What we owe each other: a new social contract

Paul Johnson

Hello, this week we have a rather different edition of the IFS Zooms In. I'm Paul Johnson and my only role this week will be to introduce our speaker, because this week we have a recording of Baroness Minouche Shafik, who is director of the London School of Economics, who this year gave our annual lecture where she was talking about her book, What We Owe Each Other, a phenomenal exploration of the structure and role of the welfare state, and particularly of social insurance, the role of the family and the role that we play relative to each other in keeping society on track. Minouche has the most extraordinary CV, she's director of the LSE at the moment, previously she's been Deputy Governor of the Bank of England, Permanent Secretary at the Department for International Development, and a Deputy Managing Director at The International Monetary Fund. Somehow, among all of that, she's found time to write a book, and somehow, she also found time to speak to us about the work that she's been doing. Do listen, learn and enjoy. 

Minouche Shafik

It's a real honour to give this lecture and such a pleasure to share this evening with so many friends, colleagues and fellow travellers in the dismal science. My particular thanks to Paul Johnson for extending the invitation and to all the staff at the Institute for Fiscal Studies for their generous hospitality and for making this annual event so wonderful and, in particular for having it in person.

Now, as a long-time civil servant and policymaker, and now as the director of the London School of Economics and Political Science, I have a particular appreciation for the IFS, and many of the people in this room, so-called unaccountable mandarins, geeks, technocrats, and experts. And I for one, think the world needs more of them and am delighted that the LSE is doing its part to produce them for the world. And the mission of the Institute in particular has earned my deep respect. A community of experts that studies public policy with an objective eye and educates the public about the choices and trade-offs inherent in all government decision making is an indispensable good. And I recall when I was at the IMF, many, many countries came to us and said, “we want to create an Institute for Fiscal studies in our country too.” And that same spirit motivates the public servants that I'm proud to have worked with in this country and in multilateral organisations. And it also moved the founders of the London School of Economics who also had - they certainly had political views that influenced their normative sense of policymaking, but they also believed in the power of facts, and evidence, and reason, and science, to guide them. And in performing this incredibly vital public service, you at the Institute for Fiscal Studies make a real impact on the lives of real people and that's something you should be very, very proud of.

Now, as I said, it's a challenge to give this lecture in part because there's such a long line of distinguished economic thinkers who've spoken before me, including many wonderful colleagues from LSE, like Professor Steve Mnuchin and Sir Tim Besley, and it's also a very large subject that I've taken on. And of course, there's a pandemic still raging in many parts of the world, a war in Ukraine, economic and political shocks created by the interactions of all those things reverberating around the globe. It may feel a bit naive and perverse to discuss anything but those acute issues. But in a moment like this, I draw my inspiration from one of my most distinguished predecessors at LSE, Lord William Beveridge. His famous report which provided the intellectual foundations for the welfare state in the UK, was published in 1942. In fact, it was the most popular government document ever produced at that time, and people queued up the Kingsway, hundreds and thousands of people queued up to get a copy of this report. But remember in 1942 British soldiers were still engaged in a life or death struggle on the continent with no guarantee of victory. And Beveridge knew though, that as a society, we couldn't allow the urgent present to obscure the important future. And we learn from his example, recognising that there will never be a quiet moment to ask the big questions, and that quiet moment will not come, and for better or worse this is the only chance we have.

So, let me turn to the question, today's British economy, I think, has two urgent problems. The short term one is the cost-of-living crisis, fuelled by dramatic shifts in the supply and demand for goods, particularly energy in a time of war, plague and disruptions of trade. The second challenge is an entrenched, toxic blend of structurally low growth and productivity, or what the economy 2030 inquiry which I'm chairing, along with colleagues at the Resolution Foundation, memorably calls Stagnation Nation. And with the highest inflation rate in the G7, labour productivity half the OECD average, shrinking real wages since 2010, and a host of other terrible economic indicators, it is no surprise that the Bank of England projects that this year British households will see the biggest collapse in living standards, since records were first kept sixty years ago.

Now in combination these problems appear as an acute, unexpected and short term catastrophe, and now they've been synchronised with changes in political leadership and they've become the subject of partisan politics, even further removing them from the kind of objective, sober and reasoned analysis that the IFS specialises in, and is so badly needed at the moment. But of course, our present crisis is not acute, or unexpected, or short term at all, it's merely the latest symptom of chronic, structural and longstanding problems. These failures share a common origin, I think, the breakdown of the basic set of norms, rules, benefits, and obligations that bind individuals, firms and states together and define what we owe each other in a society. Over recent decades, we've seen a breakdown in the consensus about the way the economy functions and what most people expect of what society will provide them and ask of them, what I call the social contract in my book.

