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Welcome to the Free Cities podcast. My name is Timothy Allen and this is the official podcast

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of the Free Cities Foundation.

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Hello and welcome to this episode number 142 of the Free Cities podcast, brought to you as always by our wonderful sponsor Veritas Villages.

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Veritas Villages are off-grid, energy, self-sufficient luxury communities in Latin America designed for freedom lovers just like yourself.

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Bitcoin is accepted at all villages, including for the purchase of property there.

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For more info, www.ecovillages.life forward slash free cities.

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That's a link to a page about Veritas Village Coronado, one of their Panama projects.

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They also have another Panama project.

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Veritas Village, Chiriqui. That's a riverfront home site property. They have Playa Pacifica

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in Nicaragua. That's a beach community. And hot off the presses in Costa Rica, they've just

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acquired land in Atenas for a new community. www.ecovillages.life forward slash free cities

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for more info. Please mention us if you choose to do business with them. And if you're interested,

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Patrick, their CEO, has his own YouTube channel and he interviewed me a couple of weeks ago.

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Look in the show notes for a link to that. Right. Today's episode, well, it's with a gentleman by

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the name of Michael Minnelli. He's a British scientist, economist and accountant known for

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being the chairman of ZN, I think a little better known as the Sheriff of the City of London,

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2019 to 2021, and probably most notable, at least in my eyes, he was the 695th Lord Mayor

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of the City of London. Yes, I know. Sorry to those of you from the US. I'm fully aware that

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the American mind cannot comprehend that fact, but you're going to go and have to deal with it.

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Yes, we have very old things over here on the other side of the pond. I'm jesting, but ironically,

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Michael is American-born, and as you will hear, still retains much of his US accent. I met him

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in London a couple of weeks ago, and we discussed, amongst other things, the City of London, of course,

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It's history and governance, the concept of private cities and free zones, regulation and the roles of government and the free market.

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And the best part for me, wicked problems and dilemma analysis.

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Now, if you're not sure what dilemma analysis or wicked problems are, here's a quick 101 to prepare you for what's to come.

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They're both strategies for dealing with problems.

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Dilemma analysis is about choosing between difficult but defined moral options.

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Wicked problems involve deep complexity with no clear boundaries or permanent solutions.

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A couple of examples that really helped me.

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Dilemma analysis.

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A doctor must decide whether to respect a patient's autonomy or break confidentiality to prevent harm.

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That's a good one.

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Wicked problem, climate change, poverty, health care reform, urban planning, or as Michael says, governance.

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He believes governance is one of the biggest wicked problems of our time.

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And I think I would agree with him.

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Many thanks to Michael for hosting me in the Square Mile.

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The pleasure was all mine, Michael.

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Many thanks also to Christopher Almanis, ANT, CB, Bullish Mike, Cousin Vinny, Dovidas, Matthias.

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Many thanks for actually choosing to offer your own hard-earned Bitcoin to this podcast's strategic Bitcoin reserve in the form of a monthly subscription.

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If you find any value here, please consider doing this also yourself if you haven't done it.

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Hit the subscribe button on the Fountain app and you will gain early access to very long interviews and bonus episodes.

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The next bonus episode is coming up in a couple of weeks.

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It will be part two of my epic chat with what shall I call him?

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The thinking man's Bitcoiner.

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Yes, GG, the one and only.

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That's an episode only available to subscribers.

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But above all else, as a subscriber, you will get that warm, fuzzy feeling inside that you're supporting our work and mission here at the Free Cities podcast.

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Many thanks to you all. Right. Time for the conversation now.

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Oh, I forgot to mention I'm in Latvia.

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I'm here to do another round of interviews at and around the Honey Badger Conference.

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Loads of great stuff coming up.

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Look out for those over the next few months. Right, the conversation is coming. You've arrived at the gate. Now pay your toll and enter the city. Find a quiet spot, sit back, relax and enjoy my conversation with Michael Minelli.

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right um michael i think um i it's very hard to know where to start actually because

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we are a podcast interested in free cities free zones etc etc and there are so many ways to

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approach that from where you are as far as i can tell i mean i haven't done a huge amount of

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delving into your backstory but enough to make me realize that there are a number of ways to

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approach this i think that the the best one for me and the easiest one was to come at it from the

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and i found this in very interesting that you you were the 695th lord mayor of london is that right

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That's right.

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Which in itself is quite astonishing.

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I'm not sure I know any organisations that have 695 former people in charge, maybe.

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I mean, the City of London must be one of the, on a, on a, what was certainly one of the oldest currently existing special economic zones.

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Would you call it a special, special economic zone?

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I mean, what was the original purpose behind the City of London?

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When you go right back in history, was it something that just formed naturally, as you would expect a group of people in one place deciding, okay, we need to create a system here?

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The formation of the City of London is lost to some degree in a history that is not very well recorded and also quite a bit lost in legend.

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So sometimes the legends overrun the facts.

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if you were to look at its age i would argue it is probably the oldest continuous democracy in the

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world and the the the other crowd who might have a go and say it's they would be the tin vault in

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douglas on the isle of man and there are different versions of how much this had to do with anglo

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Saxons and Vikings and all sorts of craziness. But what probably distinguishes the city of London

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was the ability to use the old Roman walls. So London itself was founded, if I get it right,

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AD 42. The Romans come over, Boudicca burns them down a decade later, but they persist.

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And the Romans leave in 400 AD. And we don't know why they left. And again, their arguments that

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They were absorbed in the native population and a few leaders left and their arguments

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say they kind of left en masse.

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But the most important thing is that the city of London itself was unoccupied.

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So the city of London constitutes just over 677 acres.

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We don't have that much land, so we pay attention to 1.2 square miles is another way of looking

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at it and 2.2 or something square kilometers.

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Anyway, there are arguments again about that.

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but the old Roman walls extended from what we would see today as Blackfriars to the Tower of London and then up and around what is called London Wall still The modern city largely follows that pattern

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It's a little bit extended from outside that initial wall, but not by very much.

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Are the gates Roman?

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The gates were Roman, yep.

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And again, arguments about the numbers of gates.

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Some would say five, some would say seven.

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but Alder's Gate, Bishop's Gate, Alt Gate without the other, New Gate which was put in well after the Romans, hence New, and so on.

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So you've got the gate system, the walls all set up roughly around the 200s.

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The Romans had a wooden palisade and then they went down to Maidstone and Kent and barges would come up and they built the wall itself.

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When London was unoccupied, and the archaeological evidence is really clear, 200 years of no occupation from 400 to 600, the people such as they were were occupying what we would today call Fleet Street, which was then called London Vic or London Port.

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And I don't know, to me it looked probably a bit like a science fiction film set, Planet of the Apes or something, that there were all these temples overgrown and people sort of scurrying in the walls, but they stayed out.

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And then suddenly, for reasons we don't understand, they moved almost en masse at 600 in and set up 25 wards and Beatles to run those wards.

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And then, again, there are arguments on this.

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The earliest would claim that sometime around 640 AD, we began electing sheriffs to hang over a pair of sheriffs following the Roman consular model of two consuls.

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That's one argument.

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Some people would say the sheriffs came later.

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And this is where I say legend overruns things.

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So you'll hear things that the word sheriff comes from shire, reeve, which means a shire, and reeve is a tax collector.

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But that would imply there was a king to have a shire.

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And, of course, the city of London isn't a shire anyway.

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Some people would point to the fact that the ancient word shire means just any kind of habitation.

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So the habitation tax collector, which is probably what I would buy into, is the most likely.

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But the term sheriff originates again.

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Then something emerged as well, something called the Court of Hustings, which was an original meeting outdoors and related to the Saxons had a concept of folk moots that the people should get together.

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And again, arguments about how often, but probably about twice a year and have a folk moot where they would sort of shout things out and talk things through.

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So we've got records, particularly like of the folk moots and the Hustings going back to the 7800s.

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So we know that they were around.

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Then we have the concept of aldermen for the wards. Again, some history tests, and a lot of these texts were done off of legend as opposed to primary research, would say the aldermen didn't really emerge until roughly the 1100s.

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Again, that seems rather inconsistent.

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My best guess would be that the aldermen emerged around the 900s, and sometime around

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the year 1000 to 1100, we had a court of common council.

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The reason I'm agonizing over this is there's a particular date that everybody knows in

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English history, which is 1066.

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This is when William I enters the country, comes up to the walls of the city with, we

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We estimate about 6,000 men having landed at Hastings with possibly 8,000.

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Beats Harold, comes up to the city, and he meets 20,000 people on the wall.

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And he decides this is not a battle he wants to fight.

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And he leaves basically the city alone.

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He trots around.

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He actually goes, believe it or not, to Runnymede at one point.

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So don't confuse that with King John.

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But Runnymede was quite a popular place to stop and do your monarchical rights.

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And then he goes up to Birkhamstead.

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And so it's all quite a mess. But he comes back in 1067 and negotiates a treaty with the city, which we call the Charter of William I, because he never conquered the city. This then leads to a lot of tussles with the monarchy. And I'm hardly a monarchical historian, but we have a treaty of 1132, 1189. A lot of people focus on 1215, the Magna Carta, but with reference to the city, the Magna Carta merely says the city will keep all of her rights.

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and that. So the concept of an independent city-state is probably far too strong,

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but there certainly was enough tension that they were allowed to elect their own sheriffs,

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they were allowed to raise their own taxes, but to pay them over as well, and to set a lot of the

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trade rights. Now again, this wouldn't be particularly astounding, except that London

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has always been 20-25% of English GDP. So you've got this very large city-state.

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And you might say, well, what about York? What about Bristol? What about Manchester,

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Birmingham? Pick your place. Truth is, I think that there were certain problems with these.

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The English system was very, very centralized. The French system was very centralized.

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And both of these systems didn't lead to the establishment of independent cities. I think

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London just by virtue of size and history had been able to kind of hold its own.

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which is in contrast for example to the holy roman empire the hanseatic league the northern

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italian city states which were you know proper city states but you know london had its own

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militia in fact we still have a police force today because we always had our own militia

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and we are what's called incorporated by prescription from time immemorial that's our

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legal status so we're allowed to do anything we can prove that we did before the time of

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Richard the Lionheart. So that's a kind of an encapsulated version of it. But to say city-state

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is far too strong to assert your rights, if they did exist even in law, would be unrealistic in

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the modern era. So it is slightly anachronistic, but it does give us a little bit of freedom of

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movement. And I think that's particularly important because in a centralized system like

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the British system, it's actually difficult to relate to other cities. And having the city of

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London, which is four times larger than the next European city, able to link up directly with other

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cities around the world is a good thing and gives Britain, you know, an extra degree of freedom

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and diplomacy. So to get it straight, because I like to, I want to formulate a sort of a picture

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of this in my mind, was when the city of London was uninhabited for that 200 year period, were the

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Were people living where they were living?

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Were they also within the boundary of,

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was there a walled boundary?

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Like why weren't they using the city of London?

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That seems to.

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Well, so they were living at broadly,

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basically what we would today call fleet streets.

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So they kind of moved to the West

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and they clearly were using a port,

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the fleet to do the port work that they did.

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A lot of curiosity as to whether or not

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London Bridge had always been a block.

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You couldn't get north of London Bridge

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with the sailing ship anyway.

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sorry I'm saying not north you couldn't get west of London Bridge with a sailing ship so it was

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always a bit of a block there so this is a kind of a it's it's a very misty period between 400 and

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600. Why weren't they using the walls? Well this is where you get into medieval defenses and again

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I'm not a Tudor historian I'm not a medieval historian I'm not a military historian but the

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way that it's been explained to me when you've got a walled city it's actually hard to defend if you

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have sufficient numbers of people because somebody kind of just comes in the backside while you're

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sort of trying to defend the front side. And one of the legends about the 20,000 people on the wall

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is that the sheriffs got out old women and things and put armor on them and they were all up on the

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walls roaring, you know. And from where William was, it's just a lot of people. But if he'd only

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seen sort of a third of the wall occupied. He might have been tempted to split forces,

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go around, divide them. And that's where it gets to become hard.

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And still trying to get this vision in my mind, what was the population of London area at that

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point? Are we talking about when you say that the conurbation moved to Fleet Street, for example,

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was that just that area and then nothing else? Or was it a case of London was relatively sprawling,

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not as much obviously anywhere near what it is today, but was it obvious when the City of London was re-inhabited

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that it was a separate place to the growing city of the rest of London, if you see what I mean?

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Yes, it does appear that people left London Vic by and large and moved into the city, therefore leaving it empty.

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And this comes back if you look at a lot of the maps from 1066 onwards.

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You'll see there's this little sliver strip connecting London with the palaces at Westminster and not much else.

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So they had pretty much moved back in.

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Equally, though, you're talking about very small populations here.

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They could put 20 adults on the wall which would imply at best 30 as the population of the city in 1066 The city population is running at around 30 as late as the early 1500s In fact the largest city in Europe in the early 1500s

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was Antwerp with about 100,000.

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And do you happen to know if it was a conscious decision

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to maintain the city of London as the city of London

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while the rest of London as a whole grew

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and became political and became, you know, all those things?

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There were a number of things, particularly throughout the 1700s as the city walls started to become very, very occupied, when there were discussions with central government back and forth.

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And you had various factions saying we should be the governing body of London as it expands into villages outside.

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And others who said strictly let's stick to the city.

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That second group sticking strictly to the city won out.

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you could argue it was a bad thing. You know, a lot of people like to make land grabs. I certainly

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see that on television a lot these days, you know, expanding is a good thing. There's another

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argument that in a centralized nation, it's very difficult to maintain a power center in the

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capital. It just leads to conflict. So take America and Washington, D.C. It's very difficult

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for Washington to establish something, whereas mayors of New York or Chicago or LA can establish

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positions of power.

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But to have two powerful people in a single city frequently leads to trouble.

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So I think restricting the city was probably a realistic outcome for London.

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And you can see some of the struggles that London has had over the years with the precursor

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of the GLA and Ken Livingston, and then later Boris Johnson and Sadiq Khan. These are complicated

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positions when the Parliament is sitting there in the Capitol at the same time.

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So what is the day-to-day relationship between the City of London and London then on the whole?

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I mean, I lived in London for eight years. I worked on Fleet Street. I worked for a newspaper.

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and we i it was you know i thought i knew quite a lot about london and i knew there was a for

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example a private police force here because whenever we were here i was a photographer

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there was and there was private land that was i remember people thinking well that shouldn't be

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private land you know that's a walkway i should i should be out of you know so there's a lot of

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mystery about it and the corporation of london and what it means etc etc so what is the actual

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day-to-day relationship between, you know, say.

