Rory Sutherland - Why We Need Monopolies in Free-Market Capitalism

now I'm going to be completely honest what I'm talking about here is not my idea but I've suddenly decided that as a marketer one of the most valuable things you can do and this borrows I think a little bit on taz's work is give storytelling appeal to other people's good ideas my wife is currently at Communion at the Cathedral she's a vicar I'm here taking care of the Mammon she's taking care of the god and occasionally she gives me a hard time for working in advertising and marketing and I have the perfect repost which is well you can criticize marketing all you like but no one would have heard of Jesus if it hadn't been for Paul um and many many good ideas don't just need someone to have them they need someone to tell the story but Darwin needed Huxley for example and I think one of the most valuable things we can do is actually take great ideas which we think have been unfairly neglected the kind of also Rands the things that never quite made it and just try and make them more famous that's also true of Technology by the way I think one of the best things you could do with technology is become a technology archaeologist which is to go and look at things which narrowly missed it often for quite arbitrary reasons you won't realize this but there was a period at the beginning of the last century where the electric car almost became the standard mode of transportation there was a three-way kind of runoff between steam electricity and the internal combustion engine the internal combustion engine by the way is by far the most complicated of those three modes of propulsion part of the reason electric cast may have failed actually is that at the time they were seen as female because they were quiet and very very clean and didn't require a beefy person to wind a starting handle they were actually seen as girly cars which in the early part of the 20th century wasn't a great way to Market cars and indeed Henry Ford marketed cars by racing them very heavily so that business of actually taking ideas that nearly made it and thinking do they deserve a second chance it strikes me as a perfectly worthwhile thing to do so as I said what I'm talking about is not my idea it's the idea of the guy principally called Nicholas Gruen who's my kind of Economics Bengali he's an Australian Economist wonderful guy by the way if you want intellectual stimulation go and look to Australia and the reason for that I think is quite simple that by being isolated Australian thinkers kind of evolve in isolation a bit like Australian flora and fauna and as a result you kind of get you know kangaroo mines you know the weirder kind of ideas often arise from isolated places you know if you ever get a chance to go and see an Icelandic Economist go along and see what they have to say so this is very much gruen's idea with a little bit of help from Henry Tudor and let me explain well let me explain actually first with a little bit of a an example okay some of you may be interested in driverless cars I'm interested in driverless cars I think there are very big problems to do with driverless cars not least to the driverless car with a bomb in it is kind of indistinguishable from a cruise missile I think there are huge issues of uh for example uh what will happen if driverless cars always stop the positions which is that pedestrians will dick them around okay and so driving through a city center uh in a driverless car will be an unbelievably painful experience because people will just walk blithely straight in front of you I think there are a lot of problems but I think it's interesting but I think there's another interesting aspect of driverless cars which is for some weird reason the software guys in Silicon Valley have all assumed that this is a problem we have to solve on our own we have to produce a standalone car which without any tinkering with road infrastructure the way traffic lights work the way roundabouts are designed the way light display to other Road users that the car is actually drivable us so they can give it a bit of extra extra room and space on the road now it'd be much much easier surely to solve the driverless car problem if governments could agree to say well we'll put metal strips down certain motorways which the driverless car can follow or we will change the design of traffic lights so that it is more obvious to a machine as distinct from a human being when it's red green or Amber you know you know we can have a new thing that needs to be on driverless cars to other motorists understand that it's actually being driven autonomously but nobody's doing that no one's talking to government at all and the whole option is this is a pure private sector problem which one brand one company has to solve on its own with no cooperation from the people who actually manage the roads and this seems to be emblematic to me of a kind of dichotomy which seems to have come partly from neo-liberal economics which is that government has no part play um in business whatsoever it mustn't pick winners it mustn't get involved it mustn't participate in markets it mustn't seek to influence markets its only job is to sort of get out of the way now in some respects that's probably not a bad principle but it's a false dichotomy okay I think there are occasions when government can actually play an active and encouraging role in getting businesses started and off the ground much much faster by actually to some extent intervening in the