Show Hide image

A thinker for our times

Global leaders are once again reminding themselves of the insights of the Cambridge academic who hel

John Maynard Keynes has been restored to life. Rusty Keynesian tools – larger budget deficits, tax cuts, accelerated spending programmes and other “economic stimuli” – have been brought back into use the world over to cut off the slide into depression. And they will do the job, if not next year, the year after. But the first Keynesian revolution was not about a rescue operation. Its purpose was to explain how shipwreck might occur; in short, to provide a theoretical basis for better navigation and for steering in seas that were bound to be choppy. Yet, even while the rescue operation is going on, we need to look critically at the economic theory that takes his name.

In his great work The General Theory of Employment, In terest and Money, written during the Great Depression of the 1930s, Keynes said of his ideas that they were "extremely simple, and should be obvious". Market economies were in herently volatile, owing to un certainty about future events being inescapable. Booms were liable to lead to catastrophic collapses followed by long periods of stagnation. Governments had a vital role to play in stabilising market economies. If they did not, the undoubted benefit of markets would be lost and political space would open up for extremists who would offer to solve economic problems by abolishing both markets and liberty. This, in a nutshell, was the Keynesian "political economy".

These ideas were a challenge to the dominant economic models of the day which held that, in the absence of noxious government interference, market economies were naturally stable at full employment. Trading in all markets would always take place at the "right" prices – prices that would "clear the market". This being so, booms and slumps, and prolonged unemployment, could not be generated by the market system itself. If they did happen, it was due to "external shocks". There were many attempts to explain the Great Depression of the 1930s along these lines – as a result of the dislocations of the First World War, of the growth of trade union power to prevent wages falling, and so on. But Keynes rightly regarded such explanations as self-serving. The Great Depression started in the United States, not in war-torn Europe, and in the most lightly regulated, most self-contained, and least unionised, market economy of the world. What were the "external shocks" that caused the Dow Jones Index to fall from 1,000 to 40 between 1929 and 1932, American output to drop by 20 per cent and unemployment to rise to 25 million?

He set out to save capitalism, a system he did not much admire, because he thought it the best hope for the future of civilisation

We can ask exactly the same question today as the world economy slides downwards. The present economic crisis has been generated by a banking system that had been extensively deregulated and in a flexible, largely non-unionised, economy. Indeed, the American capitalism of the past 15 years strongly resembles the capitalism of the 1920s in general character. To Keynes, it seemed obvious that large instabilities were inherent in market processes themselves.

 

John Maynard Keynes was a product of Cambridge civilisation at its most fertile. He was born in 1883 into an academic family, and his circle included not just the most famous philosophers of the day – G E Moore, Bertrand Russell and Ludwig Wittgenstein – but also that exotic offshoot of Cambridge, the Bloomsbury Group, a commune of writers and painters with whom he formed his closest friendships. Keynes was caught up in the intellectual ferment and sexual awakening that marked the passage from Victorian to Edwardian England. At the same time, he had a highly practical bent: he was a supreme example of what Alasdair MacIntyre calls “the aesthete manager”, who partitions his life between the pleasures of the mind and the senses and the management of public affairs. After the First World War, Keynes set out to save a capitalist system he did not particularly admire. He did so because he thought it was the best guarantor of the possibility of civilisation. But he was always quite clear that the pursuit of wealth was a means, not an end. He did not much admire economics, either, hoping that some day economists would become as useful as dentists.

All of this made him, as his wife put it, "more than an economist". In fact, he was the most brilliant non-economist who ever applied himself to the study of economics. In this lay both his greatness and his vulnerability. He imposed himself on his profession by a series of profound insights into human behaviour which fitted the turbulence of his times. But these were never – could never be – properly integrated into the core of his discipline, which spewed them out as soon as it conveniently could. He died of heart failure in 1946, having worked himself to death in the service of his country.

The economic theory of Keynes's day, which precluded boom-bust sequences, seemed patently contrary to experience, yet its foundations were so deep-dug, its defences so secure, its reasoning so compelling, that it took Keynes three big books – including a two-volume Treatise on Money – to see how it might be cracked. His attempt to do so was the most heroic intellectual enterprise of the 20th century. It was nothing less than the attempt to overturn the dominant economic paradigm dating from Adam Smith and David Ricardo.