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Well, I've always described the City of London as a democratic workers in residence, cooperative.

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We really kind of control the area.

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And so concepts of private probably don't apply in the way that you just implied, but

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that they're owned by the corporation.

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Yes.

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But that's a body that is representing those people who work in the city and the 8,000

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residents.

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So those who have the vote.

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And again, this is an interesting bit about as a workers' cooperative and all those structures

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I spoke about, hustings and folkments and all that, the Anglo-Saxons really had this

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concept of people had a right to vote.

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But they focused typically on economically productive people.

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So the early franchise didn't come to you because you had property, which is again a

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modern notion that if I have property, then I get the vote.

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In fact, there it was, well, you can have property and not get the vote.

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You would be unlikely to have property though if you weren't economically productive, so

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the two came together.

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But you could be economically productive without property and get the vote.

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And it was really the were you usefully contributing that got you the vote.

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And that was kind of important.

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It was still today.

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So our workers have the vote.

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It's a complicated system with one in 10 votes per worker as opposed to residents with a

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full vote.

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But broadly, that's the concept.

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And I go through that because that then leads you into a discussion on this idea of public and private, even with the police force.

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So the police force, I'm not trying to play games here, you know, it's there to support the workers and residents who are in the city.

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It's not a private force.

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Whereas, for example, we have private security forces out at Canary Wharf, but that's a private security force, not a police force.

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and our police force is therefore public.

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Relations.

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Well, relations with London, wider London, are very, very good.

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We host a government dinner every year for all 32 boroughs,

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and Sadiq Khan, whoever is the mayor of London, is the primary person.

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Speaking alongside the Lord Mayor,

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we raise quite substantial amounts of tax money,

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00:23:43,572 --> 00:23:45,172
well over a billion on our land,

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And we give, I believe last count was 90% of that goes or over 90% goes to other boroughs.

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So a lot of the stuff that people say the city is very rich and it's ceremonial and it pays for ceremonies.

253
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I wouldn't claim you're rich, but we do have ceremonies and we do have medieval funds that we're spending on that.

254
00:24:03,052 --> 00:24:05,992
But actually as a local government, the local government functions.

255
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So we are not a local government.

256
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We have local authority powers.

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But those powers are exercised well within the tax break.

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We benchmark ourselves and give the surplus, because we don't have as many schools, we have very few roads.

259
00:24:20,932 --> 00:24:25,572
So we benchmark ourselves in that, and that is then given into the general pot for London.

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It's an often unremarked point that we actually do hand those monies out.

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Personal relations, honestly, I like Sadiq Khan, and I wouldn't claim that we're talking to each other every day or anything,

262
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but get on very well with them when I was Lord Mayor.

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I understand. Well, I know that my predecessor did well, and I assume my successor is doing well.

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So relations are really quite smooth because everybody wants to help greater London. We were

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big supporters when Ken Livingston wanted to get his bikes going. We were enormous supporters of

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Crossrail, putting in seed money to help get that going. So, you know, our interests and the interests

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of greater London are almost always very closely aligned. But Sadiq has a very different set of

268
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powers because of the way that the GLA has been constructed with the other boroughs.

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Anyway, I'm probably at the end.

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This is probably something for Tony Travers, who's the great LSE professional in London.

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I'm fascinated because it's a bit of an anomaly, I suppose, really, to think in terms of

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the city of London being a separate entity.

273
00:25:32,972 --> 00:25:39,452
I think it's interesting because, like you mentioned that if you show productivity,

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you have a vote here if you're a resident, right?

275
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What do you vote on?

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And do people vote?

277
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I mean, do people who live in houses here

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go and vote on things and stuff here?

279
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Yes, very much so.

280
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Well, the majority of it,

281
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I can't recall us ever holding a referendum.

282
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It was certainly not in my time, perhaps,

283
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and some historian will correct me.

284
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But no, you're typically voting for your common councillor,

285
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your alderman.

286
00:26:05,692 --> 00:26:11,192
This used to be an annual thing to vote for common council and aldermen are elected for

287
00:26:11,192 --> 00:26:14,632
six years in kind of a senatorial type system.

288
00:26:14,632 --> 00:26:19,092
In fact, aldermen are really elected for life legally, but we make a pledge that we will

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stand down every six years for reelection rather than having to run a new bill through

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parliament.

291
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And we've adhered to that for, I forget, something like 30 or 40 years.

292
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The common councilors used to be elected every single year, but that changed a few years back

293
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Now they're elected every four years.

294
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Again, every year was getting a bit silly.

295
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So elections are very big in the city, and I think we've calmed them down to the point

296
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that they now make sense.

297
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Every four years is about right.

298
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So that's what the residents are doing.

299
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The wards themselves are quite tiny.

300
00:26:50,612 --> 00:26:55,552
So I have in my ward of Broad Street, three common counselors.

301
00:26:55,552 --> 00:26:57,532
There's a hundred common counselors in total.

302
00:26:57,532 --> 00:27:01,292
So that would work out to be four per ward plus one alderman.

303
00:27:01,292 --> 00:27:03,692
So three is a little bit smaller than average.

304
00:27:03,692 --> 00:27:06,592
I think the largest one has 10, next one down eight.

305
00:27:06,792 --> 00:27:09,892
So you can kind of get some feel for the range of voters in it.

306
00:27:10,412 --> 00:27:18,632
And that roughly, in my case, equates to between around just under 25,000 workers and I think about 26 residents.

307
00:27:18,912 --> 00:27:20,492
So I have what's called a business ward.

308
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And then there are other wards where the residents are more numerous.

309
00:27:24,752 --> 00:27:26,592
And so you get a flavor there.

310
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I, of course, you know, in running for office, I'm really going on things.

311
00:27:31,772 --> 00:27:38,492
therefore probably of more interest to the business person which is rubbish, crime,

312
00:27:39,932 --> 00:27:45,532
bicycles that are in the way or violating the law. Obviously they'd like to have their taxes

313
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and rates reduced but they're not onerous so that actually doesn't come up as much as you might think

314
00:27:49,852 --> 00:27:54,812
it did. And then they're very interested and this is where the city begins to establish its unique

315
00:27:54,812 --> 00:28:00,732
character. The workers are very interested in what we're doing to represent and build business.

316
00:28:00,732 --> 00:28:02,232
What are we doing with incubators?

317
00:28:02,232 --> 00:28:15,248
What are we doing with international trade delegations What are we doing on regulation and financial services or AI or whatever So they want to see us promoting the city that way The residents are

318
00:28:15,348 --> 00:28:19,248
you know, typical residents. They want to make sure they're living in a clean environment. So

319
00:28:19,248 --> 00:28:26,888
even as an alderman, you do quite a bit. Things like what takes up my time, rubbish. A lot of my

320
00:28:26,888 --> 00:28:33,088
time is taken up on noise problems, light problems, people blocking light on each other.

321
00:28:33,748 --> 00:28:39,128
I've had issues to do with broadband, broadband, broadband, you know, to be the world's capital

322
00:28:39,128 --> 00:28:44,088
city and to have what I think I would describe as mediocre broadband is not the finest.

323
00:28:45,228 --> 00:28:50,608
We had a lot of problems with shredder vans over the years. These are vans that drive into the city

324
00:28:50,608 --> 00:28:55,008
and insist that they're doing on-site shredding, which means they pull up on the footpath and then

325
00:28:55,008 --> 00:28:59,388
they start their engine up. I call them, you know, kind of portable particulate polluters

326
00:28:59,388 --> 00:29:03,308
because they come in and when they should just take the stuff out and shred it outside. But

327
00:29:03,308 --> 00:29:09,188
the law firm or whatever says, you know, you must shred it on site. So we have a lot of these kinds

328
00:29:09,188 --> 00:29:14,308
of little things. And then of course we, the city does manage a lot of wider things. So we manage

329
00:29:14,308 --> 00:29:21,168
800 acres up at Hampstead Heath. We manage Epping Forest, the walls of dairy. There are a lot of

330
00:29:21,168 --> 00:29:26,108
little bits of Bob's around the country, which the city has volunteered to manage our support

331
00:29:26,108 --> 00:29:32,628
over the centuries. And those two come up. And so we have a very rich panoply of things to do.

332
00:29:32,908 --> 00:29:38,488
What about things like regulations, though? I mean, do you have any kind of regulatory autonomy?

333
00:29:40,328 --> 00:29:41,708
In the...

334
00:29:41,708 --> 00:29:48,108
I mean, say you mentioned the businesses are often obviously very interested in what you're

335
00:29:48,108 --> 00:29:54,828
doing for business. Can you adapt regulation of the wider British or English regulation?

336
00:29:55,688 --> 00:30:04,488
The strict answer is it depends. So under the original Markets Act, I think it was at six and

337
00:30:04,488 --> 00:30:12,288
a quarter miles or six miles and 345 pace or something like that. The idea was that a farmer

338
00:30:12,288 --> 00:30:16,128
could go to market in the city, and this would be regulated.

339
00:30:16,608 --> 00:30:19,768
So you could walk in, sell some stuff, and come home.

340
00:30:19,948 --> 00:30:20,988
That was the deal.

341
00:30:21,628 --> 00:30:25,588
And the city had a monopoly on the regulation of all markets in that area.

342
00:30:26,568 --> 00:30:31,448
Now, today, that extends to Smithfield, Billingsgate,

343
00:30:31,448 --> 00:30:37,048
and New Spitalfields, which is just inside that.

344
00:30:37,548 --> 00:30:39,508
And so, therefore, we're regulating fish.

345
00:30:39,508 --> 00:30:43,948
were regulating beef, chicken, and meats,

346
00:30:44,368 --> 00:30:47,108
and were regulating fruit and veg in those markets.

347
00:30:47,448 --> 00:30:49,548
But there was a time when those markets were everything.

348
00:30:50,788 --> 00:30:54,328
Now, you'll say, well, technically you're regulating them,

349
00:30:54,428 --> 00:30:57,928
but they're not that vital, is what some might argue.

350
00:30:58,408 --> 00:31:02,248
That did extend in the olden days into a variety of other areas,

351
00:31:02,248 --> 00:31:03,508
which got very confusing.

352
00:31:04,108 --> 00:31:06,628
For example, the early stock exchanges,

353
00:31:06,628 --> 00:31:11,948
a lot of the things that went on in the Royal Exchange, the original insurance markets.

354
00:31:12,888 --> 00:31:17,948
And a lot of this, when I came to the city in the 80s, very early 80s, was run through what were

355
00:31:17,948 --> 00:31:23,848
called SROs, self-regulatory organizations. So Lloyd's was one because it runs the markets for

356
00:31:23,848 --> 00:31:27,848
insurance. It's not an insurer, it runs the markets for it. But there were ones for the

357
00:31:27,848 --> 00:31:31,608
independent financial advisors, for the stockbrokers, for the pensions providers.

358
00:31:31,608 --> 00:31:46,768
This was swept away in 1998 from memory in a long debate running when labor took power in 1997 and wanted to create a unitary financial services regulator.

359
00:31:46,768 --> 00:31:51,988
financial services being just under 40% of what we do, that clearly is a large chunk of our

360
00:31:51,988 --> 00:31:58,488
regulatory remit. If we had thought that we could do it because these were markets within

361
00:31:58,488 --> 00:32:04,888
a day's walk or half a day's walk, fine. In truth, it's worked out as a kind of a

362
00:32:04,888 --> 00:32:11,708
very much a national thing. So our work in regulation in financial services is mostly

363
00:32:11,708 --> 00:32:16,388
focused on lobbying for things we think are for the good of the industry or the good of the country.

364
00:32:16,768 --> 00:32:28,508
And that's a different thing than the idea that we are the regulator, which in days gone by, we did have a role in regulation, but that's over a generation ago.

365
00:32:28,508 --> 00:32:39,388
So you wouldn't find, for example, NatWest, someone in one of the buildings, one of the companies having slightly different regulatory powers.

366
00:32:40,008 --> 00:32:43,728
Is that something that people wonder about?

367
00:32:43,728 --> 00:32:52,948
I mean, presumably the opportunity legally might be there if you looked into it, if you really looked into it.

368
00:32:53,668 --> 00:32:54,888
But better than anywhere.

369
00:32:55,508 --> 00:32:55,988
Very slim.

370
00:32:56,548 --> 00:32:57,048
Very slim.

371
00:32:57,648 --> 00:33:02,488
But I think where this leads us to is what is regulation?

372
00:33:02,788 --> 00:33:07,728
Because a lot of people seem to focus on regulation as solely a government prerogative.

373
00:33:07,728 --> 00:33:14,088
and if you've really been tuned into this we've been running these markets for hundreds of years

374
00:33:14,088 --> 00:33:21,468
and so self-forming markets do not need national regulation and i and i point repeatedly to what i

375
00:33:21,468 --> 00:33:26,368
call community-enforced standards markets which are what the srls were the self-regulatory

376
00:33:26,368 --> 00:33:32,068
organizations had good and bad and there'll be people out there muttering uh oh you know this

377
00:33:32,068 --> 00:33:37,168
guy's going on but he's forgotten about maxwell and the pension scandal no i haven't there were

378
00:33:37,168 --> 00:33:41,168
scandals under the SROs, but there's some pretty big scandals that go on today.

379
00:33:41,508 --> 00:33:44,848
So I could go about RBS, GRG, I could go on about PPI.

380
00:33:45,448 --> 00:33:52,548
So the form of regulation is intriguing, but when you look at a variety of areas even more

381
00:33:52,548 --> 00:34:00,708
deeply, so if you take, for example, food safety, maritime sector, petroleum products,

382
00:34:00,708 --> 00:34:09,468
A lot of areas are handled by the ISO standard system, which has within it quite a rich grouping.

383
00:34:09,588 --> 00:34:17,968
So I call it community-enforced standards markets because these tend to arise because people in an industry want to have a good industry.

384
00:34:18,668 --> 00:34:25,328
And there's a tension there between wanting to keep the cowboys out and having standards that are too high that you can't make money.

385
00:34:25,768 --> 00:34:30,508
And the best people to interpret that in many cases are the people in the industry.

386
00:34:30,708 --> 00:34:58,748
So take food safety. So you're eating prawns from Vietnam that have been shipped across the world. Well, there was a lab in Vietnam that tested them. Then they were packaged according to international standards. Then they were transported and they needed to be refrigerated to particular standards. And the people who did that met a standard for transportation under temperature and blah, blah, blah. And then they came here and then they were on your supermarket shelf and then you bought them with a sell-by date and the contents of where they came from.

387
00:34:58,748 --> 00:35:05,128
Now, the way that the governments run that is they say you will adhere to the ISO standards.

