Ben Yeoh: CFA Institute Podcast, ESG, investing, progress | Matt Orsagh

Matt Orsagh talks with me. We discussESG integration, ESG education, demographics, Economist Thomas Malthus, and the future of capitalism. We also talk about current and impending regulation and policy around ESG disclosure as well as the intersection of art and ESG. One section:

You are someone in 1650, do you think we would ever not have slaves? I'm guessing 99% of people would say, "You'd be crazy. We've had slaves for 4,000 years. Our whole economy would disappear. Why would that be possible?" Yet it was. So fast forward to the 1950s. You had a lot of movements, from faith based and other investors thinking about a kind of ethical or value based judgment about how they would want to invest. They just wanted their investments to reflect their mission and values.

Then you fast forward kind of into the 1980s, 1990s where you had thinkers like Milton Friedman come along thinking about markets and capitalism in that respect. And then 1990s, you started thinking about triple bottom line, a lot of talk about people, planet, profits; all three going together. Then you had the birth of what we're calling environment social governance; ESG. So that kind of takes us to where I started where actually ESG wasn't yet a term in terms of where we started. But we started thinking about how these extra financial matters could affect long term value. I guess this is where you had the initial bifurcation between what we might call value and values. So you had a lot of people who were still thinking about it from an ethical lens, but you started to think about a lot of people who thought, "Well, actually there might be a lot of circumstances where if you do good by your customers, if you do good by your employers or employees, if you don't have environmental spillages, if you had good relationships for your regulators you would create long term value."

So a lot of people today can talk about stakeholder capitalism or enlighten shareholder value. You don't even have to produce the ESG terms. You just go, "Well, I'm looking about where long term value is." By serving my customers and by not having a good relationship with regulators you're going to get a lot of value. So a lot of the debate today now is around that. What is material to long term value creation? What might be value and what might be values? I think there's a lot of debate around that. I think I did want to pick up on two or three other things which have changed and this is in the nature of fund management itself. So again, if you go back 50 years ago, you did not have what we would call passive index funds, or rules based tilted funds, or quantitative funds. So that has changed the nature of stewardship voting and what we would call active ownership; so how to use your vote. But this idea of stewardship or active ownership actually goes back hundreds of years.

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Lightly edited Transcript below

The Sustainability Story: A Talk with ESG Renaissance Man Ben Yeoh; Portfolio Manager, Educator, Podcaster, Playwright

Matt (00:04):

Hey everybody. Welcome again to The Sustainability Story. I'm Matt Orsagh with CFA Institute. Our guest today is Ben Yeoh; Senior Portfolio Manager, Royal Bank of Canada Global Asset Management. Good to see you again, Ben.

Ben (00:19):

Thank you. Thank you for having me.

Matt (00:22):

I think in the title I've written-- I don't know if you've agreed yet. But I'm calling you an ESG Renaissance man, if that's okay with you.

Ben (00:30):

Fine by me. Call me whatever you like.

Matt (00:33):

But you have a very interesting background and very interesting stuff you have going on. So before we jump into the details, tell us a little bit about you, your journey on sustainability, and how you got here.

Ben (00:44):

Sure. So I was born in London, UK to a Malaysian father and a Singaporean mother. I did all of my schooling or high schooling in London. Then I went to Cambridge, Harvard and then back to London. As an undergraduate, I pretty much specialized in science; kind of neuroscience and behavioral science. Then when I was in America, I tried some of the liberal arts things and did actually a lot more in theater making, poetry, and writing. And then I started my career over 20 years ago now as an analyst in what we call the city of London in terms of doing investment analyst. I started as a healthcare analyst because that's from my science background. Then around 2002/2003, there was a lot of work being done in the pharmaceutical industry or around pharmaceuticals to do with access to drugs in Africa; particularly HIV drugs in Africa.

I was very much involved in the multi stakeholder debate and discussion there where pharmaceuticals were wanting to be seen as part of the solution rather than part of the problem. There were a lot of supposed hurdles. Well, they were real hurdles; things like parallel importing, patents, pricing. But there were also solutions which a lot of players could see in terms of trying to get that round in terms of regulation and all of that. We were involved in actually getting a lot of that work kind of done, and the end result was that HIV drugs did end up going through to Africa at cost of very little money on the back of beer trucks and soft drinks trucks going around Africa. So it was one of the kind of early success stories of collaborative engagement around back then almost 20 years ago.

That set me on the path of thinking about how you can have a lot of win-win situations. So when you're looking at extra financial type of things like access to drugs in Africa, that you can have win-win solutions which work for corporates, which work for society and actually a collaborative engagement getting you across there. So that's where I started a lot of my work and what we now would call an integrated fashion of looking at this. I picked up non-executive work working for a kind of ethical investment trust on policy issues. That kind of kick started my journey on sustainability and thinking about extra financials and investment.

Matt (03:17):

I've warned you about this upfront. I ask all my guests to help frame the conversation we're going to have. Is there one number, or fact, or kind of a series of those that you've come across that helps frame what we're going to talk about for our listeners? So you've warned me that you may ask me some questions back. I've never been quizzed before on this. I'm a little nervous. So what do you got?

Ben (03:40):

Yeah. I love data. I think investment analysts or portfolio managers at the end really do love data. So that's a worrying question for you. So I have some around life expectancy, literacy rates which think about social, women's votes, and actually deep poverty. Let's see how much of this you know yourself. So life expectancy in India in 1950-- kind of a generation ago-- In 1950, what was the average statistical life expectancy? Do you think I would be dead or alive?

Matt (04:20):

Well, I don't know how old you are. But I'm not going to...

Ben (04:22):

I'm in my forties.

Matt (04:23):

I was going to say mid-forties, so okay. I'm going to try. I think you'd be dead because I'm guessing today life expectancy is probably in the mid to high seventies, low eighties. I remember seeing this for the US like a hundred years ago. Life expectancy was around 50 or something in the US. I can't remember. Or like high forties or fifties. So I would be about dead because I'm a little older than you. So I'm going to say India in 1950, I'm going to say 39.

Ben (05:03):

That's super close and good line of thinking. So it's 35 in 1950 in India. In India today, it's closer to 70. But you are right, in the US or the UK you're talking about high seventies. In some places low eighties; demographics and things. The point of that and the same with the other two is that we've come a long way, but actually we still have further to go. So literacy rates is thinking really about a form of, I guess, education or social progress or social capital. We're going to go to Portugal and we're going to go around about the same time. I have the data for 1960. So 1960 in Portugal, what is the percentage of the population who can read and write? The percentage who are literate in Portugal only in 1960.

Matt (05:55):

This is dangerous because I feel I'm going to be insulting the Portuguese people if I guess too low. But this is over 50 years ago.

Ben (06:04):

Yeah. Develop the European country fairly rich.

Matt (06:08):

I’m going to say two thirds. 66.67%.

Ben (06:13):

That’s pretty close. It's 60%. So six out of 10 could read and write. But the amazing thing is, most people get it wrong at first because that means four out of 10 people in Portugal in 1960 could not read and write. And of course, today you are over 90%. So I think you are pretty close to 98/ 99% actually. So again, we've come a long way and people don't expect that in a European country. 

Social progress; women's vote. Going to take you back to 1950 because that's where I have the data. What percentage of the world allowed women to vote? This is percentage countries really. So what percentage of the world countries allowed women to vote in 1950?

Matt (06:59):

Okay. It's only been about a hundred years here in the states. So I'm going to say 30%.

Ben (07:09):

It's a bit higher than that. So in 1950, 66% of the world allowed women to vote. That did mean the other side, one in three did not allow women to vote.

Matt (07:18):

I was retrospectively more negative about the world.

Ben (07:21):

Yeah. A little bit too negative about the progress we made, but you're right. So a hundred years ago, I think the data's pretty close to zeros. Those countries had just started around there. There are a few pre 1900 but not very many. Today, it's by countries. It's 98.5%. There's just one nation state holding out. It's a little bit of a trick question because actually it's the Vatican in terms of a nation state.

Matt (07:46):

Oh, that's not true. Come on.

Ben (07:48):

So the last one, which actually I think is maybe even the heart of all of those because life expectancy, literacy rate, social progress all go to that. In 1990-- So this is really quite close. This is just 30 years ago. What number, let's go absolute number of the population were in deep poverty; were below the poverty line in 1990 in the world?

Matt (08:12):

Global?

Ben (08:13):

Global.

Matt (08:13):

Okay. I'm going to go back to my number that was so wrong before for women's vote. I'll go back to my 30% because I'm going to guess it's a little above or a little below that

Ben (08:33):

I don't know as a percentage. We can do it in percentage. I'd have to convert that to the popular-- what's the population now? About 7 billion?

Matt (08:48):

It's going to hit 10 billion by the middle of the century, isn't it?

Ben (08:53):

Yeah. But I have to go back to 1990.

Matt (08:56):

I'm trying to work back. This is a fantastic podcast where you listen to people do math on a podcast.

Ben (09:01):

So it was 5 billion in 1990 world population. So 30% is 1.5 billion. You are really good. That's almost there. So 1.9 billion. So in 1990, 1.9 billion were below the poverty line. I'm just going to fast forward to today. Today, that figure is probably around 600 to 700 million. I make that point because it really expresses two things. On one hand, that's unbelievably brilliant. You have made 1 billion people in 30 years lifted out of deep poverty. That's deep poverty. So there's still a lot of sort of normally poor people, but this is kind of below the poverty line. But you still have six or 700 million which is still significant. That's still about 9% of today's population; 9 or 10% who are below poverty. So you have really decreased that.

So I think my theme here is that we've come a long way, but we have a long way to go. But we mustn't give up on the fact that we have made progress. I think that's number one, and this applies to actually what everyone thinks in terms of extra financial and environment social governance sustainability thinking. But it also means we still have a long way to go. We want that number really to be zero, and there's kind of no theoretical reason why you couldn't get very close to zero except for the fact that it's getting much harder. In fact, the forecast of that is it already has a shallow decline in the next 10 years because it's increasingly hard to get people out of deep poverty. But I think those stats to me says a lot of the story that we've come a long way, but we have to go a long way further. We've come a long way in all of the dimensions that we think are important. So you mentioned sustainable development goals. The idea here is that we value more than what might be GDP, call it GDP plus, or the wealth of the nation that's in your social capital, your human capital, your natural capital. We're doing better in terms of women's votes, social capital, life expectancy, as well as in things like GDP.

Matt (11:08):

Wow. Well, three things actually. Those are very interesting numbers and I think it is great to remind people of the point that you can despair quite a bit if you're in this world of what's going on with the climate, are we ever going to get to where we need on climate, natural capital as well has many challenges. But take a step back and look from with the hindsight of history of where we've come and that we won't get to a perfect utopian society on any of these issues. We have come a long way, but we still have a long way to go. These goals are achievable. A lot of these ESG sustainability goals are achievable. It just takes policy and will and invest. We're talking to investors and investors to push the needle on these things.

The second thing is, I think I've said a horrible precedent that now my guests are going to be expected to quiz me. I'd be fine with that but I don't know if my guests would be fine with that because I think that was fun. This could derail the whole podcast, but it made me think about... We talk about demographics and that's something that I'm interested in. I look at what are projections for demographics around the world in the next 10, 20, 30 years in our lifetime and our children's lifetime. We're likely to hit a peak of population in the world in about two decade’s time and then slowly go down in China and Russia and other large countries. Meanwhile, Nigeria will be exploding. But around the world, we're likely to have a demographic-- not crash, but slowly go down that hill.

I think we're going to top out at somewhere projected 9.5, 10 billion, somewhere in there. And then by the end of the century, it'll be like 8 billion or something like that. My numbers might be wrong but that's the trajectory we're on. My question is-- and as I said, maybe this is a whole different podcast. So maybe we keep this short and I'll either have you back or have a demographic specialist on to talk about this issue. What does that do? Does that help with sustainability or does that hinder with sustainability? We're both people that have spent too much time in finance and the dominant theory in finance for the past hundreds of years is capitalism. That's what we live under. Capitalism assumes every growing markets, every growing resources. It's fascinating to me how capitalism will be challenged and have to change and adjust over the next 20, 30, 50 years, and what we will we even be calling it during that time. I know that's a huge topic and we didn't really discuss that. But any thoughts on that before we move on?

Ben (14:07):

Sure. Let me try and keep this short because it has very interesting philosophical roots. I'll give you both views. So if you go back really to ancient philosophers, but more recently Malthus. Malthus the Malthusian challenge would talk about that. It’s what do you do about growth? The modern movement of that would actually call themselves de-growth economist and thinkers. So they would worry about how that growth happens. Even though that capitalism has lifted a lot of people out of poverty, they would point to those people still left in poverty. But I think there are two or three interesting things to put on top of that. One is you are likely to, or you seem to be able to be getting what we would call carbon light growth, or growth which is decoupling from the use of natural resources. You can argue about whether we're doing it quickly enough. That definitely seems to be a trend.

The second thing which you could point to which is kind of interesting from a philosophical point of view is that human beings have made a lot of these challenges. But uniquely, human beings are probably going to have to be the ones to solve a lot of these challenges. If you come to that point of view, then actually we need humans and we need new ideas to solve these challenges. You can end up in what I would call something called techno realism. Whereas techno optimist would say, "Okay, it's definitely going to be technology.” They would say this to you and you get to a kind of utopia. Techno realist are kind of one stage back where they go, "Well, we have these problems about carbon intensity. We have to decouple. And actually some of the ways that we're doing it for things that we want; food, cement, fertilizer, airplanes, and things like that have to be done by technological progress and that will be an intersection between government state and private actors.

They would generally discount de-growth because:

1. Malthus wasn't correct at his time and hasn't been so far. Or be it the future could be different.

2. They would talk about this decoupling that you have.

3. How do you get those deeply poor out without growth?

Now you could say, “Yes, if you are in Sub-Saharan Africa you should be allowed to grow. And maybe if you are in some other nations you might not.” But they would point to that problem about getting those people out of poverty. So can you triangulate all of that? I would err on the side of saying, "I think it's possible.” It's not definitely in the bag. But if you talk about the climate challenge, if you look 10, 20 years ago on the policy scenarios that we were looking at, we were probably at the median scenario looking at something like a four degree world, give or take, which would have been a huge disaster. Today, we are looking at somewhere between a two degree to three degree world on central policy scenarios. That is far from great. You're still going to lose huge waves of places which become uninhabitable and that's still not great. But it is, you have to admit, greater than where we were at four degrees. So we have come quite a long way in 10 or 20 years even within that.

I think part of this is the fact that we need to have good economic growth, but we do need to try and decouple that from natural capital use, carbon light growth. Maybe people will go, “Rather than buy for us fashion and buy a fashion brand, you'll buy that as an intangible piece of computer digital clothing that you'll wear for your avatar.” You'll still spend $5,000 on your avatar rather than on a fur coat that might have the same sort of decoupling and signaling. Seems to be happening now. I think those were the two debates about where it's happening. But I remain, I guess, cautiously optimistic. That's what portfolio managers like to say.

Matt (17:59):

Yeah. I mean, just as a student of history thank you for bringing up Malthus. He's one of my favorites just because he seems so negative about the prospects of humanity. If I remember correctly, he was right around when the industrial revolution was starting. We had all this oil and coal to supercharge capitalism. And so it will be very interesting to see how that decoupling changes things. It doesn't mean capitalism, is it real? Or does it work? It will have to change. But capitalism and high carbon intensive economies have been the norm for the past 200 or so years. So what does that look like 50 years from now when we're in something else? I don't know.

I don't want to spend all our time on that. It's just a fascinating topic. So thank you for the quiz. I may have to add that to the podcast now. But before we start diving down into more detail, you've been in this sustainability world for a while. As a portfolio manager, where have you seen us come from? We've already talked a little bit about this. Where are we now and where do you see sustainability going in the future?

Ben (19:10):

Sure. So I want to stretch back a little bit further to where I start and then take it from there. We touched on this about Malthus and the long history sale of capitalism. I want to go back to the fact that for thousands of years in all human cultures we had slaves. Then about 200, 300 years ago, human beings decided that slavery wasn't for us. And now slavery is pretty much outlawed. You can talk about modern slavery and the things like that, but slavery is legal. You go back a couple of thousand years ago, you put a price on human life and you traded human life within slavery. And you didn't. You go back to the 1700s, you had objects, you had glassware, you had pots where you had labels and the pots were said, "Not made by slaves." That's the roots of the fair trade movement today.

Fast forward to women's rights which we've talked about. Women couldn't vote a hundred years ago. They now can vote. Great social progress within that. So you have this fast forward about these social change movements which seem impossible at the time. You are someone in 1650, do you think we would ever not have slaves? I'm guessing 99% of people would say, "You'd be crazy. We've had slaves for 4,000 years. Our whole economy would disappear. Why would that be possible?" Yet it was. So fast forward to the 1950s. You had a lot of movements, I guess, from faith based and other investors thinking about a kind of ethical or value based judgment about how they would want to invest. They just wanted their investments to reflect their mission and values.

Then you fast forward kind of into the 1980s, 1990s where you had thinkers like Milton Friedman come along thinking about markets and capitalism in that respect. And then 1990s, you started thinking about triple bottom line, a lot of talk about people, planet, profits; all three going together. Then you had the birth of what we're calling environment social governance; ESG. So that kind of takes us to where I started where actually ESG wasn't yet a term in terms of where we started. But we started thinking about how these extra financial matters could affect long term value. I guess this is where you had the initial bifurcation between what we might call value and values. So you had a lot of people who were still thinking about it from an ethical lens, but you started to think about a lot of people who thought, "Well, actually there might be a lot of circumstances where if you do good by your customers, if you do good by your employers or employees, if you don't have environmental spillages, if you had good relationships for your regulators you would create long term value."

So a lot of people today can talk about stakeholder capitalism or enlighten shareholder value. You don't even have to produce the ESG terms. You just go, "Well, I'm looking about where long term value is." By serving my customers and by not having a good relationship with regulators you're going to get a lot of value. So a lot of the debate today now is around that. What is material to long term value creation? What might be value and what might be values? I think there's a lot of debate around that. I think I did want to pick up on two or three other things which have changed and this is in the nature of fund management itself. So again, if you go back 50 years ago, you did not have what we would call passive index funds, or rules based tilted funds, or quantitative funds. So that has changed the nature of stewardship voting and what we would call active ownership; so how to use your vote. But this idea of stewardship or active ownership actually goes back hundreds of years.

In the 1920s, Benjamin Graham talked about being an activist shareholder and essentially saying, "If you feel that corporates have a poor policy, you should vote against management and you should be active." He famously was an activist investor himself. But the nature of that has changed in quantitative techniques and things like that. Then the other side on the value side; the kind of ethical or philanthropy side of arms has launched what we might now call today, impact investing or impact charity. So this is the idea of trying to measure to some extent, the impact you are having on the world. I think this is a very interesting idea which has rolled into what we are now talking about in terms of ESG and mainstream investment as well, but also have its roots when you're thinking about extra financial or non-financial.

I think the philosophical movement here which is really interesting I would call long termism and also effective altruism. So in the way that this is a kind of philosophical roots in terms of John Stuart Mill, even pieces like human things like that, about how to do the most good in the world. That's a kind of another interesting arm away from pure financial returns which is really influencing how to give an impact. That impact is then influencing those who have financial return as well in what we call mainstream integrated ESG.

Matt (24:17):

That was a very succinct summary. I think that got us. In discussions I've had on the topic, I haven't heard things go back hundreds of years. But it's interesting to think about it that way when you have things labeled out as, "Not made by a slave." The conversations that I've had and listened to on this topic usually go back to apartheid. In the late eighties, early nineties as a start. Kind of the modern focusing on governance, focusing on ESG. It was SRI back then; Social Responsible Investing. When you stop and think about it, it goes back much longer than that.

Ben (24:55):

Much longer. I make that point because markets are driven by humans. They're not driven by animals and they're not driven by plants. You could call it an intersubjective construct. They have value to humans because humans believe in them. A lot of these market constructs going back even to the early days of thinking about capitalism like Adam Smith and the like, have always had this component about what humans believe is important and what they believe is important in the future. In fact, talking about the long history, the early capitalist-- So around the times of Adam Smith, if you think about what they were articulating I have an anecdote here which is actually one which is told by Amartya Sen who is a developmental economist and Noble Prize winner. In his reading of the early capitalist he said, "Well, imagine you are being chased down the street by someone who wants to mug you or kill you for whatever reason. They want your money. They don't like the look of you. They're coming down the street at you.”

But what happens is that before they get to you, money rains down in the street. You have coins which you can collect and there are notes of value there. They stop chasing you and in their own self-interest they go and collect the money. Early capitalists believe that by directing self-interest to something like money, you would direct humans away from their more violent and base urges. So to them, early capitalists was a way for actually fostering a kind of self-interest or interest in money away from what they would view as bad behaviors, and to something where you could systemically have good behaviors. I think that's very interesting in thinking about that. But it was still very much constructed around how we would use markets essentially for the values that human find important. That's why I think the modern databases around ESG and all of these have these roots much deeper in history than we would acknowledge, and you can actually find this by reading Adam Smith. You kind of think he is the godfather of capitalism. He's also the godfather of thinking around about this social value of markets.

Matt (27:14):

All right. Well, now we're going to get into the Renaissance Man part of the conversation. Let's talk about first of all, something that started a couple years ago by the UK society; The UK CFA society. It is this certificate in ESG investing that you've been participating in. Now it’s part of the CFA Institute and it's global. People are taking the exam and getting their certificate in the ESG investing. So tell us a little bit about how you came to be involved. You've written the same chapter and updated a couple times, and I think broadly kind of-- I've seen the past 10, 15 years-- I'm sure you have as well, just the need for more and better education around ESG, how the ESG certificate is fulfilling that, and how you see the state of ESG education in our financial world.

