Last week while at SOMESSO I had the opportunity to meet with Umair Haque, one of the world’s most radical economists. I was interested in understanding what his ‘economics of ideals’ means in the context of the changing world in which we live. To give you a flavour of his thinking, check this post and consider these statements:
Business needs an institutional infrastructure — relatively voluntary exchange, some level of ownership, some measure of expected honesty, some kind of market efficiency, and investment with a horizon greater than nanoseconds.
None of these exist anymore. And they’re not, barring a miracle, coming back.
So what we are left with are the institutions not of economic democracy, capitalism, or socialism — but of feudalism. In feudal systems, “business” doesn’t exist. Patronage does.
In this 6 min 31 sec video, he describes business as ‘incremental’ where we keep adding ‘features’ but which may have unintended consequences. An example might be cars that clog up the atmosphere. He then goes on to describe a different way of thinking, one based on ideals where you are striving for a goal in all you do. This changes the dynamics of business to one where your concern is on outcomes and not incomes.
Umair then goes on to state that we can never regulate our way to better outcomes. Instead, he argues that bottom up asymmetrical experiences like Google and Apple represent a different way of thinking about how business is organized. In a different discussion, Umair talked about how Wal-Mart is refactoring its business to reflect the needs of a sustainable business that can trade well into the future without blowing up world resources. In this sense, he is arguing for self-regulation of a very different kind to that which we have seen in the past. Whether this will happen is moot but the conditions are right for change of this kind.
Asked to give his top three predictions for the next 12 months, he said:
- There will be a lot more turbulence to come.
- The introduction of new forms of institution, especially in the US, that reflect the notion of ideals. The alternative is a significant backlash from those who elected Obama on the promise of change.
- A need to re-evaluate what sustainability means beyond the obvious green issues to include new forms of consumption.
I’ve now met Umair twice and each time he challenges the way I think about regulation in the context of the new economics he is proposing. If he is correct then I suspect we will be dealing with a very different, more open regulatory landscape. However, it is already evident that there is a wait and see attitude to how for instance the banking crisis will work itself out.
I find it worrying that governments seem to believe the banking system cannot be allowed to fail yet anecdotally that’s exactly what’s happening, at least a the large end where most attention is being paid. Yesterday I took a call from a person working in the brokerage business who said ‘It [trading] is going away.’ Maybe, but what will replace?
Four months into Obama’s administration and we still seem to be tinkering with regulation. Today I hear there is fresh pressure on PCAOB with an attack on Sarbanes-Oxley as unconstitutional. In the UK there seems to be little attempt at reform but plenty of action around investigating the actions of others. This is the kind of turbulence that obscures the need for action now.
As professionals, we should have a voice in this debate. We cannot continue to operate as reactive nodes in discussions of this kind. It is all very well to say that we must live with the regulation that is handed to us but surely now is a time to be counted upon to express some opinion that moves the debate about how we are regulated and what it means for our industry.
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