388
00:35:05,748 --> 00:35:12,608
If you break them and we find out, then all heck will break loose, which is fair enough.

389
00:35:12,748 --> 00:35:17,008
There are criminal and civil sanctions for breaking those rules.

390
00:35:17,488 --> 00:35:22,868
However, the government regulatory element of it is actually to let those standards evolve.

391
00:35:22,868 --> 00:35:38,988
So if there's a new standard for labeling or there's a new standard for determining colors on prawns where your pink prawns are no longer pink because they've outlawed the coloring agent or whatever, that's all being done largely through the international system, not by the British government.

392
00:35:38,988 --> 00:35:43,948
And the British government, quite rightly, adds to that a layer of food inspectors and

393
00:35:43,948 --> 00:35:45,408
all, but they're sampling.

394
00:35:46,348 --> 00:35:51,908
They're trying to make sure, in essence, that the private auditors who are also in the system

395
00:35:51,908 --> 00:35:53,008
are doing their job.

396
00:35:53,608 --> 00:36:01,248
So the system consists of a body of standards run typically through the WTO and ISO, but

397
00:36:01,248 --> 00:36:03,588
sometimes originating as national standards.

398
00:36:03,688 --> 00:36:04,948
In Britain, we have BS standards.

399
00:36:04,948 --> 00:36:11,688
The aspiration for most BS standards is that they will become an international standard or merge with other ones.

400
00:36:12,548 --> 00:36:18,468
Then the standards are separate from the inspectors, and the inspectors are of two types.

401
00:36:18,948 --> 00:36:22,748
There are the accreditors, typically one accreditation agency per nation.

402
00:36:23,248 --> 00:36:27,428
Here is the United Kingdom Accreditation Service, and I'm not executive on that.

403
00:36:27,948 --> 00:36:29,788
And then we have certifiers.

404
00:36:30,348 --> 00:36:34,148
So the accreditor is not allowed to check people to the standard.

405
00:36:34,148 --> 00:36:38,788
the accreditor is only allowed to check that the certifier is good for certifying.

406
00:36:39,328 --> 00:36:42,028
Why is that? Because we want to keep competition in the system.

407
00:36:42,848 --> 00:36:46,288
And so we will often have many certifiers for one line.

408
00:36:46,648 --> 00:36:49,868
And there are many specialist lines, you know, asbestos removal,

409
00:36:50,408 --> 00:36:57,608
I mentioned petroleum products, electrical products, grading systems for roadworks.

410
00:36:58,248 --> 00:37:00,908
We have 800 certification bodies in Britain.

411
00:37:00,908 --> 00:37:04,068
And then those rely on laboratories,

412
00:37:04,068 --> 00:37:07,348
which we also accredit, and there are about 3,500 of those

413
00:37:07,348 --> 00:37:09,528
is one reasonably good estimate.

414
00:37:10,448 --> 00:37:13,348
But as the accreditation body, we are quite tight.

415
00:37:13,348 --> 00:37:15,548
We're only about 350 people,

416
00:37:15,548 --> 00:37:17,108
because we're just making sure these people

417
00:37:17,108 --> 00:37:18,908
are competent to do the checking,

418
00:37:18,908 --> 00:37:21,108
and then they go out and do all the checking

419
00:37:21,108 --> 00:37:24,228
in a competitive environment, which industry appreciates,

420
00:37:24,228 --> 00:37:27,668
because it's unlike a government inspector,

421
00:37:27,668 --> 00:37:29,848
when the government inspectors do come in

422
00:37:29,904 --> 00:37:33,944
areas and there are certain areas where government inspectors come in they just tell you how much

423
00:37:33,944 --> 00:37:41,044
they're going to charge you that's tough um well i mean i think the the common sort of the lay person

424
00:37:41,044 --> 00:37:46,884
would see regulation as something the government does to business so you're saying on the whole

425
00:37:46,884 --> 00:37:54,684
the market is is is generating these things in its own self-interest it's a i've actually i think

426
00:37:54,684 --> 00:37:58,764
the average person thought of that i've had unfortunately i'm the lay person and i just

427
00:37:58,764 --> 00:38:02,544
assume that it's some conniving government telling me what to do and what I can and can't do.

428
00:38:02,624 --> 00:38:06,944
And again, it depends on the business year. And so if you're running a security

429
00:38:06,944 --> 00:38:13,464
thing, supplying nightclubs and pubs as security guards, you will know that you've got to get them

430
00:38:13,464 --> 00:38:17,564
all certified and authorized. Well, that's all private sector stuff. The government has said,

431
00:38:17,684 --> 00:38:24,724
we'd like to make sure that security guards are authorized and happy to deal with that system.

432
00:38:25,544 --> 00:38:29,624
Corgi gas, for some of you are older people, you might remember.

433
00:38:29,784 --> 00:38:30,664
I do remember, yeah.

434
00:38:30,664 --> 00:38:32,704
That was a private sector system.

435
00:38:33,864 --> 00:38:37,424
A few cowboys, so to speak, had blown up some tower blocks,

436
00:38:37,424 --> 00:38:42,444
and the gas industry said, if we don't get this under control, nobody's going to buy gas.

437
00:38:42,704 --> 00:38:45,244
Isn't it true in maritime law as well?

438
00:38:45,964 --> 00:38:51,424
It's all generated by the market, and it's all enforced by...

439
00:38:51,424 --> 00:38:56,944
I know it would be enforced by the flag of the ship, wouldn't it?

440
00:38:56,944 --> 00:38:57,944
Really.

441
00:38:57,944 --> 00:39:00,184
It's really enforced by the harbour master.

442
00:39:00,184 --> 00:39:05,024
No, but I mean, I often, we talk a lot about cruise ships on this podcast because they're

443
00:39:05,024 --> 00:39:08,544
a really interesting model of a private city, basically.

444
00:39:08,544 --> 00:39:11,064
They are a floaty private city.

445
00:39:11,064 --> 00:39:18,024
And as a result, it's a brilliant example because nobody goes onto a cruise ship thinking they're

446
00:39:18,024 --> 00:39:23,264
They're walking into a private governance model and they don't actually care who's in charge.

447
00:39:23,764 --> 00:39:27,604
They care they're getting a good service from the ship, which is basically.

448
00:39:27,964 --> 00:39:32,704
And as a result, the ship doesn't want to kill anyone, doesn't want to hurt anyone, doesn't want to, you know.

449
00:39:32,884 --> 00:39:35,324
And the regulations adhere to that.

450
00:39:35,324 --> 00:39:40,904
But there's no one, you know, there's no one walking around the ship making sure XYZ is happening.

451
00:39:40,904 --> 00:39:50,284
It's a really interesting example of basically what a lot of people in the free cities movement would like to see on land more.

452
00:39:50,724 --> 00:39:52,844
That kind of free market city.

453
00:39:53,444 --> 00:39:59,304
Well, we could talk in a minute or two about how they could promote that because I would promote that.

454
00:39:59,384 --> 00:40:03,004
But I would argue that they haven't quite understood how regulation already works.

455
00:40:03,764 --> 00:40:06,984
Now, on a cruise ship, that's a really interesting area.

456
00:40:07,124 --> 00:40:08,764
Well, ships in general are very interesting.

457
00:40:08,764 --> 00:40:15,304
so the international maritime organization the IMO is based here in London it's the only UN

458
00:40:15,304 --> 00:40:25,844
entity based in the UK as its headquarters remember it has no navy it has no coast guard

459
00:40:25,844 --> 00:40:31,984
so it's a good talking shop where people get together and discuss the issues that they face

460
00:40:31,984 --> 00:40:37,424
and what they want to do and it can only move as fast as the average not the slowest member but

461
00:40:37,424 --> 00:40:51,164
And it's made great strides, in my opinion, on areas like low sulfur, on fuel efficiency, on reducing maritime noise for cetaceans.

462
00:40:51,564 --> 00:40:54,804
It's actually done a lot, but it's got to talk.

463
00:40:54,904 --> 00:40:57,364
And then they typically work through standards.

464
00:40:58,364 --> 00:40:59,804
But who enforces those standards?

465
00:41:00,284 --> 00:41:03,064
And it is really mostly the harbor master.

466
00:41:03,064 --> 00:41:12,464
So when you go into a harbor, a typical ship like one of your cruise ships will probably have about 50 or 60 certificates of various forms.

467
00:41:13,364 --> 00:41:22,444
There'll be a load line exemption on the techniques of the vessel, whether the vessel complies with maritime safety rules, riding rules, moments, all that.

468
00:41:23,204 --> 00:41:25,364
There will be food safety because there's food on board.

469
00:41:25,364 --> 00:41:32,944
So they'll have various certificates showing that they have been audited typically by a private sector organization.

470
00:41:33,064 --> 00:41:34,984
that is internationally recognized.

471
00:41:35,644 --> 00:41:37,844
So the BSI could do it for any ship,

472
00:41:38,484 --> 00:41:40,264
SGS, Yarsley, Bureau of Veritas,

473
00:41:41,004 --> 00:41:42,104
TUV, and Deutschland.

474
00:41:43,104 --> 00:41:44,204
So these will come on.

475
00:41:44,544 --> 00:41:46,284
And the harbormaster, it's up to the harbormaster

476
00:41:46,284 --> 00:41:49,204
to decide whether she or he accepts such a certificate.

477
00:41:49,484 --> 00:41:51,564
And they accept it from a credible organization.

478
00:41:52,204 --> 00:41:54,204
Certificate is typically backed up with insurance,

479
00:41:54,284 --> 00:41:55,544
which they also wish to see.

480
00:41:55,964 --> 00:41:57,664
So the insurer says to the ship,

481
00:41:57,764 --> 00:42:00,424
I'm not insuring you if you don't meet the standards,

482
00:42:00,524 --> 00:42:01,164
but I'm an insurer.

483
00:42:01,264 --> 00:42:02,304
I don't know how to run a kitchen.

484
00:42:02,304 --> 00:42:06,104
So just meet the food safety standards and the inspections on that.

485
00:42:07,064 --> 00:42:08,544
And that's the enforcement.

486
00:42:08,724 --> 00:42:12,304
So when you're on the high seas, yes, there's nobody walking around on deck.

487
00:42:12,524 --> 00:42:15,964
Or let me be more accurate, nobody needs to walk around on deck.

488
00:42:16,244 --> 00:42:28,344
Of course, a proper ship does actually have a lot of inspectors on board who make sure that things are being done the right way in fire safety, fire inspection, man overboard drills, lifeboat drills, et cetera.

489
00:42:28,344 --> 00:42:31,584
And the system is, therefore, largely private.

490
00:42:31,584 --> 00:42:35,684
But a ship is absolutely useless if you can't get into a port.

491
00:42:35,684 --> 00:42:39,304
So the harbormasters really do have a lot of control, and they don't want to let you

492
00:42:39,304 --> 00:42:42,904
into a port if you're going to be dumping a bunch of sick people, or you're going to

493
00:42:42,904 --> 00:42:47,264
be discharging waste into their harbor, or if you're so badly crude that you smash into

494
00:42:47,264 --> 00:42:48,264
other ships.

495
00:42:48,264 --> 00:42:50,504
This is just a harbormaster's nightmare.

496
00:42:50,504 --> 00:42:55,204
So it's they who say, you can't come in until you've met all of the international standards.

497
00:42:55,204 --> 00:43:09,224
Also, unlike other cities, land-based cities, they face the problem of people leaving very, very easily and choosing another city as well or choosing another ship because there's plenty of them.

498
00:43:09,224 --> 00:43:12,024
I mean, I really love it as a model.

499
00:43:12,404 --> 00:43:17,404
It's beautiful because it has all the characteristics of me personally,

500
00:43:17,544 --> 00:43:20,884
how I would like to see cities competing with each other.

501
00:43:21,384 --> 00:43:26,444
Ease of coming and going so that there's a pressure there to be a good city.

502
00:43:26,444 --> 00:43:33,244
And at the same time, having regulations which are derived from keeping people happy, basically.

503
00:43:33,564 --> 00:43:36,304
Well, you know, I've got a fairly strong IT background.

504
00:43:36,304 --> 00:43:42,904
and people in IT would say, oh, this never happens in IT. But it does. I mean, things are inspected

505
00:43:42,904 --> 00:43:47,204
before they leave the shop. We have the CE mark for all of the kit and equipment. But when you

506
00:43:47,204 --> 00:43:52,424
look at the kind of, there's a whole set of standards where you want to plug into a network

507
00:43:52,424 --> 00:43:57,184
and you can only plug into the network if you meet its protocol. I see you've got a Bitcoin pin on.

508
00:43:58,044 --> 00:44:03,024
So, you know, a Bitcoin pin is a pretty good example. You could, I'm going to write my own

509
00:44:03,024 --> 00:44:06,744
Bitcoin system and tell Bitcoin what to do. Well, that's sweet, but it's not going to get you very

510
00:44:06,744 --> 00:44:15,904
far. So a lot of the CIT standards, you can't do something if you don't meet that standard.

511
00:44:16,664 --> 00:44:21,764
I might argue you'd be better to call that a protocol because the protocol sort of is take

512
00:44:21,764 --> 00:44:26,464
it or leave it. There's just no way to participate in the system unless you do it. And the standards

513
00:44:26,464 --> 00:44:32,924
tend to need a bit more auditing because people are tempted to cheat, cut a little bit, put

514
00:44:32,924 --> 00:44:36,864
too much water in your prawns or color them with something that you didn't want to actually eat if

515
00:44:36,864 --> 00:44:41,464
you knew what it was. So it's that kind of a system. And it's protocol on the one hand is

516
00:44:41,464 --> 00:44:45,824
tough. You'll just have to follow it whether you like it or not. Standard is kind of,

517
00:44:46,104 --> 00:44:52,684
we got to make sure you follow it. Well, I say the problem with protocols,

518
00:44:53,104 --> 00:44:59,004
it's not a problem with protocols. In the sense of free cities and the idea of

519
00:44:59,004 --> 00:45:05,864
independent jurisdictions, at the moment, it's very difficult to decide to create a new protocol

520
00:45:05,864 --> 00:45:11,824
and try it out, which is one of the issues we talk about so much on this podcast. What is your

521
00:45:11,824 --> 00:45:17,704
opinion on the idea of private cities, for example? Do you know about Prospera,

522
00:45:17,704 --> 00:45:23,104
usually? Are you in favor or against? Do you think it's a good, bad idea?

523
00:45:24,724 --> 00:45:28,484
I'm not in favor. I'm not against. I don't know enough about protocol to comment on it,

524
00:45:28,484 --> 00:45:30,524
But I did, for example, mention Canary Wharf earlier.

525
00:45:30,804 --> 00:45:32,024
You know, that's a good example.

