“The consulting industry has infantilised government” - Mariana Mazzucato on taking back control

How can the government attract the country’s best minds to work for them? How do we know when a private sector contract is a good one? And what can we learn from NASA about business and efficiency?

Mariana Mazzucato is a professor of Economics at the University College London and an advisor to many governments. In her latest book, ‘The Big Con’, she looks at the relationship between the consulting industry and government, and the way business and governments are run, and plans executed.

She joins Krishnan Guru-Murthy on Ways to Change the World to discuss how economic theory can streamline everything from school lunches to handling a pandemic, and the link between knife crime and the economy.

Produced by Imahn Robertson and Ka Yee Mak

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[summarydog]

00:00 The economy is influenced by how the public and private sectors are governed and their interrelationship.
00:10 A reactive government and profit-maximizing private sector with problematic relationship lead to a problematic economy.
00:40 Marianna Mazzucato, an economics professor, discusses the impact of consultants on businesses, governments, and economies.
01:25 Consultants are advisors who bring expertise to various sectors, including climate change and health
03:09 The government's attempt to run everything in the 70s led to a broken country. The private sector also makes mistakes, but civil servants are blamed more. Learning from mistakes is important, and there has been an ideology that values the business sector over government.
03:32 The private sector often brags about their mistakes, while civil servants are criticized. Learning from mistakes is crucial, and being a learning organization is important. There has been an ideology that values
05:34 NASA worked with businesses in various sectors to overcome challenges and achieve the moon landing.
05:42 Outsourcing brainpower without proper knowledge and contracts can lead to mistakes and inefficiencies.
06:01 The Consulting industry's influence on government contracts has infantilized Whitehall, hindering learning and capacity building.
06:38 Lord Agnew, a conservative
08:07 The problem is not having a new narrative or making the existing one softer. We need government and the private sector to work together for a better economy.
10:43 AstraZeneca is a good example of a well-negotiated deal.
10:52 Governments need to be good at negotiating and investing in deals.
11:03 Austerity is not the main issue, but rather the destruction of public organizations.
11:14 It can take
12:54 The core role of a university is not central to what it does. The core role of a government and health system matters. Government expertise is important for solving problems.
13:13 Government's past failures lead to a lack of confidence in their own competence. Dominic Cummings highlighted the need to change how government bureaucracy is built.
13:46 Creating dynamic and creative bureaucracies is important. NASA changed its bureaucracy to reach the moon. Geeks are willing to join government if its remit is different.
15:25 Making the economy inclusive and sustainable, benefiting as many people as possible.
15:32 The importance of having different representatives of the people making decisions.
15:44 Considering both big and small governments when thinking about who decides what's good for the people.
15:58 Austerity measures created social problems and had a negative impact
18:05 The curriculum fed to bureaucrats globally is framed as fixing market failures, but government failures are worse. Fear of risk prevents experimentation and learning.
18:27 Steve Chu left Stanford to become a civil servant not for money, but for the mission to make the world a better place.
18:43 Being a civil servant means helping steer and collaborate with the private sector to improve society, not just facilitate.
20:42 Consultants cannot solve sustainability and inequality issues. Governments should seek advice, but there may be conflicts of interest and lack of transparency.
20:55 More experts are needed to help and advise, regardless of sector. The key is deep expertise, conflict of interest, and transparency.
21:22 Consulting companies often have conflicts of interest by consulting on both sides. Transparency is crucial in consulting relationships.
23:07 Opportunity and luck played a role in my success as an author. The book I wrote in 2013, 'The Entrepreneurial State, ' influenced the UK government's industrial strategy. I also helped change the European Commission's approach to inclusive and sustainable growth.
23:25 The UK government's industrial strategy shifted from sector-focused to challenge-focused, with a focus on clean growth, healthy aging, sustainable mobility, and the day-to-day economy. I collaborated with Greg Clark and David Willetts on a commission for mission-oriented innovation and industrial strategy.
25:28 The 17 sustainable development goals are about designing policy to foster cross-sectoral investment and innovation. Government levers like procurement, budgeting, grants, and loans are used to galvanize bottom-up experimentation.
25:56 The clarity of goals is important to determine if they have been achieved. Some goals, like those related to health and climate inequality, are too broad to answer with a simple yes or no.
27:54 Risks and rewards of privatization and socializing rewards. Better pricing strategy for drugs to save taxpayers. Obama's green direction with guaranteed loans to companies like Tesla and Solyndra. Government picking up the bill for failed companies. Inequity in energy companies' massive rents and executive pay.
28:00 Retaining equity in investments. Criticism of Obama's handling of Tesla. Government steering fiscal stimulus in a green direction. Tesla receiving a guaranteed loan of $465 million. Solyndra's bankruptcy and the government's $500 million loss. The need for a smarter loan
29:57 Our form of capitalism is financialized, but the state has lost faith in itself. Financialization affects the financial sector, real estate, and insurance. The business sector doesn't reinvest in the economy or a greener economy.
30:36 Sweden's mission for school meals is to make them healthy, tasty, and sustainable. This aligns with their goal of a fossil-free welfare state. The supply chain for school meals needs to be green, requiring innovation and transformation.
32:14 Solving problems requires collaboration with other actors, not just bureaucracy. Dismantling the cartoon image of the bureaucratic vs. cool Elon Musk is essential for change.
32:31 Mariana Mascato shares her way to change the world. Collaboration and embracing craziness are key.

