Podcast (du-entrepreneurship): Play in new window
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John Sebesta:
Welcome back to the Entrepreneurship at DU Podcast. One of the questions we spend a great deal of time thinking about at iot DU is how do we create value? Not just economic value but social value, not just individual success, but broader societal wellbeing. As part of Entrepreneurship Week, my colleague Melissa Kaka and I had the privilege of hosting Graeme Roy from the University of Glasgow for a conversation connected to the 250th anniversary of the Wealth of Nations by Adam Smith. While Smith’s work helped shape modern economics, our discussion focuses less on what Smith thought and more on the questions that he challenged us to ask. What do we value? How do markets contribute to human flourishing? What role should institutions play in creating opportunity and how do we prepare the next generation of leaders to navigate increasingly complex challenges? It’s a fascinating conversation that sits at the intersection of entrepreneurship, economics, leadership, and the public good.
I hope you enjoy it. Today we’re going to have a conversation about the new wealth of nations as we look at the 250th anniversary of Adam Smith and the Wealth of Nations. So I’m going to kick it over to Melissa to introduce yourself and then Graeme over to you.
Melissa Akaka:
Okay. Well, my introduction is pretty brief. I am currently the Associate Dean for Research and Strategic Initiatives here. I’m also a marketing professor and a lot of the work that I do in terms of my research has been rooted in the work of Adam Smith and his conceptualizations of value. So my excitement, enthusiasm for this conversation is beyond what most normal people would have for a conversation like this, I think.
Graeme Roy:
Great. Well, first of all, thank you so much for the invitation to attend this podcast. So I’m a professor of economics at the University of Glasgow and a former head of the Adam Smith Business School, so the business school named in Adam Smith’s honor. Adam Smith was a student and a professor at University of Glasgow. And one of my roles at the university has been to look at ways we can commemorate Adam Smith’s legacy, but also how we can take that legacy into the discussions and debates we have with our students today. So I’m really looking forward to this chat, looking forward to getting to some of the details, some of the relevance about why I think Adam Smith still matters so much for today’s debates.
John Sebesta:
Yes. Thank you so much for joining us. And I think that that’s where I would love to start is how do we recognize the influence of a book written 250 years ago that isn’t as prevalent in higher ed as maybe it used to be. And so some of our students aren’t as aware and yet a lot of those works form the foundations for how we think about economics and how we think about our markets and specifically how we think about value. And so I’d like to start with how Adam Smith thought about value and how you feel that’s relevant today or how that has evolved over time.
Graeme Roy:
I think one of the first things that is really interesting about Smith and his book, The Wealth of Nations, is actually the full title of his book, which is The Nature and Causes of the Wealth of Nations. And I think if we just ponder that, that’s one of the reasons why I think Smith remains really relevant today. And he asked a question about, well, what is wealth? What do we value as wealth? And I think that is one of the fundamental questions that we ask ourselves as our global society. And once we decided on what we think that wealth is, how do we actually cause it? How do we improve it? What are the risks to it? How can we make it worse? And I think that while Smith was writing in a completely different time and while wealth might be different today from what we think Smith was talking about in the past, that question about what do we value, what do we see as being the wealth of nations, it cuts to the core, I think, of everything that we do.
And a final subtle point I would say as well is that he didn’t write about the wealth of a nation. He wrote about the wealth of nations. And that’s something which perhaps has been lost particularly in recent debates is that actually it’s this collective community of nations hopefully working together with their own interests, but working together in a way to improve society at a global level. So even before we get into the detail of what Smith was saying, actually just a title of his book I think is something we should ponder and think about both in terms of business, policy and as universities.
Melissa Akaka:
Yeah. No, I think that’s a really interesting perspective. I guess I never really pondered the title of the book, but it does open it up. And what I like a lot about Smith is that when he presents his thoughts and even some of his arguments, they’re very complex and so he doesn’t say this is how it is and how it should be. He provides options for considering what we really see and what we want to do with what we see.
Graeme Roy:
Yeah, I think so. And I think there’s a risk with someone like Smith and looking back at people who were writing 250 years ago to try and find solutions in those pages to today’s problems. And we have to remember, he was writing in a cold, wet part of Northwestern Europe before really commercial society and industrial revolution had really gained momentum, his book was published in the very year of the Declaration of Independence of the US. So he was writing at a time which would be unimaginable to us today and equally for him to try and have any relevance to today’s debates. I think we stretched that too far, but I think you’re right. I think what Smith did was set out a way of trying to look at problems and work through problems and come up with a way of thinking. And I think that’s what we can learn from them, not an idea about how he … What did he say about AI?
