 Hello. I'm delighted to welcome you to Inet's webinar, Building a Global Economic Response to COVID-19 with Muhammad El-Aryan, a commissioner on Inet's Commission on Global Economic Transformation. I'm Pia Milani, senior economist here at Inet. Those of you who follow our webinars regularly may remember a few weeks ago when Muhammad sent in a question for his co-author, Mike Spence. And I put him on the spot to go live and dig deeper with Mike on the issue. We are very fortunate today to have Muhammad take the time to come in and give us a fuller description of his vision on how we should be responding to the crisis with a more global perspective. While initially many of us were hoping that the developing world would be spared the worst health effects of the crisis, though still bearing the economic burden, it has become apparent since then that this is far from the case. And many less developed countries are reeling from both the health and economic shock, just as countries such as the US and the UK, albeit with fewer resources. We are also seeing across much of the globe that in response to the crisis, there has been a rise in economic nationalism and isolationism. There are a few glimmers of hope, like the debt restructuring attempts we are seeing in Ecuador and Argentina. The weather they work is yet to be seen. Muhammad has been exploring ways in which we can actually approach the situation constructively. And I'm very eager to hear his thoughts today. By way of introduction, aside from his affiliation with Inet, Muhammad is the president elect of Queens College, Cambridge, and chief economic advisor at Allianz. He chaired President Obama's Global Development Council, is a senior advisor at Gramercy, a columnist for Bloomberg View, a contributing editor at the Financial Times, and the author of several books, including two New York Times bestsellers, When Markets Collide and The Only Game in Town, Central Bank's Instability in Avoiding the Next Collapse. Before I turn it over to Muhammad, Inet's president, Rob Johnson, would like to say a few words. After the presentation, we'll open it up for questions. So if you have any, you can go to the Q&A button at the bottom of your screen and type them in there. And we'll get to as many as we can. Rob, over to you. Well, thanks, Pia. And you covered very concisely and quickly the breadth and depth that Muhammad represents. And I'm very, very proud that he's a member of our global commission. We've had a number of meetings. And I know he's very close friend of Mike Spence, the Nobel Laureate. And when Muhammad speaks, I see the commissioners open up. The breadth of his pattern recognition, his ability to integrate ideas, whether they're in the current circumstances, the COVID crisis, or the role of central banks, or very, very different type of sovereign debt renegotiation in Argentina that's ongoing. And I've also written about too recently. Or his reflections on the ebbs and flows of globalization. Whatever is on the horizon, my son was a national caliber chess player. And I always think when I'm listening to Muhammad, that he's thinking about our world three or four steps ahead, like a chess player envisioning the move after the move after the next move and the reaction of others. And it's in that type of exploration, curiosity, and gifts that makes me so excited to hear him speak today. Muhammad, thank you for being with us. Thank you, Rob. Thank you, Pia. Thank you to my INEP colleagues. I didn't realize the negative consequences of asking Mike Spencer a question on a previous presentation. But Mike has been such a wonderful influence on me. In fact, a lot of the tools that underpin what I'm saying today come from Mike, both what he's written and the privilege I've had of having conversations with him. Going into this COVID shock, we were living in a world where low-probability events were becoming reality. But we weren't drawing any major conclusions from them. And by low-probability events, I'm talking about negative interest rates. I'm talking about Brexit. I'm talking about the US becoming the most protectionist advanced economy. These were all low-probability events, but they became reality. And the shock, the multidimensional shock that COVID involves right now is perhaps one of the biggest tail events that have materialized. And it has taken us professionally, personally, out of comfort zones. It is pressuring our institutions. It is raising basic questions on not just what we do, but how we do it. And most of our reaction, as behavioral science would suggest, is wanting to go back to where we've come from, wanting to mean revert. And what I'm going to say right now is that's the wrong way to think about this, that whether you look at initial conditions, whether you look at how things are playing out, or whether you look to what's ahead, the reality is that we are on this incredibly uncertain bumpy journey to an uncertain destination. And underpinning this is not just something that we have heard about a lot, which is the difficulty of reconciling health, immediate public health priorities with immediate economic priorities. But there's a combination of information failures, misaligned risk assessments, coordination failures. And as Mike Spence always told us, this inability to distinguish noise from signals because of various asymmetrical signaling. So what I'm going to do is I'm going to take three very apparent elements that are playing out day in and day out, economic