0:00:00.319,0:00:03.902
This is about a hidden corner of the labor market.

0:00:03.902,0:00:07.535
It's the world of people who need to work ultra-flexibly,

0:00:07.535,0:00:08.852
if they're to work at all.

0:00:08.852,0:00:10.019
So think, for instance,

0:00:10.019,0:00:13.637
of someone who has a recurring but unpredictable medical condition,

0:00:13.637,0:00:16.420
or somebody who's caring for a dependent adult,

0:00:16.420,0:00:19.267
or a parent with complex child care needs.

0:00:19.267,0:00:22.425
Their availability for work can be such that it's,

0:00:22.425,0:00:24.118
"A few hours today.

0:00:24.118,0:00:27.718
Maybe I can work tomorrow, but I don't know if and when yet."

0:00:27.718,0:00:30.237
And it's extraordinarily difficult for these people

0:00:30.237,0:00:33.266
to find the work that they so often need very badly.

0:00:33.266,0:00:36.085
Which is a tragedy because there are employers

0:00:36.085,0:00:39.391
who can use pools of very flexible local people

0:00:39.391,0:00:43.290
booked completely ad hoc around when that person wants to work.

0:00:43.290,0:00:45.891
Imagine that you run a cafe.

0:00:45.891,0:00:47.558
It's mid-morning, the place is filling up.

0:00:47.558,0:00:49.141
You're going to have a busy lunchtime rush.

0:00:49.141,0:00:52.458
If you could get two extra workers for 90 minutes

0:00:52.458,0:00:55.112
to start in an hour's time,

0:00:55.112,0:01:00.070
you'd do it, but they'd have to be reliable, inducted in how your cafe works.

0:01:00.070,0:01:01.946
They'd have to be available at very competitive rates.

0:01:01.946,0:01:05.113
They'd have to be bookable in about the next minute.

0:01:05.113,0:01:09.045
In reality, no recruitment agency wants to handle that sort of business,

0:01:09.045,0:01:12.428
so you are going to muddle by, understaffed.

0:01:12.428,0:01:14.746
And it's not just caterers, it's hoteliers, it's retailers,

0:01:14.746,0:01:18.045
it's anyone who provides services to the public or businesses.

0:01:18.045,0:01:22.578
There's all sorts of organizations that can use these pools of very flexible people,

0:01:22.578,0:01:25.729
possibly already once they've been inducted.

0:01:25.729,0:01:27.762
At this level of the labor market,

0:01:27.762,0:01:31.612
what you need is a marketplace for spare hours.

0:01:31.612,0:01:33.729
They do exist. Here's how they work.

0:01:33.729,0:01:37.196
So in this example, a distribution company has said,

0:01:37.196,0:01:40.479
we've got a rush order that we've got to get out of the warehouse tomorrow morning.

0:01:40.479,0:01:41.879
Show us everyone who's available.

0:01:41.879,0:01:43.530
It's found 31 workers.

0:01:43.530,0:01:47.062
Everybody on this screen is genuinely available at those specific hours tomorrow.

0:01:47.062,0:01:49.396
They're all contactable in time for this booking.

0:01:49.396,0:01:53.397
They've all defined the terms on which they will accept bookings.

0:01:53.397,0:01:56.811
And this booking is within all the parameters for each individual.

0:01:56.811,0:01:59.372
And they would all be legally compliant by doing this booking.

0:01:59.372,0:02:01.296
Of course, they're all trained to work in warehouses.

0:02:01.296,0:02:03.511
You can select as many of them as you want.

0:02:03.511,0:02:04.963
They're from multiple agencies.

0:02:04.963,0:02:08.895
It's calculated the charge rate for each person for this specific booking.

0:02:08.895,0:02:11.229
And it's monitoring their reliability.

0:02:11.229,0:02:14.229
The people on the top row are the provenly reliable ones.

0:02:14.229,0:02:15.978
They're likely to be more expensive.

0:02:15.978,0:02:19.179
In an alternative view of this pool of local, very flexible people,

0:02:19.179,0:02:20.862
here's a market research company,

0:02:20.862,0:02:24.812
and it's inducted maybe 25 local people in how to do street interviewing.

0:02:24.812,0:02:27.497
And they've got a new campaign. They want to run it next week.

0:02:27.497,0:02:30.896
And they're looking at how many of the people they've inducted

0:02:30.896,0:02:33.178
are available each hour next week.

0:02:33.178,0:02:35.912
And they'll then decide when to do their street interviews.

0:02:35.912,0:02:38.529
But is there more that could be done

0:02:38.529,0:02:40.279
for this corner of the labor market?

0:02:40.279,0:02:42.965
Because right now there are so many people

0:02:42.965,0:02:46.563
who need whatever economic opportunity they can get.