marketplace and this precisely as Nicholas gruen's idea he's you know he's not a you know some sort of weird revolutionary communist or anything of this kind but what he effectively says he calls it government as impresario and his idea is that there's the potential for public private Partnerships in building the public goods of the information age and as he points out the West economic takeoff since the 17th century yes there was an awful lot of individual genius quite a lot of it uh around these parts of Britain by the way you didn't know that actually champagne is effectively a Geordie drink didn't you long before it was invented in France it was improvements in northeastern glass making which made it possible to ferment wine in the bottle that was demonstrated to the Royal Society long before Dom Perignon claimed to have got in on the ACT see um now a huge amount of it by the way in exactly this part of the country and his point is that central banks the legal apparatus of joint stock companies public underwriting of new knowledges and initiatives like the British Albuquerque's longitude prize the government can play an active and positive role it isn't necessarily a distortion it isn't necessarily an obstacle and I think we're suffering a little bit with our attitude to government of what you might call the J.R Hartley problem I suddenly realized that half you have no idea who I'm talking about and the other half are going oh yes of course okay J.R Hartley was a famous advertising person what we often forget about the wonderful Jr hardly campaign he was using Yellow Pages to find a copy of his own book that was the wonderful little conceit in the ad and it was adorable the most popular ad of the decade but the point of the ad it ended with good old Yellow Pages we don't just help with the nasty things in life like a block drain and the point was that people use you don't even know what the Yellow Pages are to you oh okay but people use directories at the time before there was Google and the internet people use directories basically if happened but they never thought of using it for positive things there was by the way in the Yellow Pages which was a long yellow director of people there was always a single joke by the way which is if you looked up boring it said boring see civil engineers but the marketing director who later became the boss of Yellow Pages which was a lucrative and Powerful position at the time made this point that everybody is looking to Yellow Pages if someone breaks your window or if your boiler packs up but no one actually expanded usage into wouldn't it be funny and I think that government is suffering from a kind of Yellow Pages problem okay in that it's become just for the nasty things in life like a block drain or income inequality and people have completely forgotten the fact that government when well directed can just make life a lot better and nicer quite easily if it does it intelligently and if it knows when to get out of the way and when to intervene and just as proof of this I mentioned Henry Tudor a great Welsh Monarch people dispute how Welsh the tutors really were but let's face it look at him right top of it a rugby shirt okay you know which one he'd be wearing okay and he founded the Royal Mail in 1516. the Royal Mail is actually one of the oldest businesses in Europe now the Royal Mail when it was founded it was partly controlled by government because they were obsessed with Espionage and they were absolutely terrified of people's letters being read by other people it was kind of like even more expensive than you know a a kind of Premier Courier firm it was basically for rich people and for government people to actually share information now there's a problem with the mail service when only rich people can use it which is if you think about it there's no point in writing to anybody poorer than you because they can't afford to reply okay so if you you know if you're a wealthy Aristocrat and you wonder are you you wonder if someone's free to sort out the drainage in the lower field you can send them a letter saying are you free on Thursday and then you might go well I'm free on Thursday but unfortunately I can't afford to write back many for a long long time you actually paid for letters on receipt not on sending them so you had to make a bet as to whether the letter was news from your um son who was fighting in France or an invitation to join a Reader's Digest prize draw and you couldn't tell until you'd pay the postman to receive the letter quite a lot of innovation by the way is around pricing I looked at the hair very interesting YouTube history of Netflix and Netflix for the young people among you was actually a DVD rental service before it was a streaming service and they uh in fact Blockbuster turned down the opportunity to buy Netflix for only 50 million dollars which was probably a bit of a mistake looking back but interestingly that was at a time when Netflix hadn't cracked this you pay a monthly subscription you can keep three DVDs at any time and every time you send a DVD back you get a new one but you don't pay late fees that was the idea that suddenly kicked Netflix from being an also ran to being the mainstream provider of DVD rental and pricing Innovation the innovation of how you charge for things is generally an under explored field I would argue but anyway as I said Royal Mail was a service for the rich and there's a limited value to a service which only allows you to write to and receive