Every Oct. 16 is World Food Day. This year’s theme was “Grow, nourish, sustain. Together. Our actions are our future”. Pre-COVID, Statistics Canada reported that almost 4 million Canadians didn’t have enough food to eat. In May 2020 their snap survey indicated that 5.5 million Canadians went to bed hungry. That’s one out of every seven people in Canada. The trend is going the wrong way, here in Canada and around the world. The UN goal of Zero Hunger by 2030 is in jeopardy. Juxtaposed against that, the National Zero Waste Council estimates that the average Canadian household throws out 140 kilograms of edible food per year.
Real estate brokerage Royal LePage reported last week that “despite the steepest economic downturn since the Great Depression, Canadian house prices have soared, with the aggregate price up 8.6 per cent over the past year… Most Canadians have sharply reduced spending on discretionary goods and services… and with mortgage rates at record lows, many have refocused on housing investments, be it renovations to accommodate work-from-home needs, a recreational property or a new property better suited for the times,” Royal LePage CEO Phil Soper said. Juxtaposed against that, insolvency firm MNP, in its quarterly survey reports that “nearly half of Canadian households- 47 per cent- said they were $200 or less away from insolvency in the third quarter of this year, up from 43 per cent in the early months of the pandemic. A full 26 per cent said they are already effectively insolvent.” MNP’s debt index- a measure of how well households can handle their debt- dropped to its second-lowest level, higher only than in March of this year, at the start of the lockdowns, reports HuffPost.
In a Forbes article, George Calhoun explains that the COVID-19 outbreak is what the economists call an exogenous shock — an unpredictable force crashing into the economy from outside the normal framework of the business cycles, supply and demand, trade patterns, monetary and fiscal policy. “The impact has been more sudden and more severe than any previous macro-economic dislocation.” Governments have responded with massive economic stimulus programs; many economists are warning that these trillions will translate to a classical explosion of inflation. A recent headline from the Financial Times: “Coronavirus Will Awaken Inflationary Forces Before The Year Is Out.”
Juxtaposed against that: prices are falling. In fact, inflation in Canada has been close to 2 per cent per year for the past 25 years or so, and today is only 1.4%. Says Calhoun, “In some cases, prices did not merely decline. They actually went negative — sellers paid buyers to take the product. This has happened with fundamental commodities including crude oil, electric power, and, most notably, credit itself (negative interest rates now hold for trillions of dollars of sovereign and corporate debt). The Wall Street Journal ran a headline: “Specter of Deflation Rises Again.”
Will the mindset of economists and policymakers eventually give way to… new ideas—perhaps even a paradigm shift? Why should the economy behave in 2020 the way it did in 1970, or 1919? Are we missing the extraordinary impact of new technology?
COVID-19 has shone the spotlight on several long-standing problems: inadequate support of the most vulnerable, inadequate co-ordination of healthcare services – these are awaiting new ideas. Say Don Drummond and Duncan Sinclair in a C.D. Howe Institute monograph, “The COVID-19 spotlight has accelerated talk about other fundamental issues, including the social determinants of health, such as filling gaps in social assistance by a Guaranteed or Basic Income and, more generally, coming to grips with poverty as a major threat to health and well-being. Perhaps the best example of the pandemic’s accelerator effect has been the almost lightning speed with which the federal government introduced the Canada Emergency Relief Benefit and the Canada Revenue Agency processed 11 million applications. The speed with which governments have shown they can act is a potential ‘game changer.’ Never again should it be accepted that a problem is too large, too complex or will take too long for governments and their bureaucracies to solve!”
Much has been revealed in the last eight months: telemedicine is finally a reality. Banking, entertainment, travel, education – all are being transformed, and it’s no longer hard to see how it will happen. Intellectual systems — like traditional economics — may lag the change cycle but will not escape it.
Dian Cohen is an economist and a founding organizer of the Massawippi Valley Health Centre.
Cohendian560@gmail.com
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