Charlie Hebdo

Je suis CharlieFollowing the terrorist attack on French satirical magazine Charlie Hebdo, the OECD Secretary-General has expressed his condolences and support, on his behalf and that of the Organisation’s staff, to President Hollande and the French authorities. He also indicated that the OECD deplores this action, which is fundamentally opposed to the values we hold dear.

I’m writing this after coming home from one of the many spontaneous demonstrations in France following the murder of the journalists and staff of Charlie Hebdo. I saw many people in tears. The magazine probably wasn’t well known outside the French-speaking world, but it was on Al-Qaeda’s death list after publishing cartoons mocking the Prophet Mohammed, and the journalists knew they were potential targets.

Provocation was Charlie Hebdo’s trademark, and with their satirical texts and illustrations, they managed to offend, outrage and insult most ideologies, institutions and belief systems at one time or another. They didn’t spare the OECD, defining it in this article as the intellectual framework that unites the technocrats who run things, a think tank at the origin of recommendations and a certain number of tools that claim to be neutral but that lead to the implementation of certain policies. On the other hand, Charlie Hebdo could also quote the OECD as an authority as they do here.

That’s what democracy is about. You don’t have to approve of the other, but you should be ready to recognise that they may have something interesting to say, even if you don’t agree with them. Or as the great Arab philosopher al-Kindi put it, “We should not be ashamed to acknowledge truth and discover it no matter what source it comes from”.

One of the victims was Bernard Maris, who taught economics at Paris-8 University and Iowa University. He had a wonderful talent for explaining complex notions in simple language, and pointing out what was wrong with conventional wisdom. In his newspaper, television and radio work, he argued for a world that was more just, where money didn’t rule everything, and we didn’t destroy the planet for some short-term benefit. Like his friends and colleagues, Bernard Maris’ fought against inequality, injustice and oppression.

The world is a sadder place without the mockery of brave, clever, funny people like them.

Can luxury lead us out of inequality?

Real LuxuryToday’s post is by Misha Pinkhasov, co-author of Real Luxury: How Luxury Brands Can Create Value for the Long Term, published by Palgrave Macmillan in 2014. He worked in OECD communications for nine years before founding NAIR-SAFIR, strategy consultants helping companies integrate shared-value thinking into their corporate culture and communications.

Inequality will figure high on government and media agendas in 2015. Kicked into the spotlight by Thomas Picketty’s best-selling Capital in the 21st Century and buoyed by findings of the OECD, Pew Research and others, inequality has even been dubbed the defining word of 2014 by the Financial Times.

It is about time. The Great Recession put people out of house and job, but bailed out big business with public money in the name of protecting the market economy and bringing a quick return to growth. Austerity on the one hand and corporate tax breaks on the other have only deepened the dangerous rift between the winners and losers in this game.

This growth-obsessed model looks more and more like a pyramid scheme, in rich countries in particular, with an eroding middle class, downward wage pressures from developing countries, narrowing population pyramids and now the effects of austerity. The semantic trick of calling it green growth, or sustainable growth, or inclusive growth does less to address the issue than to give it a more palatable flavor.

We need a major change in focus from wealth to well-being. From quantity to quality. From production to innovation. From profit maximization to value creation. From competition to collaboration. From ownership to stewardship. This change is not just a model for economic stability and sustainable prosperity. It also addresses the economic roots of international conflicts, which will only intensify with competition for resources. Like the founding intentions behind the European Community, it is a model for peace and security that has served that continent well.

This change will not originate from the top because it requires political will from the voting public. To spark that change, we must recognize that citizenship has been replaced by consumerism. We have put so much of the political process into protecting the market that the market has become the political process. Building political will now means changing consumer behavior by redirecting its ambitions. And if citizens follow their leaders in aspiring to a better society, consumers look up to the rich in aspiring to luxury.

