Kevin Page writes that we need to do some hard thinking about our economic future:
The political and economic stakes are high. With the prorogation of Parliament, triggered in part by the resignation of a finance minister, the government will table a Speech from the Throne in late September.
While I’ve been reading spy novels, [civil servants] are looking over the shoulders of colleagues in the European Union and possibly US presidential candidate Joe Biden to see what they are planning for recovery. They are assessing recently announced provincial (e.g., Ontario and Alberta) and municipal recovery plans. They are reading geeky disquisitions on possible economic scenarios for the world economy—with and without a vaccine—and trying to find a governing philosophy for fiscal policy in a world awash in debt.
If we rely on past (stimulus-type) policies to guide economic recovery plans they will likely be misguided and fall dangerously short. We cannot collapse present policy thinking into the past.
Plans are required for multiple scenarios. Uncertainty cannot be an excuse for no plans. As the saying goes, “No plan, no action leads to no results”.
For 40 years, deficits have been the bogeymen of our politics. But, Page writes:
The economics of deficits have changed. With next-to-zero interest rates and no inflation in near sight, there are virtually no bottom-line balance sheet impacts of running larger deficits. All the risks are punted to the future. Debt creates instability risks. If years down the road, inflation makes a comeback, interest rates will rise. The carrying cost of debt will skyrocket. Higher debt interest costs will crowd out spending on key policy priorities.
It's critical to think about what those deficits can accomplish:
Targeted policies are essential. The process has started with the evolution of programs like the wage subsidy and employment insurance. With high but declining unemployment rates and no vaccine in sight, expect this to continue but with increased focus on people and businesses locked out of the recovery.
They must be targeted to clear objectives. In Europe and the United States, that process has begun:
The European Union has already launched its recovery policy path to the future. They have recently agreed to a trillion dollar plus (Canadian) recovery fund. The policy framework is composed of five big missions—cancer, climate change, oceans, cities, and food. The missions are designed to bring evidence, resources and policy experimentation to long-term issues. Targets will be set—along the lines of President John F. Kennedy’s 1961 vow to put a man on the moon by the end of the decade.
US Presidential candidate Joe Biden will campaign on a long-term recovery policy “Build Back Better”. The high-level plan focuses on four long-term challenges—manufacturing, infrastructure, children, racial equality. While financing the challenges will depend on a presidential victory and congressional backing, the Democratic candidate is proposing government support well in excess of a trillion dollars.
In Canada, policies to address long-term issues such as climate change, income disparity, economic and health resiliency (i.e., our capacity to address the next policy shock, whether a pandemic or financial or geopolitical crisis), and competitiveness are urgently needed. Governments need to lay out a vision (a north star) and plans to build confidence and partnerships (investment). Why not pro-actively shape and drive our future—more sustainable, more equitable, more resilient, more digital?
There is a way out of this calamity. But now -- more than ever -- we need to think critically and clearly about our future.
Image: The Toronto Star
10 comments:
According to the UN's IPCC, at least 80% of fossil fuels need to stay in the ground if we are to meet our climate commitments. The only way that happens is through government action. We'll know Trudeau is serious about recovery if his plan includes no new money for oil and gas and a rapid ramp-down of current subsidies. After 92 years, Exxon was delisted from the Dow Jones. It makes no environmental or economic sense to prop up this dying industry. Money needs to be put into transitioning away from fossil fuels.
Cap
This is all about transitioning, Cap. We'll soon know how serious this government is.
Climate crisis denialism is always an excuse for continuing to poison our land, sea and air. Regardless of the climate situation we have to stop poisoning our land, sea and air.
We pay for what we deny, Toby. It simply costs more -- much more -- the longer we refuse to recognize the problem.
I worry that, as we emerge from this pandemic, our economists and mandarins and political caste will chart the future in the same way generals use the restoration of peace to start preparing to fight the last war.
The scientific community has warned us, in the clearest terms, that we must prepare for a "cascade" of crises or emergencies that may arrive either simultaneously or in some overlapping pattern. That's not to say they will be able to respond to multiple emergencies effectively. That could be too much for the most competent administration to handle. The best we might expect from them is to have a well-reasoned order of priorities that recognizes that, for the greater good, some interests may have to be subordinated to others.
Early in the Covid-19 pandemic we saw this "Sophie's Choice" dilemma at work as doctors had to decide which patients would be placed on ventilators and who would be left to a fatal outcome.
No government can anticipate what emergencies might arise and when nor can they make anything resembling life or death policies. It is enough, however, that they and we all come to grips with the reality that this may arise and that the public has confidence they will make horrible decisions based solely on greater good considerations.
This brings me back to Cap's argument. Our governments have to start looking after the public interest in priority to the interests of the Oil Patch. There is no public interest purpose served by doling out billions in fossil energy subsidies, constructing bitumen pipelines and such. That whole industry is now being kept on government life support and there's somewhere less than zero chance industry will clean up its own mess - the orphan wells and those damned tailing ponds. The sort of thinking that leads governments, Liberal and Conservative, to these practices is precisely the outlook that will impair government's readiness to deal with future emergencies.
We have been living for a while now with the notion that the government's function is to individual profit and socialize losses, Mound. The 2008 crash should have taught us that notion is folly. But we have yet to learn our lesson.
The economy was creaking long before Covid19.
The economy has long been propped up with subsidies to business be it direct or in the form of reduced environmental protection, reduced taxes, levies,royalties or even that darned red tape.
We have never had a true and honest economy, capitalism be damned.
Our wealth has come from the exploitation of less developed countries ( smaller armies) and unrestricted resource extraction.
We live in a self promoting sham that values little more than the winner take all.
Our world is driven by valueless industries and services that exist only to produce capital.
All this happens whilst those that produce the necessities of life, farmers , fishermen and those that protect our water supplies are reduced to bystanders.
When market values Facetime and Zoom as the more important investments in life then ; Houston we have a problem!
TB
Indeed, we have a problem, TB. COVID has made it clear that our "essential workers" are also our lowest-paid workers.
And yet, by and large, we still are electing right wing politicians who pander to that vaunted GDP and the corporations that demand it grow exponentially on a quarter by quarter basis.
In addition, our important wildlife populations as well fishery resources are being depleted at an amazing pace. It boggles the mind that the only population that continues to grow at a at an uncontrolled rate is the human one, the one that is most destructive to our earth's finite bounty.
We "manage" wildlife populations to control their numbers while us humans are rolling along with uncontrolled scorched earth policies that will see more and more of us either starving to death or being destroyed by civil unrest. What could go wrong?
Like the little boys in William Golding's Lord of the Flies, we're hellbent on burning down the island, Lulymay.
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