Free trade with Kyrgyzstan

My favourite Xmas present this year is a beautiful shyrdak (actual one pictured) from Kyrgyzistan. A shyrdak is a felt rug originally designed for a yurt. It has a base layer of felt onto the top of which is sewn a second felt layer containing the patterning. No felt is wasted because the artisans produce a duplicate rug with the design in opposite colours (more on construction). Apparently, the design is rich in symbolism and I will report back once it has been decoded. A friend, Tim Moock, is importing these using fair trade principles – a three way split of profits between him (the importer), his partner (the exporter) and the artisans that produce them. Prices are already rising as his shyrdaks are to be featured at the Rebecca Hossack Gallery early next year and designer interest is gathering pace. Some quite poor people are about to become relatively rich and globalisation appears to be serving everyone involved, especially me, rather well…

How much do we really care about the future? Stern’s critics assessed…

Time for another look at the Stern Review and what people have said about it. It’s received much critical acclaim: Stern even lined up five Nobel laureates and other notables to applaud at the launch [see here] and the BBC canvassed largely favourable expert opinions [here]. And I think it is an incredibly important step forward – not least because of its politics… the messenger is at least as important as the message. Not surprisingly, the report is attracting criticism, and in my view some of this is fair. So what to make of the Stern Review? Continue reading “How much do we really care about the future? Stern’s critics assessed…”

Pale green tax plan mocks Stern’s call to arms

After the Chancellor’s omission of Stern or climate change in his speech to the captains of British industry [below], I wasn’t surprised, but I was disappointed. The Pre Budget Report environmental package [see chapter 7] was no more than tinkering-as-usual. There was absolutely no sign of the urgency that the Stern report should have inspired – as Stern concludes: A range of options exists to cut emissions; strong, deliberate policy action is required to motivate their take-up.

But there is nothing there: Continue reading “Pale green tax plan mocks Stern’s call to arms”

R&D sometimes necessary, but never sufficient, for innovation

A couple of interesting reports on R&D… firstly the DTI’s R&D Scoreboard 2006, where clearly more is better – at least one assumes that’s the purpose of creating lists and league tables ordered by the sums spent (see chart from the report showing the world’s biggest R&D spenders). Note the big spenders are not necessarily who you would regard as the great innovators.

The second report is from the management consultants Booz Allen Hamilton… Its arresting title is: A Select Set of Companies Sustain Superior Financial Performance While Spending Less on R&D Than Their Competitors [release/report]… What it comes down to is that innovation drives business, but that R&D spend is only loosely correlated with innovation. Booz Allen reckons that 94 out of the 1,000 companies it surveyed are ‘high leverage innovators’ (ie. Google not Microsoft, Toyota not General Motors)- they have an innovation system rather than R&D spend.

All of this should give pause for thought… For example, the EU plans to spend €50.5 billion on R&D between 2007 and 2013. Will this be spent in a way that generates innovation? Continue reading “R&D sometimes necessary, but never sufficient, for innovation”

The soothing sound of Stern

The Stern Review Report on the economics of climate change is truly fascinating and an excellent contribution… it looks like the work of a small army of über-anoraks.

But there’s a big difference between the tone and the tome. The launch messages are useful and politically powerful – doing nothing will cost a great deal; passing 550ppm is too dangerous to contemplate; doing something about it is feasible and economically good value; early action saves greater costs and risks later. The tone of the launch was oddly reassuring, suggesting that climate change can be fixed with about 1% of GDP, that’s the proceeds of about 3 months of world growth. A bargain, surely, to save us from the savagery of a rapidly changing climate? Broadsheet commentators cheered, relief was palpable, paradigms will be shifting, but only a bit. Sorted!

