Moving To New Steady State — Brian Romanchuk

The issue Canada faces now is that it is unclear what the strategy is. In my view, the only clear option is eradication, as it presents an obvious endpoint. However, the situation south of the border is worrisome, and it cannot be sealed forever. We are stuck in the position of hoping for a vaccine, or medical treatments that can greatly reduce the effects of the disease. I am not a fan of relying on hope as a strategy.

As for the economic strategy, it will be necessary to decide what to do with industries that cannot safely operate. I do not see any options that are politically palatable. It may be that I have been spending too much time writing about MMT recently, but putting workers in shuttered industries into a Job Guarantee programme seems like the fairest option. As for the firms, I lean towards fairly harsh national interest considerations. For example, a national airline is important for internal communications, and even for back-up troop transport. Canadian National Railways was created out of the wreckage of failed private railways. Conversely, given the ease of setting up a new bar, I see no strategic need to keep drinking establishments afloat. The premise of capitalism is that owners take risks in face of fundamental uncertainty; they get the upside if things work out, but should they not face the downside?

Probing for "the new normal." 

Faced with a still huge level of uncertainty, evaluating risk is difficult. 

This pandemic is a massive exogenous shock to the global system, which was not prepared for it sufficiently. There is already a large contraction of demand, and potential a contraction of supply if global commerce continues to be restricted, especially if there is contraction in the world economy along with food scarcity, as international agencies are foreseeing. 

And we are simultaneously experiencing the quickening of  another exogenous shock in the form of climate change. While this is more gradual in onset than a pandemic, it acts like a vise. 

Difficult to discern an outline in the fog that clouds the immediate future, and the long term doesn't offer much to be optimistic about, other than hopefully achieving success in meeting the emergent challenges. Those able to adapt, innovate and cooperate will do best. 

Societies with these characteristics will  have a better chance at outperforming others, which is already becoming evident. But the necessity on the global scale is concerted action rather than some nations and regions taking advantage of competitive advantage.

Bond Economics

Moving To New Steady State
Brian Romanchuk