What did he say about climate change, but how would he have approached these sorts of issues and that role of evidence? And I think that’s the bit that I think is a really good lesson that we can take from Smith.
John Sebesta:
At the same point, I think that there are some specifics in there that continue to persist in terms of like the nature of wealth and moving that from the gold standard of the time to living standards of the general society. And how do we think about creating an environment where all of society does benefit and we can increase that standard of living for everyone and how do we approach that? How do we think about those then the causes of wealth and the specialization and division of labor and some of those things that he espoused, how does that apply now in an AI driven world? Now when we look at digital agents instead of just human agents in our work, the foundation is a lot of this is still very applicable.
Graeme Roy:
Yeah, very much so. And if you look at the point about what is wealth and who owns it, again, Smith was writing at a time with a dominant view in the UK and remember the time that was a British empire was of the value of empire. It was mechantalism. It was about wealth measured in terms of gold and in terms of material and political power. That’s what he was essentially writing a book against saying that actually that’s not the way to think about wealth. Think about wealth in terms of living standards, not just of the elite, but of society as a whole. Now clearly back in those days he was thinking about material living standards there. We might think of it more broadly nowadays about wellbeing or about good governance in the broadest sense. So I think, but the principles of that I think are really important.
And yet to your point about AI, I mean, the one thing that Smith was very clear about was that what he was trying to do was embed markets into society. And again, that was really pioneering at the time. Everyone only really thought about society as being governed by politicians or by kings in our case and he was saying, look, actually you need to place markets at the heart of that, but then you’ve got to think about the institutions and the trust and the governance of those institutions and how they shape the market. And that is the fundamental question we’re having about AI. Who governs AI? Who’s looking after the trust that we have in AI? So that you’re right, the principles that Smith was thinking about back then, many of them are still relevant even if the context has radically changed.
John Sebesta:
And I think that it has then when we place markets into that role and we recognize their influence, it has been the entrepreneurs. It has been those risk takers that developed new solutions that allocated capital that specialized in his terms that drove a lot of that to that creation and increased living standards. And to your point, then we look to government for creating the institutional environment that makes all of that possible, that incentivizes that. As we move from 250 years ago to today’s context, how are those institutions supporting or constricting this free market ability to create value?
Graeme Roy:
Yeah, it’s a great question. And I think it gets to the heart, I think, of that balance between the trade off between encouraging innovation and competitiveness, but also thinking about ethics and good governance more broadly and then the links that Ian Smith was still talking about back then about who owns that wealth, who drives that innovation and he was famously writing about the East India company, which was the big monopoly state owned business that essentially was carving up large parts of Asia for the wealth of a very small number of merchants within the UK. And that’s probably a really good example going all the way back then to where you have lots of innovation, lots of competitiveness and lots of wealth creation, but zero trust, zero accountability, zero in terms of broader wellbeing and really negative effects for the people who are being impacted by that.
And again, if you take that through to today is a really interesting challenge for us about how do you in worlds like AI or technology where innovation and competitives creates very large companies, creates large wealth, concentrated a small number of people, but that’s where the role then comes from good governance, good accountability, good public policy to really look after the ethics of that, look after how the wealth is distributed in there and there’s no easy answers to that. And one thing I think that Smith was also really good at, he warned against what he called in those days speculative physicians who had simple solutions to complex problems. I think of all the lessons you can take from Smith, that actually is the one that we need to kind of keep hold of. The idea there’s a simple solution to AI regulation, to climate change, to technological, to tackling inequalities, then there are no simple solutions to that.
John Sebesta:
Absolutely. And so then what is the role of those innovators, of the markets, if you will, and what is the role of government in pursuing and finding solutions to those really complex
Graeme Roy:
Challenges? Yeah. So I think, I mean, a large part of it without trying to be too simplistic about is that government has a big role about setting the rules of the game, setting out the overarching parameters in which you can then let innovation and competitiveness flourish. And what you have to slightly watch is that the government doesn’t overreach therefore and try and shape that in a way where it oversteps that boundary about setting out the rules of the game. I think then that’s where you then open up the entrepreneurship and the businesses and innovators to really think about how they can come up with new ideas to really experiment and to drive forward economic growth. But crucially though, just in the same way as business, sorry, as government has to make sure it doesn’t overreach, there’s a really important role in entrepreneurs to think about, well, what are the ethical dimensions of what they’re doing?
