THE ADAM BUXTON PODCAST - EP.185 - MARIANA MAZZUCATO

Episode Date: August 12, 2022

Adam meets Mariana Mazzucato, 'one of the worlds most influential economists'* about how capitalism fails and how it can be made to work better by 'reimagining the state'.(* see WIRED article link below)This episode was recorded face to face in London on 10th March 2022Thanks to Séamus Murphy-Mitchell for production support.Podcast artwork by Helen GreenRELATED LINKSMARIANA MAZZUCATO WEBSITETHIS ECONOMIST HAS A PLAN TO FIX CAPITALISM - IT'S TIME WE LISTENED by João Medeiros - 2019 (WIRED MAGAZINE)MISSION ECONOMY: A MOONSHOT GUIDE TO CHANGING CAPITALISM - 2021 (WORLD OF BOOKS)MISSION ECONOMY: MARIANA MAZZUCATO IN CONVERSATION WITH GILLIAN TETT - 2021 (YOUTUBE)MARIANA MAZZUCATO - NEW ECONOMICS LECTURE - 2016 (YOUTUBE)MOONDOGGLE: THE FORGOTTEN OPPOSITION TO THE APOLLO PROGRAM by Alexis C. Madrigal - 2012 (THE ATLANTIC)GIL SCOTT-HERON - WHITEY ON THE MOON - 1970 (YOUTUBE)WHY EXPLORE SPACE? A 1970 LETTER TO A NUN IN AFRICA (by Dr Ernst Stuhlinger) (ROGER LAUNIUS' BLOG - 2012) Hosted on Acast. See acast.com/privacy for more information.

I added one more podcast to the giant podcast bin. Now you have plucked that podcast out and started listening. I took my microphone and found some human folk. Then I recorded all the noises while we spoke. My name is Adam Buxton, I'm a man. I want you to enjoy this, that's the plan. Hey, how you doing, podcats? Adam Buxton here, taking a crunchy walk through the dry grass of a field in Norfolk, UK.

It is, as I speak, early August 2021. I'm here with my dog friend, Rose. Half whippet, half poodle. All genius. What do you say, Rosie? Yes, it is true. All right. Now, I said at the end of the last episode with Louis Theroux

that I might be back with a few episodes of the podcast before starting back in earnest in autumn of this year. And, well, this is one of those episodes. I think I've got maybe two or three that I'm going to put out between now and the end of September when I start back properly. Hey, I hope your summer's going okay, by the way. It was good to meet some of you the other day in Crewe, where I was doing a show at the Jodrell Bank Observatory for the Blue Dot Festival. My first time at Blue Dot. Really enjoyed that.

There's a scientific theme to the Blue Dot Festival in the way that it's decorated. That's the right word. And in some of the guests invited to appear there. My Best of Bug Show took place after a talk by British astronaut Tim Peake in the mission control tent, for example. And there is a sort of connection there with my guest today, who is the Italian-American professor of economics, the Italian-American professor of economics, Mariana Mazzucato, PhD,

referred to in Wired magazine, let me tell you, as one of the most influential economists in the world. Earlier this year, I listened to her book, Mission Economy, a moonshot guide to changing capitalism, published last year, 2021. In it, Mariana argues that instead of giving up on capitalism altogether, a more useful approach would be for governments to promote the best aspects of the capitalist system and get behind more ambitious and risky projects. That we've come to think of over the years as the preserve of the private sector. The benefits of this mission-oriented approach to the economy are illustrated, says Mariana, by America's Apollo space program during the 1960s, which of course achieved its goal, famously articulated by

President Kennedy in 1961, of landing a man on the moon and returning him safely to the Earth. Now, I love space and spaceships and space people, so I was well up for a deep dive into the triumphs of the space program through the lens of economics in a way that might provide some inspiration for how to solve some of the world's current problems. So when I got the opportunity to record with Mariana, I was delighted because, of course, I'm also an expert in economics, public policy, and innovation-led inclusive and sustainable growth. So I wasn't at all concerned that I wouldn't be able to keep up with what Mariana was saying and reveal myself to be quite out of my depth. But it was certainly

one of my less trivial chats. Let's put it that way. Mariana hasn't been on any comedy panel shows. hasn't been on any comedy panel shows. She is, instead, an advisor on economic policy at institutions that currently include the United Nations, the South African government, the Organization for Economic Cooperation and Development, and the World Health Organization. Here's a few other Mazzucato facts for you. Mariana was born in Rome in 1968 and moved with her family to Princeton, USA,

after her father accepted a position as a physicist at Princeton University's Plasma Physics Laboratory, where he still conducts his research. Her mother was a teacher of Italian literature and a locally celebrated cook, whose dinner guests included John Nash, the Nobel Prize-winning game theorist portrayed in the film A Beautiful Mind. Mariana received her BA in economics

from Tufts University in Boston and her MA and PhD from the graduate facility of the New York School for Social Research in New York. For the last 20 years, Mariana has lived with her film producer husband and children in the London borough of Camden, where she helped set up the Camden Renewal Commission, at which she has been applying some of her global expertise to local issues like housing, education and knife crime. My conversation with Mariana took place face to face on a warm day back in March of this year, 2022, in a big high-ceilinged book-lined office at the University College London Institute for Innovation and Public Purpose,

or the IIPP, where Mariana, as the founding director, is focused on bringing business together with government, policy makers and public institutions in order to help tackle some of society's big problems. In her advisory work and the three books she's written over the last couple of decades, starting with her highly influential 2013 debut, The Entrepreneurial State, Mariana has summarized her focus as simply reimagining the state. I'll be back at the end for a quick goodbye, but right now, with Mariana Mazzucato, here we go. Let's chew the fat and have a ramble chat. Put on your conversation coat and hide your talking hat. Yes!

La, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la, la So I read recently Mission Economy. The whole thing? Yes. Wow. And I listened to the audio book. Is it okay to admit that? Yeah. It's not my voice. I should probably do it next time.

