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Xand Van Tulleken 0:04
Hello and welcome to season 2 of public health disrupted with me Xand Van Tulleken… and me Rochelle Burgess. It’s good to be back! Xand is a doctor, writer & TV presenter, and I’m a community health psychologist and Associate Professor at the UCL Institute for Global Health. This podcast is about public health, but more importantly, it’s about the systems that need disrupting to make public health better. Join us each month as we challenge the status quo of the public health field, asking what needs to change, why and how to get there. In today’s episode, we’re exploring the relationship between the economy and health and how we can improve the health of the public by taking a mission-oriented approach.
Rochelle Burgess 0:36
In today's episode, we're exploring the relationship between the economy and health and how we can improve the health of the public by taking a mission oriented approach. And I am personally super excited about today's episode because I have spent various phases of my life trying to understand economics and failing miserably, but from positions that really, I suppose have been mostly quite critical of it. So I'm really really excited to hear about how this field has the capacity for such amazing social change.
Xand Van Tulleken 1:11
Unlike you, Rochelle, I have a firm grasp of all of economics, but I am going to let our guests talk about questions. Our first guest today is Professor Mariana mazzucato Professor in the economics of innovation and public value at UCL where she is founding director of the UCL Institute for Innovation and public purpose. Professor mazzucato is also the chair of the newly formed World Health Organisation Council on the economics of health for all made entirely of female members. She's the author of three highly acclaimed books, the entrepreneurial state debunking public versus private sector myths, the value of everything making and taking in the global economy, and mission economy, a moonshot Guide to Changing capitalism. Mariana was named as one of the three most important thinkers about innovation by the New Republic, one of the 50 most creative people in business in 2020 by Fast Company, and one of the 25 leaders shaping the future of capitalism by Wired.
Rochelle Burgess 2:10
Our second guest is Kate Rayworth a renegade economist focused on making economics fit for 21st century realities. Kate is the creator of the donut of social and planetary boundaries, and co founder of donut economics Action Lab, which combines one of my favourite things in the world, one of my most fear things in the world. So, Kate, I'm gonna try and make you my best friend after this. Her internationally best selling book donut economics, seven ways to think like a 21st century economist, has been translated into over 20 languages and has been widely influential with diverse audiences from the UN General Assembly to Pope Francis to extinction rebellion. Kate is a senior associate at Oxford University's environmental change Institute, where she teaches on the Masters in environmental change and management. She's also professor of practice at Amsterdam University of Applied Sciences. She currently serves on the World Health Organisation Council on the economics of health for all. So Mariana can I start with you.
Xand Van Tulleken 3:12
Answer, as widely as you like, I wanted to begin by exploring how does the economy impact our health and well being? And I guess the reciprocal as well, how does our health and well being impact the economy?
Mariana Mazzucato 3:23
So the reason we actually set up the Council on economics of health for all was to say, let's actually start with the goal. So if you think about everyone on the planet, living in a healthy way, and having access to public health systems, equitably, then what does it actually mean for the economy? How do we actually structure or economic system? How do we design economic policy? How do we govern public private partnerships in order to actually achieve that goal? So putting the economy at the service of people and missions and moonshots that actually have to do with people living in a more prosperous way? Reducing or eliminating inequality, having a sustainable and healthy planet? How can we design the economy to actually achieve that that's really what I'm very interested in. And that's why I think we need a completely different way of thinking about economic policy, which in the mainstream tradition, policy is there just to fix problems and economists like to sound fancy, so they say to fix market failures. So the idea is that the market works great. Sometimes it screws up. And it's that market failure fixing methodology and framing, that means that we're always kind of too little too late. If you don't have what I call a market shaping, then it's actually impossible to design and govern the economic system to actually achieve goals like inclusive, sustainable growth.
Xand Van Tulleken 4:51
Can you just give us a specific example of what that would look like then?
