One of the biggest things that has been negatively affected as a result of the COVID-19 pandemic has been the economy. Here in Canada (and the United States for that matter) we are steamrolling towards another massive downturn akin to the Great Recession of 2008.
According to Goldman Sachs, one of the largest financial institutions in the world, the Gross Domestic Product (GDP) of the United States (which refers to the combined value of goods produced and services provided in a country in a year) is likely to shrink by 24% due to the coronavirus. This would amount to the largest decline in GDP ever, so it’s safe to say we are on the cliff of economic catastrophe.
With that said, while these large measures, like the strength of national and international economies, global supply chains, international financial institutions, transnational corporations and so on, are important, the way it’s being addressed and the impacts that this economic collapse will have on working people are both far scarier.
Currently, the approach largely consists of throwing endless cash at these massive companies and financial institutions with no strings attached. Companies are asking for multi billion dollar bailouts left and right. The United States Federal Reserve Bank has been giving out $1 trillion a day since the COVID-19 pandemic began to the big banks (yes that’s right, $1 trillion DAILY) all without any strings attached.
To have no requirements set in place for what these companies ought to do with this money is what really scares me. Governments around the world are giving massive cheques without getting anything in return, simply trusting these companies to get us out of this mess (even though they’re the ones who need the bailout in the first place).
What makes more sense, even from a business perspective, is if the government were to give these companies these bailouts in exchange for ownership stakes in the companies, given that they can’t seem to handle the situation on their own. This would allow the government to centrally orchestrate the economy during this time, in order to best coordinate a unified economic response, as opposed to telling them to figure it out on their own.
This would also put a stop to stock buybacks and paying out dividends to stockholders and executive compensation packages, which is increasingly common today. What that means is that the no strings attached money the government is giving out is often being used to inflate the companies stock price and pay out to investors, which they are motivated to do as they are still only private companies with no other legal obligations then to make money (and massive government handouts make that a lot easier when the economy is in the tubes).
These blind cash injections need to stop, no questions asked. There needs to be a much larger expectation put on businesses and our government needs to be demanding controlling stakes in these companies for these huge investments.
Another thing that we are massively behind on is paying out working people. Canada’s response to the crisis in particular is fairly lacklustre. They have introduced a whole host of complicated measures, as well as reducing some of the restrictions on employment insurance.
The issue is, all of these means-tested programs that require you to apply and have your application processed by likely a very small number of overworked public employees are guaranteed to let some fall through the cracks. There is also a high likelihood that people won’t see any of these benefits until May or even later, a long time to wait for workers losing their jobs now.
My point with talking about this is to highlight the strange priorities our governments have during this time. If we are writing blank cheques to anyone, should it not be working families? People who have been laid off and are quickly running out of money? Why are we giving endless amounts of money to corporations to squander without virtually any accountability, while we have to nickel and dime everyday working people?
They have decided to do this in Denmark, as the government will be paying 75% of the salaries of employees who would have otherwise been laid off. This is just one part of their historic COVID-19 stimulus package that amounts to 15% of the country’s GDP.
We need to be thinking as universally as possible. We can’t have all of these programs designed to pay out to only ‘those who qualify’ or who ‘fill out the right forms,’ while massive corporations see all of their wildest wishes come true. When it comes to means-testing for working people, enough is enough. Even the United States is working towards implementing a direct cash payment to go out at the beginning of April, while the first payments under Canada’s plan wouldn’t see the light of day until likely May at the earliest.
Hopefully the government can correct course quickly, because this type of action will radically influence how the next couple of months play out.