The Nobel prize winning economist Dr. Milton Friedman, said the business of a business is making money - but within the acceptable social norms. Dr. Raghuram Rajan, Katherine Dusak Miller Distinguished Service Professor of Finance at Chicago Booth School and he was the 23rd Governor of the Reserve Bank of India, looks into how “social norms” have changed and how the businesses need to adapt to adopt sustainable practices. May it be their impact on the planet, how they treat their employees and or make their products. He talks about how there needs to be regulations to guide and help the corporations to achieve these goals. Further, with countries setting goals for netzero, how can we actually have a plan that is accountable and works. Dr. Rajan proposes a global incentive scheme to reduce carbon emissions. On April 19th, 2022 he presented this solution to The Coalition of Finance Ministers for Climate Action that required countries who exceed the per capita global country average for carbon emissions, estimated at 5 tons, will pay to a global carbon incentive fund. He calls this payment Global Carbon Incentives (GCI). He further explains - “this annual payment would be calculated by multiplying the excess emissions per capita by the country’s population and a dollar amount called the Global Carbon Incentive. So if the country’s population is 30 million, its per capita emission in 17 tons, and the GCI is set at $10, it would pay $30 million*(17-5)*10= $3.6 billion. Countries below the global per capita average would receive a payout commensurate with their “under-emission”. This fund could be managed by a quasi government agency like the World Bank. Mindful Businesses is one of the first media outlets to share Dr. Rajan’s solution. Listen to it in our latest episode. https://en.wikipedia.org/wiki/Raghuram_Rajan https://mindfulbusinessespodcast.com/ Mentions: Coalition of Finance Ministers for Climate Action. Angad Daryani - Founder - Praan Ram Palaniappan - Founder of Earnin #raghuramrajan, #globalcarbonincentive, #carbonemmissions, #greenhousegases, #SDGs
The Nobel prize winning economist Dr. Milton Friedman, said the business of a business is making money - but within the acceptable social norms. Dr. Raghuram Rajan, Katherine Dusak Miller Distinguished Service Professor of Finance at Chicago Booth School and he was the 23rd Governor of the Reserve Bank of India, looks into how “social norms” have changed and how the businesses need to adapt to adopt sustainable practices. May it be their impact on the planet, how they treat their employees and or make their products. He talks about how there needs to be regulations to guide and help the corporations to achieve these goals.
Further, with countries setting goals for netzero, how can we actually have a plan that is accountable and works. Dr. Rajan proposes a global incentive scheme to reduce carbon emissions. On April 19th, 2022 he presented this solution to The Coalition of Finance Ministers for Climate Action that required countries who exceed the per capita global country average for carbon emissions, estimated at 5 tons, will pay to a global carbon incentive fund. He calls this payment Global Carbon Incentives (GCI). He further explains - “this annual payment would be calculated by multiplying the excess emissions per capita by the country’s population and a dollar amount called the Global Carbon Incentive. So if the country’s population is 30 million, its per capita emission in 17 tons, and the GCI is set at $10, it would pay $30 million*(17-5)*10= $3.6 billion. Countries below the global per capita average would receive a payout commensurate with their “under-emission”.
This fund could be managed by a quasi government agency like the World Bank. Mindful Businesses is one of the first media outlets to share Dr. Rajan’s solution. Listen to it in our latest episode.
https://en.wikipedia.org/wiki/Raghuram_Rajan
https://mindfulbusinessespodcast.com/
Mentions:
Coalition of Finance Ministers for Climate Action.