developments, policy developments, and markets, and compare and contrast them. And in doing so, bring out the good, the bad, and the ugly of what lies ahead. So I'm going to start with just very brief comments about initial conditions. Then I'm going to go into the compare and contrast, and then end up with forward-looking implications with a bit of detail because this is after all an INET event. As to what this means for the economic profession. So the initial conditions we know, March, April was the biggest shock, global GDP shock that we have ever seen. Together with an alarming evidence of lack of policy coordination, we then saw a recovery. And China's GDP number yesterday, which surprised on the upside, shows you where that recovery is most advanced. But underlying all that are the dynamics of what I call an economic sun stop. And I want to stress this because unless you've lived in a community that has been hit hard by a major natural disaster, or unless you've lived in a failed or fragile state, economic sun stops are very unfamiliar. We've never seen it on this scale, which is not just the major economies as well as the smaller ones, but the global economy as a whole. And we've never seen it involve this incredible tension between health and economics, between individual and collective responsibility, and between national and international priorities. So what we're living through is not a shock with a mean reversion dynamic to it. It is this journey, this iterative journey, to what are unstable partial equilibria. I like to think of it not in terms of letters, but in terms of a pendulum. We were at one extreme, normal economic functioning. We swung to another extreme lockdowns. And we're now somewhere in the middle, trying to find that resting point, but not getting there. When you have that situation, you cause a wedge between effective and notional demand and supply, what people want to do, and what people can do. When you have that sort of shock, you accentuate inequalities, not just of income and wealth, but most importantly, inequalities of opportunity. When you have that sort of shock, you amplify human counterparty trust issues, very different from financial counterparty trust issue, which was what the global financial crisis was about. Human interactions become problematic because there's information failures, a signaling problem. And then you add to all that a problem of misaligned risk assessments. Look at what happened here in California, Florida, Arizona. When we opened up, the cohort that felt most comfortable engaging back in normal activity were the ones that have lower risk, the young. But what they underestimated is that their assessment of risk is very different than the risk that's posed to society by their engagement, their premature engagement too quickly without certain precautions. And what we're finding now is that society is having to deal with that risk, which of course is why California has gone back on the reopenings. When you put all that together, by definition, precision becomes difficult. Having said that, if you want a set of projections that come closest to what I think the baseline is, it's what the IMF came up with a couple of weeks ago. And it's important to couple the quantitative projections with two important qualitative statements they made, which is, A, that the balance of risk is still tilted to the downside, and B, that there's a lot of uncertainty out there. But if we take the IMF projections at face value, we are looking at a really big contraction of global GDP in 2020 led by the advanced economies. So the advanced economies are expected by the IMF to decline by 8%, and that contributes to a 5% contraction in overall global GDP. Emerging markets look better on paper, but that's really because of China. If you take China and the rest of Asia out, you have significant falls in Latin America, in particular 9%. And along with that, debt rising at a record pace and a whole host of questions about debt sustainability. 2021, while looks somewhat better, nowhere near repairing the damage. So combine these two, it's about lower growth, higher indebtedness, greater government involvement on the monetary side, lower rates for longer, an element of the globalization, and increasing financial risks. That is what the overall picture. Now, whether we tip towards higher probability worst outcome or a lower probability good outcome will depend on the policy response. And I'm gonna come back on that. But underlying all this is this notion that we can run the global economy at different speeds. And of course, the US is going through its own natural experiments where we ran the US at different speeds in the reopening phase. And now we're running it at different speeds again with certain states going the other way. So when you look at that and you ask yourself, what is the one conclusion that I should take away? Is that dispersion and divergence is gonna be put significant pressure on systems that are not wired for that. And we're already seeing that play out in inequality. And we're not just talking about the inequality of income and wealth, but as I said earlier, the inequality of opportunity. Let me give you two examples that I always have front and center when I talk about these things. And they come again from California. Anybody with kids knows that the move from school being a physical experience to school, being a virtual experience was not an easy one. Well, you know what? The Los Angeles School District