Preface

The COVID pandemic may well be remembered as the biggest challenge humanity has faced since the Second World War. Indeed, in many respects it has felt like a war with unprecedented simultaneous health and economic shocks hitting every country and many lives lost. The pandemic has also exposed the horrendous risks humanity faces if it ignores addressing issues related to ‘global public goods’: goods or assets whose benefits and/or costs transcend national borders and jurisdictions and on which, however critical, uncoordinated national action will ultimately fail.

Yet the pandemic will also be remembered as transformational. An extraordinary global scientific cooperation has produced several vaccines in less than a year from when the COVID-19 genome was posted on the Internet in January 2020. Under lockdowns, digital technologies, while already extensively in use, have allowed an accelerated shift in the way we work, study, shop, interact and enjoy leisure. While policy responses have varied by government, by and large, the global economic meltdown has been averted. This has come at a considerable economic and societal price, whose full extent will be recognised only in the years to come. The ultimate cost will very much depend on the type of policies governments employ now and the extent of their cooperation.

Designing policies for the post COVID world requires both cooperation and a healthy competition of ideas. This debate of ideas must occur now.

We can draw inspiration from the remarkable endeavour of the vaccine creation. The speed with which several vaccines have been created – squeezing what would normally be years of research into a few short months – has reminded us of the creative nature of the human spirit as well as the power of competitive-yet-highly-cooperative research across countries and continents.

At the London School of Economics and Political Science (LSE), we are keenly aware of the urgency of the policy challenge. As a novel way of proposing policy options, under our Maryam Forum Initiative we have assembled expert groups of leading academics, policymakers, representatives of the private sector and our LSE students to contribute to and accelerate this global debate. In this unique public-private policy research platform, our expert groups work directly together on the biggest challenges of our time, organised into six work streams.

This eBook contains policy assessments and recommendations that the expert groups presented at the virtual Maryam Annual Forum Conference in December 2020 and first published in the LSE School of Public Policy COVID blog series, along with a short video of the conference’s high level policy panel on a new policy paradigm for the post-COVID world. It also includes a Manifesto by our student leaders to world leaders, respectfully demanding a meaningful role in designing policies that directly determine much of their future.

A key lesson we draw is that leadership matters more than ever, and not only in government but in business and civil society as well. Another is that science and evidence matter but we need to find new and more inclusive ways to draw on evidence and inform our policy makers and citizens. We are also learning that the young generation, whose economic and labour market prospects have been particularly hit by the pandemic, is eager to have its voice heard more clearly, particularly in areas where policy decisions today irreversibly impact their future. Science-informed inclusive leadership is what we need to tackle the big challenges ahead of us.

Our expert groups, led by renowned academics and LSE students, have produced a set of recommendations for the coming period:

• Reforming the way we deal with global emergencies. Existing systems for dealing with global emergencies have struggled to rise to the challenge of the pandemic. Preparing for and dealing with global emergencies requires a multi-disciplinary approach, combining expertise in global health, epidemiology and economics. COVID-19 has shown the need for

an integrated approach weighing in health, financial stability and development outcomes without sacrificing one for the other. Erik Berglof, Adnan Khan and Hassan Gali sets out what needs to change, including adaptation of locally optimal smart containment strategies; creating pre-existing integrated data infrastructure to support preparedness at national levels along with protocols for data sharing and coordination; and standardising debt restructuring and pre-emptive debt relief for the poorest countries.

• New rules for finance and the global financial architecture. The pandemic has triggered radical changes in both national policies and the global financial architecture. At the national level, the policy mix has fundamentally altered with fiscal policy providing extraordinary stimuli, in unprecedented coordination with, and direct support from, monetary policy. The changing global financial architecture reflects both the rising importance of central banks and the gradual encroaching of key institutions on each other’s traditional roles. Altogether, a new international architecture is in the making. Franklin Allen, Piroska Nagy-Mohácsi,

Ricardo Reis and John Gordon propose measures to enhance the credibility of the rapidly changing national institutional arrangements for fiscal and monetary policy, including transparently defining the rules of the game for monetary and fiscal authority cooperation and introducing a periodic review of their policy mix. They also call for identifying and managing the risks from the emerging new global financial system.

