George Osborne: new ideas and new questions

April 8, 2009 by
Filed under: Credit crunch, Politics, The RSA 

Just come away from the Great Room after responding to a speech by George Osborne - you can see a short interview with him below. The Shadow Chancellor concentrated mainly on the case for new and better forms of oversight and intervention in financial markets.

My response covered three points:

I welcomed George’s interest in behavioural economics (the RSA is, after all, the leading public platform for thinkers in this area). But I suggested that once we recognise that individual short term choices don’t always add up to the best aggregate outcome the discussion about ‘nudging’ takes us into even bigger debates about the relationship between affluence, economic inequality and well-being. Although David Cameron opened up the well-being debate a few years ago, this is still challenging   territory for the Conservatives.

Second, I asked about how the Conservatives are now thinking about the role of the state. The state can be big or strong in three different ways. It can employ lots of people and provide lots of services, it can collect and redistribute a lot of money, or it can pass a lot of laws that intervene in people’s lives. Take one example: we might address the growing crisis of social care by the state expanding public provision of care, by the state taking more tax giving this to people with care needs who are free to spend how they will, or we could pass a law forcing everyone to look after their grannies. Ideological anti-statists will tend to oppose each of these forms of state power.

The Tories advocate nudge-type policies which seek to shape behaviour.  George suggested in his speech today that the Bank of England might have a general power of intervention over and above any regulation, or that the Government might break up the big banks.  It seems that the Conservatives are recognising that Government needs to be more interventionist while presumably continuing to be sceptical about the state, for example, as a mass provider. I suggested it would be interesting to hear about how today’s Conservatives conceptualise the state we need for the world we are moving into.

Third, echoing my blog yesterday, I asked how economic policy might contribute to building civic capacity; how can we better fuse enterprise and the pursuit of profit with social good and civic renewal?

George gave positive, if rather broad brush, answers to each of these questions so maybe we can get him back to the RSA again soon to elaborate further.

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5 Comments on George Osborne: new ideas and new questions

  1. Simon W on Wed, 8th Apr 2009 11:56 am

    2. I am left wondering where the ‘enabling state’ fits with your three definitions of big or strong states? Surely this fits better with the argument for increased civic capacity?

  2. matthewtaylor on Wed, 8th Apr 2009 12:48 pm

    3. Interesting question, thanks Simon.

    To some enabling means active to others the reverse. My own position may seem perverse; I believe that state can be enabling in that it can help people take more control of their lives and it can foster community spirit but that (a) the public sector is still pretty bad at doing this in practice and (b) supporters of a strong state systematically understate the way well-meaning public policy can undermine self reliance. So I believe in the potential but despair at much of the practice.

  3. Reporters on Wed, 8th Apr 2009 1:48 pm

    4. Nudge economics still relevant in recession, says George Osborne…

    Banking reform has to be based on acceptance that markets are irrational, says shadow chancellor At the…

  4. Simon Watson on Wed, 8th Apr 2009 2:55 pm

    5. I agree that we are poor at designing policy to enable civic capcity, and at the same time we are poor at understanding the negative externalities of public policy design.

    Perhaps ‘positive conditionality’ will be a hallmark of the future state – one that replaces the benefit safety-net with an ebabling trampoline, i.e. state-support is structured to to nudge people to undertake positive activities for civic and indivual benefit.

  5. Matthew Kalman on Wed, 8th Apr 2009 3:06 pm

    6. The posting about George Osborne’s speech – on the RSA’s Social Brain blog – arguably illustrates the potential danger of talking from the ‘Concerned Ethical’ mindset so beloved of campaigners and politicos (like us!), but which really grates with some of the other value mindsets in society.

    I talk about this “‘Too Worthy’ Trap” and other such issues in 2 online articles on ‘’Ethical living – Smart Living – Safe Living’: how to target environmental communications’ here: http://www.integralstrategies.org/envirocommunication.html
    And ‘Climate action: ‘West of England’ project fosters behaviour change’ here: http://www.integralstrategies.org/climatechange.html

    I hate to admit not having read ‘Nudge’ yet – so I’m just not sure how the well-established behaviour change strategies that use psychographic segmentation differ from behavioural economics-inspired interventions that the RSA is helping to popularise.

    I was prompted to write this by comments from Matt Grist like this:
    “It should also be about learning to live in a less materialistic, more socially responsible, environmentally sustainable society. All the evidence suggests such a society is not only desirable for ethical and practical reasons, but that it would also make us happier”.

    Cheers,

    Matthew Kalman

    PS Obviously, I personally lap up anything written from the (inner-directed) ‘Concerned Ethical’ mindset! But as Spiral Dyamics’ Don Beck says: ‘If what you are about to say or do looks and sounds good to you, don’t do it! (Unless, of course, your listeners or readers have the same value systems as you)’.

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