Wednesday, 15 April 2020

Life and Wealth after Covid-19

For most of us Covid-19 is an unprecedented catastrophe. As the incidence of death starts to plateau, we are starting to look at what the future will look like. For many and most of us life as we knew it will never be the same. It is time for us to learn, adapt, or perish, if we have another pandemic or global crisis.
 First let us thank all those medical, health practitioners, and first responders who have given their time to save lives, the front line in grocery stores, truckers and food providers who keep the supply chain moving.  Times of crisis are great educators. Out of gloom and doom the human race has come out and progressed, this time is no different if we learn from our mistakes. Governments around the world have ignored the severity of the pandemic because they were misled by the Chinese government who did not advise the world about the outbreak of the virus. Some governments were not prepared for the extent to which the spread of virus would affect their citizens. The World Health Organization (WHO) is increasingly being blamed for their inability or lack of transparency in handling the whole disaster. As a result the number of cases and deaths has risen to a level never seen before since the Spanish Flu pandemic in 1918.
 Could we have handled the situation better? Yes and no. If countries had closed their borders earlier there could have been a mitigation of the number of infections, but the fear of offending people stopped many governments from closing their borders. Since there was no scientific diagnosis of the virus, very little was known how it spread and how and who it affected. Testing which is touted as the major solution to manage the outbreak was not available, so it would have been difficult to stop the infection anyway. What we learned was that self-isolation, and distancing were perhaps the best ways to combat the infection on a large scale until a cure or vaccine is found. Unfortunately the rise in deaths was among the most vulnerable including the elderly, those affected by diabetes, pulmonary, heart and other medical conditions. In Canada a significant number of the deaths occur among elderly patients in long-term care homes. But the left could not stop itself from using the race card to win political points when it was found that minorities in the U.S. were affected in larger numbers. However they ignored the facts that minorities live in closer quarters in high density areas, are more prone to heart and diabetes due to diet and poverty, and that the areas most affected had a larger population of homeless people and illegal immigrants in sanctuary cities. British Columbia, Alberta, Toronto and Quebec were the airports which were still functioning, and allowed passengers from other countries to enter the country, with minimal or no testing available.
As governments realized the enormity of the pandemic, citizens had to adapt to a new reality. Self-distancing closed everything. No more crowding, as all gatherings were suspended, and we have now entered a life with no contact and isolation, with no sporting and entertainment events. The work place as we know it has changed, many work from home, schools have closed and classes are delivered online. Restaurants and eateries are now operating online with a delivery service. The result has been a collapse of the economy and the realization that globalism may have failed us. Governments are pouring money into the economy to ward off a major depression. Trillions of dollars are being printed and the stock market has dropped to record lows. The problem is once the pandemic is over; the large debts will have to be repaid. It is well and good to see government pour money to stave off a major collapse of the economy, and provide support for all the people who have lost their jobs, but the fact remains that the recovery may produce a world totally different to the one we have known before the pandemic. How long will the lockdown last? Can we survive for very long with a completely closed economy?
We cannot afford to open the economy too quickly, because we may face a second wave, due to false negative testing which could be even worse. Perish the thought that our political leaders decide that their power base is being threatened and that they require more powers to manage the situation. It is already apparent that global organizations like the WHO, IMF, and the U.N etc. have failed us during this cataclysm. All powers granted in these difficult times should have a sunset clause. However there are many who believe that this is an opportunity to organize a World Government. As Trump said, and now reported by MI6, it is becoming apparent that the WHO formulated a ‘China centric’ policy to advise the world of the pandemic. They were late to inform the world about the extent and severity of the virus. The WHO did not provide true data from China the country of origin of Covid-19, despite red flags from Chinese scientists as early as November of 2019. Can we really believe that China with the size of its population has only some 4,000 deaths compared to the U.S which may have 25,000 deaths?