has lost touch with 20% of their students. They had no idea what has happened to 20% of their students for the last four months. Why? Because many of these students simply did not have the infrastructure to go virtual. When I look at what's happening to unemployment here locally, it has hit people who thought they had permanent jobs and had absolutely no savings to rely on. We're talking about, as an example, we're talking about the baggage handler at the local airport, who as far as they were concerned, they had one of the most stable jobs out there. And now suddenly they don't know whether they'll be employed again. So what we're seeing is that there's an element of inequality of opportunity that's playing out in a big way. And this dispersion that we can see at the global level, we're gonna see it even more at the state level. Now, what makes this really interesting to analyze is we don't know how long the journey of living with COVID is gonna be. And therefore, we don't know what the destination is gonna look like. And I'm gonna focus on economics, but we could have a socio-political discussion. We could have a geopolitical discussion. What it ends up being is a spaghetti ball with very different outcomes, depending on how you assume the spaghetti ball is untangled. As we often said, I look for silver linings and I wanna stress that there are many silver linings and our challenge as a society will be to bottle them up and make sure we continue to benefit from them. We are seeing massive leaf frogging in invention and innovation on the medical side that will help us for a long time. We're seeing scientists collaborate in ways that we haven't seen before. We're seeing some private public partnerships that are working. We are seeing the use of digitalization in a very positive way. We're seeing a lot of respect for key professions. We're seeing a CO2 emission reduction, but importantly, we have greater sensitivity now to tail events, which hopefully means that we can deal with climate change, which is not a tail event. It's actually a baseline event, better. And finally, we're seeing recognition of the problems of global coordination failures. And hopefully these things will have a positive impact. Now let's talk about policy. The original policy approach was all in, whatever it takes, whole of government. And we have seen really impressive outcomes in terms of income support, in terms of postponing bankruptcies and delinquencies, and in terms of minimizing the cost of unemployment. And that is a great achievement and our policy makers should be concreted later on. But there's two issues that we should worry about, especially when you go to the developing world, where most countries have seen very impressive policy responses. One, to use a term from game theory, and I wanna stress, this is not a game, this is very serious, but I think that game theory gives you an ability to see through the fog. Part of the problem is that this shock was treated as big, temporary and reversible. It was treated as a one-round game. So you throw everything you have at it to postpone and to make sure that short-term problems don't become long-term problems because you revert back to a mean. What if you don't revert back to a mean? What if it's a multi-round game? Then you have to worry about your ability to continue reacting, but you also have to worry about the costs and risks over the medium term because a lot of the policy interventions cannot be reversed. This, of course, involves the massive non-commercial involvement of central banks and markets where seemingly there are no red lines anymore in terms of taking on credit risk. It also involves difficult judgments which companies should really be saved and which companies should not. What is the risk of zombie companies versus the risk of premature bankruptcies? And what about zombie markets? And what about this enormous disconnect that we've seen again with the earnings from the banks in the last three days? What about this enormous disconnect between Main Street and Wall Street? Now, I'm saying that because the economy interpretation looks like the spaghetti ball that's very hard to untangle, the policy side looks complicated because it's not a one round game. And yet, if you look at financial markets, everything seems fine. I'm not just talking about the surge that we've had in stocks. I'm talking about the incredible stability we've had in foreign exchange volatility, the incredible stability we've had in government bonds. If all you had been looking at is just what's happening in financial markets, you would think that everything is fine, that not only have we reverted back to where we've come from, but we've reverted back with a very limited amount of volatility. So we have this incredible inconsistency between what's happening on the economy, the policy ability to keep up with what's happening in the economy and what markets are doing. Now, there's three explanations for that. The first one relies on irrationality and information failures. The second, drawing from Mike Spence's early work, relies on information segmentation and symmetry. And the third one relies on massive differentiated drivers. I've lived, as many of you know, my life in this intersection of economics, finance, markets and policy. And I've seen enough in policies to know that most of the time information failures do not explain what's going on. I think the explanation comes more from the second and particularly the third issue. And