526
00:45:32,804 --> 00:45:34,604
There are lots of gated communities.

527
00:45:34,764 --> 00:45:40,124
So there's a whole spectrum of kind of, I run a little extra security force to keep my neighborhood safe.

528
00:45:40,124 --> 00:45:45,004
And we all voluntarily pay up a bit to this is an isolated area and I'm in charge of it.

529
00:45:45,164 --> 00:45:47,664
And I'm responsible for all the planning and things.

530
00:45:48,824 --> 00:45:50,244
I've got no qualms.

531
00:45:50,344 --> 00:45:51,504
I'm really into experimentation.

532
00:45:51,504 --> 00:46:03,104
And I feel one of the problems we're facing in the world is the increasing over-centralization of many forces and how do we engage local democracy.

533
00:46:03,584 --> 00:46:07,224
Now, I've got no specific answers to that.

534
00:46:07,684 --> 00:46:21,164
I've long been a proponent of land value tax, but that's because I believe that it's a better way to look at taxation and keeping the tax revenues local, but also encouraging the locals to make the most of it, which has always been the problem.

535
00:46:21,504 --> 00:46:31,384
I mean, in Britain, we're running, I forget the exact number, but I know it's over 90% and I believe well over 90% of the funds that local governments raise are given to the central government.

536
00:46:31,384 --> 00:46:33,204
And then they get back according to a formula.

537
00:46:33,464 --> 00:46:39,384
Not very motivational in terms of trying to improve your local area to increase your tax take.

538
00:46:40,004 --> 00:46:43,884
And this is the sort of area where land value tax begins to really play.

539
00:46:44,564 --> 00:46:59,854
I think the city of London does exhibit elements of land value tax I trying to remember how much of the city we own I think it probably around the 10 mark But the idea has always been I think the city strategy that we want

540
00:46:59,854 --> 00:47:05,034
to create prosperity, which is why we work so hard with businesses. Because if you don't

541
00:47:05,034 --> 00:47:09,394
have prosperity, you don't have anything. Once you've got that prosperity, how do you

542
00:47:09,394 --> 00:47:13,914
reinvest it? Well, I think you reinvest it in two ways. One is improving the physical

543
00:47:13,914 --> 00:47:17,794
environment, and the second is improving the business environment so that you attract more

544
00:47:17,794 --> 00:47:19,914
business and more people.

545
00:47:19,914 --> 00:47:24,814
And then we believe strongly in the idea that you're sharing that prosperity around.

546
00:47:24,814 --> 00:47:31,094
So we do a lot on charity work, City Bridges Trust, and the delivery companies give away,

547
00:47:31,094 --> 00:47:32,654
I think it's 85 million a year.

548
00:47:32,654 --> 00:47:35,514
The city gives away another significant sum.

549
00:47:35,514 --> 00:47:41,714
So we're looking at well around the 150 million mark, something like that, of funds dispersed

550
00:47:41,714 --> 00:47:44,434
to try and help those who are not as well off.

551
00:47:44,534 --> 00:47:46,754
So it's a good virtuous system.

552
00:47:47,454 --> 00:47:50,254
And then within that, even though we are a city,

553
00:47:50,834 --> 00:47:53,054
I would argue we have four things on our mind.

554
00:47:53,274 --> 00:47:54,574
One is the rule of law.

555
00:47:56,114 --> 00:47:57,894
Second one is defense and security.

556
00:47:57,894 --> 00:47:59,994
Third is access to talent and skills.

557
00:48:00,614 --> 00:48:02,774
And the fourth one is open and fair trade.

558
00:48:04,614 --> 00:48:06,834
You know, a city-state tends to follow

559
00:48:06,834 --> 00:48:09,654
traditional economic liberal principles

560
00:48:09,654 --> 00:48:15,634
and likes things like you want property rights, you want free speech, you want individual rights,

561
00:48:15,634 --> 00:48:21,914
but those in turn imply control, keeping government at a reasonable level.

562
00:48:22,014 --> 00:48:26,394
I'm not saying small government or large government, but definitely not just government for its own sake.

563
00:48:27,094 --> 00:48:33,074
Then moving on to open and fair trade very much comes out of that and free movement.

564
00:48:33,594 --> 00:48:36,694
So you've got kind of three what I'd call ethical principles,

565
00:48:36,694 --> 00:48:42,234
the individual rights free speech and property rights and those then imply economic principles

566
00:48:42,234 --> 00:48:47,754
now in our case if i go back to the four that i mentioned earlier as i started let me reverse

567
00:48:47,754 --> 00:48:56,234
defense and security never forget it a lot of people do you know and you know your your um

568
00:48:56,234 --> 00:49:02,274
cruise ship you know needs to repel borders there's got to be a way to do it uh in our case

569
00:49:02,274 --> 00:49:08,174
it's fairly obvious. People don't bring money to a war zone. But in addition to that, they don't

570
00:49:08,174 --> 00:49:14,914
bring money to a cybersecurity hazard either. So we do use our police force, and our police force

571
00:49:14,914 --> 00:49:20,194
is in fact the national cyber and national anti-fraud element. So those are important to us,

572
00:49:20,234 --> 00:49:25,574
and we're prepared to spend on that. Second thing is on the rule of law. Again,

573
00:49:25,934 --> 00:49:29,614
a bit like regulation. For most people, this means a judge in a courtroom.

574
00:49:29,614 --> 00:49:36,294
Well, that's certainly the case in criminal, but when you come to civil, in fact, going

575
00:49:36,294 --> 00:49:38,854
near a courtroom is a bad thing.

576
00:49:38,854 --> 00:49:43,074
Commercial people really don't want to go near courtrooms if they can avoid it.

577
00:49:43,074 --> 00:49:48,254
So the very tail end of that is seen in the courtroom, but there are a lot of disputes.

578
00:49:48,254 --> 00:49:54,014
And those are typically handled through arbitration, mediation, conciliation from time to time,

579
00:49:54,014 --> 00:49:55,514
expert determination.

580
00:49:55,514 --> 00:49:59,874
These things are settled out of court, not because there's a court case, but just settled

581
00:49:59,874 --> 00:50:03,014
long before the court cases arise.

582
00:50:03,014 --> 00:50:04,014
So it's a huge thing.

583
00:50:04,014 --> 00:50:09,914
And then there's just a general environment that you need of my word is my bond.

584
00:50:09,914 --> 00:50:14,154
Do you really want to do business in a place where every time somebody says something to

585
00:50:14,154 --> 00:50:15,914
you, they're up to something?

586
00:50:15,914 --> 00:50:20,734
So it actually benefits everybody to have a certain level of norms.

587
00:50:20,734 --> 00:50:23,854
I hate to use the word trust because that's a very loaded word.

588
00:50:23,854 --> 00:50:28,174
But I know I can rely on both things here, and I'll just be a little careful as opposed

589
00:50:28,174 --> 00:50:32,674
to I'm so careful that I never actually can contract a deal with anyone because I can't

590
00:50:32,674 --> 00:50:36,694
trust anyone, then the whole of commerce collapses.

591
00:50:36,694 --> 00:50:37,694
So we want that.

592
00:50:37,694 --> 00:50:42,854
I think access to talent and skills speaks for itself, and open and fair trade, there's

593
00:50:42,854 --> 00:50:44,094
no point in doing it.

594
00:50:44,094 --> 00:50:47,234
And I sum all that up as treating all comers fairly.

595
00:50:47,234 --> 00:50:58,074
But you're at the whim of the, in terms of all those things, you are at the whim of the

596
00:50:58,074 --> 00:51:00,674
government, not yourself, your own government.

597
00:51:00,674 --> 00:51:07,054
If you want to attract new business, for example, there is a limit to what you can do.

598
00:51:07,054 --> 00:51:11,834
You can make the place nice, you can make it secure, but you can't attract people in

599
00:51:11,834 --> 00:51:15,474
the same way that, say, something like Prospera could.

600
00:51:15,474 --> 00:51:21,114
has a system where you can choose from OEC direct regulations throughout the world. You're here,

601
00:51:21,234 --> 00:51:25,974
you're stuck with the UK regulations, you have to do it that way. So what does that actually mean

602
00:51:25,974 --> 00:51:35,874
in real time? How is it that you attract people to the city particularly? How is that different

603
00:51:35,874 --> 00:51:41,794
from the government giving incentives for business to come to the UK in general, say, for example?

604
00:51:41,794 --> 00:51:49,954
in a realistic sense there are going to be conflicts and there are and you know good one

605
00:51:49,954 --> 00:51:56,574
would be on immigration so we would like we don't want open access but we definitely want access to

606
00:51:56,574 --> 00:52:01,434
the talent skills that we need and once we've decided we need so and so and she's out of

607
00:52:01,434 --> 00:52:06,214
bulgaria and we need her to work here we we all whinge if there's any kind of paperwork or cost

608
00:52:06,214 --> 00:52:10,114
to it that's outrageous how should i be doing this but but in truth there are going to be

609
00:52:10,114 --> 00:52:15,354
conflicts here. Secondly, as I mentioned earlier, we are able to lobby and negotiate with central

610
00:52:15,354 --> 00:52:19,234
government, and it's in central government's interest for us to be healthy. So it's not like

611
00:52:19,234 --> 00:52:22,854
it's quite a battle or anything like that. It's just people have different priorities. The

612
00:52:22,854 --> 00:52:29,094
government's got priorities on keeping boat people out. It's got a national zeitgeist of making sure

613
00:52:29,094 --> 00:52:33,954
that people feel that they're being treated fairly. So it's a process of negotiation,

614
00:52:33,954 --> 00:52:39,834
and I think, bluntly, Prospero, when it gets bigger, we'll start to find that those problems

615
00:52:39,834 --> 00:52:47,134
will arise as well. So when it comes to us locally attracting business, well, clearly we're not doing

616
00:52:47,134 --> 00:52:52,174
it on actually having lower taxes or anything, but we're doing it on our adherence to those four

617
00:52:52,174 --> 00:52:58,074
principles. So we do a lot on arbitration, mediation, and civil, much more than I think

618
00:52:58,074 --> 00:53:04,774
people realize. There's a whole court system up at Rawls. The London Chamber of Commerce runs the

619
00:53:04,774 --> 00:53:09,154
the Chamber of Arbitration and Mediation.

620
00:53:09,154 --> 00:53:11,834
So at that level, we're doing quite a bit on the rule of law.

621
00:53:11,834 --> 00:53:16,814
I mentioned the police, but also our emphasis on cyber essentials, all sorts of things that

622
00:53:16,814 --> 00:53:19,094
we do to try and lock down there.

623
00:53:19,094 --> 00:53:20,474
So we're doing a lot.

624
00:53:20,474 --> 00:53:24,334
We're also doing a heck of a lot on trying to improve the built environment, which takes

625
00:53:24,334 --> 00:53:25,334
time.

626
00:53:25,334 --> 00:53:30,794
But one of the great things I'm very proud of is over the last 15, 20 years, we've seen

627
00:53:30,794 --> 00:53:33,014
the re-emergence of many of the little old alleyways.

628
00:53:33,094 --> 00:53:35,134
Well, the re-emergence of alleyways,

629
00:53:35,234 --> 00:53:36,414
they may not be the same old ones,

630
00:53:36,774 --> 00:53:38,474
that you can now walk through the city.

631
00:53:38,554 --> 00:53:39,354
It's more permeable.

632
00:53:40,154 --> 00:53:42,054
And then we have many plans to increase that.

633
00:53:42,794 --> 00:53:45,434
One of the other things we do a lot of is,

634
00:53:46,474 --> 00:53:49,374
my theme last year's Lord Mayor was Connect to Prosper,

635
00:53:49,874 --> 00:53:51,974
trying to celebrate the many connections that we make.

636
00:53:52,794 --> 00:53:55,014
So we like to make more connections.

637
00:53:55,814 --> 00:53:58,414
So even things like the permeable areas,

638
00:53:58,554 --> 00:54:00,394
you and I run into each other in an alley,

639
00:54:00,394 --> 00:54:03,854
hey, Tim, good to see you. What's happening? And we try and increase that. We have the livery

640
00:54:03,854 --> 00:54:09,334
company movement, which is 50,000 strong, making sure people meet at that level. We support all

641
00:54:09,334 --> 00:54:14,714
sorts of clubs and associations. We hold conferences, Gloria, our Innovate Finance

642
00:54:14,714 --> 00:54:20,574
conferences, our tech conferences, et cetera. Level 39 over at Canary Wharf was half funded

643
00:54:20,574 --> 00:54:25,234
by the city because we wanted to increase the connectivity on fintech. So we're always doing

644
00:54:25,234 --> 00:54:29,834
things to make people meet each other. And all those make London a very attractive place.

645
00:54:30,394 --> 00:54:35,574
I can genuinely vouch that a lot of people who've left London for other places have come back

646
00:54:35,574 --> 00:54:41,374
because it just lacks the vibrancy. Maybe the taxes are a bit high, maybe it's a little dirty,

647
00:54:41,574 --> 00:54:48,574
but you know what? I miss the buzz. And I'm sick and tired of kind of going from office block to

648
00:54:48,574 --> 00:54:53,794
office block for a formal meeting and not actually meeting anybody or having new things in my life.

649
00:54:53,794 --> 00:54:59,434
It's that novelty and new connections that we try and foster. So there's a lot that we can and do do.

650
00:54:59,434 --> 00:55:02,434
as an entity here in the centre.

651
00:55:04,434 --> 00:55:08,134
I've still got loads of questions about the City of London,

652
00:55:08,454 --> 00:55:10,934
but I want to move on because I think we're going to end up

653
00:55:10,934 --> 00:55:12,914
speaking for too long on that particular subject,

654
00:55:12,994 --> 00:55:15,634
and I'm sure I've heard you talk about this kind of stuff before.

655
00:55:15,634 --> 00:55:18,834
But something that I did find interesting

656
00:55:18,834 --> 00:55:20,194
and that I'd never heard of before is,

657
00:55:21,554 --> 00:55:26,114
and Peter mentioned this to me in the context of what you do here.

658
00:55:27,254 --> 00:55:28,614
It's ZN, right?

659
00:55:28,614 --> 00:55:36,414
yeah and he he he described this phrase dilemma analysis which i'd never heard of before can you

660
00:55:36,414 --> 00:55:43,114
talk a little bit about that and what it what it is what it means and yeah and then i'm gonna and

661
00:55:43,114 --> 00:55:47,954
then depending on what you say i want to ask you some questions about um it was i'd never heard of

662
00:55:47,954 --> 00:55:54,374
it before um so i think when i looked it up as well it was also called um it had another name but

663
00:55:54,374 --> 00:55:57,614
But maybe you could explain it in terms of dilemma analysis.

