1 00:00:00,130 --> 00:00:05,700 Off we go. Thank you. Your feel. Very much indeed. 2 00:00:05,700 --> 00:00:19,140 Now. This is a paper that I've written with Warwick McKibbin from The Iron You for the Ox Rep issue on economics and covered. 3 00:00:19,140 --> 00:00:27,610 And as Cameron said, we had a number of papers in this about international cooperation of various kinds. 4 00:00:27,610 --> 00:00:38,560 And this macro on trade, on macro, on finance and and on the funding of the World Health Organisation for a very different ones. 5 00:00:38,560 --> 00:00:45,520 Let's get specific in this talk. For the next 15 minutes or so on macro issues, 6 00:00:45,520 --> 00:00:50,620 everybody's been complaining about how this looks so different from when Gordon 7 00:00:50,620 --> 00:00:57,040 Brown was running the world in the way that I love doing in early 2009. 8 00:00:57,040 --> 00:01:07,720 I have to say, with extraordinary cooperation from Barack Obama and all those gathered in that summit in London in April 2009. 9 00:01:07,720 --> 00:01:15,520 But when when we slid into the covered crisis, many of my colleagues turned to me and said, 10 00:01:15,520 --> 00:01:21,370 well, listen, David, what exactly macro cooperation do you think is needed? 11 00:01:21,370 --> 00:01:28,830 It's all very well, blah, blah. Let's cooperate. But fun and games is not what cooperation is about. 12 00:01:28,830 --> 00:01:42,910 It's about a purpose. And here is the story of the key points about there being a coordinated macro policy response, 13 00:01:42,910 --> 00:01:50,560 not yet content as what that should be with leadership completely missing. 14 00:01:50,560 --> 00:01:53,560 And we'll talk about that in questions. 15 00:01:53,560 --> 00:02:05,290 There will be a role for the IMF in the background and we're going to run this proposal through a model and show you just what a big difference. 16 00:02:05,290 --> 00:02:11,160 What we've done wouldn't make. So what kind of. 17 00:02:11,160 --> 00:02:15,450 I'm still the the rabbit isn't out of the hat yet, very deliberately. 18 00:02:15,450 --> 00:02:19,440 What macro levers might we pull? Welspun excuse me? 19 00:02:19,440 --> 00:02:23,100 Interest rates, a zero bound. There's nowhere to go with that. 20 00:02:23,100 --> 00:02:28,370 Remember in after the dot com crash. 21 00:02:28,370 --> 00:02:34,770 Zero interest rates cut instantly. Can't go there. 22 00:02:34,770 --> 00:02:42,930 Of course, central banks are doing a remarkable amount of liquidity and confidence. 23 00:02:42,930 --> 00:02:50,580 We prevented a financial crisis happening as a spill-over from covered in a very remarkable way. 24 00:02:50,580 --> 00:03:01,750 And there's a whole seminar about that. But I'm not going to talk about that today. Many countries have loan guarantees. 25 00:03:01,750 --> 00:03:07,660 And there's a whole lot of micro stuff to discuss about support for firms. 26 00:03:07,660 --> 00:03:13,330 But I still haven't got there. This is where I'm going to fiscal policy. 27 00:03:13,330 --> 00:03:19,150 And let's skip forward one slide and I'll come back to this one. 28 00:03:19,150 --> 00:03:38,590 Just look at this extraordinary picture from the IMF fiscal monitor, which shows spending in red as a percent of GDP on on the right hand side of. 29 00:03:38,590 --> 00:03:46,620 With the G20 as a percent of GDP, very large numbers. 30 00:03:46,620 --> 00:03:52,350 Look at the United Kingdom, much lower. But look at the US and Australia. 31 00:03:52,350 --> 00:03:58,590 Thirty three percent of GDP. These are very, very big fiscal numbers. 32 00:03:58,590 --> 00:04:06,540 And the revenue meant merit measures are much larger in Italy. 33 00:04:06,540 --> 00:04:17,010 I said that wrongly. The equity and particular the guarantees are much larger and loans. 34 00:04:17,010 --> 00:04:21,480 And we've all got reservations about loans because they have to be repaid. 35 00:04:21,480 --> 00:04:29,100 But you will see just what a huge difference there are across countries, some of which have been able to do it. 36 00:04:29,100 --> 00:04:39,960 And others now go to the left of the picture Mexico, Turkey, Russia, Indonesia, Saudi Arabia, India, in particular, Brazil, tiny numbers. 37 00:04:39,960 --> 00:04:47,270 And you ask, why is it. And let's just get a picture of how big this is. 38 00:04:47,270 --> 00:04:56,070 I've never done seminars or or simulations in trillions before this new world for me. 39 00:04:56,070 --> 00:05:01,290 But pin down the numbers. U.S. GDP is about 21 trillion. 40 00:05:01,290 --> 00:05:07,890 Well, this picture from the IMF fiscal monitor adds up to 10 trillion. 41 00:05:07,890 --> 00:05:21,780 The world is injected to two to help fix problems in domestic economies, not cooperation across leant across countries is just spending at home. 42 00:05:21,780 --> 00:05:27,390 So it's our furlaud and our job, Australia's job guarantee. 43 00:05:27,390 --> 00:05:35,580 And those does that is the very major part of it, that there'd be no large fiscal expenditures and. 44 00:05:35,580 --> 00:05:45,950 The this paper is all about Mexico, Turkey, Indonesia, India, down there on the left have not been able to do this. 45 00:05:45,950 --> 00:05:55,730 Answer the question, why not? And sir, if they tried, there would be a currency attack. 46 00:05:55,730 --> 00:06:07,530 The international financial markets worrying both about increased fiscal debt and deficits and the increases in debt, 47 00:06:07,530 --> 00:06:17,280 but also about the current account deficits that these countries will run and worrying about whether the country itself would become insolvent. 48 00:06:17,280 --> 00:06:30,710 So in the back of this imaginary G20 meeting in Saudi Arabia later this year that agrees this, they would have to be cooperation. 49 00:06:30,710 --> 00:06:38,210 From the International Monetary Fund and international agreements to make that cooperation possible so that, 50 00:06:38,210 --> 00:06:47,420 roughly speaking, this Fickett financial security of countries that did this would be guaranteed big ask. 51 00:06:47,420 --> 00:06:54,080 But central to the story now, what are we? 52 00:06:54,080 --> 00:07:03,650 Thinking that the gains to coordination would consist of this is a coordination which simply allows some countries, 53 00:07:03,650 --> 00:07:10,550 the ones on the left of that picture that haven't had a fiscal expansion to do an expansion, 54 00:07:10,550 --> 00:07:17,120 more like what is the particular picture for the countries on the right? 55 00:07:17,120 --> 00:07:32,090 And also, we believe, important to study and to investigate is we think that an agreement of this kind would reduce global risk premia. 56 00:07:32,090 --> 00:07:40,980 Now, wait, there's a long story about this and fitting this model to the data which McKibbon has done with great care, 57 00:07:40,980 --> 00:07:50,490 has involved a lot of thinking about risk premia. And I invite you all to have a look at it to investigate what he's done and how. 58 00:07:50,490 --> 00:07:56,370 We have in stimulating how bad the world is before the problem begins. 