that is the conditioning of markets to believe they are in a win-win situation. If you want simple insights to that, go to the three most commonly cited principles in markets and add two more. The first principle is markets are forward-looking. We look through shocks. We look through the valley. The second one is don't fight the Fed, follow the Fed or even better, lead the Fed. And the third one is the trend is your friend. Had you applied these three very simple principle, especially the second one, you would have ignored a lot of the economic, political uncertainty, post-global financial crisis, let alone what has happened recently and you would have been right. And what that has done is it has created two more principles, what are called FOMO and TINA. FOMO fear of missing out because markets always go up because they have massive liquidity support. And TINA, there is no alternative. And as Bob Schiller has shed a lot of lights on narratives matter, and those narratives now condition market behavior and ironically also influence policy behavior. So in a self-reinforcing cycle that creates this win-win in the market perception. You win by betting on a V, by looking through the valley, by betting on therapeutics and vaccines, but you also win if you've got it wrong because central banks cannot afford to have massive financial volatility because the last thing central banks want is volatility to undermine the real economy. So that's where we are today. That explains these incredible inconsistencies. And the issue that I find most uncomfortable is that as you run it forward, these inconsistencies become more problematic. That unless you believe that we have permanently decoupled fundamentals from markets, unless you believe that we are mean reverting, then you start having issues build up. And that tells you what we should expect and what are the policy priorities and what does it mean for economics? So first we should expect that without timely action. And remember, there's three response phases to policy. Relief, living with COVID making that as potentially possible as you can, meaning reconciling a less than perfect public health issue with a less than perfect economy and not swinging around, not finding an equilibrium. And then third, recovery. We've got to have policy responses. Absence, good policy responses in all three. There's a head to productivity and there's a head to demand. The head to productivity comes from the fact that we're seeing growing industrial concentration, that wires, supply lines are being re-wired as people put greater emphasis on resilience as opposed to efficiency. And as governments put quite a bit of more persuasion on certain industries to localize their supply chains. On the demand side, we are seeing a hit to economic insecurity. Households are becoming more insecure. We're picking that up in various indicators, less so in the US. But remember, the US now has hit a second big pothole, but certainly you see it in Europe. We're gonna deal with this notion that it's an inequality trifecta, income, wealth and opportunity. That's gonna be growing global fragmentation and the loss of trust in the corporate referee model. And there's gonna be this risk of financial stability. And all that before you put in all the secular challenges that we have going into this, climate change, demographic and technology. So when you put all this together, it leads us to the so what? First thing, stop thinking in terms of a normal distribution. Stop looking for precision. Precision is almost impossible in this world. Think much more in terms of distribution of potential outcomes with an appreciation that the belly of the curve that normally anchors these is being hollowed out. It's being hollowed out economically, it's being hollowed out in terms of institution and it's being hollowed out in terms of social and political elements. So you have a distribution where the anchoring middle has less weight and the tails are much fatter and much more asymmetrical. At the extreme, it becomes a bimodal distribution of outcomes and that sheds light on what every segment of society needs to do to handle this well. And it's really developing muscles that are quite distinct from what we need when we are in a normal bell shape distribution. So think of this in terms of the most likely traps when you're looking at a distribution like that. One is adjustment fatigue. I started out by saying we've been taken out of our comfort zone. We wanna go back to what's comfortable and for most of us that means mean reversion. And if the longer it takes for this mean reversion to happen, the higher the risk of adjustment fatigue. If you have kids at home, you know exactly what I'm talking about. If you're in a developing country that has tried first and second generation reforms, you know what I'm talking about. In advanced economies that mostly lived in cyclical space, that's a pretty new phenomenon. And it's one that has resulted for example in people going back too quickly in terms of behavior. Secondly, avoid the one round specification. This is a multi-round game. And like baseball, it can go into extra innings. Third, avoid repeating the mistake that we made coming out of the 2008 financial crisis. Just like now, then we were faced with the real threat of a global depression. We managed to win that war over the global depression, but we failed to secure the peace of high inclusive and sustainable growth. We have to be able to avoid that. Fourth, be