He finally said what he wanted to say in the preface to The General Theory: "A monetary economy, we shall find, is one in which changing views about the future are capable of in fluencing the quantity of employment and not merely its direction." In that pregnant sentence is the whole of the Keynesian revolution.

Keynes's understanding about how economies work was rooted in his theory of knowledge. The future was unknowable: so disaster was always possible. Keynes did not believe that the future was wholly unknowable. Not only can we calculate the probability of winning the Lottery, but we can forecast with tolerable accuracy the price movements of consumer goods over a short period. Yet we "simply do not know" what the price of oil will be in ten, or even five, years' time. Investments which promised returns "at a comparatively distant, and sometimes an indefinitely distant, date" were acts of faith, gambles on the unknown. And in that fact lay the possibility of huge mistakes.

Classical economists could not deny the possibility of unpredictable events. Inventions are by their nature unpredictable, especially as to timing, and many business cycle theorists saw them as generating boom-bust cycles. But mainstream economics, nevertheless, "abstracted" from such disturbances. The technique by which it did so is fascinatingly brought out in an argument about economic method between two 19th-century economists, which Keynes cited as a fork in the road. In 1817, Ricardo wrote to his friend Thomas Malthus: "It appears to me that one great cause of our differences . . . is that you have always in your mind the immediate and temporary effects of particular changes, whereas I put these immediate and temporary effects quite aside, and fix my whole attention on the permanent state of things which will result from them."

To this, Malthus replied: "I certainly am disposed to refer frequently to things as they are, as the only way of making one's writing practically useful to society . . . Besides I really do think that the progress of society consists of irregular movements, and that to omit the consideration of causes which for eight or ten years will give a great stimulus to production and population or a great check to them is to omit the causes of the wealth and poverty of nations . . ."

Keynes sided with Malthus. He regarded the timeless equilibrium method pioneered by Ricardo as the great wrong turning in economics. It was surely the Ricardo-Malthus exchange he had in mind when writing his best-known aphorism: "But this long run is a misleading guide to affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again."

Ricardo may have thought of the "long run" as the length of time it took storms to disperse. But under the influence of mathematics, economists abandoned the notion of time itself, and therefore of the distinction between the long run and the short run. By Keynes's time, "risks", as he put it, "were supposed to be capable of an exact actuarial computation". If all risks could be measured they could be known in advance. So the future could be reduced to the same epistemological status as the present. Prices would always reflect objective probabilities. This amounted to saying that unregulated market economies would generally be extremely stable. Only very clever people, equipped with adequate mathematics, could believe in anything quite so absurd. Under the influence of this theory, governments withdrew from active management and regulation of economic life: it was the age of laissez-faire.

Keynes commented: "The extraordinary achievement of the classical theory was to overcome the beliefs of the 'natural man' and, at the same time, to be wrong." It was wrong because it "attempts to apply highly precise and mathematical methods to material which is itself much too vague to support such treatment".

Keynes did not believe that "natural man" was irrational. The question he asked was: how do we, as rational investors, behave when we – unlike economists – know that the future is uncertain, or, in economist-speak, know that we are "informationally deprived"? His answer was that we adopt certain "conventions": we assume that the future will be more like the past than experience would justify, that existing opinion as expressed in current prices correctly sums up future prospects, and we copy what everyone else is doing. (As he once put it: "Bankers prefer to be ruined in a conventional way.") But any view of the future based on "so flimsy a foundation" is liable to "sudden and violent changes" when the news changes. "The practice of calmness and immobility, of certainty and security suddenly breaks down. New fears and hopes will, without warning, take charge of human conduct . . . the market will be subject to waves of optimistic and pessimistic sentiment, which are unreasoning yet in a sense legitimate where no solid basis exists for a reasonable calculation."

 

But what is rational for individuals is catastrophic for the economy. Subnormal activity is possible because, in times of crisis, money carries a liquidity premium. This increased "propensity to hoard" is decisive in preventing a quick enough fall in interest rates. The mainstream economics of Keynes's day viewed the interest rate (more accurately, the structure of interest rates) as the price that balances the overall supply of saving with the demand for investment. If the desire to save more went up, interest rates would automatically fall; if the desire to save fell, they would rise. This continual balancing act was what made the market economy self-adjusting. Keynes, on the other hand, saw the interest rate as the "premium" for parting with money. Pessimistic views of the future would raise the price for parting with money, even though the supply of saving was increasing and the demand for investment was falling. Keynes's "liquidity preference theory of the rate of interest" was the main reason he gave for his claim that market economies were not automatically self-correcting. Uncertainty was what ruined the classical scheme.

