Wednesday, July 8, 2020

Is a Global Demographic Crisis Unavoidable?


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Wednesday, July 8, 2020
Is a Global Demographic Crisis Unavoidable?
By Dr. Rodrigue Tremblay
(Author of the books “The Code for Global Ethics”, and

Throughout history, any profound political and social change was preceded by a philosophical revolution, at least among a significant section of the population.“
M. N. Roy (1887-1954), humanist and political figure from India, 1950.

For social problems, to paraphrase the population doctrine of Thomas Malthus, have the unfortunate tendency to grow at a geometric ratio with the growth of the organism of which they are part, while the ability of man to cope with them, if it can be extended at all, grows only at an arithmetic ratio. —Which means that, if a society grows beyond its optimum size, its problems must eventually outrun the growth of those human faculties, which are necessary for dealing with them.“
Leopold Kohr (1909-1994), Austrian economist and philosopher, 1957.

I am convinced that some political and social activities and practices of the Catholic organizations are detrimental and even dangerous for the community as a whole, here and everywhere. I mention here only the fight against birth control at a time when overpopulation in various countries has become a serious threat to the health of people and a grave obstacle to any attempt to organize peace on this planet.“
Albert Einstein (1879-1955), German-born physicist and professor, 1954.


When I was born, in 1939, the world’s population was around 2,240 million people. Twenty years later, in 1960, the world had a population of almost 3 billion, an increase of a third. At the turn of the century, in 2000, the 6 billion mark had already been crossed, as a result of the world's population having doubled in only 40 years. And by 2020, the Planet was home to 7.8 billion people, and almost a quarter million more people are added to the world every day. This is the reality.

Will human population continue to explode exponentially in the coming years, and if so, will it cause serious transformations and crises? Average estimates and projections by the United Nations Population Division show that the earth's population will reach almost 10 billion in 2050 and exceed 11 billion people in the year 2100. However, these average projections are based on hypotheses of a decline in fertility rates and an increase in life expectancy in many countries. This remains to be verified in fact.

Projections of future population growth are based on uncertain assumptions

The region of the world with the fastest population growth is also the region with the poorest countries, i.e., Africa. Indeed, this continent is expected to have more than half of the world’s population growth by 2050, while population growth will be negative in 55 other countries, notably in several European countries.

The reason is relatively simple: unlike other regions of the world, which have experienced significant declines in their fertility rates, those rates are still very high in Africa. For example, the average fertility rate in sub-Saharan Africa is 5.4 children per woman, compared to the world average of 2.5. Some African Muslim countries even have fertility rates of between 7 and 8 children per woman. (N.B. An index of the fertility rate of 2.1 children per woman is sufficient to replace the population).

Nevertheless, demographic projections are made in assuming that fertility rates overall will continue to decline in the future, under the influence of a greater literacy rate among women and more advances in family planning.

However, if fertility rates do not fall as predicted, and if governments do not get involved in finding solutions, while infant mortality continues to drop dramatically and life expectancy continues to rise, then, what will happen? Well, in the year 2100, there would not be 11 billion inhabitants in the world, as it is now logically expected, but the world population could reach astronomical levels, with figures that could range between 15 and 27 billion people at the end of the present century —that is to say in only 80 years.

• Overpopulation can lead to major transformations and crises

Many major transformations and crises could result from such a demographic explosion.

To begin with, the climate crisis would almost certainly worsen, because it is, in part, linked to human activity, due to the high levels of CO2 in the atmosphere generated by industrial production, thus resulting in a greenhouse effect and global warming. More generally, such overcrowding would likely accentuate the ecological footprint of otherwise required production, and it would bring to the foreground the issue of the carrying capacity of the environment.

Secondly, rivalries and escalating conflicts over resources could intensify, given the shortages already observed, for example in the supply of drinking water. We currently observe several conflicts resulting from the lost of influence of international institutions, which were specifically created to prevent them.

Third, a high level of overcrowding may also hamper progress in the fight against poverty, hunger, and malnutrition in many countries. Similarly, the coverage and quality of health and education systems for a booming population could suffer.