open to your behavioral biases. These behavioral biases become much more pronounced when we're out of our comfort zone and they often turn strength into weakness. And finally, be aware that we are in these multiple equilibria dynamics. So you cannot judge the destination without having a very good feel for the journey. Which leads me to the final set of comments which really relates to economics in the context of INET's efforts to enhance the relevance and impact of economics. So far, the response of economists has been really impressive. I have a very simple metric because I sit on the board of the NBER, the Natural Bureau of Economic Research. So I get to see the working papers and the volume of working papers that has been produced, looking at the different aspects of the COVID shock is really impressive. The economic profession has responded and we're seeing collaboration among different areas which is really, really encouraging. We're also seeing a willingness to go beyond traditional data. The speed with which the economic profession has embraced these unusual high-frequency data is really impressive. Mobility, Western reservations, retail traffic, there has really been an embracement of that. But not everything has been smooth and some of the bumps that we're going through reflect longstanding issues that Rob has heard me talk about including insufficient emphasis on multidisciplinary approaches. Failure to probably incorporate behavioral science, resistance to scenario analysis and less than full embracement of evidence-based approaches. Which means we don't stress test enough the assumptions that are there, that are deeply embedded in models and our mindset. And of course, all that is made worse by a problem that I think economics now fully understand, which is the lack of cognitive diversity that comes with the lack of gender diversity, waste and background diversity. So in conclusion, whichever way you look at it, we're living through not just a consequential so-called unprecedented shock, but its implications are far from clear as yet. This is a long journey and we're still at the beginning of it. And this distribution of outcomes that we're looking at is unusually uncertain, which poses both problems at every level and a collective problem of how do you deal with that without falling into the inevitable traps that happen on that. And what we do know is open-mindedness matters, collective action matters, better alignment of incentives matter and a willingness to learn and course correct is gonna be absolutely critical. No one has the answer to many of these questions. And it comes down to this trifecta that I've been talking a lot about, is the ability to combine resilience, which is surviving through the journey with optionality, a wide open mindset to incorporate new data, to question parameters that have become variables, and finally agility. Resilience, optionality, agility is gonna be the key three attributes if we are not just to overcome what remains a pretty uncomfortable period, but also secure what we didn't do last time, which is a long-lasting piece. Let me stop here and happy to take whatever questions you may have. Mohamed, thank you. That was a really broad and deep understanding of where we are today and how some of the issues are playing out. We do have a few questions coming in from the audience, but if I could just touch on a couple of things that you said, I really appreciate the comments on how we need to be rethinking economics. As you know, this is the basis on which INET was created in the wake of the 2008 financial crisis. There was this question of, what does this mean for the field of economics? There are some things we saw playing out post-2008, and you've talked about the importance of us not falling into the same traps. I think what some of us are seeing are specifically the issues that played out in 2008, and we're seeing us essentially walk right back into the same set of issues, where if you look at the incentive structures that allowed 2008 the financial crisis to happen in terms of too big to fail and the misaligned incentives, are we not seeing very much the same kinds of incentive problems just in terms of the response, the policy response to this and who is being bailed out and where the money is going, and what are the lessons that we should have learned that we didn't learn specifically with respect to incentive structures and what should we be doing differently this time around? So we certainly are seeing what I call active inertia, which is you recognize that you have to do something different and you end up doing exactly the same thing. And the business world, the policy world and our everyday life is full of example of active inertia. I always joke about the American tourist who goes to France. They ask a question in English to a local and the local either doesn't want to understand English or doesn't understand English. So they go like this, what's the most likely reaction of the American tourists is to say the same thing louder but in English. I can give you example of the example of companies and policies. So there's been a huge element of active inertia within what has been a very responsive policy element. The question now becomes, can you pivot quickly? And can you pivot to dealing with these two major threats ahead of us, higher household economic insecurity and lower productivity? And that requires us to do things differently and it requires the economic profession also to