Covid-19 Symposia

How will Covid-19 change the way nations govern their economies and societies?

Episode Summary

Covid-19 has upended daily life and revealed significant vulnerabilities, as well as strengths, in the governing capacity of both democratic and authoritarian nations. Foremost in everyone’s mind is how nations will learn from this crisis and adjust their governing capabilities and styles, as we eventually move out of lockdown. In this podcast, our speakers will address several important issues and questions, such as: whether we will see an overarching paradigm shift in economic policymaking; what patterns of learning among policymakers we can expect; how national health systems will respond; what role civil society will play in post-lockdown life; and what new roles can we expect for international organisations, such as the WHO, the IMF and the World Bank.

Episode Notes

Speakers:

Episode Transcription

     

INT:      Welcome to this podcast symposium on the politics of Covid-19, from the Department of Political Science at University College London. My name is Jennifer Hudson. I am Professor of Political Behaviour and head of department of Political Science and I am your host for the session. Today our focus is on how will Covid-19 change the way nations govern their economies and societies. The onset of the Covid-19 pandemic has disrupted every aspect of our lives. Understanding the social, economic and political impacts of Covid and how we respond to them in policy terms is vital. The PS online podcasts are here to help us make sense of what’s going on. Our speakers, who I’ll introduce in a moment will be addressing how the global pandemic will change our economies and our societies, both in the immediate response to the crisis and how we move on in the next phase. Specifically, will we see an overarching paradigm shift in economic policy  making? How will national healthy systems respond? What patterns of learning among policy makers can we expect? What new rules can we expect for international organisations, such as the United Nations, the World Bank and the International Monetary Fund. I’m delighted to be joined today by four speakers. The first two are from the Department of Economics at UCL. Wendy Carlin is Professor of Economics and Gabriella Conti is Associate Professor of Health Economics. And from the Political Science department, Claudio Radaelli, Professor of Public Policy and Mike Seiferling, lecturer in Public Finance. Before we get started, can I ask each of you to reflect on what has surprised you most since the onset of the Covid-19 pandemic? Wendy?

 

WC:      I think the thing that surprised me was the rapidity with which governments in many countries were prepared to impose as recession on their economies to deal with the public health crisis, and then twinned with that, how willing they were to come in with very big fiscal and monetary stimulus packages.

 

INT:      Interesting, the rapid response into recession. Gabriella, what about you?

GC:       So, to me what was really surprising is the way about the discourse of the pandemic’s evolved, because at the beginning we were hearing of the pandemic as the great equalizer. We were told the virus does not discriminate; everyone can get the virus. There is no social class distinction, but then what has started as a crisis has become an economic crisis and now it’s very clear that while we might all be in this together, for sure, we’re not in it equally.

INT:      Claudio, what’s surprised you?

CR:       Well, two things. As a citizen I was surprised by a photo I saw in the second or third week of the pandemic taken in a Tuscan town called Prato, of all the citizens waiting outside a supermarket, very disciplined with the right measure of social distancing and some commentator says it looks like the painting Golconda by René Magritte. And that told me that there is a huge capacity to self-discipline and that is not about the state or the market, but it’s about our communities. And the other thing that surprised me as a political scientist was that the response of the European Union, especially compared the crisis of the Eurozone, where it took months into the crisis, to see the emergence of a coordinated response. Whereas this time it was much quicker. 

INT:      Thank you, Claudio. And Mike, over to you. 

MS:      I think not the size of the expansion of the balance sheet of the central Bank and the central government, but the relationship, the financial relationship between the central bank and the central government has changed dramatically, even comparing to the 2008 crisis. Which creates a lot of different risks and exposures and questions going forward. 

INT:      Lots to reflect on there and we’ll pick those up a little bit later in the Q and A. Wendy, if I can start with you? Covid along with climate change, you said, could be one of the driving forces to transform economic thinking. Can you flesh that out? What do you mean by that?