The same uncertainty made monetary policy a dubious agent of recovery. Even a "cheap money" policy by the central bank might not be enough to halt the slide into depression if the public's desire to hoard money was going up at the same time. Even if you provide the water, you can't force a horse to drink. This was Keynes's main argument for the use of fiscal policy to fight a depression. There is only one sure way to get an increase in spending in the face of falling confidence and that is for the government to spend the money itself.

This, in essence, was the Keynesian revolution. Keynesian economics dominated policymaking in the 25 years or so after the Second World War. The free-market ideologists gave this period such a bad press, that we forget how successful it was. Even slow-growing Britain chugged along at between 2 and 3 per cent per capita income growth from 1950-73 without serious interruptions, and the rest of the world, developed and developing, grew quite a bit faster. But an intellectual/ideological rebellion against Keynesian economics was gathering force. It finally got its chance to restore economics to its old tramlines with the rise of inflation from the late 1960s onwards – something which had less to do with Keynesian policy than with the Vietnam War. The truth was that "scientific" economics could not live with the idea of an unpredictable world. So, rather than admit that it could not be a "hard" science like physics, it set out to abolish uncertainty.

The "new" classical economists hit on a weak spot in Keynesian theory. The view that a large part of the future was unknowable seemed to leave out learning from experience or making efficient use of available information. Rational agents went on making the same mistakes. It seemed more reasonable to assume that recurrent events would initiate a learning process, causing agents to be less often surprised by events. This would make economies more stable.

The attack on Keynes's "uncertain" expectations developed from the 1960s onwards, from the "adaptive" expectations of Milton Friedman to the "rational" expectations of Robert Lucas and others. The development of Bayesian statistics and Bayesian decision-theory suggested that agents can always be modelled as having prior probability distributions over events – distributions that are updated by evidence.

 

Today, the idea of radical uncertainty, though ardently championed by “post-Keynesians” such as Paul Davidson, has little currency in mainstream economics; however, it is supported by financiers of an intellectual bent such as George Soros. As a result, uncertainty once more became “risk”, and risk can always be managed, measured, hedged and spread. This underlies the “efficient market hypothesis” – the idea that all share options can be correctly priced. Its acceptance explains the explosion of leveraged finance since the 1980s. The efficient market hypothesis has a further implication. If the market always prices financial assets correctly, the “real” economy – the one involved in the production of goods and non-financial services – will be as stable as the financial sector. Keynes’s idea that “changing views about the future are capable of influencing the quantity of employment” became a discarded heresy.

And yet the questions remain. Is the present crisis a once-in-a-lifetime event, against which it would be as absurd to guard as an earthquake, or is it an ever-present possibility? Do large "surprises" get instantly diffused through the price system or do their effects linger on like toxic waste, preventing full recovery? There are also questions about the present system that Keynes hardly considered. For instance: are some structures of the economy more conducive to macroeconomic stability than others?

This is the terrain of Karl Marx and the underconsump tionist theorists. There is a long tradition, recently revived, which argues that the more unequal the distribution of income, the more unstable an economy will be. Certainly globalisation has shifted GDP shares from wages to profits. In the underconsumptionist tradition, this leads to overinvestment. The explosion of debt finance can be interpreted as a way of postponing the "crisis of realisation".

Keynes did not have a complete answer to the problems we are facing once again. But, like all great thinkers, he leaves us with ideas which compel us to rethink our situation. In the long run, he deserves to ride again.

Lord Skidelsky is the author of "John Maynard Keynes" (three volumes), published in hardback by Macmillan

This article first appeared in the 22 December 2008 issue of the New Statesman, Christmas and New Year special

Stuart Ramson for Lumos
Show Hide image

“It’s probably the thing of which I am most proud”: J K Rowling in conversation with Eddie Redmayne

The Harry Potter creator talks to the star of Fantastic Beasts and Where to Find Them about her work with the Lumos charity and the urgent need to end the institutionalisation of children.

