9 March 2022. Futures | Economics
Three lessons from futures work. The limits of market economics.
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1: Three lessons from working on the future of water and sanitation
I spent much of 2021–together with a small team from SOIF, where I work—mentoring the strategy team at WaterAid as they worked through a full futures process. We worked with them as they started with scanning, identified domains of change, built those into scenarios, and finally used the scenarios to wind-tunnel a set of big policy ideas that had emerged from the organisation.
I’m delighted to say that the WaterAid team has now published a blog about part of the process, which includes the domains of global change that were identified as shaping the landscape in which they are working to improve water, sanitation and hygiene (WASH) outcomes. I’ll mention those below, but perhaps the three “lessons learned” are as useful:
Our first lesson was that while you can’t predict the future, you can explore the range of possibilities in the decades ahead. Thinking about these possibilities gave us many insights and helped us to ask new questions about our work and how it might change over time.
The workshops and other collaborative processes produced a second lesson:
that thinking about the future can change staff mindsets and support decision-making.
Which obviously was exactly what Pierre Wack had in mind at Shell when he wrote about the “gentle art of reperceiving”, or Arie de Geus when he talked about “futures as learning”.
Our third lesson was around complexity and the array of possible data sources we could use... So, we needed to prioritise. To do this, we collected insights from our staff and external experts as they talked about how they see change happening in the world around them. These discussions produced six main themes that we’ve used to guide our thinking about the future and the possible impacts for our work.
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(Art: Liaqat Rasul, Photo credit: © RANKIN/WaterAid, 2021. From WaterAid’s ‘best seat in the house’ art project.
The six domains—we described these as components or sub-systems of the overall emerging landscape that WaterAid is operating within—were as follows. There’s more detail in the blog post—I’ve edited these down.
1. Public health and pandemics
The pandemic will shape our future for years to come as the health impacts and subsequent economic fallout unfold.... A key question for us, going forward, is whether we will see a renewed focus on the root causes of health inequalities, allowing public health to rise up the political agenda.
2. Environmental crises
The projections for the environment are gloomy... But the path to addressing the deep structural problems in our relationship with the environment could also bring opportunity and innovation... We’ll almost certainly see continued growth in renewable energy, but will that also bring increased environmental stewardship and a greater focus on the sustainable use of resources?
3. Power dynamics
Power dynamics are changing at all levels and, in some cases, being upended. We see change all around us, from cities and businesses becoming more influential actors on the global stage, to a world in which China, and other Asian economies, continue their economic ascendance. This brings challenges and opportunities at different scales.
4. Urbanisation
(W)e’ve seen a vast surge in urbanisation, especially in the global south. The patterns that drive this urbanisation might be changing... But there’s a range of possible outcomes. On one hand, the prospect of mass migration, climate change and huge volumes of municipal waste point to cities and small towns being placed under increasing pressure. But on the other, the hub effect of urban spaces and the role of cities in global processes bring the potential for improved standards of living, innovation and new solutions.
5. Financial flows
Financial flows in the aid sector and beyond are changing. The amount and form of aid given by Asian economies, the growing importance of partnership and the erosion of the conventional North-South dynamic of donors and beneficiaries are all playing their part. More broadly, we are also seeing the increased focus on environmental, social and governance investing which use more socially and environmentally conscious criteria to screen investment decisions.
6. Technology
Digitalisation, inter-connectivity and access to data provide important opportunities for the delivery of water, sanitation and hygiene (WASH) programmes. However, the extent to which technology can change the world around us will depend on how equally these emerging technologies can be accessed.
As I said at the top, these domains were also developed into a set of scenarios. These were valuable in testing potential policy ideas, but for more day to day work, scenarios are difficult for people to work with. They come with unnecessary cognitive complexity. Often just having a map of the landscape and a clear view of the tensions within it is enough to create effective conversations that look at the future and then disturb the present.
2: The limits of market economics
One of the consequences of the financial crisis was that the Financial Times chief economics writer, Martin Wolff, became much less convinced of the efficacy of actually existing capitalism. This means that he listened to the recent Mais Lecture by the British chancellor of the exchequer, Rishi Sunak, with a more sceptical ear than he might have done 15 years ago.
For non-British readers, the Chancellor of the Exchequer is the British Treasury minister/secretary, and he gives this lecture annually, to set out his current thinking. He? It’s 2022 and we have never had a woman Chancellor of the Exchequer in Britain. Maybe party leaders think that women can’t count, although that’s not been a barrier with some of the men.
Rishi Sunak is a fan of markets. He ought to be; before going into politics he worked first at Goldman Sachs and then a couple of hedge funds, and made millions out of them. And his speech went long on the benefits of markets for solving economic problems, as Wolf observes:
Sunak rightly notes the stagnation of productivity and asks “how do we accelerate growth and rejuvenate productivity?” The answer, he continues, is “a new culture of enterprise”. But have we not had a culture of enterprise for four decades? So what has gone wrong and why? And how is it going to be any different this time? It is disappointing that he did not address these obvious questions.
Because four decades of “enterprise” have made no difference to Britain’s output per hour, when measured against other European countries, or GDP per head. We were near the bottom in 1980 on both these lists, and we are near the bottom now.
One of the solutions to the productivity problem that market fans recommend is lower taxes. Sunak is a lower-tax fan. Wolf is having none of it:
(T)he evidence suggests this is quite unimportant, however much the self-interested wealthy insist upon the opposite. According to the IMF, among these 15 countries, the UK’s tax burden is third from the lowest. If high taxes crippled prosperity, the UK should be among the richest. It is not. Finland, Belgium, Austria, Sweden, Germany, the Netherlands, Denmark and Norway all have substantially higher tax burdens and higher GDP per head. So, when Sunak states that “I firmly believe in lower taxes”, he is just uttering ideology.
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But one of the consequences of low tax regimes is higher inequality, and Britain is off the scale on inequality compared to other European countries. It increased sharply during the 1980s and has not yet responded to the types of policy measures that British politicians have preferred. (It decreased slightly under New Labour in the ‘00s.) But it turns out that GDP per head doesn’t correlate with inequality. If anything, it’s the other way around.
These changes have also had significant implications for the absolute and relative standards of living for those at the bottom of the pile. It is hardly surprising that the years since 2010 saw first stagnation and then falls in life expectancy. This matches US experience. It is not surprising either that politics shifted towards identity issues, notably Brexit, and away from a focus on prosperity.
Part of Wolf’s case is that we now know what the effect of those uncritical pro-market policies were, and if you’re going to be a credible politician in 2022, you need to be honest about that:
He needs to show which parts of the Thatcher ideology worked and which must be scrapped… It would be unfair to say that Sunak, like the Bourbons, has learnt nothing and forgotten nothing. But it would not be all that unfair. He must think harder.
Ouch.
Mistakes
I forgot to include a link yesterday for Patrick Collinson’s article on pollution. It’s here. (I assume people call these ‘Errata’ because fewer people realise that it’s about a mistake).
j2t#276
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