replies from people who are just as rich as you are or people also employed in government and then a man's man said two people spotted What If instead of making Royal Mail about few and expensive we made it many and cheap and that man was in part Roland Hill now it's worth noting that in London in for example the 17th century there were Penny postal services but they only allowed you to send letters elsewhere in London and generally you paid to send letters in proportion to the distance they were traveling so if you wanted to send a letter to Newcastle you want to send a letter to Edinburgh it would cost you a hell of a lot more now what do you think about it that seems kind of rational doesn't it you go well yeah obviously you know the further the letter goes the more I should pay for it actually not really and the person who had to do the maths that explained how a single universal one penny postal system with next day delivery could work across the UK wasn't just some random mathematician they scraped off the street it was actually Charles Babbage he was I think at the time he may not have been yet the occasion professor of mathematics at Cambridge he's also known of course as the kind of inventor of the Difference Engine so in many cases is considered the forefather of the computer because bloody it's thorough going genius in other ways not to say that Roland Hill wasn't but he made the point that in a network which is what the post is actually because of the consolidation of letters between say London and Newcastle and Edinburgh the actual distance traveled by a letter in the company of 20 000 other letters adds absolutely trivially to the cost of carriage and he said the reason you can have a single universal one penny rate which is a brilliant innovation in pricing by the way because it doesn't just make things cheaper it also makes things really bloody simple how much does it cost to write to Barnstable one penny okay he realized that nearly all the costs are actually in the first mile the sorting and the distribution and the distance traveled is more or less irrelevant to the cost of carriage and it took a genius mathematician to understand what was really Network economics the you know a very very early example of network economics and by the way they extended it in I think in 1905 because I tried to find out how much ramanujan had to pay to write to JH Hardy in Cambridge if those of you who are mathematics nerds will know the story I won't go into detail because I thought there was a clerk working in a shipping office in India in Madras I think okay Chennai you're right occasionally say Keen here you've got to be careful these days okay and I thought wouldn't that be incredibly expensive for him to write to Cambridge it turned out there was a thing called the Imperial Penny post for a time and it cost you one p anywhere in the British Empire to send a letter um uh except for Australia and New Zealand where you had to pay extra okay and that was based on this fundamental Insight of Babbage which is that with consolidation distance is irrelevant to the cost of carriage which is kind of counter-intuitive and really interesting now an important fact I think or two important facts about the penny post one it didn't make money at first nor would you expect it to okay and there are several reasons why one of which is that two big forces that drive human behavior are habit and social copying and if you're trying to get people to adopt a behavior which they've never done before which nobody else does it's very very difficult there's a lot of friction you know if you open a brand new bridge what's weird is the volume of traffic on the bridge on day one is much much lower than it is on day 700 because people have to get their heads around anything new but also it's worth noting that at the time a lot of people simply didn't know enough people far enough away to write to okay you know people just weren't in the habit of going that's weird I could actually write to someone 300 miles away it took them time to get their heads around this idea the second thing is the the idea when you think about it only works at a certain scale right in other words this idea that distance becomes irrelevant uh to the cost of carriage only works assuming you have enough letters to actually bulk collect letters in London and ship them up the great North Road in enough quantity so that there are I don't know how many I have no clue fifteen thousand twenty thousand on a single delivery that kind of requires in the early days of of the idea it kind of requires it to be a monopoly okay and that's a problem because Network goods are Goods which only deliver their benefits or their economic feasibility at some scale which means they tend to be loss making at first this was loss making at first for the first few years it basically lost money they had faith in the idea they had faith in the mathematics eventually it paid off okay but the Empire I think the Empire Penny post never made money and I think they eventually abandoned it it was probably done for symbolic reasons rather than anything else but what that means that means there is when you think about it A peculiar kind of good which is a kind of network good where the value of the good isn't just dependent on a transaction between you and the provider the other users of the service the people you can both write to and the people who can write to you make the service more valuable so the more people who use the service the more