EDDIE REDMAYNE: Good evening, good evening ladies and gentlemen.

I am so excited that you are excited! Welcome to Carnegie Hall and – thank you! – Welcome to a very what I hope is a very special evening. More than 25 years ago, an author put pen to paper and created one of the most extraordinary stories that the world has ever seen. Her astounding imagination continues to thrill us, it captivates us, it enthrals us, it moves us, and it leaves us wanting more. And tonight ladies and gentlemen. . . there will be more.

But ten years ago, an unimaginable image and an unthinkable story propelled her down a very different path – where the lives of millions of voiceless children would need saving. The author is J K Rowling, and the path is Lumos.

Tonight, we will cast a light on eight million hidden children around the world who desperately need our help. 

FILM – NARRATED BY J K ROWLING: A child’s life is so much more than the sum of its parts ‐ and the love a family brings holds everything together. From the very beginning, a child thrives on individual care and attention. A baby quickly forges a bond with loving parents – and because of this bond the brain develops with remarkable speed and complexity. Within a safe, secure and stimulating environment a child gets the most out of life; in play, education and friendship their personalities develop freely within safe bounds. But this picture of childhood can be a fragile one. Conflict and disaster can destroy the foundations of family life. When countries suffer the effects of extreme poverty, the bond which holds families together can easily be broken apart. In these circumstances, families can feel they have no choice but to place their child into a so-called orphanage, especially if the child is disabled and needs care the family cannot afford. Community support alternatives may not even exist. That orphanages do exist locally may convince desperate parents that there is no alternative. But once a child enters an orphanage, a very different picture of childhood can emerge. A child must now compete for the unique attention they crave. A lack of individual care harms babies and affects their infant brains at a critical stage. Any schooling they receive is no compensation for the parental love they are denied, and children can become cut off from the world. Ill-prepared for life outside they have very poor life chances, and they are much more likely to fall victim to abuse and crime once they leave an orphanage. And we know there are at least 8 million of these children worldwide. But there is hope ‐ and it lies at the very heart of the problem. 80 per cent of children in orphanages are not in fact orphans but have parents or extended families who could care for them, given some support. And by better channelling of existing donations, we can support these vulnerable children at home. By directing funds away from so-called orphanages we can transform systems of care; we can establish community‐based services and prevent these places from ever taking root. Community‐based services are a better investment for donors: they are more cost efficient than residential care and reward children and communities in the long run. Placing children into orphanages is a choice and not a necessity; it is preventable and reversible. And by giving communities options in how they support families, we can change the lives of millions of children and give them strong beginnings ‐ and the futures they deserve.

ER: So now to hear more about Lumos and its life-changing work, please welcome to the stage its founder. Ladies and gentlemen, the extraordinary J K Rowling.

JKR: Thank you, thank you very much.

ER: So here we are!

JKR: Here we are!

ER: This is a big deal. We’re playing Carnegie Hall!

JKR: We are, yes. It’s actually my second time!

ER: Really? Alright, so in a short while we get to show these people our little movie.

JKR: Yeah, which is exciting and a little bit terrifying.

ER: And we will get onto talking about that in a little bit. But first, the reason we’re all here. So we’ve just seen this film – this is clearly a massive humanitarian issue, and a gigantic undertaking. I wondered: why this issue? Why is it so close to your heart?

JKR: Well, I think Eddie said it really well in his introduction – truth is that I saw a newspaper story about a very small boy, he was seven years old and he was effectively being kept in a cage. And I was pregnant at the time and I saw this image in the newspaper, and it was such a shocking image of this child – holding onto wire and screaming – that I went to turn the page. I went to turn the page because it was painful to look at, and I felt very ashamed. As I went to the page, I thought: No, no, you have to read the story, and if it’s as bad as it looks, you gotta do something about it. So I read the story, and it was even worse than it looked.

So to cut a very long story short, I pulled out the news story – which was all about an institution in the Czech Republic where very young children were being kept in appalling conditions. I went home the next day, Monday, [and] I started to write letters to anyone I could think of – MPs, and MEPs, and the president of the Czech Republic. I wrote to everyone I could think of, and that led me to connecting with experts in this field, and the creation of Lumos.

