding digital education delivery and putting in capabilities for either fully remote delivery (for emergencies) or ongoing hybrid education.  The opportunity should also be taken to see how education impact can be enhanced vs. the current normal in-person education delivery.  

Restoration of freedoms. The pandemic has resulted in significant restrictions on individuals and in many cases undue use of private information. There have been losses of freedom of movement and of socialisation. There have been restrictions on the ability to work with remote working being mandated in many areas. Many countries have put in curfews in locations with high outbreaks. Last but not least, in a number of countries, individuals have had to sign up to apps so that the health authorities can track their movement. There have been requisite loss of freedoms for businesses and organistions to operate. Eliminations of these restrictions and restoration of normal rights is a critical part of moving to a new normal; no one wants a full time ‘nanny state’.

In addition, across all parts of the government, they can make a big impact by ensuring the optimum levels of employment in the supply chains related to their services; this includes, having a careful look at the role of local vs. international sourcing. 

Figure 4-4

Secondly, restoring the performance of the market economy.  Universally, the performance of the market economy is the key driver to economic growth and the improvement of the welfare of the population of a country.  One of the key roles of the government in advanced economies has been to reduce the impact of a recession and contribute to its rebound – economic smoothing.  In the post pandemic environment, this includes helping sound economic companies and sectors to recover; looking at challenged sectors and thinking how to assist them in reconfiguring into a successful relevant sector going forward; and, providing stimulus in the form of research and development, and financial support, to key strategic and growth sectors going forward – including driving the green agenda. 

Thirdly, investing in infrastructure and public goods to get them appropriately focused for impact going forward and to improve employment levels.  With a ‘new normal’ being driven off changes in consumer behaviour, the government needs to incorporate this into the specific requirements and capacities needed for each service they provide.  There is also a period of excess resources required for catch up in areas such as the health sector where diagnosis of ailments and treatments have lagged during the crisis.  

Building resilience against future disruptions (including pandemics, fires, flood, tornados, etc.) should also not be forgotten. It is very clear that a number of countries were highly unprepared for a pandemic despite everyone knowing that it was a possibility.  Just look at the preparedness of countries such as S Korea, Singapore, Japan and Germany and the superior outcomes they have achieved vs. the woeful performance of the US, UK, Spain, Belgium and many South American countries among others who were caught unprepared.  

Linked to resilience is the need to shift services to include the use of digital capabilities to improve the efficiency and effectiveness of service delivery as well as resilience.  Improved administration efficiency, digital and hybrid healthcare and education delivery are other clear areas.  Japan, under its new prime minister, Yoshihide Suga, has just announced a minister responsible for the digitisation of government services.  

The other area governments should look at is bringing forward investments that create a multiplier effect on employment and the economy.  Climate change is one of these areas, where accelerated investment is critical in any event to help countries meet their Paris Climate Agreement commitments. As with this pandemic, climate change also demands each of the governments to improve levels of global cooperation.  Global problems need global solutions.  

There are limits to investment capacity, so governments need to make tough choices on where to focus their efforts and then what combinations of the 3 Fs (frameworks, financing and fiscal) they use to stimulate the market economy.  Frameworks are regulations and other non-financial mechanisms that the governments put in place to shape markets, drive consumer behaviour, deliver public services and protect individuals and organisations.  Clearly, financing and fiscal are the financial mechanisms for funding different activities.  To the extent that the government can find ways to help the economy recover without always reverting to financing, then we are all ultimately better off.  This could be as simple as re-zoning roads to provide plenty of room for outdoor seating for cafes and restaurants to help them rebuild their businesses.  

One of the leading modern economists, Mariana Mazzucato, has been pushing to create/recreate dynamic public-private interaction and the creation of mission oriented industrial strategies.  She clearly identifies that the state is instrumental in many parts of our economy, including helping to stabilise and grow the economy, yet the spoils of their involvement is never appropriately compensated vs. the risk. Virtually all the upside where the government is assisting accrues to businesses and their shareholders despite the public (through taxes) taking the risk.  Whether the government is helping businesses to recover, helping sectors to reconfigure or stimulating the growth of new sectors, through R&D or investment, the government should be looking for a fair reward structure for their successful involvement.  This should help reduce a governments debt burden, and the consequent public tax burden, over time.  It should also help drive improved corporate responsibility.

In summary, for each government this is a complex equation of where to spend and how much.  The three categories of potential spend are addressing fundamental shortfalls in public services, providing market economy recovery and growth support, and bringing forward government programs that will create a job multiplier effect.   Some example areas are shown in Figure 4-5.

Figure 4-5

Integral to the development of a ‘new normal’ is also a society aligned with accelerating progress against our critical environmental challenges of addressing climate change and biodiversity. Clear focused programs on these must be included. As an example see Figure 4-6.

Figure 4-6

Behind all these factors and potential initiatives to restore and progress economies, is the simple truth that uncertainty is the enemy of progress. Having clarity on government actions and programs, confidence that they won’t unsuspectingly change and some forms of longer term certainty that individuals and the market economy can plan on and rely on is critical.  This gives individuals and companies confidence, horizons they can plan against, and an improved ability to raise further financing.

#Covid 19 #pandemic #post Covid #strategy #disruption #resilience #innovation #WHO #McKinsey #Accenture #EY #UN SDGs #WEF #blacklivesmatter #metoo #DoughnutEconomics @Kate Raworth @Mariana Mazzucato #biodiversity #remote working #strategic framework #climate change #government role #social contract #public #infrastructure #fiscal policy #monetary policy