59 00:07:56,370 --> 00:08:05,100 There have been increases in both the risk premium, which people apply to their future permanent income. 60 00:08:05,100 --> 00:08:17,460 An increase in the risk premium applied to most countries relative to the US, the US being the safe haven. 61 00:08:17,460 --> 00:08:23,310 And thirdly, and importantly, a very significant increase in the equity risk premium. 62 00:08:23,310 --> 00:08:34,650 Now, what we've done in in our simulations of the base run before we start this game off is imagine that those 63 00:08:34,650 --> 00:08:43,980 risk premia to discounting of disposable income and country risk premia a large in the first year, 64 00:08:43,980 --> 00:08:49,410 half in the second year and all gone again in the third year, even in the bad world. 65 00:08:49,410 --> 00:08:54,450 But the bad world with continuing Kovik problems, 66 00:08:54,450 --> 00:09:04,110 we imagine no immediate move to solving the the the the vexing problem of still contains an equity 67 00:09:04,110 --> 00:09:14,190 risk premium in it in the of the base from before out our exercise and why this is all on the store. 68 00:09:14,190 --> 00:09:18,840 On the screen. Is that what we've imagining and what I'm going to show you? 69 00:09:18,840 --> 00:09:29,340 It's the cooperation between countries fiscally is also combined with a reduction of the equity risk premium, 70 00:09:29,340 --> 00:09:37,880 because everybody can see the cooperation between nations acting internationally. 71 00:09:37,880 --> 00:09:46,430 Just before I show you the results, just remind yourself of past exercises in international cooperation. 72 00:09:46,430 --> 00:09:56,420 It's not a Mary story. The only good story there are two and there are two or three bad stories on this page. 73 00:09:56,420 --> 00:10:02,810 One good story is way back in 1980 with the second oil crisis. 74 00:10:02,810 --> 00:10:11,450 There was a genuine global cooperation by nations together to fiscally stimulate. 75 00:10:11,450 --> 00:10:21,710 Much like your own in the early 90s, there was a considerable discussion about cooperation with monetary policy in an inflationary world. 76 00:10:21,710 --> 00:10:29,660 People were concerned and this was a Thatcher Reagan game played out amongst people amused. 77 00:10:29,660 --> 00:10:39,290 In economic seminars suppost, Thatcher does a very tight monetary policy and appreciates the exchange rate of Britain, 78 00:10:39,290 --> 00:10:48,650 then that will make imports into America more expensive and imports into Britain cheaper and will lower our inflation and push up theirs. 79 00:10:48,650 --> 00:10:57,500 Well, guess what? The US would do the same to us and to world game would produce a really bad outcome. 80 00:10:57,500 --> 00:11:01,700 Cooperation would involve them understanding not to do this. 81 00:11:01,700 --> 00:11:06,230 We all know the cooperation of this kind didn't actually happen, 82 00:11:06,230 --> 00:11:15,860 but it was where much of the initial understanding about international cooperation in macroeconomics was first thought about, 83 00:11:15,860 --> 00:11:24,690 discussed and worked through. Next was the GFC in 2008 09, 84 00:11:24,690 --> 00:11:36,190 where the cooperation led by Barrack Obama and Gordon Brown involve very great fiscal expansion of the kind that I'm gonna be talking about here. 85 00:11:36,190 --> 00:11:50,260 But a grim story, it's to remind you of what happened just a year later at the G-8 20 summit in Toronto in 2010. 86 00:11:50,260 --> 00:12:06,250 When our chancellor, George Osborne, teamed up with WUST, with Scheidler and with the US Treasury to cooperate in austerity, 87 00:12:06,250 --> 00:12:15,610 austerity led to much less fiscal work in helping solve the crisis than most people thought desirable. 88 00:12:15,610 --> 00:12:24,700 But it also led to countries trying to do quantitative easing and depreciate their exchange rate and steal jobs from each other. 89 00:12:24,700 --> 00:12:33,640 The cooperation and austerity turned into exchange rate warfare in a way that was extremely unsatisfactory. 90 00:12:33,640 --> 00:12:44,250 What we're trying to do is something most like what it says on this slide about what happened during the GFC. 91 00:12:44,250 --> 00:12:49,170 What's the numbers? Very large numbers. 92 00:12:49,170 --> 00:12:58,200 You remember I said that US GDP is of the order of 21 trillion and advanced 93 00:12:58,200 --> 00:13:03,450 countries at the moment have stimulated to the extent of about 10 trillion. 94 00:13:03,450 --> 00:13:11,520 Huge numbers. The McKibbin Vine's exercise in this paper that I'm talking about would put an extra three trillion 95 00:13:11,520 --> 00:13:24,220 onto government debt in the countries of the kind I've described over a period of five years. 96 00:13:24,220 --> 00:13:28,300 Let's pass quite quickly to the results. 97 00:13:28,300 --> 00:13:37,750 But just before I do so, I want to just say a little bit about how to reach an agreement. 98 00:13:37,750 --> 00:13:49,810 Just as the slide and I flicked back here about international cooperation in macro policy doesn't produce very many good pictures stories. 99 00:13:49,810 --> 00:14:01,000 Part of the reason is that international cooperation is a very particular kind in a world where there's no political oversight. 100 00:14:01,000 --> 00:14:04,090 Because, of course, no global government. 101 00:14:04,090 --> 00:14:12,110 And those those of you in the audience who worked on the IMF and the World Bank know very well about conditionality, 102 00:14:12,110 --> 00:14:23,270 namely an international institution imposing requirements on countries which are given benefits through the international institution. 103 00:14:23,270 --> 00:14:27,950 That's to say you get a cooperative global assistance. 104 00:14:27,950 --> 00:14:35,060 But there's people there in the background going like this, making sure you do what you're told. 105 00:14:35,060 --> 00:14:41,960 What we're advocating is something much more like 2009, get together. 106 00:14:41,960 --> 00:14:46,220 You identified the problem. You agree what's going to be done. 107 00:14:46,220 --> 00:14:50,660 And then you let countries get on with doing it themselves. No. 108 00:14:50,660 --> 00:15:02,180 Enforce conditionality. A little footnote disputes in Europe about the way that Greece and Italy have been treated by the European Commission. 109 00:15:02,180 --> 00:15:11,450 That's exactly the kind of issue that I'm footnoting here, which could have a much larger discussion in our questions and in further analysis. 110 00:15:11,450 --> 00:15:16,460 We talk a bit about it in the paper. Now, here's some pictures. 111 00:15:16,460 --> 00:15:30,910 And I'm sure you can just about read the top line, which says for the critical countries, which I'm going to identify as. 112 00:15:30,910 --> 00:15:38,950 A two and a two GDP goes up by two point seven and two point four percent. 