Angad Daryani - Founder - Praan
Ram Palaniappan - Founder of Earnin
#raghuramrajan, #globalcarbonincentive, #carbonemmissions, #greenhousegases, #SDGs
how do you make that promise agnostic to political parties the promise of becoming net zero by any day the problem
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is the efficient thing is the unfair thing if you think about the carbon that's already out there in the atmosphere a lot of that carbon has been
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put out by the developed countries and they still continue to put out more carbon for example the united states
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produces 16 tons of carbon per person per year tanzania produces 0.2 tons of
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carbon per person per year i think what it makes sense is for payments to take
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place from the high emitters to the low emitters the beauty of this is tanzania
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now has an incentive not to consume more carbon because if it increases its
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consumption of carbon it reduces the amount it gets from the fund
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welcome to mindful businesses presented by sarani and i'm your host vladia iyer
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in our podcast we bring to brands that are mindful in their practices and processes a mindful business adopts and
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employs sustainable social economic and environmental practices
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today we have on our show dr raghuram rajan kathryn dusak miller distinguished
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service professor of finance at chicago boot school he was the 23rd governor of
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the reserve bank of india and he also served as a chief economist at the imf
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dr rajan joins us from chicago illinois welcome raghu thanks for having me
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in an op-ed published in 1970 in the new york times by dr milton friedman who
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went on to win the nobel prize in economics he wrote and i quote businesses that take seriously its
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responsibilities for providing employment eliminating discrimination avoiding pollution and whatever else may
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be the cat word of the contemporary crop of reformers he compared it to
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unadulterated socialism he went on to say and i paraphrase now that the goal
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of the business should be to make as much money as possible while
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conforming to the social norms and that is about 50 years ago now we've come a
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full about 10 we've done a complete about 10. what has changed to some extent what has
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changed is that businesses have come under a lot more social pressure than at that time it is
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certainly true that milton friedman said the business of business is making money i think the second part of what he said
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is very important that he said within the constraints of the laws and the norms of society by norms he basically
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meant reasonable business practice now what he was very worried about which is
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something we should worry about today also it is important that we remember
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the basic business of business is making goods and services that you customers
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want to buy at a reasonable price that's what a business is about now everything
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else is over and above it obviously you have to respect the laws obviously you have to do it in the most
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environmentally reasonable way possible now what he was trying to say which i
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think is being debated today is that you don't have to do anything more than what the laws say and i think today because
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of the difficulty that we have in passing the laws that matter because of
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the differences in opinion within society there's a lot of public pressure being applied on corporations for
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example to be better at emissions than what the law requires and this is where
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milton friedman would disagree he would say democracy means you pass the laws if
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you can't pass a laws then trying to enforce them on a company without them being passed by the democratic majority
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is not you know consistent with a democracy it is some private interest group which says this is more important
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and i will try and enforce it by picketing the corporation etc you could argue about that for a long time but
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basically i think his point was certainly if you make a good product you
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will make money unfortunately he wasn't particularly political and by saying the business was to make money the vision
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that comes in people's minds is of people rampaging of companies rampaging
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through society selling shoddy products in order to make the most profit possible he would say that's a very
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short-term profit and you can't sustain that you would have to be much more thoughtful about selling a good product
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it gives you a vision of avarice exactly so we are moving from average to
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empathy not necessarily i think that's what corporations would like us to believe and there are a few corporations
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that genuinely care more broadly but for a lot of corporations it is how do i
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maximize the bottom line but address these other constraints that are imposed on me i have to look as if i care about
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the environment let me give you an example so we did this study on corporate objectives a whole
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bunch of corporate objectives say we care about the environment one of the interesting thing is when do
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corporations assume that objective of caring about the environment disproportionately when they find by the
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epa for violations in other words when you are caught out in order to signal
