Since the second half of March, more than three million Canadians have applied for jobless benefits and emergency income aid due to the coronavirus. This week, the federal government started taking applications for the Canada Emergency Response Benefit. The CERB will directly deposit $2,000 a month into the bank accounts of Canadians who qualify.
The government has already acknowledged there will be glitches, which it has promised to fix. What’s important is that, in two or three weeks, a huge surge will sweep through Canada’s shutdown economy, as households spend the replacement funds paying past-due bills and restocking their bare cupboards.
Alongside the threat that COVID-19 could overwhelm even the most modern hospitals, the pandemic has revealed several serious weak points in profit-driven economies. Indeed, with most service industries shut down — a sector that comprises 77 per cent of the U.S. and 70 per cent of the Canadian economies — business voices warn of an imminent recession and perhaps a big D depression.
In the U.S., 10 million people lost their jobs in late March, as several — but not all — states closed all non-essential businesses. The U.S. president openly emphasized COVID-19’s effects on the economy, rather than on the population. He announced that U.S. governors were on their own to handle their states’ emergency medical responses to the pandemic.
Governors like New York’s Andrew Cuomo, juggling inadequate resources among a patchwork of private and public hospitals, are blasting POTUS for blatantly trying to find some way to exploit the crisis. State governments are not just on their own; they are bidding against each other and the federal government for essential medical supplies.
While scholars will spend decades parsing what happened during the pandemic, some lessons seem pretty clear.
1. In dealing with a global hazard, co-operation works better than competition. Everyone’s survival depends on people being able to get along.
Facing this pandemic, co-operative householders are more likely to stay home when asked, and co-operative medical services are more likely to lend equipment back and forth across jurisdictions. The U.S. president sowed discord by undermining top U.S. experts and encouraging competitive bidding for essential medical equipment, as well as promoting an unproven prescription drug.
There’s no question which culture has higher survival rates. Co-operative California is sending 500 ventilators to competitive New York City, which needs them desperately.
2. Some of our most valuable workers are also the most poorly paid. We’re re-defining who and what’s “essential.”
Horrifying images on the news, of trucks full of bodies outside hospitals full of patients lining internal corridors, keep reminding us that the cleaners, orderlies, doctors, nurses and other medical staff must be driven by something greater than a paycheque or even duty. That’s why, around the world, including in Canada, grateful citizens stand outside their homes and cheer the health-care workers, retail clerks, delivery drivers, stockers and helpers who provide essential goods and services while the rest of us are staying home.
3. Globalization breaks down just when you need it most.
“The new coronavirus is shaping up to be an enormous stress test for globalization,” warned the March 16 issue of Foreign Affairs magazine. “… As critical supply chains break down, and nations hoard medical supplies and rush to limit travel, the crisis is forcing a major reevaluation of the interconnected global economy.
“Not only has globalization allowed for the rapid spread of contagious disease but it has fostered deep interdependence between firms and nations that makes them more vulnerable to unexpected shocks. Now, firms and nations alike are discovering just how vulnerable they are … “
In the 1980s, Ronald Reagan and Margaret Thatcher birthed the Conservative myth that tax cuts would stimulate the economy. Thatcher used the term TINA, “There is no alternative,” to tax cuts, public service cuts, rush hours and the whole capitalist, militaristic, colonialist, fossil fuel-driven, class-ridden, racist, sexist and generally callous world economy.
With COVID-19, Mother Nature has overturned TINA. Having the Angel of Death walk among us humans has stimulated our ingenuity. Suddenly organizations of all kinds are learning how to work remotely, via shared documents and live videos. We’re burning a lot less fuel — no rush hour traffic jams, no bustling crowds lighting up the big office buildings, no planes full of guests to destination weddings. Although humanity is paying a terrible price, the earth is getting a rest.
And so is the economy, which raises an intriguing question: Between COVID-19 and oil prices lower than $10 a barrel, most of Canada’s capitalist economy stopped last March. Humanity persisted, nonetheless. Now the question is, do humans drive the economy, or does the economy drive humans?
In some ways, with the spontaneous “caremongering” movement, we’re back in the gift economy, the goodwill economy, where people run errands for neighbours and share their food (at a distance), and learn how to sew face masks to protect medical workers. Manufacturers small and large are retooling their production lines to turn out life-saving equipment, often gratis.
But modern economists don’t count gifts in their calculations. They only count paid transactions. With everything shut down, spending in Canada has slowed. Almost our whole economy is based on retail or providing services.
Of course, all those three million newly unemployed people would gladly do their part to boost the economy, if only they had money to spend. Canada is very similar to U.S. in that, “Consumer spending … accounts for more than two-thirds of U.S. economic activity,” Reuters reported in August 2019. And this from Bloomberg: ” … Consumer spending, or consumption as the bank likes to call it, was the single biggest contributor to economic growth last year and is expected to retain that title in 2020.”
Hence my prediction that the CERB payment will produce a surge, in the same way that the Canada Child Benefit, which acts as a basic income guarantee for families with children, has been credited with increasing Canada’s GDP. Spain’s finance minister has already announced similar emergency funding in response to COVID-caused economic crises, stating that the payments will evolve into a universal basic income.
Figures from the Canadian Centre for Economic Analysis show that since 2016, the Canada Child Benefit has injected $71 billion into the economy, or 2.1 per cent of Canada’s total GDP. Every CCB dollar generates nearly $2 in economic activity, and returns more than half ($0.55) through taxes, $0.30 to the federal government and $0.25 to provincial governments.
In short, government cash injections into households may be able to help a consumer-driven economy chug along at half speed for quite a while, probably much longer than similar injections into mega projects such as pipelines.
Everything may look different again by the fall. The economy will have to change to accommodate contagion concerns that are likely to continue for two or three years due to uneven isolation rules. Social distancing may doom some industries, such as ocean cruise lines. Most of the changes will decrease carbon emissions.
“Nature is sending us a message,” said Inger Andersen, the UN’s environment chief. “We are intimately interconnected with nature, whether we like it or not. If we don’t take care of nature, we can’t take care of ourselves … There are too many pressures at the same time on our natural systems and something has to give.”
Indeed, capitalism’s insatiable demand for growth lies behind the climate crisis, desperate poverty and the Saudi-Russian price war over oil. Warning signs are flaring all around the globe, as wildfires, locust invasions, floods and droughts. A tiny protein molecule wrapped in fat has brought us all a wake-up call with the spring equinox. Right now, with physical distance requirements challenging basic aspects of the service and retail sectors (in effect, putting them out of business indefinitely) the world economy is broken. Right now, while we recognize that we’re all in this together — albeit two metres apart — now is the time to recognize that endless perpetual growth for profit is an illusion. Now is the time to figure out how human beings are supposed to fit into nature, and to re-introduce equity and justice to our financial and ecological economies.
If not, well, nature has much deadlier viruses out there that we have yet to discover.
Award-winning author and journalist Penney Kome has published six non-fiction books and hundreds of periodical articles, as well as writing a national column for 12 years and a local (Calgary) column for four years. She was editor of Straightgoods.com from 2004-2013.
Image: Tim Dennell/Flickr
Editor’s note, April 9, 2020: An earlier version of this story misspelled the last name of the UN’s environment chief. She is Inger Andersen, not Anderson.