In the reign of Catherine the Great, the Russian empress had a lover who also happened to be a decent general and a capable administrator. Grigory Potemkin also had a lot of enemies, and they claimed he would create false-front villages along Russian roads to impress foreign visitors. Behind these facades, Russians lived in squalor.
Apparently, that story wasn’t true. Catherine did eventually trade up when Grigory got old, but she was looking for a man who could go the distance. And with her, that was a marathon. And poor Grigory, talented as he was on the battlefield, the office and the bedroom, is now just remembered for Potemkin villages.
Which is what we live in now.
In the spring of 2020, Covid caused the collapse of the Western economy. Millions lost their jobs, the value of equities collapsed, thousands of businesses shut down. Governments in the Western world have papered over that disaster by printing money.
Between mid-March and the end of November, 2020, the federal government spent more than $240 billion to prop up the economy. Covid relief spending in this fiscal year is budgeted at $159 billion, and that’s based on the debatable premise that the disease has run its course.
That’s more spending, even in real terms, that the government of Canada spent on fighting the Second World War (spending from September, 1939 to May, 1945), was about $385 billion in today’s dollars. And it doesn’t count the massive amount of “quantitative easing” by the Bank of Canada, which bought up billions in distressed assets while holding interest rates below the rate of inflation. That spurred one of the greatest mortgage debt orgies in the world.
Back then, you could see the difference: the Great Depression ended, anyone who wanted a job was able to get one, and the federal government even drafted the chronically-lazy and sent them into the factories. By the end of the war, Canada was rich. Young people felt solvent enough to get married and have children. Once wartime plants switched over to making consumer goods, people bought new cars, new furniture,. and women demanded new fashions.
Families had money in the bank. Millions of women — whether they wanted to or not — left their wartime jobs and went home. If they were married, their husbands made enough to support them.
It’s far different now. We have wartime-style inflation and some shortages. And a trip through the commercial districts of cities opens a person’s eyes to the large number of businesses that didn’t make it, and office space that’s become unrentable and unsellable.
Otherwise, 2021 looks like 2019. It’s taken $400 billion in federal spending, plus big spending by some of the provinces, to maintain that illusion. Cities keep going, even though municipal transit systems have been running empty busses and subways for eighteen months. People have money to spend, even though many of them didn’t work for months. Small businesses that qualified for government help are still open, even though they’ve bled money since March, 2020.
Tourism is dead, except for regions where people fled from the cities, places like Prince Edward County and Collingwood. The entertainment industry, with the exception of part of the book trade, is on life support, as is the country’s gigantic hospitality industry.
The idea seems to have been to inflate the economy to maintain commerce and public morale long enough for the pandemic to subside, But it doesn’t seem to be going away. Each new variant is worse than the last one.
Now, finally, to the point. We have a somewhat normal election happening in a fake economy that simply would not exist without that $400 billion in extra federal spending. The real economy, without the effects of that spending, would resemble the worst of the Great Depression. But politicians are acting as though things are normal, making promises as though the economy is healthy and sustainable.
Kim Campbell once supposedly said federal elections are a bad time to talk about complex policies. The reality is that the media tends to talk about nothing of substance, as though likeability will get us through Covid and the inevitable spending draw-downs.
We have seen what the Covid spending has done to house prices, and housing is on the political agenda, without serious talk of the impact of $400 billion in extra spending and rock-bottom interest rates on the housing market. It’s just one of the many bubbles created by Covid spending. Stock markets have risen, too, as the wealthier people in society look for a place to sock away their Covid profits.
I am in favour of the government spending that saved millions of people and businesses from financial ruin. I wish there would have been more, including the youth volunteer program WE Charity was going to run. But I also know it can’t last forever.
Politicians should stop talking as though there’s nothing wrong with the fundamentals, and it’s time for journalists to ask tough questions about who gets a seat when the music stops.
The Liberals need to show a plan that carefully draws down spending. A Liberal government did that after the war, and it worked.
The Conservatives need to be forced to do more than promise a balanced budget. They need to show where they would cut, and how they would decide which sectors continue to get help, and which ones go it alone.
The NDP will promise to keep the printing presses going. If, by some fluke, the achieve power, they’d have to break a lot of promises. Now, their role in the system seems to be to elect Conservatives by splitting the left-of-centre vote.
We shouldn’t be in an election now. Canada needed time to recover and take stock before politicians hit the train (or their campaign TV studio) to make promises. But we were saddled with the Parliament elected in 2019, in one of the dirtiest, sleaziest elections in our history, and minority governments won’t last.
We are in for some tough times. Some commentators say the combination of inflation and Covid damage to the economy could generate a recession that’s so severe that the social divisions of today would seem minor. If so, we need real political leadership.
To get that leadership, we need serious, intelligent media coverage of this election, and a lot of tough questions.