113 00:15:38,950 --> 00:15:50,860 Very large numbers. As a result of this injection, now I'm going to tell you a bit about what countries are the A1 countries or all down below. 114 00:15:50,860 --> 00:16:00,910 You can see all the places like Australia, US, Canada, France, UK that have already done the fiscal expansion they need. 115 00:16:00,910 --> 00:16:07,540 These are countries standing here saying international cooperation involves us helping the rest. 116 00:16:07,540 --> 00:16:18,760 Right. So there's got to be some rest. Well, let's divide the rest into the rest amongst advanced countries and the rest in the best of the world. 117 00:16:18,760 --> 00:16:26,650 Well, who are the rest amongst advanced countries who haven't been able to do the fiscal expansion that they want to need? 118 00:16:26,650 --> 00:16:31,630 Well, at the time of the writing of this paper, the answer was basically Italy, 119 00:16:31,630 --> 00:16:39,880 Spain and some other members of the European Union held in place by the European Union's fiscal rules. 120 00:16:39,880 --> 00:16:49,300 And the Financial Times and other papers were just full of complaints about how the commission was preventing them doing what they look across. 121 00:16:49,300 --> 00:16:54,520 Germany, France and Britain and say, this is ridiculous. We're not allowed. 122 00:16:54,520 --> 00:17:00,990 You and I all know that there's been an agreement last week for tooth and nail to the end, 123 00:17:00,990 --> 00:17:08,470 but the European recovery from fund, what's not yet clear is how much Italy will actually be able to do. 124 00:17:08,470 --> 00:17:12,670 But you might say that Italy is big for Spain. 125 00:17:12,670 --> 00:17:21,400 Few others have been pushed in the direction of McKibbon and Vine's and smile and say, isn't that a good idea? 126 00:17:21,400 --> 00:17:30,490 What's the. Non advanced country, emerging market country, that's done all it wants. 127 00:17:30,490 --> 00:17:34,270 Well, there's only one of them in the E one column, that's China. 128 00:17:34,270 --> 00:17:42,250 And China is not constrained internationally and is being enabled to do exactly what it wanted. 129 00:17:42,250 --> 00:17:47,290 So the real deal is e two countries. And look at the bottom of the list. 130 00:17:47,290 --> 00:17:50,080 It goes on and on in alphabetical order. 131 00:17:50,080 --> 00:18:01,660 Argentina, Brazil, Indonesia, India, Mexico, Russia, Saudi Arabia, South Africa, Turkey and the rest of this and rest of that. 132 00:18:01,660 --> 00:18:12,130 Heaps of countries, all of whom in this simulation have been entitled to do this massive fiscal injection. 133 00:18:12,130 --> 00:18:15,520 That is six percent of GDP in the first year. 134 00:18:15,520 --> 00:18:27,850 Four percent in the second year and two percent in the third year, mirroring how badly the Cauvin shock is at the beginning and dwindling away. 135 00:18:27,850 --> 00:18:36,280 Discuss why. Dwindling and blah, blah. Later on. I've just given you a picture of the shape of the process. 136 00:18:36,280 --> 00:18:44,380 And so the big deal is the E to countries with GDP going up by two point two percent. 137 00:18:44,380 --> 00:18:52,760 Now Koven is close to collapse in GDP of a number order of 12 or 13 percent. 138 00:18:52,760 --> 00:19:00,850 So this is no McKibbon and Vine's on fixing the world. But this is a very big media gracian of the problem. 139 00:19:00,850 --> 00:19:07,120 And if you look at the employment numbers, they're very significantly larger. 140 00:19:07,120 --> 00:19:16,810 And that's because the the the detailed work in the model we're using enables 141 00:19:16,810 --> 00:19:22,480 us to talk about a reduction in real wages in the countries that does this. 142 00:19:22,480 --> 00:19:30,700 And also changes in relative prices to two things that enable employment to go up quite a bit more than GDP. 143 00:19:30,700 --> 00:19:39,220 Essentially, this stimulus in enables expenditure to go up by those who receive the income from 144 00:19:39,220 --> 00:19:44,380 the stimulus and the expenditure is concentrated on labour intensive industries. 145 00:19:44,380 --> 00:20:00,970 That's the shorthand version of the story. That now look at the fiscal position ratio of GDP in the first country. 146 00:20:00,970 --> 00:20:07,110 The budget deficit. And we've got the numbers there. 147 00:20:07,110 --> 00:20:11,960 Minus means, but that the deficit's got worse. 148 00:20:11,960 --> 00:20:18,900 And in the two countries, minus one. 149 00:20:18,900 --> 00:20:25,740 One trip. Don't get the numbers right. What a trillion. Three hundred billion. 150 00:20:25,740 --> 00:20:32,250 Why? This is a tax cut. Tax cuts cause increased fiscal deficit. 151 00:20:32,250 --> 00:20:44,310 Look at the current account position. The trade deficit. The trade deficit of these countries, minus 715 billion. 152 00:20:44,310 --> 00:20:54,800 A very big trade deficit. Because you're stimulating the economy by cutting taxes. 153 00:20:54,800 --> 00:21:00,420 Let's now let's look at what happens to the rest of the world. Well, the rest of the world benefits. 154 00:21:00,420 --> 00:21:07,870 Why just straightforward locomotive effects, expansion, expansion in one part of the world. 155 00:21:07,870 --> 00:21:15,880 Saxen. Imports from the other part of the world. 156 00:21:15,880 --> 00:21:21,460 So there's an export boom in the parts of the world that aren't doing this. 157 00:21:21,460 --> 00:21:28,450 That's a positive. I'll let you spend more money. And when you spend it, some of it will be spent on my stuff. 158 00:21:28,450 --> 00:21:36,880 Roughly speaking, is is the simple version of the story. 159 00:21:36,880 --> 00:21:46,900 How did it work? Well, a straightforward open economy, macroeconomics tells us how it works. 160 00:21:46,900 --> 00:21:56,500 Fiscal expansion by tax cuts in all that long list of countries leads them to have more expenditure, 161 00:21:56,500 --> 00:22:09,660 more less deflation than they would have been depending on the details of the simulation in some countries, actually, some more inflation. 162 00:22:09,660 --> 00:22:16,810 Take a monetary policy. Remember that we're talking in the covered world in which monetary policy has been very loose. 163 00:22:16,810 --> 00:22:21,490 So what tighter monetary policy means is not quite as loose monetary policy. 164 00:22:21,490 --> 00:22:31,240 That's how we run, um, the McKibbin model. And and of course, the currency will be not as depreciated as it would have been. 165 00:22:31,240 --> 00:22:32,620 That's what you'd expect. 166 00:22:32,620 --> 00:22:43,960 These external emerging market countries have suffered very significantly because of falling exchange rates as a result of Kofod, 167 00:22:43,960 --> 00:22:51,990 the collapse of their export revenues, being able to expand and to have tighter monetary policy than they would have. 168 00:22:51,990 --> 00:22:57,600 And having a more appreciated exchange rate is all part of a good package. 