While Trump may be blamed for his nationalist positions, it is now clear that he may have been right in his opposition to the continued trade practices with China. There is no doubt that China has been practicing a policy to see them dominate the world within the next decade. Unfortunately, the western world which has been blind to the real threat posed by China has continued to rely on cheap Chinese labor for the production of many of our essentials. The reliance and dependence on Chinese products, including pharmaceuticals has exposed the world to the reality that it is time for industrialised countries to bring back their manufacturing industries and start producing many of the essentials at home. The focus of western nations and an obsession with climate change prevented many of them from being prepared for a pandemic. The medical profession was exposed because many countries did not have a strategy to deal with a pandemic. Too many countries did not have enough ventilators, masks and personal protective equipment (PPE). Fortunately due to entrepreneurship and the endeavor of many private businesses (some 5,000 in Canada alone), the vacuum is gradually being filled and innovation in the private sector came to the rescue.
All the changes made during the crisis have also provided us with new opportunities. We may well see a world which will restructure the way that we live, work and play, where technology used to connect us will definitely expand our service delivery from health through tel-med and education increasingly using the internet to teach. We may finally see the promises that were supposed to be delivered by new technologies finally take place. More time working at home rather than in big box offices. Less government dependence on large labor forces as a result of restructuring, because during the crisis, it showed that the need for large bureaucracies did not stop the world from continuing to function, albeit at a slower pace. Re-training will be needed to absorb many who in the workforce would have lost their jobs.
Prior to the declaration of the pandemic the U.S. economy was in good shape. Despite the WTO’s claims that we may see 32% shrinkage in the global trade, the IMF predicts shrinkage of 3% in the global GDP for 2020.  I believe the economy will recover in a U shape rather that the Trump touted V shape. It will take some time for life to come back to normality. Wealth after Covid-19 will depend on how much we grow national economies not just global economy. It is quite apparent that much of our future will depend on the ‘invisible hand’ as described by Adam Smith, and not necessarily on the expansion of government. Government debt will have to be repaid; only growth in the economy will spare us the huge taxes needed to repay the largess of government during the crisis. Financial help to large corporations should be limited to loans and a share in equity position by the government. Once the economy is restored governments could recuperate their investment through the sale of their equity shares. Any gains from these investments should be returned to the public in the form of tax reductions and not used to further political legacies. A massive investment in infrastructure delivered through Private/ Public partnerships will give an enormous boost to the economy. SMEs are the backbone of the Canadian economy, and we must ensure that we transform our economy and rely less on the traditional industries that have made Canada what we are today. It is not the role of the government to diversify the economy, the private sector, with fewer regulations, will take us to the next frontline.
As for how we live with each other, we may have to re-consider high density living. While we ponder whether the handshake will be a past tradition, it is really important that we regain control of our freedoms and not allow governments to further their grip on powers acquired during the crisis.
A few important changes will have to be made to Canada’s geopolitical agenda. Foreign aid to gain votes to acquire a seat at the U.N for example must be curtailed. Charity should begin at home, and essential supplies should be used for national purposes before being sent to foreign countries. Progressive governments should come to the realization that climate change is not the existential threat faced by humanity, but rather that virus and pandemic are the more pressing dangers. That will need a re-assessment of the oil and gas politics. Covid-19 has exposed the Trudeau government’s deficiencies. Coupled with a Russia/Saudi Arabia oil skirmish, the price of oil has collapsed and has affected the Alberta economy even more, hence the economy of the country. Furthermore the pandemic has exposed our demand for PPE and other medical supplies and our dependence on plastics. The source of plastic, it must be remembered, is OIL.
The world’s relationship with China will have to be severely reassessed as a result of this pandemic. That will include not only trade but the military expansion in the China Sea and its influence in other parts of the world, namely Africa and the Middle East. Trade will change and the role of WTO, IMF, the U.N and other global organizations will have to be swotted.
Covid-19 may well be the catalyst for the world to take a breath and re-assess what is important and how we regain control of our lives and wealth, without too much reliance on a One World Government or organizations that have failed us in this time of crisis. It is not a call for a retrenchment into nationalism, but rather a serious look at collaboration and not abdication and loss of sovereignty. We will come out of this crisis, and the world will be better for it.

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