What do you think? I'm going to move this closer to you. I was surprised that you didn't, actually, because you're a good speaker. I don't have time. I know. I probably should. I've got four kids who keep me busy. And I have seven different hats I hold and job wise. But I think I should. That is the first of your books that I've read. And you talk in that book about capitalism being in crisis. And that is a system that's been blamed

for a lot of things over the years, and continues to be unpopular with a lot of people. I mean, how would you summarize why? Sure. First of all, this is the kind of third popular book I've written. I've written academic books, which are so expensive that the publishing houses make money just by selling them to libraries around the world. But in terms of the kind of more commercial-oriented books, it's the third. And I just say that because for me, this third book is a recipe book. It's literally the how, like, you know, two eggs, some flour mix, because I was getting fed up with all the theorizing. But the first book I wrote was called The Entrepreneurial State. And it was all why we

need a completely different type of state. The second book was on the theory of value we actually need in economics to underlie that was called the value of everything. And second book was on the theory of value we actually need in economics to underlie that. It was called The Value of Everything. And this third book for me was really about saying, all right, enough complaining. What are we going to do about it? But in terms of the complaint bit, I talk about the crisis of capitalism in different ways. First of all, that we can't keep just kind of picking up the mess. What's the mess? Financial crises, climate crises, health pandemics, which prove us to be totally unprepared, whether it's the personal protection crises climate crises health pandemics which prove us to be totally unprepared whether it's the personal protection equipment which wasn't delivered

whether it's the test and trace which we had to outsource to Deloitte a consulting company because government decided it wasn't able big failure there and Deloitte did not do a good job whether it's the vaccine which currently we're you know to get out in the world, but what we actually have is a vaccine apartheid, where the rich world is basically hoarding the vaccine, so most African countries have not vaccinated even once the population. And so those are problems. They're symptoms of the sickness. The sickness goes much, much deeper,

and if we keep just patching things up, literally putting Band-Aids, we're just reproducing the sickness elsewhere. So the roots of the problems, why we're in crisis, is that, first of all, we have a business sector, industry, which has become overly financialized, meaning a lot of profits aren't even reinvested back into the economy. They're extracted out. Profits aren't even reinvested back into the economy. They're extracted out. Over the last 10 years, the top global businesses have spent over $4 trillion. That's 12 zeros just in buying back their own stock, their shares, to boost stock prices, stock options, executive pay. That's a key issue around the 1%, 99% maldistribution of income. So that kind of financialization, lack of reinvestment is at

the heart of all sorts of things like how workers are getting screwed. So that's one huge problem. Then we have a finance problem, which is that finance itself, as I already mentioned, mainly goes back to finance, insurance, real estate, but we also have a government crisis. They butt into this idea that at best they can fix market failures. At worst, get the hell out of the way. At best, come in and patch up the system. Yeah. And that's a very bad design to policy. Sure. But there's a reason for that, surely, which is that people don't like the idea of governments taking risks with their taxpayers' money.

Do you have a smartphone? Yes, I do. Throw it out. Anyone who thinks that should throw out their smartphone. Everything that makes your smartphone or any smart product you have smart was government. They invested. So it was government investment, risk-taking investment in the internet, GPS, touchscreen display, and the Siri voice-activated system. The four technologies that make our phones smart and not stupid. Then we needed companies like Apple with a great sense of design, simplicity, all the great things that Steve Jobs and the team have and had. Johnny I, one of the great designers within Apple, he's a good friend of mine, or not a good friend.

He unfortunately supports Tottenham. I support Arsenal, so he'll never be a good friend. That goes over my head anyway because I don't know anything about football. Oh, okay. I'm Italian, so I have to like football. Oh, okay. I'm Italian, so I have to like football. So you need companies to put together that technology, but it's completely wrong to think that government isn't kind of able to innovate. Governments often aren't able to innovate, but it's a self-fulfilling prophecy. We end up creating really bad, bureaucratic, inertial, vertical bureaucracies. In my institute here at the Institute for Innovation and Public Purpose, we have a whole master's program for civil servants teaching them that the word bureaucracy should not be a bad word.

It's just a fact. We need a bureaucracy. The problem is we have bad bureaucracies. We should have a creative, dynamic, a sexy bureaucracy. One that's agile and flexible and able to adapt to uncertainty, deal with complexity, and so on. So it's just purely an ideological point that government is not able however because that ideology is so strong it then informs the practice

on the ground and we end up with bad bureaucracies and state structures that are problematic i'm from italy it'd be stupid if i defended the state. We have a very problematic public sector in Italy. That's why we have the mafia, by the way. The mafia in Sicily was set up back in the day to counter a very problematic state, which wasn't governing properly. So you had people setting up mutual help organizations. The original name was the Società dei Beati Paoli. It later became literally Cosa Nostra, you know, the mafia that you see on Hollywood movies. So that's what happens when you have problematic states. You end up with mafia-like organizations. So I'm not there to defend the state. I'm there to ask the state, businesses, but also third sector organizations like philanthropies, which I think have increasingly in some ways become part of the problem. It's not their fault,

but because governments and the business sector is not doing its job. Like currently with vaccine equity, we shouldn't have philanthropic giving and charity, making sure that Africans get vaccines, we should get the business models to change. So that, you know, the knowledge is shared, especially during a pandemic. Instead, we have intellectual property rights, which are allowing huge amounts of rents to be accrued by the pharmaceutical companies. And do you think, though, like coming from a perspective totally outside the world of economics and not knowing anything about it, I was actually going to ask you to explain to me what you mean by vertical. Oh, yeah. Cool. And things like that.

Sure. And I might ask you to define terms as we go along because i literally i think we need more of that do you know that when i'm in cabs unfortunately often in a cab rushing somewhere i will sometimes just like engage with the cab drivers who in london at least are often on the kind of center right side of the spectrum if you think about brexit or whatever not always and i engage with them properly on the issues and sometimes they'll get out of the cab and they'll turn around and they'll say love no one ever explained it to me like that yeah i think we have a really

condescending academic environment that doesn't explain terms just like i wouldn't understand nuclear physics that's what my dad does why should anyone understand the economy yeah but it used to be much simpler like the economic debate used to be more at a level that people understood. And we've made it almost on purpose, I think, difficult to understand. Yeah, sure. I'm happy to define. Everyone likes a bit of jargon. Makes you feel part of a club.