WC:      So, I think we’ve got to try and focus on what the characteristics, the specific characteristics of this crisis might be that could change how we talk and think about the economy. So, it’s probably good just to kind of set the discussion by thinking about influential policy paradigms in general and thinking that they typically combine a set of ethical values with a model of how the economy works. And an important property of the model is that pursuing those ethical values contributes the performance of the economy as represented in the model. And the model, of course, has to have some relationship to the empirical feature of the world. So, if we think of the Keynesian policy paradigm as one that we’re kind of familiar with, then the values there are like a commitment to reducing economic insecurity, raising the incomes of the less well off, and the model, the sort of key feature of the model was that we had to have aggregate demand, the concept in order to understand persistent unemployment. So, we got out of that a new policy framework where pursuing those values was consistent with the model, helping us understand a well-performing economy. We have these big kind of paradigms, ways of thinking and then they get displaced when the world changes. So, the world change, out went the Keynesian paradigm, in came the neo-liberal one. So, why do we think that Covid-19 might be a trigger for a new paradigm? And I think it’s like a really sharp trigger, and there’s also the much slower acting climate crisis that feeds into the same ideas. And I guess, the point here is that it’s a different set of values that are the centre of this, as compared with previous shifts in thinking. So, here we think of actually, what Claudio was referring to. We can think of discipline but also reciprocity, altruism, fairness and identity. We’ve seen all of those at play in various ways, in different countries, throughout this crisis and you know, brought into really sharp relief. And so, we’ve got a different set of values that seem to be at play as being really important. We then have to think about an economic model, and we’ve also got the foundations of a coherent and rather different kind of model that have been built up over the last three or four decades on the basis of information economics, behavioural economics and gain theory. And what all of that does is that it takes us away from this sort of one dimensional space of thinking of policies lined up between the state, on the one side, and the market on the other, opening up this third dimension of community or civil society. And if you think of that sort of inverted triangle, then we’ve got a whole space there, where we can place lots of the new activities and policy moves that have happened in this really short time of the Covid crisis, and that through this crisis, we are all learning that we have to speak much more about values, certainly than the economists are particularly comfortable in doing. And fairness is one, as Gabriella highlighted. So, we think about fairness in relation to the lives lost to the disease, but also to the lives and the livelihoods lost to the shutdown, that these costs are falling very unequally. So, how we put together this different set of values within this different kind of model, to help inform policy and the complementarity between these three poles, I think that’s the way we’re going to begin to think and it’s really kind of been given a push by the Covid crisis. 

INT:      Thanks, Wendy. In your Financial Times piece, you talked about the importance of trust, that we needed a civic-minded citizenry that trusts public health advice, that’s committed to the rule of law, and that people have acted with both extraordinary generosity and trust, can you tell us how trust plays and important part in this new model?

WC:      It turns out that, I think, that when we’re talking about this much richer space for conceding policy, then we have to take much more seriously that it’s not just a question of material incentives on the one hand or people complying with state regulations on the other, to get effective action. So, we need people to trust that they’re getting good advice. They need to trust that other people are complying with the advice and that this is so sharply 

[10:00]

WC:      highlighted in the case of a pandemic, where the external effects of our actions are so important and can’t be relegated to a simple individual cost benefit calculus. So, we have to bring in things like trust, trust in experts, but also trust in actions of fellow citizens.

INT:      A final question for you, Wendy. You talked about these ethical and moral considerations, particularly fairness and solidarity amongst different groups within society. Now, this will apply to the UK context in terms of domestic policy making, but I wondered if this is also something that we want to think about, kind of in  the international global sphere. Is Covid a catalyst for making better moral arguments about supporting sustainably development? Does this new model travel outside the UK boundaries? And is it something we should be looking at in the new global economic regime?

WC:      I think it does and again I think that because of the character of the crisis, we’re lead very much to think about our interdependence with other parts of the world. And you could just kind of narrow that down to a case of self-interest, but I think it’s a moment where using these broader ethical arguments has a chance to have a lot of resonance and feed into the formation of better policy. 

INT:      Thank you, Wendy. Going to now pivot and move to Gabriella Conti. Gabriella, you have been looking at the impacts of this crisis on vulnerable communities. Can you give us a sense about how is it that different communities might feel the impact of Covid-19 differentially?