The 700 page tome is much more unsettling. Continue reading “The soothing sound of Stern”

Soft paternalism – changing behaviour for the common good without giving orders

Several interesting meetings last week… including with:

And it turns out they all had a common theme, namely ‘behaviour change‘ – ie. recognising that people have considerable behavioural autonomy and governments can’t simply legislate to achieve many of the key sustainable development outcomes, so more subtle persuasive models are needed. This is sometimes seen as a branch of paternalism known as ‘soft paternalism‘.  The Economist [leader/article] recently highlighted its rise – partly to disparage (it in that annoying way they have), but also approvingly to distinguish the soft from the ‘hard’ variety. I think it’s an apt description of the role of the modern state in securing collectively-valued outcomes from an aggregation of individual behaviours. Continue reading “Soft paternalism – changing behaviour for the common good without giving orders”

Stern warning ahead

I’m looking forward to the release of the Stern Review on the economics of climate change on Monday. Sir Nick Stern has been thoughtful and eloquent on the subject, describing the problem of climate change as a complex international and intergenerational collective action problem, in conditions of uncertainty and with potentially irreversible effects. He also makes much of grounding the economics in the science – hopefully consigning once and for all one of the great shortcomings of many of the sceptics’ economic critiques of climate change. The timing is auspicious and deliberate – in advance of the UNFCCC & Kyoto Protocol meeting in Nairobi in November, where new impetus will be sorely needed.

Much of the economic debate about climate change has focussed on four themes: the impact of growth on emissions; the availability of low-C technologies and the economics of their adoption; the external (social) cost of carbon;and fiscal instruments and market designs to control emissions. A bold new analysis will need to build on this and integrate several difficult concepts. If I may be so bold: Continue reading “Stern warning ahead”

Mega projects and risk – is co-operation a dangerous new idea?

Whatever one thinks of the sanity of the projected growth in aviation as foreseen and accommodated in the aviation white paper, The Future of Air Transport, the project to build the £4 billion Terminal 5 at Heathrow has some fascinating lessons for project management and contracting – and wider commerce. Against the prevailing orthodoxy, the project promoter, BAA, has assumed all the project risk itself, instead of designing contracts to allocate risk – with penalties – to its main contractors. After studying mega-project failures elsewhere, BAA reasoned that an aggressive risk transfer approach would lead contractors to behave in ways that harmed its interests: Continue reading “Mega projects and risk – is co-operation a dangerous new idea?”

Environmental markets – long, loud and legal please

An excellent report from Vivid Economics, titled The business opportunities for SMEs in tackling the causes of climate change, done for Shell’s Springboard programme.

The particularly good thing about it is that it shows in clear terms how a market for environmental goods and services forms – primarily through policy interventions, as ‘the environment’ doesn’t establish a demand and pay in its own right. The chart shows the expected environmental value of the policy intervention in avoided carbon emissions (top) and the expected value of the market for environmental goods and services thereby created in £million (bottom).

Long, loud and legal – the value of strong interventions
It’s because of this market-making function that forward-looking business groups (eg, WBCSE) call for the policy framework to be ‘long, loud and legal‘ – if the signals from environmental policy are sufficiently long-term, clear in intent, and intolerant of free-riding then they will stimulate investment and R&D to meet future demand. Continue reading “Environmental markets – long, loud and legal please”

Where did the day go?

A letter in The Observer (see the one from Moira Davies here) took Ruth Kelly to task for her comments on ‘work-life balance’ and her apparent determination to put her family before her job as a Cabinet Minister. A difficult area, but I wonder if the chief executive of a FTSE 100 company would get away with telling their shareholders that they put family life before the firm’s success? Isn’t the cliché that top people “resign to spend more time with the family”? That is, they make choices at different parts of their life course.

Ms Davies’ letter also highlighted the unacknowledged costs of ‘flexible’ working practices such as job sharing, part time work, home-working and flexible hours – not least in the burden of responsibility implicitly transferred to those that do not take advantage of these practices.

This all came to mind because it is ‘Diversity Week’ at my employer and I want to speak up for a marginalised group – the hard-working full-timers that backfill for, and work around, flexibly working colleagues. I’m well aware of the arguments for work-life balance policies (see this Canadian government case) and can see the case. What I don’t like is the denial about the inefficiency, costs and burden-shifting that come with them. But most of all, I think we should understand time use much better and have insights into where our time goes and how paid work, unpaid work and leisure are distributed in society and how this is changing. Continue reading “Where did the day go?”