think differently. There's still massive mean reversion constructs out there. And what's encouraging is some of the work on the labor market that I've seen come out recognizes that certain jobs aren't coming back. Recognizes that you need to get very granular, very quickly to come out with good outcomes. The work on monetary policy and fiscal policy hasn't gone there yet. So it depends where you look here to see where you get but we are still likely to make the same mistake in certain areas. Thank you. I'm gonna turn now to some of the questions we have coming in. So there is a question here from Vinit Sharma who asks what the role of multiratural institutions like the IMF are supposed to be? Have they been playing an effective role and what should they be doing in response to the crisis? Vinit, that's a great question. They've responded. I mean, the IMF is dealing with over a hundred requests for emergency assistance, of which over 60 at last count were taken through the system. That is amazing amount of volume and speed for the IMF. The IMF also, I think, has led the way in thinking more in a more innovative fashion. I thought the last analysis they did, especially in the world you cannot outlook, was very, very insightful. But they are constrained. They are constrained by their shareholders. They are constrained by the US having decided that multilateralism is not the answer to this problem. So they've done a lot from what they're able to do, but relative to what is needed, multilateralism as a whole is not keeping up. And that's gonna become a major issue because the next stage is gonna be not providing relief, but making really hard judgments. We're gonna see this play out in that with structurings coming up. We're gonna see this play out in the balance between conditionality and financing. And it's gonna get a lot tougher because as it turns out, it's not a one-round game. And the initial response of the multilateral institutions had a big one-round element to them. Yeah, following up on that, Rob asked, what does the Argentine debt restructuring negotiation imply for the world system in the emerging world? And if I can tag on to that also, what do you see with what's happening in Ecuador? So already Argentina has been involved in a very protracted restructuring process. It is one that shouldn't be taking so long, but I must say at this stage, and I've written about this, at this stage, I don't think Argentina is a problem. I think the credit is our problem. And what I think we're seeing is a structural problem and an appreciation problem. The structural problem is lack of credit or cohesions. The creditors are now divided into three groups. One that has engaged constructively. A second that is on the fence, retaining optionality. And a third that's playing hardball. And it has proven very difficult to get credit or cohesion. And we don't have mechanisms to get credit or cohesion. Very different from the Latin American debt crisis of the 80s where you had a handful of banks and you had the ability of governments to deploy both a carrot and a stick approach. The second element I think we're seeing is people are not solving this comprehensively. If any creditor was to sit down today and look at what Argentina has offered, relative to what is ahead of Argentina, they would take this offer. Holding out for the extra two or three points when you're facing such uncertainty is hard. The wet approach when you face uncertainty is you start creating anchors, a foundation you can build on. I had hoped the second part of the question that Ecuador was gonna be bad. And initially we had evidence that the Ecuadorian restructuring was voluntary, was constructive and would move quickly. But again, a group of creditors, the same set of creditors are playing hardball there. So this is gonna be a real test as to what resolves this issue, what makes people realize that making the best the enemy of the good is not a good idea when the world is so uncertain. But until now we haven't seen this resolution mechanism. So I worry that we're gonna end up not having timely enough that restructurings that avoid unnecessary pain for everybody involved. Most importantly, the population of the countries. Yeah, that is a very deep concern at this point. I have a question here from Charles Ina. He says one difference from earlier crises, for example, the global financial crisis is that those originated from systemically important. I think he means from countries that are central to the financial system. This crisis comes from the deep periphery and can research from the deep periphery, Chinese markets, US rules. Does this not change the need for focus, the needed focus for post slash intrapandemic policies, one that must be much more inclusive and coordinated in responses? Yes, Charles, initially there was this notion that this is a big shock, we've had it, we've had a similar big shock, which is the global financial crisis. And therefore it's painful, but we can deal with it. I think the global financial crisis was a heart attack. It hit the heart very, very hard. And the heart of any capital market-based system is the payments and settlement system. And what we saw during the global financial crisis is the loss of counterparty trust. Banks no longer trusted each other and the minute banks no longer trusted each other, the whole system comes to a halt. But it is very concentrated in this financial counterparty issue. And if someone can come along, in this case, the central