Mariana Mazzucato 4:56
Sure. Just think about innovation for a minute.If we believe that innovation and value is only created in business, literally inside firms, and then the public sector is there to fix different types of problems. For example, if there's not enough basic research investment being done, because of the issue of positive externalities and public goods, than the state the ideas, it comes in and fixes that problem by putting in some, you know, basic r&d financing in the system. Now, that's not going to help you govern the internet, or health innovation in order that it actually achieves the kind of goals we want. If you're just seeing basic research and development, spending, an investment is filling the gap of too little investment by the private sector. If we look at the United States government, which spends $40 billion dollars a year on health innovation through its National Institutes of Health, that money. First of all, it's huge. A lot of people don't know about it, it means that something like 75% of new molecular entities with Priority rating. So these are the really kind of radical, new drugs that come out actually trace the research back to public money. So to actually govern public investment, whether we're talking about health, digital platforms, or also the green economy. So that is actually good for people and planet that needs a much more active and proactive market shaping governance structure. So in the case of health, it means for example, looking at intellectual property rights, and making sure that they're not abused. So it's not about saying we don't want patents, we don't want intellectual property rights. It's more about how do we actually govern patents in such a way that can we can truly foster collective intelligence?
Xand Van Tulleken 6:48
That's a great kind of portrait of the limits of standard paradigms and standard ways of thinking. I think, Rochelle, do you want to pick up from here?
Rochelle Burgess 6:59
Yeah, so one of the things that you said, Mariana, that sort of really, sort of stuck with me, is yours using the phrase of co creation. And I think that's a really important one, but also for me feels quite tenuous, because what is the actual real world capacity that actors or states with less functional or productive power at their disposal have in these co created relationships,
Mariana Mazzucato 7:25
that's very hard to co create, unless you have specific types of, of relationships that really are designed to create and collaborate and to get foster that kind of collective intelligence. Another issue is if you're actually trying to embark on this kind of market, shaping a market co creation, design of policy, you actually need to also be trained in a particular way. So the actual training the curriculum, for example, matters. And that's why I've personally set up this institute at UCL, the Institute for Innovation and public purpose, where we're trying to redesign the Master's in Public Administration. So MPa, not MBA, for global civil servants very much around these issues of collective value creation, public purpose, notions of creative bureaucracies, and not kind of boring, you know, inertial bureaucracies, the word bureaucratic doesn't necessarily have to be a bad word, we just have the wrong bureaucracies, but also kind of to bring in that kind of design thinking and seeing markets and economies as outcomes of how we actually govern public, private, third sector institutions and their interrelationships. And the problem is, though, that in many countries that capacity to think about the state as a co creator and to really kind of govern with people and public purpose at the centre has been reduced and it's been reduced also in countries like the United Kingdom, where recently Lord Agnew, a Tory Lord said that we have overly consult defied you know, through the McKinsey's and PwC is government, when you have government's outsourcing their capacity to the McKinsey's and the Deloitte, it actually reduces their own ability to learn by doing right. And learning by doing we know is really important. We have this a massive outsourcing of the doing and the project management, we've actually, you know, cheated governments of that learning, but the governments themselves are part of the problem. They're scared to take risks. As soon as by the way, a civil servant takes, you know, a risk and might fail along the way, like falling off a bike, it's on the front page of the newspapers. Whereas when venture capitalists are the entrepreneurs of Silicon Valley makes some mistakes that's just seen as a natural kind of risk taking, you know, aspect of entrepreneurship. So if we want what I call entrepreneurial states, we have to welcome that kind of experimentation, learning by doing trial and error, but also invest in the capacity to learn from the errors. It's not enough to say, make a mistake if then you don't learn from it. What does that mean for the kind of investments we need within our public organisations to learn how to use procurement for example, procurement budgets are huge in governments but it's often not used as a funnel for innovation to actually achieve really important targets around sustainability and so on. What does it mean for the design of a public private partnership? We know there's been huge problems with PFI and PPPs. Around the world, including the UK. Well, what does it mean to again, put a lot of attention on that notion of a mutualistic partnership with collective intelligence at the core? What does it mean to think about budgeting in a different way, so outcomes oriented budgeting, and so on, including the kind of IPR issues I talked about before. So it's not good enough to talk just about kind of corruption and weak states. The bigger question is, what needs to be done to build dynamic capabilities and capacity within public organisations concurrently, unfortunately, the curriculum has been driven by Chicago School economics, which in the public sphere, is about public choice theory and new public management, which is a very problematic way to think about the role of the civil servant in the economy.