Ben (28:01):

Sure. So we built on the work for instance, that the PRI; Principles of Responsible Investment did with you guys at the CFA doing ESG case studies and the like. We realized here in the UK driven by the society that we needed more ESG education. There was a cluster of, we would call it consensus techniques that a lot of practitioners were using in an integrated ESG fashion without any value assignment for saying, "Are these good techniques? Will they definitely produce better risk return or not? What are these techniques that investor practitioners are using?" In much the same way that in the early days of value investing you would say, "Well, these are techniques that value investors use." There was still a huge debate as to, “Are you going to get better risk return by a values process or cheap price to earnings or something like that?”

So we formed a consensus as to what the techniques are. We went out to a lot of investment practitioners around as to, "Well, what is the consensus of these type of techniques?" The first half of the book was a lot of more of the basic terminology. “How does governance work? Stewardship work? What might you mean by an environmental factor or a social factor?” Then my chapter and Jason Mitchell's chapter on portfolio management about what were the techniques that people use. We were very interested in trying to get to specific questions. So there's a lot of talk about this blob called ESG. "Does it work? Does it not?" It's a very unhelpful question because the blob of ESG-- I think you said it yourself. In some way there is no such thing as ESG investing. It's kind of a meaningless term.

You're just using it as a catchall to say this is something you're interested in. It's almost the same as saying, "Are you a value investor?" Wow. The next question is, "What sort of value investor?" Because actually a value investor today is almost meaningless as well. So we looked at that and specific questions. For instance, looking at Alex Edmond's work on the fact that if you have happy and engaged employees, you seem to get better company return metrics and stock return metrics. We looked at how to look at extra financial factors, how people are embedding it in their valuations, looking in terms of intangibles and competitive dynamics. We looked at it in terms of portfolio management, different scores, how quantitative managers were all looking about this. We gave people the kind of techniques that investment practitioners were doing in order to try and help their investment process.

You can go back to the roots that investors disagree at the moment whether you can get value from active managers over passive managers. People disagree about what sort of passive management you would do. There was a lot of investment debate around how to invest generally. ESG is part of that debate and we wanted to say, "Well, these are the set of consensus techniques that people are using." Then you can decide for yourself which techniques you think are useful, which are maybe less useful, which would be useful for your own investment belief, and processes. And that's how it came about.

Matt (31:02):

I've seen just talking to people and looking on LinkedIn and hearing from people just in our world and here internally at CFA Institute, it seems to be quite successful. I'm heartened that the education we see and you mentioned about five or six years ago, CFA Institute partnered with PRI on a number of papers around ESG integration. We asked you to do one of our case studies and that's how we first met. We went around the world and talked to people about what they did and didn't understand around ESG. What was the current state of ESG where they were from? From Toronto to Sydney, to Sao Paulo, to London and everywhere in between. One of the big things I saw was the huge gap in ESG education and demand from clients to get up to speed.

And then in supply of folks like yourself at firms like RBC and other places, that really had a good grounding in sustainability in ESG. I think this curriculum and others as well is doing a lot of great work in getting folks up to speed on that. I've looked through and I've read it myself. It's very rigorous. I'm fortunate enough to have taken the CFA exams and the amount of rigor and amount of time you have to spend on it is about the same for what it is. People have joked that it's CFA level 4 because it's kind of the same amount of study. And now the CFA UK society is coming out with a climate. They just came out with something similar on climate. I've read that as well. I would argue it's actually too rigorous. There were things in it I was like, "This chapter is 150 pages long. You have to cut out some stuff.” But for anyone interested in really diving into this stuff, I think they're a great resource.

Ben (32:48):

I would say you can buy the textbook from your favorite online retailer to have a look. I do think we aimed quite a lot of the material at below CFA level 1 to some extent. So an introductory part. But you are right. The portfolio management techniques that Jason Mitchell and I talk about are in some ways very advanced. Not all portfolio managers would use them. So it's a very interesting blend. I would say though that you can look at this work even before you've done CFA level 1, 2, and 3 because it takes you all the way through it. I think the other thing to highlight is we were quite good at involving other asset classes because a lot of people just think of equities. We talked about debt, bonds, government bonds, and we don't talk about that much, but we allude to property, real estate, VC, private markets which are now all deeply ensconced in their own expressions of how to integrate a lot of these extra financial factors. I think that's really positive. If you are a believer in markets, which I am, then actually new techniques, new competition, and new debate is all very healthy for this.

Matt (33:58):

Yeah. Agreed. Now, let's get into your day job. As a portfolio manager, how do you see the ESG sustainability landscape and how do you integrate it into what you do?

Ben (34:09):

So I'm a deep fundamental portfolio manager. So we always deal with the fundamentals of a company. It happens that when you are thinking about the fundamentals of a company, many of those drivers are extra financial. How you are dealing with your customers. Your relationship with your regulators, and with your suppliers. How we look at it is if you over borrow from one of those sources of extra financial capital, you tend to end up destroying long term value. You treat your employees badly, they leave you. You get a bad glass door reputation, you're not hiring back. So that's a destruction of long term value. But if you can see that's true on the risk side, call it an extra financial liability which is not on the balance sheet, you can see that it's probably true on the asset side as well.

So if you invest in your own people, you invest in the future, you have a good relationship with your supplies and regulators you are creating an asset and value. It's really interesting that this intersects with a lot of work or what people would so-called intangibles. So even if you don't use the phrase ESG or extra financials, you call a lot of this stuff intangibles. And economist at the same time-- There's some very interesting work for instance by Jonathan Haskel and Stian Westlake. Jonathan Haskel sits on the Bank of England committee, like the fed committee for selling interest rates, and Stian Westlake is a long time innovation economist. They've done a lot of work about how the value of a business and the value of the economy today is increasingly, if not majority intangible. A lot of that is human capital and ideas.

So that comes through to the fact that these are assets and they're not reported very well in the annual report. Partly because it's hard to quantify and partly because this is not how our frameworks have come about, which is very useful for getting around the efficient market hypothesis. Because if it's all really neatly explained, as you'll know in CFA 1 , 2 or 3-- I don't remember which part of the syllabus it comes in anymore. But the fact that this information is not that efficient allows you to get better risk and return. Coming back to me as a portfolio manager, the first thing you are really doing whether you're looking at extra financials or not, is what are the core drivers and risks for the long term prospects of that business. You really want to try and hone down on those to use our pilot's material. What are the really important drivers? You want to ignore the ones which aren't that important and look at the ones which are really important.

And actually again, even your old school fund manager would say, "Well, that's exactly what we do. We wanted to disregard the stuff which is not important.” So we're probably not important for natural resource use or water stress for a financial services company. But actually we knew if we were a drinks company in Africa using those sort of resources, then how you are managing your supply chain or your natural resources would be really important for us. So you're looking at what we call materiality for how strong or good the company is, and then we will come up with the judgment about the strength of that company. Then we will embed it in the valuation how these things affect long term cash flows. Some people actually also like to do it in discount rates than a like. We personally prefer to do it in terms of how this is affecting long term cash flows because at the end of the day, the discount for your cash flows back is how you're going to value a company.

Matt (37:27):

That's a great transition into the next thing we wanted to talk about. That is getting those standards for that data around the world is really kind of at the apex of those efforts as we're speaking now. The SEC just came out with their proposals for required climate disclosures a little over a month ago. The ISSB; International Sustainability Standards Board did something similar. I'm in the middle of writing our response to the SEC; our comment letter as we speak. After we talk I have to go up to my desk and do some more on that. ISSB is due at the end of May. We're talking in late April 2022. The ISSB deadline I think is mid-July. Add to that, the folks at the TNFD; Taskforce for Nature-related Financial Disclosures, have put out kind of their first guidebook for their natural capital disclosures they want to do. That is similar in structure to this TCFD for climate. I know I'm throwing out way too many acronyms here. There's no deadline for that, but it's kind of a rolling comments if you want to get to them.

But my point is that we are at the height of trying to put some numbers and some structure to these standards on what is material; whether it's climate or natural capital. Europe has been at the forefront of this more so than other parts of the world. So as someone who's involved in this and closer to what's going on in Europe, what are your thoughts on where we are, all these efforts, and are we getting to where we need to be?

Ben (39:04):

So let's start with SEC and climate and use that as a lens. I will start with the opposing arguments which I think are probably best expressed by Hester Peirce; one of the SEC commissioners who dissents from this idea. You have to go back to her original source material, but from what I'm seeing she sort of claims two matters.

1. Where climate is material, companies should be disclosing this anyway, therefore these regulations are unnecessary. That's her sort of first line of argument.

2. The SEC is not an environmental regulator. So it's overstepping its regulatory mark. 

Those are broadly I think the strongest arguments on the other side. Now on her first argument saying that, “If they are material they should be disclosed,” I have a little bit of sympathy for that because I think that is true. If this is material, then you should be disclosing this kind of information. But there are two problems with it. One is the fact that some companies are not. So to the extent that we have better regulation that would force that from the point of view of investors, that is going to be helpful. So on the one hand, I agree that if it's material it should be disclosed. But actually you can see from market practice that there is a lacuna there. There is a little bit of a hole.

The second part of the argument though is kind of interesting that it's a little bit different. That is that even if for one small company, you could maybe make an argument that some sort of climate disclosure is not super material for that company-- which we can debate whether that's going to be true of any company. But say you had that argument and you bought that, you would fail if you say adding up all of the largest 2000 companies in America, you would definitely say that was systematically important. This is an interesting second leg of where you see it from, for instance, Commissioner Gensler in the arguments that he makes. That is then going to be interesting to investors. Particularly for instance, investors who hold all 2000 companies in the US; largest 2000 companies. They will need to have this information in order to make a materiality judgment on that systems basis.

I think that's a slightly newer argument that we've heard and that also kind of goes back to what we're talking about. The fact that in my work, and I think the work of a lot of asset managers, they're very interested in this revolves around active stewardship. How you use your vote and how you use your engagement, because particularly in what we would call secondary equities-- So when I'm buying and selling shares with another counterparty but not raising any new equity or debt, engagement in stewardship is one of the main ways that we make a difference in the real world. 

If we don't have the information to base our engagements on, then we are not going to be able to do that as effectively; whether you are deep fundamental active manager like myself, or a large tilted quantitative or passive manager. So I think it is really important and I think it's going to be increasingly important to have that baseline level of disclosure. Then actually, this is where whether you're a market leaning person or a policy regulation leaning person, the markets can do their job when they have their information of which there is a consensus agreement on that. Now, some would say, "Yes, material you're meant to have this information." But you can tell for market practitioners, we don't have this information.

So therefore I think it would be an important disclosure to do. This is where it's closing a loop on the fact that I think in the future-- already today but definitely in the future, this active ownership stewardship piece is going to be increasingly important. And to the type of asset owners that I speak to in the institutional land, that's already important now and growing. But I think the person in the street, the woman in the street is increasingly interested in how their money is being managed in this fashion as well. So I think this is likely to be a long term trend.

Matt (43:17):

I would agree. I think we're also in a very interesting kind of nascent stage of, "Well, what does that mean when you say ESG, versus an ESG fund, or sustainable fund, or sustainable investing?" I think the moment we're in now there's a lot of greenwashing out there; whether it's for products or whether it's for companies reporting. I think a lot of it gets back to just education-- not just for us in our world, but for the consumer, or for the regulator, or for the company. What does it mean to be 'green or sustainable?' We're still working around that language of what that means from the woman on the street who wants to buy a fund that does well by doing good. “Okay. But how do you do that? You can't just buy something that is labeled green.” The CFA Institute put out standards on sustainable or ESG labeling for funds that came out last year. The SFDR in Europe is doing the same. 

So I think if we're having this conversation five years from now, there'll be a much better understanding-- not just in our industry, but from the person on the street, from the policymaker, from issuers, corporates. There's more agreement about when we say sustainability or we say ESG and what that means because there will be the standards from the EU, or the SEC, or the ISSB, or it will have been baked into policy for X number of years. So I think ESG and sustainability is a cultural change in our industry, but also beyond that in society. That's going to be a messy proposition in some cases.

Ben (45:00):

Yeah. So I would make an analogy with actually typical financial rhetoric. So you've always had a problem with corporate puff. Everyone wants to put their best foot forward, and sometimes you overstate that and that's why you have advertising standards because sometimes it's such an overstatement that you need to retract it. I do think that institutional owners in some ways should know better. They should be able to know whether something's going dark brown to light brown, whether that's good, whether they could go dark brown to light green, and not necessarily need a taxonomy for them to sophisticatedly figure that out. I think on the retail or the person in the street, there is a lot more need for that. But if you think about it, what does it mean to say if you are a value investor? Is Warren Buffett a value investor?

Does that mean if you're a value investor you never buy anything which is overvalued? Does that mean you never buy anything which is below a PE of a certain type or a certain thing? If you are a sustainability investor, does that mean does anyone ever want to buy anything which is unsustainable? Does anyone ever want to buy anything which is overvalued, if you take the counterfactuals of those terms? So I do think we need a lot more. But I think there needs to be a sophisticated in the judgment. That actually goes back to your earlier question on the data. So I think we need a lot more disclosure and I think standardization will help. But actually, data in itself is also not going to solve the problem. I sometimes worry a little bit that you have some people saying, "We'll have all of this data and our problem will be solved."

Well actually, there's a twofold thing to that because you still need analysis of the data. Actually, sometimes the lack of data doesn't stop you from knowing what the correct thing of what you should do is. So on the one hand, you also don't want to let a lack of data stop having good strategies and creating value; so you don't want to wait sometimes for that data to come through. And on the other hand, a lot of the data might be contested. Particularly if you look at the scenario analysis or the things like that. We'll still need analysis, right? So you don't want to sort of say, "We have all of this data. ISSB has done its job. The regulators have done its job and we have it." That's a little bit like saying, "Well, now I know the return on equity is 8.4%. Great. Job done." Well, what has that told you? Even if I tell you my carbon scopes and even if that's audited to some degree, the fact that I've got 30 tons per million carbon intensity, what does that tell you? Where am I going? What does that mean? What's your scope three? How does that work in your strategy? Where are you in the world? Data is only a piece of the problem. It's a really important piece and I think we do need to work on that. So I don't want to take away from any of that. But if you think that is definitively the end of the journey, then we're also going to be in trouble.

Matt (48:05):

Yeah. It's what we've been talking about so far. That data that we will be getting in some better way over the next three to five years has to be coupled with the education we're talking about, with solid analysis. Data with no analysis is useless and analysis with no data is useless. They go together.

Ben (48:29):

Exactly. And actually the analogy might be that we're going to need private actors and we are going to need government policy. You can't have one without the other. I think you can be working on them separately, but you want both tools. And actually you'll also want non-government actors as well; NGOs and the like. Traditionally, the classical model has been governments, NGOs, private actors, and they each have domain expertise and they also coin sect. They're all looking about creating long-term value or long-term wealth; however you want to define it. I think that still holds. Each is going to have to play its part in being part of the solution and not part of the problem. Companies will not be able to act without supportive government policy and NGO and the like. Government policy itself is also not going to get you there without corporate actors also playing their part.

Matt (49:20):

Agreed. All right. Well, we've gone through everything in the Ben Yeoh Renaissance ESG Renaissance Man Portfolio except Ben Yeoh Playwright. Can you tell us a little bit about how being a playwright intersects with the ESG world and a little bit about your journey there?

Ben (49:40):

Sure. So I was really interested in theater all the way from school as a teenager, high school, and then did more theater work at Cambridge; although that wasn't part of my degree. And then at Harvard as part of the liberal arts training, did a lot more training in terms of dramaturgy, writing poetry and the like. I guess part of my own personal theory of change is that stories and arts and culture really matter. They matter because for instance, the stories we told ourselves around slavery, the stories we told ourselves around women's rights were absolutely key for those social change movements. If you think about the things that humans value, yes, there are a lot of tangible things like having enough to eat and things like that. But there are also things that we do for instance, in our leisure, in arts, and in culture.

In some ways, those are the very things that we try and defend when we're looking about growing the wealth of a nation. In some ways, those are the things which are very hard and are often not put into GDP but are really important to us. So I've been intersectional in having that, that I feel driving that type of change is important. It's also important in terms of equity. We have a feeling of the voices that are not heard. Yes, that's true in terms of diversity inclusion amongst our sector generally. But it's also true that the stories that we tell ourselves. For instance, today, depending on how you define it, anywhere between 10 to 20% of the world has some form of disability. They are not how you'd view a typical person.

We need to hear about the equity there, their stories, what makes them human. I think that's a really important part of what makes investors real in the real world. In terms of my latest work in terms of this, I host my own personal podcast around some of these type of things; around arts and culture as well as in investing. I recently done a line of work which we call performance lectures, which you kind of cross a little bit of lecture and data with story and art and things like that. So I've done one around the topic of death; how we die today versus two or 300 years ago? What are our actual major causes of death? Then some of the causal things we might think of that we do or don't die from like, "Do we really die from grief?" 

300 years ago people said that you did die from grief. Do we die from grief today? And things like that. I've also actually done one thinking around sustainability and climate. Again, trying to put all of these things together about what we might do both on systems and a personal level for all of the intersectional entity on that. That's part of the wider work I feel in terms of being impactful. Talking about what we do, how we can have better ideas, and being pluralist about getting people in the room who want to point in the same direction. We want human beings to be wealthier and better, living longer and having all of these things. But what are the actual changes that we can happen to do that? I think arts and culture is a really important part of that.

Matt (52:54):

I couldn't agree more. I called this podcast The Sustainability Story for a reason. Because I think of myself as a storyteller. I love stories. I've always loved stories my whole life. And I think it's an underappreciated part of really any endeavor you're involved in. We are the stories that we tell ourselves. We tell ourselves the stories of our tribe, whatever that is; our nation, whatever that is; our sports teams we follow, whatever that is. You think about if you're a Yankees fan or a Chelsea fan. All the stories you talk about of what that means going back all those years. And really anything in your life, and the personal relationship you have, all the stories you have, when you get together with friends you haven't seen for five years, you come and you recount the stories that give that friendship meaning. It's not different whether you're talking about a market or investing. There are stories behind all these companies. They're not just numbers on a spreadsheet.

Ben (54:01):

Exactly agree. Had we told ourselves different stories, we would not be at war today. The stories that have gone into some of these things are being uniquely influential-- and that's been throughout the whole of human history, not just now. That's why I think it's critically important. If you look at these, talking about some of the major causes of death in our lifetime, we call them the full horseman of apocalypse for a reason. So once you've got around death, we've had pandemics, we've had famine and we've had war. These are not human inevitabilities. Depending on the stories we tell ourselves, how we work together, and what we're going to do in the future will really depend on the course of human trajectory about what we do. I think stories and ideas will be extremely important in the future to come.

Matt (54:53):

I think that's a great way to end things. But before we let you go and before we let our listeners go, what are you reading? What are you listening to? What are you watching that you think our listeners might be interested in to kind of help them dig deeper on some of these topics, or something unrelated to what we've talked about that you think you want to share with them?

Ben (55:13):

Sure. So I read an awful lot. I read a lot of books at the same time. I also don't always finish books nowadays. That's one of the changes for me versus 20 years ago. Sometimes you get the key idea or it's flabby. I don't think you have to finish all books. Having said all of that, I am currently reading Lydia Davis. She is an exceptional American short fiction writer and also essayist. Some of her short stories are only a paragraph long, and she has really put the whole form of stories and storytelling on another level in terms of what she's done. So interesting form as well as interesting stories. 

In terms of theater, I'm actually rereading. I actually have hundreds of plays sitting in my home library, but I'm rereading Ionesco's “Rhinoceros.” This is an absurdist story where essentially everyone turns into rhinos. This is really interesting because it's a sort of commentary on mass delusions or delusions, but depending on which side of the fence you are on, you can actually often apply it to either side of the fence. It's a really beautiful universal story because often you think the person who disagrees with you is having the mass delusion. So I think it's even greater than where it is. So people talk about Ionesco's “Rhinoceros” and they use it in their favor. Then I can think, "Well, people would've thought that earlier--" Like our earlier conversation on slavery. I think before it happened, people would've thought you are really deluded to ever think that we wouldn't have slaves. And now today, we would think you're deluded the other way around. So it's got great resonance in an absurdist manner.

Then in terms of economics, I'm also rereading Albert Hirschman's “Voice Exit and Loyalty.” He was an amazing economic and political economic thinker. I reread this quite a lot because Voice Exit Loyalty talks about the difficulties of essentially whether you engage or whether you divest; not just in terms of investments, but every decision you might have in your life. Where you work, how you might view your relationships, and all of those things. You've always got this choice. Let's say in the relationship-- Say it's a friendship and for whatever reason you haven't spoken or you've had a disagreement. Do you put the work in it and try and change it for the better? Or do you walk away and say, "This is no longer for me." Those are always your two choices. Do you use your voice or do you exit? It's actually a thin book and it's been very influential in people's thinking. He writes really well about it.

Then my last one that I've almost finished reading-- so I'm going to finish the whole book and I really recommend. It's called “Letters To My Weird Sisters” by Joanne Limburg. She is autistic and she talks about historical female figures who have some of the traits that you might think about in terms of autism. But it's really intersectional about thinking about female figures, thinking about otherness, different ways of thinking, inclusiveness, and what it really means to be human today. It is extremely erudite and has really changed my thinking at least, opened my eyes to thinking about through both the gender lens, but through an otherness lens and then through history about what it means to be human. So that's another book I would recommend to change your mind about something.