bank, and says, don't trust each other, trust me. I'll be on the other side of your transactions. You can deal with the heart attack. It doesn't mean you reduce all damage, but you deal with it. Cascading economic stops, which is how we got into this issue. You remember it started in the province in China, then it was China, then it was around China. Then it appeared in Italy. Then it went through Europe. The US looked at that, so that's not our issue. The developing world was, it went to the US. The developing world was doing fine at that stage. Now they're not. We're seeing the surgeons go there. It's a little bit like having infection in lots of parts of your body. You can't deal with it with one intervention. You have to have, like you say, a more inclusive and more coordinated response. Because unless you can do so, you find that you're dealing with one infection and then the other infection becomes problematic. And the next thing you know, the one result comes back. And that's the nature of an economic sudden stop. It's very different from a financial sudden stop. And I completely agree with you. That's why, yes, policy has to be more coordinated and more comprehensive. And that's why I worry a lot more about this living with COVID phase. Until we get community immunity or vaccine, we're gonna have these coordination failures make life much more difficult than they should. That it should be. We have a question here from Jack Gao. COVID seems to have exposed existing fissures and created new ones in our international regime. How do you see the US-China relations playing out from here? I'm getting worse, okay? Just simply put, bad getting worse. Let me just say that there are so many different elements fueling this conflict that it is very difficult to put back to put the genie back into the bottle. The inner world of greater dispersion of low growth, the pressure for protectionism, the pressure for blame game goes up. So first we're gonna deal with the reality of what economic low and insufficiently dispersed economic growth does to how different countries react. Second, national security now is playing a big role wheel and perceived. Look what's happening on the technology side. That is not going away. There is a very deep support in the US across political lines for a harder stance towards China. That's not gonna go away. Third, you have the problem of what I call the dual option countries. And that's one thing that we haven't as a profession worked on enough. If you are Australia, if you are Singapore, if you are many other countries, Italy, you and many developing countries, you have basically been pursuing this dual option approach. You have an option on the US mostly for national security. And you have an option for China, mostly economic. And the cost of these options of running them simultaneously has been very low. So countries have run them. But as we saw yesterday with the Huawei decision out of the UK, which is a 180, the cost of this dual option model is going up significantly. And what we haven't figured out yet is what happens to the global system if the dual option approach is no longer one that is feasible. And I think that is the big issue. If you really wanna know what the consequences of these tensions are, don't look at China and the US because both of them can deal relatively well with the tensions, look at it on third countries and ask the question, what does it, if you were a decision maker in that third country and you were forced to make a decision, a choice between these two options, which one would you take? And no one wants to make that choice. But as the tensions grow, the real impact is not gonna be the bilateral impact, it's gonna be the third country impact. And I think that's a key issue to think more about and analyze more. That's a really interesting take. I have a question here from Robert Owen. To what extent in your view do existing failures in economic and financial theory potentially obfuscate our ability to analyze the mechanisms characterizing the consequences of the current crisis? Also, what should our priorities in reformulating the analytical foundations of our inquiry? Yeah, there's something that I've worried about a lot even before this crisis. First, we have a legacy problem. Go back to November, 2008, when Her Majesty, the Queen of England was being briefed at the London School of Economics and she asked a simple question to the economists out in the room, why didn't you see it coming? And I think the economic profession took a beating. I'll give you one illustration of that beating, look at the major policy makers in the US, none of them are trained economists. It's been okay to bypass the economic profession for major economic posts, whether it is treasury secretaries, whether it is Fed governor, whether it is head of the National Economic Council, wherever you look, they've bypassed the profession. And they've bypassed the profession because the profession has a legacy problem. We lost trust because of both the crisis and its aftermath. And part of that trust is what Rob has heard me say, is this thing that for a very long time, the profession was dominated by high priests. And you had other people doing really exciting stuff, trying to incorporate finance into mainstream economics, trying to incorporate behavioral science, trying to be more multidisciplinary. But the ability to enter the temple was limited. Now I think there's greater appreciation to why it's important to be