Well, maybe you could define vertical before I ask you the very broad question I was about to ask you. Well, I just used the word vertical, but I usually use it in a different way. So first, I'll explain what I meant by vertical in the way I just said. And I'll explain it maybe through an example. In this book I just wrote called Mission Economy, A Moonshot Guide to Changing Capitalism, I tell the story of when the US government decided back in the early 60s that they were going to compete with the Russians by trying to get a man on the moon and back in a short amount of time, Kennedy said, in one generation. So that required a level of risk-taking, agility, a public-private partnership.

It wasn't just aerospace. It was all sorts of different sectors like nutrition, materials, electronics, software that had to innovate. But what NASA, the National Space Agency in the United States government, learned early on is that they were too vertical. Now, what do I mean by that? After the Apollo 1 fire, which killed three astronauts on the day of the fire, I think it was June 1967, Gus Grissom, one of the three astronauts,

yelled out, how the hell are we going to get to the moon if we can't even talk between two or three buildings? So to talk between two or three buildings, you need a horizontal structure, right? You need different departments, whether it's a government, broader government, or a NASA, the different departments that need to be speaking to each other horizontally, agilely, right? Vertical means when you just have this hierarchy from top down, kind of like a teams, they were delegated tasks, but the key thing was to communicate between teams in a horizontal way so that communication could happen between these two or three buildings because those three astronauts couldn't even hear what was being said to them from the mission control room on that day.

Right. Another way, I usually use vertical as a different way, but we can talk about that later. Okay. Well, just for things standing up, that's way i usually use vertical is a different way but we can talk about that later okay well just for things standing up that's the way i use vertical sorry say that again i'm being oh something's standing up yes interesting well vertical in terms of policy maybe i'll just say because this is very important in my book vertical in terms of policy is when you choose an area horizontal is when you say we need to invest in horizontal kind of background conditions like

education research and development science and industry linkages as an economist who focuses on innovation and industrial kind of economics vertical would be like let's choose a sector like artificial intelligence quantum computing the creative industry right that's like a vertical choice of of the what the horizontal is often the how. And my work says the vertical needs to change. You shouldn't be choosing sectors or technologies. You need to be choosing problems, big problems, like getting the plastic out of the ocean, carbon neutral cities.

In London, zero knife crime. And then getting all different sectors to work together to solve those problems. That's how I use vertical, and that's why I talk about missions and moonshots as a different way to define the vertical, by being really bold on what the problem is and going after it in every which way you can. But currently, how are things done then? They're not done like that. They're done just kind of, am I allowed to swear?

Yeah, yeah. Kissing in the wind, a friend of mine used to say, who then passed away, was a very famous industrial economist called Keith Pavitt. He said that how policy is often designed is pissing in the wind. In other words, just kind of distributing things randomly and it flies back in your face to bite. Now, what it actually means in terms of industrial strategy, something I'm very interested in, in the current way, the status quo, the wrong way, is it ends up being a choice of sectors. Like you might remember Vince Cable, he was a Secretary of State, actually worked quite closely with him. How Vince Cable and some other ministers of industry and innovation often think is, you have a list of sectors. At the time, for him, it was in the UK, life sciences,

the creative industries, finance, so financial services, automotive and aerospace. Don't ask me how I remember that. I literally don't remember what I did yesterday. And so my point was, why are you just like making this random list of sectors? First of all, there's lots of sectors not on that list. And it might even be that some of those sectors lobbied you, right, to be on that list. So that's a problem. They said focus on the big challenges that we have as a nation. And these challenges are broad. Sometimes at the global level, these might be the sustainable development goals.

But the challenges they chose were clean growth, healthy aging, because as you know, in many advanced industrialized countries, we have very old population, which then doesn't age very well. Future of mobility, which isn't just transport, it's how we move in a more sustainable way. And then they came up with the fourth one, which I thought was problematic, because to me, it's more of a general purpose technology, as economists would call it. So the data economy, the kind of digital economy, which I think has to be cross cutting any challenge. Anyway, once you have those four challenges, the idea is turning those into moonshots. Like with clean growth, you might say we're going to get every city in the UK to be carbon neutral. That's already more specific, right? So you can actually answer how many cities now are carbon neutral. Is it 50%, 70%? And by

when do we want that to happen? And the way that to do that is to redesign your industrial strategy in this moonshot mission oriented way, problem focused to get all your sectors. There's no sector, if you think about it, that should be left behind with a clean growth strategy. But that means those sectors need to transform themselves. They can't just be getting handouts. So the status quo is just giving money out to sectors that are hurting. Think of the bailouts right now with the COVID-19 pandemic, where lots of sectors ended up in crisis. We gave a lot of money out to companies like EasyJet, 600 million, no conditions were attached. What should have happened would be if you have emission, clean growth, well, surely you're going to give EasyJet a loan. They might need it or some

sort of bailout when they're not flying. But that should be conditional on them lowering their carbon emissions in the next five years once they start flying again as a kind of quid pro quo. That kind of mission-oriented thinking then should be translated into contracts, a new social contract between the public and private sectors to be less parasitic, more mutualistic, symbiotic. So they're both gaining instead of one just free-riding off of handouts from the other. contract between the public and private sectors to be less parasitic, more mutualistic symbiotic. So they're both gaining instead of one just free riding off of handouts from the other. So your general take on capitalism is not that it should be scrapped necessarily, but sort of reorganized and reimagined. Is that right?

Well, I mean, even if I wanted it to be scrapped, it wouldn't get scrapped. I don't have that power. So it's more given that we have a capitalist system, we have to redesign it so it works for people and not just profits. The current way it works is both because of the badly designed policies, but also what we have allowed in the corporate governance setups is a lot of, as I mentioned before, extraction with the profits and this value creation, which in my work, I argue it's been, you know, value is created in a hugely collective way. As I mentioned before, every technology in your smart product was publicly financed. But of course, there's lots of private innovation. So that's a collective investment. But the profits end up getting privatized. So we socialize the risks. We privatize the rewards.