And ultimately businesses in the long run, their success is built on trust. So you might be able to get some successes in the short run, but ultimately it’s trust. I mean, you only have to look at examples around the world from Europe, what’s happening in the car industry where companies that were highly trusted, had a huge market share, have lost that trust and are now seeing the market and the competitive consequences of that. And that’s a really good example of where it’s not just about innovation and growth for businesses, trust ultimately is essential in the long
Melissa Akaka:
Run too. I actually wrote that down in your last comment around trust and having trust or losing trust, I think we feel in a lot of different areas and spaces right now. Where does this trust, what do we need to trust in, I guess is my question when we have these complex systems and many actors contributing to it, like as a consumer, as a business person, what should I have to trust in order for this to work better?
Graeme Roy:
Yeah. It’s a great question. You speak to an economist very much when this starts to stray out my area of expertise. But I mean, I’m chair of a public body in Scotland and the UK, which is the independent fiscal institution which looks after all the forecasts for government spending, et cetera. And we are right at the front end of debates over trust, debates over accountability and we’ve had an important role to hold government to account to be honest and transparent. And I would argue, as you expect me that that then creates a positive value, which then means that we end up with better outcomes and better policy making, but it is really difficult. And I think there is a real challenge about the institutions that we’ve relied on, particularly over the last 100, 150 years that have essentially been the anchors of setting that rules of the game that I mentioned earlier within both domestic markets, local markets, but also internationally too.
There is a real, I think, a lack of trust, a loss of confidence, issues around transparency within those institutions, which I think are having negative implications upon outcomes. And again, speaking from a country in the UK where we’ve just coming up to 10 years of Brexit, of the Brexit referendum, that was a whole manner of different reasons about what drove that, but one of the core reasons was a lack of trust and a lack of accountability within the EU institutions and that fueled resentment, lack of confidence, which then led to the UK voting to leave the European Union. Now, I personally believe that’s a negative decision that’s going to have long-term implications as far as economically, socially, and culturally, but I can understand in many ways why people felt that there was that lack of trust and that lack of engagement with these institutions. And I think there’s two parts to that.
I think part of it is how do we work with society and the populace at home to rebuild that trust, but equally, I think there’s an honesty that has to happen along with these institutions that for many of these institutions, they have become unaccountable, they have become quite far removed, they have become quite complex and there’s something about how do we reset not just the relationship between the general population of these institutions, but actually how do we reset these institutions too? And Europe is a really good example of that where there’s a real lack of trust in many of our core institutions.
Melissa Akaka:
Yeah. I think we’re feeling similarly here on the side of the pond. And you mentioned a couple of ways to think about rebuilding trust with especially our governing bodies and the institutions that sort of establish a lot of the rules of the game. I think we are also lacking trust in some of our market spaces and higher education as well. And I would love your thoughts in terms of, especially where we’re at a higher education, what can we do or how do we position ourselves to contributing to create understandings of wealth that are different and build back some of the trust that has been lost?
Graeme Roy:
Yeah. I think there’s many different facets to that, but where universities have an absolutely fundamental role in that universities are some of the most visible global institutions you have that are in a local area. I mean, we’re here a fantastic university that is a global university that has a global reputation, but it’s not moving. It’s the perfect definition of an anchor institution. So it has a really important role that companies don’t have or government doesn’t have as a genuine global institution that is very locally based. And we are the same at the University of Glasgow as well for 575 years we’ve been embedded into one city, but we’re a truly global institution. I think there’s a really important onus on us as an institution to be one of the core institutions that is making the case for good governance, trusting institutions, accountability, and honesty in public debates.
I think there’s a really important role as an institution. We also have really important role about the people we educate and ensuring that we bed into our education offer that we give the people who come through our doors, not just the best skills, how to become an economist or the best skills to become a management scholar, but actually how can you have the leadership and the skills and the ambition and the confidence to be a leader in your community, whether that is at a really local level, whether that is at a national level, a national level too. And then I think there’s about the role of us as academics and that precious academic freedom to be out there making the case for evidence-based policymaking or good practices in businesses. And if universities are not the institutions doing that, then who is? So I think there’s many different ways where universities are absolutely fundamental to that cohort ease of us about how institutions and that trust develops.