Matt (58:39):

Great. Ben, as always, it's great to talk to you. Thanks for the conversation. I hope to see soon.

Alec Stapp: policy for progress, under-researched areas, science of science, biosecurity | Podcast

Alec Stapp is the co-founder and co-CEO of the Institute for Progress. The IFP is dedicated to to accelerating scientific, technological, and industrial progress while safeguarding humanity’s future. Alec and co-founder Caleb Watney are supported by prominent progress thinkers such as Tyler Cowen and Patrick Collinson. The mission statement essay is here. His twitter is here.

An excerpt:

How non-profits should be run and conceived differently, why, and why the world has been so slow to adjust. Why are there so few "internet first" non-profits?

“... a lot of it's just inertia and institutional momentum. So the reason that all the biggest names in think tanks in DC have been around for decades is because once you get a core donor base, it's very hard to lose them or you reach a certain equilibrium where as long as you're doing a decent job, you'll keep getting the same donors to give you more money a year by year and the brand awareness is worth it in the DC community -  people know what Brookings is. Brookings will be here. Brookings was here 10 years ago. They'll be here 10 years from now. Right. So that kind of stability has its own value, but we looked at it and we said, this is highly inefficient. The way a lot of these organizations are structured we think there are probably two main components to why think tanks need to change. One's on the personnel side and one is on the information distribution side.

So, since the advent of the internet since become extremely mainstream in the way that most of us consume most of our information and spend tons of our time, think tanks are still weirdly, mostly oriented around long white papers that are PDFs on the internet. We're often even printed out and handed to staffers on Capitol hill or they do in- person events or during COVID they're doing webinars that have very dubious value in terms of actually influencing the policy debate. So, one of our things is being an internet first and a Twitter first think tank. And so it's thinking like, where is the policy conversation actually happening in the US? It's on Twitter with media professionals in New York and DC and policy makers in DC spending tons of time on there. So making sure that your content is formatted and distributed in a way that can be consumed by those internet native users and then on the personnel side, it's really understanding that there's a lot of bloat in think tank organizations and being very careful about how you hire full-time employees. And so we think that the modern policy wonk or policy professional is really like a multi tool athlete, meaning they're really good at a variety of areas. They're really good at research. They're really good at policy communications. They're really good at outreach if they can talk to staffers directly and explain their ideas and fit their idea to be helpful in the context of piece of legislation or particular rule making. And one, those are very rare skill sets. And so, we're looking for all stars who we had to pay them more than they might have made previously and they're hard to find, but when you do find them, really hold onto them and then recognize that the internet has dis-intermediated a lot of the communications shops.

So, a lot of the big old think tanks have dozens of professionals who work in communications, who are supposed to help promote your ideas, but the best people like Caleb and I found this on our own work, the best people to promote your work is - you - the person who wrote it. And if you don't have that skill set, it's really hard to teach or have another person come in to do that for you and similarly with government affairs and government outreach staffers are in their twenties and maybe thirties, they like talking to people who are in their twenties and thirties who have done the research and are experts on the issue. They don't want another person intermediating that process for them, who's another voice in the room. That's how a lot of older think tanks handle this. And so we think by structuring a think tank around the policy experts who again are these multi tool athletes and prioritizing the internet for distribution, you can run a much leaner, much more effective organization. And so we've cultivated a donor base for our organization. Those donors care about policy impact. And so they said, Hey, do what's most effective? Don't worry about cranking out a 40 page white paper if it's not necessary to the process, don't worry about holding a webinar if the webinar is just a deliverable with no value add. … if it doesn't actually help move the needle on policy, don't do it. And so we're highly aligned from top to bottom for that…”

We discuss the competing interests that prevent physical infrastructure such as power lines, or cafe “parklet” structures from being easily built.


Alec explains how using a framework borrowed from Effective Altruism: impact (will it be impactful), tractability (is it possible?), under-researched (are many other people working on the challenge?) - is a useful framing.

Alec discusses why biosecurity (pandemic preparedness), meta-science (understanding how science progresses) and immigration (in particular high skilled) are the initial areas of interest and what other areas, like climate, might be next.

We speculate on what intractable bluesky policies we would potentially pursue.

We play over-rated/under-rated (in honour of Tyler Cowen):

  • Carbon tax 

  • Planning laws 

  • Crypto

  • Rogue AI

  • Animal welfare 

  • Charter cities 

  • Innovation agencies 

  • Remote working 

Alec ends with his life advice for others in thinking about a career on how to have the most impact in your life.

Transcipt below, you can listen below or where you get podcasts.

Transcript (only lightly edited)

Ben  (00:39): First, congratulations in building something new. One criticism I hear is that we are not creating enough new institutions or new big things like new types of cities or new types of university and building things has become hard, but your Institute, I guess, is a form of rebuttal to that even while you are concerned about potentially slowing progress. So, on the worry and risk side are we really stagnating? There are some challenges in productivity growth, but there still seems to be lots of progress too, for instance, in software and biotech. So starting, what are you most worried about and what's your diagnosis of the problem?


Alec  (01:19): Yeah, so again, thanks for having me. Those are good questions. Start off, I would say, well, one, you mentioned there's definitely been a lot of innovation in software for the last 50 years and especially the last 30 years since the advent of the internet has really exploded. And so that's the one, I would say, exception of our economy where you definitely are seeing tons of progress and innovation at a really rapid clip. Biotech seems more recent to me. So obviously the mRNA vaccines promising stuff with CRISPR or genetic sequencing. We're really at the advent of that and I think we're on the cusp of a biotech revolution and we're seeing some of the fruits of that. That's really more prospective than retrospective in terms of a potential revolution there. And then where are we seeing just still stagnation with not much hope in sight and hopefully it will change, it's really building things in the real world, in the us context at least, but this is true in many developed countries around the world. Construction productivity has been stagnant or following philosophical years in terms of are we actually building more with a given set of inputs in terms of physical structures? In the US context it is often a couple of the main candidates that are blocking new construction are actually environmental laws and often they're not substantive in nature, they're just about process oriented.


Alec  (02:40): So for example, the national environmental policy act requires really long and costly environmental impact statements and environmental impact reviews. And again, it's not substantive, like if they find this they definitely won't allow you to build. It's just that you have to, in detail, lay out all the potential impacts and then bad actors often, so NIMBY, not environmentalists, but NIMBY who don't want building near them, or want to block a project for another reason, exploit and leverage these environmental process protection laws to slow down projects or veto them in the long run. And so, that's slowing down innovation in green tech. We can't build large solar farms, wind farms. We are not close to building any nuclear sites, but nuclear has often hit the same problems. No one wants the waste or even the power plant near them. So, I think in the physical realm, and this is why it's cool that we're building a new think tank, but also it's much easier for us, it's currently a four person team without an office, a shared space in DC. We're not encountering many of these same really hard problems of like, if you want to build a large structure in the physical environment how do you get past all the veto points that could stop you from doing that? And that's the part that I'm really most concerned about.


Ben  (03:53): So that brings to mind a couple of recent examples, particularly in the US context, but we see it all around Europe and the developed world and even in some parts of the developing world as well. So I read an article-- I think Ezra Klein talked about it, but it's essentially these outside cafe restaurant structures, I think in San Francisco and California and during the pandemic they popped up quite quickly and people were allowed to build them. And generally everyone was quite happy cause you had somewhere to sit outside and restaurants got more income. And then they said, well, let's not make this temporary. Let's try and make this permanent cause everyone thinks it's a good idea and then they went round and got a stakeholder exercise cause you want to have input and because everyone was defending their input, you got kind of in specific, quite a reasonable proposal, say from the fire department saying, wow, if there's a fire on the second floor of this building, then you only need it to be a certain height and therefore this is what we would propose fire regulations. And as you went round each kind of stakeholder, you got more and more of these veto points or these pain such that when the legislation came round, they were so onerous that most restaurant owners said, well, either we can't do that or our current structure is not suitable or it costs us so much that the whole idea falls apart. And that seems to be like a little tiny example of this type of thing. Well, apart from the better understanding of the holistic tradeoffs in that, where could policy or where could we really unpick something like that, which actually has broad support from most of the stakeholders involved? It's just a question of trying to get it through.


Alec  (05:35): Yeah and I think that's a great example. These little parklets I think they're called, at least in DC. I've been to these restaurants, they are very pleasant, especially during COVID when you needed-- Indoor dining was much more dangerous. Yeah, it seems like this is again the kind of low hanging fruit. Most people like this stuff, why can't we get this built or get this done? And I think the key thing here and this applies to housing as well and in many types of construction is do we have the wrong level of decision making for the particular project. So, I'll use housing as an example, but a lot of this would apply to these outdoor restaurant spaces as well. In the US, most housing decisions in terms of zoning regulations are made at the municipal level and often even neighborhood level. And the key problem there is that when you have the zoning meeting with the local council members, people who come to those meetings to voice their opinion on a new project are a tiny fraction of the community, like less than 1%. And there's a kind of selection effect here where it's like, what kind of people have the time and resources to attend these meetings? Often it's retirees. People are very old and have a lot of free time on their hands and it's people who are highly invested incumbent t homeowners. It's not a renter from a neighboring town who might move to that new multifamily housing complex if it were to be built.


Alec  (06:56): And so there's an incumbent t bias effect. There's a person who has free time on their hands. And then it's just who's the most vocal and the loudest and it's people who are very afraid of change and don't want the noise from new construction. They don't want to lose their parking spot on the street. They don't want more traffic just in general. And they just want things to be the way they were when they bought their house 10, 20 years ago. And I think that really distorts the process. And so people say like, oh, what's more democratic? What's a better example of participatory democracy than a local town council meeting, where individuals come and voice their opinions. And I think that's a highly distorted view of democracy because it's ignoring the interests of the vast majority of people in that area or in other areas who might want to move there and participate in that community. And so the two options here I think are moving the decision to a much higher level of government or to a much lower level of government. And then by lower level government, I mean like the block level for an individual town block. This is the streets folks ideas from our friends in the UK, John Myers, some of you who are listening might be familiar with this. But the idea there is basically if you let each individual city block vote on how they're being zoned, you get this nice game theory situation where people realize I like the way my house is and where I'm living, but if we up zone our individual city block, we could all make a lot of money for the first block in this area to up zone. And so then you change the incentive effect of, the people who do vote to up zone would make a lot of money by doing so. And so you get a lot more increases in zoning.


Alec  (08:30): Alternatively, you can raise the decision in the US context, at least, from the city level or neighborhood level up to the state level. So at the state level, policy makers have different incentives. They're thinking about aggregate growth. They're thinking about spillovers. They're thinking about if there's a housing cost problem in one city, but not in others, how do we collectively at the state level balance those incentives and balance those costs and benefits. And so you get much more rational or cost benefit oriented policy at a higher level because the elected officials at that level need to consider more stakeholders and more tradeoffs than a local town council member who is being yelled at by a 75 year old person who's been a homeowner for 20 years in the neighborhood. So that applies to these parklets as your client writes about as well, if people show up to those meetings are also upset about things changing in their neighborhood but it doesn't consider all the diffuse benefits that new projects like that can bring.


Ben  (09:26): Sure. And there's been quite a lot of interest in this street plan idea here in the UK and similar, and I think Ben  Southwood has written about this and actually it riffs on some early ideas and planning about having sort of street level code. So if everyone agrees that a block can look like this and you can have several kinds of code plans, then if it looks similar to this and the block votes on it, then maybe we can get something through, although there's also been push back on whether it really works or not. And I can see that on the housing level, but it's interesting that you also talk about potentially going up a level, either a state or a more centralized idea in some ways. And I was reading today I think Alex Tabarrok has mentioned this wall street journal article, which is essentially the story of trying to get this power cable, I think from Quebec to Boston. And Quebec's very rich in hydro power. Boston could do with this power cable and it's taken 17 years and they haven't got very far and some of it is this environmental law. I think there's rare butterflies and rare fish and things like that. Which again, looking at the tradeoffs you could call them bad actors, but acting in their own self-interest. So it's no good for them for there to be.


Ben  (10:49): So I think there was something like another power plant, maybe it was a nuclear power plant there, or other business interests where it wasn't going to be very good for them, even though it could be better for that. And I wonder then in that case, going down to a local level, probably wouldn't really solve that. Also this is sort of transnational but do you think going to a higher level and saying, well, actually look, someone can kind of cut through all of that to do it and would you need to repeal quite a lot of laws? How could you actually work around such a problem?


Alec  (11:20): Yeah, I agree. One, it's taking on these kinds of transnational issues. It's taking it to the policy decision making, it's taking it to the national level and saying, this is in our national strategic interest. We have national goals and global goals around climate change and getting more clean energy transmitted across the country. And so, this is why we kind of need to consider tradeoffs across local jurisdictions. And in a sense it's almost like picking winners and losers. It's saying that, this is going to benefit the entire country in a more diffuse way. And so some local interests need to be overruled by a higher level of government. But I think you can think here that as you were describing this question, I think I vaguely heard of this project. You were talking about the hydroelectric transmission lines. I often think of Power Broker [Inaudible:00:12:09], a pretty formative book for me and think about these types of issues describing Robert Moses in the earlier part of the 20th century in New York, all the things he built. Like you wanted to return to an era of building in the United States. Robert Moses would kind of be your guy of actually building roads, bridges, tunnels, all sorts of massive infrastructure projects. But in that book, it's a mix of a hopeful tale and also a cautionary tale because Robert Moses steamrolled minority groups. Most of these bridges and stuff were put through black and brown communities without their input. And it was much more rarely done in rich affluent white communities in New York at the time.


Alec  (12:50): And so, that was, again, a more of an anti-democratic approach. He's not going to need the input of the world or lower classes. And I think what we're seeing here is the US policy competition has kind of overshot the mark. So now we're as a much richer society and a much more egalitarian society than maybe 80 years ago, we become too concerned about respecting every single minority interest in any particular area. Minority, I mean like the smallest group and now everyone's terrified and we've implemented all these process safeguards to make sure that we're hearing every element of the community's input but then they're being exploited by incumbent t interests, by concierges and others who have economic interests in keeping things the way they are and are biased against change to exploit those processes. And so I think, before maybe 80 years ago, we weren't listening enough to community input and we were kind of steamrolling people in an inappropriate way, but now we're so scared and we built so many quote unquote safeguards into the process, we don't end up building anything. And so we need to kind of roll it back a bit and find that nice middle ground of can we still do big projects? Can we try to minimize harms to certain communities, but still recognize the big problems we need to solve and big problems involve building big things?


Ben  (14:07): And do you think that is tractable as you would put it in your framework called feasible because whatever you are, whether you are a minority group, groups are very reluctant. Any group is very reluctant to give up power and it seems if you look at legislation in Europe or in the US, it's been very hard to roll back and actually you've had some governments who've said, oh, let's try and roll back some of these rules and laws and they actually haven't got very far.


Alec  (14:37): Yeah, this is definitely one of the tougher issues and you'll notice that for our think tank, we try to work on issues that are important, tractable and neglected. So you mentioned tractability here. For our first three issues for our think tank, we picked meta science. So, how do we get more breakthrough research, more diversification and experimentation in research for science, policy immigration with a particular focus on high school immigration and biosecurity. So how do we stop future pandemics? And so the reason we didn't start with something like urbanism or housing and transportation is because we do believe it's a bit of a harder problem. And so eventually we'll branch out into that, but we think that it's extremely important. We don't yet have a clear path on tractability. And so that's why we didn't pick it as one of our first three areas, but we will eventually work on it as we find more solutions that we think might be trackable.


Ben  (15:27): That makes a lot of sense. And so rolling back one, your sort of founding mission statement essay cites this framework influenced by the effective ultras movement, which I paraphrase as looking at very impactful areas, but also areas that are unresearched and tractable as in politically feasible or actually potentially possible to do. So with that in case, maybe of these three areas that you highlight perhaps you want to talk about why you are looking at those areas, maybe meta science, science of science, or an understanding of how we make progress. And I think in the essay, you've suggested that potentially the incentives are not working as well as they could, and that organizations are perhaps not in the best structures or at least there haven't been any more new structures within the institutions or organizations looking at it. So, maybe what's your diagnosis of the problem here in terms of the science of science and how do you think we might make some progress?


Alec  (16:29): Yeah, I think this is a case of a classic-- Through science funding institutions, they just become quite sclerotic. And so it's hard for any institution that's been around for decades and decades and decades to maintain a similar level of output or impact, especially in areas like science that often naturally have diminishing returns. And so, you have to get very creative and experimental to get bigger breakthroughs. And so, I'm thinking of obviously like NIH, NSF, I mean, collectively the US federal government is the largest funder of basic R and D in the world and the military also funds lots of basic R and D. And so, I think the key problem here is that funders, again, through processes, through these long application process, through committees determining who wins grants for certain projects and a crazy statistic is that primary investigators in the United States researchers spend about 45% of their time on documentation like this and preparing applications, which is not doing science per se. And so, that's a huge waste of some of our most talented scientists and researchers, it's a waste of their time. And two, I would say that anytime you have this level of process and bureaucratization set up, there's a chance that it's worth it. There's a chance that this actually helps us pick better projects and you need to spend the time to sort through them to make sure you're funding the right stuff, but we don't actually have evidence that that's true. And this is what meta science is all about. It's about saying let's study the process. Let's make sure that if we're spending almost half of our time on how we pick certain projects and how we fund them, that we're doing that optimally or that actually the juice is worth the squeeze.


Alec  (18:03): And so for example, one piece of legislation; a provision we're trying to put into forthcoming legislation is about a scientific lottery. And the idea would be a second chance lottery if you've applied to get a grant with the NSF, for example, and you get denied. Well, you take all the denied applications, put them in a pot, run a lottery, fund a certain small portion of them and then over a longer time horizon compare how impactful that research was versus the research that you picked through your process in the first round of funding. And if it turns out, and this has happened in New Zealand and other countries that have tried this, that the impact is roughly similar for the second chance lottery winners and the first round process winners, then you have to ask yourself what was the process getting us that a lottery couldn't by picking by random chance if they clear some certain minimum threshold of quality. So, that's kind of what we're advocating here is that we need much more experimentation, we need many more new institutions. For example, we think the DARPA model is much more effective than traditional NSF or NIH models where you have program managers that are temporary. I believe they serve five years and then they all leave and they have a lot of control over a small portfolio of ideas, and they can take big bets and make big risks in a way that a committee picking what to fund often wouldn't. And so we think having new institutions with more control and more experimentation is the path forward for science because we're not seeing the breakthroughs that we were 50 years ago, and there are a lot of different reasons for that but I think institutions are a big part of it.


Ben  (19:39): Yeah. And I think your point about the lottery is we don't really know whether lotteries might be equal, worse or better, and the evidence might suggest they're about the same. But I suspect when I've looked at it, you get a little bit more of tail bets within lotteries, because if you have an off mainstream idea, by its very nature committees are quite hard to back those ideas. Even if you have one or two backers, it's quite hard to get a majority cause they will be off mainstream and therefore likely higher risk where there's a more even chance in a lottery that you get them and if the chances are you've met the minimum standard, there might be something here. So this is a good segue. I have a question here from Tyler that he suggested and he asks, "How should a nonprofit be run and conceived differently? Why is the world so slow to adjust from that?" So for instance, why there's so few internet first nonprofits, for instance, but essentially why have nonprofits or the structure of organizations really not seemingly evolved as much as where technology and other things have gone?


Alec  (20:42): Yeah, that's a fun question and I'll talk about nonprofit think tanks just cause that space I know better and lots of different types of nonprofits that I can't really speak to but it goes into decision making of why Caleb, my co-founder and I decided to start her own think tank is it did seem like there hadn't been updates to the way that think tanks in DC had been run. I think a lot of it's just inertia and institutional momentum. So the reason that all the biggest names in think tanks in DC have been around most of them for decades is because once you get a core donor base, it's very hard to lose them or it's like you reach a certain equilibrium where as long as you're doing a decent job, you'll keep getting the same donors to give you more money a year by year and the brand awareness is worth it in the DC community of like people know what Brookings is. Brookings will be here. Brookings was here 10 years ago. They'll be here 10 years from now. Right. So that kind of stability has its own value, but we looked at it and we said, this is highly inefficient. The way a lot of these organizations are structured we think there are probably two main components to why think tanks need to change. One's on the personnel side and one is on the information distribution side.


Alec  (21:52): So, since the advent of the internet since become extremely mainstream in the way that most of us consume most of our information and spend tons of our time, think tanks are still weirdly, mostly oriented around long white papers that are PDFs on the internet. We're often even printed out and handed to staffers on Capitol hill or they do in- person events or during COVID they're doing webinars that have very dubious value in terms of actually influencing the policy debate. So, one of our things is being an internet first and a Twitter first think tank. And so it's thinking like, where is the policy conversation actually happening in the US? It's on Twitter with media professionals in New York and DC and policy makers in DC spending tons of time on there. So making sure that your content is formatted and distributed in a way that can be consumed by those internet native users and then on the personnel side, it's really understanding that there's a lot of bloat in think tank organizations and being very careful about how you hire full-time employees. And so we think that the modern policy wonk or policy professional is really like a multi tool athlete, meaning they're really good at a variety of areas. They're really good at research. They're really good at policy communications. They're really good at outreach if they can talk to staffers directly and explain their ideas and fit their idea to be helpful in the context of piece of legislation or particular rule making. And one, those are very rare skill sets. And so, we're looking for like all stars who we had to pay them more than they might have made previously and they're hard to find, but when you do find them, really hold onto them and then recognize that the internet has dis-intermediated a lot of the communications shops.