GC:       As I was saying at the beginning, now it’s very clear there are inequalities that emerge even more because of the Coronavirus situation, and the consequent economic crisis. So, just to give like a figure, last Friday, the first prognotional statistics show that the Covid is more than twice as much in the most deprived areas, so, being compared to the least deprived areas. And one important dimension is inequalities in children, between the parents of high and low socio-economic status. In particular you can think of different dimensions of vulnerability. So, you can think of socio-economic status, parents of disabled children, at risk of harm in poorer quality of overcrowded housing or single parents and those are all a particular risk. And they are a particular risk for different reasons, for the economic risk, which has been brought by the recession, so, many parents might have lost their jobs and we know that the younger parents and especially lone parents, according to research, they’ve been hit harder. In particular, this recession is different from the previous on because women have been hit harder than men, which is a difference as compared to the Great Recession. And another characteristic is that there has been an increase in the volume of home production. So, the fact that there are no childcare centres for small children have been closed, the schools have been closed, implies there has been an increased burden on the parents, also the home school, to take care of their children. And we do know there is different abilities of parents to do so, depending on the socio-economic conditions. Higher, more higher socio-economic status, the more educated parents would have better opportunities, better home environment and will be better able to home school the children. So, this, at least in the short term, will further increase inequalities in child development. So, in addition to, you know, the economic, the economic recession and the economic crisis that faces the parents, there are also associated stress which is driven also by, you know, the greater uncertainty of the situation but also still the existing health risk. And there is past research which shows that increased stress can also have a biological effect directly on child development. So, there is a multitude of stressors which are both of biological nature, related to the health nature of the crisis, but also of economic nature, determined by the economic policies put in place to combat the health crisis. So, which really constitutes almost the perfect storm and low socio-economic parents are likely to be hit harder and to be less able to cope. And so, there is an increasing need to help them to face this situation otherwise there is this risk that inequalities in children development, which have been increasing, especially in England, in the last few years, would further increased. And we do know that inequalities in early years have long term consequences. So, taking a long-term perspective, it’s really important that, now that the phase of the lockdown is finishing, we take action to prevent further [s.l. cost damage boot 15:26].

INT:      Thank you. You were just going into, I think, my next question, which is thinking about how we mitigate the impacts of Covid for vulnerable children and families, so, that these are not exacerbated over the long term. So, what are some of the, what are some of the policy interventions that we might think about, that government might think about doing now, so, that we don’t see the stress manufacturing into kind of longer-term problems for children and families?

GC:       It is fundamental now that the resources are put where there is greater need and we have to say that the state has been intervening to prevent further damage from the crisis, in a way, that I think was unimaginable until a few weeks ago. So, when Wendy was saying this crisis has the potential to change the system and I really hope that this will lead to a rethinking of the current system, also for what concerns health, public health and early intervention. So, what can be done? I mentioned  before that the fact that the childcare is closed, that is putting increasing strain, especially on more vulnerable parents in those sort of [inaudible 16:39] those social distancing situations, there is less reliance on networks of relatives and friends. We also know that interventions exist which are able to help more disadvantaged and vulnerable parents, and many of these interventions are actually in place in the United Kingdom and in particular in England. Some of these interventions that I’ve studied much in the last few  years, home visiting programmes targeting disadvantaged parents, one home visiting programme named the Family Nurse Partnership is particularly targeting first time disadvantaged mothers and this has been implemented in England for the last ten years, and it’s based on the US programme most effectiveness has been shown, which is called the Nurse Family Partnership. But one even more important thing to say is that England is a country where there is a universal health visiting programme, which means that every child in the country receives a certain number of visits by a health visitor, who is a public health profession, very well specialised in improving children’s development and safeguarding and increasing in general mother and child wellbeing. Now, one particular worrisome aspect, which has been a consequence of this crisis is the fact that to help frontline workers, which is certainly something to do, to enable the NHS to face the increasing hospitalisations and something we have heard all over in the last few weeks, what is happening is that other workers, from the health workers have been redeployed from their existing jobs to help at the frontline. And this has also included a great number of health visitors, so, the figures collected suggest that in some sites, between 50 and 70 percent have been redeployed and this is happening after years and years of cuts to the public health services, due to the austerity which has hit the local authorities. So, one important thing to do would be to make sure that such intervention services, which are health visiting but also are the community health services, which are available at the local level, will be restored and will be reinforced. We can think that especially in some disadvantaged situations, there are vulnerable women who might be subject to domestic violence, vulnerable children who might be subject to abuse and we know that all these have very severe longer term costs, and in general we may need to make sure that these families in need, these children in need are reached. And one very effective way of doing so, is enabling the services which are already in place, the network, the structure of services which is already there, to do their job. Now, many health visitors are, where possible, as much as possible continue the via telehealth which is good that services are continuing, but it’s not able to reach all families for various reasons, also lack of digital connectivity, so, as soon as possible it’s important that the existing network of services would be restored and possibly 

[20:00]

GC:       that the cuts which have really hit very hard, and the public health will be restored and there will be more focus made to public health and prevention going forward.