Melissa Akaka:
I love how you frame that we are a global entity, but we’re locally bound. We have worked with our local entrepreneurial ecosystem for the last few years and John has worked with them for longer and other local ones as well. Can you speak a little bit to how our understanding of the wealth of nations at the macro level and the sort of bigger picture international trade, how does that tie down to at the local level and our local governance?
Graeme Roy:
Yeah. I mean, I think a large part of that I think comes down to that balance that actually Smith was writing at a time just when the global economy was becoming a thing and now everything is global and particularly in a world of AI and tech and the fact that we’re even chatting today just shows just how global the world economy is today and that interconnectedness in that. So I think for me it’s about that balance between how do you support local economic growth, exactly what you’re doing about entrepreneurs and new business growth that there’s two things. One is creates a mindset about what’s their role within the local community that they’re developed and incubated in and how do they drive that mission that is very locally focused, but does so with that global lens that it looks as market opportunity, not just within Denver or Colorado, but genuinely global in that scale and particularly in the many of the sectors that I know the university works in, that happens from day one.
That’s not about building up your market here and then hoping that you can maybe sell or export internationally at some point into the future. That happens very much in day one. So it’s that balance of having that local mindset, that role of an anchor institution with that global ambition is fundamental. And it comes back to Smith’s definition of it’s the wealth of nations and not just the wealth of one nation.
John Sebesta:
As we think about that, and you mentioned Brexit earlier and we’ve seen a push towards more nationalism and I think we see that down at the local level. There was recently an open letter from several hundred business leaders in Colorado to our local government advocating that Colorado is losing some of its prestige and some of its position as a hub as a place to come and found your companies to grow your companies and they’re going to competing areas within the states,
Graeme Roy:
Right?
John Sebesta:
How do we think about building those strong local ecosystems while supporting the growth of the whole? Where are we competing with Dallas, with some of the other metroplexes and how should we think about
Graeme Roy:
That? Yeah. So a couple of things I would say about that. So one of the things we’ve learned particularly the last 50 years is that while most economists will say that international trade and globalization at a macro level, an aggregate level is a good thing and again, going way back to Smith, that was one of the arguments he was saying, but what we also know is that just because there’s an aggregate improvement doesn’t mean that everybody gains from that. I think we’ve as an economics profession and as policy makers, we didn’t pay enough attention to that and we didn’t pay enough attention to the fact that globalization opening up markets to new opportunities actually, we’ll make it negative outcomes for people. It’ll create unemployment in different regions. It will create business insolvencies in different markets and I don’t think we’ve appreciated that or been honest about that as enough as we should and or thought about the consequences of that.
So that has quite rightly formed presentment to it. Again, Brexit is a really good example of that is economists certainly are wandering around saying, “Oh, the hit to UK GDP will be X percent.” But if you’re living in an old post-industrial coal mine town, what relevance has that argument got to you? And so I think there is a reframing of that, which I think is really, really important to think about the regional consequences of these global activities. I think then to your point about then how do you then counterbalance that and how do you then ensure that you can balance that local innovation and development within business to get to global scale, get to the heart of that balance between what’s the role of government and what’s the role of the market and where do you edge and influence in there? And I think there’s a lot in there about a really pragmatic and honest industrial strategy about where you’re investing in a way which is clearly transparent, clearly fair and open, but it’s trying to get benefits that could go beyond purely the aggregate.
But it’s also about standing up where people are using that cover of that intervention in a way which is not fair and competitive competitive. And we see that again in a global economy where some countries have used the power of the state in quite an aggressive way to gain market share at the expense of other people who haven’t been using that and then turn around and advocate for free trade at the end of it. And you see that the electric car market is probably the best example of that at the moment where you’ve had state power being used by China in order to gain a massive foothold in the market that has then been more difficult for people to compete. So I think there’s a lot of complexities in that, but I think it’s about that balance between effective and good government intervention and support versus again, Smith, one of the things that Smith would see is that once government starts getting involved too heavily, then you start having problems.
John Sebesta:
Yeah. I think that that definition of too heavily is where all the complexity resides. And to your point in a much more recent author power corrupts and absolute power corrupts, absolutely. And I think that we see that in a lot of cases and one of the things that Adam Smith advocated for was that we shouldn’t have policies that promote those monopolies, that promote that aggregation of wealth. And I think we see that a lot, whether from the business community or from government of advocating for that concentration of power and the preservation of oneself. And so Adams certainly advocated that we have the free hand in that with those institutions in place it leads to this rising benefit as people pursue their own self-interest. At the same point we see in practice, those institutions certainly aren’t perfect and thus there’s opportunity for power to corrupt and for people to abuse those.