Alec  (23:29): So, a lot of the big old think tanks have dozens of professionals who work in communications, who are supposed to help promote your ideas, but the best people like Caleb and I found this on our own work, the best people to promote your work is you the person who wrote it. And if you don't have that skill set, it's really hard to teach or have another person come in to do that for you and similarly with government affairs and government outreach staffers are in their twenties and maybe thirties, they like talking to people who are in their twenties and thirties who have done the research and are experts on the issue. They don't want another person intermediating that process for them, who's another voice in the room. That's how a lot of older think tanks handle this. And so we think by structuring a think tank around the policy experts who again are these multi tool athletes and prioritizing the internet for distribution, you can run a much leaner, much more effective organization. And so we've cultivated a donor base for our organization. It cares about policy impact. And so they said, Hey, do what's most effective? Don't worry about cranking out a 40 page white paper if it's not necessary to the process, don't worry about holding a webinar if the webinar is just a deliverable for an external state. It's like, if it doesn't actually help move the needle on policy, don't do it. And so we're highly aligned from top to bottom for that.


Ben  (24:42): That's really interesting because it's one of the small theories about why I do the podcast and why I think the podcast is important because people prefer to listen to people directly about their ideas. And perhaps this is sort of slightly one light as in, cause we might not go into the exact details of legislation wording, but they prefer to people hear the ideas out loud and transmit the knowledge of what would be a 40 page white paper, but in five or 10 minutes or speak and then have the more involved discussions and those conversations can actually go around and make more impact in a very resource light type of way, but in a very high impact return, particularly if the idea is really sound and you can express it really well and if you can't do those two things, then you're not likely going to be able to convince the legislator in any case, maybe that picks up on the second area that you suggested of working on, which I guess is the immigration or talent management challenge. And although I think this is kind of US specific because again in the US you point out about liberal democracy, very large country, one of the most influential countries in the world and places like even the UK has a couple of elements of that, but is not as large on the world stage.


Ben  (25:56): I do think it's a kind of almost general problem essentially about how do you get the most talented people or people with certain skill sets to the places or companies or organizations where they can most fulfill their potential and therefore systemic potential. And I think you'd argue this is the US for a lot of kinds of people but even interestingly, when you look at the US and some of where it has got immigration it is often tied to a company so you can get sponsored by a company and get there, but the company kind of slightly keeps you. So maybe that was good, but maybe actually you are not the most fulfilled at that type of company, but you kind of can't move company or move things to where you would have the most systemic difference. So in some levels that's like a kind of similar sort of challenge that we have with some of these other things about the systems level versus the individual level. I'm interested sort of why on the immigration or talent problem. What do you think are the kind of things that we should be looking at here?


Alec  (26:56): Yeah. And I think you frame that nicely mentioning that a lot of our current high school immigration system is tying individual immigrants to particular companies. They really become indentured servants in that sense where their immigration status is dependent upon their continuing employment with this one company, which is a really perverse kind of a system if you think about it and when we talk about immigration and that framework of importance neglected intractability people often are a little skeptical of immigration and say like, that is not neglected. Lots of people talk about immigration in the US context, it's a very salient, prominent issue and I agree that the overall debate is quite salient and not neglected but there's a subset of high school of immigration we think is neglected. And so often in the US context, there's debate about what to do with Southern border and illegal immigration from central America and from Mexico and that's a whole different debate that we're not going to really focus on as an organization. We think that the high school debate has much more room for bipartisan cooperation. There's a significant number of Republicans who support high school immigration, most Democrats do and people would say, well, if it is good for companies, why aren't companies funding lobbyists to go work in DC on high school immigration? Is this actually a market failure?


Alec  (28:22): And to your point, we are experience in Washington, DC is that for companies, for the Microsoft's and apples and Facebooks of the world, the current system doesn't feel that broken because they get to exploit the H1B process. And it's better for them if the immigrants who come to the US are tied to those individual companies. And so it's really a competitive advantage and startups can't afford to hire those lawyers to help potential workers navigate the H1B process. And so it's not clear to us that the current large incumbent t companies are dissatisfied with how immigration is run in the us. And so we think there is a role for organizations like ours to say, Hey, let's think about how do we get a startup visa in the United States for entrepreneurs to come and build their own companies in the United States like other countries like the UK have? How do we make sure that we are proactively recruiting the smartest minds in the world at cutting edge fields to come to the US. Again, the UK is an example here of going out and finding students from top universities to migrate to the US. One last example I'll do here is that in the US, we have the 01 visa for immigrants extraordinary ability but it's never been clearly defined. What does extraordinary ability mean? It's an uncap temporary visa program.


Alec  (29:40): So, an administration could leverage that visa to bring a lot more talented individuals to the US but you need to have guidance for that. And so, the Biden administration just a few weeks ago released extra guidance for that. We hope to see them use it as a much stronger tool, because ,again, it's an uncapped temporary visa program and then simultaneously working behind the scenes to increase the number of permanent visa programs. Like how do we get an uncap green card visa program for for example, stem graduates and technical talent. So that's how we're thinking about it and we think there's a segment that's neglected that we believe has high potential.


Ben  (30:18): Sure. And that's interesting from the UK perspective, essentially a high skill program has been, or is being established and there hasn't really been that much pushback. So you think immigration is a hot button topic and it is essentially being pushed through where people are like, okay, so that's actually been slightly surprised to some particularly actually on the UK, cause you look at some of these net migration figures and numbers and you go, oh, well actually it's not necessarily low skilled from places in Eastern Europe, but you were replacing that with high skilled from actually anywhere in the world. And so you're still getting the numbers in, but it's with a different system. And so if I heard you correctly, the three kinds of ideas you have in this type of area would be something easier for startups or smaller companies like startup visas or things like that. And then something a little bit more widely to help stem green cards or essentially something like that, which would be a little bit more diffuse. And the last one was just if you have got talent, however, defined again, making it easier to come to the US. Did I get those kinds of three ideas, right? Or is there anything you'd want to add?


Alec  (31:28): Yeah, I think those are basically right. I mean, again for the US context, another way to bucket these ideas is like legislative reform and executive action reform and those had their own different tradeoffs, right? So legislative reform is harder to accomplish. It's a longer process but if you can pass it, it's a much more durable solution to the problem. And on executive action, you have more discretion and leeway in implementing new rules. But if, you know, Biden does something this year and he loses reelection in 2024, a Republican can come in and change those on the executive side. So, it's less durable in that sense but the one other specific idea I'll talk about is that currently, it's now called the make it in America act, it's going through Congress. It was previously called and started out as the endless frontier act, then became the United States innovation competition act. In the house, it was the America compete act. We're very bad at naming things. The names are changing a lot, but now it's called the make it an America act. And this is mostly about a science and industrial policy bill. There's a lot of stuff really to semiconductors and we can debate the merits of those things. There's some good stuff, some bad stuff. But the best part of this bill is actually related to immigration and it involves an uncap green card for stem graduates in critical industries and includes both master students and PhD students or PhD degree holders. And we think it'll be amazing. This is how you create the uncapped talent pipeline for international talent.


Alec  (32:57): It's having a temporary visa like the 01 that you use much more aggressively And then it's having uncap green card spots for stem graduates. And so, that's the kind of like getting the executive part correct and the legislative part that really can unlock big results for the United States.


Ben  (33:17): Great. And would you want to touch on why you think the United States, the US should be a kind of magnet for this? So you could argue that somewhere like the UK also has liberal democracy and high schooled immigration. I guess you could argue somewhere like India and China have population power resource and GDP power. But I think you make a specific argument that the US is still the country, which kind of has all three elements that you'd kind of want to see.


Alec  (33:45): Yeah. I think, yeah, the key thing is it's great if immigrants move to Canada, the UK, Australia, some of our liberal democratic allies that we believe share our values and are on the cutting edge of a lot of different fields, but the US is really in the league of its own in terms of economic power and being immigrant friendly while being a liberal democracy. And we think that, especially in science and technology kind of glomeration effects are so strong and there's a lot of good economic research to back this up, that when you put a researcher or a scientist in the largest cluster of their field, it's much more productive and physical interaction still matters a lot even in the age of zoom and a lot of internet collaboration. And so putting that scientist in San Francisco, in New York in Boston is really, really important for increasing their productivity. And so, it's much better if the next genius from Nigeria moves from Nigeria to the UK, but it's even better if they move to the US rather than the UK. And so we view the US as the global provider of public goods in a lot of these areas. And so research is often hard to gate it or control it. And so once a big idea is discovered in the United States, it diffuses across the world. And a lot of these tools or platforms that are built in the US are used by people around the world.


Alec  (35:14): And so, if we just care about global impact, having the smartest minds based in the US and working in the US, often is the way to achieve that and I would just say in terms of China, we think they're the most plausible alternative to the US being the global leader in science and technology and we believe there's a lot of path dependence in technology. And if a technology is birthed and developed in an authoritarian regime it's going to change how the technology develops, how other countries use it, what are the values that it promotes? And we were very concerned about what Chinese leadership in a lot of these areas would mean for the rest of the world.


Ben  (35:53): Great. Yeah, that makes a lot of sense in terms of the impact, because we are seeing in an intangible world and a technology first world, the spillovers from that technology are massive. I think there's some suggestion that the inventors of some of these original technologies maybe make 1%, 2% or 5% of their overall value, and everyone else gets 90, 95 percent of a lot of these. So, maybe turning to your idea on biosecurity, I'm interested why you would choose biosecurity, which I think would be things like manmade, lab made viruses and the like over maybe some other existential risk factors that people talk about in terms of say nuclear war or some people are worried about AI, some other people are worried about climate. I could see that you could say, oh, climate, a lot of people are working on it. So maybe not as under researched, although there's a lot there. What made you think about biosecurity and how do you think about typical existential risk factors, which is a little bit within the mission statement that you have?


Alec  (36:54): Yeah, it's definitely in our mission statement. That's definitely what we mean by safeguarding humanity's future. We're trying to accelerate technological and scientific progress, but we need to safeguard the future and not accidentally increase the odds of existential risk or catastrophic risk in these areas. So first one area I'll start which you mentioned is climate change. That's probably what we are expanding over time, that's the likeliest next candidate for us is a climate and energy person to hire. And we will weigh on those debates. And so Caleb and I are constantly reading in this area interested. We believe it's like you said, a little less neglected, but extremely important and it is tractable in the sense that Congress is often passing provisions that are relevant to climate issues. And so, maybe not a single climate change bill happens, but we are making slow more quiet progress on that topic and I'll also say that there's a lot of attention from the activist community on climate change, but there's an underrated element. Our thesis basically is that if we're going to mitigate the effects of climate change, it's going to be a technological solution. So, it's about making major advances in nuclear geothermal battery technology to make solar and wind more viable because they're intermittent sources of energy. It's about having huge breakthroughs in carbon capture technology to mitigate the effects of carbon that's already in the atmosphere and certain elements of the heavy industry are just going to be extremely difficult to decarbonize. And so maybe we can still use natural gas to power those small percentage of the economy, but then use carbon capture to make sure that we're actually hitting net zero emissions.


Alec  (38:34): So, we think those technological solutions are the answer. We think that if we overshoot the mark and we actually fail in climate change, we need to have geoengineering backups. So again, more of a technological solution to the problem, and all this de-growth mindset of we'll just use less and consume less, we think those are basically doom strategies that a lot of the policy community is still promoting. We think it's a mistake. We think that carbon taxes while they're a perfectly economically sensible solution, and I would vote for a carbon tax tomorrow to help address the problem, we think that they're extremely unpopular in practice. Referendums in the US on carbon taxes always fail. In other countries where they're able to implement a carbon tax, they are often repealed later by a future government. So we just think that for the political economy of the question of climate change, a carbon tax is not going to happen and we're wasting energy on it to try to push that as a solution. And it's much better to subsidize and strategically invest in clean tech options. So as you can see, we're very excited about it. We're thinking about it a lot. It'll be an area for us to go back to biosecurity. We think that it has a tractable moment because of COVID where it's obviously important and it's been neglected for years but this is an opportunity where there is focus on it and an openness to investing in pandemic preparation efforts and new technologies.


Alec  (39:53): And so, that's why we were investing in it heavily as a team and then for the other areas like AI, we just don't think that we have much to add to the bait and there is in the effect of [Inaudible 00:40:01] community, a lot of investment in that right now. If you talk to people who work in these [Inaudible 00:40:06], they don't have actionable next steps to reduce AI risk we should do X. They're often just like, if you did X, it might make the problem worse. And so therefore we can't even barely talk about it in public. It's like an info hazard to talk about it. So that makes it very difficult for us as the boots on the ground in DC trying to implement these ideas. It just doesn't seem like the AI alignment community has enough consensus on what the solution is for us to be helpful in that. So, we're waiting, we're watching and waiting on AI as a particular one and then on nuclear security again, and also very important. I don't think we as co-founders have unique insight into that area, we don't feel that we yet have a strategy of how to reduce the risk of nuclear conflict.


Ben  (40:48): Sure. So that brings up two things, one on the carbon tax and another following up on the biosecurity. Carbon tax, so I recently spoke to Chris Stark, who's the leading policy thinker here in the UK. He's the CEO of the climate change committee and he agrees broadly with what you said that actually there's maybe an over focus on carbon tax to your point, essentially, it's not politically tractable, but you could get it via sector specific ways of doing it, innovation, subsidies and that one. So, the cleverest policy people that I tend to speak to or listen to do seem to be following that pathway. On biosecurity then, it's interesting. So you are talking really about pandemic preparedness for you is that things like having quick ability to scale up manufacturing and facilities and having the science and essentially having to call them agile organizational structures and institutions ready to go. So you've got that kind of institutional governance knowledge, or is it partly on the science and things or what are you thinking about the aspects of biosecurity that you think we should be investing in and we could do so.


Alec  (41:58): Yeah, the manufacturing capacity is a big part of it. We're still talking internally and developing what we think is the optimal solution. But a big theme we talk about is the importance of effective medical countermeasures. So things like vaccines and therapeutics. In the US context at least-- other countries did a bit better than we did, but in the US context, non-pharmaceutical interventions just flat out failed, like getting people to comply with social distancing and masking and other improving just fighting respiratory how do you contain this respiratory diseases and not that effective of a solution. We can hardly get people to take vaccines. And so the framework I'm thinking about in my mind is we need our solutions for pandemic preparation to be less focused on things that depend on a high uptake among the general population. We need to give people tools to protect themselves from future pandemics. And so, what that means is things like vaccines and therapeutics, that if you opt into taking them as an individual, you can protect yourself and your family. It may means things like advanced PPE, where instead of masks, you know, cloth masks being less than 50% effective, and you really need everybody in the room to be wearing the same cloth mask, what if we had much more effective masks that were 99% effective, even better than the N 95 masks that were comfortable and easy to wear, you know, not just for medical professionals. That kind of advanced PPE, where again, if you are the only one wearing it and no one else is wearing it, you're still likely mostly protected.


Alec  (43:29): Those are the kind of solutions that we think are much more likely to be implementable in the United States and not lead to this failure where if you don't get buy-in from greater than 80% of the population, then your total strategy is going to fail. And so, yeah, and for vaccines, that means having platforms and manufacturing capacity ready to go. We think the operation warp speed was the biggest success of the entire pandemic and not enough people in DC talk about to this day and that's about combining private sector risk taking and government purchasing power and saying we guarantee, and we know that pandemics are uncertain. How many more variants will there be in a year? How many cases will there be in the US and around the world? The private sector is rationally wary of making huge investments that might not pay off because the pandemic might end sooner than they thought, or people might not purchase what they want to sell. And so having government purchase guarantees of saying, if you create a safe and effective vaccine, we will buy a hundred million doses from your company. If you create an effective therapeutic, we will buy 200 million doses from your company of that antiviral. That is a, in our opinion, beautiful combination of government purchasing power to deliver public goods to the country and private sector risk taking and innovation to actually figure out what works to achieve those ends.


Ben  (44:49): Sure. And I've heard Caleb talk about advanced purchased commitments to these ideas, and they have worked actually over time in many therapy areas. It even works for malaria today. Those organizations say, you know, you invented malaria treatment, whatever, we'll buy 2 billion worth because the huge return is more than that, I have to say on a global basis, so slightly disappointed that, again, if you could think about a global systemic return, which obviously we can't because we're nation states then actually purchasing a lot of this and distributing it to the world might have cost you a hundred billion, but you would've had a trillion return. So if you were the kind of rational economist for the world that you would do, but you couldn't gather together enough actors to get the hundred billion in order to see the kind of trillion, it's probably more than a trillion return globally. And so you might be right, like if it has to work at the level of a nation state, it has to be within the capacity for that nation state for people to protect it. And you can't rely on getting even 60%, 70%, 90%, even 50%, maybe of people to go to, cause people are going to have different political ideas on it.


Ben  (45:58): So I guess putting that all together, there's a lot of talk about what I guess, a right leaning thinker might call state capacity, libertarianism, that type of thing. And what a left leaning thinker seems to be calling supply side progressiveness or things like that. But when you take the label away from it, it does seem to be kind of pointing at the same sort of thing. So it's kind of interesting that if you're kind of left leaning, right leaning, even sort of quite far within that you are merging on some of these ideas. And do you think potentially that they have more in common than what ideology would suggest then, is this the kind of bucket that you are aiming for being that actually you can get people on both sides to kind of agree because the game plan, the aim is what everyone wants and actually the kind of game plan shifts between the two, even though they might label it slightly differently. It still kind of walks like a duck, have I read that right? I don't know because the terminology seems relatively new on both sides to it having just been coined. What's your thoughts?


Alec  (47:03): Yeah. I a hundred percent agree with that and this is really-- this is the community. We want to speak to you and represent you. We have friends, we're friends with Ezra Klein and people who read him as he coined the supply side, progressivism or liberalism and obviously Tyler Cowen is a longtime supporter of ours with his state capacity libertarianism. I really do think these are the same themes or same ideas and part of why we think this moment is coming together there's a lot of different reasons, but especially from the liberal and progressive side, I think we are finally experiencing an overheating or overshooting economy where, you know, in the US context again, but is true for a lot of other countries, in the 15 years since the great recession for the most of that time aggregate demand had seemed to be below aggregate supply in our economy and we seemed to be just undershooting the mark. A lot of economists were saying that the natural weight of unemployment was six and a half percent. No, it's five and a half percent. No, it's four and half. Like we just kept realizing like, oh, there was much more capacity in the economy to grow and absorb more demand. That's been the narrative for the last 15 years, and it's been surprising in that direction. And now we've kind of gone the other direction where we have 7% inflation. We have a rapidly following unemployment rate and an overheating economy with these supply chain issues and bottlenecks throughout the economy. And I think what Ezra Klein, especially on the liberal progressive side, but people across the spectrum are realizing is that this is the moment for targeted deregulation and investments in supply-side ideas.


Alec  (48:38): And if we do that, we can achieve more progressive goals because right now just pouring more money into the problem, more subsidies will just lead to more inflation and higher costs, but actually won't get us more of the real goods and services that we desperately want. And so I think, you know, an analogy here is that part of what drove-- I mean, people think in the US context of Ronald Reagan as the great deregulator, if you look at the history, actually most of the most important deregulation moves were under Carter in the 1970s. And why was Jimmy Carter so open to the idea of deregulating as a Democrat? It was because they had a huge inflation problem and I think similarly, this inflation issue we're facing today of again, 7% inflation will lead people to realize that, okay, now is the time for deregulation in certain areas and cost cutting measures that make the economy more efficient and hopefully delivering a lot of these progressive ends that we care about achieving.


Ben  (49:31): Sure. That makes a lot of sense, now's the time. I guess, on a systems wide level I read I guess maybe more left thinkers, although it is in the right as well, talk about a kind of worry on trust and also polarization. I heard some disputes as to exactly how that is, but the trusting comes up polarization perhaps a little bit more debated and then you have thinkers like Tyler Cowen and also others suggesting that culture is very upstream from a lot of these things. I guess that's a systems level thing, humans following their tribe or whatever the culture is. To what incense do you think this sort of trusting culture thing is a challenge and is it something that you think you can work on through policy or you just going to have to skip around the fact that these do seem to be challenges for getting things done?


Alec  (50:23): Yeah, I think this is definitely one of the hardest issues to address because I agree, I believe trust and culture are more bottoms up phenomenon. You can't really be controlled in any direct way from a top down perspective. And so as a policy person it's a harder problem to solve. I would actually go back to immigration as one of the best opportunities we have here to influence culture in the long run and this is really the history of the United States. It's that as a country of immigrants, we get this nice selection affect where people who move from-- I was actually reading just recently about this is one interpretation of why the US became much more culturally individualistic and more oriented towards free markets than Europe is because the type of immigrants that left Europe to come to the United States are selecting themselves because they're risk taking, they're entrepreneurial, they're willing to start a new life. That's still true today. That's still true when we get immigrants from Africa and Asia and South America, like the kind of person who's able to make it through our terrible immigration system is highly motivated and highly open to taking risks. And so I think by bringing more of those kinds of people to the United States in the long run, they often have higher fertility rates than native born people in the US. And so I think a lot of that culture will continue to bubble up as we bring in new fresh voices and individuals to the US. So, that's one take on it, but in general, I would say that yeah, culture is a very hard phenomenon to influence directly and art and things like that are very important, but not necessarily our expertise.