Fourth, more advanced countries, in Europe and in North America, for instance, could feel destabilized by more or less controlled waves of immigration from poor and overcrowded countries, a phenomenon which, in turn, would pose many societal problems. Indeed, a certain number of countries have no choice but to offload their surplus population to other countries with limited capacities to integrate them. More worrisome perhaps are the instances when some leaders even use the surplus population in their countries as a weapon to blackmail other countries and threaten their stability and prosperity.

Fifth, generating economic growth rates high enough to meet the needs of a booming population would pose special challenges to countries and their governments. The economic and financial globalization of the past quarter century has already been questioned because its benefits have not been distributed equitably.
Conclusion

There is a lot of concern nowadays about the climate crisis. Perhaps a strong emphasis should also be placed on the upcoming demographic crisis, since the former is, in part, the result of the latter.

Land and resources on our Planet Earth are not unlimited, despite all the ingenuity that the human mind can deploy to cope with such scarcities.

The juxtaposition of global warming and overpopulation in certain parts of the world will be accompanied by frequent and devastating droughts impacting agriculture, while the disappearance of marine species will reduce the expected yields of commercial fishing.

Rising sea levels will also jeopardize human habitat in areas bordering certain heavily populated regions, which could force the migration of entire populations. This, in turn, could likely cause social and political tensions in many other countries.

All this to say that there is no guarantee that the economic, social and political progress recorded in the world during the last three quarters of a century—through the expansion of international trade and technological innovations—will proceed at the same rate in the future. This is not impossible, but the precautionary principle would require that the world be prepared to solve the great economic and environmental problems to come, or adapt to them.

An important international conference on this issue would be timely and would undoubtedly be very useful in raising awareness among leaders and populations of the challenges to come.
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International economist Dr. Rodrigue Tremblay is the author of the book “The Code for Global Ethics, Ten Humanist Principles”, of the book “The New American Empire, and the recent book, in French 




Please visit Dr. Tremblay’s site:

Posted Wednesday, July 8, 2020, at 8:30 am.

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© 2020 by Dr. Rodrigue Tremblay


Tuesday, May 12, 2020

Could the Current Serious Economic Recession evolve into a Full-fledged Global Economic Depression?


By Dr. Rodrigue Tremblay
(Author of the books “The Code for Global Ethics”,

I was 21 and looking for work in 1932, one of the worst years of the Great Depression, and I can remember one bleak night in the Thirties when my father learned on Christmas Eve that he'd lost his job. To be young in my generation was to feel that your future had been mortgaged out from under you - and that's a tragic mistake we must never allow our leaders to make again. Today's young people must never be held hostage to the mistakes of the past.” 
Ronald Reagan (1911-2004), American actor and politician, former Governor of California and 40th U.S. President, 1981-1989, (in an address to the Nation, on Oct. 13, 1982.)


The 1929 [Great] Depression was so wide, so deep, and so long because the international economic system was rendered unstable by British inability and U.S. unwillingness to assume responsibility for stabilizing it by discharging five functions: (1) Maintaining a relatively open market for distress goods; (2) providing countercyclical, or at least stable, long term lending; (3) policing a relatively stable system of exchange rates; (4) ensuring the coordination of macroeconomic policies; (5) acting as a lender of last resort by discounting or otherwise providing liquidity in financial crisis.” 
Charles Kindleberger (1910-2003), American economic historian, and author of The Great Depression 1929-1939, 1973, revised and enlarged in 1986. (Quote in, The World in Depression, 1929-1939 (2nd ed., 1986), Ch. 14: ‘An Explanation of the 1929 Depression’.)

So far, it can be said that central banks and governments in most advanced economies have acted correctly to prevent the economic lockdown of large segments of the economy from turning into a total economic disaster. They have, at least, saved the day.

At the microeconomic level, nevertheless, there has been costly inefficiency when wage replacement programs had the unintended consequences of creating labor shortages in the very essential sector of health care centers and nursing homes.