From the spike in energy prices, to the NHS backlog, we're failing to provide a decent minimum level of security for the worst off in our society. In our failure to put in the maximum investment in the capabilities of our people, we are ensuring sluggish future growth, and embedding greater inequity between people and places. And in our flexible but highly insecure labour market, our and our haphazard approach to decarbonisation, we're failing to share risks intelligently and equitably across society and across generations.

So, what I hope to accomplish tonight, and what I hope I tried to accomplish in my book is to make the argument that our social contract has been broken, but how we might organise ourselves differently to provide greater security and opportunity to all citizens. And such an approach, would, I think also increase the well-being of our citizens, which of course Gus O'Donnell has been a long-term champion of. I'll argue that if we think about today's urgent problems in the context of our social contract, we are more likely to come up with a coherent set of solutions to current challenges, but also long-term ones.

So, what are these long-term questions that I think shape the social contract? For example, are children raised at home by mothers or grandparents, or does the state provide childcare or pay parental leave so that both parents can care for children and continue to work? How much of health care is the responsibility of individuals and how much do we pay for collectively through insurance or public funding? Do we expect employers to provide contracts with regular hours and benefits such as sick leave and pensions, or do we expect workers and their families to carry the risks of illness and old age? And how much do we invest in future generations, and what endowment do we leave them in terms of physical, human and natural capital?

Let me start by why I think the social contract is broken. Until the late twentieth century, social contracts were built on the premise that families would have a sole male breadwinner and that women would take care of the young and the old. There was a presumption that people would stay married until they died, give birth to children only when they were married. They would have steady employment with very few employers over the course of their lifetime. The education and skills that they accumulated in school between the ages of roughly six to their early twenties would be sufficient for that career. And most people would only live a few years after retirement, and the support that they needed in those years would be provided by their families.

Now, as I've described those assumptions of the old social contract, you're probably sitting there thinking that bears no relationship to the world that we live in today. Today, half of women are employed in the labour market and that trend is an upward trend, and is universal. In advanced economies between a third and a half of marriages end in divorce. And in most developing countries, of course, the rate of divorce is increasing. A growing proportion of children are born outside of marriage. The average worker has many more jobs over the course of a lifetime, and technology is likely to increase that over time. And while many developing countries are still transitioning to having more workers in the formal sector, there are growing signs of informality in many advanced economies - I often say that the gig economy is just a cool word for the informal sector. And of course, climate change brings massive risks that could disrupt our economies and the sustainability of our societies.

I think the biggest disruptors of the social contract thus far have been the changing role of women, which have affected childcare and elderly care; and technology, which has fundamentally changed work and what we need from our educational systems. Looking forward, I think there'll be even more disruption caused by ageing and climate change. And of course, the pandemic revealed the cracks in our social contract even more, with women struggling with home schooling, precarious workers unable to take sick leave even when they had COVID, and those in the vulnerable groups suffering the greatest loss of life. On the flip side, the pandemic also showed us how work and education could be organised very differently, and we're only just beginning to adjust to those new possibilities.

Now let me also start by making an important distinction between the social contract and the welfare state since they are not synonymous. The social contract reflects all the ways that we organise things that we need delivered collectively, through families, communities, employers and the state. The welfare state is just one mechanism for delivering those common goods. Now there's a misconception that the welfare state is primarily about redistributing income from the rich to the poor. What my colleague at the LSE Nick Barr calls the “Robin Hood function” of the state. But actually, the main purpose of the state is to redistribute income across our own lives. What is sometimes called the “Piggy Bank function.” So, a clever child can't roll up to a bank and say, “can I borrow money for my education and I'll pay you back when I have a job?” The welfare state finances that education and then expects that child to pay taxes when they're adults as a form of repayment that enables others out in society to benefit.

