By Andre Carrel
COVID-19 is not the world’s first pandemic. Humanity recovered from the Black Plague and from the Spanish Flu. We will recover from this pandemic too. The measures imposed in an effort to bring this pandemic under control are leaving many with time on their hands. We would do well to use at least some of that time to reflect on what will follow the pandemic.
Hundreds of billions of dollars are being spent by governments, federal and provincial, on a range of responses to the pandemic. Many governments, including the federal government, had grown accustomed in recent decades to run deficits in spite of a fairly robust performance by our economy. In addition to these public expenditures, businesses, with few exceptions, will have lost billions of dollars as a direct result of the pandemic. The billions committed in response to the pandemic are not drawn from approved budgets, nor are they withdrawn from savings accounts. The future will have to pay for the COVID-19 billions.
The last economic hick-up, the 2008 financial crash, occurred over a decade ago. Governments responded to that crisis by “inventing” billions of dollars to throw at the economy, much as they do now. The difference then was that the cause of the crisis was the economy itself, that is to say the ideology governments had embraced since the 1980s to manage the economy. The remedy governments prescribed to fix the 2008 debacle adhered to the same neo-liberal/neo-conservative ideology at the root of the trouble: corporate tax cuts, privatization, and belt-tightening for public services. As a result, millionaires became billionaires and union workers became zero-hour contractors.
Several generations ago, society went through back-to-back catastrophes that, from today’s perspective, are difficult to imagine: the Great Depression following the 1929 stock market crash and on its heels the Second World War. The cost of these two disasters, measured in both human and economic terms, was of a magnitude that made “business as usual” unthinkable. An economic theory developed by John Maynard Keynes, asserting that an economy is driven not by supply but by demand with the driving factor being levels of employment, was adopted.
Keynesian economics not only paid for the losses society suffered in much of the first half of the 20th century, it produced the resources need to bring about unemployment insurance, old age pensions, public health care, affordable post-secondary education, and improved public infrastructures in transportation, communication, and public health.
Forty years ago we changed direction. The government was no longer the solution, it was the problem. And yet, as the current debacle clearly demonstrates, it is not to the Googles and Amazons of the world that society turns to charter planes to repatriate stranded citizens or to support exhausted health care workers, it is government. Deeply indebted governments are compelled to go deeper in debt as billionaires bemoan their stock market losses.
It may well take a few more months before we find ourselves on the downhill slide of this pandemic’s curve. How will we deal with the aftermath? Will we embrace the 2008 recipe, to restore a sense of security for “too big to fail” corporations and their executives? Will we raise secondary education tuition fees and enact new measures to combat welfare fraud to pay for it all? How about taking another look at Keynes’s “The General Theory of Employment, Interest and Money”?