Read on Twitter
I agree that this does encapsulate the political divide.
Many in the private sector are suffering loss of employment/hours/business because of the pandemic. One side thinks that public sector workers should share this pain. The other side looks to mitigate that suffering.
1/ https://twitter.com/citizen004/status/1260364043488878592
Many in the private sector are suffering loss of employment/hours/business because of the pandemic. One side thinks that public sector workers should share this pain. The other side looks to mitigate that suffering.
1/ https://twitter.com/citizen004/status/1260364043488878592
Large portions of the economy have suddenly come to a standstill because of #COVIDー19. Few people, however, can quickly adjust their expenses to reflect their lower incomes. Nor should they if the economy will largely bounce back within the next 1–2 years.
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So, this raises the question: how should this temporary but exceptional economic shock be managed? And here is where we see opinions diverge on ideological grounds.
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Many businesses may want to retain their workers, especially if they think they will need them soon and it would be costly to hire and train new staff. But if businesses run out of cash or take on too much debt, they won’t survive. So, many have to lay-off staff.
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The laid-off workers or the hourly employees who have lost shifts now have to deal with a sudden loss of income. This creates a risk that many will fall behind on rent, mortgages or other spending. Or they will see their savings drained and debt grow.
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This then causes further economic problems: landlords can’t pay their bills, loan arrears means banks don’t have the cash to make new loans and less spending means business income falls. The feedback loop means more lay-offs, and the economic shock becomes a long recession.
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Fortunately, there is an economic actor that is not trapped by a lack of options. Governments can implement fiscal policy to stop this economic shock from becoming more serious or protracted than absolutely necessary. We don’t have to have another Great Depression.
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Essentially, there are three broad ways that governments can mitigate the economic shock.
First, it can help stop businesses from running out of cash or accumulating too much debt.
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First, it can help stop businesses from running out of cash or accumulating too much debt.
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For example, the federal government has provided liquidity supports in terms of various lending facilities for businesses. In addition, CEWS and other programmes allow many businesses to retain staff and avoid taking on too much debt to do so.
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Second, governments can provide income-related supports for workers who have lost employment income (not all layoffs can be prevented). Federally, this includes CERB. There are also government programmes designed to help people with mortgages and, in some provinces, renters.
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Third, governments can avoid compounding the problem by cutting public sector workers at this time. Yes, this may mean some people might end up drawing full pay for little or no work. But it means that this segment of the population will remain able to support the economy.
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The goal here is that, when the economy reopens and it is safe for people to resume quasi-normal lives, consumer spending will quickly return to near pre-pandemic levels. To meet that demand, businesses will rehire and the economy will largely recover relatively quickly.
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On a less macroeconomic level, it means that fewer people will suffer bankruptcies, lose their housing or otherwise suffer huge and often debilitating financial stresses (and associated health problems caused by this) because of the pandemic.
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Aside from what I think are the strong economic reasons for this approach, it also coincides with my morality. Just as the shutdown was right in that the economy must yield to saving human life, so too should we be saving people from financial disasters beyond their control.
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So, I disagree that public sector workers, or at least those who don’t have immediate work to do, should suffer along with people in the private sector. Instead, I think governments should do as much as they can to mitigate the suffering to those in the private sector.
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Unfortunately, I do not see evidence that the Government of Alberta shares my values. Nor am I convinced that it accepts the economic arguments (although it is possible that Alberta is just cynically freeriding off of the federal programmes by uploading its costs).
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And unfortunately, there continues to be a large constituency that supports the UPC ideology/economic philosophy. Rather than trying to limit who gets hurt and the amount of suffering, they seem to be more interested in themselves. Which is both counterproductive and sad.
/fin
/fin
