There are a lot of questions about the global economic recovery in the
next few months and even years to help us get some of those answers,
we're speaking with Dambisa Moyo.
She's a leading global economist who's written several bestselling
books about international affairs and economics.
So what do you see as the biggest economic risk?
Well, I think that the one that I'm deeply concerned about is an
inability for countries to get people back into the workforce,
whatever that ends up looking like.
I mean, that in itself is a challenge.
As you're probably aware, the participation rate has not improved
even since 2008.
And, of course, now that we face a very high unemployment rate, akin
to what we saw during the Great Depression, I think this is another
issue that we are really focused on in terms of public policy
intervention. And are there certain jobs or sectors that you see as
most at risk when it comes to getting back into the workforce in the
future? About 16 percent of large corporations in the United States
are in such a liquidity challenge that they're not even able to pay
the interest on their debt.
So we already have that problem.
Now we know that's at the very big level, but when you think about
cascading those effects more broadly into small businesses and to
companies that are part of the supply chain, it does become quite
worrisome. I am not a, I should say no longer a believer in the
v-shaped recovery.
I think it's going to take longer.
I do think, as I said, I think we're still dealing with a lot of the
tactical issues right now.
The more substantial structural issues are yet to come onto the
table. What policies are needed to kind of address those longer term
structural issues that you're referring to?
Is there something that should be done now to address those concerns
in the future? Well, it's a great question, because if you look over
the last 100 years at history at the government response to previous
crises, whether there were wars, pandemics or indeed economic
challenges, we did have a toolkit, certainly in economics.
We had monitoring fiscal policy.
Those are proving somewhat impotent.
We have negative interest rates in Europe and Japan already.
And we have massive debts and deficits which the Congressional Budget
Office of the United States was already warning us about and
cautioning us about given concerns around entitlements and was
talking about 2030 being really a time period, which was a great
worry for us to resolve these issues.
But now that problem has come much faster in terms of some of the
structural challenges.
You know, there's a whole list of things that people been talking
about for some time, issues of infrastructure needs in the United
States. As you're aware, the American civil engineering study that
comes out every couple of years ranks American infrastructure as a
D+, you know, in terms of bridges, roads, et cetera.
And so that to me, seems like an obvious area in which you could see
a significant uptick in terms of employment, but also in terms of
helping to rebuild the economy.
And the problem, of course, is that, as I mentioned a moment ago, you
got debts and deficits, but also the corporations themselves need a
lot more latitude to be in partnership with governments to help
address some of these issues.
And we've heard a lot about share buybacks.
You've heard a lot about dividends and sort of the capital allocation
decisions companies are being forced to make over the last few years
because they have not seen a longer term projection for real great
growth opportunities to invest in.
So it's really about the policy backdrop.
Are there compelling stories, compelling things that we should be
investing in? I think really around technology and infrastructure,
those are the areas I think are the most immediate ones.
And is that something should those investments be happening, even
though you mentioned debt being at now record highs and set to go up,
should there continue to be spending on the part of companies and
government despite those debt levels?
Well, I think, first of all, there needs to be a bit more sharper
thinking about what we're doing.
It's absolutely the case to my mind, that government is going to is
big and is going to get bigger.
We already have a situation where welfare payments in Europe and the
United States combined is 90 percent a world welfare payments.
I think government is going to also have not just a bigger role, but
a more important role in terms of the economy, both in terms as as an
arbiter of capital and labor.
And we're seeing that government is bailing out industry.
Government is earmarking or targeting capital towards different
projects. We're seeing in the United Kingdom, for example, the
government step in and pay salaries in the labor market.
So to me, government is definitely getting bigger.
But in it also at the same time, which is quite worrisome from my
side, is that we're seeing corporations and the private sector shrink
in terms of publicly traded companies.
In the past 10 years, we've seen that number come down by about 50
percent. We're seeing much more concentration in sectors.
The idea of companies are becoming much more oligopolies.