That's a huge thing to change. And that's not because of socialism. That's because of having proper equity in terms of risks and rewards, which is actually what you learn in any business school as kind of finance 101, the risk reward relationship. But because the stories we tell, that's why podcasts are important, we should be telling very different stories which debunk and undermine the problematic structures. There's a famous Native American quote, which Plato also is credited for, storytellers rule the world. So the stories we tell of where value came from are extremely siloed and underpin problematic policies.

So if you want an example, I can give you one with Tesla, because everyone knows about Tesla car. So after the financial crisis, the US government engaged in a huge stimulus program at the same time that in the UK and most of Europe, there was austerity, so cuts to public budgets. They said, no, we have to stimulate the economy. So there was an $800 billion stimulus package or recovery fund. And Obama originally wanted to make it green directed. So to have a

green stimulus, kind of what today we say build back better. He then got in trouble with the Tea Party. It didn't happen as well as it should have, but he tried. And one of the things he did through the Department of Energy was to give out loans, guaranteed loans, to green companies, of which one was Tesla Motors that everyone knows about because of Elon Musk. So Tesla got a guaranteed loan those early days, 2009, of about $465 or something million guaranteed loan from the government. Guaranteed meaning if things go bad, don't worry, government picks up the bill. Another company called Solyndra got more or or less the same amount just a bit more they went bust and it became a huge scandal everyone used it as you know an example of government not knowing what it's doing taxpayers got you know pissed off because they had to bail out another company

yeah um no one first of all knew that tesla got the same amount of money. So that's a huge success from the public loan side. But how it was structured made no sense. What happened was that the government, so the taxpayer, picked up the bill on Solyndra, with Tesla was seen as a private sector success. Not only that, the government said to Tesla, if you don't pay back the loan, we want 3 million shares in your company, which makes no sense. If the company is not paying back its loan, it's probably a crappy company. Why would you want 3 million shares in a bad company? The company did pay back the loan in 2013. And in that period, 2009, 2013, the price per share in Tesla went from 9 to 90. That difference multiplied by 3 million

would have more than paid back the Solyndra loss and the next round of investment. That's like a public venture capitalist kind of viewpoint, right? That means you're not just bailing out the downside, you're also getting a share of the upside. So that kind of redistribution of wealth to a more collective group of actors is how I think capitalism actually should work. Instead, we confuse that with socialism because people like Corbyn will say, oh, just nationalize everything. That's not the point. The point is, it's not about nationalization. It's literally about redistributing risks and rewards in a more just, fair way that recognizes that collective,

not just individual and private sector value creation. So what should the US government have done then with tesla at the beginning just taking out three million shares if the company was successful that should not if it was a failure okay yeah and it could have gone into an innovation fund which can also make the government budgets more sustainable some people including them including myself in some ways because theoretically the point is right some people will say well you can just create money just create money, just like when we go to war. Literally, when we go to war, we create money out of thin air. Even these recovery funds that are coming out of the woodwork were created out of thin air. Normally, governments pretend they have budget constraints,

and they say, oh, no, if we spend more on education, we have to spend less on health. That's a false, like, that's true for a family. Like, you literally need to spend less on health that's a false like that's true for a for a family like you literally need to spend what you're earning and if you you know you can take out some credit but if you end up not being able to pay back those loans you're going to go bankrupt and you'll go to prison or someone will take your house away from you right that's not true for the government for countries with their own sovereign currency they create money all the time but isn't it true to the extent that at some point they will have to, at some point they're going to have to pay for that money? Well, so there's two separate points. First of all, my point about retaining equity is just to say,

in theory, governments don't even have to do that because they can create money. In practice, I think they should do that because also the narrative of getting back your share is important. So even without creating the money, you can actually set up a more sustainable public fund by distributing risks and rewards. And that example I just gave, and there's other ways to do that too. Now, coming back to public debt, the irony is that often the debt to GDP, which is what really matters, goes up. Why?

Because if you're obsessing about the deficit, you might end up reducing the public investment in key areas, whether it's education, publicly funded research and development, or in some ways, even the social fabric of society. Crime rates go up. Again, the social fabric is weaker. That itself has a cost, which then you have to pick up the mess later through other types of public funds. itself has a cost, which then you have to pick up the mess later through other types of public funds. So there's this irony that by obsessing on the public debt just as an annual figure, which is the deficit, you ironically end up in terms of the ratio debt to GDP, which is what matters, having that go up because the denominator doesn't rise. And just from basic mathematics,

you might remember when you have a ratio, x over y y is the denominator if y is zero that ratio goes to infinity right any number over zero goes to infinity i don't remember that yeah well i know i don't think people take enough math in this country that's another big obsession of mine i've got four kids it's crazy that at the age of 16 they give a choice of people to stop math or poetry. I think we need to have poets and mathematics both taught. Absolutely. Until the end. Well, you talk about the storytellers. There certainly aren't enough stories about inspirational maths teachers.

And therefore, I don't think that there are too many people who want to get into teaching maths for that reason. You know what I mean? Like being an English teacher is always an attractive option because you imagine yourself getting your students to stand on their desks and recite poetry and have a wonderful inspirational time. All those, you know, when people talk about teachers who change their lives, it's almost always someone from their arts, you know.

Oh, mine was a historian, Mr. Locker. There you go. Historians, but still, you know, know historians english teachers yeah that kind of thing but but see mathematics can be really exciting but not at the gcse level it gets exciting at further maths yeah yeah and what's crazy in this country and i really see it because my kids i have four children they've all gone to state schools in london um and you know they're lucky they're at homes, my home with lots of books and, you know, my books, my husband's books, their books. For a lot of kids who don't have, you know, books in the home, just due to all sorts of reasons, school really, really matters.