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that you've turned you've actually seen the light and you're going to turn over a new leaf you espouse that as a
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corporate objective so i don't want your listeners to be overly cynical about this but i would say when corporation
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expresses a whole degree of sensitivity for the public good i mean a fair amount
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of it which is what milton friedman said is hogwash now what i would think is important is not to rely on the
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corporation to do good on its own but to make it easier for it to do good by
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passing the appropriate laws that you think it ought to obey in other words render unto caesar the things that are
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caesar's and unto god the things that are god's i mean keep separate the objective of making money of the
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commercial proposition which is what the corporation is about from the social good which is what the government is
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about but try and ensure the corporation comes under significant sort of rules
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and regulations of course in a reasonable quantity that makes it do the right thing
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so understand your point about democracy and if you live in a democratic world or a country the laws will be
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passed but you are a researcher at chicago booth which is primarily free
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market as libertarian as possible and you are saying that laws must be enacted
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to make corporations perform no absolutely so first a university is a big tent i
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don't go to my office every day and genuflect at the altar of milton friedman any academic god is a
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contradiction in terms your whole objective is to challenge the wisdom all i'm saying is in the current environment
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where corporations have 15 different objectives and claim to be adhering to
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all of them where the business roundtable says we care about all our stakeholders we're going to do everything good for all of them well
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you're sort of in a situation where they say they do all this but obviously corporations have to choose they have to
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choose occasionally between you know their shareholder and their worker they have to choose within the environment
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and providing jobs i mean there are lots of choices they have to make and being vacuous about it and saying we care
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about everybody is not helpful in letting you understand what they really care about and i think it sort of is can
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hide a lot of hypocrisy i think what is important really is you know for
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corporations to have a set of clear guidelines which they have to follow i mean i'm not saying that they're all
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untrustworthy i'm not saying there aren't great ceos who are great human
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beings also what i am saying is don't rely on that don't rely on
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self-regulation by corporations and i don't also want us to over regulate the
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corporation but if you want them to do something for example reduce emissions make that a law let them follow the law
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and that is the way i mean whenever we rely on the good intentions of corporations i mean remember a time when
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all these social platforms were really idealistic and we thought do no evil
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which was i think google's motto reflected the true instincts and now today of course many of these social
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platforms are public sees them with a much much darker view than it used to see them and in part it is because we
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relied on them to regulate themselves and we said you're going to figure out what content to allow what sort of and
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see what happened and the net effect is now we've got so much disagreement about
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you know say a platform like twitter which is in the news today should twitter allow free debate or should
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censor debate more and you've got all sorts of sides being formed on this and
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i think this is where sensibly society will sit down and say here are some
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rules which you have to follow and hopefully is a light set of rules it's a clear set of rules but leaving it
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totally unregulated is i think leaving it to the good intentions of corporations which i think is very weak
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but the truth of the matter is even if you have regulations only if it
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increases profit or some other benefit for the company till then they are not going to do it right absolutely but that
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again i want to distinguish between long-term value maximization and short-term ripping people off if i rip
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you off in the short term yes i can make more money off you but then you never come back to deal with me again i think
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it's a mistaken to believe every corporation is short term and wants to rip you off you know typically the best
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managed corporations think about the long term think about how they can make money by producing the best product for their
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customers or the most sort of best product for the money that the customers pay and so in that sense i don't think
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that the natural instinct is to rip you off but i do think that where the law doesn't force them to do something they
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have a choice do i become a good global citizen and cut my emissions even though
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no law requires me to do that even though it cost me money even though it
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probably means i cannot spend that money on investment i cannot create jobs i cannot do all these nice things because
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i care about the environment so do you want that kind of calculation to be done by the corporations or do you want the