valuable it becomes now the reason that's odd and this is the point that Nicholas Gruen makes and by the way there's always a chance he'll contact me and go Rory you're talking but I think I've got Nicholas Gruen right for this okay this is how economists typically divide good do you have private Goods that's something you buy yourself for your own consumption you consume it that means someone else can't have it okay now that means they are excludable by which I mean you can charge for them effectively can of Coke okay and they're rivalrous which is if I consume a can of Coke somebody else can't okay a lot of goods and most economic thinking probably sits around the realm of private Goods food clothing cars parking spaces this is from Wikipedia okay then you have non-excludable things which are kind of rivalrous but it's very difficult to actually charge them overfishing would be an example of something where there is a limited number of fish but it's very difficult to stop people overfishing okay because you don't pay to retrieve a fish from the sea air the atmosphere fish stocked Timber coal free public transport is an example of that point okay you know um I suppose you might say a fireworks display would be a good example would that be non-rivalists interesting question now fireworks display that's crowded okay you can't really stop people from watching fireworks because they're up in the sky okay and then you have these non-rivalers things Club Goods Cinemas private Parks satellite television which are excludable but non-rivalrous in their consumption in that my enjoyment of Sky doesn't prevent you watching Sky okay they're effectively there okay and in the same way you have non-excludable that's free to Air not excludable non-rivalous and those things are free to wear television rear classic case National Defense we all benefit from it um but it's very difficult other than through taxation to actually fund it now in a way Network Goods have a few weird properties one of which is they don't work at first they don't work unless they have a certain amount of scale Douglas McWilliams who is the chief Economist of IBM made this point about Network Goods that one of the reasons why progress may be stalling is that a lot of the progress is in network goods and it takes time for them to reach a critical mass you know there are interdependencies going on which means that in the there's no point no size you don't know what a fax machine is do you I suddenly realize but there's no point in owning the world's only fax machine right because there's nobody you can fax to and then there's a strange thing that every time someone buys a fax machine your own fax machine actually becomes more valuable because now there's somebody else you can send a fax to okay now in a way and I thought this was my original idea Network goods are actually add an extra row to this particular chart because in a way they're anti-rivalrous the more people who use them the better they are and you want a lot of people to use them You could argue that Google's an interesting case because it's potentially excludable they could just charge per search but they realized that Google is ultimately more valuable if everybody can use it because in part every single person's search is contributing to the quality of Google search results so you could argue that it's a classic case of a network good and I thought I'd invented this phrase being anti-rivalrous which is the opposite of rivalous but it turned out it wasn't me it was Stephen Weber who's a tech guy it's to something you said the opposite of a rival good the more people who share it the better it gets okay and I would argue that government has a role in promoting non-rival risk goods and getting them to critical mass perhaps by creating an artificial Monopoly in the beginning because if you if you think about it I mentioned the fact that the penny post didn't make money at the beginning didn't make money for the first four years or five years until volumes reached a level where it became self-supporting if you'd opened up the penny poster competition and there were six other people all providing their own postal networks of their own I would argue it might have taken 25 years for any one of those to become profitable okay because each of them will be operating at a volume which would have been less than the uh feasible critical mass of volume of use for much much longer because there would have been Cutthroat competition between all parties and you know I wouldn't argue and I'm 56 years old that's glasgamy festival and to me it's a vision of pure hell okay uh festivals I said recently they're a bit like socialism okay it's very difficult to get there then you have two or three days of peace love and general altruism and finally the toilet stopped working you know it's a little bit like that but to me okay that's a vision of pure hell I'd hate it because I'm kind of claustrophobic I hate crowds but I understand that among young people the fact that there are lots of other people there is part of the benefit if you think about it if you had hundreds of different festivals all on the same week all equally attended okay it wouldn't be better it'll be kind of right and there are cases where you either want either things are natural monopolies which to some extent they are the winner takes all effects where they become a natural monopoly or they need to be monopolies or have some sort of Monopoly whether it's a brand Monopoly or simple according