Interviews

An Interview with Elliot Harris: UN Chief Economist

Elliot Harris is particularly notable for his studies on the African Continent, but is also more generally a very successful economist from who we all have a lot to learn as he presented his opinions on a number of issues facing the world today.

What role do you think international institutions should be playing in guiding foreign and domestic policy, especially as the 21st century progresses?

That is a good question. I think we are living now, in an age where a lot of the problems that we face cannot be handled by individual countries acting on their own.

Climate change is a very clear example. No one country can fix the problem and we can only solve the problem of climate change acting together, and that’s the role that international organizations could play. They could facilitate having individual countries come together to act in a group act collectively to address some of these problems, that they can’t deal with on their own – climate change is one of them. We also have Multilateral trade as a major driver of our development and our growth over the last 40 or 50 years on again. This works so well because we have an agreement on the rules of the game, and those rules come from the multilateral community coming together to decide jointly; to decide that this is what they want to do. So there is a lot that has to happen, but we need to deal jointly with what we think international organizations can do to help countries to come together to make these kinds of joint decisions.

Do you believe that institutions like the UN have a role in directing the domestic policy of countries and trying to influence the way you know they operate within their borders?

I would certainly not use the word direct domestic policy: that we wouldn’t want to do and wouldn’t be able to do. But I do think that there is a role for an international organization like the UN to point out to individual countries what their responsibilities and their contributions are – what they could do to help improve situations in a range of different areas. Now the UN would not be able to dictate policies. They couldn’t say ‘thou shalt do this’ or ‘thou shalt not do that’. But we can point out the range of policies that would contribute to making a positive step forward on any given agenda. So, we would say that moving towards reducing greenhouse gas emissions is a positive step and will help to combat climate change. We would encourage countries to set up domestic policies that help them to reduce their greenhouse gas emissions. We can’t force them to and we can’t blame them If they don’t, but we can encourage them to and demonstrate why makes sense.

In that case, do you think the UN needs more power in terms of influencing policy, given, for example, Trump pulling out of the Paris agreement?

I don’t think we need more power. I think we need to have very good arguments. We need to show countries that it is in their interest to do certain things or not to do certain things. Sometimes it’s difficult when we’re talking about a global objective, like reducing the impact of climate change. It’s hard to show in an individual countries case what their specific interest might be or what that improvement might be on. Sometimes it needs a little bit of convincing, if you will, to bring out the arguments that it is a good thing for a country in its borders to do things in a certain way to reduce their greenhouse gas emissions. Even if that reduction benefits other countries as well, it Is still a good thing for the country in question. And so that is a sort of argument that we could use. We do need to argue, and sometimes it’s a very good thing that we also have science. The Proof behind the arguments to support what we think countries should do and what we recommend they should do.

What would you say to the critics who claim that the U. N should be more accountable, which is in the motivation for, for example, Trump’s rejection of the UN and his rejection of globalism?

I think I’ll keep those two things separate. The UN has to be accountable to its member states and all of you because it’s an institution that works on behalf of every individual and if there are times when the UN’s actions or lack of actions lead to outcomes in which people are not satisfied with them. They should hold us to account. We should be able to explain what you’ve done, why we’ve done it. And if we find that this was not the right way to handle something, we should be capable of learning from our mistakes. But that holds for every institution, for us in particular, because we’re a global institution and, if you will, beyond the reach of individual citizens in a given country. But I don’t think that that is necessarily the reason why we’re seeing a loss of support for multilateralism per se. I think that we are living in a time of great and rapid change, and people are uncertain. Technology, for example, is changing the labour markets and people are afraid of essentially what is to come. They don’t know what’s to come. They find it difficult to explain it to themselves, so they are much more open to suggestions. Oh, you’ll be safer within your borders, you’ll be safer looking inside. We should put our country first and not think about what the rest of the world needs or expects from us. That’s a very easy argument to make. But in our view, it’s dangerous in the sense that it allows countries and people, individual people to think that that is a solution that turning inwards is a solution to the problems that they’re facing. In many respects, it’s not so technology is not something that respects national boundaries. So, if we find the technology is generating unfavourable outcomes or things we worry about, then we need to come together to manage the technology more effectively.

What do you think are going to be the long-term impacts of the Coronavirus?

I think we’re going to see a major disruption in trade, In global value change. We’ll see a lot of countries are experiencing a downward tip in actual economic performance. If we’re not careful and we don’t react with contracting policies. We may find that growth slows, and in some cases, people may fall into unemployment, some growth of jobs creation may fall and some people may lose jobs unless there is an effort to produce policies to counteract the effect. Now the longer-term impact, I think may very well be a positive one because this crisis has come up and demonstrated a need for a coordinated response.

 And so perhaps, with time, we will learn how to handle this kind of massive outbreaks or these sorts of dangerous developments in a coordinated fashion at the very beginning and allow us to respond more rapidly or more effectively. Hopefully, that will be one of the consequences of this outbreak.

Do you think perhaps that there’s a chance of globalism being seemingly rejected in some states most hit by it?

I think it could be used as an argument by those who want to move us away from a coordinated multilateral incorporated approach. For those who want to say, ‘it’s a bad thing to cooperate with and to be in contact with your neighbours and with people from around the world’, this is the sort of thing that they can use as an argument. They can say that if we are not in contact if we’re not trading if we’re not traveling, then we are less vulnerable and we’re less exposed. That is true. But it would also mean that the quality of life is a fundamentally different one. And I think we would need to be able to weigh the pros and cons. And if we do so, honestly, we’ll find that the cons of that kind of argument far outweigh the pros. It is not a solution to say let’s hunker down behind tall walls and hope it all passes us by.