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corporation to say i have to obey the law emission standard is doesn't such i can't violate it and maybe i go a little
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below that just to stay on the right side of the law in case you know the law changes so in these two situations i
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think it's better that we have the latter where you don't leave it to the good intentions of the corporation but
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the corporation sort of has to stay within law now that is not to say there aren't places where corporations have to
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make judgments but you don't want everything to be a judgment call you want as little as possible to be a
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judgment call in the sense of where society really cares about something well make it a law
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so when we talk about a sustainable world and its impact we talk about people the
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profit and the planet right the triple bottom line so for instance if we have
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i'm just thinking of some law the minimum wage law so if you increase the minimum wage there are people who will
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say that it will cause inflation you know so what do you tell them the businesses will have to pay more and we
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already have what eight and a half percent inflation right now in the united states every decision has some
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winners and losers typically right and you have to make choices and if you increase the minimum wage you're saying
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as a society there are some people who have relatively weak bargaining power and i want to protect them by setting a
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minimum at the same time you must recognize that this has some costs that
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you know you're increasing the cost of labor to some corporations it's not cost-free and that those corporations
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will either pass it on in higher prices that is your inflation you're talking about or some of them might find that oh
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this has become too expensive for me to run this particular franchise or to run this particular restaurant and i'll
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close it down because it's just too expensive now everybody wants to point to studies and there are studies which
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find that you know increase the minimum wage there's no short-term effect in fact it may increase business and that's
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possible but it doesn't happen in every circumstance you know the notion that choices don't have consequences and we
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can have everything and be happy i think is a recipe for la la land this is where
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for example when the corporations in their business roundtable statement in 2019 said we care about everybody we're
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going to do good to everybody that's a nonsense statement it's a completely accurate statement you can never do good to everybody if you're
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running a serious business you have to make choices sometimes it is for the shareholder versus the employer
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sometimes for the employee versus shareholder think about google you know there was project at the defense
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department which basically was about artificial intelligence for drones in
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devising targets for military uses right and a bunch of google employees said no
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no we think this is terrible we're not going to work on this and google at that time just dropped the project it said
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okay our employees are more important than the bottom line because they contribute to a larger bottom line in
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all the other stuff we're doing so they dropped the department of defense project and so that's an example where a
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corporation has to make a tough choice it can't be nice to both the department of defense which is an important
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customer its employees an important stakeholder as well as shareholders it's
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making choices it's probably saying in the interest of maintaining the sustainability of the company i have to
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emphasize my employees and that is going to be good for the long run bottom line but the department of defense gets hurt
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in the short run so you served as the governor of the reserve bank of india and as a banker i
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have to ask you a few questions well i'm more of a bank regulator than a banker though i did work in a bank once upon a
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time but yes happy to answer the question so there are these neo banks
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and they seem to be disrupting the banking system they are working
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i want to say under the regulator's radar because one of my guests ernin the
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founder's name was ram palaniyappan what he said is that the regulations for
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now work for the banks not for the customers as the neo banks come how will
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the banking environment change to help more people get fair credit
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grow their credit fairly not be predated by the banks how will it work
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it's a great question i mean when you say new banks i presume you mean the kind of entities that use fintech that
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use a lot of data that use automated structures and so on exactly yeah i
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think they're very valuable competition to the banks because they
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are using data that banks never used never collected maybe don't even know
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some banks how to collect that data as a result are able to make better credit
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decisions if i know that you pay your utility bills on time every month i have a greater sense of
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confidence in you if i know your friends are all people who pay their bills i
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have a greater sense of confidence in you these entities use a lot of data that typically the state old banks
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didn't use and that has expanded the possibility of credit now one has to be a little