0:02:46.563,0:02:48.613
Let's make it personal.

0:02:48.613,0:02:51.396
Imagine that a young woman -- base of the economic pyramid,

0:02:51.396,0:02:53.596
very little prospect of getting a job --

0:02:53.596,0:02:57.312
what economic activity could she theoretically engage in?

0:02:57.312,0:02:59.596
Well, she might be willing to work odd hours

0:02:59.596,0:03:02.896
in a call center, in a reception area, in a mail room.

0:03:02.896,0:03:06.228
She may be interested in providing local services to her community:

0:03:06.228,0:03:08.779
babysitting, local deliveries, pet care.

0:03:08.779,0:03:11.916
She may have possessions that she would like to trade

0:03:11.916,0:03:13.162
at times she doesn't need them.

0:03:13.162,0:03:16.761
So she might have a sofa bed in her front room that she would like to let out.

0:03:16.761,0:03:20.929
She might have a bike, a video games console she only uses occasionally.

0:03:20.929,0:03:24.330
And you're probably thinking -- because you're all very web-aware --

0:03:24.330,0:03:26.895
yes, and we're in the era of collaborative consumption,

0:03:26.895,0:03:28.655
so she can go online and do all this.

0:03:28.655,0:03:31.313
She can go to Airbnb to list her sofa bed,

0:03:31.313,0:03:35.197
she can go to TaskRabbit.com and say, "I want to do local deliveries," and so on.

0:03:35.197,0:03:40.547
These are good sites, but I believe we can go a step further.

0:03:40.547,0:03:47.161
And the key to that is a philosophy that we call modern markets for all.

0:03:47.161,0:03:51.712
Markets have changed beyond recognition in the last 20 years,

0:03:51.712,0:03:55.396
but only for organizations at the top of the economy.

0:03:55.396,0:03:58.396
If you're a Wall Street trader, you now take it for granted

0:03:58.396,0:04:01.312
that you sell your financial assets in a system of markets

0:04:01.312,0:04:04.895
that identifies the most profitable opportunities for you in real time,

0:04:04.895,0:04:08.548
executes on that in microseconds within the boundaries you've set.

0:04:08.548,0:04:11.980
It analyzes supply and demand and pricing

0:04:11.980,0:04:14.073
and tells you where your next wave of opportunities are coming from.

0:04:14.073,0:04:17.623
It manages counterparty risk in incredibly sophisticated ways.

0:04:17.623,0:04:20.057
It's all extremely low overhead.

0:04:20.057,0:04:23.058
What have we gained at the bottom of the economy

0:04:23.058,0:04:27.152
in terms of markets in the last 20 years?

0:04:27.152,0:04:33.311
Basically classified adverts with a search facility.

0:04:33.311,0:04:35.324
So why do we have this disparity

0:04:35.324,0:04:38.874
between these incredibly sophisticated markets at the top of the economy

0:04:38.874,0:04:42.490
that are increasingly sucking more and more activity and resource

0:04:42.490,0:04:45.939
out of the main economy into this rarefied level of trading,

0:04:45.939,0:04:48.323
and what the rest of us have?

0:04:48.323,0:04:51.389
A modern market is more than a website;

0:04:51.389,0:04:54.008
it's a web of interoperable marketplaces,

0:04:54.008,0:04:56.542
back office mechanisms, regulatory regimes,

0:04:56.542,0:05:01.439
settlement mechanisms, liquidity sources and so on.

0:05:01.439,0:05:04.590
And when a Wall Street trader comes into work in the morning,

0:05:04.590,0:05:09.789
she does not write a listing for every financial derivative she wants to sell today

0:05:09.789,0:05:12.405
and then post that listing on multiple websites

0:05:12.405,0:05:14.905
and wait for potential buyers to get in touch

0:05:14.905,0:05:18.622
and start negotiating the terms on which she might trade.

0:05:18.622,0:05:21.521
In the early days of this modern markets technology,

0:05:21.521,0:05:23.589
the financial institutions worked out

0:05:23.589,0:05:27.221
how they could leverage their buying power, their back office processes,

0:05:27.221,0:05:29.521
their relationships, their networks

0:05:29.521,0:05:34.111
to shape these new markets that would create all this new activity.

0:05:34.111,0:05:37.200
They asked governments for supporting regulatory regimes,

0:05:37.200,0:05:39.834
and in a lot of cases they got it.

0:05:39.834,0:05:41.784
But throughout the economy,

0:05:41.784,0:05:44.602
there are facilities that could likewise leverage

0:05:44.602,0:05:46.201
a new generation of markets

0:05:46.201,0:05:48.934
for the benefit of all of us.

