It's the end of the world as we know it. So what happens now?
Don't blame the pandemic. We had a real mess on our hands all along
"The new world is being born."
That's what Luke Ashworth said to Stephen Tomblin and me on our PodCo direct message group, as the global pandemic reached Newfoundland and Labrador.
Luke is known in Memorial University's political science department as "Dr. Doom" because he teaches the popular End of the World course. It examines the fall of civilizations over time and the conditions that lead to collapse.
I remember him calmly explaining to me last fall that societies do not collapse because they face a single challenge. In fact, a modern society can probably face up to three challenges at a time. However, when that fourth challenge arrives, collapse is probably imminent.
For example, it was not invasion alone that led to the fall of Rome. Overspending, corruption and political instability, enabled by weak government over a number of centuries, were all contributing factors.
Nowhere is health-care reform more badly needed than in Newfoundland and Labrador. Yet we cannot even have a conversation about it without becoming mired in partisanship.
As such, pandemics alone do not collapse societies. However, they can be the fourth condition that arrives to collapse a society that already faces significant vulnerabilities.
Premier Dwight Ball recently wrote Prime Minister Justin Trudeau to ask for help because the provincial government was struggling to pay its bills. Furthermore, most of the industries we depend on were crashing.
Apparently, things have improved since the Bank of Canada started buying provincial bonds. However, this fiscal crisis is far from over. There's a long dark road ahead.
Our leaders will tell you that it was the combination of January's Snowmageddon and the pandemic that collapsed our provincial economy. They have long sold the narrative that they had no financial options after Muskrat Falls was approved by the previous government.
The truth is that the current government had options when they took power in 2015. In reality, they have failed to act on those options again and again, despite repeated calls from citizens to do so.
Vulnerabilities in the financial system
For some time now, representatives of civil society, including many scholars, have been ringing the bell on extensive borrowing, inequality, overdependence on oil, failure to address climate change and overly partisan politics.
In 2013, economist Thomas Piketty published Capital in the Twenty-First Century. The book effectively documented that in the contemporary world the return on capital is greater than the rate of economic growth, which has resulted in concentrations of wealth, inequality and economic instability.
The book articulated what many had been feeling about the economy and reached No. 1 on the New York Times bestseller list. It also became the most purchased book ever published by Harvard University Press. Clearly, the public is aware of the problems of inequality in the contemporary capitalist world.
In 2016, the provincial government introduced a budget that relied heavily on consumption taxes. Ultimately, most of those changes had to be undone.
Consumption taxes are the most regressive of taxes. The lower your income, the greater the portion of it that gets spent on consumption taxes. Citizens on low incomes rebelled against bearing the brunt of mistakes that were made by political elites.
The opposite is true of income tax, which affects those at the highest income levels the most.
Well-documented need for health-care reform
Newfoundland and Labrador has the lowest income tax levels in Atlantic Canada, even though our incomes are higher on average. Provincial income tax rates were reduced by the Williams government when oil revenue was at a high.
Political economist Russell Williams has estimated that Newfoundland and Labrador has left up to $500 million a year in income tax revenue on the table by not bringing our tax levels in line with the other Atlantic provinces.
Similarly, Williams has noted that unincorporated areas of Newfoundland and Labrador are not taxed, even though they are in other provinces. As such, the provincial government, rather than municipalities, pays for services in these areas. He maintains that this leaves approximately $400 million in annual revenue on the table.
The Newfoundland and Labrador Liquor Corporation does not bring in as much revenue as similar Crown corporations in other provinces, even though its costs are higher for vendors. The NLC has also been plagued by scandals, which has limited its effectiveness.
The need for health-care reform in this province is well documented. When the leader of the Official Opposition called for it in the last provincial election, the governing party unleashed attack ads stating that Progressive Conservatives were going to cut health care.
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Our province has the highest per-capita expenditures in health care and the lowest health outcomes. Nowhere is health-care reform needed more than in Newfoundland and Labrador. Yet we cannot even have a conversation about it without becoming mired in partisanship.
This province has had options for the last five years. There were revenue sources available to us so that we did not have to continue to grow our debt and continue paying larger amounts of interest.
The provincial government also pursued dependence on oil, despite warnings that the price of oil was not stable and that it was not a good source of revenue to depend on over the long term.
In the midst of all this financial vulnerability, our government maintained over-reliance on borrowing and natural resources; inequality, driven by low wages and precarious employment; and climate change policies that are not doing enough to decarbonize.
Along comes a global pandemic and boom! You have got your fourth condition that makes collapse imminent.
A brave new world
Unfortunately, after this pandemic is over, there will be much more pain ahead. We have not even seen the impact of this in many nations, which are under-testing.
Most people have not yet fully grasped the reality of the economic crisis that awaits us both globally and locally. People are too busy trying to survive to worry about government debt. While the International Monetary Fund has put global GDP at $90 trillion, a Reuters report this winter estimated that public and private debt globally is almost $260 trillion.
Soon it will become clear, however, that while taxpayers are benefiting from government programs, we are also the people who will have to pay for them.
Low-income workers are now being sacrificed on the altar of being essential, even though they are not essential enough to be provided with a living wage, benefits, and safe working conditions.
Health-care workers are being treated as collateral damage, and they do not have the appropriate protective equipment. Leaders in many nations failed to act in a timely manner on containing the virus and obtaining the necessary medical equipment.
All of this will spark a major conversation about incomes and working conditions. There is already a lot of discussion of the need for universal basic income. It will become even more obvious that generations with little to no retirement savings now have even less. Or nothing left at all when the markets are finished crashing.
Ideas becoming 'more powerful than institutions'
Finally, within the next 10 years it will become abundantly clear oil is no one's salvation. Most analysts believe the price of oil is never coming back to previous levels.
Ideas are becoming more powerful than institutions as it becomes even more obvious that a new generation of political institutions must be designed that will better meet the needs of citizens.
As a historian of print, I have recently found myself reflecting on the work of Mary Shelley, who published dire warnings about the modern world as it was being built in the 19th century.
Her novel The Last Man (1826) is a post-apocalyptic tale of a world that is ravaged by plague. In it she asks:
Hear you not the rushing sound of the coming tempest? …Feel you not the earth quake and open with agonizing groans, while the air is pregnant with shrieks and wailings – all announcing the last days of man? No! None of these accompanied our fall.
In the final analysis, it is not a pandemic that is bringing an end to the world as we know it.
When the histories of this age are written, it will be concluded by many that it was our political structures that failed us.
Just like ancient Rome, we are burdened by overspending, corruption, political instability and weak government.
We will be dealing with the inadequacies of our systems of government for long time after the threat of contagion has passed.
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