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careful in some situations what would be ideal is combining the
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savvy of the banks they know lending had been through downturns they know what
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happens then with the optimism and the technical skills of the fintech companies
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sometimes fintech companies do things which no banker would but no banker would for good reason and then the
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fintech company finds it's made massive losses because it's subjected itself to you know basically rip-offs
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so they do bring a new facet it is not to say that the old problems
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don't emerge with some of them also i mean as you know the chinese government has been going after and financial the
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fintech arm of alibaba and part of what the chinese government is saying is you're following monopolistic
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practices you are not so much predating on your customer but you're monopolizing
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the data you're not giving it to the state-owned banks and as a result you're squeezing the customer with excessive
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rates and so on a higher rate than would be possible if you you know allowed for fair free and fair
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competition and financial is basically saying it's the data we collected those guys didn't collect the data now you're
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telling us to give the data to everyone but you see the challenge that you can be really good as a fintech company but
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the incentive to make money which we talked about earlier in the program doesn't go away and therefore regulators
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have to be aware that even though this opens up possibility of bringing in a whole lot of people who were excluded
17:59
earlier you have to be careful because these people who are excluded are also
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vulnerable to predation to you know monopolistic practices and so on so just
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the fact that they've got access doesn't necessarily mean that they'll never be ripped off now you might say getting
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access and being ripped off a little is better than having no access at all and that may well be true but there may be a
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better solution than just letting them run right either so from banking let's move on to the
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environment that is in everybody's mind because of
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cop26 the goals people are setting up for becoming net zero 2050 2060 i know
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you're a macroeconomist right but how do people at the micro level do
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things to impact that change i think we all have a role to play to say somebody
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else is going to do it for us minimizes the involvement of people in society and
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so i think we should all be cognizant that we have to play that role as you will
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know growing up in india we were often sort of trained to economize we used to use paper bags
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made out of newspapers we used to try and use both sides of a copy book use
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the cover use the back side use every side and you know clothes were handed down within the family from i remember
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wearing my uncle's trousers because they were 30 years later they were back in style they were
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narrow legs but these are the kinds of things that you know you did and i think we need to
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embrace that old philosophy of being careful on consumption as i think former
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finance minister in india yashwan sinha used to say if the whole world consumed
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at the rate of a suburban american household there would be no planet left just imagine the indian household
19:55
consuming at this rate i mean the you simply do not have sustainability if we are to create space for the poorer
20:02
countries in the world to be able to consume more richer countries have to tighten their belt somewhat so that's
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the personal effort you cannot sort of preach conservation etc while having a
20:14
year-round heated swimming pool you have to ask what the cost of that i mean no matter whether you buy carbon credits
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for that or not you have to think about your own lifestyle that said i think
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there is a important role for getting the incentives right globally this is
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where i mean most economists would say let's impose a common carbon tax around the world so that everybody sees the
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common cost of producing carbon and that'll be the efficient thing to do the
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problem is the efficient thing is the unfair thing if you think about the carbon that's already out there in the
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atmosphere a lot of that carbon has been put out by the developed countries and they still continue to put out more
20:55
carbon for example the united states produces 16 tons of carbon per person
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per year tanzania produces 0.2 tons of carbon per person per year today and
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this is after all the conservation etc that has happened in advanced countries should tanzania have the same
21:14
responsibility for reducing its carbon as the united states should have
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that leads to my next question about just transition not sure if you've heard
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that terminology and why should tanzania now say who's trying
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to grow who's trying to develop who's trying to catch up with united states in terms of their
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infrastructure their building their development why should they
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say okay i'm going to stop at .2 tons whereas
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the united states and russia and many of the other countries if you take what we call stock carbon
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carbon that they have not going forward in the past how much they have put out
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in the atmosphere how is it fair to transgenia it's certainly not at the same time it's inefficient for tanzania