Monopoly in order to reach the scale at which they become fabulous okay lots of little festivals added together aren't as good as one big one that's why it's kind of anti-rivalrous okay I mentioned the fax machine it's kind of anti-rivalous you know now the advantage of the facts machine you didn't need government to get involved there because there was already a telecoms network which had been forced by government to become open to all and interoperable so the fax machine simply sat on top of an interoperable existing Network okay if fax machines had required completely different wires to connect them and you'd had six of those people operating different and incompatible facts networks the facts would never have been a success now this is what I'm saying that there may be a kind of intervening stage of what you might call the network base where government can actually provide absolutely common standards but even common infrastructure and then allow private now I don't know how many billions of economic value were added to UK GDP by the existence of a working Penny post system but lots and lots of businesses use the post even though the post was a monopoly and was effectively created by government then as I said there's always a problem because um if you look at more Australian stimulus the Ehrenberg bass Institute as I said habit and social copying are really important in the adoption of any new Behavior new Behavior tends to proceed on a sigmoid curve it's slow at first you can look at anything acceptance of same-sex marriage for example uh attitudes to drink driving generally there's a small group of people then there's a period where people collectively change their minds very very fast and then you reach kind of asymptote at the top that's a common pattern you would have seen it by the way in the adoption of mobile phones for instance that's that's called the bastard Fusion curve of new ideas it tends to be sigmoid the other point of the Aaron Burke bass Institute is there tends to be in most businesses a kind of Winner Takes all effect anyway um but it strikes me that we've occasionally gotten inverted commas lucky because someone had a monopoly now let me explain this now this is where the Behavioral Science comes in okay for a very early period I think in the early days of the 20th century something like 50 of the cars sold in the United States were Ford Model T's you had one player which was so supremely Superior to anything else in terms of price and utility that effectively the decision was not do I want to buy a car do I want to buy a Ford Model T okay I would argue that musk with his billions did the same thing he made for about six years the decision was really easy if you wanted to buy an electric car you're going to buy Tesla and that makes it much much easier for people to change their mind when they've only got to make one decision do I want this or down tired because if I do want the I know what kind of it is I'm gonna buy right do I want to send a letter to someone 500 miles away because if I do I go to the post office and I buy a bloody stamp right sometimes competition in the early days of a new technology can not only destroy the network effects the anti-rivalist nature by preventing any of the competing players from reaching the critical mass at which point the service generally starts to deliver its benefits okay but it can also just confuse the hell out of people now I'll give you an example of this where I think sometimes easy choices make a huge difference to what people do and this is my defense of why the British are very bad at learning languages actually we're not bad at languages we're very good at understanding non-english speakers speaking in a variety of completely different accents okay so we're quite good at understanding people from overseas as long as they speak English now you know that's not a total use of the skill in France if you get the gender wrong they claim not to understand you at all okay but nonetheless think about it like this okay if you're Dutch you've got two questions to ask okay they're both pretty easy do I need to learn a foreign language well the answer is pretty much if you're planning to leave the Netherlands and to go to places other than the small parts of South Africa and maybe some weird places in Indonesia do I need to learn a language other than Dutch answer yes second question which language do I learn first easy answer English not because it's the most spoken language but it's the most widely spoken language geographically okay learning English will help you if you go to South America even if it isn't an English-speaking part of the world okay it'll help you if you go to Asia it'll help you get a Scandinavia okay it'll help you talk to I mean the Scandinavians learn English not speak to us they learn to speak to each other right if a Swede meets a Norwegian they'll probably speak in English and then start abusing each other okay now now think about it if you're a bridge right a bit more difficult isn't it right do I need to learn foreign language well not really sure which one should I learn don't know right I mean fair right secondly in order for your learning Dutch to pay off it's not nearly necessary for you to learn a few words of Dutch you've got to be better at speaking Ducks than the average Dutch person is speaking English which is going to take you five years work okay before it starts to pay off so Choice architecture which is what this is called is really important and