664
00:55:57,614 --> 00:56:01,834
Well, yeah, you can start with dilemmas, and you can move on to trilemmas and quadrilemmas

665
00:56:01,834 --> 00:56:03,414
and all sorts of things.

666
00:56:03,414 --> 00:56:22,424
Yeah I think Xion very much was set up 30 years ago 31 years ago and it was set up as a commercial think tank to try and go out and find problems to solve that would keep us all busy and interested We had no shortage So we done a lot in the climate change space

667
00:56:22,684 --> 00:56:26,444
We've done a lot on funding of SMEs.

668
00:56:26,704 --> 00:56:28,784
We've done a lot on developing countries' growth.

669
00:56:29,224 --> 00:56:32,964
We're probably most famous these days for running three fairly large indices.

670
00:56:33,844 --> 00:56:36,224
One is called the Smart Centers Index.

671
00:56:36,224 --> 00:56:43,724
and this is looking at how commercial centers are good at taking advantage of ideas and innovation

672
00:56:43,724 --> 00:56:49,264
and deploying technology. So it's not smart cities in the sense of, you know, are the traffic lights

673
00:56:49,264 --> 00:56:53,904
wired operating? It's much more about smart centers. And we have our global financial centers

674
00:56:53,904 --> 00:57:01,464
index, which is looking at how good the center is for deploying finance and taking advantage of new

675
00:57:01,464 --> 00:57:05,644
financial products, and the two overlap a lot. And we have our global green finance index,

676
00:57:05,644 --> 00:57:07,364
which is looking at that specific area.

677
00:57:08,024 --> 00:57:11,844
We're currently looking at a new creative services industry as well.

678
00:57:12,404 --> 00:57:15,524
And so our advice tends to be to go into centres.

679
00:57:15,664 --> 00:57:21,384
We track about 140 cities and advise them on how to improve what they're doing.

680
00:57:21,484 --> 00:57:26,964
So it's quite related, oddly, mentally to the work that I do individually at the corporation.

681
00:57:28,004 --> 00:57:33,364
But the ideas behind what Peter called dilemma analysis,

682
00:57:33,364 --> 00:57:45,504
which was that there are certain problems which the solution to which is not apparent because there are conflicting things working against each other.

683
00:57:45,624 --> 00:57:47,364
Is that a good way to describe it?

684
00:57:47,544 --> 00:57:47,844
Yeah, it is.

685
00:57:48,064 --> 00:57:50,664
We would probably term those wicked problems.

686
00:57:50,844 --> 00:57:51,784
Yes, wicked problems.

687
00:57:51,904 --> 00:57:52,724
That was the other, yes.

688
00:57:53,244 --> 00:57:56,044
But wicked as in, not as in evil.

689
00:57:56,344 --> 00:57:58,164
Wicked just because hard to crack.

690
00:57:58,284 --> 00:57:59,464
Nor the Wizard of Oz or anything.

691
00:57:59,464 --> 00:58:00,704
No, it's wicked.

692
00:58:00,704 --> 00:58:10,444
The term originated in two sectors. One was aerospace, and the other was actually urban planning in the 50s and 60s in America.

693
00:58:11,304 --> 00:58:18,764
And those are the two areas where they realized that there are a lot of problems that are messy, aggressive, and circular.

694
00:58:19,724 --> 00:58:24,464
And it's a bit like the old Irish expression, I wouldn't start from here to get there.

695
00:58:24,464 --> 00:58:30,624
You know, it's this, you know, what do I do? And we've got tons of democracy and local democracy we spoke about.

696
00:58:30,704 --> 00:58:36,084
earlier, new types of voting systems, how to handle poverty.

697
00:58:36,084 --> 00:58:40,944
You know, I look at the 17 Sustainable Development Goals and go, well, there's a whole list of

698
00:58:40,944 --> 00:58:42,524
things the world would like to solve.

699
00:58:42,524 --> 00:58:44,644
So we're not sure to them.

700
00:58:44,644 --> 00:58:46,044
How do you deal with that though?

701
00:58:46,044 --> 00:58:51,004
Well, we wrote a book 10 years ago called The Price of Fish, which was all about how

702
00:58:51,004 --> 00:58:53,224
to solve wicked problems in economics.

703
00:58:53,224 --> 00:58:57,424
we took for our basis of it was

704
00:58:57,424 --> 00:59:04,604
we'd seen Feynman's Easy Pieces series

705
00:59:04,604 --> 00:59:06,464
where he tries to teach physics simply.

706
00:59:07,324 --> 00:59:09,864
And there was a lovely piece of work done by a physicist,

707
00:59:10,124 --> 00:59:12,344
David Deutsch, called The Fabric of Reality.

708
00:59:13,004 --> 00:59:17,624
And David Deutsch said that the Greeks had a concept of a man,

709
00:59:17,664 --> 00:59:19,104
and it was a man, could know everything.

710
00:59:20,204 --> 00:59:21,304
What did that mean?

711
00:59:21,304 --> 00:59:24,904
well, it didn't mean he knew the name of every chicken in every village.

712
00:59:25,704 --> 00:59:35,444
It was more that he had a series of mental tools that allowed him to look at the world and analyze situations.

713
00:59:36,044 --> 00:59:38,504
Now, the Greek's tools may have been a little bit crude.

714
00:59:39,344 --> 00:59:41,464
Why, oh great Tim, is there thunder?

715
00:59:42,124 --> 00:59:43,964
It's because of the thunder god, Michael.

716
00:59:44,044 --> 00:59:45,284
Well, that was a good explanation.

717
00:59:46,744 --> 00:59:47,524
So there was that.

718
00:59:47,524 --> 00:59:53,164
But David then went off onto physics and obviously being into quantum mechanics.

719
00:59:53,364 --> 00:59:55,064
Quantum mechanics is one of the disciplines.

720
00:59:55,584 --> 01:00:01,264
But interestingly, he picked epistemology, computational, theory, and evolution as the other three.

721
01:00:01,664 --> 01:00:05,684
So if you understood those four, he felt you could look at physics.

722
01:00:06,244 --> 01:00:07,844
And I thought that was a great approach.

723
01:00:07,884 --> 01:00:09,384
And I said, what would it be for economics?

724
01:00:10,004 --> 01:00:12,324
And so we had a good look at it.

725
01:00:12,604 --> 01:00:16,684
And I did a series of 29 lectures on it.

726
01:00:16,684 --> 01:00:20,164
It's your listeners are welcome to go to Gresham College and see.

727
01:00:20,844 --> 01:00:23,424
But I chose choice, choice theory.

728
01:00:23,524 --> 01:00:24,764
How do we make decisions?

729
01:00:26,464 --> 01:00:29,184
Economics was equivalent to his kind of quantum mechanics.

730
01:00:29,184 --> 01:00:36,164
All the basic stuff's about supply and demand and positional goods and all that.

731
01:00:37,064 --> 01:00:38,664
Evolution really stands up.

732
01:00:38,724 --> 01:00:45,824
You've got to look and say, once I get these entities there, what are they likely to do to maximize?

733
01:00:46,684 --> 01:00:51,544
their lifespan to persist in going, and what are they going to do in terms of spawning new things?

734
01:00:51,704 --> 01:00:57,564
So very good point, very good overlap. And the last one was systems theory. Now systems theory

735
01:00:57,564 --> 01:01:02,824
is if I was to pick one area that people aren't taught enough in school, and it wouldn't require

736
01:01:02,824 --> 01:01:11,904
much, is a very advanced set of techniques for analyzing complex situations and decomposing them.

737
01:01:11,904 --> 01:01:18,264
And it's from systems theory, largely the chaos theory came and from chaos theory came

738
01:01:18,264 --> 01:01:19,224
complexity theory.

739
01:01:20,264 --> 01:01:26,724
And this is ways that people try and look at an environment to take a railway system.

740
01:01:27,404 --> 01:01:29,624
Our railways are running late, Tim, fix them.

741
01:01:30,424 --> 01:01:31,284
Where do you start?

742
01:01:32,324 --> 01:01:36,464
So you've got to start breaking it down to, well, there's tracks and there's delays and

743
01:01:36,464 --> 01:01:37,324
there's maintenance.

744
01:01:37,584 --> 01:01:38,804
And that's probably what's causing.

745
01:01:38,924 --> 01:01:39,284
Hang on.

746
01:01:39,284 --> 01:01:40,824
Let me look at the timetable.

747
01:01:40,824 --> 01:01:43,164
Could the timetable change to all that?

748
01:01:43,164 --> 01:01:45,204
Would it change if we had faster trains?

749
01:01:45,204 --> 01:01:50,164
Would it change if I could stop the passengers boarding too late so they weren't halting

750
01:01:50,164 --> 01:01:51,164
the trains?

751
01:01:51,164 --> 01:01:53,524
You get into, oh my gosh, there's a lot of things.

752
01:01:53,524 --> 01:01:57,144
Just answer simple question of how do you make the trains run on time?

753
01:01:57,144 --> 01:02:01,384
And systems theory helps you, gives you a set of very simple tools to decompose that.

754
01:02:01,384 --> 01:02:09,764
So, I mean, when I looked into it very briefly, I couldn't help thinking that what, say for

755
01:02:09,764 --> 01:02:14,444
example, a lot of people in the Free Cities movement, what they're trying to solve is very

756
01:02:14,444 --> 01:02:20,504
much a wicked problem. But it's the problem of governance and the way that we're governed,

757
01:02:20,504 --> 01:02:29,084
or the way that a place lays out its own rules. And democracy comes up a lot because democracy is

758
01:02:29,084 --> 01:02:35,144
not the democratic process, at least the one we see currently. A lot of people vote on something

759
01:02:35,144 --> 01:02:38,804
that gets someone into power that then creates rules.

760
01:02:39,244 --> 01:02:42,324
In that process, quite a few people are disenfranchised

761
01:02:42,324 --> 01:02:46,024
because they were, just by the fact they were born in a country,

762
01:02:46,144 --> 01:02:48,584
suddenly now something is happening in their country

763
01:02:48,584 --> 01:02:50,764
that they are probably not a part of.

764
01:02:50,964 --> 01:02:54,644
And one of the ways you solve that is in the private city, for example,

765
01:02:54,744 --> 01:02:58,364
like a cruise ship, you say, well, here's a contract, sign it,

766
01:02:58,424 --> 01:03:00,984
this is the rules, abide by the rules.

767
01:03:01,144 --> 01:03:03,544
If you don't like these rules, there's another one over there.

768
01:03:03,544 --> 01:03:06,444
There's another city state over there or another free city over there.

769
01:03:06,484 --> 01:03:07,304
You could go and use that.

770
01:03:08,584 --> 01:03:12,804
It certainly is a very wicked problem, the problem of governance.

771
01:03:13,044 --> 01:03:22,364
And I would say probably, from my perspective at least, where we're at in the moment is, I think there are a lot of people unhappy.

772
01:03:22,844 --> 01:03:26,744
It seems at least in my world, maybe I've probably skewed in one direction.

773
01:03:26,904 --> 01:03:31,984
But maybe if I went out on the street and said, do you like the way you're being governed to the average person here?

774
01:03:31,984 --> 01:03:38,764
They probably don't think about it, in all honesty, but amongst people that do think about it, it's a wicked problem.

775
01:03:39,704 --> 01:03:42,124
And so how would you go about solving it?

776
01:03:42,124 --> 01:03:51,344
See, my response would be, okay, there's an easy way to begin the process of solving that, and that's create a market of governance.

777
01:03:53,184 --> 01:04:00,844
We don't really have a very obvious market in governance at the moment.

778
01:04:00,844 --> 01:04:07,124
You could move to another country, but the governance model is often roughly the same.

779
01:04:07,784 --> 01:04:12,204
Or you could go somewhere where you really don't want to go, where they've got a terrible governance model.

780
01:04:12,504 --> 01:04:15,184
So how would you go about solving that?

781
01:04:15,744 --> 01:04:20,844
And I'd be interested to know what you think might be a good solution if you would sort of...

782
01:04:20,844 --> 01:04:23,104
Wow. Details, details.

783
01:04:25,104 --> 01:04:26,184
You're absolutely correct.

784
01:04:27,004 --> 01:04:29,364
Governance is very much a wicked problem.

785
01:04:29,364 --> 01:04:31,784
and I would argue it's one of the biggest problems of the day.

786
01:04:34,584 --> 01:04:36,744
One thing I have muttered is

787
01:04:36,744 --> 01:04:38,744
it would be really good to have an ISO standard

788
01:04:38,744 --> 01:04:40,024
for good governance.

789
01:04:42,084 --> 01:04:43,304
They'd never let it happen.

790
01:04:43,544 --> 01:04:45,684
Well, ISO would, but the idea...

791
01:04:45,684 --> 01:04:46,724
That's what I mean.

792
01:04:46,824 --> 01:04:48,404
Yeah, but ISO would allow it to happen,

793
01:04:48,504 --> 01:04:49,224
but, you know, who would...

794
01:04:49,224 --> 01:04:50,164
They wouldn't enforce it.

795
01:04:50,384 --> 01:04:52,804
Would the mayor of New York accept that he was being shut up?

796
01:04:52,804 --> 01:04:54,844
Well, it's more like who would enforce it

797
01:04:54,844 --> 01:04:57,384
because we're relying on them to enforce it on themselves.

798
01:04:57,384 --> 01:05:02,064
You could in terms of attractiveness, you could say, hey, we're a well-governed town,

799
01:05:02,224 --> 01:05:07,944
and we've had people in to audit us on it, and we know what the international standard is,

800
01:05:07,964 --> 01:05:14,064
and we meet it. Many standards start that way. That's what I mean. They're community-enforced

801
01:05:14,064 --> 01:05:19,484
standards markets. They're not government-enforced, that was my point earlier. And the way to start

802
01:05:19,484 --> 01:05:23,264
that is through a bit of competition. So if there's a competitive environment, people then

803
01:05:23,264 --> 01:05:28,104
often reach out for standards, but let's park that one for now, that it's one.

804
01:05:28,104 --> 01:05:42,954
The second thing is is there a lot of anger and frustration out What was that film Network in 1970 I mad as hell and I not gonna take it anymore I think there is actually quite a bit of that around at the moment in quite a number of countries

805
01:05:43,054 --> 01:05:48,394
Not all, by the way, but quite a few countries. I was at a breakfast a few weeks ago where some

806
01:05:48,394 --> 01:05:55,114
champ stood up at a club and ranted on for five minutes at a politician who's not in power.