0:05:48.934,0:05:50.902
And those facilities --

0:05:50.902,0:05:54.618
I'm talking about things like the mechanisms that prove our identity,

0:05:54.618,0:05:56.901
the licensing authorities

0:05:56.901,0:06:00.734
that know what each of us is allowed to do legally at any given time,

0:06:00.734,0:06:04.402
the processes by which we resolve disputes through official channels.

0:06:04.402,0:06:07.251
These mechanisms, these facilities

0:06:07.251,0:06:10.800
are not in the gift of Craigslist or Gumtree or Yahoo,

0:06:10.800,0:06:13.902
they're controlled by the state.

0:06:13.902,0:06:16.633
And the policymakers who sit on top of them

0:06:16.633,0:06:22.851
are, I suggest, simply not thinking about how those facilities could be used

0:06:22.851,0:06:25.634
to underpin a whole new era of markets.

0:06:25.634,0:06:30.351
Like everyone else, those policymakers are taking it for granted

0:06:30.351,0:06:32.619
that modern markets are the preserve

0:06:32.619,0:06:40.530
of organizations powerful enough to create them for themselves.

0:06:40.530,0:06:43.957
Suppose we stopped taking that for granted.

0:06:43.957,0:06:47.123
Suppose tomorrow morning the prime minister of Britain or the president of the U.S.,

0:06:47.123,0:06:49.305
or the leader of any other developed nation,

0:06:49.305,0:06:53.156
woke up and said, "I'm never going to be able to create

0:06:53.156,0:06:55.322
all the jobs I need in the current climate.

0:06:55.322,0:07:00.656
I have got to focus on whatever economic opportunity I can get to my citizens.

0:07:00.656,0:07:04.623
And for that they have to be able to access state-of-the-art markets.

0:07:04.623,0:07:06.991
How do I make that happen?"

0:07:06.991,0:07:09.740
And I think I can see a few eyes rolling.

0:07:09.740,0:07:13.522
Politicians in a big, complex, sophisticated I.T. project?

0:07:13.522,0:07:17.052
Oh, that's going to be a disaster waiting to happen.

0:07:17.052,0:07:20.057
Not necessarily.

0:07:20.057,0:07:22.905
There is a precedent for technology-enabled service

0:07:22.905,0:07:26.607
that has been initiated by politicians in multiple countries

0:07:26.607,0:07:29.423
and has been hugely successful:

0:07:29.423,0:07:31.873
national lotteries.

0:07:31.873,0:07:33.623
Let's take Britain as an example.

0:07:33.623,0:07:36.223
Our government didn't design the national lottery,

0:07:36.223,0:07:39.006
it didn't fund the national lottery, it doesn't operate the national lottery.

0:07:39.006,0:07:44.157
It simply passed the National Lottery Act and this is what followed.

0:07:44.157,0:07:47.422
This act defines what a national lottery will look like.

0:07:47.422,0:07:49.090
It specifies certain benefits

0:07:49.090,0:07:51.773
that the state can uniquely bestow on the operators.

0:07:51.773,0:07:54.472
And it puts some obligations on those operators.

0:07:54.472,0:07:57.822
In terms of spreading gambling activity to the masses,

0:07:57.822,0:08:00.856
this was an unqualified success.

0:08:00.856,0:08:02.640
But let's suppose that our aim

0:08:02.640,0:08:06.523
is to bring new economic activity to the base of the pyramid.

0:08:06.523,0:08:08.673
Could we use the same model?

0:08:08.673,0:08:10.457
I believe we could.

0:08:10.457,0:08:14.573
So imagine that policymakers outlined a facility.

0:08:14.573,0:08:18.557
Let's call it national e-markets, NEMs for short.

0:08:18.557,0:08:20.406
Think of it as a regulated public utility.

0:08:20.406,0:08:23.290
So it's on a par with the water supply or the road network.

0:08:23.290,0:08:27.406
And it's a series of markets for low-level trade

0:08:27.406,0:08:30.223
that can be fulfilled by a person or a small company.

0:08:30.223,0:08:32.972
And government has certain benefits

0:08:32.972,0:08:35.522
it can uniquely bestow on these markets.

0:08:35.522,0:08:38.306
It's about public spending going through these markets

0:08:38.306,0:08:40.905
to buy public services at the local level.

0:08:40.905,0:08:42.640
It's about interfacing these markets

0:08:42.640,0:08:46.290
direct into the highest official channels in the land.

0:08:46.290,0:08:49.690
It's about enshrining government's role as a publicist for these markets.

0:08:49.690,0:08:52.472
It's about deregulating some sectors

0:08:52.472,0:08:53.905
so that local people can enter them.

0:08:53.905,0:08:56.157
So, taxi journeys might be one example.