INT:      Thank you, Gabriella. You mentioned there in your example, comparing the UK and US policy interventions. How are international health systems coping more generally? Can you see evidence of successful strategies in terms of these different types of interventions or responses to the pandemic?

GC:       Yes, this is a very interesting question. We have seen a lot of different responses worldwide. There is also a lot of originating outcomes that we have discerned across the various health systems. So, I’m sure everyone is aware that there has been a lot of talking about test and tracing strategies, which seem to have been very effective in some health systems. The leading  example which is usually brought forward is the one of South Korea. South Korea had a very large number of cases, at the very beginning and now they’ve manged to take this under excellent control. There are various reasons why this has happened. I don’t think we have a very effective way of disentangling the various reasons, but one of them could be a very early effective test and tracing strategy. Another could be the widespread use of masks in that population. But it is important that going forwards, for sure, testing and tracing and isolating the cases at risk will have to be a response harmonised across the varying systems which needs to be put in place to restore some sort of normality, because we can’t evidently keep going under various forms of social distancing and lockdown. So, that’s certainly an important thing which needs to be put in place, but there has been very important arguments put forward, especially with regards to England. In order to do that, to implement the strategy which was implemented by England before it was decided that actually it was impossible to be able to contain the virus and it was abandoned early in March. It is important to give more power to the public health and to the local authorities, see them as surveillance that will actually work. So, at the end of the day, all the health systems have been geared towards a focus on treating, and curing and really long-term conditions, chronic conditions, most of them at least in Western countries, not really prepared for a pandemic for an infectious disease. And so, I think this is really an opportunity for changing the system and thinking what society do we want to live in? So, the legacy of the pandemic, I hope, will be really to try to tackle this health inequalities and no matter what the next pandemic is going to be, to make system more resilient and this implies a greater shift towards prevention and towards public health.

INT:      Thank you, Gabriella. That moves us really nice, I think, to Claudio. Gabriella talked about different types of responses, particularly with regard to contact tracing and we’ve seen huge variations in that across different country government’s approach. What does it mean to learn in a policy crisis, Claudio?

CR:       Yeah, learning is the lance I use these days to look at the crisis. A couple of years ago I did some work with Jonathan Kamkhaji on the learning in the context of the crisis of the Eurozone and so, when we were into this crisis, I thought is this different? Or are some fundamental mechanisms that I can find across the different crises? Learning by self, it seems attractive, raises a number of questions, like we’ve already seen today. Who learns? The governments, the European Union. I am comparative, mostly specialising on European countries, or the people. When does learning take place? In the stage of containment, or in the stage that we are hopefully getting to very soon of governance of the process of relaxing and lifting of restrictions? How does learning unfold? What are the mechanisms of learning? So, what I think is happening is that there has been a kind of spontaneous convergence in the responses across Europe, I’m talking about the European democracies, non-coordinated, so, we’ve seen a lot of cross-national learning or at least looking at other countries. Most fundamentally we’ve seen that the leaders of our democracies talking about learning from evidence and this is quite interesting. So, until a month ago, we were talking about populism and the lack of expertise, and now Prime Ministers and President in France, are very strong in talking about relying on evidence. On the one hand, I am sure they are trying their best. At the same time, we have seen social scientists talking a lot about biases, heuristics. Even in the presence of the best evidence, heuristics and bias skew or shift the attention of policy makers so, there is kind of an interruption in the transmission belt between evidence and policy decisions. My take is a bit different. My take is that governments, in the first stage, where we still are, in the UK have been a bit like an individual thrown into the water. When you throw someone into the water without giving prior lessons about swimming, you find some people, most actually, can stay afloat and then they try again and there’d be an instructor can explain what happened and they coordinate a bit better. After a few days, this individual would be able to tell you how they are capable of swimming. Now, in the context of the pandemic, we have seen very fast-paced associations of stimulus and response. Our government has been a bit like Pavlovian dogs, learning, trying to learn very quickly in a contingent way from one day to another, one country to another, data from a lockdown, Italy being in lockdown and not yet locked down France and so on. This is not learning from evidence. This is a strange situation in which behaviour changes. You can have the same trials, the same understanding of paradigms. You change because of the sort of change or die situation. We have seen that spectacular U-turn of Boris Johnson on this. So, behaviour changes first and where we are now is probably a stage where the environment in which we have sent all these [inaudible 27:42], which after all, policies are theories. And then we have some feedback from different countries and the validation of what works and doesn’t work is crucial at this stage. That’s where the proper process for learning can take place. Now, this model of learning coming after behaviour has changed is in contrast with everything we say exists in political science, the learning is about learning from evidence, not necessarily scientific evidence. It could be evidence from social interaction, but we think in social sciences, in politics, in particular, not in cognitive psychology, but in political science, that it’s certainly the mind that changes first and then how our behaviour changes, because the mind guides behaviour. Whereas here it’s a change of [inaudible 28:37] like in 2010, 2011, in the Eurozone, so, I’ll go back to what I said before about my lessons drawn from the crisis of the Eurozone. It’s very important, I want to be concrete, it’s very important now we focus attention on feedback and validation of what works and doesn’t work in different contexts and abandon for the time being, the emphasis on whether, let’s say, Boris Johnson is more evidence based than Emanuel Macron.