I think sometimes too early competition messes up Choice architecture I'd love to buy an electric scooter I will possibly an electric bicycle the problem is there isn't a Tesla of electric scooters and so I don't know which one to buy so I end up not buying any of them okay I think there is a problem that the extent to which you can now imitate other products so rapidly using Chinese manufacturing actually means that the period of where you enjoyed a kind of schumpeterian rent because when you invented something it took five years for anybody to copy you has now been reduced to about two months which actually has negative effects on Innovation Because by the time I become aware of an innovation there are 47 variants you remember those duck board hoverboard things that were the big hit of Christmas right they weren't clearly branded nobody knew which one to buy some of them had weird lights and Bluetooth speakers attached and then one of them caught fire under a Christmas tree while charging and set the house on fire because there was no clear branding to help your decision nobody knew which product was adversely affected so they erected by boycotting the category altogether it's where Brands can play an absolutely essential part in uh in both encouraging innovation and preventing early stage problems from polluting the whole category they're kind of watertight compartments okay within consumer choice but that worries me because sometimes you need simple choices and I think gruen's right I think there are areas where the government what the government could do is license one player to a monopoly for five or six years it's kind of how the railways got built do you know by the way that the Elder Stevenson bit of trivia here the Elder Stevenson the Great ravenry Locomotive Pioneer had such a strong Geordie accent that when he went down to London he was accompanied by an interpreter I thought that's quite cool right a great boiler on the bastard what Mr Stevenson is saying is okay I think that's unbelievably cool by the way right I think there are loads of areas where we could create common pool network resources with government sanction sanctioned as a monopoly with profits going towards the government okay and with some accountability to the electorate and to the customer not only to the corporate provider where we could do things that haven't been done but need to be done I'll give you one very clear and banal example we need a network we need a locker Network in the UK small densely populated country with about 20 000 lockers you could have a locker for collecting your stuff groceries deliveries whatever okay this could be open so local shops could use it you could bring up your local shop and say actually I need you know some milk or some whatever I need a copy of this book can you just pop it in in Malacca okay by six o'clock this evening it could actually facilitate local Commerce as well as remote Commerce okay now just to explain why this is um the biggest source of Road congestion that in terms of what is growing as a form of traffic is delivery vehicles the cost of delivering to twenty thousand locations remember Babbage okay the cost of delivering to 20 or 30 000 lockers is infinitesimally small compared to the cost of delivering to 20 million households there are also advantages with lockers by the way which is you can deliver really early in the morning or really late at night if you know if it suits you you can't deliver to residential areas at one o'clock in the morning because either you go nuts or your neighbors go nuts right having a van turn up at that kind of time I think what the government could do is license one player to enjoy a monopoly for five to ten years okay and say okay you can make as much money out of that Monopoly as you can and we're licensing you to become this Sole Provider so that it has the greatest chance both in behavioral terms and in network economics terms of becoming actually viable and popular and commonly used one thing for people to have to understand one thing for them to have to learn I think there has to be an opportunity this has grown Nicholas Gruen of in pooling DNA health information in an anonymized form that has to be done centrally okay because the value of it depends on there being only one the interoperability and the standardization of the format in which the data is presented has to be made uniform I also think there's a chance of um marketing doing this I think the government could collect from consumers voluntarily information on what they buy their purchasing habits okay and their intentions and rather than making marketing this absurd game of chess where people are using data from a variety of sources from Tick Tock to Google to try and second guess what people want why don't you just ask them to tell you put it in a central form then they pay with and there are some government restrictions on the use they pay to use that data to Market more efficiently why not just centralize that instead of effectively paying loads of search engine optimization people to play a game of chess with Google which is what's really happening at the moment you know you're playing chess against someone else's algorithm it's non-efficient use of time why don't you just have reasons now in Finland to some extent apparently it kind of works like that that the government is the main provider of data you can go to the government and say I want people over 40 years old who have a house of over you know 200 square meters