And so now it’s how does the market come in and correct that in some capacities? How does government come in and correct that? And like say it’s not a simple thing, it’s certainly a complex challenge that we are facing globally.
Melissa Akaka:
Absolutely. And I think this idea of trade off is something that is pretty clear in the, again, back to the writings of Smith, but also when we see it playing out and how we tend to take that easier road when it comes to thinking about wealth because we can count money and we can see it as a clear metric of success. How do we think about the trade offs and how do we, I guess more than those of us who are sort of like really thinking deeply about this, those that are running businesses, right have a economic infrastructure that rewards entrepreneurs in very specific ways and John and I have been thinking about and talking to the entrepreneurs about funding sources, funding products, how can we rethink the way that that market looks so that we can support growth and development of companies, but it might not look the same as these hockey stick trajectories of return on investment.
And with that sort of trade off happening in terms of enormous amounts of potential wealth for individual companies or small groups of people, how do we think about balancing it out? What is needed in order for us to do that at the local level or I guess maybe even thinking more broadly?
Graeme Roy:
Yeah. A lot of it, you’re right, gets into, I guess that historical model about how we’ve thought that you can get how a business grows and adapts over time, but increasingly now with that growth being concentrated in such a short number at a small number of people, it’s how do you balance it out a bit? I mean, I think there’s different parts of that. So on is obviously how do you share the returns from that gain? So there are obviously big questions about taxation of wealth and capital, which aren’t just US questions or questions which are globally, but how do you fairly tax an organization that’s a big multinational, which has got operations in different countries? How do you come together as countries in order to have an appropriate assessment of that tax base comes back to your point about institutions for that you need trusted global institutions and where we don’t really have them anything like we used to have, particularly since particularly in comparison after the Second World War where you had the setting up of the major global institutions.
We don’t have anything like that effectively working in the same way nowadays. So part of that is about how you look at how you distribute the returns from that. I think part of it then is also how do you, back to what you’re talking about, you’re working on about that source of funds in the first place and what’s the return on that investment, what’s the profit sharing margin within that? What’s the role of government into that? What’s the role of crowdfunding within all of that? What’s the role of governance and pass through within organizations? There’s a big movement in Europe looking at employee owned businesses and how you can get more profit sharing to go out across employees rather than being concentrated purely within the executive. There’s questions about that kind of quarterly return model, which is very much Which a big thing in the US and the UK, but it’s quite different within Europe.
I know we’ve always looked down our nose about the European model and said, “Well, it’s less dynamic, it’s slower.” But there are some lessons in there about how you can get that long term thinking feeding through into the more angle Saxon type capitalism model. So I think there’s definitely that it’s going to be much more complex than it has been in the past. But again, that’s where I think some of the really exciting initiatives and research is taking place.
John Sebesta:
Yeah. That point and you were mentioning it earlier of some of the European automakers and now feeling those effects of lack of transparency at the same point the executives of those companies from years past where a lot of that was potentially happening aren’t feeling those consequences and they were able to profit off of that. I think that is one of the real challenges, especially in our US economy and I think in the UK is we are so short term focused. We are also quarterly earning focused and the rewards are tied to that. And so as an economist, as we think about incentives and how do we structure a system that actually rewards and incentivizes this long term thinking that is essential to maximizing overall societal health and wellbeing instead of just your short term personal wealth.
Graeme Roy:
Yes. Yeah. And that gets to the heart of things like regulation and you’re right about accountability over the longer term. And I think you can’t think of a better example of that about climate change and what do we do around tackling climate change and what’s the role of business within that? Because you’re right, if we keep focusing in the short term then we’re going to end up in a really difficult situation. And one of the roles I have, as I mentioned in the UK is this fiscal role, this advisor to the government on public policy. And it’s really difficult even from a policy making point of view is to have that focus in the long term and move it away from the short term political day to day. And I’m not saying it’s easy. In fact, I’ve got a lot of sympathy and the challenges for that, but if we don’t have that longer term thinking, then we’re going to deal with the consequences further down the line, which is much, much greater.
