Making Innovation Flourish

The failure of market failure: Towards a 21st century Keynesianism

This morning saw the launch of a new NESTA provocation by Will Hutton and Philippe Schneider on The Failure of Market Failure: Towards a 21st century Keynesianism.  The provocation updates the age-old debate about the efficacy of state intervention versus laissez faire, and in so doing is fiercely critical of economic frameworks used to inform policymaking in the UK. The primacy of the concept of market failure in policymaking - the view that state intervention can only be justified when it can be demonstrated that free markets cannot do better - comes in for particular criticism.
 
The provocation updates the debate in two ways: first, by reference to developments in institutional economics, psychology and behavioural economics which the authors see as jarring with the behavioural and motivational assumptions traditionally made by policymakers; and second, by interpreting the current financial crisis as prima facie evidence that markets need government ('markets fail more often than they do not'). If the UK is to successfully innovate, the authors argue, policymakers must recognise the importance of the government and the private sector working together, not falsely pitch them at opposite sides.
 
At this morning's policy breakfast to launch the Provocation, Will Hutton argued that a number of crucial policy interventions in the UK have been sacrificed at the alter of market failures. For those working on policies to support future innovation and creativity, where well-defined market failures are by their nature difficult to anticipate and evidence, this is a sobering thought. Will finished his comments with a call to the British academic economics profession among others to respond to the thesis set out in his Provocation. Going ahead NESTA looks forward to playing its role in facilitating the debate.

On Evidence-Based Policymaking

We take it for granted that a solid evidence base is a key requirement for government interventions. The Department for Business Enterprise & Regulatory Reform’s (BERR) five principles of good regulation state that any regulation should be “transparent, accountable, proportionate, consistent and targeted”.

Yet the European Commission – in its proposed Term Extension Directive – is calling for an extension of the European copyright term for sound recordings from 50 to 95 years, which all the independent evidence suggests would be bad news for emerging talent and for consumers.

The theoretical trade-offs are well-known: an extended term of protection, it is argued, provides incentives for musicians to create new recordings, but it also prevents artists from innovating on the back of published music and diminishes the choice of music available on the market. Which effect dominates, and the case for term extension – should rest on a careful consideration of the empirical analysis.

Happily, an international group of 50 leading academics has done just that in the Bournemouth University statement submitted last month to the European Commission.  The academics have carefully reviewed the available independent evidence and have shown overwhelmingly that the proposed term extension would be bad for Europe’s creativity (though good for a relatively small number of long-living performers and their estates).

The academics wrote to The Times earlier this week to call on policymakers to examine the case in light of the evidence.  Three cheers for the academics!

Preparing for the Future: A Generation of Mentees

Luke Skywalker knew how to be a good mentee and as a result, the whole universe was at his fingertips…..

In the second of our series on preparing young people for a rapidly changing world, entrepreneur Tom Hadfield highlights the importance of mentoring.

Tom argues that “the art of how to ask for advice from mentors, how to distil the key lessons and how to apply them to our own lives is one of the best kept secrets in education”.

This is a refreshingly novel idea. Effective mentoring benefits all parties involved. For the mentor, it provides a personal development opportunity. For young people, it encourages them to seek advice and guidance, and, as Richard Reeves argues in last week’s essay, to continually question. A successful mentoring relationship can provide young people with some of the skills likely to be needed to succeed in the future workplace, such as confidence, enquiry skills, reflection and flexibility.

Is the current education system the right environment for successful mentoring relationships to develop? Much support is given to training the mentor. But how do we support young people to ask the right questions in a environment which focuses on knowing the right answers? As always, I am keen to hear your views.

Preparing for the Future

It’s difficult to prepare for something that is uncertain, unclear and unpredictable.  But that is precisely what our education system is tasked with doing as it strives to equip young people with the skills and knowledge needed for a rapidly changing world. 

We have just posted on our website the first of a series of essays that provides different viewpoints on this theme.  It’s from Richard Reeves, the commentator on the future workplace. 

Richard argues that the debate on the merits of academic qualifications over vocational learning misses the point. Instead he asserts that what is important is that young people are supported in developing the characteristics and attitudes necessary to support lifelong learning. 

Research that we commissioned found that young people concur with this view believing that their own passion, motivation and personal attributes will be more important in helping them pursue the career of their choice than qualifications.

We will be posting one of these essays every week on our website and we welcome your ideas on this subject. 

A recurring theme in these articles is how different the workplace of the future will be and how the nature of work itself is altering.  This, together with globalisation, demographic shifts, and challenges such as environmental sustainability, means that the demands on today’s young people will be very high. 

I can’t help agreeing with the French philosopher Paul Valery when he declared “The future isn’t what it used to be.”

So how do you best prepare young people for this?  I’m keen to hear your views.

Our education system needs to change - a Provocation

I'd like to draw your attention to our latest Provocation - a thought piece on the subject of creativity, innovation and education.  These are free to download from the NESTA website and include extended essays by key thought leaders working in innovation. They aim to foster debate and new ideas, and showcase thought-provoking work on innovation.

Beginning at the Beginning: The Creativity Gap was written for NESTA by Anthony Sargent, General Director and Katherine Zeserson, Director of Learning and Participation at The Sage Gateshead.  The essay argues that to unleash the innovative capacity of the UK in the 21st century, our education system needs to nurture the natural creative innovator in all children and ensure it is protected, nourished and stimulated into adult life.  It critiques many aspects of our current approach to education, and outlines a vision of a creative education system that operates as a whole community process.  This essay was launched in Gateshead last week and was also the subject of our latest policy breakfast in London last Friday.

I welcome your comments.

Secondfest: the shape of things to come?

This weekend I attended Secondfest, The Guardian- and Intel-sponsored 3-day virtual music festival that took place in SecondLife, the online virtual world. Intel donated the use of their SecondLife islands, and The Guardian sponsored what promised to be a stellar lineup of artists.

On the whole, it looked just like a real-life music festival: several stages, a campsite complete with tents, drinks stalls and whatnot. But this is exactly what let things down in my mind. Why would you build an exact replica of a real-life festival in an environment where you could have virtually anything? Why not put one of the stages on a cloud? Or inside a giant dinosaur? Or under water? Making the impossible possible is one of the joys of SecondLife. I think they missed a real trick here.

Net taxation could kill collaborative innovation

Soon the US government will decide whether the ban on taxation of internet access should continue or not. If the ban is lifted, Americans could be taxed per access or amount of bandwidth used instead of the current blanket per month fee for broadband. Not only is this a backward step for consumers (remember dial-up?), this clearly has societal implications, allowing only the moneyed classes to readily access high-bandwidth content such as video, or to stay online for long periods in Second Life or MMORPGs. But there's so much more at stake than missing out on YouTube or online games. The entire economy of the internet would change. Would you do your banking, grocery shopping or check-in for flights online if you had to pay extra to do so?

The rise of cheap broadband also opened the door to exponential growth in online social networks and collaborative tools such as Basecamp and Central Desktop, not to mention online meeting tools and VOIP. There are millions of people online every day, collaborating on projects and ideas, sharing knowledge in ways that weren't possible before, and just plain getting things done. People from oppostie sides of the world can collaborate in real time without ever leaving their chairs. Taxation such as that being debated could kill these kinds of online collaboration. Without cheap & easy access would projects such as the IBM InnovationJam thrive - or even exist?

If the US were to lift the ban, other countries could be inspired to follow suit - I only hope that those of us who live our lives online can make sure this doesn't happen. It also highlights the fact that many of the factors in creating a climate where innovation can thrive reach way beyond 'innovation policy' or personal  entrepreneurship.