Indeed, many deaths caused by the virulent coronavirus occurred in under-staffed institutions, where the contagion remained unchecked for months as some workers quit their job to qualify for a government wage stipend. In the haste to inject money into the economy, funds were dished out to unqualified corporations, which should not have received them. —On the whole, however, the main macroeconomic objectives seem to have been attained and the worse case scenario seems to have been avoided.

It has been estimated, according to a compilation made by Bloomberg, that governments around the world have committed themselves to spending some $ 8 trillion in fiscal measures, excluding central banks’ intervention, to prevent their economies from collapsing. The question now is to know if such a large injection of purchasing power has been enough to prevent a severe recession from turning into a long lasting economic depression.

5 to 10 percent decline in GDP, and possibly more, is not out of the question for 2020 in total

In the United States, preliminary figures for the decline in the real Gross Domestic Product (GDP) during the first quarter of 2020 are not giving a complete assessment of the total economic damage caused by social distancing measures and the closure of many businesses. Indeed, it is estimated that the economic decline during the first quarter of 2020 was 4.8% of GDP, at an annual rate. It is reasonable to expect that the second quarter, which runs to the end of June, will likely show a more important decline.

That is why an economic decline of 5 to 10 percent for all of 2020 can be expected in the United States, and possibly even more, if there is a second and a third wave of coronavirus infections in the fall and next winter, as some experts have been predicting.

What to expect in Canada? The International Monetary Fund (IMF) estimates that Canada’s real GDP could decline 6.2 per cent in 2020. This assumes that most of the decline would have occurred during the first half of the year, with a rebound during the second half, as the economic lockdown is progressively lifted. —That figure could be too optimistic. As a matter of fact, the Canadian economy is expected to suffer somewhat more from the economic lockdown than the U.S. economy because of the collapse of the relatively important oil sector.

The relative importance of the service sector

It is important to realize that today’s advanced economies have a larger share of production of services than of goods or products (primary sector: agriculture, forestry, fishing, mining; secondary sector: construction, manufacturing, energy, etc.). For example, the tertiary service sector (consumer personal services, health care, education, retail and wholesale commerce, financial services, tourism, transportation, media, culture, etc.) accounts for 80 percent of GDP in the United States, and it is also where 80 percent of the jobs are.

In Canada, because of the importance of the resource sector, the service sector accounts for only 70 percent of GDP, but it employs about three quarters of Canadians.

All this to say is that the decline in production during the current economic lockdown is really a loss. This will not be fully recovered when the economy rebounds. There cannot be an inventory of services.

As a preliminary conclusion, we can say that even with an important economic bounce back in the second half of 2020 and in 2021, as many economists expect, this would far from erasing the economic damage already done by the lockdown, during the first half of this year.

In the U.S., a 5 percent decline in real GDP for 2020 as a whole would mean a loss of output of some $1.1 trillion US. However, in the event of a more pessimistic scenario of a 10 percent decline in GDP, this could translate into a loss of output of some $2.1 trillion US.

In Canada, similar percentages would entail a loss of $117 billion CAN, in the first scenario, but a loss of $234 billion CAN, in the second scenario.

A paramount objective: To stop the advent of a persistent structural deflation

The need for central banks and governments to intervene massively in such a time of viral and economic crisis is to prevent the economic downturn from turning into a structural deflation.

A structural or malignant deflation is the result of insufficient demand in an environment of excess capacity, and that may be the consequence of an aging population. The result is a persistent downward pressure on prices and wages. Such an economic condition happens when numerous sectors (ex. financial markets, agriculture, energy, mining, etc.) experience falling prices when firms are forced to reduce prices to move their inventories in an environment of stagnant demand. This results in a drop in profits and in the demand for labor. With a high level of unemployment, wages fall with prices, and a dangerous downward wage-price spiral can be set in motion.