INT:      Thank you. Thank you, Claudio. I’m listening to you and I’m hearing you say we’re not yet at the point or we haven’t been at the point in this crisis, where learning from evidence is possible, because this is relatively new to most policy makers responding to this kind of threat. And so, people have been doing behavioural change, looking at their neighbours, adopting different types of responses. When do we get to the stage where governments, where different institutions will look at each other and have the ability to look at the evidence and take it up? And what are some of the difficulties using evidence to learn about successful policy change?

CR:       Yeah, as you said, it’s really important to learn in this stage, because what we have seen in the early stages, for example in Italy, where the government were not able 

[30:00]

CR:       to provide care to people who needed an urgent care unit is a violation of the fundamental pact, contract between the citizen and the state. It’s impossible to pin down the moment when learning takes place, and not necessarily doing it to think about learning directly from other countries. It’s a more subtle exercise in extrapolating lessons and looking at whether fundamental mechanisms that may have worked in one country could work in our context, for example, in the UK. So, there is also a lot to learn in context and extrapolate mechanisms in context. Obviously there is also the possibility to learn through super national institutions. For countries committed to the European Union, we have now a European exit roadmap that is supposed to guide a coordination of the member states into a phase of governance as opposed to the phase of containment. There are three important criteria for this learning to happen and I don’t say anything new but it’s worth stating that one is an epidemiological criterion, so, that we have to be able to say confidently that the disease has decreased over a sustained period of time and no-one knows exactly what the sustained period of time is. And second the criterion about health capacity, which the different healthcare systems of the different countries can or cannot cope with a future increase in infection rates when we lift the measures and whether this is local or diffuse where there are infections in one specific area or not. And the third, that is political science for us and maybe it’s better is the appropriate monitoring capacity. When we talk about including the large-scale testing capacity we’ve been talking about in the UK over the last week, or so, to detect and monitor and describe the virus, combined obviously with contact tracing hopefully and when necessary the quarantine capacity. Those are the criteria of the European exit roadmap. I think that’s general criteria. The government here is insisting very much on targets, on testing capacity and this is classic of how governments play with targets, they move our attention only on that target, including intention of the civil service. There is a lot of pressure on the NHS and general and public managers to get to the target and so, at the moment, we’re not looking at the three criteria in a holistic way, we should do. Our attention is skewed towards the target and obviously the next stage of that would be people saying, but what is the target made up of, exactly? How do we measure the target? What is the validity of the target? But for the time being, we are a bit losing track of the different elements. We’re looking at one because that’s what targets and indicators do. There is nice work done in the past by Christian Boswell at the University on Edinburgh on targets and the press manifestation of our attention can be skewed.

INT:      That’s fantastic. I think we’ll pick up with some of the implications for learning, not just within the European Union but globally at the end of our conversation. Mike, I want to pivot over to you. We’ve been looking at national and super national approaches. Can we reflect on macroeconomic policy and particularly how it relates to international organisations? You’ve been doing quite a lot of work on the IMF and the World Bank. What does it look like from your view?