169 00:22:57,600 --> 00:23:03,450 But what do we see in the other countries? You and me, in advanced countries, we will. 170 00:23:03,450 --> 00:23:14,310 Somebodies appreciation is somebody else's depreciation. So not only do we have locomotive effects of of of Mexico and Brazil and whatever. 171 00:23:14,310 --> 00:23:22,560 Purchasing more of our imports, but also our currency is somewhat more depreciated and more competitive. 172 00:23:22,560 --> 00:23:32,420 And we export more. That way. So you would expect me to say that this is all a big deal, wouldn't you? 173 00:23:32,420 --> 00:23:37,700 It's a big deal. You'd expect me to say it's a good deal. 174 00:23:37,700 --> 00:23:51,560 But we come back to where I began, and this is open for questions that needs to be leadership to make this happen, which is just not there. 175 00:23:51,560 --> 00:23:52,920 And in particular, 176 00:23:52,920 --> 00:24:03,410 there needs to be support from the International Monetary Fund that would enable the countries that I've described in that long list to be able to 177 00:24:03,410 --> 00:24:15,260 achieve the extra budget deficits and the extra current account deficits without being subject to international speculation and currency attack. 178 00:24:15,260 --> 00:24:19,690 So that's my story. Thank you very much. Fantastic, David. 179 00:24:19,690 --> 00:24:30,350 Thank you very much indeed. Now, after a brief Q&A with me, because I'm going to abuse my position as chair here and ask you some questions directly. 180 00:24:30,350 --> 00:24:38,480 We do have time for Q&A. This three lined up already. But if you wish to ask David a question, do hit that. 181 00:24:38,480 --> 00:24:47,400 Ask a question button on the bottom of your screen. So to kind of I'm a simple person at heart. 182 00:24:47,400 --> 00:24:55,310 And what I'd like to do here is just really cut to that the what, how and the why here. 183 00:24:55,310 --> 00:25:04,730 So I stop auditors to talk. Indeed, as I was reading your paper asking, why isn't an individual national response here enough? 184 00:25:04,730 --> 00:25:10,630 Why doesn't individual nations just doing what they naturally would think to be in their self-interest? 185 00:25:10,630 --> 00:25:14,720 Why doesn't that add up to something sensible? At the global level? 186 00:25:14,720 --> 00:25:20,600 And the first point you've made is that while there's an awful lot of countries who actually can't help themselves here. 187 00:25:20,600 --> 00:25:29,030 And so part of the story is simply kind of helping your neighbour when when they're literally down any of that, people are dying. 188 00:25:29,030 --> 00:25:36,950 And the reason they can't help themselves is because they've got limited fiscal positions, concerns about debt and currency attacks. 189 00:25:36,950 --> 00:25:43,090 So then the question is, well, what what can we do to help them and where we can chuck them a whole lot of cash 190 00:25:43,090 --> 00:25:49,340 in in the form of IMF related facilities or others come back that second vote. 191 00:25:49,340 --> 00:25:54,080 But why would we do that other than just the goodness of our hearts? 192 00:25:54,080 --> 00:25:59,900 And you've given us three answers to that question. I mean, the first is that there is this Lokomotiv effect. 193 00:25:59,900 --> 00:26:03,690 If half the world goes down to half the world's demand gone in the whole year. 194 00:26:03,690 --> 00:26:11,170 You end up with a global recession. And I'm wearing a mask as well. So no human is an island and our economies are all interconnected. 195 00:26:11,170 --> 00:26:12,990 That's life. That's for me, the big reason. 196 00:26:12,990 --> 00:26:22,340 Yet the second reason you've given is reduced risk premia, which, as I understood it was firms need to be confident of future demand levels. 197 00:26:22,340 --> 00:26:28,850 And if you've got a large, coordinated, clearly communicated multinational governmental stimulus, 198 00:26:28,850 --> 00:26:35,950 then firms are going to think, okay, it's going to be. It's gonna be all right. I'll invest and create jobs and so on and so forth. 199 00:26:35,950 --> 00:26:41,270 And then third one you gave was because actually, if we are to have an expansion, 200 00:26:41,270 --> 00:26:50,000 you want a balanced expansion and just an expansion by the A1 countries doesn't give you balanced economic activity around the world. 201 00:26:50,000 --> 00:26:53,630 So I think that's the core of your argument. 202 00:26:53,630 --> 00:27:02,390 Now, if I come to a key question, actually, it's in the in the list of questions being asked by someone called Cucchiara Kajita. 203 00:27:02,390 --> 00:27:09,560 How does this actually work? How's it govern? Obviously, the IMF could take a number of actions here. 204 00:27:09,560 --> 00:27:16,040 But the IMF is perhaps not beholden to its member state countries. 205 00:27:16,040 --> 00:27:22,880 But it has to. Has to work with them. So what exactly is the pathway? 206 00:27:22,880 --> 00:27:27,080 Not in an ideal world, but in a kind of plausibly realistic world. 207 00:27:27,080 --> 00:27:33,880 Who should do what? Here to make this coordination real. 208 00:27:33,880 --> 00:27:40,820 Well, don't put Italy on one side, but a member of a monetary union. 209 00:27:40,820 --> 00:27:51,310 We'll come back to that. All the other countries that I've described are a show that. 210 00:27:51,310 --> 00:27:58,500 The countries that manage their own monetary policy, they can. 211 00:27:58,500 --> 00:28:06,390 Literally do a tax cut. Big numbers of the candidate described which injects more money. 212 00:28:06,390 --> 00:28:13,740 Now this in in elementary macroeconomics one on one. 213 00:28:13,740 --> 00:28:24,000 This is an outward shift of the ice curve and it will be appropriately dealt with by monetary policy if there's no inflationary pressure. 214 00:28:24,000 --> 00:28:28,350 Then the L.M. curve will simply simply shift out with it. 215 00:28:28,350 --> 00:28:33,540 If we're in the world with studying in our model, whether it's something like a Taylor Rule in place, 216 00:28:33,540 --> 00:28:39,030 the interest rate might rise a bit in order to manage the inflationary pressures. 217 00:28:39,030 --> 00:28:43,980 But it's a it's a fiscal expansion that creates extra public debt. 218 00:28:43,980 --> 00:28:53,420 And monetary policy is accommodating and constraining only to the extent that it's inflation so everyone can get on. 219 00:28:53,420 --> 00:28:56,870 Tanyalee said, get on an aeroplane after the G20 summit. 220 00:28:56,870 --> 00:29:05,340 So virtual just simply turn around when they've done it and say, okay, guys, this is what we're going to do in our parliament tomorrow. 221 00:29:05,340 --> 00:29:10,620 That's at home. But what's the global stuff? 