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to build coal plants today when you're scrapping coal plants in the united states or in europe right but often the
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technologies which are dismantled in one economy and disallowed goes to the
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people who are cannot afford the latest technology yes of course but you don't
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want emissions being produced to the same quantity in tanzania that you just avoided in the united states that makes
22:34
absolutely no sense right you close down the plant in the u.s transported to tanzania and started up again there it
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not only doesn't make sense but all the workers in that plant in the us will naturally feel aggrieved you closed us
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down but for what aim you started it up in tanzania that makes no sense i think
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what makes sense is for payments to take place from the high emitters to the low
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emitters here we won't give you the coal plants and we would hope that you won't
23:05
in a sense build coal plants but instead we're going to make transfers to you
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which allow you to go directly for example to solar plus battery or wind
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plus battery and that way is win-win but you develop in a green way so you don't have to scrap the stuff down the line
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and we basically are paying you for it so in that sense you know we're
23:28
recognizing our responsibility so i have a very simple scheme for that which i
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actually this morning spoke to the finance ministers around the world trying to describe it it's so simple
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it's basically let's set the world average of emissions per capita how would you
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set that you know that it's 4.6 tons per person that's the world average if
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you're the u.s emitting 16 tons you're over consuming carbon emissions and
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therefore you should pay a price for it because forget the past forget the stock that you put out even if you let bygones
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be bygones but charge for what people are emitting today because they're consuming that carbon stock that we have
24:11
left before we reach the 1.5 degree centigrade so in a sense when the us
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puts out 16 tons it is consuming tanzania stock and so the us should pay
24:21
tanzania for the right to consume some of tanzania's stock what is the simple mechanism if i'm consuming 16 tons i'm
24:28
consuming 11.4 tons over the world average for every ton i
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consumed more than the world average i paid ten dollars per ton ten is not a large number given most carbon taxes are
24:41
thought of as the right number is 75 dollars per ton but let's say 10 10 per ton times 11.6 means 116 dollars per
24:49
person times 320 people in the us that's 38 billion 38 billion is the amount the
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us pays into a global fund for over consuming carbon relative to the rest of
25:01
the world and who gets it a country like tanzania which is under consuming a country like indonesia which is under
25:08
consuming so it acts like a carbon tax except it's a carbon reward to tanzania
25:14
it's a carbon tax for the united states the united states has to pay tanzania
25:19
receives but it receives less if it produces more carbon per capita and
25:24
that's why tanzania has the same incentives to save as the u.s it's the efficient system except it also takes
25:31
into account fairness the incentive structure that you are proposing doesn't really incentivize
25:39
america to move the energy production to tanzania tanzania will say no because i
25:44
would lose this credit absolutely that's exactly right the u.s wants to consume
25:49
less of carbon so it wants to go green but tanzania also wants to consume less of carbon because it gets more if it
25:55
consumes less of carbon so tanzania also wants to go green you don't have this shifting of brown assets across the
26:02
world everybody wants to go green that's what we want given the urgency of the climate situation
26:08
you presented this paper today and i just want to note that today is april 19th 2022 and
26:16
you presented it to the coalition of finance ministers for climate action that's right
26:22
so who will collect this fund who will be i'm just trying to understand the mechanics will it be world bank or
26:29
yeah you need a small bureaucracy and i mean it in not in the pejorative term but in the what you need is technocrats
26:36
right because you need first to measure the emissions that's one thing we all we don't do we don't measure the true
26:42
emissions that a country puts out carefully second you need to make some adjustments the system i suggested was
26:48
really simple but if you want to sort of penalize consumption rather than production you have to also adjust for
26:55
the fact that some countries import goods which are very carbon intensive they import all their manufactured goods
27:02
so some other countries getting the blame for the carbon that's embedded in those goods even though the final
27:09
consumption is by a country that imports goods so you have to adjust for the
27:14
goods that are traded so for instance china's carbon output
27:20
will be lower if you go towards the consumption part of it because so many
27:26
of the goods come to america exactly so you got it right on china
27:31
would be penalized 34 35 billion if it was penalized for production but if it
27:37
is penalized for consumption which it consumes far less it would be more like 20 billion
27:42
talk about the scheme so does the scheme have a name would it be credits would it
27:48
be incentives well ten dollars per ton is called the global carbon incentive i
27:53
didn't want to call it a tax because it's an incentive and it's called the global carbon
27:59
reduction incentive global carbon reduction scheme but see the problem in these things is really this goes back to
28:07
an earlier conversation we had which is when you leave things at the level of
28:13
fuzziness nobody accepts responsibility so today there is no responsibility on who's
28:20
supposed to take actions on climate change who's responsible for paying into
28:26
that 100 billion fund that developing countries were supposed to get starting 2020 to help in mitigation that's 100
28:33
billion dollars per year nobody's talking about where that is and generally when they start talking about
28:39
it it is by repurposing all sorts of aid to do that i think it is high time that
28:44
we recognize who's responsible for putting this carbon out there and who continues to do it and once you can fix
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responsibility then it becomes clearer who has to take more action otherwise basically it's a time-honored moral that
29:00
the polluter pays those who are emitting the most at this point should pay let the stock don't even need to worry about
29:06
that if we could get the high emitters to pay today they have the incentive to change but you can also get the funds to
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help the poorer countries sort of adapt and mitigate and that is where we should