In some ways, our current system of financing higher education embodies this concept. Students are lent money by society through the student loan scheme to invest in their education, and then are expected to pay it back when they earn above a certain threshold. Now let me show you some figures for the UK which illustrates this point, and how our relationship with the state over the course of our lives changes at different ages. The X axis is age, and the top, the Y axis is projected receipts or spending, this comes from the OBR. And what it shows is it illustrates the point I've just made, which is that when we are young, we tend to benefit from government spending, mainly through education. When we're in the middle of our lives, we're net contributors through the state through taxes. And then at the end of our lives, we are again net beneficiaries through pension and health spending. My former LSE colleague John Hills, who we lost sadly last year, argues that in the UK, for the vast majority of people, they put into the state as much as they take out, and while some people would argue the rich put in more because they pay higher taxes, they also tend to live longer and benefit from health care and pensions much longer, and so net net, it's about the same.

This Piggy Bank function of the state, which is by far the most important thing that the state does and is about three quarters of what the state does, is at the heart of what economists call pre-distribution policies, that invest in and around citizens to enable them to be productive and to contribute to society throughout their lives, and I'll come back to this theme.

So, let me give you now some examples of domains where I think the social contract is broken and what I think a better model would look like, and I'll give you examples from education, from work, and then finally the social contract between the generations. Let me start with education. So, humanity has made huge progress on education, this chart shows you illustrates for some, a group of countries where we spend our money. Between pre-primary, primary, secondary and tertiary education and then at the very end of the bar charts adult learning. The vast majority of countries spend most of their money in education on primary, secondary and the tertiary levels, roughly between the ages of five or six to early twenties. Spending on pre-primary and adult learning is very modest in relative terms. And yet research from places as diverse as Jamaica and Chicago show that providing extra nutrition to preschool children, and supporting parenting skills early in life generates huge improvements in educational outcomes and lifetime earnings later in life. In the Jamaican case, 40% higher earnings from being visited by a community health worker once a week in your early years.

In the UK we used to have a programme called Sure Start but we never ran randomised control trials or stuck with it long enough to be able to comprehensively evaluate its impact. But longitudinal evidence from other countries, published in The Lancet, shows how acting in the first thousand days of life when brain development is highly influenced by nutrition and mental stimulation, can generate benefit to cost ratios of about seventeen to one and builds the foundations for future learning. And I would argue that if you really care about social mobility, early years education is the best investment that you can make.

At the other end of the spectrum, the forces of technology and ageing will mean that people will have to work much longer and have to change jobs more often. Hundreds of studies of adult learning demonstrate how strong links between employers, early intervention and sustained funding can increase the employability of adults. In the UK we have some of the best universities in the world, but we've completely failed half the population who don't go to university as a result of endless tinkering and chronic underfunding of further education. I would argue that a better social contract would invest more in the early years, where the possibility to equalise opportunity is greatest, and much more in adult education, where longer careers and technological changes mean that re-skilling throughout life would be essential.

Let me turn to employment as another example. One of the most striking things about modern labour markets is how informality, which as I said used to be associated with developing countries, has become a feature everywhere. More workers are on flexible contracts as our labour force has become more diverse and as technology has made it possible for firms to outsource more activities. This flexibility has had huge benefits for employees and for consumers, and explains a great deal of the reason why many consumer goods, for example are far cheaper. For those employed on flexible contracts, they may have jobs they might not otherwise have had, which is to their advantage. But they get that with a great deal of insecurity about their income, their hours of work, and what happens when they're sick or old. I would argue a better social contract would retain the benefits of flexibility while providing workers with more security in the form of mandatory benefits for all workers regardless of the nature of their employment contract, generous unemployment insurance and opportunities for retraining throughout life.

This chart shows you how different countries strike a different balance between flexibility of the labour market and security for workers. So, on the X axis you have increasing flexibility and on the Y axis you have increasing levels of worker protection and security. Most advanced countries, many European countries, for example in the upper left-hand quadrant, where you have fairly rigid labour markets with low flexibility and high levels of employment protection. The developing world often is in the lower left-hand quadrant, which is where you have seemingly low flexibility in the formal sector labour market where workers have high degrees of protection but very high flexibility in the informal labour market and then low levels of protection.

The sweet spot where you want to be is in the upper right-hand quadrant where you have high flexibility and so employers can adjust their labour force as needed depending on economic circumstances. But high levels of protection, countries like Denmark and New Zealand are in that space. There the social contract protects the worker, not the job. If you look at many Nordic countries, for example, they have the highest rates of labour turnover of anywhere in Europe. In fact, in some places workers do not benefit from things like notice periods or severance pay at all, but it doesn't matter, because unemployment insurance is generous and retraining is also equally well funded, and so most people are very quickly back in work.