ER: And so there are eight million children living in orphanages worldwide –

JKR: That we know that we know of! See, I think what’s staggering with. . . what was amazing to me when I first began finding out about this these issues, you think how could eight million children be going through this and we don’t know? But a very small amount of thought shows you they are – as you just said – so voiceless. They are literally hidden from sight. So in fact eight million may be a conservative estimate – there may be more children who have been taken from families that we don’t know about, because record-keeping tends to be poor, which is one of the problems.

ER: And they are institutions that we are saying are harmful to children – I suppose, I imagine, not everyone agrees?

JKR: Absolutely so it is completely understandable that we – and by ‘we’ I mean wealthy Westerners – we may have an idea that institutions are kind. Kind in that otherwise perhaps the child will be on the street, or the child is alone. That’s completely understandable. We tend to have that image in our minds from movies, like Annie, that orphanages can be kind of fun! Actually, that’s not true – even the well-run ones are proven, as we saw in that short film, to do often irreparable harm. You will know, because he has – you have a baby now, who is five months old?

ER: Yup.

JKR: And you will know, as I know as all of us who have anything to do with small children know: that they are hard-wired to demand love. They just come out looking for it, because that’s what they need for brain development. And as was shown in this movie, we know that children who are raised in institutions suffer developmental delays, they tend to be physically stunted, they normally have psychological trauma… it is just not what nature intended for children to be herded together, and not given individual love and care.

ER: And are there sort of studies and statistics which support [this]?

JKR: Absolutely, so I’m not just saying this – plucking this out of the air to tell you. We have 80 years of research now that shows very, very clearly – all the research agrees – that this is very harmful. And in fact Lumos works with scientists in the field who can show you brain scans, showing the difference between a child that’s come from an institution and a child has been raised in a family.

As the movie showed, one large recent study shows that children who come out of institutions were six times more likely to have been abused;

10 times more likely to enter prostitution; 40 times more likely to have a criminal record.

And they were 500 times more likely to kill themselves. So you see we do have this enormous bank of research telling us that we are allowing or even inadvertently causing children to be harmed.

ER: For me, one of the complicated things get my head round – and, I suppose, for people in developed countries like the US or the UK in which institutionalisation is a thing of the past – one of the things we struggle with is there’s this sort of disconnect in terms of how we view orphanages.

JKR: I completely agree. I think a small amount of thought shows us if you imagine what would happen – God forbid – were a terrible natural disaster to hit New York tonight, everyone I think would immediately think “Well, the important thing is I keep my loved ones close to me, we stay together and we get the support we need to rebuild our business, find ourselves a home”… When we put ourselves and our families in that in that mentally in that position we understand. However, what’s happening across the developed world is disaster hits and families are immediately pulled apart: “we’ll take those children from you.” Now, imagine that, in the wake of the disaster, people come to you and say: “that child will get fed only if you give me that child.” And we keep propping up the system, and it’s causing a huge amount of damage.

ER: And so is that why families are being torn apart? Why do parents give them up?

JKR: Right, exactly – for many people, that’s the key question. So when I tell people [that] 80 per cent of these children have parents, then an understandable reaction is “what loving parent could give up their child to one of these places?” But we know that there are three main drivers into institutions. The biggest one, the overwhelming one, is poverty.

So parents who make themselves literally be starving are told “if you want to feed that child, we will take it to the institution – the child will get food in the institution.” So they literally believe “that’s how my child will be fed and survive – I’ll have to give the child.” The other one is disability. We find in the developed world, and certainly this was the case in Eastern Europe, where we’re doing a lot of work, children with disabilities were not integrated. And so parents again were told “if you want medical assistance for a disabled child, or if you want that child educated they have to go into the institution.”

And then the third driver is natural disaster, and this is where a very nasty aspect of institutionalisation comes in. It is often the case in the developed world, the so-called orphanages are run as businesses, and that effectively children are trafficked for profit because we Westerners are generous and we can we give a lot of money to these orphanages. And unfortunately there are very unscrupulous people, who in the wake of disasters use it as an opportunity to get children and corral children as a magnet for foreign money, rather than putting the money into systems of care that would keep families together. So since 2010, there has been a 700 per cent increase in children in institutions in Haiti. 

ER: So, for me. . . what’s the solution? How does one go about it?

