Book review : “Winners Take All: The Elite Charade of Changing the World” by Anand Giridharadas

When I decided to read Anand Giridharadas’s book “Winners Take All: The Elite Charade of Changing the World” I was looking for answers to my questions on changing the world through business. I finally ended up with even more questions! I read the book a second time, the list of questions kept getting longer, and many of my “mental models” were strongly challenged. Lastly, “Winners Take All” helped me conduct a deep introspection to reframe assumptions to make the world a better place. May be that was the author’s intention after all!

The book is an in-depth critique of many accepted “truths” today, such as:

  • The market is the most powerful vehicle for addressing the world’s problems;
  • The ideal market solutions blend social/environmental benefits and financial profits;
  • Technological innovation has the potential to solve most problems;
  • Governments and bureaucrats are obstacles for real change. Hence, solutions have to designed avoiding the public sector as much as possible.

The limits of changing the world within the “system” boundaries

 “Winners Take All” is a strong critique of rich elites self-appointed as leaders of social change.  The author argues that these elites, all in all, do more harm than good and contribute to or sustained the problems they are wanting to change.

Giridharadas claims that “elites believe and promote the idea that social change should be pursued principally through the free market and voluntary action, not public life and the law and the reform of the systems that people share in common; that it should be supervised by the winners of capitalism and their allies, and not be antagonistic to their needs; and that the biggest beneficiaries of the status quo should play a leading role in the status quo’s reform”.  As a result, rather than fundamentally questioning the rules of the game, looking at the big picture and shaking up the system, business saviors prefer focusing on impact investing, entrepreneurship, corporate sustainability, social responsibility, philanthropy and tech-driven solutions to save the world. According to the author, the do-gooders failure stems from the fact that they are “trying to solve the problem with the tools that caused it” in the first place without challenging mainstream assumptions, addressing systemic and questioning root problems because of conflicting interests. “Those who propose to solve problems in other ways—especially by looking at power and resources and other things unsettling to winners—are sidelined” Giridharadas says.

How to take it from there?

I feel that the book’s main recommendations are as follows:

  • Supporting and improving public institutions to be a central driver of change for the good of all.
  • Yes, it is good to make doing good easier but what is more effective is to make doing bad harder (through public institutions)
  • Real and sustainable solutions to our world’s problems require daring to ask “tough” questions and address root causes not the symptoms

Selected quotes from the book

“The only thing better than controlling money and power is to control the efforts to question the distribution of money and power. The only thing better than being a fox is being a fox asked to watch over hens.”

“There is no denying that today’s elite may be among the more socially concerned elites in history. But it is also, by the cold logic of numbers, among the more predatory in history.”

“For when elites assume leadership of social change, they are able to reshape what social change is — above all, to present it as something that should never threaten winners,”

“To fight inequality means to change the system. For a privileged person, it means to look into one’s own privilege”

“Inequality is built on antecedents—preexisting conditions ranging from ingrained prejudice and historical racial, gender, and ethnic biases to regressive tax policies that cumulatively define the systems and structures that enable inequality to fester.”

“Elite networking forums (…) groom the rich to be self-appointed leaders of social change, taking on the problems people like them have been instrumental in creating or sustaining.”

“More often, though, these elites start initiatives of their own, taking on social change as though it were just another stock in their portfolio or corporation to restructure. Because they are in charge of these attempts at social change, the attempts naturally reflect their biases.”

“It is difficult to get a man to understand something when his salary depends on not understanding it. —UPTON SINCLAIR”

“Stories promoted by MarketWorld that tell us that change is easy, is a win-win, and doesn’t require sacrifice.”

“Those who propose to solve problems in other ways—especially by looking at power and resources and other things unsettling to winners—are sidelined”

“MarketWorld had shown itself willing and able to engage in the arena of politics—to “change the system”—when it came to seeking lower taxes, freer trade, the repeal of laws like Glass-Steagall, debt reduction, scaled-back regulation (…). Yet the reversal of some of the very things it had fought for was deemed too hard, too political, too vast to take on.”