Well, school matters for everyone, but it especially matters for those that maybe aren't having those, you know, philosophical discussions around the table or for whatever reason. And for those kids having that really broad whatever reason. And for those kids, having that really broad education, I think for all kids, I'll repeat for all kids, but especially for those who are less lucky than my kids, it's really important to get training in debating, for example. Why do we only have debate clubs in private schools, basically? There's very few in state schools. So of course, the confidence you get from learning how to debate is going to a particular group of people. But in most schools, like in Italy, where I'm from, but even in the US, where I grew up, and neither of those educational

systems are perfect, you don't have like a much broader curriculum for everybody until they're 18. Whereas in this country, when you're 16, you choose three, maybe four, it's usually three subjects. So you end up often with those who just take kind of STEM subjects, you know, math, physics, chemistry, or just social sciences, history, English, philosophy. So tracking kids at such a young age, you know, I ended up becoming an economist and learning a lot of high level maths later. I wasn't very good at maths in high school. I later learned it properly to do economics, but I didn't particularly like math when I was a 14 year old. So if I was judged when I was 16, which track I'd go, I would never have become an

economist. Going back to austerity, what should have happened then with austerity? And how did the, remind us how the government sold it to us because i do remember you were talking about the fact that governments can just create money and it's not like you said managing a family's finances and balancing the books as a in a household but i i'm sure i remember some politicians saying that it was like that. And actually, that just wasn't the money. The money had to be found from somewhere. And this is why austerity was. Oh, they always say that.

But what happened with the COVID-19 recovery is money literally came out of the woodwork. Right. So it's different what they say and what they do. They will always say almost all politicians, even progressive. It's almost like, you know, it's not even just about kind of conservatives versus, you know, labor versus Tories. You have often across the political divide, this assumption that you're gonna have to pay back, you know, the debt.

Now, in theory, coming back to my point before, as long as you're actually expanding the economy and doing those public investments in a sensible way, really investing in new technology, but also really good state education so people increase their skills and their capacities to even engage with the best that the 21st century can offer,

then it's very likely that your public investments and private investments will be expanding the pie, which is that denominator. Think of it literally, almost geometrically, you have, I'm Italian, so a pizza, which is your economy, and the pizza's staying static in place. It's not getting bigger. You just throw a lot of money at it. Per slice, there's going to be more cash on it, right? If you're actually expanding that pie, the GDP, because your investments are smart,

they're increasing productivity, the productive capacity of the economy, also the skills level of people, increasing the social fabric, that pie is going to be growing. So you can be creating money, and there's no reason that should actually increase inflation. So it's really the inflation risk that matters. It's not about going bankrupt. If governments could go bankrupt, they'd be bankrupt right now everywhere, because we just created $4 trillion, basically, in the US, almost $4 trillion. They're still debating exactly how much money the recovery plan is going to be there. But just a couple years ago, before COVID, they would have never, ever put $2 trillion into the economy through a recovery

package. The argument would have been, we can't do that. There's no money. We have to raise it first through taxation. So that's just theoretically not true. You don't have to raise it through taxation. No one ever raised it through taxation to go to war. In World War II, in Vietnam, in Afghanistan, they created the money to go to war. My book is about why is it that we just create money to go to war or during a health pandemic when it's too late and don't realize that we should have outcomes-oriented budgeting like we go to war, or during a health pandemic when it's too late and don't realize that we should have outcomes-oriented budgeting, like we do with war, on social problems, like health for all. That means vaccinating everyone in the world, not just creating vaccines for the hell of it. And then you backtrack and say, what does it mean for the design of the economy,

for budgeting, for procurement, for intellectual property rights, for public-private partnerships, how we design those to deliver on the goal. That's how we got to the moon. We would have never gotten to the moon and back had the government, and NASA in particular, designed their tools like procurement strategy, like public-private partnerships. So organizing the contracts, the design of the budgets, the procurement on the goal. That's how we got to the moon. They would have never gotten there had they just said, oh, let's do a public-private partnership, a PFI scheme to go to space. Yeah.

I still can't get my head around the idea of just creating money and there being no, you know. But there is a problem, inflation. Right. That's what usually happens. That's what happens. No, no, no. a problem, inflation. Right. That's what usually happens. That's what happens. No, no, no, it doesn't have to happen. That's what happens when you don't do it properly. Okay.

But your bigger question, I think, is when you have, you know, will it mean that you go bankrupt because you have to pay back the money? Yeah, I'm thinking of the magic money tree that politicians are always invoking and saying there isn't one. But think of, like, first of all, you're often just paying this money back to yourself. So you could actually, like Germany does, they have often kind of just redistributed the money they're creating also between the different regions.

Here we call it leveling up. But the German government allowed to happen within Germany between the different landes, the regions. What they didn't allow to happen in Europe in terms of that kind of redistribution between Germany and Greece after the financial crisis where all those loans that were going to be provided and bailouts from the European Commission,

you had the Germans saying, don't waste it on the Greeks because they're just going to squander the money. So a lot of the austerity was also imposed at the European level due to that kind of siloed ways of thinking also about redistribution. Because actually, I mean, this brings us to a whole other conversation, which we don't have to get into, but just kind of who owes money to who is a big part of this question. But at least if we just focus a bit on this case of countries like the UK or the United States, when they're creating debt, they really

just owe it mainly back to themselves. Now, you have many developing countries who end up owing it to another country that's actually a different kind of worms, then you can get into trouble. Like Argentina, creating a huge amount of public debt owed mainly back actually in dollars to the US. They have much less freedom in that context. But if we're thinking about countries like the UK, or the United States, then you're basically just owing it back to yourself. So you could, in some ways, cancel that debt whenever you want. But that's not necessarily a smart thing to do. Because you do want to hold yourself accountable, you do want to make sure that you're, you know, investing and spending and creating this money in a sensible way. So the real question is,

what are you doing with the money? How are you investing it? And what are the organizations? This is one of my focuses, also in the institute that I run, is that organizational capacity on the ground. What's the design of your NHS? What's the design of your public bank? This organizational capacity matters. And I just gave evidence, when was it? Yesterday. God, I can't remember. Two days ago to the House of Lords on the BBC. The BBC, the British Broadcasting Corporation, is an organization mainly funded from the license fee and from the public sector. Well, the BBC has had internally a debate about issues like public value, public purpose that has informed its design. One of the things I'm interested in,

and I talk about this a lot is what is public value and public purpose mean for any public organization, not just the BBC. But the BBC has been actually very ambitious and mission oriented and a market shaper, not just a market fixer, because it has independent of the format. So documentary, soap opera, talk show, tried to be really ambitious. So they made soap operas about the working class before anyone did, EastEnders. That wasn't Dallas or Dynasty in the US, which was just about the rich and famous. They made talk shows really bringing people who were diverse to the screen. These things matter. So we shouldn't just be talking about money through the public sector. It's through what organizations, what are we actually investing in?