Ben  (52:01): [Inaudible:00:52:01] Also puts a lot of emphasis on the value of travel and I guess I have a question about why you're based in Washington, DC. In one way it's obvious because that's policy world, and you can take a little office there and in some ways you've made the argument that you are actually based on the internet rather than a particular place. So I'm interested, is there anything special about the cultural place of Washington DC and also hang on, do you think there's anything you've learned growing up in Arizona or your experience outside there that you'd add into the geographic question?


Alec  (52:41): Yeah. I think the culture and place is really important. So, we felt like we had to be based in DC for a variety of reasons. One, we genuinely believe that US policy matters for the world and it's the most important place to be doing national level policy. And so, this is the place where a lot of people have taken or tried to influence policy in DC from afar. They're not necessarily based here. We think it's much more effective to be in DC because it's not just about the internet, it's the complementarities between having a recognizable presence on Twitter and on other places on the internet, on blogs, podcasts, et cetera, but then also being able to in person meet with people in DC and build trust and build relationships because that is the culture of DC. That's what was true 50 years ago, it's true today. Things happen in DC based on interpersonal relationships that are built over years and years of face to face communication. And so, you need to be able to-- if you want to actually influence the DC policy making process, you need to at the drop of a hat to grab coffee, grab a drink after work with someone, really share information. It's amazing how fractured and fragmented the information ecosystem is in DC. You get lots of stuff, not just from reading, you know, the latest newsletter from Politico or other sources, you get it from eating in person with someone and sharing live information about how a bill is going on Capitol Hill and what your odds of success for influencing that process are.


Alec  (54:09): And so, you have to be here to have that in person communication, and that is the culture of DC for better and for worse and as a person from Arizona just real quick on that, I would say that it's helped me stay bubble a bit of, you know, people who grow up in New York or DC or Boston go to an Ivy league school and never really experience what the rest of America is like. It really is something about coming from a purple state, like Arizona that has Democrats Republicans, a little more conservative. I have friends and family back home who I can kind of test messaging with and be like, so how do you feel about this issue or does this makes sense for your community? It just kind of gets you out of the east coast bubble a bit that can help you remember what actually is feasible in politics and policy.


Ben  (54:56): Yeah, I agree. I guess there's a glomeration effect essentially to policy spillover by being with lots of policy people. But I do think having traveled a bit around America and just traveled generally, that on the ground being outside your bubble is really helpful if you can get it. Well, I guess in honor of Tyler, I thought we'd play a little overrated/underrated if you want to. So you can also do--


Alec  (55:17): Let's do it.


Ben  (55:18): --Obviously Normal rated. We've actually covered a couple of these topics, but maybe you could clarify on some of them. So overrated, underrated, carbon tax,


Alec  (55:31): Carbon tax, overrated. I'm trying to think if there is anything I want to add to that. I would just say that, yeah, we're extremely sympathetic that like as economists, this is the best idea. I wish I lived in a world where we could pass the carbon tax, if so, I would make our number one priority for climate change, but it is just not going to happen. If you look at the cross sectional and time series data on how people around the world view energy prices and food prices, the highest input on food prices is often energy prices. Like it's the most important thing, like why do banana Republic dictators often have price controls on gas prices and food prices? It's because it's so important in selling it to people. That's how they try to maintain public opinion. That's why they throw tons of subsidies at it. It's because people are extremely sensitive to the price of gasoline and heating for their homes and food on their table and it's unfortunate that there's not much room to impose a carbon tax that would increase the price of those things but we have to think realistically and pragmatically, and that means subsidizing, using more carrots than sticks and subsidizing the types of clean technology that create an abundant energy future that everyone kind of wants to move towards anyway.


Ben  (56:47): Great. So zoning laws or planning laws.


Alec  (56:52): Zoning laws or planning laws. I would say overrated. I'm trying to think about how to frame the perspective on this one, but they are overrated in the sense that like you don't need them as much as people might think, they're underrated as like-- In our circles, it sounds like we get to meet a lot of the same people. Everyone talks to them all the time, but it really is like at the end of the day, the most important thing-- Like there's the Sia Emery paper that famously shows [Inaudible:00:57:22] on construction over the last 50 years in the US, aggregate growth would've been 50% higher. This is just like the most important thing. And so relaxing zone regulations is probably the most important thing we could do, even if it's politically difficult.


Ben  (57:39): Yeah. There's an interesting thing about the built environment, at least the outside facings, because there's a lot of debate as to whether that's better today than a hundred years ago and people are saying maybe not. But also we spend so much more on our interiors, right? So we have a lot more interior value. Then why are we so much more restrictable on what we let people build on the outside? It's kind of strange, but I can see that. Okay, overrated/ underrated crypto, maybe more specifically Bitcoin, but what do you think about crypto in general?


Alec  (58:12): This is interesting. I would say that crypto is probably still overrated. For a long time, I was an extreme skeptic of crypto. I read too much Matt Levine. If any of your listeners read Matt Levine at Bloomberg Matt has had a long series, he writes a daily newsletter on all finance issues. Of course it touches on crypto and you did see it persuaded me for a long time. Crypto was just speed running the last 200 years of financial innovation regulation. They were just recreating a lot of the same utility, but also running the same problems of like, here's why you don't want self-custody of all your assets and then if it gets stolen from you, you have no recourse from reversing those transactions or combating fraud, et cetera. There's a reason we develop the systems we did, even if they have a lot of cost to them. So Matt basically convinced me of that, but as I learn from out the community sort of reading the [Inaudible:00:59:07] and blog more, looking into the potential of Ethereum. I read an amazing essay on medium. I forget who the author was just explaining why Bitcoin in particular is a better digital gold. And if you look at the properties of what gold promises to deliver, it's better than almost every single dimension. And then you just run the numbers and you're like, what's the total global market value of gold? What's the total global market value of Bitcoin. If it substitutes all that value and a bit more, because it's more useful, what would Bitcoin be worth?


Alec  (59:36): And so, I think there are all these narrow use cases for Bitcoin and Ethereum that are compelling, that are going to stick around but if you ask me will this replace all big tech apps and they'll become decentralized crypto versions of those. I'm still a little bit skeptical because for developing complex UI, UX platforms, it seems like you do need a pretty hierarchical decision making process. You need a CEO. Who's like, this is what it's going to look like, here's what the team of a thousand engineers is going to build and trying to do that from a consensus based process. I don't yet see the path forward of how you would do that. There are too many little decisions that matter a lot for the end user experience that I don't understand how a consensus based process would work, but maybe, I'm still learning a lot.


Ben  (01:00:21): And we like someone to blame. So I guess that's overrated by the crypto bros, but maybe a little bit underrated or at least your rating has gone up over time. And I agree, Matt Levine, Matt Levine's interesting. I think he's one of the most interesting financial commentators on crypto and he's also one of the most interesting commentators on what we call ESG environment, social governance and sustainability issues through, again, through a legal and finance lens, which is kind of incredible, which are two of the biggest kind of movements within investment there. Okay. So overrated, underrated, the concept of rogue AI?


Alec  (01:01:01): I'll have to say it's overrated just because I don't fully understand it and, again, I'm still reading and learning about this, but people who are worried about rogue AI, they run the numbers and they're just like, this is the most important thing in the world for anyone to work on and it's almost like it's unimportant toward anything else and I'm not yet persuaded that's the case. I think at least through a lens of moral uncertainty, we should have a more diversified approach to some people should work on AI stuff, some people should work on pandemic stuff, some people should work on global public health and wellbeing issues. And so, the people who work on it, they're just so bought in, but they haven't persuaded me that it's likely enough or that there are solutions to this problem that are retractable or feasible that wouldn't make it worse than it's worth pursuing. And so, I have to say it's overrated because if it weren't overrated, we would have full-time staff members working on it, we would be spending more time on it but yeah, I'm just not yet sold even though I'm glad someone's working on it.


Ben  (01:02:03): Yeah. Overrated, at least for you, otherwise you'd be working on it. Great. Animal welfare?


Alec  (01:02:10): Super underrated and this is one where again, I think the political economy part of it is so important. The average American does not care at all about animal welfare. If it's not a dog, their personal dog, they do not care at all. But I think from a moral calculus perspective, it's super important. And so creating policy solutions that reduce animal suffering while being politically palatable is very important. And so I'm thinking of like fake meat, for example. Once artificial meat is tastier and cheaper and healthier than traditional meat, everyone will use it and not for animal welfare reasons, but just because it's tastier cheaper and healthier. And so investing in using [Inaudible:01:02:56] policy investment to accelerate those technologies and make them better, make them happen faster, I'm fully supportive of those. Those are the kind of solutions that work; moral scolding and shaming people and guilting them in my experience and based on the research I read does not seem to work be effective, especially for a very low priority issue for most people like animal welfare. So, I think it's extremely important and again from an EA utilitarian perspective, you run the numbers on how many billions and billions and billions of farm animals there are, not even to getting into wild animal welfare. There are huge gains to be had from minimizing suffering in our factory farm conditions. And so, I'm optimistic there.


Ben  (01:03:36): Great. Charter cities or new cities in general?


Alec  (01:03:41): Underrated, not enough people are trying them. This is a very fresh conversation for me cause I was chatting with Caleb about this yesterday. We have a friend who I can't name, but someone who's working in tech right now where their entire goal is to just make a ton of money in this software company to then go build their own charter city. And so, we were talking about his ideas for this and I think within the charter cities community, it's overrated to go to developing country and get an autonomous legal designation; like saying the rules of this country don't apply, we're going to write your entire own constitution and we have our own rule of law here. I think that's overrated because the reality on the ground is that as a charter city, you need to be under the security umbrella of someone. And so long as you depend on a foreign military to protect you, you are de facto subject to their laws or their whims. And so, I think charter cities like within the United States or within the UK or within Europe they have the same rule of law, but they're starting from scratch. They like you go to an uninhabited area and you build a university, you build a new town center you get the incentives right to attract venture capitalists and entrepreneurs. I think that starting from clean slate is very attractive. There are a lot of variables to get right. This person that Caleb was talking about thinks the university is the key, building a world class university first and then radiating out from there to build the entire city would be one of the breakthrough mechanisms. And so, I'm optimistic.


Alec  (01:05:06): I think more people should try it. I think that the founder, Mark, I don't know if you've read about Mark Morey, he founded multiple e-commerce companies that got bought by Amazon and Walmart and now I think he's using all of his money to start something, I want to say it in Nevada or Texas. I think that's cool. It's an exciting way to use your billions of dollars that could have a huge impact and if someone got it right, then we could replicate it. This is an example of being experimental and testing the model and then once it works, you can scale it up to the rest of the world.


Ben  (01:05:38): Yeah. I've flip flopped on this one. I'm currently learning a little bit more people first over place. Obviously, they intersect, but here in the UK, we've had a lot on trying to create these zones and things and the problem is you need sort of 27 or 11 billion different little ingredients to really spark it. So I think universities are a definite core ingredient and maybe foundational, but can you get the other 23 things which go alongside a university? I don't know, but if you give people the autonomy, say through immigration or however they seem to coalesce around the places which kind of need it and the cluster seems to emerge that way, where the preconditions are maybe already there. I'm slightly more optimistic about reinvigorating cities, which were definitely great beforehand because actually the remains of infrastructure are still potentially more valuable than we think cause it actually doesn't take that much to re kickstart particularly the physical infrastructure, which was built a 100, 150 years ago seemed to be planned. There's something about it, which is actually quite easy to restart that we've seen but yeah, I don't know. A couple more on overrated/underrated innovation agencies. You mentioned a couple already. We have one here in the UK, you have Aria - They all have these acronyms, which are really hard to remember but essentially innovation agencies of some form.


Alec  (01:07:09): Yeah, I would say as of now they're overrated and this is part of you know, I think for individuals maybe shaming doesn't work, but hopefully for institutions it might work a little better. I think they need to be more self-critical and there needs to be more public criticism of them because they have slowed down or become more stagnant or sclerotic. I think this is the primary role of private science initiatives in the United States right now with the Arc Institute in the bay area that Patrick Collinson and others just started. There's the activate initiative, which is about filling the gap between someone getting their PhD, but not being ready to start a startup company. Can we give them a few years of funding in an academic lab to really take a shot there with their big idea. There are lots of these private sector science initiatives that are great and I hope they work, but they're not really at this scale to make global impact, I would say, across a wide variety of domains. And so, the real utility of those private science initiatives is to demonstrate to them a model that works. And then we view our job at the Institute of Progress in DC to help take those learnings from the private initiatives and apply them to federal innovation agencies and scale them up to the global level. And so, I'm excited about that. There are lots of principles and learnings that can happen from that do need to be scaled up and we'll see how they go.


Ben  (01:08:34): Do you think it's easier to bring those learnings to agencies or organizations which already exist or would it be better or easier to create new agencies which don't have the hierarchy and culture that were already incumbent t, but also don't have resources and history which go along with that?


Alec  (01:08:56): We're still testing out this idea, but we think it's actually a mix of the two, which is creating new offices within existing agencies. And so it's really hard to start a new agency, first of all. So, to get the funding for it and institutional buy, it's very, very hard to start a new agency. Less difficult to start a new office and then the goal is to get all the benefits of a new agency while keeping it within this office. So the idea is like, for example, the CDC has not done great during the pandemic. It'd be nice if we had-- cause it's more of a research academic agency than it is actually a public health controlling diseases kind of agency. So, CDC is based in Atlanta, Georgia in the United States. If they had a different office in a different city with its own leadership structure, its own incentives starting from scratch, it was about surveillance of new viruses and they were investing in wastewater surveillance and all sorts of ambient technology for monitoring new diseases and kickstarting the counteracting process once we've identified a new virus, that would be great. And then that small office could grow over time and then maybe in the longer run, maybe 25 years from now, that office is actually more important than the parent organization, and it's disrupted internally by the larger organization to where it matters more. But that's the model we think would actually work and not radically disrupt the current equilibrium because again, in DC, the status quo has a lot of stakeholders who don't want to see much change. And so, you need to be very subtle and careful with how you upset that equilibrium.


Ben  (01:10:37): I haven't had that idea, but instinctively that I think could work and I see it reflected in private business. So Google alphabet creates Waymo for cars. It looks like it was easier to do that than necessarily start a whole new venture, so they can piggyback off that, but it's operating a lot. Or even, you think about Stripe, they have a lot of different ventures, but they have something like Stripe Press. I mean, essentially that's kind of publishing with a lot of different things in that, but it's within the kind of Stripe umbrella, so you can get a lot of benefits from that. So yeah, I do see that. Last one on overrated/underrated remote working.


Alec  (01:11:17): Remote work I'm going to go overrated. I used to be even more skeptical of it. I would say that I've been surprised by the pandemic, how well it's gone. Someone pointed out recently that if you read quarterly earnings reports for the last two years of private sector companies, these are public companies, obviously none of them mention that we're doing really poorly this quarter because remote work has been harder than we expected. They're all mentioning supply chain issues and dealing with inflation and things like that but no one's saying our workforce is surprisingly unproductive based on remote work. We're trying our best to get them back in the office as soon as possible. If anything it's the other direction. We've constantly just been delaying, delaying, delaying return to office, which if it weren't going well, you wouldn't really see that, I don't think. And so, it's gone better than I thought, but I still think in the long run, I still think it's overrated because agglomeration effects matter so much. I think for running a scaled mature business it's possible to do remote work cause you're just implementing processes that are already in place, but for doing any kind of zero to one innovation, it really is about late nights in the office, team camaraderie, building that culture, sharing ideas, chance innovation, things like that that I think you just can't replicate over zoom.


Alec  (01:12:34): And so, I'm very worried about like 10 years ago there would be a team of people at Google, a team of engineers working on an issue. They would realize, oh, this is a better idea for a startup. We should leave Google together. You need high trust to make that decision to leave an incumbent t and go do a startup. I don't think you can build that level of trust over zoom. The reason Caleb and I left our previous think tank and started our own think tank is because we've been friends for multiple years. We've been in the office every day together, spending hours a day, working on policy issues. We developed high trust with each other and we thought this is a person who could be a co-founder for a new institution with me. And so, I think that kind of thing is what we're losing with remote work and I don't see yet how the internet can replace that fully.


Ben  (01:13:18): Yeah, there are these debates. So I think for instance, Jamie Dimon, CEO of JP Morgan's been on the record with this, that actually you can get some benefits, but he would still like some more people in the office and some of the more creative R and D type industries. For instance, I heard the CEO of [Roche] say similarly that you need some sort of office culture because of this creativity and the trust needed, albeit you can get some advantages from some of the remote work. So it'll be interesting to see how that goes. So, last couple of questions here. So, you talked about policy ideas, which are tractable and obviously in your areas of expertise but I was going to propose if you had maybe one, two or three or however many you might like policy idea. It could be in your area, but it could be outside your area, but is not necessarily tractable. So this is kind of your magic policy idea. What would be the one or two that you would suggest is like okay, I know this is kind of crazy impossible now because no one really likes it, or we don't really have the things for it and it might be a kind of tail ideas, it might not even really work or things, but this is the kind of left field one that I would want people to explore.


Alec  (01:14:36): Hmm. I need to take a second to think about that; crazy idea, left fields, not tractable.


Ben  (01:14:42): It doesn't have to be necessarily crazy, but it's just not necessarily tractable. So, you're working on these tractable ones. So I guess this has come from, you know, these are the lessons that science fiction can teach us, or these are the lessons that art and creativity can teach us because science fiction tells us, oh, well, that's sort of impossible or you think it's impossible, but there are lessons to be learned by imagining something which isn't viable now, or doesn't seem to be viable, but actually has the germs of the catalyst of an idea, so I thought I'd post it. It doesn't have to have anything, but I just thought, you know what? I came across this idea and I just know it wouldn't be possible, but this is something that science fiction tells me, or this is something that I just think would be worth exploring, even though I wouldn't be able to get any mainstream funding to do it because it's just not there. This is something you need to put in your lottery application because your committee is going to reject it, but you got a one in a hundred chance that you get a second chance.


Alec  (15:36): Yeah. Maybe I'll go for space exploration issues. Pretty fascinating that I learned recently was that NASA and space exploration weren't even popular. People think about the golden age of space exploration is the fifties and sixties of going to the moon for the first time. And this is the heyday of NASA. I saw a polling recently that it wasn't even popular back then. It was more of an elite project. I think if you ask people in the public should we be spending this much money on space exploration relative to other issues of national importance, it polled extremely poorly and then of course today there's a lot of narratives around billionaires going to space and we need to first solve poverty and healthcare inequalities, et cetera, et cetera, before we do anything in space. And I think both for EA reasons of colonizing the galaxy and spreading out and be a multi-planetary species is important. Also, I think it's important from an optimistic vision setting perspective of it's the final frontier of we've explored most of earth, now it's time to explore other planets and stars. And so, I think a massive investment in interplanetary travel technologies to enable that, the James Webb space telescope; super inspiring, very cool to see NASA successfully so far get that off the ground. But if I'm being realistic, I don't think it's tractable because I think it would be politically unstable to invest that kind of money. I think people are too narrow minded about a lot of these issues and they wouldn't see the value in it. And so, I don't advocate for it in my work because I think-- and I know people share my interest in seeing us achieve these great things that people would say, this is a waste of money or time. So, it's unfortunate.


Ben  (01:17:28): I can see that. I'd vote for it. I'd probably go for oceans before space, but I actually would do oceans and then space just cause oceans are slightly nearer and we still, you know, what's it called? The Mariana Trench. We know nothing about it. So there's a lot that we don't know here, but it's the same idea that this exploration frontier-- It's probably as expensive to do oceans as space actually. So, I'm not sure you get the cost saving. I flip flop on the two I have in my mind at the moment. Actually Patrick Collins has written a little bit about this. One is really exploring a different way of teaching and learning and my unattractable policy would be say in the UK and the US you give an open kind of lottery to-- If you are this person, we are going to give you a 1% chance to that. If you want to have three or four person, small group learning with a, I call them an elite set of teachers, but a set of teachers or tutors who we know are meant to be really good. But you gather together these set of teachers and you gather an obviously self-selecting group of students who like, okay, we're going to forget traditional school and we're just going to go to these three or four groups and we're going to learn in a completely different way, probably off curriculum.


Ben  (01:18:54): So we'll learn about whatever this group wants to learn. Can you get like a 10 X or a hundred X return from these type of people, because you've just something radical, which actually is kind of how we learned 200 years ago when you had this kind of governor elite type of system and then we went sort of mass produced. Is there something which would spark essentially more breakthrough or very different ideas because they've come through a very different way of learning and I see that because you see so many of these kind of home educated, self-educated or differently educated type of people seem to be making more of these breakthroughs and if it's a small percentage, if you can up them 10 X, then maybe that's something. Obviously [the idea is] completely intractable but something to it.


Alec  (01:19:38): I love it. And it's not even just like we observe these kinds of atypical people being really successful and there's the famous finding. It's the bloom 2 Sigma phenomenon that if you do one on one in tutoring, you can get two Sigma better results in terms of learning for that student. I don't know how much it's been replicated or how scalable it would be, but the idea being this one on one tutoring can really unlock huge gains. The other one that I'm fascinated with that seems very replicable, but underutilizes space repetition. So, so many fields-- Like creativity happens once you've mastered all the basics and got to the frontier and then you're combining new ideas from different places but I think rote memorization actually is kind of underrated at this point and the importance is just to remember a large body of knowledge to help you get to the frontier, it matters a lot and space repetition of like using flashcard systems that you do it every day and then every other day, and then every once a week, and then once a month, and you're accumulating lots of knowledge very easily. It is an underleveraged tool that I'm surprised people don't talk about. I would pair it with one on one tutoring as like the two most underrated ideas in the field of education based on what I know.