“Generosity is not a substitute for justice”

“Businesspersons calling themselves “leaders” and naming themselves solvers of the most intractable social problems represent a worrisome way of erasing their role in causing them.”

 “If you want to be a thought leader and not dismissed as a critic, your job is to help the public see problems as personal and individual dramas rather than collective and systemic ones.”

“It is hard to get a man to understand something he is being paid not to understand.”

Book review: Humankind a Hopeful History by Rutger Bregman

After the success of his first bestseller Utopia for Realists, Dutch historian Rutger Bregman has just published his second book “Humankind: a hopeful history”.

The main idea in a nutshell

The book’s main thesis goes as follows: “Most people, deep down, are pretty decent” and if we want the best from people, we need to believe in their innate kindness and ability to organize themselves for the common good. Inversely, if we are looking for the worst in people, we are bound to find it even when it does not exist!

Why this is important? Because of self-fulfilling prophecy: If we assume that most people are selfish and cannot be trusted, then we will design our institutions based on that assumption, which will create exactly the kind of people that our human nature view assumed.

Rousseau vs Hobbes debate on human nature: and the winner is …

The author cites two basic ways of understanding human nature. On one hand, Thomas Hobbes, claiming that, left to their own devices, people will wage a “war of all against all”. Hence, they need the institutions of civilization to restrain their instincts. Hobbes’ view aligns with the veneer theory stating that human morality and kindness is just a thin layer over an otherwise nasty human nature. On the other hand Jean-Jacques Rousseau, stating “that man is naturally good, and that it is from these institutions alone that men become wicked”.

When we look at how schools, leisure centers, companies, prisons have been designed, it is clear that the Hobbesian view dominate (ie. our natural selfishness and aggression can only be contained by strict laws, rules and regulations). However, Bregman, which sides with Rousseau, says that scientific evidence suggests that Hobbes’s assumptions are flawed. Bregman’s solution is to leverage people’s innate kindness to rethink” the way we organize our lives and societies.

Bregman’s plethora of examples and anecdotes

The book is full of examples, research and case studies to support Bregman’s argument and to overturn many common preconceived ideas based on Hobbes view. Examples include:

  • Agora: The school with no classes, no classrooms and no curriculum.
  • Buurtzorg : The “best employer” and “Best marketing in health care” in Holland with no HR nor a marketing team!

Bregman’s 10 takeaways:

In the book’s epilogue, Bregman recommends 10 rules to live by :

  1. “When in doubt, assume the best.”
  2. “Think in win win scenarios”
  3. “Ask more questions”
  4. “Temper your empathy, train your compassion”
  5. “Try to understand the other, even if you don’t get where there are coming”
  6. “Love your owns as others love their own”
  7. “Avoid the news”
  8. “Come out of the closet : Don’t be ashamed to do good”
  9. “Be realistic”

Selected quotes from the book

  • “Crisis brought out not the worst but the best in people”
  • “Basically, (…) we are trained to see selfishness everywhere. See someone helping an elderly person cross the street? What a show-off”
  • “There is a persistent myth that by their very nature humans are selfish, aggressive and quick to panic”
  • “A drug we use daily, that’s heavily subsidized and is distributed to our children on a massive scale. That drug is the news”
  • “Poll among twelve thousand parents in ten countries revealed that prison inmates spend more time outdoors than most kids”
  • “The opposite of play is not work (…) the opposite of play is depression”
  • “Our biggest shortfall isn’t’ a bank account or budget sheet but inside ourselves. It is a shortage of what makes life meaningful. A shortage of play”

Book review : Utopia for Realists by Rutger Bregman

Utopia for Realists is a book by Dutch historian Rutger Bregman. Originally written as a series of articles in Dutch, the book has been published in several languages.

