Remarks by Angel Gurría
27 February 2020 - OECD, Paris
(as prepared for delivery)
Ambassadors, Director-General Van Jaarsveld, Chairman Lees, ladies and gentlemen,
In policymaking, we hear the word “system” all the time. The economic system. The education system. The financial system. The political system. The social system… However, we rarely hear the word system attached to the word “approach”.
But unless we adopt a systems approach, unless we employ systems thinking, we will fail to understand the world we are living in; we will fail to anticipate the consequences of our decisions and actions; and we will fail to build adequate resilience to the threats facing us.
Our economies and societies are grappling with important challenges. Let me briefly outline some of the most important ones.
Energy-related carbon dioxide emissions are rising again. Coal, oil and gas continue to meet the lion’s share of global primary energy demand growth.
On current population and consumption trends, global food production will have to double over the next 30 years, but more than 75 per cent of the Planet’s land is substantially degraded.
Ocean acidification and warming is driving rapid and dramatic changes in marine ecosystems, the number of fish in major fisheries is declining, while some studies estimate that by 2050 there will be more plastic than fish in the sea, by weight.
Extinction rates have increased to between 100 - 1,000 times the ‘background rate’ and we are now facing a sixth mass extinction.
Our economic systems are also creating huge social challenges. The OECD has produced some stark figures on the trends underlying the feelings of resentment, pessimism and distrust.
The average disposable income of the richest 10% of the population is now around ten times that of the poorest 10% across the OECD, up from seven times 25 years ago. Wealth inequality is even more pronounced, with the top 10% holding half of total wealth, while the bottom 40% holds only 3%.
It would take children of poor families in OECD countries 5 generations to reach the average income in their country; while a 25 year-old university-educated man can expect to live almost 8 years longer than his lower-educated peer on average across OECD countries.
Inequalities are fracturing societies, hurting economies, and undermining democracies. They also undermine growth.
Governments and the international community are taking important steps to tackle these challenges. However, these steps will lead to opposing directions and we will not get where we want to go unless we realise that these issues are interconnected. Each one influences the others and is, in turn, influenced by them.
A systems approach can help us to understand the main features of the most complex issues we have to deal with. Features such as emergence, when the overall effect of individuals’ actions is qualitatively different from what each of the individuals is doing.
Radical uncertainty is another important aspect. It describes surprises – outcomes or events that are unanticipated, that cannot be put into a probability distribution because they are outside our list of things that might occur.
But despite radical uncertainty and the unanticipated, the future is born by anticipation. We take decisions and perform actions to influence the future, as individuals, societies or governments. Even things that may never happen, or will only happen decades from now, can have an impact on what we do today. That is why we plan our day, buy insurance, and pay into pension funds. That is why we try to forecast everything from GDP to the weather to the results of elections or football matches.
Of course, not all our decisions about the future are in tune with what economic rationality would like us to do. Moreover, experience shows that simply extrapolating from the past can be ridiculous, dangerous or at best misguided.
A systems approach helps us to avoid these errors. It helps to understand a world characterised by nonlinearities, tipping points, and asymmetrical relations, where a small cause can have a big effect. In a systems approach, global issues need global solutions.
If we are to tackle these issues, governments must change the ways in which they design and implement policies. Shift from a top-down siloed culture to an enabling culture where evidence, experimentation, and modelling help to inform and develop stakeholder engagement and buy-in.
That is the motivation behind the report we are launching today, and behind the strategic partnership between IIASA and the OECD that our NAEC unit is coordinating under the supervision of Gabriela Ramos, OECD’s Chief of Staff and OECD Sherpa. By joining forces to work on the central issues, we gain a more thorough understanding of the systemic and dynamic linkages among the major trends shaping our world, as well as the impact that different policy measures have on them.
The nature of the challenges means that no country can overcome them on its own. And for issues such as climate change or trade, a single country acting alone can potentially make things worse for everyone, including its own citizens. That is why the response has to be co-operative, multilateral and systemic.
For example we have to look at the linkages between finance, investment, and climate change; we have to develop concerted policies for the climate, ecosystems, energy, and water nexus; our employment strategies have to incorporate the interactions between technological innovation and economic progress.
Ladies and Gentlemen:
Systems thinking will be indispensable in better understanding the issues at hand; in anticipating the consequences of our decisions; and ultimately, in building resilience.
I would like to thank IIASA for its collaboration in the preparation of this report. Together we can shape a brighter future, for our economies, our societies, and all of our citizens. Thank you.