Ben  (01:20:47): Yeah. So Nintil (Jose) has done some essays looking at that. So the mastery has been replicated, but with not quite as strong as effect as when he [Bloom] did it, but it still seems to be apparent and particularly, although this is contested when you can also-- Essentially how to do it, when you use this other principle of following the child's interest-- So, it's obvious to anyone. If you're curious about something genuinely you learn 10 X better than if you're not interested. So if you can pair that with it, this is why you kind of go off curriculum. If you've got something boring in the curriculum, why do it because you're 10 less productivity, but if you find something adjacent, so you get 10 X better, and then you compound that, then you do seem to get it. But again, nothing which you could necessarily explore and space repetition is definitely has been robust and seemingly repeated and actually if you combine it with kind of memory palaces as well, I think you can get really good gain. My last one on the kind of crazy idea, although this is slightly more UK specific, though you could do it everywhere.


Ben  (01:22:01): So in the UK you have an NHS number. So in the US, you could almost do it by social security but I think that if we were somehow prepared to do population health based on our NHS number or social security number, so you can pull that data together and actually get preventative algorithms. So, you know certain things, you could get huge gains in population health, but no one is as yet prepared to go down that. But I think it might actually come. So it's maybe on the cost of being tractable because it's more of a political economy issue, but at some point people will just go, look, we can't pay for this much healthcare. It's a sort of costly disease, but it's not. It's just basically, if you've got good innovation, we're going to be prepared to pay for it and a lot of health doesn't scale in that same sort of way, but population health digitally managed would scale, but we haven't yet gone down there, but I don't know, maybe one day.


Alec  (01:23:00): In a previous policy life, I was often involved in the privacy regulation fights in the United States. I don't really work on that anymore, but the privacy hoax must be defeated. I think it's a very toxic element of the US policy conversation. A lot of people have very vague concerns about privacy that I think get exploited by privacy professionals, privacy advocates to stiny a lot of innovations, like the one you're talking about with biomedical innovation. And this vague sense of concern gets used against the public to do kind of fear mongering I would say. And I only use such extreme language because I think the costs are so high. I think that we really do miss out on all these huge breakthroughs because people get too concerned about it being demagogue against them.


Ben  (01:23:48): Yeah. I think they prey on people's fears. I mean, again, I'm not an expert, but the work I've read has shown that for instance, in Europe, we have the nickname is GPDR. So it's around email privacy and it's not done what they would hope yet. It's a lot higher cost, essentially, big organizations comply, the rogue organizations are still rogue. And so you haven't really changed very much and I think the other flip side is the average person or more than average person, 99% of people who aren't involved either and thinking about policy or thinking about the deeply have essentially freely given all of their data to Google anyway and mostly don't care. I mean, obviously there is a sum, but it's actually really, really small minority unless you make them fear for how it's used and obviously you've got to trade off the other side with the benefits, but again, this is one of the things. So coming to you the last question which I guess is along these themes is what advice would you have for people? I guess this can come in two kind of buckets. One is any sort of life advice that you have taken the route that you've chosen about what you would advise people interested in policy to do, or maybe do differently and I guess the second one is a slightly effective altruism one is, how are you thinking you're having the most impact or advice there, but it could be anything so free for you to say, do you have any advice and thoughts you would like to share?


Alec  (01:25:17): Yeah, for sure. I'll go backwards. So on the EA perspective one, I would say in your own personal life and career you should use the importance neglected, this intractability framework for what to work on but I would pair that also with a comparative advantage framing as well, where it's given your skillset and your experience in life, what are you best poised to actually do in terms of impact? And so, in my personal case, it's that for the last five years now, I've been living and working in DC, I've been at four different think tanks prior to founding this new one. I've been learning a lot about how DC policy works and then prior to that, obviously just reading for a decade or more about US politics and policy and really accumulating this lots of background knowledge. So there are lots of other things that someone can do to have impact in their life that are way different than working on policy and politics in DC. But me as an individual, I would be wasting the experience and knowledge I've built over time to completely pivot into an area that I have no comfort or advantage in. And so, I think people should really reflect in their own lives on what are you poised to be able to do? But then from that domain, there are very different opportunities that-- Are there low impact versus high impact or things that everybody else is working on that are neglected versus not neglected and really just be careful about that because how you spend your career matters a lot for improving the world and then for people as individuals I would just say people need to be much more risk seeking in their careers.


Alec  (01:26:51): We have potential donors we talk to who are looking for new institutions to fund, and they think that right now the main bottleneck is not money, it's actually talent and scalable institutions, scalable organizations and we look around and we see that a lot of people we know in DC, they seem too risk averse. They're comfortable where they're at, and maybe that's a way of optimizing your own like personal utility but I think the world needs new organizations, needs new institutions and maybe a more stressful life route, but your odds of success are much higher than you think if you're the right kind of person. And here's the biggest part, if you fail it's going to be okay. I think most people think their life will end if they try something big and it fails, but actually as long as you act with integrity and try your best, most people will respect you more for trying to do the thing and failing, and you still have your network, you still have your experience. You can get a new job. In the US, the labor market is very tight right now. If something doesn't work out, you can get another position. It's okay, you'll be fine. And reducing that kind of fear, I think is one of the main obstacles for people to try new things. And so, I encourage everyone to pick the riskiest highest impact option they're considering.


Ben  (01:28:09): Great. So that's great advice. So do the things where you have comparative advantage, look at things under research and attractable, and then also take good risks, which typically would be maybe bigger risks than you're currently thinking.

Chris Stark: CEO climate change committee, NetZero policy, adaptation, COP, fairness, behaviour change | Podcast

Chris Stark is the Chief Executive of the UK’s Climate Change Committee. The committee is an independent statutory body which advises the UK and developed governments on emissions targets and preparing for and adapting to the impacts of climate change. I think he is one of the most important and thoughtful thinkers on climate change policy today.

We discuss what is most misunderstood about climate policy, the likely co-benefits and the scale of investments needed especially in the UK in replacing “old inefficient stock”.

What positives/negatives came out of COP26 (recent international climate conference) and what to hope for in COP27 and beyond. Why COP26 might have been considered a corporate COP as a criticism but why that might not be bad. 

Why sector specific strategies might be a better plan than a focus on carbon tax.

Why adaptation or resilience has been a bit of a “Cinderella” in climate discussions. What the science suggests is already baked into 2050 scenarios and so what we should be thinking about adaptation as well as mitigation. 

The complexities and challenges around “behaviour change” and why it’s not a great term. Why we might not need a complete culture change (in the sense of changing lifestyles) but the intersection of behaviour and technology. (For instance, still driving cars but electric cars on a decarbonised grid.)

Why a sense of fairness is one the most important climate policy (political economy) considerations and what we should think about in terms of climate impacts falling unequally across countries and peoples. 

What role finance has to play and Chris references the work of Nick Robins at  looking at this, link here. Also see his work for Grantham Institute links here. 

We discuss:

  • Climate assemblies (and why Chris changed his view on them)

  • Divest/engagement strategies 

  • Carbon offsets 

  • Carbon taxes 

  • The role of nuclear 

  • Land use

  • Road charging 

And we end with advice Chris has for people. 

Various links to the CCC work can be found here.

Transcipt below, you can listen below or where you get podcasts. Video above or link here.

PODCAST INFO

Transcript with Chris Stark (only lightly edited, so expect typos etc.)

Ben Yeoh (0:00): Hello, and welcome to Ben Yeoh Chats. If you're curious about the world, this show is for you. What should we be doing about climate policy? On this episode, I speak to Chris Stark. Chris is the CEO of the UK's Climate Change Committee, and a leading thinker on climate policy. We speak on the transition to net zero, the investment needed, and what is most misunderstood. If you enjoy this show, please like and subscribe as it helps others find the podcast. Thank you, be well.

Ben Yeoh (00:31): Hey everyone! I'm super glad to be having Chris Stark with me. Chris is the chief executive of the UK's Climate Change Committee. The committee is an independent statutory body, which advises the UK and developing governments on missions, targets and preparing for and adapting to the impacts of climate change. And I think he is one of the most important and thoughtful thinkers on climate change policy today. Chris, welcome.

Chris Stark (0:57):  Hi Ben, it's very good to be here.  


Ben Yeoh (0:59): So, what do you think is perhaps the most misunderstood about climate policy and thinking today? For me, at least from a UK perspective, I was quite moved by your committee's work that suggested, although we need a large amount of capital investment, particularly turning over capital stock around the order of say 50 billion or 60 billion a year. In terms of percentage GDP, this was maybe 1% of GDP, and that this investment generates a lot of positive economic returns, not just in terms of climate, but a lot of natural capital, but a lot of many other co benefits. And I guess you can see this on an individual basis. So, if you upgrade your fridge, obviously, that costs you say 1000 pounds, a lot of capital expense, but you get lower operating costs and your fridges cooler, and it's got all the latest kind of things. And I kind of feel when I talk to people, people don't really understand that actually on a net basis, it may not cost that much. What is it for you? Is it along the lines of that which you can elaborate on? Or is it a couple of other things? What do you think is misunderstood?


Chris Stark (2:04): Well, I think there are misunderstandings all over the place. I mean, it's the top misunderstanding is that climate change is something that's you know, a bit further down the road, you know, that we will get to climate change, but we don't need to worry about it right now. I think that's the number one fallacy with us now.  I mean, we are speaking today in January, and it's really warm, it's very unusually warm. And you can see that it's precisely now affecting the growing season. So, you know, there are clues everywhere. And although that sounds quite nice, that's actually very problematic. You know, there's all sorts of reasons why that's a problem if the pollinators aren't there for the flowers when they come out then you've got a new problem with biodiversity and, you know, the whole kind of system of food, for example, that we have as well. So, the climate thing is, I think number one is this idea that it is something that can wait. And we still get that even though of course, it's much more popular in the discussion today. But I think the other one is the one that you raised, and you completely nailed it in the way that you described it. This idea that somehow tackling the issues of, you know, the underlying cause of climate change is going to be ruinously expensive. It just isn't and I honestly really liked the way you described it there. 


Chris Stark (03:23): Challenges that we have, lots of things, technologies that we use in everyday life, right across the economy, in every corner of modern life, we use fossil fuel technologies. We've kind of got to the point where we don't even notice it, because it's so pervasive in the West, certainly. And we got to change that. And it is a huge shift change that has a massive inertia in the system, all the infrastructure that's been there to establish those fossil fueled paradigms, and every sector of the economy, there needs to change. That is predominantly about investing. So, we need to invest to change the assets that we are using. So, you mentioned it, you know, the fridge is one of those fossil fuel assets at the moment because it uses electricity, but you can get a better fridge. A more obvious example is a car that you may drive which at the moment; most persons drive a petrol diesel car, in the future, that could be an electric car. That requires investment to change over these capital assets. And it takes time to do that, unless you're willing to do something pretty radical, and strand those assets to stop using them before they get to the end of their useful life. But that's investment and it does cost, there's no doubt there's a big investment cost to it. But the key thing and the thing that most people don't understand is that in the use of those assets that you replace those fossil fuel assets with. So, the electric car, or even that fridge that you talked about or something called a heat pump, an alternative way of heating your home.


Chris Stark (04:52):  They are much more efficient in the way they use energy. They're typically electrical. So, if you can decarbonize the electricity to those devices, then you've got, you know, cheap, your readily available decarbonized source of energy, and they're cheap to run. And if you net those two things off that big capital cost, and the cost of using it, the cheaper cost of using it, then you get to this very low cost all across the economy. It is close to 0%. And actually, in these moments of high fossil fuel prices, it actually gets slightly cheaper to decarbonize, because, of course, you know, this is the alternative to that if the relative cost falls. So, there are lots of things that people assume out there in climate land when they're commentating on it, but actually, most of it, you can kind of puncture with a bit of analysis, which is largely what we're here to do.


Ben Yeoh (5:43): And do you think that holds for the UK? Do you think that holds globally as well?  It seems to be based on some other analysis I've seen, but I don't think I've seen it as in depth as what you guys have done for the UK. But it would seem to hold that logic. Obviously emerging markets will be slightly different on the curve. And they could, in fact, leapfrog to some degree. And maybe we're seeing that in places like China in some aspects already, because one of the push backs I get when I talk to people who are sort of open minded, but a bit skeptical, they say, oh, what about China or what about the world? So, the UK can do it. Now there's a kind of historical, maybe moral and ethical imperative for why the UK should be one of the first in any event and socially-developed nations. But even putting that to one side, you think that broadly holds globally?


Chris Stark (6:33): Yeah, it really does. I mean, actually, the UK is one of the hardest places in the world to decarbonize, you could say it's the hardest actually, when we were 30 years ago, and were really starting on that journey. It probably was the hardest place because we had been most invested, more invested rather than any other country in the world in fossil fuels. Because we started it off really, since the Industrial Revolution. There are parts of the world that haven't made that journey quite as extensively as western economies like the UK. And actually, they should be even cheaper to decarbonize. And this is the exciting thing for me. Now, it's convenient to use fossil fuels. So, I think this is the challenge that you can take a lump of coal out of the ground today, I can hold it in my hands, and you know, I can put it on my desk for 1000 years, it will still retain the energy that you know, you might want eventually, within it. It's a convenience to have that coal. If you fall down the trap of going for that convenience, building out the kind of infrastructure that older western economies have built out based on fossil fuels, then you will face big challenges in the future to compare back to something zero carbon in the future. 


Chris Stark (07:46): The challenge for those economies, China might be one of the developing economies, as they are sometimes known, most notable, probably India, is to not go down the route of building out that fossil fuel infrastructure in the first place. Really interesting questions about whether a country like India needs a national grid in the way that we have in the UK for example. Might be much cheaper for them not to do that, to have solar, for example, and wind and hydro as the core basis of their energy system, but in a kind of a set of islands across the whole country. That is probably a cheaper energy system. So yeah, that story does hold in other countries. In fact, it's probably more compelling in other parts of the world.


Ben Yeoh (08:26):  So, coming out of COP 26, we had some progress and some continued areas of improvement. And we're going to go into COP 27, 28, 29 and further on. It's the kind of ongoing progress rather than a sort of point in time. But what would you point to as maybe successes on the global community basis? And what would you like to see? Maybe areas where we could improve?


Chris Stark (08:50): Yes, COP 26 was really interesting for all loads of reasons. And I find it personally very interesting, because it was my home city. So, I mean, the topic that I cover in my professional life is climate change. And it was in my home city of Glasgow. A great place to host it actually, because it's set up quite nicely to deal with a conference of that kind of scale. And I think it did a reasonably good job of it. [] the really interesting thing about this COP was that it was criticized by some of the corporate COP. And it was a corporate COP and I don't think there's any shame in that actually. I think the really interesting thing at COP 26 was it was the first time I felt at least that at a COP corporate turned up. I mean, you could tell that it was the Triple A, CEOs, you know, top financiers, they were there. They weren't just there because they wanted to be part of the show.


Chris Stark (09:51):  They were there because I think they could see the opportunity and all of this for the first time. And you get this really interesting thing happening where the economics of the transition to decarbonize the global economy get better and better each year. The cost of solar falls each year, the cost of wind falls each year, constructing technologies that can use those energy sources. And that gets better each year and that eventually becomes very compelling. And I think that's what we saw. So, although that story has been brewing for a while, this was the COP where it became clear that those like Triple A, Blue chip corporates and financiers were interested. And then you have the thing that you always get at a COP, which was that civil society was there making its voice heard. Now interesting, I think when you get pressure from both of those things together, as world leaders start to get squeezed, and start to raise the ambition. We saw a bit of that at Glasgow at COP 26, but we didn't see enough. But the really interesting thing, for me at least is that in Glasgow, what we saw was an almost universal view that net zero is the site concept of getting to the point where you are emitting as much as you take out of the atmosphere to get to this kind of balanced position. Net Zero, carbon dioxide is now a kind of universal aim for every country in the world. 90% of the world's economy is now under some sort of net zero target by midcentury. That's amazing. You know, that is a real step forward. 


Chris Stark (11:20): So, we've not had that at the COP before. And we didn't even have that, you know four or five years ago, this is a huge, huge step forward. I think the UK can lay some claim to helping that process, actually, by being willing to make that the target [Inaudible: 00:11:33] in the UK, because it looks at not just carbon dioxide, but all greenhouse gasses, tougher basis. But that was a big part of the story in Glasgow. But what was absent was the near-term ambition to drive the transition. And the change in the climate is ruthless; it only cares about the cumulative CO2 that's put into the atmosphere. So, it's great to have those midcentury goals. But unless they're accompanied by short term action to suppress emissions, carbon dioxide comes from burning fossil fuels mainly, then unless we have that, then we keep pumping carbon dioxide into the atmosphere and the temperature inexorably on the planet keeps rising. 


Chris Stark (12:15): So, you know, we haven't got the ambition rate for 2030. And I think for me that's the disappointment in COP is that we didn't get that kind of, you know, Triple A, I mentioned that already when it came to corporates. We didn't get the same ambition from some world leaders, especially for 2030. Some countries have all agreed that they should have done better: Russia, China could have done more, Australia could have done more, Indonesia could have done more, you know, there's Brazil that could have done more. So, I think there is still a gap. And it can be closed. But it's a hell of a job now over the next nine years now to get to kind of make sure that we try and tackle that 2030 goal in the way that we need to otherwise… [a goal] for COP 26, which was keeping alive, the temperature outcome of 1.5 degrees centigrade, but I'm afraid that will fade away quickly, indeed, if we keep going on the same trajectory for Carbon Dioxide emissions. So, I suppose for me this was the COP that had some really good bits in it, and stuff to hang your hat on. We've finally tackled the issue of fossil fuels in a text from the UN. But there’s a lot still to worry about. So, COP 27 is where we go next.


Ben Yeoh (13:32): I can chime in with a lot of that. So, I've been an investor and I was speaking to a large healthcare company CEO, probably about a year ago. And saying that a lot of his end asset owners’ investors wanted him to think about net zero for the company. And he was open minded. He says, yes, this is definitely a problem. And then said, well, you know, health care, we're not the most intense company. It's probably not within our top five risks when we do our analysis, but we should think about it and maybe we'll do something and what's kind of, like sort of mildly positively committed, but nothing that I thought would get done anytime soon. And then fast forward to the second half of the year, there was a real step change in the rhetoric, committed to midcentury Net Zero, but more than that was going to go negative by 2030. And had put the short-term action plan in place. And that was really in the space of, say six to nine months and pressures, obviously from both employees, outside stakeholders, probably investors, and that and coming to the right thing to do.


Ben Yeoh (14:39): So, I do think there is a shift in corporate land, although again, not across everyone and everything, but you know, this is a company with billions of dollars in revenues, hundreds of thousands of employees. So, I think that was quite interesting. And then the second order effect of the fact that what we forget is that CEOs speak to politicians and governments all the time. So, they are uniquely influential as well as civil society and everything else, because they're saying, well, we've done it, and we're just doing it regardless. So that's in one sense. 


Chris Stark (15:11): Yeah. I think it's interesting you raise that though Ben. I mean, I think for me, there's a really interesting story behind that about how change happens. So, there is still a bit, we talk a lot about policy in my job. So, people refer to policy and policymakers. And there is a sort of notion sometimes about how policy is made by governments. And the thing, I still hear it occasionally, and the thing that is often said, is that, you know, leaders in governments respond to what voters' demand. And in democracies, like the UK, you get a manifesto or an election, the party of government is elected on the strength of that manifesto, and then they implement these policies, as though it's a sort of transaction between voters and politicians. Now, there are other systems of government, of course, but I'm thinking particularly of democracies, like the UK here. It doesn't really work like that, in my experience. And actually, the process of change, basically, as far as policy is concerned, is a bit more organic and interesting actually. And a lot of it is to do with corporations, and their willingness to change. And actually, governments and world leaders hear that; I think more directly than we do, sometimes the voters.


Chris Stark (16:31):  It's almost as if the voters have a veto, actually, I often think, but one of the interesting things in my world, at least one of the interesting transitions that's ahead for us is in vehicles and fossil fuel vehicles, to electric vehicles in the future. Now, that is a fascinating transition. And most consumers haven't been asking for that kind of transition to take place. It has been actually a more of an interesting discussion between governments cognizant of some of the environmental impacts of cars, but also some of the industrial impacts of car making and those automotive manufacturers. And you get the policy discussion happening a lot in that space, actually. So, creating the incentives that countries around the world have put in place for electric cars, as a means to grow the production of those cars, and the economic benefit of that for those countries that do so. 


Chris Stark (17:28): That actually took discussion between government and corporate. And we the consumer, then buy the thing that comes out of that via policy. And I think, actually a lot of this, there's all sorts of those kinds of transitions still to come. And I think we should think more deeply about how the policy process works. Because if you do so you can actually accelerate it. And that's exactly what's happened with electric vehicles. Actually, it's been the process of creative policy making, particularly in places like California that has dramatically shifted, you know, the pace with which we think we can make that transition. And just one final point on that particular transition is I think it's really interesting that the conventional view on how you decarbonize the transport system, say 20 years ago, maybe 15 years ago, maybe even as late as 10 years ago, was that you had to tax the fuel for those cars, you had to put a carbon tax on the petrol, or the diesel, the gas for the car, and eventually the consumer will flip to something else. But I see that story of how we've subsidized and supported and encouraged and regulated for electric vehicles hasn't really involved doing that kind of taxation at all. And that tends to be a better way to get things done quickly. And it's also a politically more acceptable way of doing it because consumers don't like paying higher taxes. So, I think that some of this stuff actually really matters for some of the other things, some of the other technological shifts that need to happen across the economy. So, I actually think we should think more about how that policy process works.