You’re a member of the UN environmental program. How do you believe that developing industrialized economies should balance economic growth but also environmental protection and sustainability?

Let me put it to you as an assertion and I firmly believe that if you want to continue doing economic things, having economic activities now and into the future, you have to pay attention to sustainability. If you destroy the environment around you, at some point, there will be nothing left to work with. Our entire economies are based upon being able to use natural resources and to produce goods and services that people want: if we exhaust all those resources, well, our productions are going to stop. If we create so much pollution that our people are unhealthy, then they are not going to be able to enjoy the consumer goods that we’re producing for them. If we do not have air that we can breathe, then all bets are off. It is short-sighted, I think, to try to separate the two; to say it is economic activity on the one hand and environmental protection on the other. They have to go hand it and it’s been our mistake thus far that we’ve allowed them to be thought of separately. We’ve allowed people to see it as a trade-off between economic performance or environmental preservation. It’s not. It’s not one or the other, they go together and anyone who wants to be making a profit in 30 years had better be looking out for environmental sustainability. Sustainable development is exactly what is bringing all three elements to today. It’s the economic side, It’s the social side and the environmental side. We think all three have to be looked at together. Otherwise, none of it is going to work overtime.

Do you think that the UN is a way of solving the collective action problem that countries now have at the moment?

I think it’s a forum that can help with that. Of course, every country has to do its bit. Every country has to make an effort to protect nature and to preserve natural resources and manage them well. But again, I think the UN serves as a platform, as a forum where countries can come together and where they can work jointly to achieve common aspirations – common outcomes. I think that’s what the UN was all about in the first place and that’s a role that we play now, and with increasing importance going forward.

I think it’s a place where we can come together. We can bring together the science that should inform our decisions and we can bring together the different countries and we can have this balance of a discussion where each country sees what his interests are but is informed about the interests of the other. We try to find a compromise solution that satisfies all countries, but at the same time preserves the environment carries us forward towards sustainable development.

Therefore, do you think that wealthy countries have a greater responsibility to help the environment than say developing countries?

No, because I don’t think that there’s a greater or a smaller responsibility. Everybody has the ultimate responsibility to do everything that he or she can. Individuals, communities, countries in the global community. I think there are differences in the capacities of countries to do what needs to be done. Some countries have more money more technology so they can make a bigger contribution, if you will, because they have these resources, but I don’t think it’s a greater responsibility per se. I would not like anyone to say I am not responsible because I am poorer. Everyone is responsible. Everyone can contribute. Everyone must do so.

Right. So, you’re an expert on fiscal policy in Africa. Given that Lebanon has just defaulted, how do you think that developing countries broadly can improve their fiscal policy?

I think we have two circumstances we have to address: one is that many developing countries still have some room for improvement in their domestic resource mobilization. There are many countries where their tax to GDP ratio relatively low and there is scope to improve that. That generates more resources that the government can use for overall development for investments and infrastructure for creating the conditions for growth.

But the second issue is that, partially as a response, as a result of not having enough domestic revenues, many countries have put themselves into a highly indebted position. They’ve accumulated a lot of obligations and they have to pay them back and that the problem here is that the more debt you have contracted in the more dead service you have to pay, The less money you have leftover to do your investments to make your social transfers to educate your children to make sure that the conditions for growth are favourable. And that I think is the real balancing act. Countries have to try to accelerate their investments, accelerate their growth, accelerate their development, even if they don’t have the resources today. But they need to be very careful in managing the debt that they incur when they try to borrow the resources so that they can expend today. So that’s a problem for all developing countries. If that is not well managed, a country can very easily run into a situation where he can no longer afford to pay the service on the debt that they already had then that is very serious because it then reduces their ability to gain access to more money in the future – to make the kind of accelerated spending that they need to do.

On the subject of debt, do you think the One Belt One Road initiative, on the whole, helps these developing countries or does it lock them into the debt, as we see in Sri Lanka- or does it empower their corrupt regimes?

That’s a loaded question if I’ve ever heard one, but I think it has [helped them]. The potential to be a great motor of development is there because it focuses on the kinds of infrastructure that connects countries and communities. And I believe that that is a very positive factor for growth and development. Of course, a lot will depend on how these different forms of infrastructure investment are financed and, in many cases, it will involve a certain degree of debt. And that is where the real responsibility of the receiving country and the giving country come in. They have to agree on principles for managing any new debt flows, so that everything is transparent: Everybody understands how much is being borrowed at what conditions and on what terms.

The infrastructure is going to help generate more growth in the future, improve the connectivity of individual economies and societies and overall improve development. So that is a challenge in every investment. You have to try to find the right balance between what you are going to borrow and what you’re going to use it for; what the return on that investment might be and what the repayment of the debt that is contracted might be.

As to the question of whether or not the investments under BRI serve to prop up regimes that perhaps are less than they should be: That again is a question for governance. In other words, you want to be sure that when a decision is made to invest, it’s made for the right reasons. Not to provide a favour to some political party or to line somebody’s pocket, it has to be an investment that generates the kind of improvement that’s expected.

Otherwise, it’s not worth doing; and vigilance, accountability, transparency above all, those are the best guardians. I think this is the best guardian against any kind of corrupt practices, not just in the One Belt One Road, but applied to every form of public action. We should insist on it as citizens. We should insist as citizens on that level of transparency so that we know what is being done with our future.

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