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be going that is what we should be thinking of you touch upon a point because
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we have america wants to be net zero by 2050 i believe and china 2016 but
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what if the administrations change politics and politicians change how do we make your
29:39
scheme agnostic to political parties and political motives how do you make that promise agnostic to
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political parties the promise of becoming net zero by any date exactly the answer is none of these i mean it's
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even less credible when a country makes it itself because a country can always change its
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mind what i'm trying to say is let's get the body of nations to come together and agree that this is
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really what is just what is moral what is sensible and then there will be pressure from outside on countries yes
30:13
uh really dogged administration can say i don't believe in any of this
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but uh it will be going against the grain and the only reason countries are making these kinds of pledges is because
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it plays well domestically if there is a sense that this global scheme is going to bring everybody on board and it's
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going to limit the amount of free riders and it's going to work effectively with respect to developing countries making
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them see the light also then i think there'll be a lot of domestic impulse in countries to push for this
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and hopefully there will be more action right now asking every country to set
30:50
you know its own limits and what it's willing to do is the fool's game first it's not even clear that we measure
30:56
these things properly what does net zero mean and second you said the u.s pick 2050 china picked 2060 india pick 2070 i
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mean which one of us is going to be out there in 2015 to monitor this thing
31:09
yeah so one of our guests who was a 23 year old startup which worked on carbon
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capture he's like i don't believe a 70 year old who says in 2070
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will be net zero or 20 50 for that matter you're like i'm the only person who's going to be around at that time
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yeah i think he's absolutely he or she is absolutely right that not a whole lot
31:33
of thought has gone into how we actually do this and how we measure movement towards this
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so how about some penalties and i know we have to work with incentives you don't want to call it a tax how about
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penalties for non-compliance that's what the system is that's what the system that i'm proposing is it's not so much
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penalties i don't want to call it penalties but it is an incentive scheme and those who are polluting the most or
31:58
who are emitting the most should be incentivized to cut back the problem is that you know everybody wants
32:05
to let things be loose and informal because there's no pressure then and they can respond to
32:11
the pressure of the day which is typically covered the warren in ukraine i mean these are
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important of course but the planet's existence is probably sort of an order of magnitude more
32:24
important than the issue of the day so i have a question from a long-time
32:29
listener who is the president of her european bank and
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he wanted to me to ask you what is the single most important thing that private
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institutions can decide to focus on in the long term to contribute in a
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sustainable way in reducing environment or fragility and can this be done only
32:54
at the governmental level in this or quasi-governmental level like the world
32:59
bank or the ibrd the international bank for reconstruction and development so
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what are they not doing right now the private institutions and what can they do or does it need to be only at a
33:12
governmental quasi-government level look i think private institutions can
33:17
certainly experiment and innovate and try and find out ways of doing of
33:24
reducing emissions of producing in a more efficient sustainable way i think
33:30
that certainly is well within their bailiwick and they should do as much of it as they can i think it makes sense to
33:37
be thinking 10-15 years ahead and thinking of what the world will require then and that typically will mean going
33:44
greener in terms of what you do and perhaps investing in greener production
33:49
in greener outlook before the world fully moves to it may be an important
33:55
indeed bottom line expanding decision because you're making the changes
34:01
when nobody else is doing it and it's in a sense an open area where in fact
34:07
the cost of doing what you're doing may in fact be much lower so i think it certainly it's a sort of win-win
34:14
situation when you're looking ahead trying to see how norms how values will change in society and trying to adapt
34:20
your business for that and that typically will mean going greener i would say
34:26
do the things that you can contribute most effectively there is no point
34:31
thumping on the table and doing things in these you know go attend every sustainability forum there is with
34:38
the with the world bank and the imf and there are plenty of bureaucrats doing that that's not the comparative advantage of primary firms except in
34:45
trying to educate regulators bureaucrats etc about what might be better ways to
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do it but for that you have to know yourself which means the experimentation that i talked about i would say again
34:57
going back to the earlier theme we had rendered these are the things that are caesar's don't start trying to change
35:04
regulation other than informing the regulator, let the regulator decide what needs to be done otherwise it becomes a
35:11
very clawing crony capitalist structure but try and do the things that you can
35:16
do better which is innovate think of more efficient ways of producing. Think
35:21
of greener ways of producing try and reduce the kind of emissions that you are producing in many ways and of course
35:29
I think building a culture like that within your firm can also attract a whole lot of
35:36
very talented people within the firm it can be very useful again to the bottom line but also to the sustainability of
35:43
the business you're running. With those actionable steps, I hope our listeners
35:49
will listen and act on. Thank you so much Dr Raghuram Rajan for coming on Mindful
35:54
Businesses. Thank you very much for having me, it's been a pleasure. You're listening to Mindful Businesses hosted
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and produced by Vidhya Iyer. We'd love to hear from you, send us a voice note with your questions or comments to info
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mindful businesses