Indeed, when an economy faces declining asset prices, business closings and massive unemployment, banks, companies and consumers with the most debt suffer great financial losses under a crushing debt burden. This could lead to bank closures, loan delinquencies, business defaults and bankruptcies and house mortgage foreclosures… and also to lower prices and wages, and less demand. This could transform an ordinary economic recession into a full-ledged economic depression, with unemployment rates above 20 percent and lasting many years.

Deflation can bring on a destructive debt deflation

In an economy loaded with debts, as is the case presently in many economies, the advent of a structural deflation can signify a death knell for any sustainable future economic growth. Indeed, the Achilles heel of the current economic environment is the historically high level of debt as compared to Gross Domestic Product (GDP).

Here is a quick look at the level of the U.S. total debt picture in mid-2019:
1- Total U.S. corporate debt (nonfinancial corporate debt of large companies, debt of small medium sized enterprises, family businesses, and other business debt) was $15.5 trillion or 72% of American GDP.
2- Total U.S. consumer debt (credit cards, auto loans, student loans, home mortgages and other household debt) was $13.95 trillion or 65.2% of GDP.
3- Total U.S. government debt (outstanding debt owed by the federal government) was $22.7 trillion or 106.1% of GDP.

All together, the total nonfinancial U.S. debt level in 2019 was about $52 trillion or 243% of GDP, for an economy that produces around $22 trillion annually of goods and services. It’s like having a 500-pound man riding a pony.

With soaring budget deficits of some $3.7 trillion in 2020-21 and of about $2.0 trillion in 2021-22, the total U.S. government debt alone could reach $27.7 trillion next year.

When there is no expected inflation, governments may rely on the central bank to purchase newly issued treasury bonds and let the money supply increase. This is not an option, however, that is open to heavily indebted private companies and consumers. The latter may have no other choice but to default on their debt, or severely curtail their expenses.

For the immediate future, the economic consequences of such a debt deflation could put an important brake on the strong recovery that many observers expect, once the pandemic crisis has run its course and the economy returns to normal.

The leveraged loan market

To add to all public and private debts, policy makers and regulators should keep an eye on the largely unregulated $1.2 trillion leveraged loans market, which is a market for speculative or low-grade high-yield corporate loans.

These relatively new debt instruments are somewhat reminiscent of the 2007-2008 subprime mortgage fiasco, which led to the 2007-2009 Great recession. They could be the first category of debts to collapse if the current recession were to deepen.

Conclusion

It is very unusual that a major public health issue is intertwined with a major economic decline. In the current double-crisis world, nobody can predict with certainty what will happen in the coming years.

That is why I submit three possible scenarios of things to come: A short-term optimistic scenario in which everything goes as wished; a mid-term stagflation scenario when both inflationary pressure and slow economic growth go side by side; and, a more pessimistic scenario, in which widespread deflation and wrong responses and bad policies combine to push the economy into a prolonged economic depression.

1-   An optimistic scenario: Everything turns out just right, public bailouts are enough to prevent the onset of a structural deflation, and the unfolding of a dangerous debt deflation spiral is avoided. Unemployment returns to its historical levers. —It is based on the assumption that the threat of a virus contagion fades away permanently, and does not linger on for months, if not for years. Moreover, it is expected that disturbed commercial supply chains are easily reestablished without destructive trade wars.

2-   A mid-term stagflation scenario: The current state of affairs gives rise to important shortages in certain lines of production; prices jump and there are calls for some form of rationing; and stagflation sets in. Unemployment remains high.

3-   A more pessimistic scenario: After years of fiscal irresponsibility and the piling on more and more debt, the current economic recession turns into a full-fledged global economic depression and the economy struggles under a process of debt deflation. Policy mistakes are made and are a repeat of the 1930’s errors, i.e. rising interest rates, a contracting money supply, beggar-thy-neighbor trade policies, which combine to precipitate a worldwide economic depression where every country loses. Unemployment remains stubbornly above 20 percent for many years.

Geopolitically speaking, as judging by some repetitive aggressive rhetoric, again and again, the Trump administration (Trump himself, Pompeo, Kushner, Miller, etc.) seems to be tempted to start a war, commercial or otherwise, with China and/or with Iran. Such an occurrence could throw gasoline onto the fire and turn a bad situation into an economic disaster, with a galloping inflation, even possibly hyperinflation on the horizon. This does not happen often, but such events did occur in the past.