222 00:29:10,620 --> 00:29:17,100 Well, in that I think back to the Asian financial crisis, 223 00:29:17,100 --> 00:29:28,050 rescuing Korea or involved those bizarre meetings in hotels in Seoul on Christmas Eve and the IMF didn't have anywhere near enough money. 224 00:29:28,050 --> 00:29:36,090 So the point I'm wanting to make is there had to be there in a big whip round and and that would need to be a very big whip round. 225 00:29:36,090 --> 00:29:42,370 In addition, the IMF, the kind of numbers the IMF has. 226 00:29:42,370 --> 00:29:50,320 Is that the order? Depends who who's borrowed was aware of between half a trillion and a trillion trillion 227 00:29:50,320 --> 00:29:57,280 max totalled the very small number in in the kind of calculations that we're doing here. 228 00:29:57,280 --> 00:30:07,240 So we're we're looking at international cooperation, hopefully in a more orderly way than just a straight whip round. 229 00:30:07,240 --> 00:30:13,240 We'll look to live on the telephone, as it were, Christmas Eve. 230 00:30:13,240 --> 00:30:25,210 Look look at how badly we've done so far. There was a push at the G20 meeting in April to increase SDR special drawing rights, 231 00:30:25,210 --> 00:30:32,020 which are for those of you who don't know, the International Fund, 232 00:30:32,020 --> 00:30:41,710 Monetary Fund, magic money that actually made up internationally out of no contributions, but they contributed contributing nations. 233 00:30:41,710 --> 00:30:47,890 This would have been the right time to have an SDR increase. The push was for something like 300 billion. 234 00:30:47,890 --> 00:30:55,840 So it would have been a given that the fund's numbers are between five hundred billion trillion. 235 00:30:55,840 --> 00:31:01,080 This would be very important. Didn't happen so long. 236 00:31:01,080 --> 00:31:06,640 And so to a short question, and it can be turned into one sentence. 237 00:31:06,640 --> 00:31:11,330 SDR increase, please. OK, great. 238 00:31:11,330 --> 00:31:12,410 SDR increase plays, 239 00:31:12,410 --> 00:31:19,400 but actually no real prospect of anything at the size and magnitude that would be commensurate with the trillions that we would need. 240 00:31:19,400 --> 00:31:26,270 We're talking hundreds of billions still in a good scenario. And that kind of brings me onto the second question. 241 00:31:26,270 --> 00:31:30,560 What's the role, do you think, of debt relief here? 242 00:31:30,560 --> 00:31:39,830 Because part of the challenge for the countries who can't help themselves is a debt overhang or the fear of one. 243 00:31:39,830 --> 00:31:43,040 Could we be thinking more cleverly about deals? 244 00:31:43,040 --> 00:31:49,380 Do we need a few kind of souped up investment bankers doing debt for nature swaps or debt for something swaps? 245 00:31:49,380 --> 00:31:57,050 Yeah, that where there is a deal to be done that is in both parties interests and in the collective global interest. 246 00:31:57,050 --> 00:32:05,350 Very definitely. If your. Your and my friends in the audience would like to tune in next week. 247 00:32:05,350 --> 00:32:16,180 Chris, Adam, we'll be talking about precisely this. I'm just flicking my paper to see where sub-Saharan Africa comes in. 248 00:32:16,180 --> 00:32:19,510 In the regions of the McKibbon model. And I have to tell you, 249 00:32:19,510 --> 00:32:29,080 it's called rest of the world because sub-Saharan Africa is quantitatively very small but catastrophically 250 00:32:29,080 --> 00:32:39,430 damaged by covered because an and and a very simple understanding is that the prices of Meningie, 251 00:32:39,430 --> 00:32:46,660 many of their exports have collapsed with the collapse in the terms of trade that cosiness caused. 252 00:32:46,660 --> 00:32:56,440 So they're short of revenue, but they're already heavily borrowed and they need like us, look at the news headlines every day. 253 00:32:56,440 --> 00:33:05,920 Countries in Africa unable to do what we've done in supporting our populations in this time of debt relief. 254 00:33:05,920 --> 00:33:12,070 Absolutely central. And Chris had the number I'd taken. 255 00:33:12,070 --> 00:33:17,290 Chris Adams done a whole paper on this for four our trip, which is a very interesting piece of work. 256 00:33:17,290 --> 00:33:23,290 And it fits absolutely like that into the McKibbon Biden's exercise. 257 00:33:23,290 --> 00:33:33,820 And the numbers look like between two and three times the normal amount of aid just sub some higher in African countries. 258 00:33:33,820 --> 00:33:39,430 That's not kind of excuse me, could we have a 20 percent more aid? 259 00:33:39,430 --> 00:33:43,750 This is kind of more than doubling. And now globally, the numbers are small. 260 00:33:43,750 --> 00:33:51,590 That's still that's still only talking much less than five hundred billion. 261 00:33:51,590 --> 00:33:56,960 But but for these countries, it's absolutely make or break. Thanks. 262 00:33:56,960 --> 00:34:02,710 There's a very good questions here in the list. And let me just group some of them together. 263 00:34:02,710 --> 00:34:07,600 Quite a few relate to really the concept of uncertainty. 264 00:34:07,600 --> 00:34:15,410 Yeah, there's uncertainty as to whether we're in a recession or depression, as Patrick points out. 265 00:34:15,410 --> 00:34:21,670 There's uncertainties whether we'll have a vaccine sooner or later or ever. 266 00:34:21,670 --> 00:34:31,360 And there's a big kind of uncertain question about, as a result, how much money he needs to be on the table. 267 00:34:31,360 --> 00:34:40,840 What is good macro coordination look like in these sort of circumstances where we face some pretty deep uncertainties? 268 00:34:40,840 --> 00:34:53,320 Very good question. I suppose I would go back to the global financial crisis and look at the mistakes that were made. 269 00:34:53,320 --> 00:35:02,010 I'm going to give you an evasive answer, which is that we will we will certainly not be able to do whatever it takes. 270 00:35:02,010 --> 00:35:08,080 That magic phrase. So I'm going to turn around and say it. 271 00:35:08,080 --> 00:35:17,970 It will be helpful to do whatever it is possible, because whatever that is will turn out not to be enough. 272 00:35:17,970 --> 00:35:23,970 Properly evasive answer. But look back what happened after the global financial crisis. 273 00:35:23,970 --> 00:35:29,310 When the package in London, two percent, much smaller numbers than now, 274 00:35:29,310 --> 00:35:38,610 two percent global fiscal stimulus and an agreement not to put up tax rates when when there was collapse in fiscal revenues. 275 00:35:38,610 --> 00:35:47,400 Perfect for a year. And then they all got to get together in 2010 in Toronto and started doing austerity and wound it back. 276 00:35:47,400 --> 00:35:54,450 The real risk is that intelligence known as big as what we're proposing here. 277 00:35:54,450 --> 00:36:04,020 But whatever can be done is at risk of the debt maniacs doing exactly to sensibleness 278 00:36:04,020 --> 00:36:10,710 what the debt maniacs did to sensibleness after the global financial crisis. 