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28 January 2023

A Shock to the System

Tag(s): Sustainability, Politics and Economics, Current Affairs, Foreign Affairs
As a graduate of the University of Oxford I sometimes get invitations to events organised by the Blavatnik School of Government at the University which did not exist when I was there but nevertheless treats me as an alumnus. I recently attended one of their events online entitled “A Shock to the System: Can the Global Economy be Saved from itself?” This special event was chaired by Professor Ngaire Woods, Dean of the School of Government and Professor of Global Economic Governance at Oxford University. The event included a panel of experts in economics and public policy. Professor Woods ran the event on the basis of asking contributors to give both their negative and positive views of likely developments in 2023.

The first to speak was Vera Songwe, Chair of the Liquidity and Sustainability Facility. She is co-chair of the High Level Panel on Climate Finance. She was previously Under-Secretary-General at the United Nations and Executive Secretary of the United Nations Economic Commission for Africa and is generally considered as one of the leading African economists and now works at the World Bank. She started by referring to the dialogue between John Maynard Keynes and Harry Dexter White on whether dealing with the crisis of 1929 was an issue of liquidity or credit and she feels there is often confusion between the two. The problem that the Bank of England had to solve in 2008 was one of liquidity. Vera is concerned that the war in Ukraine is leading the private sector to pull back from their attempts to deal with climate change e.g. both Germany and Norway for different reasons going back to relying on coal as one of the sources of energy. She is also extremely concerned that developing countries have lost 30% of GDP since 2019 owing to the impact of the COVID pandemic.

 On the positive side she’s been impressed by the reaction of central banks to the current problems and by the resilience that has been demonstrated by many countries in Africa, particularly in their collaboration on various matters such as sourcing vaccines to deal with the pandemic . They have also demonstrated increasing harmonisation in coming together on the African Continental Free Trade Area and she is 95% sure that that will have a strong beneficial impact on their economic growth.

Professor Diane Coyle CBE is the Bennett Professor of Public Policy at the University of Cambridge. She is also a Director of the Productivity Institute, a fellow of the Office for National Statistics, an expert adviser to the National Infrastructure Commission, and Senior Independent Member of the ESRC Council. She believes that there is a systemic problem behind the growing debt crisis and is also highly concerned about the increasing levels of inequality in many parts of the world. She perceives that there has been a failure of capitalism particularly in the area of its financial systems and in weaknesses in cyber security.

On the positive side she is impressed by a number of innovations, for example in the biomedical area, in energy and in Artificial Intelligence.

Dr Danny Sriskandaeajah has been Chief Executive Officer of Oxfam Great Britain since January 2019. Prior to that he spent six years as Secretary General of CIVICUS, the global civil society alliance. Unsurprisingly he is particularly concerned about the levels of inequality around the world and notes that there has been a rise in extreme poverty - the first rise in 25 years. One in 23 of the global population needs humanitarian aid. He seemed to find it difficult to find anything to say on the positive side and believes that there has to be significant redistribution of wealth.
 
Dr Irem Güçeri is Associate Professor of Economics and Public Policy at the Blavatnik School. She is also an International Research Fellow of the Oxford University Centre for Business Taxation, and an affiliate of the CESifo Network in public economics. Her number one negative view, which I share, is the failure to properly deal with climate change and indeed she sees if anything a slowing down of the responses to that. Her second major concern is the cost-of-living crisis which has resulted from lots of negatives.

On the positive side she is impressed with increasing levels of collaboration and also greater signs of evidence-based policy, which is  I‘m afraid something which I don’t also share but what I do share with her is her positive views on levels of innovation and she gave the example of the impressive development of vaccines to deal with the COVID crisis in a very short period of time.

In questions the panel tried to deal with the balance of economic growth versus the target of reaching next zero and in this I’m afraid they showed very little clarity on what I think is a particularly challenging area. There was a general consensus that in seeking to grow our economies there is a struggle between rising levels of taxation to deal with ever-increasing demands for public services and competition in the markets. Their view was that the problem is not knowledge. We know what works. But the problem is aligning that with what is also both sustainable and equitable.

Overall, though I found the event interesting, it seemed to me to raise more questions than answers and perhaps that is the reality of where we are.



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