What are they doing together? What are the problems that have to be solved? If instead, you literally just have the money tree, first of all, it's not going to do much for people. You might end up having what we had after the financial crisis, where most of that money went back to the financial sector. The money created by governments to save the capitalist system from falling apart, a lot of that just went back to the financial sector. It didn't create any real capacity on the ground. It didn't solve problems on the ground. It didn't enter the real economy, let alone solve problems in the real economy. enter the real economy let alone solve problems in the real economy i am just checking because you mentioned eastenders being one of the first uh soaps about working class life actually i think

itv were doing that okay were they yeah coronation street was that before i have no idea that was the 60s okay and i think that is part of the reason that people give the BBC a hard time because they say when it comes down to it, we're paying them all this money just to copy what other broadcasters have done better and they just look at what's popular and people get upset when the BBC does kind of populist shows and say, well, that's not what we're paying our license fee for. You're supposed to be making esoteric stuff that no one else would be able to afford to make. That's a good point. But so I think the point is not, so in my case, it's not about defending the BBC. It's about saying what, how should the BBC be held accountable? It should be,

it should be, I think it has been a market shaper. Think of also the iPlayer, you know, a whole new platform or the BBC microcomputer microcomputer, because the mission was actually to get every household to learn how to code. And that having a public actor in a space that's doing what the private sector is not doing, pushing the frontier, like the iPlayer did, like the BBC micro did, like maybe they did, say, with the Women's World Cup, where they showed it and really got a lot of people watching women's soccer, women's football that never had before, and getting a lot of women to want to play football that never had before. That's what I mean by market shaping. So more of that and perhaps less of some of the safer things. However, it's an interesting question because even public banks might be accused of that.

Why are you also doing these easy things? Well, if you're going to do the hard stuff, you want to distribute it across a portfolio. So you're still earning maybe some safer returns precisely to reinvest in the harder stuff. But that itself should be a metric through which you hold the institution accountable. You know, how should a public broadcaster who's financed through the television license fee be bold and ambitious and really be doing what the private sector is not doing? And, of course, some of the stuff they're going to do will have to be commercial also to raise some of those funds. But are we sure that it's also getting reinvested in these more ambitious areas? But that requires a non-ideological conversation and one that's not part of a culture war or an ideological war, which unfortunately is what I

think we have in the UK. So we need to be very careful what's happening with the BBC. And I think there is a war against the BBC. And I don't think that's about protecting the BBC or romanticizing it for all the reasons you just rightly said. But it is about having an intelligent debate and not an ideological debate. Yeah, but the ideological debate actually about the BBC applies to a lot of what you're talking about, right? bbc applies to a lot of what you're talking about right um that people just don't like the idea of their money being spent in ways that they don't necessarily approve of on a case-by-case basis you know it's too easy for people to watch a program that offends them on the bbc and say my money paid for that this is bullshit let's get rid of it you know in the same way that if governments were more focused on mission operations then it would be too easy for people to

point to one of the failures and say why are we letting the government spend our money like this on on this kind of cylindra type operation that hasn't worked out? But that's where this issue of the vertical comes back that you raised rightly early on. So if the government, just coming to the Solyndra, come back to the BBC, if the government was literally just investing in the Solyndras, of course, that'd be a problem. What does Solyndra do, by the way? It was a solar company. It was basically making, yeah, solar and silicon ships, but broadly defined as a solar

company, which went bust. It was a huge scandal in the US because the stories that were then told about it was that it was a huge, you know, government mistake. The government doesn't know what it's doing. So if government was just making these kind of random choices on projects like Solyndra or, say, today, driverless cars, then something goes, sorry, or electric cars or whatever, driverless cars are coming. Then if something goes wrong in that area, you've got a big problem because you put all your eggs in one basket. If government put all their energy just on any one of those projects, then you're going to have trouble. So the real question is, do we have missions? So when government is handing out money to a sector or to a particular project, is the summation, what's the expression? Is the whole bigger than the parts? And the answer is no, if those parts aren't glued together by some sort of vision and

mission of how to transform our economic system or society in a better direction, you know, inclusive growth, sustainable growth, but then concrete metrics through this mission-oriented approach, which I advocate to get then all those projects to be financed, of which some will be successful, many won't. For every internet that the government financed, there was many failures. You know, any venture capitalist will tell you that's normal. For every success, you have to bear with quite a few failures, trial and error and error and error. to brag about all the failures they had to put up with to get to the success. We don't allow that in government.

We just, you know, anytime a civil servant or a government agency makes a mistake, front page of the Daily Mail, or in that Solyndra case, front page of the New York Times. So it is about the storytelling. It's also about get that portfolio to work properly across different types of investments, all geared up towards a mission. But for God's sakes, don't just pick up the mess when things go wrong. Tax bail or bailing everyone out. Also get your share of the equity of the upside. And that's what I'm very interested in through this kind of notion of public funds.

And I'm actually working in London where we're sitting today with Camden, which is a part of London where I live. And I co-chair the Camden Renewal Commission with Georgia Gould, who's a labor leader, labor counselor there. And we're setting up, we're trying to set up a Camden Wealth Fund. So I've lived in Camden for 20 years now. And in Camden, we have Google, Facebook, you know, sitting on Camden land. We have the Welcome Trust, you know, British Museum, British Library, University College London, the Crick Centre, the Turing Institute, all this, you know, what's often referred to as the knowledge quarter. But it's all sitting side by side with Somerstown, one of the poorest boroughs in the United Kingdom, afflicted by poverty, social and economic, you know, symptoms of that poverty, including knife crime, which I mentioned before, which is really traumatic because I'm talking about knife crime amongst kids who show up in hospitals and often die in

their school uniforms. That's not because these kids are born bad, right? I mean, there's a lot of kind of self-hate and there's all sorts of issues around, again, value, who's understood as a value creator in the community and who is just constantly undermined also because of the opportunities that they're not given and so on. So what would it mean for Camden to have missions around issues of inequality, but also representation, clean growth, and so on. And one of the things we've done with the clean growth mission, because I brought this kind of mission-oriented approach to my neighborhood, to Camden, is to also make sure, and this is much easier to do at the local level, that people in Camden have a say in what sure, and this is much easier to do at the local level, that people

in Camden have a say in what these missions are. And let's also debate issues around climate sustainability, instead of just assuming everyone agrees. Those safe places to disagree, we don't have enough of those, right? Like think of social media, all the hate. So if we want missions that have political consensus, they need to be debated. It's not just about telling everyone what to do. I mean, there was already a lot of resistance to it from a large part of the population, right? I mean, we think of it now, or I think of it now, as an unquestionably great historical project. It's romantic. It's exciting. It's like everything that's good about humanity coming together and doing this incredible thing. Like, it never even occurred to me that it was controversial when I was growing up until

I heard Gail Scott Heron. Whitey on the Moon. Yeah. Yeah. And that was the first time. I quote the poem in the book. Yes, you do. Yeah.