So, I would argue a better social contract would take such a flexicurity approach and combine it with mandating benefits for all workers, regardless of their employment contract. And just as - including in the UK - we now have moved to a model where workers have portable pension pots which they can take with them to whichever job they move onto, I think we should move to a system where workers have portable benefit pots. And so, if they work for three employers in one week, each of them can contribute a bit to their sickness entitlement, holiday pay, pension and training costs. Overtime, one could imagine that benefit pots for all workers could be funded in such a manner.

Let me now turn to the intergenerational social contract. Every generation wants to leave the next generation better off than itself. And yet we are at risk of leaving future generations poorer prospects for their livelihoods, high levels of debt and a severely damaged planet. If you look at polling of whether people think the next generation will be better or worse off than their parents, what's really striking is that in the emerging markets, people do expect the next generation to be better off, and that's probably a pretty good assumption. But in the advanced economies, the majority of people think the next generation will be worse off than their parents. Of course, there is good reason to believe that. Most adults, well, clearly the pandemic has disrupted education for many young people, their employment prospects and the likelihood of things like home ownership is far later. They will of course have to repay the debts that we have accumulated in the financial crisis and during the pandemic, and there's no doubt that we're leaving the next generation a planet which has far less biodiversity, will be hotter, and carry many environmental risks for them.

And so, the question is, how can we put the intergenerational social contract, right? I would argue that we need to invest hugely in the education of young people to enable them to be productive over what will be very long working lives. For many people in this room, I think we always thought of a career as being roughly thirty years. I tell my students at the LSE they need to be planning for careers that are at least fifty years. And in order to do that, you'll need to invest in your skills throughout your life. I think we also need to do as much as we can to redress the environmental damage that we have that we have wrought and find ways to reduce the fiscal burden on future generations. To achieve that today's older generation will have to work much longer and we need to link retirement ages and the eligibility for pensions more explicitly to life expectancy. And so, as people age, they should just automatically expect to work longer. And of course, we should tax carbon - we can go into that.

I think that combination of high investment in the next generation, longer working lives for the elderly, taxing carbon would be the beginnings of a better settlement between the generations, and I think it would be an enlightened investment in the older generation in the next in order to ensure that someone will be able to pay the health care bills and the pension requirements of this generation.

Now let me step back and say, “okay, what are the principles that I think should underpin a better social contract and what would those principles be?” Well, if you go back to 1909 when Beatrice Webb dissented from the Royal Commission on the Poor Laws, she argued that a better social contract for the UK should, now quote her here, “secure a national minimum of civilised life open to all alike of both sexes and all classes, by which we mean sufficient nourishment and training when young, a living wage when able bodied, treatment when sick, and a modest but secure livelihood when disabled or aged.” So more than a hundred years later, I'm not sure she'd be very impressed at how far we've progressed on delivering on those principles.

So, what would a better social contract look like, and what principles should guide us? I would argue that there are three. First is minimum security for all, two is maximum investment in opportunity and capability, and three is better risk sharing. And let me say something about each of those principles.

Minimum security for all, I think in every society it should be possible to put a floor below which no one should go. This can be achieved through cash transfer schemes in low-income countries, or tax credits for low wage workers in advanced economies. That minimum should include obviously access to basic healthcare and a minimum state pension. It should also include sick leave and unemployment insurance regardless of the type of employment contract. In developing countries, that means bringing more people into the formal sector, in the advanced economies, it means mandating that employers pay benefits to flexible workers in proportion to how much they work. I am not a fan of Universal Basic Income, I think it's an incredibly inefficient way of providing that minimum for all, because it requires high levels of taxation to recycle lots of resources through the state and give it to many people who don't need it. But I also think philosophically universal basic income violates the principle that underpins social contracts in really every country, which is that if you are an able-bodied adult you are expected to contribute to society in exchange for being looked after when you're young and when you're old. So that's how I would deal with minimum security for all.