Rochelle Burgess 10:59
I just want to pick up on this point of relationships and turn to you, Kate, because in my understanding of the donut model, it's very much founded in this perception on the importance of relationships, at scale, thinking what countries owe each other, but also at the micro, what to individuals owe each other in this more cyclical economy. And I just wondered if you had anything to say, or any thoughts on some of these points so far?
Kate Raworth 11:28
Great well on relationship, let me pick up where Mariana began as well on what is the goal. So you could say, very stylized, 20th century, somebody might have said health and economy well, we need healthy productive citizens so that they can contribute to the economy. And what we're saying 21st century learner, let's flip that around. We need an economy that contributes to health and the doughnut framework and think of it think of a doughnut with a hole in the middle. We want to leave nobody in the hole in the middle, where people are falling short on the essentials of life without health and education, housing, food, water, political voice, leave no one in the hole. But we mustn't overshoot the limits of our planetary home. To what end? are we managing our planetary household, in whose interests I think the fundamental relationship that must come in is humanity to the rest of nature, which I think has been at the periphery was certainly the periphery of economics when I studied it. So just as every child learns at school, the human body, we have multiple systems, we have a skeletal system and a muscular system and nervous system, digestive respiratory, we learned that we can't put so much pressure on them. All of our systems depend upon staying within a balanced range. So health lies in balance, and it allies in the interconnecting operation of all these systems that we don't fully understand, but we understand it a heck of a lot better at the level of the human body than we do at the planet. Your body. Just like our bodies, the planet, your body has a lot of interconnecting systems, there's a carbon cycle, there's a hydrological cycle. There's the nutrient cycle, there's a protective ozone layer. And there's a web of biodiversity of life. And we need to keep these also within balance, we need stable climate, healthy oceans, fertile soils, recharging freshwater, abundant biodiversity, and a protective ozone layer overhead. Human Health is utterly dependent upon all of these, there's no way we can have nutritious food, clean water, and secure homes and settlements. In a world with a disruptive climate and drying out rivers and toxic soils. We can't be safe, even outdoors if there's a hole in the ozone layer. So at the heart of 21st century economics for me, but the concept of the donut is to say, human wellbeing within planetary health. That is the goal. And everything that Mariana has been saying about how do we structure markets, regulation, government policy, how do we structure that tilted, shape it towards this goal? For me, this is the project.
Rochelle Burgess 14:11
So I mean, what does prosperity look like, then in the 21st century for you is is that the goal? It just often feels to me, and one of the things I hear people sort of argue about is there's there's this conflict between the way people in, for lack of a better descriptor, high income countries live their life, as consumers mass consumers, versus these big challenges over the overconsumption of our planet, let's say, how would we sort of redefine prosperity for for citizens for people wanting to live in the next in the 21st 22nd century, hopefully we get there kind of thing.
Kate Raworth 14:54
So prosperity means that for which we hope, what we aspire to, and the more that we come to understand And our well being depends upon planetary well being, we have to take that account of what prosperity looks like. So I think a very narrow 20th century idea of prosperity with wealth, riches, accumulating things, cars houses, that cannot be a 21st century meaning. To me, prosperity means living well within the means of this planet so that we create conditions conducive to life conducive to ongoing, thriving future generations. All high income countries in the world are massively overshooting their impact on planetary boundaries, excessive carbon emissions, excessive material footprint, excessive land, and water and fertiliser is they have to go on an unprecedented transformational journey to come well back within those planetary boundaries. I say there's no such thing as a developed nation. Actually, we're all developing countries now. There's no country in the world that currently meets the needs of all its people within the means of the donor. The country that's closest is Costa Rica, it's nearly meeting the needs of its people at a basic level, kind of nearly almost within the donor. But this has never until now being the goal of policy. So there's a possibility that we can do it a lot better, we need to channel the innovation, that Mariana is talking about the capacity to innovate towards coming in high income countries are way overshooting planetary boundaries and have to come back within them, then let's go to low income countries, whether we're thinking Bangladesh, Malawi, India, millions of people that are falling short on their most essential needs, and they need investment in health and education and the fundamental infrastructures that enable people to meet their needs. And they've got to do this also in an unprecedented way of meeting people's needs, but not in the way that the countries that have gone before have done overshooting planetary boundaries. At the same time, can we create the technologies, the innovations, the way we govern ourselves, to meet our needs, within the means of a living planet? To me, this is the most fancy, fascinating developmental journey that's happening everywhere.