807
01:05:56,174 --> 01:06:01,734
And he wasn't being nasty. He was just frustrated. Why can't we get potholes? Why are schools not

808
01:06:01,734 --> 01:06:05,934
functioning. Why are you? And so there's a lot of that going on at the moment. And that probably is

809
01:06:05,934 --> 01:06:10,814
an indicator of, is it more or less, or are we just cranky old men? Who knows? But I would have

810
01:06:10,814 --> 01:06:15,734
argued there does seem to be a fairly high degree of tension. What could be done about it?

811
01:06:16,954 --> 01:06:22,474
Well, I think the first thing is, I pick on three things if you don't mind. The first one is

812
01:06:22,474 --> 01:06:27,534
democracy itself. Is voting every four or five years, depending on what your system is,

813
01:06:27,534 --> 01:06:33,694
really democracy? I mean, how involved are you? You know, you said democracy is we vote people

814
01:06:33,694 --> 01:06:38,794
into power. Well, is it? I thought it was being involved in things. Now, how could we be more

815
01:06:38,794 --> 01:06:43,794
involved? So I would encourage your listeners to explore, but maybe not wholly adopt, things like

816
01:06:43,794 --> 01:06:49,534
liquid democracy and the pirate parties, where, you know, the idea in these, as I express, I'm not

817
01:06:49,534 --> 01:06:54,654
sure they would express it this way, is that we have transferable votes for the formulation of

818
01:06:54,654 --> 01:07:01,494
policy in the parties. So you're an expert on the environment. I'm an expert on oil trading.

819
01:07:01,754 --> 01:07:05,594
I will do the petrochemical thing. You give me your vote. I give you my vote

820
01:07:05,594 --> 01:07:10,454
for the environment. You give me your vote for chemical trading. We create the policies.

821
01:07:11,334 --> 01:07:15,634
So you walk into an environmental meeting and say, we're going to, I don't know,

822
01:07:15,634 --> 01:07:20,094
ban air conditioners, whatever, whatever's on your mind. And you've got 10,000 votes,

823
01:07:20,094 --> 01:07:25,774
but that's the policy, then we vote on the policy as a whole. And again, I might have transferable

824
01:07:25,774 --> 01:07:30,014
votes. So everybody's actually being involved in the formations of the policies. Whereas at the

825
01:07:30,014 --> 01:07:33,994
moment we have kind of a strange situation where we vote people into office and then they kind of

826
01:07:33,994 --> 01:07:43,394
tell us what their policies are, but they try and put them in a supposedly some type of statement

827
01:07:43,394 --> 01:07:48,254
of what their policies are before they get into office, their manifesto, but they try and be as

828
01:07:48,254 --> 01:07:53,194
vague as possible. And then they shift ground. So, you know, it's actually putting it on the

829
01:07:53,194 --> 01:07:58,394
front foot. The second thing is, you know, being involved in democracy, if you're more frustrated

830
01:07:58,394 --> 01:08:02,734
now, well, we'll join a political party and political party membership, as you know, is

831
01:08:02,734 --> 01:08:07,254
through the floor. So am I going to, who am I going to blame? I'm not going to blame anybody,

832
01:08:07,254 --> 01:08:11,934
but I think we should perhaps pay more attention to working with the parties before the vote.

833
01:08:12,294 --> 01:08:15,854
And I think the parties could do a lot more things like liquid democracy,

834
01:08:15,854 --> 01:08:22,394
people's assemblies to engage people beforehand in how they're doing policies rather than,

835
01:08:22,734 --> 01:08:27,114
well, we won't say what our policy is because if we did, somebody might attack it and then we won't

836
01:08:27,114 --> 01:08:31,314
get into office. And the key thing is to get into power. I disagree. The key thing is not to get

837
01:08:31,314 --> 01:08:37,454
into power. The key thing is to have good policies for the nation or the state or the city. So that's

838
01:08:37,454 --> 01:08:44,254
one element. Second element is there's a popular kind of approach, which I, you know, if only

839
01:08:44,254 --> 01:08:50,254
Xi Jinping were running this place, or in the old days, at least Mussolini made the

840
01:08:50,254 --> 01:08:51,274
trains run on time.

841
01:08:52,114 --> 01:08:53,594
Actually, Mussolini didn't.

842
01:08:53,694 --> 01:08:55,394
The trains were running on time before him.

843
01:08:55,494 --> 01:09:00,274
In fact, they deteriorated slightly, well, very, very rapidly at the tail end, but slightly

844
01:09:00,274 --> 01:09:01,154
under his rule.

845
01:09:02,374 --> 01:09:06,774
But what I think people are admiring is the consistency of a dictator.

846
01:09:07,334 --> 01:09:11,994
Once a dictator's made up his or her mind, they tend to follow that through.

847
01:09:11,994 --> 01:09:17,794
whereas in democracy we're very good at making a decision you know we get up every morning and make

848
01:09:17,794 --> 01:09:25,534
a different decision and that's the problem so the solution to some of that is inaction and it's

849
01:09:25,534 --> 01:09:30,914
before people's eyes if they'll look we face this on the climate change front with a lot of flip

850
01:09:30,914 --> 01:09:38,134
flopping and i wrote a paper over 20 years ago on what i call policy performance bonds so these

851
01:09:38,134 --> 01:09:45,334
were bonds whose interest rates rose if it turned out that people hadn't managed to meet

852
01:09:45,334 --> 01:09:46,134
their own policy.

853
01:09:46,834 --> 01:09:51,754
Now, before I try and make myself sound like a genius, I'm just extending an idea that Margaret

854
01:09:51,754 --> 01:09:55,814
Thatcher had in 82 when she created inflation-linked bonds.

855
01:09:56,174 --> 01:10:02,234
So her inflation-linked bonds, if she said inflation was going to be 2% and it was 4%,

856
01:10:02,234 --> 01:10:07,334
then you got 2% on the bond in addition to whatever the coupon rate was.

857
01:10:07,334 --> 01:10:10,974
She had to do that because nobody in Europe believed that Britain would actually repay.

858
01:10:11,194 --> 01:10:13,114
They'd never repaid in full.

859
01:10:13,214 --> 01:10:20,794
It had always been, you know, lend us a hundred pounds and we'll repay you in, you know, 60 pounds worth of pounds, even though it's a hundred pounds back.

860
01:10:21,434 --> 01:10:23,434
And so there was a lot of frustration about that.

861
01:10:23,494 --> 01:10:24,674
And she, she created those.

862
01:10:24,734 --> 01:10:26,974
And I just said, that's clearly extensible.

863
01:10:27,774 --> 01:10:35,234
And we've seen a very interesting policy performance bond in Malaysia where the interest rate on the bond goes up if they don't improve education in the state.

864
01:10:35,234 --> 01:10:41,014
So again, going back to these city states, if you've made a promise, how are you backing

865
01:10:41,014 --> 01:10:42,014
it up?

866
01:10:42,014 --> 01:10:48,974
Now, the greatest success we had was in March 22, the government of Chile issued such a

867
01:10:48,974 --> 01:10:50,974
bond for climate purposes.

868
01:10:50,974 --> 01:10:57,714
A 20-year bond based on targets eight years out, which was therefore 2030.

869
01:10:57,714 --> 01:11:04,154
The two targets were a reduction in greenhouse gas emissions from, I think it was 112.3 megatons

870
01:11:04,154 --> 01:11:09,374
to 95 megatons and an increase in renewables in the grid from 45% to 60.

871
01:11:09,734 --> 01:11:16,874
So if they don't make that on a straight line to 2030 and from 2030 for another 12 years,

872
01:11:17,014 --> 01:11:18,374
they pay a higher interest rate.

873
01:11:19,154 --> 01:11:21,674
So now I'm like, okay, the government of Chile means this.

874
01:11:22,174 --> 01:11:26,594
When I would traditionally have invested in the energy sector in Chile, I would have maybe

875
01:11:26,594 --> 01:11:30,254
put 50% in renewables and 50% in fossil fuels.

876
01:11:30,254 --> 01:11:33,174
But it's pretty clear the government of Chile doesn't want fossil fuels.

877
01:11:34,154 --> 01:11:37,654
But I still don't fully trust the government, so I'll buy a little bit of the bond, you see.

878
01:11:38,334 --> 01:11:40,314
Or I'll buy a lot of the bond or whatever.

879
01:11:40,774 --> 01:11:47,054
So it becomes the proper hedge for the government policy, which if you think about it in this kind of wicked solutions,

880
01:11:47,654 --> 01:11:52,994
massive, aggressive, and circular, it actually encourages you to go, wait a minute, the government must mean this.

881
01:11:53,694 --> 01:11:58,534
So you actually accelerate the government policy because everybody's like, no way they're going to change this.

882
01:11:58,574 --> 01:12:00,014
So you begin to see a rapid bit.

883
01:12:00,014 --> 01:12:05,414
As I say, that was a $2 billion issue, $2 billion in March 22.

884
01:12:05,874 --> 01:12:11,034
And they've issued many subsequent issues since with varying targets and things like that.

885
01:12:11,354 --> 01:12:13,114
Now, that's putting your money where your mouth is.

886
01:12:13,694 --> 01:12:19,974
And I think a lot of that starts to solve some of this democratic flip-flopping of choice all the time.

887
01:12:20,614 --> 01:12:25,434
And, of course, it also raises, wait a minute, you wanted a 20-year policy, right?

888
01:12:25,654 --> 01:12:28,114
And you thought you would just do it when you got out of bed?

889
01:12:28,114 --> 01:12:32,194
No, so you're forcing the decisions to be made big time.

890
01:12:32,974 --> 01:12:38,634
And so people are less inclined just to make a snap decision because a snap decision on that's there.

891
01:12:38,774 --> 01:12:47,694
It also does a lot of good alignment of government timeframes and infrastructure and business timeframes because governments make all these statements.

892
01:12:47,894 --> 01:12:49,334
You know, we're going to have heat pumps.

893
01:12:49,414 --> 01:12:49,934
No, we're not.

894
01:12:50,014 --> 01:12:52,494
We're going to only have EV vehicles.

895
01:12:52,654 --> 01:12:53,254
No, we're not.

896
01:12:53,254 --> 01:12:58,454
And these sort of flip-flops really hurt business because business is running on a 20 to 25-year

897
01:12:58,454 --> 01:12:59,454
timeframe.

898
01:12:59,454 --> 01:13:04,014
So if government wants people to make 20 to 25-year decisions, then it should too.

899
01:13:04,014 --> 01:13:07,974
And I think you could see that at city, state, and national levels.

900
01:13:07,974 --> 01:13:09,174
And it is happening.

901
01:13:09,174 --> 01:13:13,974
These bonds have come out in Chile, Uruguay has copied them, Thailand issued an environmental

902
01:13:13,974 --> 01:13:14,974
one in November.

903
01:13:14,974 --> 01:13:16,574
And I think it will happen.

904
01:13:16,574 --> 01:13:26,714
Yeah, I mean, the problem is, like you say, the flip-flopping happens because the system

905
01:13:26,714 --> 01:13:32,774
now works with a strategy of the important thing is to be in power, not the important

906
01:13:32,774 --> 01:13:35,494
thing is to have a particular policy.

907
01:13:35,994 --> 01:13:41,094
So it becomes a game of winning the election and nothing else.

908
01:13:41,134 --> 01:13:45,714
And as a result, on the whole, and you can say whatever you want to win the election

909
01:13:45,714 --> 01:13:51,874
these days it appears and then almost i mean america's just happened in america as well so

910
01:13:51,874 --> 01:13:59,074
many people who thought oh trump's come relatively that's a fresh i some fresh ideas happening and

911
01:13:59,074 --> 01:14:06,174
lo and behold when government actually kicked in and the truth came then all that stuff goes out

912
01:14:06,174 --> 01:14:11,714
the window all the reducing the size of government maybe keep the spending down that sounds great

913
01:14:11,714 --> 01:14:21,254
But then when the reality of running a massive country kicks in, it's like, no, actually, let's have another trillion dollar bill.

914
01:14:21,434 --> 01:14:21,894
Why not?

915
01:14:21,974 --> 01:14:22,674
Just don't tell anyone.

916
01:14:22,934 --> 01:14:26,974
But I often wonder whether it's just a function of the size of all this stuff.

917
01:14:27,654 --> 01:14:35,674
Because the other thing, obviously, that a lot of us are into is decentralizing things down to a bit like what you've got here.

918
01:14:36,254 --> 01:14:37,094
You've got a smaller.

919
01:14:37,094 --> 01:14:41,514
Well, no, but I mean, in the city, you're a small jurisdiction.

920
01:14:41,714 --> 01:14:47,614
in a way. And that's really much easier to keep everyone... The democratic system, I think,

921
01:14:47,614 --> 01:14:55,134
works much better on a small scale like this. Or even possibly on a scale like this, really,

922
01:14:55,134 --> 01:14:59,754
in a place where people, probably less political, they just want

923
01:14:59,784 --> 01:15:06,204
a good service. They're like, is it good here? You know, are people running this place well?

924
01:15:06,424 --> 01:15:11,744
Okay. Then really, then I'll just let them do that. Am I making money? I'm a merchant. I'm

925
01:15:11,744 --> 01:15:17,944
working here within these walls. Is my business doing well? Is everyone happy? Are we, are we,

926
01:15:17,944 --> 01:15:23,184
are the, you know, my morals, are the morals of the people in charge? Are they, are they good as

927
01:15:23,184 --> 01:15:30,424
well. But once you try and scale that up to even the size of the UK, I think, it becomes difficult,

928
01:15:30,424 --> 01:15:37,964
I think. Well, the size matters, and I would agree with that. And this comes up constantly

929
01:15:37,964 --> 01:15:44,484
in discussions that I have globally. What's the right size? There's a particularly interesting

930
01:15:44,484 --> 01:15:49,084
book written by a friend of mine, James Bryding. We went to high school together, and James is

931
01:15:49,084 --> 01:15:56,684
Swiss, and he wrote a book called Too Big to Fail about six years ago. He wouldn't explain it like

932
01:15:56,684 --> 01:16:02,444
this, but I will, because he's not on the program. Fair enough, he looks at eight countries who are

933
01:16:02,444 --> 01:16:07,224
small, the largest being the Netherlands with 17 million. Obviously, Switzerland is in there with

934
01:16:07,224 --> 01:16:14,544
nine point whatever million. I won't get them all, but Denmark, Sweden, Ireland, Singapore. He left

935
01:16:14,544 --> 01:16:18,044
Norway out because everybody said, oh, Norway is just rich. But he said, these are countries,

936
01:16:18,044 --> 01:16:27,164
and I want to measure how well they do. And the measures that he picked were the educational system,

937
01:16:27,164 --> 01:16:32,044
the healthcare system, the environment, the infrastructure, and how they treated the

938
01:16:32,044 --> 01:16:35,724
disadvantaged and the elderly. And there are metrics for these internationally. They're

939
01:16:35,724 --> 01:16:41,804
slightly imperfect because they're qualitative measures to some degree. But you know if you've

940
01:16:41,804 --> 01:16:42,604
We've been to any of those.