Therefore, there are many reasons why it would seem to be too early to declare victory on the economic front and think that everything will go back to normal, once the viral crisis subsides and the economic lockdown is completely lifted.

—Only time will tell.

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International economist Dr. Rodrigue Tremblay is the author of the book “The Code for Global Ethics, Ten Humanist Principles”, of the book “The New American Empireand the recent book, in French « La régression tranquille du Québec, 1980-2018 ».

Please visit Dr. Tremblay’s site:

Posted Tuesday, May 12, 2020, at 8:30 a.m.

Email to a friend:
http://rodriguetremblay100.blogspot.com/

Send contact, comments or commercial reproduction requests (in English or in French) to:
N.B.: Comments may be published on our weblog, unless you request otherwise.

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© 2020 by Dr. Rodrigue Tremblay



Monday, March 23, 2020

In Times of Crisis, How to Prevent an Economic Meltdown and Avoid Privatizing Profits and Socializing Losses



By Dr. Rodrigue Tremblay
(Author of the books “The Code for Global Ethics”,

 “The test of our [moral] progress is not whether we add more to the abundance of those who have much, it is whether we provide enough for those who have too little.”Franklin D. Roosevelt (1882-1945), 32nd American President (1933-1945); (in his ‘Second Inaugural Address’, Wed., Jan. 20, 1937).

“The best way to destroy the capitalist system is to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. … By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some.”
John Maynard Keynes (1883-1946), British economist, 1936.

Our economic leadership does not seem to be aware that the normal functioning of our economy leads to financial trauma and crises, inflation, currency depreciations, unemployment and poverty in the middle of what could be virtually universal affluence in short that financially complex capitalism is inherently flawed.”
Hyman Minsky (1919-1996), American economist, 1986.


Here we go again: Another financial bubble burst and another financial crisis threatening to disrupt the real economy! This time the trigger is the health pandemic of the coronavirus crisis, the most serious in a generation, which is paralyzing the real economy and triggering crashes in the financial sector.

The crisis and public measures to fight it (drastic travel restrictions, social distancing, worker quarantines, etc.) have provoked a major global economic meltdown and perturbed supply chains domestically and around the world. Moreover, they have profoundly shaken financial markets already vulnerable, after years of easy money policies and round after round of so-called ‘Quantitative Easing (QE) by central banks, which have encouraged unsustainable debt levels by pushing interest rates down at historically low levels, irresponsible large fiscal deficits by governments during prosperous times, which have enriched the very rich, and runaway unregulated financial speculation that have had the same result.

An oil supply glut worldwide has now produced an additional deflationary bias in the world economy, which will be difficult to reverse. To top it all, there are countries that are presently run by inexperienced and/or incompetent leaders.

As a result, the world is presently going through a convergence of health and economic crises that creates a perfect economic storm, for which many countries are not prepared at all to handle.

In the United States, for example, only two years ago, in 2018, President Donald Trump fired his top health official (Rear Adm. Timothy Ziemer) who was responsible for the response to pandemics, and he was not replaced. He then shut down the White House National Security Council's entire global health security unit in charge of preparing for a global pandemic. In so doing, Mr. Trump forgot the precautionary principle in government, which requires preparations to face unforeseen events.

During such a severe health and economic crisis, which touches some people more than others, governments that sometimes create problems are the only collective instruments to fight it in the most ethical way possible.

Of course, besides taking the required measures to prevent the virus crisis from spreading and preventing panics, governments must take, on the economic and financial fronts, some fiscal, regulatory and monetary steps to prevent a deflationary downward spiral of economic activity and to stabilize the financial system. They must, above all, prevent human suffering and help workers, families and communities under financial strain.

What should governments do and not do to minimize the impact of the supply shock and of the demand shock presently hurting their economies?