Ben Yeoh (18:58): That's really fascinating to me, because that ties in quite a few relatively complex observations that I've had, although contested. But to me that's putting together this idea that maybe we have Median Voter theory, where the median voter is, and this idea of the Overton window where you might get a window of policy ideas done. But if you look at it, if you want to really reflect that in democracies, politicians have to kind of reflect that median voter to some degree. The median voter really is signaling to us, they don't like carbon taxes or prices. And that's been pretty consistent wherever there's been a little bit of flex, but overall, you're not passing that through a median voter type of thing. But otherwise, if you think about what you're saying about call it the kind of industrial strategy or industrial policy, you can get corporate and say transport [ ] or maybe even buildings are where we do it; where corporates in buildings might agree like okay, we can do efficiency and do carbonization there, we don't necessarily need a carbon price, we can do a mixture of raising standards and some other incentives. And do it by a set of sector-by-sector policies which actually get there without having to worry. 


Ben Yeoh (20:13): You're within the Overton window because you're not necessarily doing a carbon tax or something like that. But you're getting to a place where you can affect policy more quickly. And maybe as effectively sort of the jury's still out on carbon within that. And I'm hearing one more thing to articulate this sort of view that actually we could do this, maybe in areas where we need. So, in this country, like say, transport buildings, maybe Agriculture and Land Use, and you don't have to use so much political capital on something like a carbon tax or price. There's an underlying background that always helps to have a price on something. But you might be able to get there with just a well thought out sector strategy, which if it has corporate buy-in, if you've got corporate buy-in policy support, and the consumer is not giving you a veto, then you can kind of go ahead and do it. Does that kind of make sense as a kind of policy framework as a theory of change?


Chris Stark (21:03): Very much so, I've been in this job for four years, four or five years now. And the whole time I've been doing this job that is the kind of advice that we've been pushing out to the government, this idea that you actually need sector specific strategies for decarbonizing. And the reason that's important is because the conditions are different in every sector. Now, you definitely do need a background carbon pricing; something that gives a strong signal to markets to move away from the thing that is causing the environmental damage. But the old […], I say old actually, but you still hear this extensively particularly from those in the oil and gas sector interestingly enough; that you still hear this idea that we can do it all with carbon pricing. But we know that's politically unsuccessful. And I'm not making... I run an organization that gives technical advice; I'm not making a political point here.


Chris Stark (22:00):  It's really important to say that we know it doesn't work, because consumers don't like paying higher taxes, a fairly obvious thing to see. So, I think if we can look around that, and increasingly use regulations and standards to try and drive the transition, and with that in mind, the idea that doing so actually will cut the cost to the consumer, if those technologies can achieve scale. That's really important in this transition. And that's the kind of advice that we've been offering. And it matters particularly because what's anchoring the whole strategy in the UK, and increasingly in other countries is this concept of getting to net zero or a goal by a certain date. Now, if you do that, it helps to work back from that date to work out at what point you need these technology transitions to take place. Because what you want to do, ideally is to achieve the technology transition, without stranding assets excessively. And that basically, if you want to get to net zero by 2050, kind of interesting stat for you is that, if you buy a fossil fueled asset technology, today, it will probably be in use for between 15 and 20 years. 


Chris Stark (23:13): So, if you want to get to net zero by 2050, you really got to stop selling those assets by around 2030, you know, slightly earlier in some sectors, slightly later and others, but that kind of date really matters. Because then you can achieve a kind of a smoother transition, you can replace assets as they reach the end of their life. Otherwise, you know, something much more disruptive is required. Now, that's really helpful if you're trying to anchor some of these technology transitions. So, you can set as we have done in this country, a goal for the ending of sales of fossil fuel vehicles, for cars and vans in this country by a date that's compatible with that 2050 transition. I think we could do more of that. And really interestingly, that that didn't involve doing carbon pricing, you could argue there's a sort of shadow carbon price in there. But what it really does is send an incredibly strong signal to the two really important participants in the market, the consumer and the producer. They both know what to do then. And they see that coming. And you get this kind of innovation cycle happening that drives down the cost. And that's exactly what we're seeing in electric vehicles. Now, we can do that in other areas. If you know, as much as I am often accused of being overly optimistic about how this transition can be achieved at low cost. I actually think we've been conservative about that, because we're not actually trying to draw in too much of that cost reduction story in the analysis that we've done. If we did, I think we could really, really bring the cost down in our assessment even further. So, I'm pretty sure that's the way it'll go.


Ben Yeoh (24:46): Excellent. I was speaking to Zeke Hausfather the other day on a recent podcast. He's a climate scientist. And he was making the point that so called 'doomsday' scenarios of say above four degrees or for in instance where life on Earth ceases to exist is kind of very unlikely that's very pessimistic. On the other hand, the challenge was really serious and that, in his view, one and a half degrees, given whatever what's baked in is very unlikely to happen. So, you're probably on a trajectory where even two degrees is possible, but optimistic. Four degrees would also be possible, but quite pessimistic. And then taking all of that of what's baked in, there's a lot of adaptation, which is going to have to happen, because there's a lot of baked in to what we already see what's going to happen in 2050. And your recent letter that you put out in January pushes forward, the idea that we probably do need to do more on adaptation. And perhaps our policy thinking on here is less well developed, given what's already baked in 2050. So, what do you think of that adaptation call? And were you hoping to see more policy perhaps from a UK perspective in 2022, and thinking about adaptation, and what's already baked in?


Chris Stark (25:57): So, adaptation is, I've described it as the Cinderella, it's the Cinderella of climate, discussion of climate policy is a slightly forgotten thing and it really shouldn't be. I don't think it is helped by the name. I don't like the name adaptation; I think it sort of tends to put people off. But I haven't found a better term; resilience is sometimes thought of as a kind of […] it's not quite the same thing. But I do think we need to start talking about it. And this idea, I think that occasionally takes hold in the minds of some of the commentators that we mustn't talk about adapting to the changing climate, because it will somehow take the pressure off, mitigating the climate changes in the first place. I think that's for the birds, you're going to have to bring these two things together. And the reason I say that is because I'm afraid with quite a high degree of certainty, most of the change over the next 30 years, let's say in the climate is now baked in; reminder, we've warmed the planet by about 1.1 degrees centigrade. Now, that doesn't sound like very much, but that's an average. And that's an average land temperature. There are differences across the world. The differences depend on whether you're on land or in water and depending whether you're in the upper atmosphere or down below. But 1.1 actually may not sound a lot, but it's a huge shift in planetary terms. And there's a lot more still to come. And I'm afraid that is driven almost entirely. 


Chris Stark (27:30): I mean, we might as well say it entirely by the change in the concentration of greenhouse gasses in the atmosphere. And what's driving that is us. And it is mainly a story of our use of fossil fuels. And we will, I'm afraid, reach those 1.5 degrees centigrade thresholds. I think with a pretty high degree of certainty. And that's what the UN's Scientific Clean House said as well. I'm afraid that's just an inevitability. The question is whether we hold there, or keep rocketing through into higher temperatures. And we really should try and avoid that. Because the damage to the, you know, the global economy, the damage to the welfare of people living in the global economy, the damage to systems that we rely on throughout the world, is dramatic, and every fraction of a degree of warming, we should try and avoid it if we possibly can. And I don't think it is very much the dog that has not yet barked. I don't think people have clocked how important this is, and how quickly the changes are happening and it is upon us. The 10 warmest years here in the UK have all been since 2002. We are now kind of consistently getting warmer temperatures; with that comes more extreme weather. And I'm afraid we're going to have to reach net zero in that warming climate. So that kind of brings in this question of whether you do adaptation or mitigation. And actually, that's for me, that's just a false dichotomy; you got to do both together. 


Chris Stark (29:05): I'm really keen on making this point because actually, even if you take very simple things like that kind of transition in the energy sector that we have been advising for net zero, we also have to think about having a resilient energy system in a warming climate that achieves net zero. And you need to think about those two things now actually. So that is one good example of where we need adaptation, actually. So, we know we're going to have a more renewables-based energy system in the future in this country. We know that our energy system will generally be more reliant on electricity. That means we have greater risks. When we have an interruption to the electricity supply. Greater risks of extreme weather mean we can't generate electricity from renewables. So, we should be thinking about these things now. And I think actually, when you do that, you get into a more optimistic framing perhaps of what can be done here and we can talk about a well-adapted economy that is also achieving net zero. And actually, I think that is a positive discussion. Got to get out of this negative feeling of it all. I'm afraid that's what's causing us not to act on it. But that's a big challenge; that's something that I think my institution is going to have to pick up.


Ben Yeoh (30:03): I agree, I always liken it to the fact that there is no reason we can't walk and chew gum at the same time, given what we have to do on this. And actually, when you think about let's call it resilience work, they often spark ideas, because some resilience is going to need innovation and technology change. And some of it can also be used for mitigation, but also just that thinking about having to invest for essentially a better future or neither arm sparks that thinking whereas ignoring it, you know, putting your head in the sand around it is just as bad on that as if it were to sort of say, okay, we're not going to do anything on the mitigation side, you know, where we're going to have to do both. So, I think that's interesting. And some of the resistance is....


Chris Stark (31:01): It's really tough, though. I was looking at this... I did a presentation a few weeks back. And one of the things I was looking at, to pull out some stats on the change that we've seen in the UK climate. We've done quite a lot of that in the last 12 months. And you and I were chatting before this podcast began. You were born in 1978; so was I, I hope you don't mind me telling your listeners that. But 1978, that's more or less the point from which we start manning, from one of the points from which we start measuring the change in temperature in this UK so that we look at the 1981 era, and 1991 to 2000. And point six degrees centigrade from 1981 of warming has occurred. So basically, what that means is reframing myself, since you and I were born, half of the global temperature increase that we are now suffering from climate change has happened. So, it's in your lifetime, that half of that has happened. 


Chris Stark (31:55): So, it is really accelerating. And sadly, it's not a surprise, because scientists have been warning about this for decades now. So sometimes it's presented as a surprise that we're seeing this accelerated warming or something that is worse than was expected. It's not; it's exactly what was expected. Models have been pretty accurate at predicting it. Halting that is really tough. And I think the other thing is, it's just holding it, there is a question about whether we can reverse it. But the first thing we've got to grab is the challenge of actually halting it. And that only happens when you get to net zero globally. So, this thing about doing the two things together, it's very hard to explain it. But it's really, really important that we do it. And you know, governments around the world are going to have to grab this. I hope the UK will be one of the places that get ahead of it. But then it involves spending money sadly and involves putting policies in place that are a longer term that tend not to be the kind of policies that governments that want to be elected in a four- or five-year cycle, want to implement. So don't dismiss how challenging this is.


Ben Yeoh (33:02): I agree, we definitely have to do both. There was an insightful report into climate change and behaviour change, which was only available for a short while on the government website, before it was removed. Because this government in particular seems currently intent or not raising possible behaviour changes such as going vegetarian, or once a week or something or flying less. And on the one hand, it seems completely fair to me that elected representatives influence the course of policy and you can see that and you know, they have to reflect that and the government has choices about where they want to put policy. On the other hand, I can see that cultural change often happens for good or for bad actually, despite or without government policy, and in fact, can go the other way. And I think of big social change movements, like really big ones, so the ending of slavery or women's votes or minority rights, which kind of came ground up and had a cultural change element. And then the government changed because society had already changed first. And I think to some degree, maybe it's correct that when you get a government, which is too on the nose about behaviour change, the population often reacts the other way. Because we don't like or a lot of societies don't like being told what to do. But wherever it comes, ground up, because this is what we want to do, it obviously becomes an easier thing. 


Ben Yeoh (34:30): So, I was interested because actually, in one of the analyses I saw from the CCC behaviour change could add an element to that, although you could take it from other places. I'd be interested in your views on where you sit on behaviour change ideas, or maybe even cultural change ideas. I'm quite keen on cultural changes. I don't exactly know where it happens. But I'm a little bit maybe more skeptical and where government mandated farmers, but it's definitely a mechanism and lever that we could push and some of it might even just be on innovation, right? We are going to need people to want to replace their fridges and their cars, be amenable to spending some of this money, future generations. And maybe if they wanted to, you know, eat less beef once a week then that would also be fine. So, I'm interested in where you sit and where there are pros and cons on it?


Chris Stark (35:16): … let's just kind of go from the top, you asked about behaviour change. And actually, it's not a term I like very much. I think behaviour change implies bad behaviour. [That’s not a useful framing]. We're talking at a societal level. The challenge of changing it, though, is a real one, right? So, we want to, in all the work we do, we see a really important role for change in behaviours and lifestyles, in, you know, assisting this transition to net zero that I've been talking about today. Really interesting, one of the last pieces of work that we did before we published, the advice that led to the UK's Net Zero target back in 2019. It was a very last-minute thing. So, we thought we were just kind of stepping back. We'd sort of built this pathway out to net zero and a loose pathway for the UK economy, could be carbonized to net zero, to justify the analysis of the recommendation that we've done. And one of the things we were able to do for the first time was just step back from it and see, right, to what degree is this transition due to technology shifts, and to what degree does rest on some change in behaviour in society. And it was really striking that the kind of pure technology changes that have driven emissions down today in the UK. And by that, I mean, things like causing a coal fired power station and replacing it with a wind farm. 


Chris Stark (36:47): That's the kind of pure technology change in the sense that I, as a consumer, when I boil my kettle don't know that the electron was generated from a wind farm. You know, it's something that happened somewhere else, there's a lot of that still to come. So, these sort of technology shifts, there's about two fifths of the total emissions reductions over the next 15-20 years, two fifths of it comes from that kind of technology shift. The rest of it involves some change in behaviour. It's really interesting when we sort of sat back and looked at that, and we repeated the exercise last year, about a year ago, we did our most recent advice on the path for UK emissions with five separate scenarios, for getting to the net zero. One of them actually focused on changing behaviour. But in all of those scenarios, behaviour change is important. And then the rest of it; more than half involves some element of changing behaviours, some of that is what you might call a kind of pure behaviour change. So, changing a diet, I suppose, is the best example of that. But actually, most of it, over 40% of the emissions reductions that we are predicting would be necessary by 2035 is a mixture of technology change and behaviour change. And that's the stuff that I find most interesting. So that's us moving to using heat pumps, which is a shift in behaviour, because you don't use a heat pump the way you use a gas boiler. So as using electric vehicles, rather than petrol cars, because you got to plug them in differently, that's a behaviour change. There is a need for some changes over and above that. And I think the most obvious of those is diet, the other one that people talk a lot about, including us is flying, doing less of the flying stuff. But actually, that wedge in the pie chart that we produce was less than a fifth. So actually, a lot of behaviour change is important. It is mainly about how we use these new technologies that will help us to get to net zero. And I think we should be more willing, therefore to talk about changing behaviour because you raise another question. Another term in your question to me about culture. And actually, I don't think that we need a change in culture, to get to net zero. By and large, the kind of culture and lifestyle that we have as the UK today is what I think we will have in 2050. We'll still be you know, traveling on roads in cars, which will be electric cars and we'll still be warm in our homes.


Chris Stark (39:13):  So, I think this idea that you need some dramatic shift in, you know, the kind of fundamentals of the, you know, the whole economy is worth probing a bit. But definitely we think it's important to change behaviours, it definitely makes the whole thing easier. And for me, this is the last point on this for this particular point. That's where I think the government has failed actually, is that because they haven't grasped the behaviour challenge. They are making it harder for themselves to achieve net zero in their own strategy, because they're missing out on this huge opportunity, I think, to make the whole task of decarbonizing the UK easier. And I think we need to find perhaps different ways of framing these different narratives because behaviour change does sound very confronting to people. [Inaudible: 00:39:57]. 


Ben Yeoh (39:59): Yeah, I guess they're all reframing. So, I guess this is partly the Bill Gates and others idea of having, if you've got an alternative technology, which is equal in price or maybe a very small green premium, you simply switch, you don't have to call that a behaviour changes because people switch to it. But actually, if you look at it, it is a behavioural change, we now use mobile phones rather than what the Germans now call Stock phones. And in fact, talking about the leap, I was speaking to someone from South Korea the other day, and their equivalent of social housing, doesn't have any landline phone infrastructure, they skipped it all, and went straight to mobile, which is a good example. So, if you build that into your social housing and the fabric of your building, then actually it's cheaper and better and cost you less, and you don't need any landline infrastructure to do that. And that essentially, is a kind of behaviour change as well. But like you said, is to do a technology thing. 


Chris Stark (40:54): I really agree. 


Ben Yeoh (40:54): And techno optimists might even say, for instance, short haul aircraft. If you invest enough money, electric engines might get you there. Long haul, maybe not. But there is sort of other ways, that even the things that you think [are hard], if you maybe do a little bit less long haul, and your short haul goes electric, and you have no issues with that, then there are actually other ways of getting there. I'm not entirely convinced by the techno optimist position, but they do have some points about actually, maybe if you're not going to want to do that, then you just throw more money on the innovation side to get around that.


Chris Stark (41:32): Yeah. And that's the key kind of challenge. I mean, I mentioned this work that we did a year ago, which looked at different scenarios for net zero, and we deliberately had an innovation scenario and a behaviour change scenario. We wanted to have archetype scenarios, we wanted to kind of stress you know, each of those elements of the transition, what was interesting was they look quite similar, actually, although in the innovation, while we were trying to stress some of these newer technologies, things like direct air capture, where you're going to take carbon from the air, from the atmosphere, and without using a plant to do so. You know, those kinds of technologies, they're great, you know, if you might well have an optimistic view on the thing you talked about aviation travel, I do, actually, I think we will have those.


Chris Stark (42:17):  I think we'll see progress there. But the reason that this scenario looks similar, is even if you believe all that, you've got to still do some pretty straightforward stuff over the next 20-30 years, to get to net zero. And my big concern with the kind of techno optimist, I think I am a techno optimist, but the big innovation proponents, particularly in the US, is that they sort of duck the idea that you've got to do anything difficult, that eventually, it'll all be fixed, but it isn't. It doesn't stand up to any kind of scrutiny, when you think about it in those terms. If you look at how long a plane, for example, will be in operation at the moment, it may be 30-40 years. So, you know that, unless you're going to actually physically take them out of the sky and put them out of commission to replace, or be replaced with something else, you know that you'll still be burning jet fuel in 2050. So actually, that leads you to I think, a more... and that's definitely you get from the CCC in our work, just a more straightforward outlook and all of this, where we completely support those newer technologies. But we also think that you've got to do the basics. And I would love more people to think that way about him.


Ben Yeoh (43:24): Now, I agree, I call that position, kind of a techno realist or techno pragmatism. So, you're not quite as extreme as Elon Musk but you have to be part of the solution. I think that's where you get actually both center right and center left thinkers in that space. I think on the center left, Ezra Klein and Adam Tooze have sort of talked about that position in terms of political economy thinking, but even more market-lead people also get there on the innovation front, actually, that leads me to remember, I was once jokingly punched by Lord Deben, who I think is still your Chair because I called him an old white man in jest. And this was unfair, because actually, he is one of the most progressive environmentalist politicians on the right side of the aisle and has been for many years. But it was really around this idea. And I guess that on the left, a lot of climate thinking is intertwined with other forms of inequality or poverty thinking, coming under this term, I guess, of climate justice. And those on the right, probably think about that a little bit less and think about growth and innovation in terms of helping the poor, and trying not to entangle that with more straightforward climate policy and their thinking, although a lot of it is intertwined. 


Ben Yeoh (44:42): And I was wondering, is there a way through these set of ideas about how you need to or not think about climate justice or things about that, in terms of the fact that in some ways, like you say, the planet doesn't care, just the more carbon you put in the air, it will slowly warm. And, you know, human beings decay out, you know, the dinosaurs came and gone off the planet Earth kind of way. You'll probably still be around in a million years. Humans may not be. So, I was kind of intrigued. Do you see any way through these set of ideas, climate justice, left, right and that entangled with things of inequality, poverty, growth and healthcare, there's all things. Some of that doesn't entangle with climate, some of it doesn't. But I guess a lot of progressive thinkers push on all of those, and makes it a little bit less clear for those maybe on the center right who want other policies on, say, poverty and growth, which don't want that entangled with climate.


Chris Stark (45:34): Yeah. For me, this is the critical issue. When it comes to that. I mean, we could talk for hours, I mean, many, many hours about the technology transition that will drive net zero. And I would love to do that. But you know, I deeply love to talk about the economics of that transition. But what that all tells us is that there is a sort of momentum in the technology space towards these decarbonized technologies, which is great. And the underlying economics, again, in any scenario was profound […], this transition taking place, what it needs, of course, is policy to make that work. But it's the policy question that then keeps coming. The policy question for me that really jumps out at you is not really about which technology to support. It's what you might call the fairness question. And I think this is now the critical issue and probably always was the critical issue, but now it's very obvious. So, I have to say, don't have that much time but not because I don't believe it but I don't think it's that compelling for many people, the kind of standard equity argument for acting on climate change is that we, in the rich Western economies caused this problem. And therefore, we should make reparations and make it happen quickly, and then fix it and go faster than other countries in the world to fix it. Whilst that is true, it's just not a compelling political narrative for a political leader. And we do need political leaders in this space. So, for me the more compelling story, when it comes to fairness, is about the distribution of the costs and the benefits. And that for me is the fairness discussion that we need to have. You can have your own view on the equity arguments on climate change. And believe me, I absolutely hold the same view on that, you know, that we do have a historical legacy here is, those countries in the world that are suffering most from climate change, have done the least to cause it. So, there's a very obvious equity problem there. The other equity problem instantly is the future generation problem. And this is the kind of reverse of COVID politics, funnily enough. The future generation, the younger generation, has suffered most during COVID because they have suffered the kind of economic insecurity that comes with the measures that we've had to take globally. And yet, weirdly, conversely, has had the least risk from COVID. 