279 00:36:10,710 --> 00:36:14,740 So there's absolutely no risk of us doing too much. Yeah, I know. 280 00:36:14,740 --> 00:36:19,590 No, I'm fine. So we do we do what we can and that addresses the uncertainty. 281 00:36:19,590 --> 00:36:25,400 Now, there's another cluster. I have to defend that in the following way. 282 00:36:25,400 --> 00:36:33,180 That covert is a supply side problem. And there's been much discussion about, well, you know, Martin wouldn't man, 283 00:36:33,180 --> 00:36:38,030 we went into inflationary problems short of stuff because people aren't working. 284 00:36:38,030 --> 00:36:47,220 It's supply side issue. That's the work that work and I've done and many others have done suggests that. 285 00:36:47,220 --> 00:36:53,950 The demand repercussions of this supply constrained. 286 00:36:53,950 --> 00:36:58,990 I nearly said much larger. Certainly larger than the supply side problems. 287 00:36:58,990 --> 00:37:06,920 Why? Because it's depressed investment, although people will consumption smooth and bad time. 288 00:37:06,920 --> 00:37:14,410 You spread it out. The difficulties that would tend to make you think that this is a supply constrained economy. 289 00:37:14,410 --> 00:37:22,990 But if everyone's pessimistic, go back to that. And so to about the future, they will invest less. 290 00:37:22,990 --> 00:37:30,340 So you add the investment reduction to the consumption smoothing kind of partly reduction. 291 00:37:30,340 --> 00:37:38,740 And the modelling shows you get really bad demand shortage. That's why I'm not worried about inflation and I'm not worried about the debt. 292 00:37:38,740 --> 00:37:48,300 Austerity's. But I thought it important to say that because otherwise this kind of response about supply shortages of. 293 00:37:48,300 --> 00:37:50,940 Yeah, fair enough. And this is clearly a big issue. 294 00:37:50,940 --> 00:38:00,490 We will go into it in further detail in this series on the 16th of September with Professor John Farmer and Maria Del Rio, 295 00:38:00,490 --> 00:38:07,650 Nana Nikpai from the impact of the supply and the demand shock of Darwin tonight and that group. 296 00:38:07,650 --> 00:38:12,100 You know the paper. Indeed. We talked a lot about. Great. 297 00:38:12,100 --> 00:38:19,770 So I was moving on to another cluster of questions, John is having that question voted up six times and voted twice. 298 00:38:19,770 --> 00:38:26,550 And this is around the interrelationship between macro economic cooperation, 299 00:38:26,550 --> 00:38:33,100 on the one hand, and cooperation on health and health care and climate on the other. 300 00:38:33,100 --> 00:38:45,300 And and then relatedly, how progress on the health side and the vaccination side effects development affects these economic issues. 301 00:38:45,300 --> 00:38:54,510 Is is it feasible that you could imagine either strong cooperation economically with no cooperation on health and climate or the flip side, 302 00:38:54,510 --> 00:39:01,020 strong cooperation on the health and the climate side? But actually, we can direct together on the economy. 303 00:39:01,020 --> 00:39:12,400 The big deal question. And it takes us right back to 1944, Bretton Woods people in the run up to Bretton Woods. 304 00:39:12,400 --> 00:39:19,140 There was a push to try and do everything. Let's do trade as well and let's do the other stuff as well. 305 00:39:19,140 --> 00:39:24,540 And an intelligence said, let's head focus. 306 00:39:24,540 --> 00:39:28,750 And they did defunded the bank and then they did the W. 307 00:39:28,750 --> 00:39:42,180 What became the gaffe in San Francisco? Two years later, in 1946 and 1945, they did the U.N. but I, I, I. 308 00:39:42,180 --> 00:39:47,340 I think focus is important. That's point one, but point two. 309 00:39:47,340 --> 00:39:58,230 They've got to be positive externalities across these cooperation areas so that if you cooperate macro economically, 310 00:39:58,230 --> 00:40:03,480 you're going to be helping fund stuff on the on the disease reduction. 311 00:40:03,480 --> 00:40:09,110 If you just adopt speaking too loosely on on fighting covert and stopping deaths 312 00:40:09,110 --> 00:40:13,750 and enabling enabling people to have a better world in which to go back to work. 313 00:40:13,750 --> 00:40:19,080 So my McKibbon sex stuff provides money for that stuff. 314 00:40:19,080 --> 00:40:25,020 But that done well would of course make the macro environment better. 315 00:40:25,020 --> 00:40:31,240 So it's obviously important to to do that. 316 00:40:31,240 --> 00:40:38,100 But but. But but but. But I'd caution against jumbling it all up in a big global deal. 317 00:40:38,100 --> 00:40:49,590 Let me just have a footnote for smiling. Cameron is he's got the paper on or on the green recovery. 318 00:40:49,590 --> 00:40:54,240 Now, the McKibbon Vine's paper was very deliberately evasive. 319 00:40:54,240 --> 00:40:59,850 We just cut taxes but stuck it in the mobile digit numbers. 320 00:40:59,850 --> 00:41:03,860 But, of course, you would not want to just cut taxes, 321 00:41:03,860 --> 00:41:14,220 try and do fiscal stuff in a nearly set of focussed in the particular direction sort of way so that I can see your cooperation, 322 00:41:14,220 --> 00:41:19,020 you oblation and the Cameron Hepburn stuff as well. Well, I have to say, 323 00:41:19,020 --> 00:41:24,810 I'm pleased to say a few questions along those lines being posted by I won't prioritise my 324 00:41:24,810 --> 00:41:29,790 own personal interests unless they get voted to the extent that I can't ignore the people. 325 00:41:29,790 --> 00:41:34,470 But actually, on the on the question of Bretton Woods and how to put this together to do we 326 00:41:34,470 --> 00:41:38,560 learn anything from the fact that the EU did manage to get its act together and, 327 00:41:38,560 --> 00:41:45,420 as you say, hammered out at great length, under great duress to the last minute, etc.? 328 00:41:45,420 --> 00:41:52,770 Do we learn anything positive or perhaps negative about cooperation and how it can or should work from the EU recovery fund? 329 00:41:52,770 --> 00:41:59,840 That's Valerie's question. Very good question. 330 00:41:59,840 --> 00:42:12,020 So I'm going to. He Valerie, Valerie's my attempt to take that question and run and say the. 331 00:42:12,020 --> 00:42:21,360 Bignone Cauvin Macro issue in the world is U.S. China trade. 332 00:42:21,360 --> 00:42:28,370 But it's all tangled up with China and the belt and road and chain tension in Asia about China. 333 00:42:28,370 --> 00:42:35,720 Now. As a student, the Bretton Woods. 334 00:42:35,720 --> 00:42:43,530 I like telling this story about Kanes because it is illuminating in a very cange like way. 335 00:42:43,530 --> 00:42:57,230 He was asked just before he died. To face up to reality and reality was the dispute about Lend Lease treaty. 