PIIE launches Rebuilding the Global Economy policy initiative

An introduction by PIIE President Adam S. Posen

The world economy is experiencing a corrosion of globalization. The web of economic and commercial ties across the world is fraying, with more frequent and larger gaps in it—even as trade in goods, services, and technology shifts locations and, in some places, grows. For globalization is multidimensional, encompassing much more than international trade, though panic about trade gets most of the political and media attention.

The economic and social impact of the pandemic has not just accelerated the corrosion of commerce and relationships across borders but also made undeniable the extreme vulnerability of the world's population—including in the United States—to disease, economic insecurity, and exclusion. As a result, the risks of the most genuinely existential threats—climate change, technological slowdown, racial and gender-based oppression, digital disinformation and removal of privacy, aging populations, and the likely recurrence of epidemics—have risen.

That is why we at the Peterson Institute for International Economics (PIIE) are providing work plans for Rebuilding the Global Economy. Heading into 2021 (and the next presidential administration), we are telling policymakers what needs to be repaired by defining critical and practical priorities and solutions. Our work plans will be published on a rolling basis through the end of 2020, culminating in the release in January 2021 of a comprehensive policy program for rebuilding. They will take the form of memoranda to policymakers and policy briefs, accompanied by data visualizations, blogs, videos, and virtual events with experts from our team of fellows and our board of directors.

The starting point for our Rebuilding the Global Economy program is a set of about 50 memos targeted at specific senior policymakers in the US government, the European Union, and international organizations. In these memos we specify what the policymakers and their agency or department should prioritize to rebuild the global economy in their remit, crucial actions they should stop or reverse immediately, and identify institutional relationships they need to change or repair.

The memos to senior policymakers from PIIE board members and senior fellows include:

• Lawrence H. Summers to the US Treasury Secretary
• Evan G. Greenberg to the US Commerce Secretary
• Jason Furman to the Director of the National Economic Council
• Karen Dynan to the Chair of the Council of Economic Advisers
• Chad P. Bown to the US Trade Representative
• Nicholas R. Lardy to the Chair of the US Delegation for Bilateral Economic Talks with China
• Stanley Fischer to the Chair of the Federal Reserve
• Pinelopi Koujianou Goldberg to the President of the World Bank
• José De Gregorio to the Managing Director of the International Monetary Fund
• Anabel González to the Director General of the World Trade Organization
• Mark Carney to the Financial Stability Board on climate change
• Peter Orszag to the International Monetary and Financial Committee on international debt
• Jean Pisani-Ferry to the President of the European Commission
• Olivier Blanchard to the President of the European Central Bank

The memos are being released in tranches by agency or issue area here. They will be accompanied by online public events, beginning Thursday, October 22, with virtual discussion about the US Commerce Department and US Trade Representative, followed by a discussion Monday, October 26, on the White House and strategic dialogue with China, and further events in the coming weeks and months, all livestreamed here.

In January 2021, PIIE will release a comprehensive rebuilding blueprint featuring more developed versions of the key policy proposals and set out how they fit together globally across countries and issues. In March 2021, we will launch an annual conference on Rebuilding the Global Economy in Singapore, co-hosted with the Lee Kwan Yew School of Public Policy to facilitate inclusive global dialogue.

Rebuilding is a very deliberate and, we believe, apt verb for the task at hand. The global economy continues to exist, and it is necessary for the future well-being of all people, whether or not governments decide to withdraw from it. People and nations need a safe structure in which to conduct their economic lives, to join communities, and to be left in privacy. The building, however, has been allowed to sink into disrepair and, in some ways, has ceased to be fit for purpose. The architecture of the 1940s, updated on the fly in the early 1970s and again after 1989, does not meet today's standards of inclusion and accessibility, does not have enough room for many growing (and some already grown) economies, and is inadequate shelter against the environmental threats we now face.

But the global economy is repairable. What is needed now are actionable plans setting out clear priorities for economic policymakers. These plans must reject the status quo and must be objective and specific in their assessment of what can be salvaged and repaired, as opposed to what should be torn down and replaced. This is where the Peterson Institute can make a meaningful contribution.

Our mission and record of success are precisely in providing the sound research-based policy proposals that make practical constructive change possible. Some of the positive international policy responses to the economic crisis created by COVID-19 bear the mark of PIIE influence or intellectual ground-laying:

• Coordinated central bank provision of global liquidity
• Sufficiently scaled and rapid fiscal stimulus packages to stabilize consumption
• Calling out and reversal of the EU hoarding of traded medical goods
• Positive steps by Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) members and other nations to move forward and to specifically keep medical trade flowing
• Consideration of new debt relief facilities and debt standstills at the IMF
• Federal Reserve shift to broader and distributional measures of labor-force slack
• Expedited mechanism of stimulus distribution
• Design of pandemic solidarity funds for the European Union
• Adoption of basic income support in Brazil
• Most influential case against vaccine nationalism

We have limited our recommendations to policymakers in official positions because that is where actions must be prioritized and implemented. Nongovernmental organizations and interest groups—including labor unions, business organizations, environmental watchdogs, and representatives of excluded groups—must have a voice in this process, but the Institute does not presume to speak for any of them. We hope to engage them in discussion of our proposals over the coming months. Similarly, we have directed our memos to American, European, and especially international officials, where our senior fellows have experience, standing, and background. The officials of other regions of the world and some international organizations beyond our scope of research should be at the table just as much as G7 governments. We look forward to engaging with them as well.

Starting now, PIIE will track the state of the global economy and the success of policy measures adopted to rebuild it in an accessible online format, to provide ongoing assessment of progress.

Media contact: PIIE media relations and communications manager Michele Heller, [email protected].