COVID-19 - The Tale of Two Economies

For years prior to COVID-19, rumblings were emerging regarding the failings of modern economies to deal directly with their inherent flaws.  Opinions abounded about the end of capitalism, of the need to bring some measure of accountability to the wealthy elites, and to create a more rewarding work culture.

The results of this division are everywhere to be found in this COVID-19 era and they remain unresolved.  The culture resentment between the two economies has hardly been created by the pandemic,  but it has been more notably exacerbated by it.

It’s a given that the lucrative financial markets have become untethered from the general economy in which most citizens move and attempt to find prosperity and meaning.  And how to explain the stock markets?  While millions of citizens around the world fret over whether their jobs will be there following our current troubles, financial elites have increased on their wealth despite global economic woes.  For a time then two economies appeared more connected when the early days of the pandemic resulted in precipitous markets drops.  Yet the stock market rallies in recent days have left people wondering if wealth and economy are even related.  It appears to be a world in which some benefit deliriously from the hardship of millions.

People’s memories are returning, of those bitter days following the Great Recession of 2008, when public funds were used to bail out private profligacy, sometimes even criminality, in a fashion that left Wall Street even better positioned to cement their wealth even as tens of millions saw theirs continue to erode.   So, yes, citizens are suspicious, with some watching cautiously while others demand a new world of accountable wealth and a truly effective economy.

What has resulted is a bloodless battle between two world views, two economic futures, that will come to characterize this era as not only a public health challenge but as an economic battle to the finish.  

Progressives of all sectors are using this COVID-19 moment has a time to right old wrongs – racism, poverty, housing, political reform, climate change and effective gender balance - with an economic renaissance that could address all these challenges.  What was once a stand-off between the two economies has now become a stark choice between a dystopian future or a more inclusive one.  The battle lines were drawn prior to the pandemic, but the fighting has been taken to the streets and to local and federal legislatures.

Central to all this has been the future of work itself.  Will unemployment rates continue at unacceptably-high rates?  Will the future be more like pre-World War Two America or Canada, or the post-war era, where wealth was legislated to invest back into communities and the national welfare?

It’s clear that the tech-sector has mushroomed during COVID-19, just as it had prior to the health crisis.  They were making billions and were rewarding those with high-tech skills and offering tens of thousands of jobs in the near future.  But for those in other sectors – industry, service, health, education, and niche operations, great uncertainty now exists that there will even be jobs to return to.  But a more caring economy, where responsibility to family and community were rewarded, has shrivelled.  Even giant industries like travel, food, textiles, natural resources, are in serious peril while the tech-sector surges.  Businesses will struggle like never before as economies attempt to reopen and workers will be massively affected.  

All this has left us not only with an uncertain future but with a war on our hands – the wealth war.  The world is taking a progressive turn, but there is no indication that it will be sustained, since there has been a similar rise in right-wing populism, a protective wealth class, and governments not quite sure where to land on the struggle.  The willingness politicians have shown to move public funds quickly out the door to help families endure the pandemic was fairly straightforward, given that the choice was between life and death.  But as the health risks decline, political elites will feel pressure once more to shape their legislative activities along familiar lines to accommodate the wealth class while at the same time offering puny progressive measures to the middle and poorer classes.  

Have no doubt about it: an economic war of seismic proportions is going on while our focus has been on our collective health challenges.  What will likely emerge will be the traditional economy with a few progressive tidbits designed to fend off the harsher elements of the economic revolution.  That can only result in stasis and the continued decline of prosperity for average Canadians.  The status quo should be no longer an option for the majority of Canadians looking for a more equitable life.  The key will be if they can sustain the battle for wealth they are now engaged in.  On that, there is no definitive answer.