So whether its technology sector, banking sector, pharmaceutical
sector, airlines, energy sector, I mean, there are fewer and fewer
competitors in this space.
And so, again, there are real questions about what fundamentally
happens. So, you know, I'm being a bit long winded, but that is the
backdrop that we're dealing with.
And it seems to me that we can't all just defer to government given
their own fiscal constraints.
I think it's really going to be important to to try and engage the
private sector, as we've done before, but really help get the private
sector involved in a manner that's not just for the financial
shareholder, much broader for the stakeholder given where we are.
And that means that more private sector engagement is required.
One of the issues that's been really topical among big companies and
smaller companies is the supply chain, which you mentioned earlier.
Do you think that there's going to be a move to take supply chains
back into the US, maybe move them out of China?
How do you view the supply chain risks going forward?
So it's a great question.
I mean, essentially, we were focusing on supply chains here, but it's
really a broader question around de globalization.
And I published an article, a Harvard Business Review a while ago
talking about the risks of supply chains.
We've already seen sort of the diminution of globalization, of
balkanization emerge around the world, whether it's around
immigration discussions, concerns around the transfer of knowledge,
the splinternet, this idea that there could be two competing
technologies. One US led, one Chinese led.
And so it's not surprising, as I put in the article some time ago,
that the supply chain risk would increase in a world that was
increasingly de globalizing.
I mean, getting into a globalized supply chain was really around cost
and efficiency. It was cheaper and it was efficient through
Just-In-Time mechanisms and other systems to get products delivered.
We now obviously have seen some of the aspects of vulnerability's
resilience in the COVID-19 era, which are absolutely throwing these
questions back onto the table regarding what's the ideal type of a
supply chain. I think it's still a lot of questions to be answered
before I can tell you whether it's going to land.
But I will say that there are considerations around inflation and
cost increases if we were to actually move the production lines back
in to the to the United States.
And likewise, on the immigration issue, do you think there will
continue to be a backlash in an effort to contain immigration, to
stop migration between different countries?
A lot of the solutions to discourage disorderly immigration, which,
according to the International Rescue Committee, now stands at around
70 million refugees and displaced people.
This is a record, a historical record.
And so, you know, I think there is there might be a predeliction to
go for a short term immediate solution to immigration, such as to ban
it outright. But I think that doesn't really help solve the more
structural problem of a lack of employment and opportunities in these
developing nations.
And so the risk of, to my mind, the risk of disorderly migration
actually will increase rather than decrease.
And I think that that will lead to much more aggressive public
policy in developed countries around immigration.
How do you see the US-China relationship going forward from here?
There's been a lot of blaming, a lot of tension even before the
pandemic. What's your outlook for how the U.S.
and China will trade and work together or not work together going
forward? Well, you know, I, I think I do it much more as we're kind
of in the middle of a separation and not a divorce in the sense that
there are lots of of the fissures and the challenges that the U.S.
China relationship has had are not new on whether it's trade with us
among foreign direct investment concerns around the splinternet.
Concerned about national security, I mean, there's a long list of
challenges as these two economic juggernauts continue to try and
figure out, you know, how to work together.
So the relationship is very integrated as far as I'm concerned.
And it's in everyone's interest, not just the U.S.
and China, that that relationship continues and doesn't fracture.
What do you think is the most optimistic thing about the economy going
forward? I do remain optimistic in many respects.
You know, we just take the last hundred years we've had enormous
economic, political and, you know, pandemic like disruptions.
And we've always gotten through it.
And, you know, I just fundamentally believe that the world and human
progress is not going to end because of a 2020 pandemic.
And now that doesn't mean that there could be costs that we should be
mitigating for we could avoid if we did things better.
I mean, that's that that's absolutely the case, which is why everyone
from individuals, communities, governments and corporations are all
working around the clock to find not just a vaccine and cure, but to
really try and get back to work and and try and do the best we can in
these circumstances. But, you know, fundamentally, I'm optimistic.