JKR: Obviously this is this is a massive issue, a massive issue. And, as you would imagine, the solution is complex but – I bring you hope! This is an entirely solvable issue. This is entirely solvable, and we know how to do it. Doesn’t mean it’s easy – but we know how to do it. So it’s a two-part problem: first of all we have these children, some of them living in truly appalling conditions, whom we need to rescue.

The other part of the issue is we need to stop children going into those institutions in the first place, ever again. Lumos’ ambition – and we believe it’s achievable – is that by 2050 we will have ended institutionalisation globally. Now, that’s going to be a huge amount of work, clearly, but a lot of us are really up for that. So, first thing is we need to put into place different systems of care, and some very good news is institutions are very, very, expensive to run. And if we just redirected the funds that are being pumped into institutions, that alone would enable better systems of care to be set up.

But you also need a lot of expertise, and what we do with Lumos is, we work with people in country who are already trying to change these systems. So that’s the point I always really like to get across, we are not moving into countries and saying: “let us show you how it’s done.” We are walking into countries because in all of these countries there are experts, who know the system’s wrong, but they don’t have the money and they don’t have the clout, and they aren’t connected with the kind of people who can help them change systems. We can go in and help them do, that so that’s what we do. We go in and we try and affect the change.

We also do things like – I mean, we’ve provided urgent medical assistance to children we’ve found in very, very bad situations and so on. So it’s multi-layered, and then the other thing we do is advocacy, so we work with places like the UN and the EU to change policy, to stop this being the default position when disasters happen.

ER: I think I read that every year, particularly in this country [the US], millions of dollars are being given to orphanages.

JKR: That’s right. I have these notes because I want to get the figures right – because normally I just make it up out of my head, like people say “how many house elves are in the Hogwarts kitchen?” and I just [gestures]. But this is really important – I’m not saying house elves aren’t important, they clearly have been massive in my life, they mean a lot to a lot of people. . .

But I want to get this right because this is this important. So, this is an incredible figure: this is how much Americans give to charity annually – how awesome are Americans? – The answer is $375bn. So I mean that is phenomenal, that’s phenomenal and just warms ones heart to think about the generosity. Now, that money was given with the absolute best possible intentions. There’s not one person here tonight, I know, of any age, that does not want to help a child in trouble. It’s a human instinct that we all have.

We know that that money drove a lot of children into orphanages who probably didn’t need to be – well, no child needs to be in an orphanage. But we know that it created a drive-in. And, so what I would like, even if you never give us another penny – I’m so grateful for what you have given us tonight, we will always be able to use money very effectively because these children have very complex needs.

But even if you never give us another penny, if you just walk out of here tonight and explain to people that donating to orphanages or volunteering and orphanages is sometimes propping up some very corrupt people making a lot of money, and if you give your money to community-based services you can actually help ten times as many children. Just checking my notes – ten times as many children.

ER: You mentioned Haiti – that is somewhere that is obviously in our minds of the moment.

JKR: It is, hugely in our minds. In my mind a lot at the moment because, we know and I have more figures here – these are new figures to me, because obviously there’s recently been an absolute catastrophe there. So we now know that there are 30,000 children institutionalised, and the same statistic I keep quoting still applies: the overwhelming majority of those children have at least one parent, and these are families whose livelihoods have been swept away, these are families who were so desperate that they thought that was the only way they were going to keep that child alive. Which is an absolutely heart-breaking thing to me and I know it will be to you also.

There is a lot of corruption in Haiti, and we know that there are people who are called child finders – not childminders – these child finders are out there persuading parents to give up their children to orphanages, and making lots of promises to them about what they can do for that child in terms of protection and care. And those children are not receiving protection and care – rather the reverse.

We know that a lot of child trafficking is going on, and we also know that for each child in an orphanage in Haiti, currently each child is attracting six thousand dollars’ worth of foreign aid, and that’s why it is becoming a business. So people with the best possible intentions are giving money, and I think they might be horrified to see what’s going on. So what I’m saying to you is, for God’s sake don’t stop giving money, but give it right. Give it to NGOs that are working to give people back livelihoods and to support communities, not to institutions.