On the second principle, which is maximum investment in opportunity and capability. I would argue that in too many places talent is wasted because opportunities are not provided to all, and disaffection is greatest in those countries where the prospects of improving your lot have diminished over time. This chart shows you data on social mobility, and it asks the question how many generations does it take to go from the bottom of the income distribution to the middle of the income distribution in different countries? And what it shows, if you look at the UK or the US for example, they’re in the middle, it takes five generations to go from the bottom to the middle. In Denmark it takes two, in countries like South Africa or Brazil, it takes nine generations, which means that on average the prospects of ever becoming middle class if you're born poor, are non-existent. And even for the UK, five generations is a long time, a very long time.

Now much of this talent that is wasted in our societies is embedded in women, minority groups, children who happen to be born in poor families or in poor places that are unable to give them opportunities. If you look at what drove productivity gains in the US economy between 1960 and 2010, you could explain between 20 and 40% of the productivity gains in the US simply by virtue of the fact that there was a better use of talent in US economy, because employers were suddenly able, after the civil rights movement, to choose from a much broader pool of people. They didn't just have to employ the white men in the economy, they could employ women, they could employ Black people, and that itself explains massive productivity gains because you could allocate people to the jobs that suited them best.

Similarly, if you look, if what's called in the literature, lost Einsteins women, minorities, children from low-income families, if they were able to invent to the same degree as white men from high income countries, the rate of innovation in our economy could quadruple. And this wonderful work by Raj Chetty at Harvard and John Van Reenen at LSE that shows how controlling for ability children who happen to be born into poor families or poor places are ten times less likely to have a patent and be an innovator simply by virtue of where they're born.

So how could we better use the talent in our societies? I think in addition to investing in the early years, we could also give all young people a lifetime entitlement to education, to pay for university education or vocational training. And while most countries have equalised educational opportunities between girls and boys, women are still disadvantaged in the workplace because they do about two more hours of unpaid work every day than men. So more generous parental leave, public funding to support families, and a fairer division of labour at home would mean that female talent is better used in our societies.

The government in the UK's proposed lifelong learning entitlement is, I think, a very good example of this principle. By allowing all citizens, not just those who go to university, but all citizens, to borrow to gain skills over the course of their lives, the state then is encouraging people to invest in themselves and future prosperity. Of course, one of the reasons this programme is needed is because we've seen a huge collapse in workplace training over the course of the past decade, and that is likely to continue as people increasingly work from home, I suspect. So, I'm a fan of the government proposed lifelong learning entitlement because it potentially levels the playing field, particularly between those who go to university and those who don't. If we could afford it, I would prefer an endowment to a loan, but if it's alone we should treat it as an investment in a more capable and productive workforce at an interest rate much closer to the government cost of borrowing. I think this is especially the case for a service economy in the UK, where in the end, in a service economy it's all about human capital and we are quickly moving to a world in which unless you have some tertiary education, you cannot expect to have a decent standard of living.

So let me turn finally to the principle of sharing risks better. Too many risks in society are being borne by individuals when they would be more efficiently born collectively. For example, it's possible to maintain flexibility for employers to be able to hire and fire workers depending on market conditions if workers know that there's unemployment insurance and retraining available to provide them security until they find a new job. A similar rebalancing of risks needs to occur around childcare or health at old age. For example, why is the cost of maternity or parental leave borne by employers when parental leave paid for through general taxation would create a much more level playing field between men and women in the labour market. Many health risks, of course, are more efficiently managed collectively, we have automatic enrolment in pension schemes in the UK, and that's resulted in a huge improvement in pension coverage. But we could also consider insurance, requiring insurance for old age care to give individuals more security at the end of their lives, such as they do in Germany or Japan.

Okay, so let me come to the question that inevitably will be asked by an audience of the Institute for Fiscal Studies, which is, is it affordable? So, in the book I provide some examples of the fiscal consequences of a better social contract. Increasing publicly supported childcare, early years education, and lifelong learning will require more spending. But some of this spending would be investment that will generate higher future tax returns. Remember, in the UK, at a minimum, returns to tertiary and higher education are over 20%. Some of these investments would also generate net benefits if we measured them properly, such as investments in the environment or in well-being. These investments could be sensibly financed through borrowing, especially in an advanced economy where interest rates are still, by historical standards, quite low.

Now some of the spending I've described whether it's on pensions or elements of health care, will be recurrent and would need to be financed through tax revenues. In some countries there is room to raise income tax and corporate taxes, particularly since in the last thirty years we've seen a secular decline in corporate tax rates around the world. In the UK, I think the obvious place to look is a better system of property tax through reform of council tax and business rates. Many people argue for wealth taxes, and we know that wealth taxes are very hard to implement because the wealthy are very good at avoiding them. I think that a better proxy is property taxes. We know that two thirds of global wealth is held in the form of property, so it's a pretty good proxy for a wealth tax.