1- First of all, government priority has to be to get out of the virus health crisis as soon as possible, and to provide medical care and assistance, while preventing shortages. Measures have to be taken to fight the infectious disease and alleviate human suffering, but also to prevent price gouging and other instances of corruption.
Lessons from previous virus outbreaks (Ebola, SARS, H1N1, etc.) can be a guide to action.
The coronavirus (Covid-19) crisis is presently the main cause of economic disruptions and hardships, and traditional monetary and fiscal macroeconomic policies are not geared to solving that type of problem.

2- The second priority is to save the economy from collapsing, and from entering into a deep recession or even into an economic depression. The first step, which is already taken to some extent, is for central banks to make sure that there is enough liquidity in the financial system to keep the latter functioning. This means that they must inject as much liquidity, i.e. cash, as needed to prevent bankruptcies in cascades of otherwise creditworthy and solvent companies, and to allow credit to flow freely.

But it is not acceptable for the government to tap public money to alleviate private banks and private companies’ cash-flow problems. This must not be done at the public expense and to enrich owners of capital, but according to sound business practice. Advances must be guaranteed loans, secured by a bank’s or a company’s assets, physical assets or shares, —and to be repaid at a future date. That is the only way to avoid taxpayers being fleeced by private improvident and risk-taking operators whose motto is “let’s privatize profits, but socialize losses.”

3- However, it must be recognized that monetary policy as such is largely ineffective in correcting a supply shock. It cannot restore perturbed supply chains or prevent companies from stopping production and employment when there is no demand for their products or services. And, it cannot solve a demand shock by simply cutting interest rates, which are already low, when people’s incomes are falling and consumer confidence is absent, or when consumers are unable to get out and spend because they are quarantined.

Moreover, negative real interest rates, the result of attempting to boost economic growth through financial means, as has been tried in Japan and in Europe, are bound to create important economic problems down the road. They are fundamentally deflationary.

They hurt savers and retirees and they contract effective demand from this important group of consumers, and they exert a negative pressure on prices. They also pose a threat to the financial viability of pension funds and insurance companies by forcing them to invest in riskier financial assets. They also encourage companies to invest in projects that would not been profitable otherwise.

4- As a preliminary conclusion, therefore, let us say that from an economic, political and social perspective, injecting liquidity in the economy is not ‘a whether or not question’ during a crisis, but it is how it should be done.

More than a century and a half ago, British economist and banker Walter Bagehot (1826-1877) spelled that out clearly when he wrote that in a time of economic and financial crisis, a central bank must discount heavily, i.e. lend as much money to institutions in need as necessary against collateral, to avoid cascading defaults and bankruptcies.

But this must be done at “punitive rates of lending” in order to avoid enriching distressed banks and their owners with public money, and to create a moral hazard by encouraging foolish risk-taking, with the knowledge of being bailed out in case of trouble.

What does it mean in practice? It means that in a time of crisis, the central bank or the Treasury must lend as much money as necessary, but the weaker and the more risky the collateral is, the higher the lending rates must be.

That is a lesson that was not totally followed in the U.S. during the 2008 subprime mortgage crisis when the Fed increased its balance sheet from $870 billion in 2007 to $4.5 trillion by 2015, (a more than a five-fold increase), in order to save some mega banks from bankruptcy by relieving them of their bad debts. The purpose, of course, was to prevent the financial system from collapsing under the weight of a mountain of mortgage-backed securities that had turned sour. But it ended up enriching the already very rich at the expense of the rest of the population.

There is unanimity among economists about the need for fiscal policy responses to the crisis

The need of strong fiscal responses, to help people and companies, especially small and medium-sized businesses, is obvious. But, by what means, at a time when fiscal deficits are already high?

Hundreds of thousands of workers are being temporarily laid off, many with no severance. They find themselves suddenly without paycheques, because their employers cannot produce and sell their goods or services. The criteria and requirements to qualify for unemployment insurance benefits could be relaxed in order to make more unemployed workers temporarily eligible.