The book starts with highlighting the benefits of free trade and globalization in terms of economic prosperity and social progress in the last 200 years: life expectancies, technological advances, military conflicts at historic lows, unprecedented levels of wealth …Then, Bregman presents the flaws within the existing deregulated neoliberal economic model, such as :  

  • Raising inequalities : He is in line with the ideas of Thomas Picketty (cf. Capital & ideology book review)
  • Wages not reflecting the value of the work: Bregman cites the social effects of strikes of bankers in Ireland and garbage men in New York City in the 60s and 70s. In the latter case, the city was on its knees after few days of strike, while in Ireland, the country continued to function normally over several months during the strike.
  • “Bullshit” jobs: Bregman cites David Graeber’s work on the existence and societal harm of meaningless jobs. Bregman mentions that 37% of British workers believe that their jobs are worthless and have no value to society
  • Gross domestic product: GDP is criticized as a popular indicator to measure economic progress.

Finally, the author proposes three recommendations (utopia) to rebuilt modern society and promote a more productive and equitable life:

  • A universal and unconditional basic income paid to everybody
  • A short working week of fifteen hours
  • Open borders worldwide with the free movement of citizens between all states

First utopia: A universal and unconditional basic income paid to everybody

The most developed of three ideas is the proposal for a universal basic income (UBI). Bregman’s underlying point is that poverty reduction pays for itself, socially and economically. Indeed, simply giving people free money, leads to reductions in crime and health problems, to improved school performance, to better mental health and to economic growth. Rather than discouraging work, UBI would instead enable people to seek jobs with true opportunities for growth and advancement.

Second utopia: A short working week of fifteen hours

In 1930, Keynes predicted that we would be working 15 hours a week by 2030. Since the 1980s, economic growth has translated, however, into more working hours instead of more leisure leading to stress and overwork, which actually reduces productivity.

According to Bregman, working less reduces stress, ecological footprint, inequality and unemployment, among others. It also fits with the needs of an aging population.  What is more, Bregman argues that a shorter working week is needed to deal with the erosion of jobs caused by automation.

Third utopia: Open borders worldwide with the free movement of citizens between all states

This is the definitely the most utopian proposal. Bregman argues that open borders could wipe out all poverty and raise everybody in Africa above poverty line. Open borders for people would make the world as a whole roughly twice as rich and would boost global wealth by roughly 65 trillion US dollars

It looks great but many questions remain without clear answers …

Most of the book focuses on “the why” and “the what” and less and on “the how”. In addition, Bregman’s concepts are presented from a very Western-centric standpoint and are not challenged from developing countries perspectives. Below are some question that I think the book did not address clearly:

  • Is UBI affordable for all countries?
  • Is UBI on the top of other government welfare programs / cash benefits or it is rather a substitute?
  • What is in the increase in the tax rates to fund UBI? Will it be acceptable?
  • Is free movement possible with only some countries applying UBI? Can we really expect a country’s taxpayers to give a UBI to anyone who chooses to move there?
  • Can rich countries accommodate millions of immigrants in a short period of time when free movement is put in place?
  • Is it true that many people would like to work less (and earn less) in a society of consumerism?
  • Is the fifteen hours workweek compulsory? If so, how to enforce it?

Quotes from “Utopia for Realists”

  • “If you can’t explain your ideal to a fairly intelligent twelve-year-old, after all, it’s probably your own fault. What we need is a narrative that speaks to millions of ordinary people.”
  • “Poverty is fundamentally about a lack of cash. It’s not about stupidity”
  • “A culture that encourages us to spend money we don’t have on stuff we don’t need, in order to impress people we can’t stand. Then we go and cry on a therapist shoulder. That’s the dystopia we live in today”
  • “Borders are the single biggest cause of discrimination in all of world history“
  • “In the twenty-first century, the real elite are those born not in the right family or the right class but in the right country.”
  • “But the real crisis of our times, of my generation, is not that we don’t have it good, or even that we might be worse off later on. No, the real crisis is that we can’t come up with anything better.”
  • “The idea that the GDP still serves as an accurate gauge of social welfare is one of the most widespread myths of our times. Even politicians who fight over everything else can always agree that the GDP must grow”