336 00:42:57,230 --> 00:43:09,600 And the famous Article seven of that which gave the US because it led to all this money to the UK to fight the war under complete, uncertain terms. 337 00:43:09,600 --> 00:43:14,890 But it was a lone gift God knows was just money by some warships. 338 00:43:14,890 --> 00:43:24,160 But Article seven gave the US the right to insist on the conditions of it, of the reconstruction of the world order afterwards. 339 00:43:24,160 --> 00:43:28,820 And guess what? These preconditions look like pulling to pieces. 340 00:43:28,820 --> 00:43:33,970 The British Empire, including imperial trade preference. 341 00:43:33,970 --> 00:43:39,890 And this person said to cheque Kanes for Britain, the post-war. 342 00:43:39,890 --> 00:43:49,450 Priority is preserving our trading position in our trading partners against global attacks on our markets. 343 00:43:49,450 --> 00:43:57,240 It's a trade issue. Why? Why, Meinhardt, if you have spent the last three years worrying about the international monetary system. 344 00:43:57,240 --> 00:44:04,630 And Cain said, now I'm turning in this dramatic rhetoric and so in the speech says, 345 00:44:04,630 --> 00:44:10,600 until you've sorted out the macro, you can't begin to do the trade stuff properly. 346 00:44:10,600 --> 00:44:16,690 And his particular story was you just start doing trade calculations and then exchange 347 00:44:16,690 --> 00:44:21,860 rates change violently and you don't know what you're doing in your calculations. 348 00:44:21,860 --> 00:44:28,640 Now, there is in the Trump China trade war stuff, 349 00:44:28,640 --> 00:44:39,830 there is a complete misunderstanding that a lot of the US current account difficulty is and and including now, 350 00:44:39,830 --> 00:44:50,030 I'll say it this way is about what economists would call absorption, the amount of expenditure at home relative to our poor production at home. 351 00:44:50,030 --> 00:44:55,400 So it's the level of demand rather than the ratio of relative prices. 352 00:44:55,400 --> 00:44:59,720 It's fundamentally driving that trade position. 353 00:44:59,720 --> 00:45:08,180 Furthermore, people who think about it sensibly understand that international trade is a global network of stories. 354 00:45:08,180 --> 00:45:15,350 And for the US, what matters is the overall trade position, not its particular trade with a particular country, 355 00:45:15,350 --> 00:45:21,020 because that all maps out and global criss-cross of trading relationship between countries. 356 00:45:21,020 --> 00:45:26,510 So to the questioner, I would say. 357 00:45:26,510 --> 00:45:32,940 Understand? And to my country, previous ones most. 358 00:45:32,940 --> 00:45:41,060 But the most famous Australian contribution to. Macro economics, in fact, economics in total. 359 00:45:41,060 --> 00:45:43,700 The famous thing called the swan diagram. 360 00:45:43,700 --> 00:45:53,360 And this shows that for a country facing an external position, what is important to get right is both its relative prices, 361 00:45:53,360 --> 00:46:03,470 which includes, of course, protection and or exchange rates, but also its ratio of expenditure to income and an untrained macro. 362 00:46:03,470 --> 00:46:10,520 Economists like me go around the world saying, let's try and get the macro right so that once we've done that, 363 00:46:10,520 --> 00:46:16,880 we can then begin to think about these trade problems which people fighting each other so hard about. 364 00:46:16,880 --> 00:46:25,610 Okay, fair enough. Is a good question here, which directly relates that, which is how will we know when we've got the macro right. 365 00:46:25,610 --> 00:46:29,230 So, so. So at what point do you say enough is enough. Yeah. 366 00:46:29,230 --> 00:46:32,240 Well when do we start. How big is this need to be. 367 00:46:32,240 --> 00:46:38,990 Now I guess in some currency events that by saying, well, we're not going to do a big enough response. 368 00:46:38,990 --> 00:46:46,680 So, you know, forget it, just go as hard as you can. But presumably that there's a separate question going as long as you can. 369 00:46:46,680 --> 00:46:52,410 Surely this doesn't go on for five years. I mean, how are we going to know when when we're when we need to stop it? 370 00:46:52,410 --> 00:46:59,910 Is that related to the vaccine? I think absolutely, yes. 371 00:46:59,910 --> 00:47:05,000 Just imagine if our life is like this still six years time from now. 372 00:47:05,000 --> 00:47:13,350 I'm along with many people trying to figure out whether we can cross the English Channel for a holiday next month or not. 373 00:47:13,350 --> 00:47:17,970 Just imagine if your life is is going to be like that. 374 00:47:17,970 --> 00:47:24,530 So the uncertainty is hugely important. 375 00:47:24,530 --> 00:47:29,760 Here's here's an institutional response to your question. 376 00:47:29,760 --> 00:47:37,550 How do we shoot it? So I'm turning your question into how we sure we're not doing too much. 377 00:47:37,550 --> 00:47:45,620 Well, guess what, in a world of great uncertainty. What you need is trusted institutions. 378 00:47:45,620 --> 00:47:59,270 To not not not constraining rules, but delegation to institutions that you trust to to to respond well in the circumstances, he says. 379 00:47:59,270 --> 00:48:07,460 Come on, David. Could please be a bit more precise. Important part of how we'll know. 380 00:48:07,460 --> 00:48:13,570 Two paths. Whether we've done. 381 00:48:13,570 --> 00:48:19,630 And now for too much is, of course, the inflation problem and. 382 00:48:19,630 --> 00:48:25,660 The resilience of central banks that stand for. 383 00:48:25,660 --> 00:48:31,210 Of course, financial stability, but also price stability. 384 00:48:31,210 --> 00:48:39,000 That's to say inflation. We've never gone for zero. Not above it as a steady, low number. 385 00:48:39,000 --> 00:48:48,210 And and. So one answer is when inflation threatens, we'll know we've done nearly too much. 386 00:48:48,210 --> 00:48:57,620 That's that's a way of turning that question into a process advancer of an institution that you trust. 387 00:48:57,620 --> 00:49:09,550 Dealing with it. I have to take the second one. When will you know if motoring madly towards levels of public debt as high as in Japan? 388 00:49:09,550 --> 00:49:14,090 When. When will you know if that's just madness and too much? 389 00:49:14,090 --> 00:49:24,230 Well, the answer will be when long term real interest rates look like they're going to start seriously rising. 390 00:49:24,230 --> 00:49:29,480 And that's why we've established our fiscal council. 391 00:49:29,480 --> 00:49:36,710 It hasn't had to do very much in the last five years except mainly pronounce about the reliability of forecasts. 