941
01:16:43,004 --> 01:16:48,464
They beat the heck out of Germany, France, Spain, Italy, Britain.

942
01:16:48,924 --> 01:16:54,084
They also beat the heck out of America because everybody's focused on this GDP number.

943
01:16:55,024 --> 01:17:01,384
And the way I express Jim's book, which I don't think appears anywhere in there, is this raises the fundamental question.

944
01:17:01,604 --> 01:17:04,184
What are the economies of scale of the nation state?

945
01:17:05,424 --> 01:17:08,784
So supposedly, as you get bigger, you should be more efficient.

946
01:17:08,784 --> 01:17:10,504
It should be easier to run the place.

947
01:17:10,504 --> 01:17:13,244
None of this, oh, it's so hard to run a large place.

948
01:17:14,044 --> 01:17:16,444
Why is a small place so well run?

949
01:17:16,544 --> 01:17:22,784
Latvia, 1.3 million people, more unicorns per capita, a fully automated governmental system.

950
01:17:23,364 --> 01:17:28,404
Somehow 1.3 million people are operating a system that we 67 million have been unable to afford.

951
01:17:29,184 --> 01:17:30,784
So, you know, parse that one.

952
01:17:31,284 --> 01:17:32,764
You can see some of the difficulties.

953
01:17:33,044 --> 01:17:35,884
Now, then you move on to the other side.

954
01:17:35,884 --> 01:17:36,484
Well, hang on.

955
01:17:36,864 --> 01:17:38,404
Let's take this to the extreme.

956
01:17:38,404 --> 01:17:42,964
and frankly we should be operating groups of 50 or whatever.

957
01:17:42,964 --> 01:17:44,284
There is a lot of corruption.

958
01:17:44,284 --> 01:17:46,844
The city, bluntly, had a bad reputation,

959
01:17:46,844 --> 01:17:49,804
particularly in the 1700s and early 1800s,

960
01:17:49,804 --> 01:17:51,544
as being corrupt.

961
01:17:51,544 --> 01:17:53,884
We have the corrupt boroughs of Britain,

962
01:17:53,884 --> 01:17:56,024
well of England actually strictly, but anyway.

963
01:17:56,024 --> 01:17:58,624
So you've got this tension.

964
01:17:58,624 --> 01:18:00,724
Some of this comes back to looking at

965
01:18:00,724 --> 01:18:02,804
some of the other federal nations.

966
01:18:02,804 --> 01:18:05,884
So Germany is a very good example, 16 Lender,

967
01:18:05,884 --> 01:18:07,184
I think 3,000 gomenda.

968
01:18:07,904 --> 01:18:09,524
Italy is not so decentral.

969
01:18:10,664 --> 01:18:14,804
Spain has got tensions because it's got a regional decentralization.

970
01:18:15,464 --> 01:18:18,044
Canada, Australia, and then, of course, we come to America,

971
01:18:18,144 --> 01:18:21,204
which Britons tend to fixate as their comparator for reasons.

972
01:18:21,964 --> 01:18:26,264
But in America, there's a high degree of risk tolerance

973
01:18:26,264 --> 01:18:31,844
for people failing in governments at county and state level.

974
01:18:32,724 --> 01:18:35,424
And in Britain, there's a kind of no postcode lottery.

975
01:18:35,424 --> 01:18:41,204
and Thatcher, you can tell that, you know, I look at her in the round, nevertheless was one of those

976
01:18:41,204 --> 01:18:45,764
politicians who believed that there was a lot of corruption going on locally and the best thing to

977
01:18:45,764 --> 01:18:52,344
do was to centralize it. So with decentralization comes risk of variance in performance and

978
01:18:52,344 --> 01:18:58,944
potential local corruption. But without decentralization, you lose any engagement

979
01:18:58,944 --> 01:19:05,184
to the population at a level that they can effectively do anything. I often think that

980
01:19:05,184 --> 01:19:10,464
the Brexit vote was due to people mystically desiring more decentralization. It wasn't

981
01:19:11,184 --> 01:19:16,304
warm beer and spitfires they were voting for. I think they were voting for Mid-Victoriana. That

982
01:19:16,304 --> 01:19:22,784
was something along the lines of, hey, there are young women dying in childbirth. What are we going

983
01:19:22,784 --> 01:19:26,944
to do about it? Well, Tim, we're going to go set up a maternity hospital here in Manchester,

984
01:19:26,944 --> 01:19:29,424
because we would do it.

985
01:19:29,644 --> 01:19:30,984
We had that sort of motivation

986
01:19:30,984 --> 01:19:34,724
and freedom of maneuver to play that game.

987
01:19:34,824 --> 01:19:37,344
And I think people were looking for that

988
01:19:37,344 --> 01:19:38,324
a little bit in Britain.

989
01:19:38,964 --> 01:19:40,524
I think there are some other countries

990
01:19:40,524 --> 01:19:42,744
where they are looking for a bit more centralization.

991
01:19:42,744 --> 01:19:47,644
When you say that the risk in decentralization

992
01:19:47,644 --> 01:19:48,584
is corruption,

993
01:19:48,964 --> 01:19:51,304
I would argue that that's a better way

994
01:19:51,304 --> 01:19:52,584
to deal with corruption though

995
01:19:52,584 --> 01:19:58,664
because it's limited to a smaller geographic area or a smaller place.

996
01:19:59,384 --> 01:20:01,884
The same goes for, a lot of people say,

997
01:20:02,084 --> 01:20:06,564
well, if you have too much decentralized, you have a lot of warring factions.

998
01:20:07,564 --> 01:20:13,004
And I would say, well, that's better than two massive states warring against each other,

999
01:20:13,044 --> 01:20:14,004
which also happens.

1000
01:20:14,584 --> 01:20:17,484
You know, I'd rather see small battles between states

1001
01:20:17,484 --> 01:20:32,764
than the US front decide to fight China for example which is basically the alternative So I don know I would still say on paper at least because it hard to find contemporary examples of this

1002
01:20:32,764 --> 01:20:37,804
where you would find lots and lots of quite small competing places.

1003
01:20:39,504 --> 01:20:45,364
Well, I agree with you, I guess, even on the corruption point.

1004
01:20:45,784 --> 01:20:50,124
I was sort of more explaining that when you fragment, you're going to create a lot more opportunities.

1005
01:20:50,824 --> 01:20:55,964
And that leads to the notion of competition.

1006
01:20:55,964 --> 01:21:00,724
So a good place that runs, and I'll give Jim his due, and I lived there for a little bit,

1007
01:21:00,724 --> 01:21:02,224
is Switzerland.

1008
01:21:02,224 --> 01:21:05,844
The amount of decentralization in Switzerland, and that's the other thing that you encounter

1009
01:21:05,844 --> 01:21:07,144
in Britain when you talk about Switzerland.

1010
01:21:07,144 --> 01:21:09,324
Well, there are only 9 million people we can't learn from.

1011
01:21:09,324 --> 01:21:12,704
I'm like, well, actually, given the way that they're performing, I think we could.

1012
01:21:12,704 --> 01:21:13,824
Yes, well, it doesn't matter.

1013
01:21:13,824 --> 01:21:15,304
It's very inefficient.

1014
01:21:15,304 --> 01:21:18,564
Well, it's not inefficient because it engages people.

1015
01:21:18,564 --> 01:21:20,024
So you've got 26 cantons.

1016
01:21:20,224 --> 01:21:22,664
You've got the Swiss system.

1017
01:21:22,764 --> 01:21:25,844
You've got the referenda going at the Cantonal level and the national level.

1018
01:21:26,184 --> 01:21:28,624
Britons only kind of wake up when there's a national Swiss referendum.

1019
01:21:28,624 --> 01:21:31,804
But the local stuff is very, very, very vibrant.

1020
01:21:32,304 --> 01:21:33,564
But there's competition.

1021
01:21:33,864 --> 01:21:41,424
And everybody is ferociously passionate about their local area, the group that they come from, and all that.

1022
01:21:41,904 --> 01:21:43,904
Now, that competition, they've got in balance.

1023
01:21:44,024 --> 01:21:45,204
You can obviously have competitions.

1024
01:21:45,204 --> 01:21:46,224
It's out of control.

1025
01:21:46,224 --> 01:21:50,984
but competition is important but competition equally means you've got to know the rules of

1026
01:21:50,984 --> 01:21:56,384
the game and so where i would go is that most of the countries that have decentralized well

1027
01:21:56,384 --> 01:22:01,664
have thought about it very hard they tend to have a written constitution and it tends to be

1028
01:22:01,664 --> 01:22:07,864
something along the lines of this is national right this is state this is local and then we

1029
01:22:07,864 --> 01:22:15,764
carve the units up whereas uh you know here we've we've done it by the history of of wales scotland

1030
01:22:15,764 --> 01:22:20,324
Northern Ireland. So we are, you know, when you talk to me, well, we've already done devolution.

1031
01:22:20,484 --> 01:22:25,824
Yeah, but that was like 10% of the population. The other 90% haven't been decentralized.

1032
01:22:26,884 --> 01:22:30,904
So there's a lot of structural issues in setting up, but you need competition,

1033
01:22:30,904 --> 01:22:35,224
but to have competition be good, you've got to have very clear rules so that people are fighting

1034
01:22:35,224 --> 01:22:40,424
to evolve better systems as opposed to fighting each other entity to entity.

1035
01:22:40,424 --> 01:22:48,424
Also, of course, Switzerland has a really feel-good tax code, let's say.

1036
01:22:48,424 --> 01:22:54,504
Isn't it right that they can decide where their tax money goes and they can decide to

1037
01:22:54,504 --> 01:22:58,664
withhold it from certain parts of the economy, parts of the government?

1038
01:22:58,664 --> 01:22:59,464
Is that true?

1039
01:22:59,464 --> 01:23:00,584
No.

1040
01:23:00,584 --> 01:23:02,584
Oh, have I misheard that?

1041
01:23:02,584 --> 01:23:03,704
Yeah, yeah.

1042
01:23:03,704 --> 01:23:06,984
There's a tiny bit of maneuvering on a few areas, but nothing of...

1043
01:23:06,984 --> 01:23:10,344
I just know some people that really love that about

1044
01:23:10,344 --> 01:23:15,304
The key thing though is that your local canton taxes, see?

1045
01:23:15,304 --> 01:23:18,204
So the share taken by the federal government is actually quite low.

1046
01:23:18,204 --> 01:23:22,584
So if you make your local canton more efficient, you will pay a lower tax rate.

1047
01:23:22,584 --> 01:23:24,524
So that's good competition.

1048
01:23:24,524 --> 01:23:28,704
And this is a time when we've got places like the OECD saying, oh, there should be a unified

1049
01:23:28,704 --> 01:23:30,704
international tax.

1050
01:23:30,704 --> 01:23:39,644
I mean, my problem has always been that human beings are apes and we do really well when

1051
01:23:39,644 --> 01:23:45,164
we balance competition and cooperation. And as I said earlier, the competition needs to be focused

1052
01:23:45,164 --> 01:23:51,084
on improvement as opposed to taking each other down. That's it. And there are ways of structuring

1053
01:23:51,084 --> 01:23:59,404
that. But we also cooperate. And so we need to get both of those right. And in the case of Switzerland,

1054
01:24:01,324 --> 01:24:04,124
it's better than average for sure. And it turns up in the numbers.

1055
01:24:04,124 --> 01:24:10,364
um yeah and it's also probably true i would say at least in my experience i live in a very

1056
01:24:10,364 --> 01:24:18,044
close-knit community let's say in a sparsely populated part of the country but the ability

1057
01:24:18,044 --> 01:24:25,964
that by scaling down and decentralizing the governance structure means that you tend to

1058
01:24:25,964 --> 01:24:32,764
have face-to-face contact more with the people that you're actually governing with alongside or

1059
01:24:32,764 --> 01:24:37,184
who are governing you and that makes a massive difference a massive difference if you're

1060
01:24:37,184 --> 01:24:44,084
plonked in the washington and you're talking about someone in ohio you don't actually i don't think

1061
01:24:44,084 --> 01:24:50,004
it's even feasible to care to honestly care like i don't i don't think it's a is a bad thing i just

1062
01:24:50,004 --> 01:24:54,804
don't think you can care i don't think you really can but when it's your neighbor or when it's

1063
01:24:54,804 --> 01:24:58,924
someone that you can go and knock on their door actually and things like that it makes governance

1064
01:24:58,924 --> 01:25:04,304
works really well that way because people respond and we know this from the internet you can say all

1065
01:25:04,304 --> 01:25:09,664
kinds of stuff on the internet but you try saying that someone's face you don't you don't and once

1066
01:25:09,664 --> 01:25:17,404
again it's a function of scale like we've got this i don't know i i'm i'm very much i would love to see

1067
01:25:17,404 --> 01:25:24,644
thousands of competing switzerland's even smaller than switzerland are all over the place i think it

1068
01:25:24,644 --> 01:25:29,604
be phenomenal because we now live in this world where you can vote with your feet quite easily.

1069
01:25:29,604 --> 01:25:35,364
Moving from place to place is the easiest it's probably ever been in the history of the world,

1070
01:25:35,364 --> 01:25:41,844
I would imagine. Really, because moving from Herefordshire to London used to be a big deal,

1071
01:25:41,844 --> 01:25:43,924
but now people go to Dubai for the weekend.

1072
01:25:43,924 --> 01:25:59,504
Well I agree with you on the difficulty of having empathy with 350 million people or 1 3 billion people or whatever I mean it ludicrous to claim that Theoretically you can I think I can feel something for large

1073
01:25:59,504 --> 01:26:06,864
numbers of deaths, but that's about it. However, just to extend the competition point to one element,

1074
01:26:09,024 --> 01:26:15,904
government is arguably getting now across the OECD running just under 40% of GDP.

1075
01:26:15,904 --> 01:26:20,904
In Britain it's running at 44%.

1076
01:26:20,904 --> 01:26:26,124
Operationally, and again it depends on whether you count health workers in, local government

1077
01:26:26,124 --> 01:26:34,144
workers in, I would off the cuff say about 20% of people really work for government.

1078
01:26:34,144 --> 01:26:43,164
Because of that 40% a lot of it is transfers to handle some of the imbalances in the system.

1079
01:26:43,164 --> 01:26:45,464
Now, why am I going up this route?