I think the other place to look, of course, is carbon taxation in order to accelerate the transition towards more sustainable economy. And I think in the case of carbon taxation, if one wants to avoid the adverse kind of gilet jaunes yellow vest protest because of the income distribution consequences, one can look at tax and dividend approaches that achieve the change in relative prices, while compensating those on lower incomes.

Now it is tempting to invoke the Robin Hood solution of taxing the rich and giving money to the poor in order to fund a new social contract - that is not what I'm talking about. I think most countries find that in practise, measures that fundamentally change and equalise distribution of opportunities are far more powerful than anything the state can do through redistribution retroactively. So, my approach is to focus on pre distribution policies such as equalising access to good education or providing additional investment in deprived communities and empowering the individuals affected to reduce the chronic dependency on state support. If we're able to achieve fair outcomes through the labour market by helping the poor into better, higher paid work, this has the advantage of reducing the need for benefit payments and the taxation that pays for it. If the society has to do a lot of redistribution, it means that your pre-distribution policies have failed.

So, my book attempts to be global, of course, and you can only cost a new social contract properly at the national level, and so here I am at the Institute for Fiscal Studies who are among the best in the world at costing public policies, and so my gentle challenge to you is this: I believe that negotiating the terms of a new social contract will become one of the defining political, economic and social issues of our time. And I encourage you to work with me, the Resolution Foundation, the LSE and many of the other organisations that are thinking around these issues about how we might approach an actionable plan for the UK. Momentum is building for a real national economic strategy, and we need a detailed policy programme to match that.

So let me now finally return back to the two crises in the current conjuncture facing the UK economy: the skyrocketing cost of living and the collapse of productivity. How would we think about those two problems in the framework of a better social contract? On the cost of living, I think we should let the Bank of England get on with doing its job of raising interest rates to fight inflation. This is not the time to do anything that might undermine the central bank independence that has delivered the low and stable inflation that we have all benefited from in recent decades.

Meanwhile, I would argue that, in a good society, we should provide the greatest cushion to those who need it most and who are experiencing the higher costs from an exogenous shock that is no fault of their own. So, my principle of providing minimum security for all, would suggest providing targeted rather than generalised support to those who are suffering from the cost-of-living crisis. This would also have the benefit of reducing the inflationary consequences of any fiscal action. On productivity, we need a serious plan to deal with the chronic underinvestment that is the cause of stagnation in recent years. Despite many years of economist time devoted to the question of the productivity puzzle in the UK, I think it's becoming pretty clear that the answer is really quite simple, chronic low rates of investment by both the public and the private sector for many years.

When I was at the Royal Bank, we used to do hundreds of surveys of investors to ask them what determines what makes you invest in one country or another? And with very few variations, the top reasons for investment were the same everywhere. First, was macroeconomic and political stability, of which we haven't had a lot recently; two, was high quality infrastructure; and three, was skills. Corporate tax rates, enterprise zones, all those things were far less important than the opportunity created by getting these fundamentals right. A strategy of maximum investment and smarter risk sharing is central to that. So, after addressing the cost-of-living issues, I would use the remaining fiscal space I had to invest in this productivity agenda. This would include putting in place mechanisms for increasing investment in skills, in research and innovation, alongside incentives for firms to accelerate adoption of existing and new technologies to increase productivity and living standards.

Okay, let me conclude. A new social contract is not about higher taxes, more redistribution, and a bigger welfare state. It's about fundamentally reordering and equalising the distribution of opportunities and security in our society. The result would be higher productivity and the possibility to more efficiently share the risks around childcare, health, work and old age, that are a source of so much anxiety in our society. We owe each other more than our current social contracts can deliver. A bit less emphasis on me, a bit more of the benefits of we would help. But a new social contract I think is possible that provides everyone with a decent life, shares risks more humanely, and draws on everyone's talents. A better architecture of security and opportunity would be based on the three principles that are identified, providing minimum security for all, maximising investment in human capability and opportunity, and sharing risks more efficiently and equitably. Those principles will provide the foundation for a society built on recognising our interdependence, enabling everyone to fulfil their potential and asking everyone to contribute as much as they can for the common good.

Thank you very much.