Note: This article was published March 26, 2020. Due to the rapidly evolving nature of the COVID-19 pandemic, some of the information in it may no longer be current.
Chief among the problems with the world’s response to the SARS and Ebola epidemics were the lack of cooperation from local governments to communicate with other countries, centralize a response, and allow health workers inside the countries in question.
What matters to the average Canadian, and the average university student, is not the macro response. What worries the majority of Canadians are the economic impacts.
Restaurants, bars, hotels, airlines, government buildings and most of everything else are closing.
The economy of a free market system is built, from the top down, on trust. The average person trusts they have enough money in their pocket to go out for a beer, take a flight, and buy clothes. They trust they will have more money coming in, and that it’s safe to go to the bar.
When an entire society decides they can’t go to the bar anymore, which we have out of caution for safety with regards to the spread of COVID-19, that bar suddenly has no customers, no income, and no ability to pay their employees.
Most people hate their boss and complain about large companies and how they don’t pay their employees more, or how the banks are out to get them. But the truth is without revenue, most small businesses can’t pay payroll within a two-week period.
If anything, this crisis should show people how tight budgets are, even at a corporate level. No one is safe. Similarly to the 2008 financial crisis, we are seeing people do what they always do: run to their bank. Banks are not equipped with enough cash on hand to pay all of their account holders all of their dollars all at once. The system doesn’t work that way.
That means when physical banks run out of cash, people can’t get their money and they panic, which is why we are seeing national banks lower interest rates and shove liquidity at the major banks to make sure cash is there if people draw their accounts clean.
The average university student doesn’t have much money to live on. In a situation like this, they are likely to be laid off from their job first.
The timeline to the economic rebound is unclear. But if it works anything like the Spanish flu of 1918, and if governments can keep businesses open while people stay at home, it should be quick and efficient.
People are watching markets melt down and assume it’s just like 2008 all over again, but that is an unwise assumption. There is nothing inherently wrong with the system as it is crashing, which is an odd statement but nonetheless a true one.
The truth is, what we really should be worried about are the supply chains of medication and food that comes from China, a country which is essentially locked down. Also, our interconnection with the U.S. makes us even more vulnerable when they lock themselves down, too.
The economics of COVID-19 almost as much a national security issue as the virus itself.
When the pandemic is solved, however long it takes, the economic rebound should be a massive one. There will be so much pent up demand for labour, goods, and skilled education that we could see an unprecedented investment in Canadian manufacturing and retail like we have never seen before.
What is the best way to solve the economy? Shut it all down. A wild and laughable concept even seven days ago, it seems obvious that if we let companies slowly drain their credit facilities, let people slowly lower their hours, let sales slow to a halt while doors are still open, we are inevitably going to see bankruptcies and insurmountable layoffs.
We can’t escape a national shutdown now. Why not kill the virus and press pause instead of stop on the economy? If everyone goes home at the same time for a month straight, the virus will be isolated amongst those hosts it has already infected, all businesses can stop paying payroll and shut the lights off, and governments printing massive amounts of money can pay the EI to keep the lights on in the average home.
Nothing is off the table now. COVID-19 is the largest crisis on Canadian soil ever. Never has there been the potential for such a health and national security crisis within these borders.
It’s time to examine how we respond in times of fear. Do we pretend everything is normal? Do we panic and revert to the state of nature? Or do we shut everything down, send everyone home, have a month of Netflix, and then pop back up when it’s solved?
File photo.
