We've been speaking with top
economists about what this Economic climate means for
companies' bottom lines. Today, I'm speaking with
economist Mariana Mazzucato. Mariana, thanks so much for
being with me. Thank you. Happy to be here. Great. All right. So what's
the biggest risk to a Company's bottom line? The type of market outcomes
we get depend on how Companies are governed, how
public institutions are Governed and especially how
they interrelate one with Another. So I think the
biggest challenge we have Today is we have
misgovernance at every Level. We have governments
that have kind of forgotten Their real role around
public purpose. They're, at best, fixing
market failures. They're too little, too
late and kind of depressed Because they're always
thinking about a failure or A financing gap. There's a hole to fill. The whole notion of
stakeholder value should Have become a real kind of
call to arms of how do we Create value differently? We need to bring
communities, workers, public And private institutions
together to create value in A more collective, better
way that's purpose-oriented, Solving climate problems,
solving all the sustainable Development goals that
every country has signed up To and the 'how' really
matters. So I think the bottom line
should be how do we actually Create a line, a
trajectory, an investment Plan towards solving the
digital divide, towards Producing more preparedness
for the next health Pandemic, which will come
our way. And we don't have to have
these massive lockdowns,
Which hurt economic growth. They hurt business growth. But especially how can we
make it really exciting? I mean, the reason the moon
landing worked is actually It managed to catalyze so
much activity. So many homework problems
had to be solved along the Way. We got camera, phones,
foil, blankets, baby Formula, software. This created
commercialization. It Created growth, it created
profits, but profits for a Purpose. I think you touched on a lot
of different things that we Want to talk about. So in
Mission Economy, you talk About citizen dividends,
which to me sounds a lot Like UBI. Can you talk to
me about how that would help Or hurt the U.S. economy? So UBI is redistributive,
right? It means that wealth
creation is happening in the Private sector. Let's just assume they pay
their tax. It goes back to government,
which then sends a check out To people receiving UBI. I prefer a citizen's share. In other words, if we
actually co-create value in What I call a mission
oriented way, which requires Public, private capital,
labor, third sector to work Together, then how do we
make sure that we're not Just socializing risks, but
also socializing rewards? In other words, that the
way we redistribute the Wealth that's created is
also in proportion to how That wealth was created in
the first place. So why is it that it's so
easy for Lloyd Blankfein to Have called Goldman Sachs
workers the most productive In the world, because we
have a way to measure the
Work that's done by Goldman
Sachs workers that then are Very kind of proud to be
seen as productive members Of society, whereas school
teachers, do you ever hear Them calling themselves
wealth creators? And they create huge
amounts of value in wealth. And surprise, surprise, one
is the arrogant part which Calls itself value
creating. And the other part is kind
of a bit timid, but doing The job every day. Nurses, doctors, school
teachers. Mm. That's very interesting. Sort of playing on that,
how does risk management Play a role in companies'
bottom lines? We need a new narrative of
what even entrepreneurship Is. What is risk-taking? Why is it that even though
everything in my phone and Your phone that makes it
smart and not stupid was not Only publicly-financed. Internet, GPS, touchscreen,
Siri all came out of the Taxpayer, but also was
risk-taking investment. For every investment in the
internet, there was lots of Failures. For every
investment in GPS, there was Lots of failures. So any
venture capitalist would Tell you that's normal.
They'll say 'for every Success, you need to
basically bear with seven, Eight, nine failures.' Why
do we accept that and even Embrace it in the venture
capital community? And as soon as government
makes a mistake like Solyndra, we blame it. We say, 'oh, another basket
case government. It doesn't know how to pick
winners. It should just Level the playing field and
get out of the way.' The Pharmaceutical industry,
the energy industry, a lot Of that high risk, early
stage capital-intensive
Investment came from the
public sector, with the Private sector coming in
later. Risk-taking itself is
collective. We need to think about what
is an entrepreneurial Ecosystem, how do we
actually make sure that all The different actors in the
system are embracing, not Just risk, but uncertainty,
which is much, much deeper. So that requires more than
just a statistical model. Sure. That sort of leads
into my next one. So how can we tangibly make
sure that the public Benefits from private
innovation, especially when That innovation, like you
said, was originally Publicly-funded? Let's just take medicines,
right? In the United States, the
National Institutes of Health, which are publicly
financed, are responsible For 75% of new molecular
entities with priority Rating. What do I mean by
that? The radical drugs, instead
of the me too drugs, a Slight variation of an
existing drug. So you would think then,
given this risk-taking Investment, coming back to
risk, because much of that Investment fails as is
normal in innovation, if the Government is responsible
from its financing of this Decentralized – centralization doesn't work, A decentralized network of
public institutions that get Us radical drugs, radical
energy, before the private Sector comes in, solar and
wind we're all invested in Before the private sector
came in, and definitely with The IT revolution. In the
case of medicines, why, why, Why, why do the prices of
drugs medicines not reflect That contribution from the
public? Why is it then that the
taxpayer pays once, twice, Three different times?
