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PS Say More: Kemal Derviş

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Project Syndicate: “Precisely at a time when rules-based multilateralism is in retreat,” you and Sebastián Strauss recently wrote, “perhaps the fear and losses arising from COVID-19 will encourage efforts to bring about a better model of globalization.” But how likely is that? As you acknowledge in your most recent PS commentary, “Solidarity across borders will be the most difficult challenge posed by the pandemic catastrophe.” Could the COVID-19 pandemic thus result in uncontrolled deglobalization? How might such an outcome be avoided, or at least mitigated?Kemal Derviş: As Strauss and I acknowledge, it could go either way. Fears about global interdependence are set to deepen, as will the instinct to protect one’s own country by reducing dependence on

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Project Syndicate: “Precisely at a time when rules-based multilateralism is in retreat,” you and Sebastián Strauss recently wrote, “perhaps the fear and losses arising from COVID-19 will encourage efforts to bring about a better model of globalization.” But how likely is that? As you acknowledge in your most recent PS commentary, “Solidarity across borders will be the most difficult challenge posed by the pandemic catastrophe.” Could the COVID-19 pandemic thus result in uncontrolled deglobalization? How might such an outcome be avoided, or at least mitigated?

Kemal Derviş: As Strauss and I acknowledge, it could go either way. Fears about global interdependence are set to deepen, as will the instinct to protect one’s own country by reducing dependence on “foreigners.” US President Donald Trump’s insistence on calling COVID-19 a “Chinese virus” reflects this approach. If the leaders of the world’s major powers succumb to such suspicion and blame, the crisis could be deeply divisive.

But there are reasons to hope that the pandemic could lead to greater international cooperation. We are also seeing an unprecedented level of open scientific collaboration, aimed at developing vaccines, diagnostics, and therapeutics. Japan and China – usually rivals – quickly offered each other generous aid. Even US and Chinese leaders pledged mutual support in a phone call on March 26!

Such support must extend to developing countries as well. In fact, if the developed economies neglect poor countries’ enormous needs during this crisis, it would foster deep resentment that would be very difficult to manage in the future. It would also likely lead to additional waves of infections globally – including in the rich countries that have contained the virus.

This point is worth stressing, given recent developments in China. Domestic infections almost disappeared, but as soon as border controls began to be relaxed, new “imported” infections were reported. This shows that the only way to eradicate COVID-19 in one country is to eradicate it in every country.

What is urgently needed is leadership in presenting a forward-looking narrative about how the world should handle not only the COVID-19 crisis, but catastrophic risks more generally. As Nobel laureate Robert Shiller argues in his book Narrative Economics: How Stories Go Viral and Drive Major Economic Events (which I recommend below), clear and compelling narratives matter enormously in shaping public opinion – and public policy.

Narratives are also often linked to personalities: credible figures who are effective communicators are particularly successful in advancing them. In the US, New York Governor Andrew Cuomo gained national prominence with his compelling case for stricter lockdowns; if some states falter, he points out, everyone will be in danger. A similar sort of leadership is needed globally. International scientific collaboration could play an important role is supporting this effort, showing what global cooperation can achieve.

PS: You and Strauss compared the COVID-19 pandemic to climate change. Both “call for eschewing traditional cost-benefit analysis – which relies on known probability distributions – in favor of drastic mitigation to reduce exposure.” The difference, of course, is that COVID-19’s effects are immediate, whereas a similar sense of urgency about climate change may come too late to make a difference. And, in fact, many major economies – including the United States, the United Kingdom, and Russia – stand to pay a heavy price for delaying their COVID-19 response as long as they did. How might we translate the condensed urgency of the pandemic to climate action?

KD: The COVID-19 crisis is a dramatic example of the world knowing about a tail risk, and ignoring it. The same can be said about climate change: science tells us that a global temperature rise of 2° Celsius above pre-industrial levels carries potentially catastrophic tail risks, which would affect the entire planet. It may not be possible to imbue the climate conversation with precisely the same level of urgency as the pandemic, but the COVID-19 crisis could help to spur a more general – and much-needed – global debate on the most desirable balance between short-term efficiency and longer-term robustness.

Designing robust systems requires building some redundancy and slack into them, at the expense of some efficiency in the short term. But if – or, in the case of climate change, when – the tail risks materialize, the more robust systems will prove to have been more efficient from a long-run...

Kemal Derviş
Kemal Derviş, former Minister of Economic Affairs of Turkey and former Administrator for the United Nations Development Program (UNDP), is a vice president of the Brookings Institution.

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