0:08:56.157,0:09:00.939
And there are certain obligations that should go with those benefits

0:09:00.939,0:09:02.540
to be placed on the operators,

0:09:02.540,0:09:04.040
and the key one is, of course,

0:09:04.040,0:09:06.906
that the operators pay for everything,

0:09:06.906,0:09:09.907
including all the interfacing into the public sector.

0:09:09.907,0:09:13.473
So imagine that the operators make their return

0:09:13.473,0:09:16.656
by building a percentage markup into each transaction.

0:09:16.656,0:09:19.090
Imagine that there's a concession period

0:09:19.090,0:09:21.523
defined of maybe 15 years

0:09:21.523,0:09:25.989
in which they can take all these benefits and run with them.

0:09:25.989,0:09:29.306
And imagine that the consortia who bid to run it are told,

0:09:29.306,0:09:32.939
whoever comes in at the lowest percentage markup on each transaction

0:09:32.939,0:09:34.431
to fund the whole thing

0:09:34.431,0:09:35.806
will get the deal.

0:09:35.806,0:09:37.606
So government then exits the frame.

0:09:37.606,0:09:39.239
This is now in the hands of the consortium.

0:09:39.239,0:09:41.790
Either they are going to unlock an awful lot of economic opportunity

0:09:41.790,0:09:43.874
and make a percentage on all of it

0:09:43.874,0:09:45.473
or it's all going to crash and burn,

0:09:45.473,0:09:47.090
which is tough on their shareholders.

0:09:47.090,0:09:49.540
It doesn't bother the taxpayer necessarily.

0:09:49.540,0:09:54.190
And there would be no constraints on alternative markets.

0:09:54.190,0:09:56.623
So this would just be one more choice

0:09:56.623,0:09:59.439
among millions of Internet forums.

0:09:59.439,0:10:01.989
But it could be very different,

0:10:01.989,0:10:05.607
because having access to those state-backed facilities

0:10:05.607,0:10:07.940
could incentivize this consortium

0:10:07.940,0:10:10.057
to seriously invest in the service.

0:10:10.057,0:10:13.124
Because they would have to get a lot of these small transactions going

0:10:13.124,0:10:14.855
to start making their return.

0:10:14.855,0:10:19.746
So we're talking about sectors like home hair care,

0:10:19.746,0:10:23.703
the hire of toys, farm work,

0:10:23.703,0:10:27.322
hire of clothes even, meals delivered to your door,

0:10:27.322,0:10:29.129
services for tourists, home care.

0:10:29.129,0:10:35.912
This would be a world of very small trades, but very well-informed,

0:10:35.912,0:10:39.779
because national e-markets will deliver data.

0:10:39.779,0:10:42.412
So this is a local person

0:10:42.412,0:10:45.412
potentially deciding whether to enter the babysitting market.

0:10:45.412,0:10:48.261
And they might be aware that they would have to fund vetting and training

0:10:48.261,0:10:49.661
if they wanted to go into that market.

0:10:49.661,0:10:52.279
They'd have to do assessment interviews with local parents

0:10:52.279,0:10:53.779
who wanted a pool of babysitters.

0:10:53.779,0:10:55.180
Is it worth their while?

0:10:55.180,0:10:56.880
Should they be looking at other sectors?

0:10:56.880,0:10:58.764
Should they be moving to another part of the country

0:10:58.764,0:11:01.013
where there's a shortage of babysitters?

0:11:01.013,0:11:03.363
This kind of data can become routine.

0:11:03.363,0:11:05.397
And this data can be used by investors.

0:11:05.397,0:11:08.563
So if there's a problem with a shortage of babysitters in some parts of the country

0:11:08.563,0:11:11.462
and the problem is nobody can afford the vetting and training,

0:11:11.462,0:11:13.046
an investor can pay for it

0:11:13.046,0:11:16.730
and the system will tithe back the enhanced earnings of the individuals

0:11:16.730,0:11:18.379
for maybe the next two years.

0:11:18.379,0:11:21.680
This is a world of atomized capitalism.

0:11:21.680,0:11:23.712
So it's small trades by small people,

0:11:23.712,0:11:30.579
but it's very informed, safe, convenient, low-overhead and immediate.

0:11:30.579,0:11:33.504
Some rough research suggests this could unlock

0:11:33.504,0:11:37.705
around 100 million pounds' worth a day of new economic activity

0:11:37.705,0:11:39.655
in a country the size of the U.K.

0:11:39.655,0:11:42.388
Does that sound improbable to you?

0:11:42.388,0:11:46.521
That's what a lot of people said about turbo trading

0:11:46.521,0:11:49.573
in financial exchanges 20 years ago.

0:11:49.573,0:11:52.673
Do not underestimate the transformative power

0:11:52.673,0:11:55.829
of truly modern markets.

0:11:55.829,0:11:57.455
Thank you.

0:11:57.455,0:11:59.040
(Applause)