Which points to an unexpected partner in all of this: Luxury brands, having ridden out the financial crisis almost unscathed, are now facing a contraction of their own, ironically just as the world economy recovers. Received wisdom says that luxury is immune to economic crisis because the rich can continue to afford their pleasures. Less discussed is luxury’s vulnerability to social crisis, when conspicuous consumption begins to look like vulgarity, if not depraved indifference. Barbara Hutton fled New York to Europe after a too-lavish debutante ball held amidst the Great Depression.

Today, luxury customers from New York to Shanghai are pulling back from ostentatious displays of wealth. Perhaps not the cossetted jet and yacht set, but certainly the broad customer base of well-to-do urban professionals who define the values and ambitions of the middle class. The brands that were most popular and visible until now are the ones suffering most as a result. And they are scrambling for solutions, be it in more discreet, higher-end products or new tactics in electronic retail and mobile commerce. But having established luxury as excess rather than excellence, they are focusing on the “What” and the “How” of sales but not on the “Why” of luxury, which is ultimately about leadership in evolving both product quality and cultural values.

So policy reformers need an attractive platform for their ideas and luxury firms need deep, new thinking to reconnect with their leadership potential. It is time for a dialog between citizen and consumer leaders. What is often shunned as an unholy alliance between makers of policy and marketers of luxury can – with sufficient sincerity – yield the keys to unlocking the public’s will for change. There is precedent for this, such as the fundraising collaborations between UNICEF and Gucci, or the tradition of Hollywood stars like George Clooney and Angelina Jolie serving as Goodwill Ambassadors. There are even more in the NGO world with names like amfAR, Louis Vuitton, Sharon Stone, Oxfam, Matt Damon and Bono.

But it must go beyond the pat PR rituals of charity events and celebrity figureheads. Luxury has more to offer than glitz. Throughout its history, luxury has been a spearhead for technological and social innovation. Luxury’s handling of rare and precious resources give firms extensive experience with sustainability. Luxury’s obsession with quality has protected fair labor practices. Luxury’s preservation of traditional skills and its engagement of the arts have promoted education, training, entrepreneurship, creativity and cultural preservation. Luxury’s global appeal, from European aristocrats, to Indian Maharajas, to Chinese industrialists, to Russian oligarchs, to City bankers, to Silicon Valley innovators, positions it as bridge for international dialog. And the visibility and influence of luxury punch far above its weight as an economic activity, making it an ideal platform for public advocacy and shaping values.

Inequality and today’s other global challenges, like sustainability, climate change, economic stability and peace are linked in a vicious web by the conflicting values of our individual need for well-being and our institutional promotion of consumption and growth. Solving them will mean addressing the gap between citizenship and consumerism. Luxury – the most emotional of industries – bridges that gap. And its aspirational pull bridges the gap between leaders and their constituencies. Having ridden out a wave of success, luxury brands are now scrambling for a purpose in the changing world context. Policy makers can give them a mandate that re-establishes their role as agents of change.

Useful links

Key role of cultural and creative industries in the economy by Hendrik van der Pol, Director, UNESCO Institute for Statistics, Canada at the OECD 2nd World Forum, Istanbul, 2007

15 resolutions for 2015

The best New Year’s toast I ever heard was proposed by some Poles, who claimed it’s traditional: “Here’s to the New Year, because even if it’s going to be worse than last year, it’s going to be better than next year”. But that’s an entirely personal view, and professionally, we’ll all be working to propose better policies for better lives again this year. So here with the help of Insights blog articles from 2014, is a list of 15 resolutions to make the world a better person in 2015.

