COVID upheaval may prompt long overdue repudiation of selfishness disguised as austerity

OTTAWA—More than a decade has passed since, during the 2009 financial meltdown, we heard the now-resurrected refrain: “We’re all socialists now.” That ironic phrasing is, of course, a recognition of the reality that, in the worst of times, people turn to government to inject large quantities of money into the economy in hopes of resurrecting business activity. The early stages of COVID-19 have been no different. Here, Prime Minister Justin Trudeau has unrolled the largest, most far-reaching bailout package in modern times, totalling an astronomical $200-billion-plus. Canada’s central bank is spending billions to keep credit from drying up in the financial system and the provinces have opened up their treasuries. But in Canada and across the Western world, medical systems are largely being proven inadequate, with equipment running out, staff shortages, and hospitals in danger of being overloaded. And millions living paycheque-to-paycheque are in danger of winding up on the street as the economy freezes up.

The lack of social infrastructure is a devastating reminder of the state of public resources and preparedness after half a century of inexorable conservative efforts to hollow out government in the name of austerity and private sector superiority. Championed by the likes of Margaret Thatcher and Ronald Reagan, and often bankrolled by the super-rich, this campaign to undermine progressive theory in favour of a right-wing, anti-government mentality has been one of the most successful political undertakings of the age. It has taught voters to expect everything for nothing while exacerbating the negative impact for average people of profound shifts in technology and commercial patterns. The wealthy and the CEO class have seen their fortunes expand grotesquely while workers have fallen behind as governments cut support programs, weakened income redistribution, and chopped regulation while freezing minimum wages, thwarting union participation, and bringing in tax regimes that favour the rich.

These developments have contributed to widespread economic anxiety in the West as well paying, secure jobs have been supplanted by the gig economy, wealth inequality has reached literally incomprehensible levels, and once-thriving communities have fallen on hard times. And the extent of this transformation has hardly penetrated mainstream politics. As Nobel Prize-winning economist Joseph Stiglitz summed it up: “Those at the top have learned how to suck out money from the rest in ways that the rest are hardly aware of—that is their true innovation.” While the implications of the current crisis are unknowable, there is a school of thought that this upheaval will lead to a re-examination of this ingrained austerity mentality with an eye to rebuilding more generous, socially conscious economic and social structures.

In Canada, the public is very much invested in government action and the response from political leaders, particularly at the federal level, has been more all encompassing than anything since the Second World War. It surpasses what the federal government felt necessary in the 2008-09 recession, (although Stephen Harper did set aside his small-government fixation to run a $50-billion deficit). Writing for Public Policy Forum, Sean Speer, a former adviser to the Harper government, and Robert Asselin, a former senior staffer in the current Liberal government, said, “Policymakers can no longer think about economic growth and public policy in the same way as in the past generation and a half … the idea that Canada can just rely on traditional market forces to remain competitive while everyone else is adopting more active industrial strategies is foolhardy.”

COVID-19 has also deeply reinforced awareness of class divisions, with many low-income workers having to confront the virus daily. Writing about how this disproportionate impact on the poor, immigrants, and other less-privileged society members may carry over into the post-virus era, MIT Technology Review editor Gideon Lichfield said: “As with all change, there will be some who lose more than most, and they will be the ones who have lost far too much already. The best we can hope for is that the depth of this crisis will finally force countries— the U.S., in particular—to fix the yawning social inequities that make large swaths of their populations so intensely vulnerable.” A similar point was made in a recent, eye-opening editorial in the Financial Times of London, which wrote: “Beyond defeating the disease, the great test all countries will soon face is whether current feelings of common purpose will shape society after the crisis. “Governments will have to accept a more active role in the economy,” the editorial said. “They must see public services as investments rather than liabilities, and look for ways to make labour markets less insecure. Redistribution will again be on the agenda; the privileges of the elderly and wealthy in question.

Policies until recently considered eccentric, such as basic income and wealth taxes, will have to be in the mix.”

 Les Whittington is a regular columnist for The Hill Times.

The Hill Times