MS:      One theme I think that’s coming out of this whole conversation that’s really nice to see is the importance of the social contracts and kind of thinking bigger, or more broadly about society and you know, discipline-focussed economic transactions or monetary transactions. We’re now thinking about transactions in terms of human transactions, in trust, in values, in these types of things. So, putting that into the IMF context, I’m really happy to see there are a series of notes that have come out recently, kind of giving advice to member countries. And if you look at things like tax policy, they’re using terms like promoting solidarity, by having high rates on income, high rates on property, looking at wealth taxes, which have in the past not generated great degrees of revenue, nor have they been very popular with the community including in the UK. But I think the movement to a more progressive world where traditionally conservative institutions like the IMF are now going and saying, we as an institution are promoting these kind of more progressive measures within society. So, when the IMF now goes into countries and they have programmes, and we all know, the kind of collateral for an IMF  programme is promises or kind of reforms, it would be great to see in the future some of those reforms, kind of moving toward some of the things that Gabriella was talking about, some of the things that Wendy was talking about, so, that we’re actually achieve the goals, even in countries where maybe the leading elites or the politicians aren’t overly keen on redistributing income or introducing taxes on a small kind of group of very wealthy people within those societies. So, it’s really nice to see these things and see these high-level meetings and the managing director promoting these type of new policies. Whether they actually happen in the future is something that we can discuss maybe later in this podcast. The other thing that I think is extremely important, in the UK, the US, all over the world is the idea of transparency. There was another note, I think it was called Keeping the Receipts or something like this, that kind of emphasised the kind of role of fiscal transparency, transparency for central banks, these type of things. And I think in my opinion if we’re going to have extraordinary measures where we’re giving a lot of financial power to the central bank and lot of power to the central government to kind of create financial contracts that will be a burden to us going into the future for quite a few years now, it’s important to know from a public perspective that those were wise contracts. And not only they were done in the public interest, but they weren’t influenced by things like lobbying or donations. And at the moment, data for financial transaction for central banks especially and to some extent for central governments, it’s provided at a very macro level. It’s provided with long legs and it makes it very difficult for society to hold government accountable. Since the 2008 financial crisis, it’s been a documented kind of drop in trust from the general public toward the central government, especially when it comes to their relationship with financial institutions. So, I think for governments to take kind of extraordinary measures in terms of showing the transparency or showing that what they’re doing is in the public interest, especially where there’s a grant component or where there’s some kind of transfer going to different sectors of the economy, that those are communicated properly. I think that Wendy touched on this in another presentation, where she talked about communication and I think that that’s another part where the elites can play a better role in saying, here’s what we’re doing to the balance sheet and without focussing on a particular sector, a particular part of the balance sheet, also looking at the trade off between things like pension funds. If we have low rates for a long time, this has been a long-standing dispute at UCL, the return on pension funds and the management of those funds is going to be extremely difficult going forward. Last piece, you asked about the World Bank and I can only speak in terms of debt sustainability, but I think it will be really interesting to see how low and emerging market economies’ debt is dealt with. There’s a huge amount of capital flight taking place right now, so, a lot of financial resources are leaving these countries and they’re not going to be able to pay their debts. I think 70 percent of emerging market countries are in debt distress at the moment or before this even happened, so, it will be interesting to see what happens in Paris Club and in kind of in relations or in negotiations between creditors and debtors going forward.

INT:      Thanks, Mike. That was the point I wanted to put to you next. These extraordinary measures, these really significant progressive packages in some way, will have created incredibly high levels of debt. And can you reflect on how countries will pay them down in the future, both kind of Western advanced democracies but also lower income developing countries? How do we handle the debt from these responses that we’ve seen from Covid so far?

MS:      Excellent question. I think that in the Western world, most countries in the Western world have the advantage of trust. So, there’s not unlimited money, but there’s a large amount of money

[40:00]

MS:      that can be borrowed at extremely, extremely low interest rates. So, over the medium term horizon, if we go with the assumption that everybody’s going with, that we’re not going to be hit by a huge amount of inflation, then in the Western world, it’s not going to be a dramatic effect on the deficit or anything like this. In the lower income world, this is going to be a much different scenario. After 2008, there was a lot of QE that allowed these governments, lower income country governments to borrow at relatively low rates, under 10 percent. So, we’re going to have to see how much money now flows in, once Covid is over, and what kind of access they have to credit. If interest rates go up in these countries then that’s going to, we’re going to see a lot of bankruptcies, basically. Like I said before, before this crisis, 70 percent of lower income and emerging market countries were, according to the World Bank DRS standards, in debt distress. So, these countries were already facing very difficult times before Covid. So, the short answer would be you’re going to see a lot of bankruptcy or a lot of negotiation between creditors and debtors, people going to Paris Club and asking for some kind of debt restructuring. Like I said, they’re not going to pay off their debts. They can’t pay off their debts. It’s just a matter of how that negotiation goes forward and how it impacts different actors involved on the process. 