more inclusive. But we are not gonna overcome quickly the trust issue and we're not gonna be able to update our models quickly enough. So I worry that even if economists were able to shed really good light on what's ahead, we wouldn't be taken seriously enough. And we have a major reconstruction and rehabilitation role to play as a profession. We have a question from Alistair Lange. Will a global commission focused on recovery slash reform and resilience bringing together experts from both economics and healthcare from around the world be necessary? Yes, I think it is really important to put people in the same room quickly because unless you resolve the inconsistency between health policy and the economy, you have a big, big, big problem. And I think of it as a pendulum in the advanced countries. I was on a call a few weeks ago when at that time Africa hadn't been hit in any meaningful manner. And there was a lot of hope on that call that it wouldn't be hit. And the reason why there was a lot of hope is because our African colleague on the call said, you know, you don't understand what happens if we get a major COVID-19 outbreak. If we get it, the choice that we face is dying from infection because our healthcare systems simply can't cope or dying from starvation. And somehow trying to find what the right balance is and how the two can coexist and coexist in an upward trending, improving trend is really important. And you've got to get people in the room. You've absolutely got to get people in the room talking to each other. Now it's happening among the private sector, among calls that include both health experts and economists, but I don't think it's happening enough at certain critical levels. Yeah, I think we saw this play out quite dramatically in India where they were very quick to shut down the economy and the impact on the economics of the people who could least afford it in the country was absolutely devastating. So quite literally we were seeing starvation. And as you point out, unfortunately it didn't stop the health shock that came after. We actually have a question here from Vinayakan Sajiv from India. Does de-globalization lead to further rise in inequality and developing economies like India? So ironically, if you asked a question, what initial attributes would you want if you are entering a de-globalization world, you'd want to look more like India than Singapore? You know, the old model of globalization and convergence, and here I'm drawing on the great work of my expense, had a lot to do with the ability to leverage a global economy, the ability to run at a high level of demand and at a high level of supply and accelerate the development journey. And whether it's South Korea, whether it's Singapore, Taiwan, China, that model worked really well. And that's because globalization was high and increasing. If you enter the de-globalization world, you don't want to be small, you want to be large, you don't want to be open, you want to be closed, and you want to have a lot of internal resources on there. So India, ironically, has a source of initial conditions that favor in relative terms, not in absolute terms. No one can avoid the hit from the de-globalization world, but you can have better relative attributes to allow you to negotiate it. Rob referred to my project syndicate article on globalization, there is a tendency among people to want to somehow either ignore or deny that we are entering a de-globalization phase. I think that's wrong. I think what we have to figure out is how do we de-globalize in the least disruptive fashion? And how do we make sure, because globalization is gonna come back, how do we make sure that when globalization comes back, it comes back on a firm of footing? Because there were problems with the previous phase of globalization. And we've got to make sure that we don't repeat the same mistakes over again. Yeah, I couldn't agree more, Mohamed. I think in part the backlash we're seeing against globalization is coming from the fact that we did such a poor job managing issues like inequality in terms of the push towards globalization the last time. But we are unfortunately running out of time, so I want to take a moment to thank you, Mohamed, for being so gracious. When I put this kind of pressure on you, both on Mike's fence's call and since then to come and take some time and speak with us. But it's been so interesting for all of us. And those of you who would like to follow Mohamed's work, he writes regularly for Project Syndicate, but also for Bloomberg View. And I find it usually a really interesting take on what's going on in the world and how to try and process some of these really big changes. So Mohamed, thanks once again. And thank you all for joining us. I want to give you a heads up that next week we will be having two webinars. On Tuesday, we will have a panel discussion on the secular rise of debt moderated by Maurice Shullerich, which is part of a new INET series on debt that is being put together by Maurice and Edward Haddad. And on Thursday, we will have Eric Brynjalsson who will be discussing the implications for the economy of the AI awakening. Eric is based at both MIT and Stanford and he's been doing some really important work trying to understand the economic impacts of technology, which as we know has been a much bigger issue now in the wake of the pandemic. So you can find information for both of these events on the INET website and I really hope you can join us. So thank you all.