392 00:49:36,710 --> 00:49:42,070 When people thought the politicians were cheating, well, that's important also. 393 00:49:42,070 --> 00:49:48,410 But its fundamental purpose is to help us understand this set of questions about public debt. 394 00:49:48,410 --> 00:49:53,270 If we got central banks, we'd trust. And in fiscal counts, 395 00:49:53,270 --> 00:50:00,890 the Europeans now have fiscal council institutions in in much of the European 396 00:50:00,890 --> 00:50:05,570 Monetary Union architecture with those that see you see how either they didn't. 397 00:50:05,570 --> 00:50:10,490 The specific question by giving an inch. And it's not evasion really. 398 00:50:10,490 --> 00:50:20,310 It's properly replying to the question by giving an institutional response of processes that we trust. 399 00:50:20,310 --> 00:50:27,120 And we've got time for one more. I'm afraid the question on is, I'll leave this with you to ponder. 400 00:50:27,120 --> 00:50:36,970 David, do we really want to be risk stimulating our economy when we know we're on a pathway to catastrophe on the climate side anyway? 401 00:50:36,970 --> 00:50:44,350 That is the question that I'm not going to ask you to answer, because it's been voted on. 402 00:50:44,350 --> 00:50:55,460 Look, look, look, I know I'm going to die between now and some time, but I do want to have a holiday in Greece before I die. 403 00:50:55,460 --> 00:51:01,520 That's my frivolous start to that question. You've been listening to derail the conversation, 404 00:51:01,520 --> 00:51:10,460 so I'm sure you could take on on a synthetic fuel that's carbon neutral or ammonia or take a beautiful piece like a log train journey or something. 405 00:51:10,460 --> 00:51:14,600 But the real question, the last question is on populism. 406 00:51:14,600 --> 00:51:23,780 So how do we deal with macroeconomic coordination and the kind of macro politics, given the rise of populism? 407 00:51:23,780 --> 00:51:28,730 I mean, you could look at this and say, well, the populists haven't been doing so well. 408 00:51:28,730 --> 00:51:34,680 They've been ignoring the science. And lo and behold, when you do that, you have a bit of a disaster. 409 00:51:34,680 --> 00:51:44,780 But how does that affects the propensity of some of the key states to actually come forth and cooperate when actually they're they're pandering to, 410 00:51:44,780 --> 00:51:51,370 you know, frankly, domestic instincts within the voters? 411 00:51:51,370 --> 00:51:58,990 Very good question. And I'm going to give you a strange answer. 412 00:51:58,990 --> 00:52:15,970 Proud of my own original home country, Australia. Australia had a really bad set of macroeconomic policy institutions at its centre. 413 00:52:15,970 --> 00:52:26,820 Extreme protectionism. And it did battle with Argentina in the 1960s to be the most heavily protected country in the world. 414 00:52:26,820 --> 00:52:32,770 And and the institution that. There were some very important economists. 415 00:52:32,770 --> 00:52:41,510 Many of the audience will have heard of Max Corton lose his idea to a fundamentally important in teaching Australians about the madness of that. 416 00:52:41,510 --> 00:52:50,110 And but there is also an institution caught what's become the Productivity Commission, which is a widely trust. 417 00:52:50,110 --> 00:52:59,700 I heard one of my respected colleagues in Australia describing this institution up there with the Central Bank of Australia. 418 00:52:59,700 --> 00:53:09,160 And I would say this wouldn't go along with the universities as the three great kinds of institutions of state in the country of Australia. 419 00:53:09,160 --> 00:53:13,870 And this Productivity Commission is a place where trusted economists, yes, 420 00:53:13,870 --> 00:53:21,880 trusted ones are asked to write detailed reports on questions of national interest, 421 00:53:21,880 --> 00:53:28,540 which inevitably involve weighing up costs and benefits of policy changes. 422 00:53:28,540 --> 00:53:31,710 And this is it. This is not inviting the question. 423 00:53:31,710 --> 00:53:42,110 It's about populism, because protectionist was protectionism in Australia was was a very populist kind of strategy in its heyday. 424 00:53:42,110 --> 00:53:49,640 And and what this institution that's done is enable the Australian polity, 425 00:53:49,640 --> 00:53:56,210 the Australian civil society, to begin to understand how to think well about economic questions. 426 00:53:56,210 --> 00:54:02,170 And and I'm actually working with some colleagues at the minute to push for 427 00:54:02,170 --> 00:54:10,840 the establishment of such institutions in my my adopted country in Britain. 428 00:54:10,840 --> 00:54:16,780 Because, of course, Liko if everybody I'm thinking about Brexit, 429 00:54:16,780 --> 00:54:24,010 but I'm also thinking about the reform of health and social care and all these deeply 430 00:54:24,010 --> 00:54:32,260 important political economy questions if analysed well by people who are trusted. 431 00:54:32,260 --> 00:54:38,700 We'll make a big difference to populism if it's it. 432 00:54:38,700 --> 00:54:48,370 You would say that, wouldn't you? A university professor thinks that the power of ideas might help win important battles. 433 00:54:48,370 --> 00:54:50,700 But I actually think it's true. 434 00:54:50,700 --> 00:54:56,600 Well, I'm I have some doubts about some of the things you just said, but I certainly have no doubt about the importance. 435 00:54:56,600 --> 00:55:04,210 So that is one way or the other, whether they are populist or not, in driving much of much of what happens. 436 00:55:04,210 --> 00:55:10,200 So that's a good place on which to leave it. David, you started by saying there are some big issues here and you would say that? 437 00:55:10,200 --> 00:55:17,580 Well, I think nobody is deny you the facts that talking about an issue where literally 10 trillion has 438 00:55:17,580 --> 00:55:23,940 already been put at stake and probably another 10 trillion is going to come is a big issue. 439 00:55:23,940 --> 00:55:29,100 It clearly is big. We've got a few more big issues to address in this series before we're close. 440 00:55:29,100 --> 00:55:38,550 Next up tomorrow at 3:00 p.m. is Professor Chris Adam on the economics of the pandemic as it relates to sub-Saharan Africa. 441 00:55:38,550 --> 00:55:40,680 And then after the summer break, 442 00:55:40,680 --> 00:55:48,960 we'll come back with the talk I mentioned from Dan and Maria on the impact of supply and demand shocks on industry and occupations. 443 00:55:48,960 --> 00:55:59,070 Mariana Masakazu familiar name, I suspect to many of you on the thatching to vote of October on a nicely titled The Big Failure of Small Government. 444 00:55:59,070 --> 00:56:04,620 And with any luck, a sneaky sneak preview that we may have. 445 00:56:04,620 --> 00:56:06,480 Yulia Kisa from the Bank of England, 446 00:56:06,480 --> 00:56:18,160 who's done a paper joint with Andy Haldane on more of these sorts of questions around the around the treatment, fiscal economic side of things. 447 00:56:18,160 --> 00:56:24,870 So stay tuned. Join me for sub-Saharan Africa and the pandemic tomorrow at three p.m. 448 00:56:24,870 --> 00:56:30,067 Thanks very much, everybody. Thank you.