INT:      There are a lot of terms that have been floating around the discourse, including a new normal, and this time it’s different and we can apply those to different aspects of the pandemic. But from your research and where you sit, what’s the biggest decision facing policy makers in the next several months?

MS:      I don’t think it’s really decision making for policy makers. I think it goes back to the comments that were made by all three other participants in terms of, are we going to see differences after this crisis? So, there’s a lot of really intelligent people making a lot of really good recommendations that will allow for societies to flourish, or to come out of this better off in terms of looking at the environment or including the environment or thinking about inequality. But let’s be fair, Jennifer. After the 2008 financial crisis, we had a lot of these kind of discussions and we didn’t, there hasn’t been a great deal of change. People have been talking about inequality for at least ten years at a high-profile level. Academics have been talking about it, politicians have been talking about it and if you look at the increase in equality in both wealth and income, they haven’t really changed. In fact, they’ve probably gone up since 2008. So, it’s not really a policy question for me. It’s are we just going to be talking about this, right now, during the crisis  and then go back to kind of normal times or are we going to see our politicians make real changes, real policy changes that have real policy results? And I think that’s really the biggest question in terms of establishing a relationship with trust, having a social contract that works, is do we see actual changes that come from the advice of intelligent people like the other three people on this panel.

INT:      I want to turn now to some questions that were put forward to us by students at the Department of Political Science, School of Public Policy and I’ll throw this out to the group. How would you evaluate the performance of the World Health Organisation in the outbreak, which is heavily funded and trained particularly for dealing with this kind of global crisis? So, let’s turn our attention to the WHO. Gabriella, it might be that we come to you first. Do you have thoughts on this?

GC:       I would think, you know, I think it has to be understood from the perspective, what the World Health Organisation is there for and also what help the WHO has been able to do. So, I’m sure we know very well what Trump think of the WHO action during this crisis and the consequence that this action has had and if we hear the WHO, we know that they tried since the very beginning of the crisis to, there in the city of Wuhan, to try to understand what was going on in China, but they were not allowed to do so, until quite late in the pandemic. Since then the WHO has tried to perform its role and to make very clear the gravity of the situation and to give clear guidelines to the various states about what was the suggested course of action and this is pretty much what the WHO can do. Then the extent to which various states have taken on board what the WHO has said, is not a question which concerns the individual states and their internal politics, and we see also their science advisors, that the different governments have listened to. One important thing that I think it’s useful to emphasise at this point, while the virus lockdowns are being released, that the WHO just warned the various governments that the crisis is not over. So, while the lockdown are being lifted, and it’s important to have a plan for the post-lockdown, and to sustain, to have a sustainable situation, to build up a sustainable system went back to what I was saying before.

INT:      Thank you, Gabriella. I’m going to put this question to Wendy first and then to Mike. Will the Coronavirus lead Western governments towards more centralised economic models? Wendy, do you want to reflect some thoughts on that?

WC:      It could be referring to a kind of shift along the state versus market spectrum and suggesting that one of the outcomes might be a shift towards thinking that more state intervention in the economy is needed. So, we’ve seen a lot more state intervention and a lot more, if you like, bipartisan support for that across countries. So, if that’s what meant, then I think there’s a lot of evidence to support that having had happened in the teeth of the crisis and this unified view that we had to have these government induced recessions and then we had to have a package that would support the economy in the wake of those recessions. But it’s a different question in the sense of what that means as the crisis goes on and another way of thinking about the question might be, would we expect to see a lot more, for example, state or government equity stakes in companies as we move from a liquidity crisis in companies to solvency problems? And with the financial crisis and the sovereignty problems of banks and we had states stepping in there to take equity stakes. Because of the very different structure of that crisis, that could be very different, and it would apply to a much broader set of all kinds of firms from different sectors. So, I think that’s going to be a lot of quite creative thinking about how to deal with debt in small and medium size firms as well as bigger firms in particular parts of the economy. But if the idea is that somehow, we would end up with a more centralised economy, I think you have to have a bit more nuanced view about that. I think there’s certainly a view of more planning is required, like resilience planning for a pandemic. But that might actually entail much more decentralisation and many of the countries that have done better in this crisis are ones with important forms of decentralised decision making and the German kind of healthcare system, I think, is one example of that. 