• Transforming global linkages and industrial policy. COVID-19 and related policy responses have led to an acceleration of some key pre-existing trends, namely geo-political fragmentation, the reorganisation of global value chains and the adoption of new technologies. Access to the Internet is no longer a luxury – jobs and livelihoods now depend on it. Many pro-recovery policy tools – focusing, for example, on innovation, health and

‘green’ – are intrinsically ‘exclusive’ in terms of their beneficiaries due to their managerial and other complexities. Industrial policy is unfit for the new era. Riccardo Crescenzi and Jintao

Zhu call for a new generation of evidence-based public policies to promote innovation and inclusive growth. Education and skills should be at the centre of policy focus to simultaneously achieve innovation and inclusion; internet access should be expanded by subsidising fix investment costs; and digitalisation, artificial intelligence and automation should be directly integrated into public policies for innovation and inclusive growth.

• New path on climate change, oceans and financial risk. Climate change and the oceans are primary global commons and risks to them are rapidly increasing. The urgency to act in these two areas has never been greater and the global context in which to do so has recently improved. Focussing on climate and ocean resilience and related financial risks, Swenja

Surminski, Elod Takats, Torsten Thiele and Karina Rodriguez-Villafuerte argue that decisionmakers undervalue investment in climate resilience, even though evidence shows that strengthening resilience is highly cost effective and can generate multiple benefits. This has caused a major imbalance in funding, with significantly more spent on recovery and repair than on risk reduction and increasing resilience. They note that the case for incorporation of financial stability risks is now well established and stress that these assessments need to be made more comprehensive to include risks to oceans and natural capital.

• Disinformation is a systemic risk to democracy. Digital technology has fundamentally undermined previous definitions of a democratic information environment. In earlier periods, non-democracies were defined by censorship and control over media, while democracies guaranteed freedom of expression and pluralism. Today dictators and political actors in democracies and ‘hybrid’ regimes use freedom of speech as an excuse to spread massive amounts of disinformation. Peter Pomerantsev and Benjamin Grazda posit that as a result, pluralism is tipping into polarisation and fracture so extreme that they risk making a common debate based on evidence and trust impossible. They argue that disinformation should be

recognised as a new systemic risk to society and propose a holistic policy response that combines regulation, innovation within the media industry and political consensus-building.

• Human mobility, enhanced integration and social cohesion. Migration is a politically sensitive topic, and the narrative surrounding it is often not rooted in solid evidence. Yet integrating refugees into labour markets not only benefits refugees, but also host communities and refugee-citizen relationships. The COVID crisis has further highlighted the central contributions that refugees and migrants make to their host countries. Dominik

Hangartner, Angelo Martelli, Bilal Malaeb and Doménica Avila offer practical policy recommendations ranging from using technology to match labour market supply and demand for refugees to adopting holistic active labour market programs for refugees and redesigning the asylum process with a focus on integration with frontline cities playing a key role to promote better reception processes and faster asylum-decision processing.

Our sincere gratitude goes to those who have been essential in designing and creating the unique research-policy ecosystem that is behind the policy papers in this eBook: Erik Berglof (LSE and AIIB); Khalid Janahi (Vision 3); Andrés Velasco (LSE School of Public Policy); as well as Geri Miric, Carolina Stern, Keith Tritton and Nina Loncar (Institute of Global Affairs at LSE SPP). Importantly, we are very grateful to all the experts and our LSE students who participated in Maryam Forum’s six working groups.

Editorial support from Ros Taylor (LSE School of Public Policy) and Anthony Williams has been invaluable.

Finally, special thanks to our renowned conference partners the Centre for Economic Policy Research (CEPR), Thinking the Unthinkable (TTU), and the Group of Nations.

Piroska Nagy-Mohácsi and Mandeep Bains Editors

Piroska Nagy-Mohácsi is a macroeconomist and the Interim Director of the Institute of Global Affairs at the LSE School of Public Policy. Previously she was Director for Policy at the European Bank for Reconstruction and Development (EBRD) and worked in senior positions at the International Monetary Fund (IMF) between 1986-2008.

Mandeep Bains is advisor to national governments, international organisations, the G20 as well as the Institute of Global Affairs at the LSE School of Public Policy. Previously she was Deputy Director for Corporate Strategy at the EBRD and also worked at the European Commission.