Xand Van Tulleken 17:01
So when we think about healthcare provision, or the activities that governments undertake to provide clinical care or to take care of public health, it seems to me there's a great interest in predating that activity by various parts of the private sector, and maybe predating, I suppose, a bit of a prejudicial term, but at least grabbing some portion of that and trying to deliver it for profit. I shouldn't say this is informed by my personal experiences and prejudices living in the US, which made me fully terrified of kind of private health care and living in the UK where we have a nationalised, you know, socialised health care system, but that is underfunded, and rather groaning and creaking along and quite vulnerable to a narrative that says, private medicine would be better. So can we start with you Mariana, and then we'll come to Kate.
Mariana Mazzucato 17:52
Sure. So we did not get to the moon, by simply saying, oh, let's get a bit of public money and a better private money and stir the soup. And then we're gonna get there, there was a very carefully designed system where the public sector led, you'll remember the, you know, all the Kennedy speeches and so on about getting to the moon and back within a generation. So it was a very clear goal. Second, they knew they had to work with the private sector, but it was directed by the public sector with that public goal in mind. And the private sector, lots of different private companies came in from sectors as different does nutrition materials, electronics, obviously, aerospace software, and so on. But that relationship was always goal oriented. So the head of procurement called Ernest Brackett, the first thing he did with the Apollo programme, was to change the way that procurement was done away from a cost plus system where basically the private sector could just kind of charge, you know, NASA any amount of money towards a fixed price system that was very goal oriented, a fixed price, almost like a price scheme, then with constant centres for innovation and quality improvement, they also changed the way that they were thinking about, you know how to make money from this. The idea was, yes, you needed the private sector. But that didn't mean that you turned it into a gambling casino, as I would argue we have in space today with Elon Musk, so they had a no excess profits clause. These are just two examples. This fixed price procurement, and the no excess profits clause to say, a it was goal oriented. Second, they had to collaborate with the private sector. But third, they actually design that collaboration. The second point, that point I would call it the mission oriented point. This needs a lot of money to have a proper social infrastructure, which includes public health. We need to spend money on it, we need to prioritise it and this idea that money is limited or funds are limited is never used when we go to war, right? Anytime anyone goes to war. No one's ever said oh, sorry, we can't go to Afghanistan because there's not enough money. Money is created to go to war money was created to go, you know, to do the Apollo programme. So unfortunately, it's often been military kind of industrial complex and kind of defence minded public schemes that are able to just kind of get money to come out in thin air. But when it has to do with our social priorities, whether it's public education, public health, even public transport, all of a sudden, we're told there's not enough money. So that's another point. Stephanie Kelton has worked a lot on the modern monetary theory, which really kind of rethinks money. And you know, Where does money actually come from, for any country, at least those that have sovereign currencies, monies, oh is created, unfortunately, only when, you know, we actually decide that something is urgent. And the problem is, that definition has often been just in very siloed kind of military areas, or on the back of a COVID pandemic, when it's, you know, millions literally, of people are dying of a global pandemic, all of a sudden money comes out of the woodwork, you know, like the 2 trillion scheme in the US Well, that's, that's too late. You can't just throw money at a problem during a crisis. If you have then over the previous decades been under resourcing under financing things like the public health system. So even with the NHS in the UK, yes, of course, it needs money now. But even if they just threw a huge amount of cash today, which they're not doing, they should do. But even if they did do that, that's not the way you solve a health crisis. You need to continuously in a systemic, holistic way be financing it properly, and valuing health workers properly along the way. And third, is the private sector can be governed in different ways. And when you said that you're horrified by the US system. This is an ultra financialized private sector, there's all sorts of debates about how do we govern corporates? You know, how do you know what is the corporate governance structure that we need, if the type of private sector that the public sector is working with is just about maximising shareholder value, by definition, that's not going to be a very good relationship. And you know, something like $4 trillion have been spent that's trillion is 12. zeros in case people have forgotten $4 trillion have been used just to buy