Post-pandemic concerns now include inflation, interest-rate hikes and debt
Woolwich & Wellesley Township's Local Community Newspaper | Elmira, Ontario, Canada

A little more local for your inbox.

Seven days. One newsletter. Local reporting about people and places you
won't find anywhere else. Stay caught up with The Observer This Week.

Enter your email to subscribe. Unsubscribe anytime. We may send you promotional messages.
Please read our privacy policy.

Post-pandemic concerns now include inflation, interest-rate hikes and debt worries

We’ll perhaps see a push for a return of some mask mandates and a stepped-up campaign for vaccination, but no wholesale lockdowns in the wake of an uptick in COVID-19 cases. There’s simply no public appetite for restrictions, and such moves would be akin to political suicide.

A return to normalcy was almost immediately hit by rapid inflation and economic turmoil, led by skyrocketing housing prices. Governments are already posting massive deficits, and have little room to manouevre if and when a recession strikes.

At a time of rising interest rates, all the debt taken on by the federal and provincial governments – much of it in good times when balanced budgets should have been the norm – will lead to much larger carrying costs.

The Canadian Taxpayers Federation predicts each Ontarian will be on the hook for $59,732 by year’s end, with each responsible for $1,500 a year in interest costs.

The federal debt is $1.2 trillion. At the provincial level, Ontarians are saddled with debt of $428.6 billion

“Much of this debt will likely be shovelled onto the backs of Canadians’ kids and grandkids,” writes CTF federal director Franco Terrazzano in a recent editorial piece.

“But the debt isn’t just a problem for tomorrow; it’s impacting Canadians right now.”

Governments are already hiking taxes to cover deficit spending.

“Government debt also directly fuels inflation when the feds use the printing press to finance deficits. That’s because the more dollars the central bank prints, the less your dollars buy. During the pandemic, the central bank printed more the $300 billion out of thin air largely by purchasing federal government debt,” he writes.

“More borrowing also means more money wasted on interest charges. This year, interest charges on federal and provincial government debt will cost each Canadian more than $1,000. That’s money that can’t stay in Canadians’ pockets to ease the pain of inflation because that money is being paid to the bond fund managers on Bay Street.”

While facets of the economy have been bouncing back – the employment situation is particularly good – a recession could jeopardize any gains.

Beyond the slow resumption of the post-pandemic economy, we’re having to deal with inflationary pressures that were not entirely expected, from supply chain issues to Russia’s hostilities in Ukraine.

Still, the income-replacement aspect of the pandemic brought into focus long-simmering concerns about the nature of work and wages.

One issue that has come to the fore is a universal basic income, as the measures to counteract the spread of COVID-19 revealed the inherent weakness of a consumer-driven economy financed largely by debt: the majority of us live paycheque to paycheque, and the loss of even a couple of weeks of work can be catastrophic.

The financial supports announced by government did little to stop the bleeding, though the cost of propping up everyone’s incomes under the current system would be immense. (That’s a good segue into the appalling habit of deficit spending during economic good times, and the failure to put away great stores of savings for the inevitable downturns – again, short-term thinking by politicians concerned only about the next election, and adopting policies that benefit fewer than one per cent of the population over the good of the entire citizenry.)

The shuttering of much of the economy during the pandemic, putting people out of work and disrupting the not-ideal consumer-dependent cycle, gave us a taste of the kind of changes that may come from automation and globalization. Those very forecasts are what prompted a renewed interest in the concept of a universal basic income.

We’re facing a shift that promises to alter jobs, incomes and the very way we live. Whether that sees a descent into feudal squalor or finally provides for the leisure society long discussed (even as we’ve headed away from it) remains to be seen.

Much of the discussion about mitigating the downside revolves on some form of universal basic income that would at a minimum keep people afloat. That grows increasingly important as automation moves beyond replacing manual labour to pretty much every facet of employment, including professionals such as doctors, lawyers and accountants.

We’re already living in a time of flux. Increasingly, good-paying jobs have disappeared, replaced by crappy service jobs. Well, in part. Fact is, across Canada and the U.S., there are fewer real jobs even as the population increases. Where the labour hasn’t been sent offshore, high immigration levels – legal or otherwise – have been used to drive down wages and to provide fodder for our consumer society. The one financed by debt that has, again, reached record levels – Canadians now owe a collective $2 trillion.

Increasingly, those service jobs – crappy and even those that aren’t – that are hyped by those eager to hide the truth from us are at risk through automation. Machines have already displaced many workers, but even jobs in the hospitality industry – waiters, hotel workers, retail clerks – seem destined to be replaced in the shift to automation and robotics. A 2013 Oxford University study, for instance, predicted that machines might be able to perform half of all U.S. jobs in the next two decades …and we’re almost halfway there.

New stories about self-driving cars and trucks are increasingly commonplace, with the corollary that job losses are likely to follow for people currently making a living behind the wheel … and the millions of others in service jobs that cater to such people (restaurants and motels along well-travelled routes, for example).

Driverless technology already exists today, destined to displace jobs such as truckers, cabbies and couriers. Driverless buses and trains will eliminate the need for transit workers, many of them an increasing burden on governments and taxpayers. 

Automated transportation, from cars to airplanes, is safer, more efficient and much less costly to operate – computers don’t fall asleep, take bathroom breaks, drink on the job or a host of other human foibles. For all those reasons, driverless is the future of transportation.

This isn’t science fiction anymore. It’s here, and the technology’s spread is inevitable. The same transformation will migrate to many fields. Not just McJobs, but into accounting, medicine, teaching and host of other jobs that now pay well, and are typically considered safe.

Once upon a time, automation was a panacea that was to lead to a mythical leisure society – the machines would do the work, while we reaped the benefit of reclaimed time to do what we wanted rather than the drudgery of work. As we’ve seen so far, technology has extended workweeks and displaced people from high-paying to lesser jobs. There’s no reason to believe that will change as technology continues to change the way work is done. Which brings us to the idea of a basic income: what becomes of our economy when there are fewer and fewer jobs? In the short term, those at the top of the income scale, including the much-discussed 1%ers, make out like bandits due to reduced costs. But if people don’t have money to spend, who is going to keep the consumer society running? Without some system to share the fruits of the economy, things start to fall apart. First the economy, then the social order.

We’re seeing the instability of the status quo at this very moment. Among the questions to come, the most important is what can we do to change the underlying nature of the economy to avoid repeating today’s experiences. A growing population, living in ever-closer proximity while encroaching on natural areas and wildlife pretty much means the next pandemic is a “when” and not an “if.”

We need to be prepared, which includes getting our collective financial house in order.

A little more local for your inbox.

Seven days. One newsletter. Local reporting about people and places you
won't find anywhere else. Stay caught up with The Observer This Week.

Enter your email to subscribe. Unsubscribe anytime. We may send you promotional messages.
Please read our privacy policy.


Related Posts