Melissa Akaka:
What is it today that because of all of these complexities and all of the multilayers that scaffold our local and global economies, what do you think is continuing to create resilience across them? Because I mean, we’re talking about a lot of bad stuff is going on, right? But there still has to be something that is keeping this together. And I know Smith talks a lot about self-interest and that as a driver of markets, but then on the flip side of that, we’re thinking about societal wellbeing, climate change, all of those kinds of issues that people do care deeply about. It’s just really hard to see it sometimes. So I’m curious, I guess to take a more positive spin here, what are your thoughts on what makes these economies so resilient and helping us to continue to move forward even when sometimes things don’t look as awesome
Graeme Roy:
As we
Melissa Akaka:
Want them to?
Graeme Roy:
I mean, there’s several things in that. I mean, I think the underlying resilience of the economy, I think is something which we take for granted, but actually is a thing that holds a lot of what we do together. And that comes back, I think, a large point to that bit about that kind of self-interest, that self-motivation to strive for better. Now we can have a debate about what better is, but that strive for trying constant improvement is built into our DNA and that then feeds through to that constant kind of search for improvement and innovation and driving there and then the role of government and the role of business to help nurture that and develop that. So I think that is something which is anchored in all what we do in there. I think the other bit as well, I think there has been a real challenge about the real challenge to our institutions, a real pushback against our institutions coming in again from the UK where we seem to be going through prime ministers on a regular basis at the moment our current prime ministers hang on for dear life after having just won a huge majority just two years ago after having a turnover a large number of prime ministers before that.
So we’re going through a real challenging period, but the underlying institutions, I still think there’s an immense resilience within that. I think it’s a concern, but I don’t think we should be complacent about it because we have seen them eroded and if it continues to be roaded, that is a real challenge in there, but there is still a fundamental kind of core base that’s in there. Interesting, we do a big survey in Glasgow, the Youth Poll, which looks at the attitude of young people across the UK and it’s quite interesting in that if you ask them a question about their trust in politicians, it’s exceptionally low. If you ask them about their trust and democracy, it’s still very high. And I think that separating out that I think is really important that there is still that underlying resilience in the institutions that we rely upon, but then equally there are some real challenges, whether that be through trust in politics more generally and a rise of populism in there.
So it’s complex, but there is an underlying resilience which we need to tap into and develop.
Melissa Akaka:
That’s fascinating. What drives the trust in democracy versus the distrust in politicians or politics? Yeah.
Graeme Roy:
And I think part of that comes back to that, the underlying resilience. I think that people still see that if our institutions work well and if there is a good balance between the market society and good policy making, that is still the most effective way to drive improvement and to generate prosperity. There’s a big question about whether the people in charge at the moment are the right ones to do that and I think that’s where the skepticism is there. I come back to Smith’s, I think his best quote, which is about beware of physicians selling simple solutions to complex problems. And I think that is perhaps one of the biggest challenges we have at the moment.
John Sebesta:
One of the things, you mentioned the views of the youth right now and one of the things that we are seeing more and more in our students, and I’m curious to see if you’re seeing this as well, is this longer term thinking, is this focus on societal wellbeing even when that conflicts with their own personal wellbeing, there’s definitely this view of the system that did just prioritize yourself and your self-interest let us down a path that we’re not exactly excited
Graeme Roy:
About.
John Sebesta:
And so I guess I’m curious, are you seeing that and if so, what’s our role as a higher ed institution in kind of fostering that and how do we think about integrating that into this whole idea of self-interest in how do we get to the people in leadership and the structures that do help us move toward this society that we ultimately want to achieve?
Graeme Roy:
Yeah. So we are seeing that in young people in their view again, I don’t know if it’s the same in the US, but in the UK, what we’re seeing is that the current generation coming through higher education for the first time since ever we’ve had records, and actually you could probably say for the first time ever, are projected to have a lower standard of living than a generation that has preceded them. So typically we’ve always relied on the fact that every generation has a higher living standard than the previous generation and the data we’ve got now suggests that’s not going to happen and I think that fuels a large part of that reaction amongst young people is that they cannot just rely on, “Well, I’m going to be wealthier than my parents and they’re not. ” And that reframes that conversation. I think the role at then universities is then how do you listen to that?