[dawidbosman]

I can relate to what the Prof is saying. For many years early in my career I worked for large consulting firms, advising clients from a wide spectrum of industries. All we could really contribute was independence and contingency capacity, not expertise; our engagement was simply too wide and diverse. Thirteen years ago I joined a state agency doing project finance and infrastructure. Now I have specialized in a strategically important field, and I have a sense that I am adding real value in shaping policy and strategy. My colleagues and I are doing what the state should be doing on a vast scale. It all starts with attracting and developing talented people, and putting them on a mission.

[jorgdirbach]

I think many people in the public sector became experts in perception management and internal politics. There is no more time to build up real-world knowledge to solve complex problems if their focus is only on power and climbing up the ladder. The politicians in almost any government today are the top-shots of this fatal development. They are now perfect clients for all the PowerPoint consultants.

[Kitty-ljeg]

Excellent interview! So true the government is fixing short term problems and creating more long term problems for the next governments. Middle class is getting poor. Taxing on ordinary people but not taxing big corporations is the problem with the government.

[TheLRider]

Consultants are there primarily as a blame avoiding tool. Any report or action proposed by a consultant for any politician or leader in the economy can simply be a huge source of browny points if the proposal turns out to be great success, otherwise it can be blamed totally on the consultant thus avoiding any negative impact on the politician. (Many leaders in business are huge politicians so don't think that they only exist in Westminster) They're prime focus is career progression..

[dreamEternal]

Damned intelligent Woman, excellent interview. Comes across as one who very much lives outside the box.

[cphcph]

The scary part is that more and more private companies outsource their brains and decision making to the same group of consultant. That leads to entire companies have all kind of managers and other talkers but no people who actually produce something.

[mattwillis]

This is one of the most important conversations I've heard in years, Mariana Mazzucato is an absolute hiero for the kind of attitude we need across every sector of public and private relations.

[brexistentialism]

'the economy is the output of what we do' the best explanation ever given.

[grantbeerling]

Not only has Mariana got a great engaging writing style, but also has a real understanding of whatever she writes about. As seen in her passion and heard in her fluid train of thought when questioned. No BS, Mazzucato ( I bet her children get away with absolutely nothing).

Highly recommend; 'The Values of Everything' if you want to get an overview of neoliberal thought both politically and economically, explaining why for example, a simple change in the early 20th Century had the later consequence of money received via rent (owning an asset be it land, patents, copyrights) becoming part of the measure of GDP, when in fact rent does not produce a product, it's as the classical economists, Marx and Keynes saw it, it's a fixed part of a products eventual negotiated price, and not as Marshalls marginal utility would have it as what people are prepared to pay, even rent. I will always think of marginal utility when ever buy a mars bar. Remembering the first one that quashes the hunger has the greatest value, whereas the 10th not so.

[thomasmarsh]

Superb talk, great work from Channel Four giving a platform to such an erudite and original thinker. It's long since seemed the case that the modern liberal-conservative penchant for outsourcing serves primarily to absolve governments of responsibility and to transfer public funds to private interests; and only incidentally to tackle whatever issue at hand.

[evas]

This talk was FANTASTIC! I could listen to Mariana for hours - a fresh, balanced, strategic view of big issues in our economies 👍🏼

[skunclep]

I can only wish more people listened to & were influenced by Prof. Mazzucato. An amazingly insightful and digestible deconstruction of Public Service Procurement, accompanied by a well deserved kick in the proverbials to the Consultation industry.
Thank goodness that the Prof. continues to teach, as this is where change truly occurs. I am truly envious of her students!

[twistedcherrypop]

This woman is so right. She is obviously way more intelligent than most of the vile commenters in this thread so far. Wish starmer would read her book- we need to invest, build and grow the public services not rely on the private sector- it doesnt work!

[macscott]

Two of the biggest value generators in the last 50 years, Internet and GPS, didn’t come from the private sector. Ditto all the standards that allow all this tech to interwork. Great interview. Totally agree on the early points on procurement and the need to retain skills as well…. Money comes and goes, organisational competence doesn’t. Killer quote for me.

[chanderveer]

Clarity of thought. Absolutely brilliant.

[alastairmcmurray]

I’ve worked on a engineering level with a quasi public body that spans the UK, the ineptitude was startling. Vast sums of money thrown at projects that hadn’t been engineered correctly, not commissioned fully and ultimately provided both the public and the institution a vastly over priced under performing solution. I have visited most of the early sites built back in the late 60s and early 70s and they are well built, similar in design and tech across the country, perfect solutions. Something has gone wrong in the 50 years since.

[TheLRider]

So many key points made in this single interview. Superb... Joined up thinking personified. Education vs prison a classic truism.

[diligentmindz]

Erudite and very timely. We need more of this, and much less of the infantilising impact of consultants on government policy implementation and administration.

[sailingsolstice]

How refreshing! We need more of this in the UK - it sometimes feels a though we are in a death spiral of faliours and learn nothing.