1080
01:26:46,204 --> 01:26:51,664
We use competition to increase efficiency in all sorts of walks of life.

1081
01:26:52,284 --> 01:26:55,184
You wouldn't watch an Olympics where people weren't competing.

1082
01:26:55,384 --> 01:26:56,564
You wouldn't watch the football.

1083
01:26:57,004 --> 01:26:59,464
We know that competition gets the best out of people.

1084
01:26:59,564 --> 01:27:02,664
That's why we celebrate the Olympians, how supreme they are.

1085
01:27:02,664 --> 01:27:09,124
Why did they work 18 hours a day and take supplements and live in poverty for four years to win a gold medal?

1086
01:27:09,284 --> 01:27:11,664
You know, it's competition works.

1087
01:27:11,664 --> 01:27:16,224
So why doesn't competition apply to government?

1088
01:27:16,224 --> 01:27:23,804
And this is why I believe the tax thing is important, because it doesn't mean low taxes

1089
01:27:23,804 --> 01:27:25,644
are a good thing.

1090
01:27:25,644 --> 01:27:28,224
It means what I want to see is value for money.

1091
01:27:28,224 --> 01:27:33,224
So I can have a high tax regime with high quality infrastructure, a low tax regime with

1092
01:27:33,224 --> 01:27:34,224
low quality infrastructure.

1093
01:27:34,224 --> 01:27:35,904
Basically, I get what I pay for.

1094
01:27:35,904 --> 01:27:40,284
The other thing I definitely don't want is low quality infrastructure and a high tax

1095
01:27:40,284 --> 01:27:47,124
regime, you see. Now that's the kind of structural element to it. But equally, there are things,

1096
01:27:47,304 --> 01:27:52,064
I put this into a lecture years ago, why don't I have passport office A and passport office B?

1097
01:27:52,564 --> 01:27:56,604
Oh, but you don't understand we need standards. We can have standards. I can have a common ledger

1098
01:27:56,604 --> 01:28:02,684
that both passport offices share to say, Tim got a passport for me, so I'm not issuing one

1099
01:28:02,684 --> 01:28:08,044
extra. That's all doable. But competing on the operational service,

1100
01:28:08,044 --> 01:28:12,604
driver license authorities actually lots of areas of government if you think it should be done in

1101
01:28:12,604 --> 01:28:21,504
government then can it also be done in a competitive way um i think i have a much more crude opinion

1102
01:28:21,504 --> 01:28:30,504
on that and i and it's that um with the monopoly on violence the incentive is taken away to compete

1103
01:28:30,504 --> 01:28:33,724
and then it gets

1104
01:28:33,724 --> 01:28:35,904
it's compounding over time

1105
01:28:35,904 --> 01:28:37,544
as more unproductive people

1106
01:28:37,544 --> 01:28:40,424
are attracted to a position of power

1107
01:28:40,424 --> 01:28:43,244
and all the merchants end up leaving

1108
01:28:43,244 --> 01:28:44,764
all the actual entrepreneurs

1109
01:28:44,764 --> 01:28:46,624
actually the people that add value

1110
01:28:46,624 --> 01:28:47,144
end up leaving

1111
01:28:47,144 --> 01:28:48,004
and the whole thing collapses

1112
01:28:48,004 --> 01:28:50,124
and that's the life cycle of

1113
01:28:50,124 --> 01:28:51,624
I don't know

1114
01:28:51,624 --> 01:28:55,304
I think in a practical way though

1115
01:28:55,304 --> 01:28:58,284
there's a lot that government could do

1116
01:28:58,284 --> 01:29:04,004
And a lot of this was tried and continues to be tried, to be fair.

1117
01:29:04,004 --> 01:29:12,604
I remember we had in the 90s when we had a whole bunch of privatizations throughout the

1118
01:29:12,604 --> 01:29:14,004
80s and early 90s.

1119
01:29:14,004 --> 01:29:19,204
And in the 90s, I think it was 1994, there was a government white paper on the civil service,

1120
01:29:19,204 --> 01:29:24,884
which had a beautiful title called Continuity and Change, which is kind of, you want to

1121
01:29:24,884 --> 01:29:25,404
have both.

1122
01:29:25,404 --> 01:29:30,344
But there was also at that time something called prior options.

1123
01:29:31,144 --> 01:29:32,964
The cabinet office did do this.

1124
01:29:33,284 --> 01:29:35,904
And in fact, I did one on an agency.

1125
01:29:36,324 --> 01:29:42,004
For agencies, you were supposed to see, did this thing need to be done at all?

1126
01:29:42,564 --> 01:29:45,424
If it needed to be done, did it need to be done by government?

1127
01:29:45,604 --> 01:29:47,824
If it needed to be done, it needed to be done by government.

1128
01:29:48,324 --> 01:29:50,184
Were there ways of involving the private sector?

1129
01:29:50,184 --> 01:29:58,564
And the funny bit about this prior options, it was off of a single memo written to the cabinet office in 92 for memory.

1130
01:29:59,124 --> 01:30:01,264
But it was very, very cogent and coherent.

1131
01:30:01,464 --> 01:30:04,464
And I followed that with one agency and the MOD.

1132
01:30:05,144 --> 01:30:07,344
And it wasn't a bad framework.

1133
01:30:07,944 --> 01:30:12,444
But once it is going to be done in government, I would add that little, could it be done competitively?

1134
01:30:13,424 --> 01:30:19,004
Because when you say could it be done by the private sector, unless you're going to establish another monopoly, and that's often done as well.

1135
01:30:19,004 --> 01:30:23,564
We have a tendency to give out, in my opinion, contracts that are too big.

1136
01:30:24,304 --> 01:30:24,704
Why?

1137
01:30:24,824 --> 01:30:26,864
Because if we centralize a contract, we'll save money.

1138
01:30:27,224 --> 01:30:30,464
But we never seem to save the money and nobody ever goes back and looks at it.

1139
01:30:30,544 --> 01:30:36,004
And I've long been a proponent that when you're doing some outsourcing, if you've got the

1140
01:30:36,004 --> 01:30:40,964
scale to do it as two or perhaps even three, do it because they will compete with each

1141
01:30:40,964 --> 01:30:41,204
other.

1142
01:30:41,464 --> 01:30:44,264
And there's some good examples of large organizations.

1143
01:30:44,444 --> 01:30:48,464
I can't name, but one big retailer in Britain did that with escalators and lifts.

1144
01:30:48,464 --> 01:30:55,384
They said to three companies, well, they said to multiple companies, we're offering a tender, but for one third of the estate.

1145
01:30:55,544 --> 01:30:59,604
And then they got the three who'd won together and said, you have to cooperate.

1146
01:31:00,284 --> 01:31:11,404
If he's failing, one of the three, if A, B, and C are together and B is not doing so well, you, A, and C, need to help him and tell him how you're achieving better results than he is, or we'll replace him.

1147
01:31:11,484 --> 01:31:24,464
And are you sure you want us to replace him So it started a kind of lovely bit of competition you know competition and cooperation in that environment So there are creative ways of doing it And back to governance I know we got time yet

1148
01:31:24,624 --> 01:31:25,224
Last question.

1149
01:31:26,324 --> 01:31:28,964
Just to end on a high note, let's say.

1150
01:31:29,304 --> 01:31:32,584
Do you have a preferred level of governance?

1151
01:31:32,924 --> 01:31:33,564
Do you have a preferred?

1152
01:31:33,964 --> 01:31:41,504
We were talking about, I mean, you're just there, like, as in the free market, how much should the free market solve our problems?

1153
01:31:41,504 --> 01:31:49,864
and what would be the correct role of government? Someone who is in that position of power,

1154
01:31:49,864 --> 01:31:56,384
what did you see as your correct position? Were there times when you thought, actually,

1155
01:31:56,384 --> 01:32:01,744
that's not really a job for a government, that's the job for the free market? And what's

1156
01:32:01,744 --> 01:32:04,744
the job? What is the actual job for the government?

1157
01:32:04,744 --> 01:32:05,744
Hmm.

1158
01:32:05,744 --> 01:32:15,624
It's funny because I gave a lecture which ended on Goldilocks government, neither too

1159
01:32:15,624 --> 01:32:16,624
much nor too right.

1160
01:32:16,624 --> 01:32:17,624
You know, what's the meter?

1161
01:32:17,624 --> 01:32:21,684
So it's an excellent question and I addressed it 20 years ago and I'm trying to remember

1162
01:32:21,684 --> 01:32:22,684
what I said then.

1163
01:32:22,684 --> 01:32:23,684
No.

1164
01:32:23,684 --> 01:32:26,044
But no, it is a pretty good question.

1165
01:32:26,044 --> 01:32:35,964
I think the real question is, is there any operational service delivery role that government should do?

1166
01:32:36,044 --> 01:32:38,064
And I would push that to the extreme.

1167
01:32:39,064 --> 01:32:39,344
Okay.

1168
01:32:39,664 --> 01:32:48,544
But when I look at things that nonprofit organizations do, they typically do four things.

1169
01:32:49,504 --> 01:32:52,504
The first thing is they develop a sense of community.

1170
01:32:52,504 --> 01:32:58,104
the second thing that they do is they deliver direct services

1171
01:32:58,104 --> 01:33:06,644
the third thing that they do is that they try effectively to change systems and the last one

1172
01:33:06,644 --> 01:33:11,944
they try and do is expand frontiers so let me give you an example let's imagine we're a blind

1173
01:33:11,944 --> 01:33:19,104
charity like rnib and rnib does do this there's a sense of community we're both blind and i you

1174
01:33:19,104 --> 01:33:20,564
I could use a little bit of support here.

1175
01:33:21,004 --> 01:33:22,324
And they get people together.

1176
01:33:22,524 --> 01:33:23,984
They have chat lines and talks.

1177
01:33:24,164 --> 01:33:25,304
And, you know, there's a community.

1178
01:33:25,604 --> 01:33:28,744
I think government can do that.

1179
01:33:29,084 --> 01:33:32,284
But that's equally done by churches and faith communities

1180
01:33:32,284 --> 01:33:35,144
and livery companies and whatever associations you want.

1181
01:33:35,404 --> 01:33:37,584
And I believe government doesn't need to do that.

1182
01:33:38,044 --> 01:33:39,744
There is a sense of national community

1183
01:33:39,744 --> 01:33:40,984
when there's a national tragedy.

1184
01:33:41,124 --> 01:33:43,204
But I sometimes think government does too much.

1185
01:33:43,204 --> 01:33:46,184
So it now becomes a, the nation is doing everything,

1186
01:33:46,184 --> 01:33:49,564
when actually it could be much more decentralized and local.

1187
01:33:50,664 --> 01:33:53,904
The second area is, as I said, it was delivering services.

1188
01:33:54,744 --> 01:33:56,644
And the RNIB does that.

1189
01:33:56,764 --> 01:34:00,684
They will sell you watches for the blind and canes and all that.

1190
01:34:00,744 --> 01:34:02,944
They'll deliver meals to people who need them.

1191
01:34:03,004 --> 01:34:03,904
So there's that level.

1192
01:34:04,304 --> 01:34:05,984
Government does not need to do that.

1193
01:34:06,084 --> 01:34:09,204
That's exactly what the private sector is for.

1194
01:34:09,204 --> 01:34:14,344
And back to that old trope about the Russians asking who controls the bread deliveries in London

1195
01:34:14,344 --> 01:34:16,064
and the answer being nobody.

1196
01:34:16,364 --> 01:34:17,464
So you can do that.

1197
01:34:18,644 --> 01:34:21,404
Third level up is changing systems.

1198
01:34:21,844 --> 01:34:24,624
That I think could be as much as 50% government.

1199
01:34:24,764 --> 01:34:26,104
That's where the policies are in.

1200
01:34:26,744 --> 01:34:28,404
But that's government in the sense of government

1201
01:34:28,404 --> 01:34:31,384
plus the democratic system, plus think tanks,

1202
01:34:31,504 --> 01:34:32,224
plus people are thinking,

1203
01:34:32,344 --> 01:34:34,544
how would I change the systems back to systems theory

1204
01:34:34,544 --> 01:34:37,204
to make something a lot more efficient

1205
01:34:37,204 --> 01:34:38,984
and useful and interesting?

1206
01:34:40,484 --> 01:34:42,744
The last bit is expanding frontiers.

1207
01:34:42,744 --> 01:34:46,144
And here, this would typically be research.

1208
01:34:46,224 --> 01:34:51,564
And again, going back to RNIB, they do research on preventing blindness, ameliorating blindness, causes of blindness.

1209
01:34:51,704 --> 01:34:52,664
You know, it's all good stuff.

1210
01:34:55,004 --> 01:35:03,064
I personally, despite having been in research, believe that government has a role there in terms of funding education that's huge.

1211
01:35:03,064 --> 01:35:12,544
providing common expensive facilities like wind tunnels or hydro tanks or you know CERN

1212
01:35:12,544 --> 01:35:18,184
accelerators that kind of thing where that's actually very very helpful I don't believe

1213
01:35:18,184 --> 01:35:23,544
government is particularly good at blue sky research but it can definitely sustain it so

1214
01:35:23,544 --> 01:35:28,604
you know as I cut through those four areas I hope that gives you a flavor that to me it's a rich

1215
01:35:28,604 --> 01:35:35,684
question, but it requires a lot of self-discipline. Back to that cabinet office memo on prior options.

1216
01:35:35,844 --> 01:35:40,404
Does it need to be done here? Okay, maybe it does a little bit. If so, how much can be done by the

1217
01:35:40,404 --> 01:35:45,704
private sector? We need to push that envelope a lot. That does lead to some troubling areas

1218
01:35:45,704 --> 01:35:53,664
in many cases. Is the health sector a private or public question? Would I go for a wholly private

1219
01:35:53,664 --> 01:35:59,244
police force? That's an interesting question as well. So these are questions for us to have honest

1220
01:35:59,244 --> 01:36:04,584
debates on. And in a sense, it turns, you want an upbeat ending, you know, we are where we are,

1221
01:36:04,944 --> 01:36:10,144
isn't too bad. It's just, we are frustrating ourselves because quite rightly, we want to improve.

1222
01:36:11,364 --> 01:36:18,264
Michael, thank you very much indeed for spending a few, nearly an hour and a half.

1223
01:36:18,804 --> 01:36:23,584
Sorry to keep you so long. I'd love to carry on. I've still got a million and one questions,

1224
01:36:23,664 --> 01:36:24,764
but many, many thanks indeed.

1225
01:36:25,004 --> 01:36:25,804
Most welcome, Tim.

1226
01:36:25,844 --> 01:36:27,224
Really nice to chat with you guys.