How do you respond to that? How do you, as I mentioned earlier, lean into that in a way where universities aren’t just about transferring knowledge, academic knowledge to young people, but really giving them the skills, the ambition and the real drive to go out and be those leaders within society. So again, at Glasgow, we are developing something alongside our core undergraduate program, something called Curriculum for Life and that now means that every person coming through our undergraduate program doesn’t just do economics, but they will do something in civic society, in leadership, in some other role in supporting organization in third sector. So that’s charities operating as businesses and they have to do that and they’ll be assessed on that alongside macroeconomics or microeconomics and it’s about giving them that broader skillset, that broader ambition to go on and become the future leaders. And interesting, that’s been driven by the demand of the students rather than imposing something on them that’s what they want to do and it’s what they want to get out of their university experience.
John Sebesta:
That’s awesome. And I do think that we’ve used the term complex of more than a few times throughout this conversation and the reality is the young adults that are coming through our programs are entering into a more complex society and more complex markets than have existed in the past, more complex challenges. And so thinking about how do we get that broader experience, what is the role of higher ed and how do we prepare young adults to go out and step into and lead in this dynamic time I think is really interesting. And so I love that aspect of giving them exposure to those different areas where certainly we have something called the four dimensional experience where we’re looking at not just developing the brain, but how do we develop the whole self with character and curiosity and sense of purpose as well that I think is a similar lens, but I like that direct exposure into some of these different segments of our markets.
Graeme Roy:
Yeah. And I think the challenge for us as universities, I think is historically we have sat in our nice offices on top of a hill. So Glasgow University is right on top of a hill and it looks across the city and everybody, no matter where you are in the city, you can see the university sitting on top of this house, a big tower and that’s how we positioned ourselves historically is that we are above the rest of the city and the city looks up to the university. I think the modern university now has to be not just we do knowledge, we do skills, we do education, we do research and then give it over to the community. It has to be how do we bring in businesses, how do we bring in society and how do we listen to what their challenging opportunities are and respond to that.
So it’s much more about how we are properly embedded in that two-way conversation rather than being something that does something and then expects everybody else to follow.
Melissa Akaka:
You mentioned living standards a little while back and I thought how interesting it must be to be someone graduating today as we’re in graduation season coming out of these universities, one in a job market that looks pretty terrifying and two, in a space where the expectation is now that you may not have a better and higher living standard than your parents did or pastor license did. And it makes me think about our metrics for success again, kind of going back to that and the way we measure wealth and the way we measure the state of our economies and I’m curious what you think in terms of the traditional metrics that we use like GDP and those kinds of things, do you think that they still hold as metrics of success for the future?
Graeme Roy:
So I think there’s two parts I think to that answer. I think GDP, so measuring the domestic production in the economy, I still think is a really useful measure to look at the underlying health of our economy because it shows whether we are creating material outputs and we’re creating income that is growing or is it declining. But the problem I think with GDP is, and this is where I’ll defend economists, is that GDP is, it does exactly what it says. It measures gross domestic product. That’s all it does. It didn’t do anything else. And if you try and say that that is then equated with quality of life or living standards, well, how could it be? It’s just measuring domestic production of economic activity. So I think the challenge is not so much GDP is a measure, but it’s how it’s then interpreted across not just economists, but the full suede of policymakers that this is the only thing we should really care about.
And GDP, the best way to boost GDP is to basically cancel weekends and force us to work on a Saturday and a Sunday, but I don’t know about you, but my wellbeing without that happened. It doesn’t measure anything about pollution, where there’s not a market in there, doesn’t look after whether you spend time with friends and family because it’s just measuring production. I think we have to be a much broader view about what do we want as a society, what do we value and then therefore make decisions accordingly. And that will vary across different societies. People will have different preferences about what they value, what they value more, what they value less. GDP will never give you insights into that. It just purely measure a technical measure of what we’re producing. So it’s useful, but I think we need to have a much more mature conversation that moves on not just looking at GDP or not just Bashi’s GDP to actually think about what do we care for in value and then how do we reward that and how do we then invest in that so that society is genuinely better off?
Melissa Akaka:
Can you give an example of an alternative metric that might capture some of these other elements of wellbeing and I guess lifestyle that you’re talking
Graeme Roy:
About? Yeah. It’s really interesting. So in the UK, there’s been a lot of work, particularly in Scotland actually, it’s been one of the pioneers in this to try and create broader measures of wellbeing or what we call inclusive growth, which is the OECD in the IMF international monetary fund have really pushed. And so two things in that. I think on is I’m slightly skeptical about coming up with a measure that does one thing that says, okay, because our wellbeing index has grown by 0.23% hurrah, we’re all better off, because it is so subjective. Like what you value will be different from what I value. It might be different from what somebody in a community in downtown Denver values. So I think we have to be slightly careful of coming up with one perfect measure, but actually thinking about, well, what are the things that we might want to have in our own measure of better success or better living standards?