It's true though, isn't it? It's like it was, I think for a lot of people, it's the first time, especially if they're white, especially if they're relatively privileged, it's the first time they get a different perspective on a mission like that. With people saying, why the hell are we spending all this money on this effort that seems to be mainly white men going off and indulging their kind of escapist sci-fi fantasies

of going off and populating other worlds when this one needs the money invested in it when there are real urgent problems now on earth that need dealing with yep so i raised those issues and but i think it's a whole book in and of itself to be done properly so first of all it did have a lot of consensus in the sense that people were inspired by it you You know, those movies that you see or the documentaries of everyone looking up literally around the world. They had the whole world looking up at the sky in this really inspirational way.

You had the janitor, the famous janitor inside NASA when, I can't remember if it was Kennedy or someone else walked in and said, what are you doing? He said, I'm also helping get a man on the moon. And unfortunately it was men at the time. Later, you know, women have also gotten up there. But there was that that was so inspirational that, you know, get a man on the moon. And of course, it was men at the time later, you know, women have also gotten up there. But there was that that was so inspirational that, you know, everyone working at NASA was just so excited about it was so were citizens across the world.

Having said that, you're absolutely right. And that's why I quote the poem Whitey on the Moon by Gil Scott Heron, who basically said exactly what you said, you know, all right, yeah, thank you very much. Go play your little, you know, game up there while people are starving. There's racism. There's all sorts of inequity on earth. Another thing I quote in the book was a beautiful letter that a Zambian nun wrote to the head of NASA in later years saying the same exact thing. You know, what are you doing spending billions up there when there's so much poverty on earth? And it's the answer to her that is really inspirational, which I think is part of the answer. He says in a really respectful way, I can't remember his name. It was a German sounding

name. He says, you're right. There's huge problems on earth, but so many of the solutions that we have found on earth to issues of malnutrition, disease, and so on, have actually come from big blue sky science that we can also trace back to, and it gives all sorts of different examples, to space missions. So it's not so clear-cut that to solve problems on Earth, you literally just have to put your eye on Earth. Actually, it has often been when we've raised our gaze and done incredible science and innovation, where then the spillovers were on Earth.

In fact, in the book, I talk about where then the spillovers were on Earth. In fact, in the book, I talk about all the different spillovers, camera phones, foil blankets, baby formula, software. The entire software industry basically was an outcome of the moon landing. So again, that gives us that sense of it's not so clear cut. Having said that,

the reason I brought up Camden and citizen engagement is I truly believe that on these societal missions, so those missions that are coming from the SDGs, the Sustainable Development Goals, which are about poverty, hunger, inequality, gender parity. These are challenges because I differentiate challenges from missions. Challenges are broad. The space race was the challenge. The moon landing, getting to the moon and back was the mission. Anyway, those missions in these social spheres, these wicked challenges that require not just technological change, but also organizational, social, behavioral change, regulatory change, I believe need to be really designed at the local

level to have resonance, to have meaning, to get people interested, especially in an era of such polarization. When we think of Trump's America, Brexit, England, what just happened in Ottawa with the anti-vax movement, we owe it to people to give them a say in what these kind of missions, how they're designed. Having said that, the challenges have been agreed to. Every country has signed up to the Sustainable Development Goals. So we shouldn't rethink that. Those are the goals. There's 169 targets below those 17 goals. The missions, though, are somewhere in between, right? And I'm very interested in, you know, if you think of Marcus Rashford, how he was so essential in this

country, a Manchester footballer who during the lockdown, you know, reminded government their responsibility to make sure that especially the kids that had been on free school meals continue to get those school meals at home during the lockdown, but also during the holidays. There was so much suffering. There continues to be a lot of suffering. Combining that issue of funding, so funding school meals, with a metric around the school meal that is targeted, so a sustainable, healthy, tasty school meal. So the procurement for the school meal becomes a lever of innovation towards a goal, sustainable and inclusive economy. And then in the schools, if the kids are learning about sustainability because their lunch is going to be sustainable, as you might remember from school, we all really cared about lunchtime. So again, that citizen

participation, getting perhaps, and I'm just kind of making this up, kids to also potentially design those school meals through the curriculum. Think of DT classes. Instead of DT just learning how to cook, we'll learn how to cook in a sustainable way. And it's going to impact how we think about school meal production in a country that has a fossil-free welfare state agenda. These are all just ways to make it just so much more exciting participatory, but it's still about redesigning our economic system. Right. Oh, man. Ernst Stuhlinger, by the way, was the name of the guy who wrote the letter. I can't remember everything I put in this book, especially names like that.

I am in awe at your ability to recall so much. I'll wrap things up by asking you about how the invasion of Ukraine has impacted your outlook, specifically the depressing prospect of defense budgets going up in the near future across the world, and how that will make it harder for governments to change to this kind of mission oriented outlook. It's so depressing what's happening. It is a crime against humanity. And it's in itself just so terrible, but even more so given what we've all just gone through in the last two years, you would have hoped that our attention globally, regionally, nationally, locally would have all been about truly building back better, getting our societies, not just economies, back on track. And there is now this huge human and political crisis, which is, first of all, it's leading to death, unnecessary death. You know, there was no provocation.