So this isn't about
socialism, this is about Proper capitalism. If you've invested in
something, surely you want Access to it. I want to shift gears just
for a second. Will AI change the way
companies do business, and What does that mean for
employees and employers? General purpose
technologies, which include New forms of energy, even
includes mass production, Includes nanotechnology. These have often influenced
new changes in production And distribution and
consumption. So it means a new
technology, a new Technological revolution
that impacts the whole Economy, not just one
little gadget or something. Even Google's algorithm was
financed from the National Science Foundation, the
internet was financed by DARPA, GPS was financed by
the Navy. The big questions we're
asking today around AI, but Even just big tech in
general in terms of privacy, How our data is being used,
do we know how it's being Used, the GPT now 5.0 or
whatever we're coming to? There are so many design
challenges. How can we make sure these
algorithms take into account Issues that we know we care
about? Just look at the human
rights declaration, right? There's a lot of good
information there, but also The sustainable development
goals, which I mentioned Before. These are all
important in terms of Defining what kind of
planet do we want to be Living on? What kind of
growth do we care about? Is it just growth for
growth's sake or is it Inclusive and sustainable
growth? So there's real Design challenges,
especially today, where a
Lot of the talent that used
to be distributed is in 4 or 5 companies around
artificial intelligence. So there's profits being
earned in excess of the Underlying innovation that
has then affected massive What I call, again,
'rents,' which are used then To hire in right some of
the top workers, labor, to Work for the companies. Much of this if you look at
AI used to be in Universities, places like
Stanford, MIT, it's now much More profitable for top
academics to be doing Artificial intelligence
research for the big 4 or 5 Companies in this space,
and not in universities or Even not in DARPA. And what I think is healthy
would be if that talent pool Was distributed. You called it digital
feudalism in one of your Books. So people do spend
hours online. I'm glad you said that, by
the way, because there's a Book out that's called
Technofeudalism. I came up With the word about seven
years ago. You definitely did. And I was like, oh, that's
a great way to put it. But how can we add value to
that for the average person? So what is the value of our
personal data and how should It be protected? It sounds
like it should be the role Of the government somehow. But how can we actually
implement that? Well, you know, it's
interesting what can be done To make sure that we have
aware, conscious utilizers, But also creators of this
digital space that is Helping to direct this
economy again, to be Inclusive, sustainable and
so on? So I do think education is
key because there's just a Complete lack of awareness.
I mean, no one reads
everything when you say Accept all, let me use this
app. Please get on with it. The actors in this space
love to talk about Entrepreneurship,
capitalism. Think of Elon Musk embracing of
capitalism. And yet we end up with the
feudal, you know, structure Article I just wrote called
Mapping Modern Economic Rents. Or how are rents? So excess profits and value
extraction being earned by Pharmaceutical companies,
by large financial firms, by Large real estate
companies, you know, and That goes back to the
original land rents, but Also modern algorithms,
growth valuations. We put anything that has a
price. So if you marry your Babysitter, GDP goes down. I'll let your listeners
figure that one out. Or if you pollute, GDP goes
up because you've got to pay Someone to fix it. It's this big
dysfunctionality and how we Measure growth. We're
trying to look at how the Design of the algorithms
themselves are reproducing a Feudalistic value
extraction system, instead Of this wonderful
entrepreneurial system that We all pretend exists out
there. I think you'll laugh at this
one. Will the U.S. remain the
world's leading economy? Is it the world's leading
economy? That's news to me. No, actually, let me make
this not a joke. So the big change today is
that U.S. Competitiveness. First of
all, it's not happening in a Mercantilistic way that
Trump was advocating for, Which was just 'build the
wall' or, you know, 'trade Relationships.' It's about
investment, investment,
Investment, the Chips act. But what's striking is that
the total of close to 4 Trillion, if you add
everything up, including the Inflation Reduction Act,
this is a lot of money, Right. So how do we make
sure that this money, which The U.S. is using for
competitiveness, embodies Within it conditions, or we
can think of it as Reciprocity, something that
sounds a bit better, that Really helps to rethink the
social contract between all The different actors we've
been talking about: public, Private capital labor. So we truly build back
better, build forwards Better, and aren't just
using the money to recover First from the financial
crisis, then the Covid Lockdown, now the Ukraine
war with the supply chain Problem and of course the
whole desire to be Autonomous from Asia's
competitiveness. That's why I kind of joked
in the beginning on whether We were the most
competitive on chips and Potentially even on AI. The real question is how do
we also see these problems As global? The collective
action that's required, not Just the national action,
is critical. So we are actually truly a
global community. And so we both need to
think of national Competitiveness. And it
would be naive to say it Doesn't matter. But unless
we solve the biggest Problems of our time around
health, climate, digital and Also AI with a global lens,
then we're not going to be Better off.