INT:      Thank you, Wendy. Mike, can you pick up on a few of those thoughts or your thoughts of those centralised economic models post-crisis?

MS:      Yes. I think Wendy, you had an excellent answer, and I agree with that. I think that a better way to think about it is the financial interdependence between sectors that now exist. So, rather than saying do we have a more centralised system, I don’t think that’s the right question. I think we have a system that has a lot more interdependence between different sectors of the economy. So, the public sector has a huge balance sheet, the last time we saw this type of exposure was the Second World War. The corporate sector has a much larger balance sheet exposure. The household sector has a much larger balance sheet exposure. So, we’re all kind of in this together, in a sense that we’re all exposed to each other and if somebody fails or one sector fails, then we all kind of are going to feel a bit of that pain. So, like Wendy said, I think the question needs to be a bit more nuanced, but I think the main kind of lesson here is that we’re all now kind of in this together in the sense that the exposure on everybody’s balance sheet, their portfolio of assets is depending on everybody else, and that goes for the central government, the central bank, the household sector, the corporate sector. So, to say that we have a more centralised government, I don’t know if we can say that. But I think a lot of the discussion that we’re having is leading to government maybe should play

[50:00]

MS:      a more of a role, the central government, not the central bank. The central government should play more of a role in promoting an equitable society that kind of demonstrates values, rather than to a greater extent than it did before the crisis.

INT:      Claudio, I want to turn to you, this last question that we had from students. The question was, do you think academics and the research community will be able to influence government policy going forward to a greater extent? So, we’ve heard quite a lot about of experts in recent years, and the importance of expert advice in policy making, so, this sits quite well with you. What’s the opportunity for greater influence or participations from academics in policy making?

CR:       Yeah, challenges as well as opportunities. There are countries where there’s been a proliferation of specialist groups, expert working parties, taskforces and some of those are based on mechanisms of cooperation, rather than meritocracy, and yeah, there are very subtle gains of blame-shifting between experts and politicians. I think the clear line of advice and completion of evidence is better than this patchwork of different committees that kind of confuse public opinion. What I see, and this goes back to not too long ago, to Fridays for Future, a number of people, Fridays for Future were mostly young people, claiming the right to science. So, partly expert and social scientists are not the most important category of experts, but I’m thinking about expertise of the type I mentioned before, like epidemiology and public health specialists, etcetera, and partly is us and the politicians. Partly is also what people will ask, how will citizens hold governments to account for the use of science expertise now? Also in relation to individual rights and freedoms, I was struck by the fact just, I think, two weeks ago, a committee of United Nations published an explanation of what the right to science means and that was not in the context of the pandemic. That was something that started a few  years ago. So, in effect, it depends on us, on our view of the trade-off between safety and our freedoms, between use of expertise and democracy. So, I would like to open up, instead of having a relationship between governments and experts, to tri-partise the relationship between a citizen, in the end, of the power to put politicians in the office out, government yes, and advisors. There are opportunities and challenges. I mentioned blame shifting, because that’s a classic risk that we are [s.l. cooportation 53:26] instead of meritocracy etcetera. So, it’s like before, I said social scientists, we know that these things happen, and we have some important regularities in the politics of expert advice.

INT:      That is a very good place to leave it for today. I would like to thank you all very much. Wendy, Gabriella, Claudio and Mike, thank you for your time today. This podcast has been the first in a series of looking at the politics of Covid-19. To find out more about the remaining podcasts in the series, please search for UCL Political Science online and go to PS Online. Our next podcast on 21st May will be looking at the morality of governing under Covid-19. Here we explore how governments around the world have taken dramatic action in response to the pandemic, restricting liberty to a degree not previously seen in peacetime and causing significant social, economic and physical harm to their citizens. How should we judge whether such interventions can be justified? The morality of governing under Covid-19 will be chaired by Dr Alan Renwick and will feature Professor Richard Bellamy, Dr Avia Pasternak and Dr Makia Kimura. If you’d like to submit a question for this podcast, please do so, on the website by May 14th. But for now, from me, Jennifer Hudson, and from all of us here at UCL Political Science, goodbye, thank you and stay safe. 

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