back shares by the large fortune 500 companies to boost their share prices to boost stock options to boost executive pay. Pfizer is one of the most financialized companies in the world. And between 2007 and 2017 19, pharmaceutical companies that are included in the s&p 500 index spent over 300 billion on just repurchasing their own shares equivalent to something like 61% of their combined r&d expenditures, that's a huge extraction of value. And if we look at how Pfizer recently behaved with a vaccine, I think it was really, you know, not a good way to put purpose, which they all talk about at the centre of corporate strategy, they weren't willing to, you know, share the knowledge with the patent pool, the prices were, you know, just not fair prices, given again, that huge, not only collective value creation, but also it was not the right price that's going to allow us to vaccinate the world. So the prices that were actually also charged in developing countries, the AstraZeneca vaccine at Oxford, you know, they were much more attentive with the Oxford researchers, basically, because the Oxford researchers force this through to make sure that the deal was a good one. So again, weak intellectual property rights, low cost low prices, a temperature for storage, that wasn't completely crazy. So it could be accessible in the developing parts of the world. So just to say that, you know, any project, whether it's a vaccine project or something else can be negotiated in a particular way. And unfortunately, ultra financialized companies tend to negotiate the conditions that will simply maximise their share prices and not do the kind of things that Kate and I are interested in.
Xand Van Tulleken 23:55
So that's an amazing kind of picture, you've painted their cake. Can I pick up with you? How do you persuade a very financialized company to alter the way it approaches things or a government to regulate that company?
Kate Raworth 24:08
So one is to start by recognising that, as you said, you know, an underfunded health system, people start saying, Oh, well, maybe we should move to private, would private medicine be better? Maybe just more funding would be better, right? Is a really dangerous sudden turn to this underfunded system isn't working, let's go private? No. Let's compare the US health system to many European systems. It actually cost almost twice as much per person to deliver health care in the US than it does in many comparable European countries. And by the way, their carbon footprint of their healthcare system is three times as much as many European countries. So public services can be delivered far more cost effectively than the private to persuade. I would say what really matters is the deep design of your own organisation. This is what it comes down to. We need to go under the hood and look at how you as an organisation that designed and there's five design traits that we discuss, and that you could take this to the NHS, you could take this to Pfizer or any private company. So the first one is purpose, what is your purpose? Why do you exist? What do you in service of? So that's crucial. Now, what are your network? How do you build your relationships through these many, many networks that you have? And how do you instil your values and ensure that you don't get pulled back to the old value? So who will you do business with? Or who you will contract and collaborate with? And who would you not contract and collaborate with? Because they're pulling you back in your direction? Third, governance? How is your organisation governed? Who has voice in decision making? What are the rules and the principles and the practices, the hard rules and the soft norms that you are run by? What do you take as your metrics, metrics of success? So that's your purpose, your networks and your governance? Now, let's go down to the really heavy stuff. How is your organisation owned? Is it owned by its employees? by the state? Is it owned by a family, if it's a business, is it owned by shareholders is owned by venture capital? Because these very different ownership designs exist, whether in healthcare or in any company, but they have profound implications for the fifth trait, which is how is it financed? What is the finance expecting and demanding from its investment? Is it investing in you because it shares your purpose? And what's a fair financial return? And what's a fair return? Maybe the fair return is public health and a thriving economy? Or is it investing in you wants the highest fast is returned, and you get all the share buybacks that Mariana so eloquently just described. Now, across those five traits, your purpose, your networks, governance, ownership, and finance. And I find these five design traits, I offer them to anybody listening, like use them, like a detective about any organisation, whether it's your own university, a public library, a company, an NGO, or foundation, because they reveal a lot about what's going on under the hood, and what's going on under the hood, really shaped what we can do and be in the world. Whether we can become regenerative and farmer distributive of value, or whether the cause of the deep design of this organisation, it's just always going to revert to being extractive and a cumulative. So let's redesign the organisations if we really want to transform the outcomes in the world.