And that will be about, yes, about potential living standards, but it will be about broader health outcomes, society outcomes, inequality, sustainability. And I think the interesting work in the UK about building up these measures lets you create your own index that matters to you and then you can take decisions in there accordingly. So I think again, come back to that complexity point, I think sometimes we try and make things too simple by coming up with one measure and that’s a challenge we’ve got ourselves with GDP is that because we can count it, it becomes a measure that everyone gravitates toward, but it’s not the measure we should be looking at.
Melissa Akaka:
Yeah. So it sounds like we need complex solutions for complex problems.
Graeme Roy:
Exactly. Yeah. And be honest about the trade offs and be honest about the fact that yes, there’ll be different things that will go around. So we can sort the fact that our living standards of young people are going to lag behind the living standards of the elderly population, but that’s going to have to be difficult trade offs. We can do that. We can take action on property prices, we can take action on taxation, we can take action on pensions, we can take action on wages, we can do all of that, but that will have consequences. But as a society, we need to have that debate and that conversation to have that. The one other, I think, fascinating thing that I’ve certainly learned about Smith since being at Glasgow is that the one thing that Smith valued the most wasn’t his writings or it wasn’t one idea that he came up with.
He constantly talked about the conversation he had with people, the fact he was part of a bigger community who would vemanly disagree with him and he changed his mind and he developed his thinking on an ongoing basis. And again, I think if we can take one lesson from Smith to today, I think it’s that constant dialogue, that discussion and debate, how we can have political debate that is not toxic, that is not populist, that is not exceptionally negative, is not within our own echo chambers, but is actually discussing ideas with people that we vehemently disagree with that we have very strong opinions that they are wrong and they all strong opinions that we are wrong, but it’s that discussion and dialogue that means that collectively will come to a better outcome and a better solution. Love that.
John Sebesta:
Absolutely. Couldn’t agree more. And we recently yesterday, I believe, announced the naming of our center on free speech and pluralism around how can we foster as a higher end institution, that’s part of our role is to foster those conversations. And I think that that’s something that is inspiring that we are at least hearing that more and more, that we’re seeing some of these, the new metrics like the UK and Scotland are pioneering that look at how do we think about this more broadly so at least we can navigate some of those trade off decisions. Going back to our role again is with evidence-based solutions and I guess for me, as much as it is a challenging and complex scary time, there’s also a lot of hope and I think that there’s the conversations are being had and there’s more and more people or students especially that are saying, “This is what we need.” Like your students demanding that type of curriculum that pushes them beyond just their traditional for- profit lens into, let’s get out into the civic and into the third sector and really understand the markets more comprehensively.
So I guess my last question would be like, what inspires you or makes you optimistic as we look at all of the challenges that lie ahead?
Graeme Roy:
Seeing the young people coming through the doors with that drive to succeed and drive to change the world, I think it’s a real privilege to be involved in academia, to have a small role in helping to shape that. And I think as anchored institutions who have that absolutely crucial role in preparing the next generation of leaders, that’s a bit that I think is really inspiring. And I think if we can listen more to what our communities and what society needs, the better and if we can also focus on the solutions. I mean, I’m an economist and social scientist, it’s dead easy to criticize, it’s dead eas to say what’s wrong, but actually shifting that into, well, how can we find solutions or how can we train and educate people so that they can find the solutions and they can be the ones that drive it.
I think that is ultimately the most inspiring bit.
John Sebesta:
Yeah, absolutely. And do that through the markets in many cases as well as some good regulation.
Melissa Akaka:
I agree.
John Sebesta:
Awesome. Well, Brian, thank you so much for joining us today. It’s been an actual pleasure and yeah, hope that you have a wonderful time here in the great city of Denver.
Graeme Roy:
Thank you so much. Yeah, it’s been great fun.
John Sebesta:
Thank you for joining us for this conversation with Graeme Roy and Melissa Akaka. One of my biggest takeaways from our discussion is that while the world continues to become more complex, the need for thoughtful dialogue, strong institutions, and principled leadership remains constant. The challenges we face rarely have simple solutions, but they do require people willing to ask difficult questions and engage with different perspectives. The Entrepreneurship at DU Podcast was recorded in the media studio in the Daniels College of Business. Until next time, keep building, keep learning, and keep creating value.