Gabriela Ramos, OECD Chief of Staff and Sherpa to the G20, leads and sets strategic direction for the OECD Inclusive Growth Initiative and the New Approaches to Economic Challenges. She discusses public value with us.
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Highlights of the discussion:
- In the current times of environmental and social crises, it is crucial that all public and private actors, as well as international institutions, focus on how they can join forces for the common good. Public value in this context is how to ensure that our actions increase the welfare of everybody.
- The OECD has been documenting the sources of inequalities and has focused on how much the living standards of nearly half of the world population have remained stagnant for the last two decades. The latest OECD report, A Broken Elevator? How to Promote Social Mobility shows that it takes five generations for a kid at the bottom of the income distribution to move to the middle. It also shows that the majority of middle class people have seen their income remain completely flat, while the cost of living, the cost of health, the cost of education has been growing steadily. The facts are there and the call to action is very clear.
OECD initiative on inclusive growth:
- The sense of purpose we have to save the planet and the sense of purpose we have to help each other should bring public and private actors together. Having a common purpose is what we want to express when we call for this framework for well-being. The growth model we have been following up until now has probably got a little bit confused because we have developed metrics that were supposed to become a mean to an end and therefore GDP per capita, trade-openness, investment flows, trade exchanges became an end in themselves. The “grow first, distribute later” mantra is also part of the equation. We know now that this growth model is not delivering, it is not delivering for the people and it is not delivering for the planet. We had to become multidimensional, we need to avoid silos, we need to look at things that are important for people (health, education, social connection).
- We also need to look whether the benefits of growth have been fairly distributed, which is not the case because if you have the top 10% of the income distribution detaining 40% of wealth, the top 5% detaining 20%, the top 1% detaining 10% and the 40% at the bottom of the income distribution detaining 3%… We cannot continue this path. We, at the OECD changed the metrics. As our statisticians say, we should “stop treasuring what we measure and start measuring what we treasure”.
- We are bound to an economic model that focuses on efficiency and productivity. This is fine. But what about equity? What about looking at what this policy will bring to each individual income group? Progress is not only GDP, it is also well-being. New Zealand’s Prime Minister Jacinda Ardern has said : “I am going to build a budget that will tell me not only where I’m going to spend the money, but also how the benefits are going to be distributed”. It is more complex in terms of measuring the impact, but we have the tools. We know where we want to go, we have a roadmap, we have the tools. The problem is that the political economy of reform is very difficult and when you have such a concentration of wealth and power at the top of the income distribution, they also have more access to the policy making. Not all membres of the G20 are on the same page, but all of them are equally worried. So I am hoping that they will be open to listen to the issues, to understand that this is a question of life and death.
- There are two issues that we, at the OECD, are particularly proud of: 1.Through the exchange of tax information, we have already collected 92 billion dollars (?) in tax revenues. If we use part of that to achieve a more balanced and more human growth model, that will be great. 2.Digital transformation : innovation remains concentrated in a very small number of countries and sectors. We have developed human-centric artificial intelligence principles that were adopted by the OECD in May 2019. What we say is : 1) Men should control technology, not the other way round; 2) Whoever creates artificial intelligence has to be accountable, transparent and responsive.
Role of big corporations?
- If we’re going to change the growth narrative, to make it people-centred, the way we measure success in the business world will have to change too. We, at the OECD, see more and more companies willing to go beyond their very narrow mandate to maximise profits and shareholder value and look at all stakeholders, to have impact in communities where they operate. In partnership with Danone and Business for Social Responsibility (BSR) we have launched the Business for Inclusive Growth Platform.
- On top of responsible business conduct, on top of philanthropy (the “do no harm” approach), we are moving toward a world, in which all these activities become the core of business, not a parallel track. We can now talk to business people, some because they are enlightened, others because they have no other option.
Follow Gabriela on Twitter: @gabramosp