  1. Get fit. To begin at the beginning. Every list of resolutions worth its salt starts with this because so many readers have a personal stake in the issue. Most adults in the developed world are now overweight and a fifth are obese. In the United States, Mexico and New Zealand, that proportion rises to a third. People who are severely obese cut eight to ten years off their lives, while every extra 15 kilograms of weight increases the risk of early death by about 30%.
  2. Fail. You may be doing this anyway, but for businesses trying to innovate, learning from experimentation also means learning from failures and mistakes – being allowed to fail and learn fast.
  3. Visit another country. There’s a joke about a holy man who’s allowed to visit hell for a few days, has a great time, and asks to stay. It then turns out to be, well, hellish, since, as God points out, there’s a big difference between being a tourist and being an immigrant. There’s also a big difference between where you’d expect expats to be happiest and the results of a survey of life satisfaction. The highest-ranking destination is Ecuador.
  4. Help other people. It’s nice to be nice. If you’re super rich, you probably know a lot about money, and a number of charities funded by wealthy individuals and institutions are working with the UN to help the financially challenged become financially included. By making it easier to get access to loans, insurance, savings accounts, etc., they hope to alleviate worries that economic integration and liberalisation of financial markets will lead to narrow, impervious corridors of spectacular growth surrounded by a hinterland of poverty.
  5. Learn to count. Kids today have never heard of balance of payment crises, but they used to be very popular in those bygone days when you had to turn a wheel to dial a phone number or change the TV channel (if there was another one). Now all the talk is about GDP, but what is GDP and how do you know it’s gone up or down?
  6. Be nice to mice. that’s the moral of one of Robert Henryson’s fables, but unfortunately the WWF reports a 52% decline in mammals, birds, reptiles, amphibians and fish overall from 1970 to 2010, while IUCN’s Red List indicates that a quarter of mammals, over a tenth of birds, and 41% of amphibians are at risk of extinction.
  7. Think more clearly. What does π times the radius squared calculate? What does multiplying current by resistance give you? You learned and forgot hundreds of things like this, but if you really want to learn how to learn, you have to think about thinking, and metacognition will help you do this, and make the world much more exciting and exhilarating too.
  8. Grow old gracefully. “You are old,” said the youth; one would hardly suppose/That your eye was as steady as ever/Yet you balanced an eel on the end of your nose/What made you so awfully clever?”. Better education and health. In Germany for instance, after 2050, at least a third of the population will have graduated from tertiary education and at least 80% of life will be spent in good health.
  9. Stop smoking. Air pollution has become the biggest environmental cause of premature death, overtaking poor sanitation and a lack of clean drinking water. Road transport is responsible for roughly half the air pollution in OECD countries, and up to 90% of that is from diesels.
  10. Change your mind. If today is your first day back at work after the holidays, you may be feeling a bit down. But for many people, this feeling isn’t temporary. Across the OECD an estimated 20% of the working-age population suffer from mental ill-health, and many of them may not even have a job: people with severe mental illness are 6 to 7 times more likely to be unemployed, while those with a mild-to-moderate illness are 2 to 3 times more likely to be unemployed.
  11. Get rich quick. It’s possible, especially if you’ve got money already. In the US, for example, the one percent’s share of pre-tax income more than doubled since 1980, hitting 20% in 2012. There were big rises in other (mostly) English-speaking countries, too, Australia, Canada, Ireland and the UK. More surprising, the 1% in traditionally egalitarian economies like Finland, Norway and Sweden also saw rises in their share of income, although at around 7% to 8% they were well behind US levels.
  12. Be happy. If you think that “happiness regression” is some politically correct way of saying miserable, you’re probably also unaware that the happiness revolution is in full swing. What it means is that national statistical offices are beginning to collect data on wellbeing; the OECD has prepared a manual on how best to do this; and politicians are promising to focus, not just on economic growth and better material living standards, but on the much wider range of things that are important to people.
  13. Be fair. If you think that the best way to pay less tax is to have less money, you’re wrong. Companies worth billions manage to avoid paying their fair share of tax through a number of schemes increasingly referred to as “BEPS” – base erosion and profit shifting. The mechanisms can be complicated, but the basic idea is to make income “stateless” by exploiting loopholes in tax systems created decades, or centuries ago. The OECD and G20 are going to put a stop to it though.
  14. Take stock. But leave some too, please. About 30% of world fisheries are currently overexploited, with many depleted or recovering from depletion. In part this is because governments encouraged the expansion of fishing through various subsidies, and now the people who benefitted don’t want to change. Fisheries managers can propose better alternatives to the current system, and the OECD has produced a handbook to help them do so.
  15. Stop making lists.

Useful links

OECD work