Chris Stark (47:56): So, you know, climate politics is the flip of that. We need the older generations to make right what they caused for the benefit of the future generations. Now, we may see that kind of clash coming out of this COVID pandemic. But all of that stuff, I just kind of set that aside, I don't think you need to believe any one thing on that to act on climate change. But what you definitely do need is a policy on spreading costs and benefits fairly in this transition to net zero. So, for me what the one I want to focus on, because although I think the overall cost of the transition, in aggregate is low, no one experiences an aggregate cost. So, there will be real costs for real people, depending where they live, what their job is, you know, what kind of lifestyle they have, and their income level. And although the overall cost of this is low, policy will need to try and spread those costs across the economy. And it will also have to try and spread the benefits as well. And I think the benefits spreading are even harder in many ways than the spreading of the costs.  It usually leads you to thinking about fiscal tools, tax policies, but actually it is much more fundamental than that. I think it's about where you put investments, for example, for some of the industries that you might need for Net zero. Do you put them in places that have been damaged by previous transactions? That seems to be the logic of what the present government is trying to do. You know, these kinds of thoughtful things need to be brought out into the open, I think. But fairness for me now is the issue, when it comes to net zero. The equity stuff is really at the margins of that, from my perspective.


Ben Yeoh (49:35): How do you think we might get a better read on that?  I reflect on two things, sort of an imaginary coal miner, you know, or stories that I hear from them. They don't mind so much losing their own livelihoods if their sons and daughters have really great opportunities in something else. But that's quite a hard transition to do. You know, that's both generational and different jobs. I'm intrigued by the climate assembly process, which I know you were partly involved in. I was slightly disappointed that I didn't feel I got as much out of that or widespread acknowledgement. I do feel that's one sort of deliberative democratic process which might get as further along as it did for instance with abortion in Ireland. It doesn't seem to have triggered in the UK here as much but maybe it's early days. So, I don't know if you've thought of any other ways of where we're going to get to on this…..


Chris Stark (50:28): Well, it is still early, but we're going to run out of time, if we don't put in place some strategic policies to support all of this. I think it is a policy discussion that sort of molded over my mind. When I would use that word; but I think it's the right word. And I had a pretty amazing experience on that climate assembly that you talked about; actually, I've been involved in a couple of them as well, in Scotland as well. I had a slightly reduced rule in the UK, one I was very central to. And a story I tell quite frequently now is that I went into that process, pretty dubious about it actually looking back and sniffy about the benefit of these processes. Because for me, as the guy who leads the institution that does the numbers, I was worried about undermining that technical analysis with this stuff about thoughts and feelings, you know, and I was totally wrong with that.


Chris Stark (51:21): I don't mind admitting it. Because it turns out, if you get a group of people in a room, if you explain the issue to them in straightforward terms, then of course, there are people at the margins who think that they still don't want to do anything about it. Most of them feel quite compelled to actually, get into the issues at that point. If you then present them with solutions to some of the problems that we talked about, and the climate assembly in the UK was about how you get to net zero, then they're up for it. Funnily enough, the great British public is actually pretty sensible at that moment. They understand the kind of nature of the challenge quite easily. And they equally understand the solutions. And the challenge wasn't to get them to support the solutions. The challenge was to hold them back actually, from wanting to be involved in the process after it finished. I think that's fascinating, definitely [Inaudible: 00:52:10], but I definitely agree with you that it didn't have the traction process as good as that I feel it should have had. Now we used a lot of the insights from that process in our technical modeling, which is, I think, the way that we'll continue to work. 


Chris Stark (52:15): So, the work that comes out of that climate assembly has fed into the technical modeling that we've done since then we have a good handle on some of the key things like behaviour change, we've talked about already. But we needed a bit more than that. The other outlook on this, which I think is slightly more productive in the current political climate, is that we know this is an investment, heavy transition. It does involve investing in capital technologies. And we know we need to do that throughout the country. This is not a game changing inclusion. But I think it's become more obvious that this is a larger than investment story. And in the world, where you're making investments of the order of, we say 50 billion, the government says 60 billion extra capital expenditure across the economy each year, from about 2030 onwards. In that world, you can direct a lot of that investment; you can put it in places where there hasn't been that kind of investment. And if you know, you're going to have to do it, you have to believe that the legal targets we have in this country will be delivered, and I do believe that. But if you know that, therefore they will be delivered, then you also know that that investment has to be made. And I think that is a pretty interesting set of circumstances because it means you can free up some of the policies that we have never had in previous transitions, coal being the obvious, most recent one in the 70s. Moving away from coal, we didn't have a good sense of what was coming next. We didn't plan for it in that we are not talking here about the planned economy. But I am saying that there are so many aspects of this transition that lend themselves quite well to planning that investment, which will mostly be private investment, shaping it to go to certain territories of the country. And I'm quite excited about that. Because I think that is a route into talking about some of the fairness things in a more productive way, regardless of your political view and all. So, for me, that's another interesting angle on it, even if you don't want to do climate assemblies.


Ben Yeoh (54:19): Yeah, I kind of think that if we had more climate assembly type thing, I'm very fond of this participatory form I've held on conferences myself just getting people involved, because a lot of this is to use a great British English term common sense in some ways. And like you say, again, something I believe, and I think is true is in general, we're not end masse. That's stupid, right? We can grapple with that. Just a lot of the information isn't told to us in plain English, you know, there are acronyms and jargons and politicians don't say anything of substance anymore. But when presented with that, a vast majority of people agree on a set of things and reasonable people disagree at the margins, where there's difficult things to agree upon. So, I kind of think more of that would actually get people thinking more pragmatically given that actually as you say, it's happening. So, it will have to come sooner or later and the later you do it, the more it will cost and the more disruptive it will be.


Chris Stark (55:14): …very briefly on that, because I think there are certain aspects of this transition that will lend themselves better to that style of work than others. And the one I would keep coming back to is the challenge of how you decarbonize buildings, because communities across the country, we live in those communities, they are different anywhere you go. And that's what's interesting with traveling around the country; you find that villages, towns, cities look different, depending where you are, they have different types of buildings, different historical legacy, different employment patterns, as well. All the other stuff that goes with that. Actually, bringing groups of people together to talk about how you invest in those communities. And as a byproduct, almost making them decarbonized is really important, because people feel that they have some handle on it, then some insight in it, and they want to do it. And that's basically what the climate assembly told us. So, I'm a big advocate for doing more [of this]. 


Ben Yeoh (56:08):…[you] can intertwine health and some other things, which I think you've said it yourself, it's likely to be localized plans, because different local regions have different needs, may be settling and trying to put all of the necessary thing together before moving a little bit on to finances. So, my read of the CCC analysis has four buckets of meeting net zero demand reduction and efficiency, low carbon solutions like electrification, low carbon energy, and then offsets. And you've done a call out for voluntary offsets. So, we'll collect evidence this year, and it has to happen across the whole economy, agriculture, land use, transport, buildings industry. And on this, is there anywhere would you like to highlight where we might be doing better, or where we need more lacking or more innovation? It seems from this conversation and what I've heard before, kind of buildings and industry, and maybe transport to some extents are those two or three clusters. Because there has to be a conversation on buildings. And we're perhaps a little bit behind the curve and an industry the observation that you made. And I think we've said that; is that if you go five years ago and come to today, we made a lot more progress than perhaps we would have thought we might have been there for five years ago. So maybe this building's industrial transport. But is there anything you'd like to sum up on net zero where we may want to concentrate more on or where you kind of want to highlight there's been some good work on?


Chris Stark (57:29): Well, listen, it'd be very good if I could sit here. And I think when I look back on it in previous discussions, maybe a couple years ago, I would have given this answer, actually, it'd be very good to be able to say, look, we're doing well on the power sector, you know, and we need to now focus on transport or heat. But the truth is, actually, although we have done quite well, in the power sector, there's a hell of a lot more to do even in that sector. So, I'm afraid the slightly glib answer is that we're not doing enough in any area. And the challenge of scaling up to the degree that we need to scale up over the course of this decade to get to net zero team is a pretty, pretty impressive challenge. So, we'll need to do a lot more in all areas. The areas where I think we see the biggest gap now, though, are definitely in that building's challenge. The government does have a view now on how to decarbonize buildings in a way that they didn't even a year ago. But if I can characterize it, it's quite a kind of atomized market laid out look on how you fix that challenge. So, you almost need to set the incentives in the right place, and people just magically switch from gas boilers to heat pumps. We know that that's not quite how it will work. So, I think there's a lot more to do in the building's front, not least to design and plan a bit better the communal solutions that we'll need. If you go to the countries on the continent, lately, Scandinavia, you'll find that they use district heating networks and not gas networks. I see that kind of stuff really matters. So, a bit of work there would really open that up, I think transport is heading in the right way. But that's mainly because of electric vehicles. And we also need to stop using vehicles quite as much as we do at the moment. 


Chris Stark (59:00): There are still challenges there. But the big gap I'm afraid is in the natural world and in agriculture. We know what broadly we need to do but it's a messy old business decarbonizing land and farming. And we don't quite know what to do, nor do we know what policies will work. And I think for me, that's one of the most interesting areas. … With our work on adaptation, but also looking at issues like biodiversity and food production food systems, trying to build a more integrated view of what needs to happen. I think that's the challenge for us over the next few years. And the last sector, which I haven't mentioned, but I will briefly give a very important mention to is industry. And I think we know what to do now with decarbonizing the manufacturing construction sectors but it's a big policy ask. We've pretty dramatically changed our outlook on how you decarbonize those industries. And mainly, we've done so by building a better sense of how you invest in those sectors to decarbonize them, and catch the investment cycles early. If we don't do that, then those industries are going to be really hard to decarbonize at the pace that we need to decarbonize them and that brings in, I suppose some of the big policy questions of the age, like carbon border adjustments, emissions trading schemes, carbon taxes, you know, that kind of stuff is really frontline, I think, but there's the stuff to do across the piece. That's why my job is so interesting.


Ben Yeoh (01:00:15): Great. So maybe turning to the sort of second order element for our last few minutes, which is on finance. So, financing all of this in the real economy. And I've had some questions from listeners on the finance and economics of climate change, and I put them in three buckets, and we'll come around to them, but I'll put them all together. The first bucket really is, "what do you think are the options or even the best options for financing this as it seems, the longer we wait, the more we have to pay, but there is sort of the difficulties in pausing those options?"  The second is that "there's a lot going on in terms of changing or nudging financial regulation, and even thinking about what obligations investors or companies might have. And in that thinking, is there anything you think we should be embedding within financial regulation or financial nudging of markets that could be useful?" And the third bucket, I guess, "is the economics around climate change on the models, are they too far off to be kind of that useful? And what is the thinking on that side? So, there's been a lot of pushbacks in terms of like, oh, it's a few percent GDP hearing that, but if you put a lot of those imports, if you think about natural capital, they just seem way off. They sort of tail risk and some of the local and regional risks about this. There has to be a wholesale change of our economic model thinking of incorporating, I guess, more human capital or natural capital, or does what we have is sufficient to where we need to drive. So, I guess coming back to the first question on options for financing that and if you want to roll into financial regulation, we can do that.


Chris Stark (01:02:02): Well, the first thing to do and I always forget to do this, when I speak on podcasts or events is to plug a piece of work that we have already done on this. And if any of your listeners are interested, we have an absolutely brilliant forum chaired by Nick Robins at the LSE. Looking at this question of what it means to have a net zero aligned financial system alongside the more conventional questions about how you finance net zero. It's a brilliant [paper]. I can't possibly do it justice in a very short answer. But having a look at that is a good place to start. If anyone is interested, it's on our website, you'll find it; just have a look under finance. But the main point coming out of that, that work, he chaired this advisory group of stellar names, and we more or less swallowed his recommendations in our final recommendations to government. What he was saying is that the UK's commitment to net zero will not be a problem to finance. You know, there is no problem with the availability of capital. But what there isn't, I suppose I'm massively simplifying Nick's work here is the translation mechanism to make sure that, that wall of capital is something to discuss by people like Mark Carney gets to the places that need to get. And that's policy. It's mainly about making sure that policy permits that. Again,[without] going into too much detail about this. One of the really important reasons why that is important is back to the old story of energy, and how we decarbonize our energy system, which is still one of the central planks of the challenge overall.


Chris Stark (01:03:43): We are moving from a world where at the moment, the model for conventional energy production and use is that the consumer pays mostly for the thing that is being burned. We think the most obvious [model] about electricity generation, the consumer is paying for fossil fuel to be burned, in return for which they get their electricity. And the future energy system that we'll have is fundamentally different. The fuel in our renewable system or even a nuclear system is essentially free. But you need the consumer to pay for the capital cost of the thing that generates the electricity and I'm sticking with electricity because it makes this really simpler. You therefore need policies that permit consumers to repay investors for that capital kit. And, you know, that's difficult. I think there's one [area] the UK has done really well actually is to put policies in place to allow large scale renewables to be financed in that way that I've just described. And I suppose extending it; the challenge is to do that in other areas. So that is for me, one of the key challenges that we haven't yet tackled is to make sure that the policy is in place to allow capital to flow to those other technologies or other challenges. And then the other thing that's in place is the kind of regulation around finance, as you've highlighted in your question, and it's hugely important to have that. The financial disclosure rules there are immensely important. They are not the answer to this, but they do raise the issue, hopefully to the level of the boardroom, if you're a large corporate having to now comply with that, and they certainly do if you're a financial institution having to look at what risks you're exposed to, when it comes to climate. 


Chris Stark (01:05:27): I rather like the way Mark Carney [has articulated it] though slightly over simplistic, but I think that's why I like it, that he talks about the two main risks here being the kind of transition risk, and the risk of climate change itself. And you need to be alive to both of those when you're thinking about disclosing it, because climate is driving, you know, a pretty fundamental shift in asset values more than anything else. Now, when you bring all that together and there's a much richer story that we could spend longer talking on, if we have the time. I think this all looks quite appealing. And for me, that's what's exciting is I think we have moved from thinking of finances as sort of background condition, you know, within which you will achieve your aims on climate to thinking actually, no, finances are a lever. It's an enabler of progress. And I'm really excited about that kind of outlook on it. And it also takes us into a thing that we haven't really talked enough about yet. But here we are planning some work here in the CCC on how you finance adaptation, as well as net zero and mitigation. And I know that's a harder challenge. But I think we can do that for that kind of potent mix of policy and disclosure requirements and regulation. So, I think there's a lot more to do here, but it's something you can expect that we're going to do more work on.


Ben Yeoh (01:06:40): Excellent. And I'll provide the link to Nick's work, which is really good. In the comments below. So now in our last five minutes, I thought we'd do a quick-fire section. Maybe I call it overrated, underrated, but you can just do a sort of neutral or a comment on it. And then we'll end with a final question. So, I'll sort of push out an idea and you can say whether you think it's overrated or underrated, or some quick comment on it. So, let's start with divestment as a strategy, overrated or underrated?


Chris Stark (01:07:11): Massively overrated. So, we do need, I think, fossil fuel industries to make the transition. I think if they had the balance to do it, that transition will happen more quickly if they do. I think it also is the case however, if they're not willing to do so, then they should be viewed as pariahs. And divestment becomes a more legitimate strategy […], but we're not going to get to net zero globally without the support of those energy corporates, mainly.


Ben Yeoh (01:07:38): Excellent. Carbon offsets. 


Chris Stark (01:07:43): I can't answer that. But I'll say that I think this is such an interesting topic, so much so that we've just done a call for evidence on it. And anyone listening to this should go to our website and submit some answers to the questions that you've asked. There is a role for offsets. Very important to say that. And even more important to say that roles change over time. So, the role of offsets today is going to be very different from the role of offsets by 2050. And I see that it's really hard to communicate. So, I'll probably underrate it actually, given that all I've said there is a tool.


Ben Yeoh (01:08:17): Yeah, it's not stationary over time, I think that's a really important thing that we're going to need to develop and change with the time, interesting. Nuclear power, or maybe more precisely, mini nukes, but any thoughts on nuclear in general.


Chris Stark (01:08:30): So, nukes have a really important role. I mean, I don't know the extent to which it will play a role in the UK energy system, except to say that without it, we're going to really struggle to get to net zero. In our modeling, it makes up about 20% of total generation. And it plays a particularly important role because of the quality of the service that is provided from nuclear. But you can get it from something else. So, it's important to say that you could do something with carbon capture and it delivered the same kind of service. But I tend to think nuclear is something we want. But the real big challenge is, we don't want it to crowd out the cheap stuff. So, if you got too much nuclear, then you crowd out you know, the cheap renewables, that we every year have discovered become cheaper. So that is a difficult balance to strike, given how long it takes to build a nuclear plant. And that brings us to these mini nukes, and I'm indifferent too. I think that they potentially have a really important system value. I'm dubious about them being able to be built quickly. And back to something I said much earlier in this discussion that matters, because in this transition to net zero, we need things that we can actually plan confidently, and I don't think that many of these new technologies will be present until maybe the 2040s or later. So, again, it's one of those things I think we should support but let's see how it goes. But let's not rely on it.


Ben Yeoh (01:09:57): Green New Deal or the idea that we could create a lot of jobs in a greener nation.


Chris Stark (01:10:03): Yeah, whether it's overstated or understated, very important. I don't much like the term [Green New Deal], something quite different with it. And I do think it's been captured by a particular part of the political spectrum. But I think in the UK, people like Ben Houchen [Tees Valley mayor, a Conservative mayor in a Labour area] have really got the secret sauce for how he maintains public support for net zero and climate change, because they are tying it so explicitly to jobs. And it's not all about jobs. But we know that's a good strategy to maintain public support. So, I do think there are lots and lots and lots of jobs in this transition. And I have no problem with people who want to make that association


Ben Yeoh (01:10:42): And Road charging as a new tool.


Chris Stark (01:10:47): This is the piece of work I want to do. But I haven't done it yet. And it's a sort of economist [dream on] road charging? 


Ben Yeoh (01:10:55): Yeah. 


Chris Stark (01:10:56): But I don't know what's the right policy, because politics is too tricky. But I definitely see the value of it. And we are right up against it when it comes to replacing fuel duties in this country, because just briefly on that we've got raises about 20 billion a year at the moment. So that's the duties that we all pay on the fuels that we use for transport, that will dwindle very quickly, if we make the switch to electric vehicles as quickly as I think we are about to. And the replacement for that is something that requires a lot of thought and a lot of planning and a lot of careful design. Now, if you work that through in the political cycle that we have in the UK, we have probably got that it will be the next parliament where we need to see the implementation of these big tax reforms for transport policy. And that means potentially that election will happen next year or the year after it means that we need to be doing the thinking now, for what replaces fuel duty. So, this is really upon us, I think, and we hope to do some work on this. Others will do so too. But it's not strictly speaking about the climate issue. It's a sort of impact of Boris Johnson's own policy, which is the sale of petrol and diesel cars.


Ben Yeoh (01:12:08): Yeah, all of the economists tell me road charging is better. But then they told me it's the same with carbon tax though. Who knows? But I would also say that initially congestion charge was also much more controversial. And now London pretty much accepts it. And I think the mayor has said that he's going to start some work on road charging, because they will need the revenue. Okay, so then last question on that. Now this is really interesting, which is, do you have any general advice or thoughts for the listener? So one could be, do you have any left field advice, you know, or moonshot, you might only put 1% of your resources into it but you kind of think you know what, this is an option, if it really hits or pays off, we could do it, we could do something really big, even though there's a small chance that it might happen or maybe to the general listener who wants to involve themselves in more policy, or work or innovation in this, any two or three areas, you kind of think oh, you know, like maybe mention buildings, or transport or policies like, go into that we just need more bright, clever people working on those problems.


Chris Stark (01:13:10): Right, so you've hit me with a curveball, because I've not prepared an answer to this [we didn’t prepare any of this conversation], but I'm going to give you a slightly divergent answer to it if I can.


Ben Yeoh (01:13:16): Sure.


Chris Stark (01:13:17): Short and punchy. To anyone who's interested in this my kind of take on it, the answer to your question, believes that this is going to happen. It is really important. So having a general belief that all the things that you and I talked about today are legitimate and probable, because that really opens up the possibility. So that's my kind of first thing. And then the second thing, there are only two, and the second thing is going back to a point I made earlier, and don't rely too much on unicorn technologies and things that haven't yet been invented. As appealing as they are, they are firstly not necessary. And secondly, almost certainly a delaying tactic, if you follow that in that kind of line of argument. So, believing that we can do something on this, that it will be cost effective to do so. But also sticking to the boring stuff that we know we need to do. And you will find the investable propositions I think through that lens, and that's pretty much the outlook that we have in the CCC.


Ben Yeoh (01:14:20): Great. So that seems to be excellent advice. So once again, Chris Stark, thank you very much. 


Chris Stark (01:14:27): Thanks, Ben.


Ben Yeoh (01:14:28): If you appreciate the show, please like and subscribe, as it helps others find the podcast.