Capital & Ideology (Thomas Picketty) : Book review

About the book :

French economist Thomas Piketty published Capital and Ideology in French (September 2019) and then in English (March 2020). The book is somewhat an updated and enriched version of Picketty’s great success, Capital in the Twenty-First Century (2013), which focused on wealth and income inequality only in Europe and the United States.

After exploring historical and contemporary justifications for inequality, Piketty outlines, in his new book, potential means of redistributing wealth.

Key insight #1 : Inequalities are never “natural”

Inequalities are never “natural”: any regime justifies them by an ideology and builds them by laws, taxation, organization of property, education system… The system of inequality that prevails in a given country is first of all the result of political and ideological choices

The central message of Picketty is that behind every inequality is a system of justification that ensures its perpetuation. However, there is no determinism: a bifurcation is possible, if the right political and ideological mobilization is there.

“Every human society must justify its inequalities: unless reasons for them are found, the whole political and social edifice stands in danger of collapse.” 

Key insight #2: Inequalities have been growing since the 1980s after entering in the post-communist and hyper-capitalist word

After the fall of the Soviet Union, the world has entered a new unequal regime, which the author describes as “neo-proprietarist”, reviving the sacralization of private property in force in the 19th century. This regime glorifies the “society of winners “and justifies the explosion of inequalities by the fact that the most talented people deserve to enrich themselves by reward for their exceptional productivity.

Interpretation. The share of the top decile (the 10% highest incomes) in total national income ranged between 26% and 34% in 1980 in the different parts of the world and from 34% and 56% in 2018. Inequality increased everywhere, but the size of the increase varies greatly from country to country, at all levels of development. For example it was greater in the United States than in Europe (enlarged EU, 540 millions inhabitants), and greater in India than in China.

Sources and series: see piketty.pse.ens.fr/ideology

Interpretation. In 2018, the share of the top decile (the 10% highest incomes) in national income was 34% in Europe (EU+), 41% in China, 46% in Russia, 48% in the United States, 54% in Subsaharan Africa, 55% in India, 56% in Brasil and 64% in the Middle East.

Sources and series: see piketty.pse.ens.fr/ideology

Interpretation. The bottom 50% incomes of the world saw substantial growth in purchasing power between 1980 and 2018 (between +60% and +120%). the top 1% incomes saw even stronger growth (between +80% and +240%). Intermediate categories grew less. In sum, inequality decreased between the bottom and the middle of the global income distribution, and increased between the middle and the top.

Sources and series: see piketty.pse.ens.fr/ideology

Interpretation. The share of the top decile (the top 10% highest incomes) in total national income was about 50% in Western Europe in 1900-1910, before decreasing to about 30% in 1950-1980, then rising again to more than 35% in 2010-2020. Inequality grew much more strongly in the United States, where the top decile share approached 50% in 2010-2020, exceeding the level of 1900-1910. Japan was in an intermediate position.

Sources and series: see piketty.pse.ens.fr/ideology

Interpretation. The top marginal tax rate applied to the highest incomes averaged 23% in the United States from 1900 to 1932, 81% from 1932 to 1980, and 39% from 1980 to 2018. Over these same periods, the top rate was 30%, 89% and 46% in Britain, 18%, 58% and 50% in Germany, and 23%, 60% and 57% in France. Fiscal progressivity was at its highest level in the middle of the century, especially in the United States and in Britain.