ER: And Hurricane Matthew has exacerbated that…

JKR: Hurricane Matthew was, as we all know, an absolute nightmare: half a million people lost their livelihoods, we have 900 dead, and it will – unless we intervene in the correct way – continue to prop up this very damaging system. And I will say this because I would like you all to know, that I put my money where my mouth is: I gave a million pounds last week to Haiti to support community-based services. And I’m not saying it for that reason – I kind of cringe slightly as I even say that – because I’m not saying it for that reason. I’m saying that I’m not asking anyone to give where I’m not already giving, but Haiti is a particular catastrophe and I wanted to give extra funds to Haiti right now through Lumos, because Lumos is on the ground right now affecting this kind of change, and really looking out for those children in those institutions.

ER: And recently Bonnie Wright and Evanna Lynch – so Ginny Weasley and Luna Lovegood from the Potter films – who we love! And I think Bonnie is here this evening – but they are two incredibly dedicated Lumos ambassadors, who visited Haiti, and they not only saw the horrific conditions but also they saw the solution that you’ve been talking about Jo and we actually have some footage from the trip here:

FILM – NARRATED BY BONNIE WRIGHT AND EVANNA LYNCH: “Hi, my name is Bonnie Wright and I’m an actress and director. You may know may know me as Ginny Weasley from the Harry Potter films. But today I am here in Haiti with Evanna Lynch, who you may know as Luna Lovegood. We decided to come to Haiti because we’re concerned about the 30 thousand children living here in orphanages instead of at home with their families. 80 percent of these children have families who would care for them but cannot. I was incredibly shocked and upset to find the conditions at the first orphanage we visited. I’ve heard so much about the work that Lumos was doing and from some of the workers here about what these institutions were like, but I think out of this first visit just highlighted how incredibly important Lumos’ work is here in Haiti. The most important thing that I took away from today is that children really need to grow up in families.”

“Without family and without love, children can’t be children. The most important thing as a child is to be with your family, and you have to do everything you can to keep that family unit in place.”

ER: Those are pretty profoundly powerful images.

JKR: They are, they are but you know… we’re obviously doing a lot of work in Latin America now, it’s an area that does have a problem with institutionalisation. But we are very hopeful at Lumos that we could reach a tipping point in five years or so, where we can we can change policy. We are very hopeful that by 2035 – if we can get the funds – we will be able to stop institutionalisation in Latin America. We believe that.

ER: So it’s solvable?

JKR: It is solvable. It sounds overwhelming when you think of that number of children, and the complexity – I’m not denying the solutions are complex. But Lumos is working with absolute experts in this field. They know what they’re doing, they know how to make it work, and what they need are the funds and the support. And the last thing I would say – particularly to young people in the audience today – I would reiterate: we need to change minds.

We need to change minds, because while people are putting money into these orphanages and while people are volunteering in orphanages, a lot of corruption flourishes around those institutions. There is a sense that we are, as ever with the best intentions, propping up something that’s very damaging. Those children should be with their families, and if they can’t be with families, foster care, or adoption, or supported living in small family-style units are all proven to be the best possible alternatives.

ER: What can we do? Tell us what we can do!

JKR: I think its two-part as I say so number one, I am going to firstly say I could not be more grateful all of you being here tonight. You’ve already done the most enormous amount for us to raise money for us and thank you, thank you. So fifty percent of what you can do: if you want to fundraise for us, I will be forever in your debt.

The other half though as I say is, if everyone who is here tonight walked out of here and said: “I get the issue! I know that institutionalisation is wrong, and in future when I donate, when I hear a friend donating, and saying they want to give some money away at Christmas, I will say “not the orphanages.”” But look, if you want to give it to a child in the developing world, look at community-based services. We’re not the only NGO working in the field, we are one of several, so do a little bit of research and make sure that you are supporting families to stay together.

ER: We will spread the word, we will spread the word. That is our job, to spread the word. And I’ve got to say, having known so little about it before, it’s an extraordinary thing and it’s a complicated thing, but as you say solvable. And you must be incredibly proud of the work that Lumos are doing.

JKR: I am – it’s probably the thing of which I am most proud.

This conversation took place on 12 November 2016 at Carnegie Hall, New York City.

This December, the New Statesman is joining with Lumos to raise money to help institutionalised children in Haiti return to family life. In the wake of Hurricane Matthew, funds are needed to help those who have become separated from their families. Please consider pledging your support at bit.ly/lumosns

Thanks to Lumos’s 100 per cent pledge, every penny of your donation goes straight to the programme. For more information, see: wearelumos.org