who Heat their home with Coke and they by which I mean you know the fuel right okay and uh they go right you are here it is now they make money the government makes money it reduces the tax burden and it's all done centralized and it's all efficient now that business of Licensing and Monopoly okay weirdly it seems to be something that monarchies did to raise money all the time when you had a monarchy proper form of government in my opinion um uh the uh when you had a monarchy in order to raise money one of the most common things they do is just license someone the exclusive rights to do something as a cash raising thing for whatever weird reason and it may be the needs to justify every decision modern governments don't seem to do that to nearly the same extent okay mobile telephone Spectrum would be an example of it okay where you license something for a certain period for a certain use but going back to uh Henry VIII's daughter that's how the British East India Company got started now I'm not saying the British East under the company was a good thing I don't care I'll get beaten up if I do what you can't say is that it was an unsuccessful business it had an army of its own which was larger than the British army okay now at some level I think there's something that government's lost which is a kind of intelligent intervention to create the conditions in which good ideas can actually get off the ground early with a slight Hot House incubation where they granted a monopoly to the best provider whether the control to some extent sits equally with government and with business that's part of the trade-off and where I think you can start businesses that way as indeed happen with a penny post that you can't start the way we're trying to create them at the moment that's what Nicholas Gruen says once again the paper is called governments impresario and I recommend it to all of you thank you very much indeed thank you a huge thank you just one quick question because we are we are a little over time now um I I mean you know we live in a time of such Simplicity in terms of you know either cut taxes or not cut taxes or no it's an Overton window I mean the the things government is kind of allowed to do yes that's right a ludicrously constrained yeah you say Monopoly and I automatically think bad and and so the idea and so I guess I guess how do you move that move Overton windows so that actually we can indulge in the fact that actually no so your argument is sometimes Monopoly is good because it helps with the anti-rivers goods and things like that I feel a bit sorry for John Major in a way because he did one thing okay it wasn't the best idea in the world but he had something idea like the cones hotline right and because he was talking about the cones Hotline in other words making people's Journey better rather than talking about for example you know GDP annualized GDP growth right he was considered a figure of ridicule yeah but I want to see governments saying things like there aren't enough public lavatories what do we do okay I've just had sciatica this is what the chair is for it's one of those psychological things where you don't necessarily need the chair you just need to know it's there okay it's a bit like being by the sea in hot weather you don't necessarily go swimming but it makes a difference that you know that you can and you know there are those things if you want people to walk more it suddenly occurred to me what you actually need is not more walkways it's more benches right because the problem with walking is that once you start walking there's nowhere to sit down right okay and government could quite easily encourage things that make life better for people in all kinds of ways I mean uh you could by the way and this might be a brexit dividend you could be much I would like to see well I I mentioned Henry George I won't go on about that because it tends to be a bit weird um but you could shift taxation from income to consumption and you could have extremely different levels of Taxation on consumption depending on how pro-social it was okay okay that's just one example so the things which are rivalrous and competitively bought luxury goods and unnecessary luxury goods being the most extreme you could tax very highly things which actually had a wider social benefit you could tax very generously and you could actually encourage more pro-social consumption that way it doesn't make luxury goods any worse by the way because the people like the luxury goods precisely because they're expensive so if you put the tax rate up they actually become better luxury goods in many respects okay there are loads and loads of things that government could be doing to look at just consumption Behavior and the environment and they're constrained by economics into this extraordinarily narrow Overton window where you've got about three levers to pull yeah yeah it's frustrating as heck listen Rory thank you so much absolute pleasure thank you very much fantastic [Applause] [Music] [Applause] [Music] [Applause] thank you

Channel: Bright Ideas Gathering

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Keywords: Rory Sutherland - Why We Need Monopolies in Free-Market Capitalism, rory sutherland, behavioural economics, behavioral economics, ogilvy rory sutherland, rory sutherland ted talk, rory sutherland behavioural economics, rory sutherland talk, ted rory sutherland, rory sutherland ted

Id: t_aHLSFf9qg

Length: 38min 32sec (2312 seconds)

Published: Tue Oct 25 2022