Sources and series: see piketty.pse.ens.fr/ideology

Key insight #3 : Picketty’s recipe to tackle rising inequalities

  • Granting employees voting rights in (fairly large) companies with capping of large shareholders voting rights
  • Putting in place a progressive tax on income (all income), inheritance but especially on wealth (all wealth) so that capital circulates more
  • Creating a Capital endowment for any young person entering working life: A cash payout of two hundred and thirty-one thousand dollars—the equivalent of sixty per cent of the average adult’s net worth. (Piketty has called this system of capital endowment “inheritance for all.”)
  • Creating of a basic income and education capital for everyone, up to the education expenses of the privileged groups, to be used throughout life
  • Extending the carbon tax to all carbon emissions so that it takes into account the realities of climate change, with a great contribution from polluting companies
  • Renegotiating treaties and trade agreements, which force countries to compete with each other for who has the lowest taxes on wealth and income, starving national social systems and increasing financial inequality

Good Economics for Hard Times : Book review

The book was first published in November 12, 2019. The authors, Abhijit Banerjee and Esther Duflo, were jointly awarded the Nobel Prize in economics in 2019 (Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel).

In the book, Abhijit Banerjee and Esther Duflo address controversial topics such as immigration, trade, economic growth, technological disruption, universal basic and climate change. To do so, the authors rely on various experiments (randomized controlled trials) to test the effectiveness of specific policy interventions, in the same way clinical trials are performed in medicine (cf. figure below).

Thanks to its experimental focus, the book is written in an easy-to-understand style, which makes it accessible for readers who are not well versed in economics.

Some of the findings that caught my attention are as follows:

  • Increased immigration does not negatively affect local people wages
  • Ordinary people like to stay in their place. They don’t want to go to a different sector, to a different location and to a different life
  • Free trade boosts overall growth, but it also produces concentrated pockets of job losses
  • Tax cuts for the wealthy do not produce economic growth
  • Damages from climate change will be much more serious in poor countries
  • Because of distortions in the tax code (taxing humans more than capital) and industry concentration, most of automation today is more about deplacing workers than raising overall productivity
  • There is no evidence that cash transfers make people work less
  • Universal basic income is a good idea but it is very expensive. However, in the case of the US, it would require eliminating all existing welfare programs and raising the US tax level to the level of Denmark’s

Selected quotes from the book :

“Economics is too important to be left to the economists.”

“Economists are more like plumbers; we solve problems with a combination of intuition grounded in science, some guesswork aided by experience, and a bunch of pure trial and error”

“The focus on income alone is not just a convenient shortcut. It is a distorting lens that often has led the smartest economist down the wrong path, makers to the wrong decisions and too many of us to the wrong obsessions”

“We clearly don’t have all the solutions, and suspect that nobody else does either. We have much more to learn. But as long as we understand what the goal is, we can win”

“If the world warms by a degree centigrade or two, residents of North Dakota will mostly feel perfectly happy about it”

“The bulk of R&D resources these days are directed towards machine learning and big data methods designed to automate existing tasks rather than the invention of new products that would create (…) new jobs”

Book review : The age of knowledge by Idriss Aberkane

Idriss Aberkane, a French essayist, is known for his writings and lectures on the knowledge economy and neuroscience. His lasted book “L’age de la connaissance / the age of knowledge “is worth reading. The book seeks to dismiss two contemporary paradigms: “Produce or flourish” and “Nature or employment”.

The key takeaways from his last essay are the following:

  • Knowledge is more valuable than natural resources. This statement is clear when looking at the evolution of global companies ranking in the last two decades.
  • Fostering a knowledge economy should be the priority of any government: To support his argument, the author frequently uses the example of South Korea who own little natural resources yet is one of major global exporters globally thanks to Korean technological powerhouses. However paradoxical it may appear, South Korea exported 45 Billion USD worth of Processed petroleum oils in 2018 even though the country does not have oil reserves !
  • All revolutions / radical innovations go through three stages:  They are firstly considered ridiculous, secondly as dangerous and finally obvious. Think of slavery abolition and labor rights for instance.  
  • Knowledge dynamics follows three principles :
  1. The exchange of knowledge is positive sum : “When we share a material good we divide it, when we share an intangible good we multiply it”
  2. The exchange of knowledge is not instantaneous : Unlike physical good, the transfer of knowledge requires more time and energy
  3. The combination of knowledge is not linear : “The Whole is Greater than the Sum of its Parts”
  • Nature as a source of inspiration and one of knowledge economy applications : Nature is the largest deposit of knowledge on earth. The author is a strong supporter of Biomimetics, which is the imitation of the models, systems, and elements of nature for the purpose of solving complex human problems in locomotion, construction and architecture, structural materials, optics and agriculture to name a few.

J’ai lu : Vers une économie à trois zéros (Zéro pauvreté, Zéro chômage & Zéro émission carbone) du Pr. Muhammad Yunus

L’économiste Muhammad Yunus, prix Nobel de la paix en 2006, commence son livre par la critique du système capitaliste qui en dépit de ses apports est la source de plusieurs externalités négatives notamment l’amplification des inégalités sociales et économiques ainsi que le dérèglement climatique. De ce fait, pour Muhammad Yunus, il est nécessaire de repenser le modèle capitaliste afin de réconcilier les intérêts personnels et collectifs.

Le véhicule mis en avant dans le livre pour repenser le modèle capitaliste est l’entreprise sociale. L’entreprise sociale est définie comme une étant une entreprise qui fonctionne exactement comme une entreprise normale mais qui se distingue par deux caractéristiques :

  • Le but premier de l’entreprise sociale est de résoudre un problème social ou environnemental
  • Contrairement aux organisations caritatives, une entreprise sociale génère des bénéfices et vise à être financièrement autonome. S’affranchir du besoin constant de lever des fonds (comme dans le cadre des organisations philanthropiques) permet aux entreprises sociales de réinvestir leurs bénéfices pour générer un impact durable.

Ainsi, ce type d’organisation, à cheval entre le business et la philanthropie, ne vise pas à enrichir les investisseurs mais à améliorer durablement la vie des gens et à rendre le monde meilleur.

Dans le livre, Muhammad Yunus présente plusieurs exemples d’entreprises sociales opérant par exemple dans les énergies renouvelables, le recyclage, l’eau et plus généralement la capacitation économique. Il insiste par ailleurs sur trois moteurs pour permettre à l’entreprise sociale de transformer le monde : Les jeunes, la technologie et la bonne gouvernance & les droits de l’Homme.

Au-delà des concepts très intéressants évoqués dans ce livre en relation avec l’entreprise sociale, je retiens personnellement trois conclusions :

  • Quel intérêt du savoir si nous ne l’appliquons pas pour améliorer la vie des gens ? Avant de fonder Grameen Bank (littéralement la banque du village) Pr. Yunus était un professeur d’économie à l’université de Chittagong au Bengladesh. Le déclic s’est produit quand il a remis en cause l’intérêt d’enseigner à ses étudiants des théories économiques alors que des villages avoisinants souffraient d’une extrême pauvreté et n’avaient aucun accès aux services financiers
  • Les défis économiques, sociaux et environnementaux que nous affrontons sont complexes, interdépendants et transfrontaliers. Puisque l’intervention des gouvernements n’est pas et ne sera jamais suffisante, il est plus que jamais nécessaire de mobiliser l’ensemble des parties prenantes pour relever les défis y compris les sociétés civiles et les entreprises (sociales et conventionnelles)
  • Comme le dit Muhammad Yunus dans son livre, si nous imaginons un monde idéal, il y a une chance qu’une partie de cet idéal soit réalisée.  Si nous n’imaginons rien, il y a très peu de chance que les choses changent !  Aussi évident cela puisse paraitre, l’espoir est non seulement une cure psychologique mais aussi une condition sine qua non pour espérer de nous en sortir un jour