Xand Van Tulleken 27:23
Between the two of you, you paint a picture of the problems and the the way of analysing the system that does at least reveal more problems and potential solutions, which leaves me feeling maybe a lot more optimistic than I thought I might at the end of this conversation. I was going to throw to Rochelle for the last question.
Rochelle Burgess 27:42
Yeah, just a huge thanks. If either of you had been professors at the LSE, when I was there, I might have switched programmes, because you've given me a lot of hope in a discipline that used to only give me anxiety, and sadness. So thank you so much. One of the things that we do with our guests as we ask them, what piece of art or music or poetry or anything in your world or environment has disrupted the way you think, or your perspective. For me, it's really easy.
Mariana Mazzucato 28:14
It's easy, because I'm working with the most amazing artists right now who inspires the hell out of me. He's actually even doing a PhD with me, George Matanga, George, the poet, he is one of the most fascinating podcasters, but also fascinating artists, really big thinker about a lot of the issues we're talking about. How do we actually think about, for example, with hip hop and rap, and black music in general, the huge social collective infrastructure that's produced it, and the people who have produced it, the communities often, you know, people from the black community that then haven't actually benefited from the profits that are made in this trillion dollar industry. So how do we both rethink and open up our understanding of the value as it's created, but also think of new distributive and ownership models which reinvest those profits, which are massive, if you think of the global Hip Hop slash rap industry, into the communities in terms of public arts programmes, social housing and so on?
Rochelle Burgess 29:20
Yeah, I have definitely heard of him, maybe we can see if we can get him to come on, would be really cool. Kate,
Kate Raworth 29:26
so there is an organisation in Birmingham called Civic Square, who have taken the concept of the donut and they are downscaling the donut to a set of neighbourhood streets in lady wooden port loop in Birmingham. But they are doing it with such art and play and fun and getting kids and everybody engaged in the most beautiful, creative way. It's it's very, very humbling seeing somebody take an idea from a book, and then bring it to life in the streets and have community parties and games and engagement. with people, economics was this source of pain and anxiety. And it shouldn't be, it should be everybody's conversation. And the name donut makes it fun, it makes it accessible. Since we're on a health podcast, I have to say, have let you know don't eat too many donuts. This is the only one actually turns out to be. It's conceptual is so long as economics is seen as something by men in suits with a briefcase and equations, and I don't understand it. That is politically strategic and alienating from everybody else. We have to make it accessible, we have to open it up with metaphors and games and humour that makes everybody knows actually this is politically for us all.
Rochelle Burgess 30:39
I've nodding so hard that my neck hurts.
Mariana Mazzucato 30:43
George the poet is actually part of the Camden renewal commission that I co chair with Georgia Gould, the council leader of Camden, which is part of North London. And one of the things we've done is we've brought this notion of missions and public purpose to Camden. And just to give you an idea of this co creation, and how it comes in, because it's very much as Kate was talking about, it's fun, it's all about citizens taking part co designing these missions, so that they're kind of Felton and really benefit from the imagination that all sorts of people bring to it. That last one that the housing estates candids it states be healthy and sustainable. The first thing that came to did was actually bring the resident associations to the table to actually talk about what does it mean to live together in a more sustainable way? So instead of just saying, We're gonna retrofit all the, you know, housing estates, how do we understand how do we debate how do we, you know, think about living together in a more sustainable way. And that process of bringing these very different voices to the table as part of setting the mission was probably the most inspirational. I love
Xand Van Tulleken 31:47
it. The both ended with learning by doing which you talked about, but that you're actively in Birmingham, living in Camden applying this and figuring it out. And more than economists, it's poets and it's human beings and artists. That's a fantastic way to end. Thank you both very much.
Rochelle Burgess 32:05
Thank you so so much. Yeah, it was amazing. Thank you. You've been listening to public health disrupted this episode was presented by me Rochelle Burges and Xand Van Tulleken, produced by UCL health the public and edited by Annabel Buckland our guest today we're Professor Mariana Mazzucato and Kate Raworth. If you'd like to hear more of these podcasts from UCL health the public, subscribe wherever you download your podcasts. This podcast is brought to you by UCL minds bringing together UCL knowledge, insights and expertise through events, digital content, and activities that are open to everyone.
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