But all individuals and families, to different degrees, may see their financial situations deteriorate during the crisis. This is both an economic and social problem. Helping those individuals and families who are the most in need of urgent assistance poses a logistic problem for governments.

For one, some laws or directives by the relevant level of government could be adopted to protect the most vulnerable people from being evicted from their lodgings during the crisis. Small landlords are also facing mortgage payments and would have to be compensated for lost rents.

The simplest fiscal way to quickly deliver cash payments to people in need would be to mail monthly checks of a few thousands dollars to taxpayers whose income in 2018 was below a certain amount, say $50,000, in order to provide them temporarily with a basic guaranteed income to bail them out during the coming months.

The proposal made by House Speaker Nancy Pelosi to provide emergency government funding (two-thirds of wages while away from work) to reimburse lost paychecks for those workers who are self-quarantining and are missing work or losing jobs amid the outbreak, goes in the same direction. This could be done through the channel of employers or through the Social Security Administration.

There are, however, logistical problems with any simple solution. Indeed, it is not everybody who has a full-time job, a tax record and a mailing address. Some people are self-employed, some are retired, some are seasonal or part-time workers, and some have income too low to file an income tax return. Some are homeless. They could be left out of direct financial assistance if direct assistance is used, even though they are probably among those who need help the most.

For example, there were more than half a million homeless Americans in 2019. These people would have to be reached and helped through different approaches. The number of children in needy households must also be taken into consideration. Possibly, municipalities or other community organizations could serve as aid distributors.

Proposals to resort to payroll tax cuts would not address the problem properly since such taxes are only paid when employees are still working! Similarly, providing direct financial assistance to people with incomes as high as $198,000 a year, as Republican Majority Leader of the U.S. Senate Mitch McConnell has proposed, would be both very costly and unethical.

Whatever the channels used, some direct fiscal assistance from the government has become a necessity, considering the declining incomes of many workers laid off during this crisis.

For example, if federal and state governments in the U.S. were to inject in the economy, this year, an amount equal to about 30% of the Gross Domestic Product (GDP), this would mean a combined effort of $US 6 trillion.

In Canada, if federal and provincial governments were to do the same, their combined efforts to sustain the economy would amount to some $CAD 550 billion. This is much more than what is under consideration in either country.

We must add that the Covid-19 pandemic is worldwide and that countries should cooperate to stabilize international trade, in order to facilitate an orderly return to prosperity once the health issue has been resolved.

Conclusion

There is no doubt that all efforts should be devoted to stopping the coronavirus pandemic in its tracks. This is an absolute public health priority.

However, in so doing, all must also be done to repair the heavy damage inflicting on the economy by distortions in the supply chains, by workers being laid off in droves, and by deflationary financial crashes, so that the economy can rebound quickly when things get back to normal. And since this is a worldwide crisis, the more international coordination to lay the ground for a quick return to prosperity, the better it will be.

For one, governments should not refrain from relying on monetary, regulatory and especially fiscal policies to inject liquidity and financial assistance where it is needed. However, this should not be done in a way that ends upprivatizing profits, while socializing losses.”

Secondly, it must be said that over the last forty years or so, there has been a curious politico-economic system, which has been imposed upon the people in some countries.
It has translated into being a harsh capitalist system for most of the people and an accommodating socialist system for the owners of capital and the super rich. After the current catastrophe, I do not think that people are going to tolerate such a system much longer.
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International economist Dr. Rodrigue Tremblay is the author of the book “The Code for Global Ethics, Ten Humanist Principles”, of the book “The New American Empire, and the recent book, in French « La régression tranquille du Québec, 1980-2018 ».

Please visit Dr. Tremblay’s site:


Posted Monday, March 23, 2020, at 12:30 p.m.

Email to a friend:
http://rodriguetremblay100.blogspot.com/

Send contact, comments or commercial reproduction requests (in English or in French) to:
N.B.: Comments may be published on our weblog, unless you request otherwise.

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N.B. For commercial re-use, please write to: carole.jean1@yahoo.ca.
____________________________________________________________
© 2020 by Dr. Rodrigue Tremblay