So it's just wrong on every single level. And to me, it's especially sad because we had actually an agenda, I think, globally for the first time. If you look at the Build Back Better agenda in the United States or in Europe, the Next Gen EU recovery scheme, which is about 2 trillion euros, why don't we have an equal level of global interaction, investment around all the big, again, problems we have, and now we have this war. And, you know, I'm not a military expert in any way, but seeing so much money now going to defense, again, when my whole point is, why do we only do this with military industrial complex? Why don't we apply the same level of ambition, outcomes-oriented budgeting, dynamic procurement for our social problems? And now we're again, you know, back to thinking that we can just create money for war. And unfortunately, you know, who knows how long this war will last and the

human suffering behind it. How would you argue if there was a politician in the room and you were talking to them about rethinking the state, etc. And they just countered with saying, listen, that all sounds great, but we've got to focus on defense now. But that's already what they were saying, by the way, even without talking about the war. What I've done in the last two years is say, stop saying that now because you need to think about the health pandemic, you can no longer think about climate change. So it's always an excuse. And again, I'm not a political scientist and I can't say anything more interesting

than anyone else about this war and how terrible it is. But I would say to them exactly what I have said to them in the last two years, don't use this health pandemic to stop investing in a sustainable future in terms of planetary boundaries because actually they're linked. All these crises are linked, aren't they? The financial crisis, the climate crisis,

the health crisis, in some ways also the geopolitical crisis. But again, that isn't my area of expertise, but they are linked. So if you look at where COVID-19 came from, in terms of, apparently, by the way, as the permafrost melts, which it is because of climate change, all these new viruses will also be unleashed. So solving these challenges together is not only important in terms of the portfolio of different challenges that we should be thinking about, but because they are interlinked. But that requires also thinking about things in a systemic and a systems-oriented way, a whole-of-government approach, and not seeing something like health just through a health

ministry. But health for all, for example, needs to go through all the different ministries, especially the treasury and the ministries of the economy. And that's really what my work is about, getting an intersectoral, interactor, interdisciplinary, whole of government approach, but not just as pie in the sky, you know, abstract thinking. When I come back to the recipe book that I wrote, it is about the how, okay? You know, let's see how we got to the moon.

We would have never gotten there had we thought about government and business, how we think about it today. Well, I wish you the very best of luck. Thank you very much. I really do it's inspiring this is an advert for Squarespace every time I visit your website I see success yes success the way that you look at the world makes the world want to say yes.

It looks very professional. I love browsing your videos and pics and I don't want to stop. And I'd like to access your members area and spend in your shop. These are the kinds of comments people will say about your website if you build it with Squarespace. Just visit squarespace.com slash Buxton for a free trial. And when you're ready to launch, because you will want to launch, because you will want to launch. Use the offer code BUXTON to save 10% off your first purchase of a website or domain. So put the smile of success on your face

with Squarespace. Yes. Wait. Continue. Come on, Rosie. Let's crunch back. Hey, welcome back, podcats. That was Mariana Matsukato talking to me there.

And I'm extremely grateful to her for making the time and her people for setting it up, her publishers. I really recommend her book, Mission Economy, which I felt like I understood most of. There were sections, a little bit like our conversation, where I was struggling. But it was really interesting and I'd certainly recommend it. When I was listening back to my conversation with Mariana, the bit that really gave me a slight cold sweat, with Mariana. The bit that really gave me a slight cold sweat, because I was right back there in the University College London Institute for Innovation and Public Purpose, with my tatty baseball cap on, trying to keep up with Mariana, when she said this.

So there is this irony that by obsessing on the public debt just as an annual figure, which is the deficit, you ironically end up, in terms of the ratio, debt to GDP, which is what matters, having that go up because the denominator doesn't rise. And just from basic mathematics, you might remember when you have a ratio, X over Y, and Y is the denominator, if Y is zero, that ratio goes to infinity. I was really in trouble at that point i was right back at school like the beginning of that sentence i was thinking yep yeah i'm on top of this this is all fine yeah yeah i'm intelligent i've read books yep and then by the end i was like oh dear i'm gonna have to admit i didn't get that one

dear. I'm going to have to admit, I didn't get that one. Mariana was kind and patient, and if she felt that she had appeared on the wrong podcast, she certainly didn't let on, so I'm grateful for that. In the description of today's podcast, you will find links to a few mariana matsukato related bits and pieces link to her website where you can find out more about what she has done what she continues to do link to mission economy a moonshot guide to changing capitalism there's also a couple of links related to the apollo space program and some of the things in mariana's book and that we touched on in our conversation a very interesting article by alexis madrigal from 2012 in the atlantic not sure if you have to be a member to access that i don't think so anyway it's called moondoggle the the Forgotten Opposition to the Apollo Program.

And then a link to Whitey on the Moon by Gil Scott Heron, also on YouTube, which I've linked to before, and I'm sure many of you will be familiar with already. Then there is also a link to a blog post by Roger Launius, also from 2012. And he was writing about that letter from the nun in Africa to Dr Ernst Stuhlinger. And you can read that letter from the nun and the reply from Dr Stuhlinger. You can read that letter from the nun and the reply from Dr. Stuhlinger. There's also a few comments from people beneath, some of whom aren't convinced by Dr. Stuhlinger's reply. I must say, I was. But obviously it's kind of still a very divisive and controversial thing, isn't it?

Like, you've got all these problems on the Earth and you're going to go and spend billions of dollars on buggering off and going all spacey? Hmm. OK. Thank you to Seamus Murphy Mitchell. Thanks very much, Seamus, for your hard work on this episode. Thanks once again to Mariana Mazzucato and the folks at her publishers who helped arrange the conversation.

Thank you very much to Helen Green. She does the artwork for the podcast. Thanks to ACAST for their continued support. But thanks most of all to you. It's hot and I'm a little sweaty but i don't think i smell that bad no i don't smell that bad so i'm gonna give you a virtual hug if that's okay come here summer hug till next time take good care care. Stay, if possible, cool. And for what it's worth, I love you.

Bye! And subscribe. Please like and subscribe. Give me a big smile and a thumbs up. Nice, take a bite, put me thumbs up. Give me a big smile and a thumbs up. Nice, take a bite, put me thumbs up. Like and subscribe. Like and subscribe. Like and subscribe. Please like and subscribe.

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