Time for a ‘fundamentally different way of organizing the economy,’ say progressive economists

Strengthening the care economy, expanding the public sector, and a Green New Deal are vital in the wake of COVID-19
Photo: Sean Marshall
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“A good reflex to have, if we’re critical of reopening the economy in the same way as it was before, is to use the term ‘reconstruction’ rather than ‘recovery,’” says Guillaume Hébert.

“That choice of terms is, itself, a political choice.”

Like many others in his field, Hébert, a researcher at the Quebec-based Institut de recherche et d’informations socioeconomiques (IRIS), has been working hard these past months to create a roadmap for what the economic recovery — or, reconstruction — that follows the COVID-19 pandemic and associated economic crisis might look like.

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Taken together, the work of progressive economists like Hébert has laid out a vision of a post-pandemic economy focused on care work and an ambitious expansion of the public sector.

The care economy

“One of the real eye-openers for me has been the extent to which the ‘essential economy’ hinges on care,” says Armine Yalnizyan, an economist who is also the Atkinson Fellow on the Future of Workers.

“It hinges on elder care, hinges on childcare, hinges on healthcare.”

Yalnizyan says she expects to “lose some yet unknown quantity of the ecosystem of childcare” as a result of the crisis, and that reality has the potential for widespread impact on the workforce.

Without making childcare more accessible, and improving its quality standards, the coming months and years could see more working mothers decide to stay home to raise their children themselves.

“We’re looking at two things,” Yalnizyan says. “Either a ramping up of the childcare system — which should be money with strings, not warehouses for children. And if we don’t do that, we’re looking at rolling back decades of advances that women have made in the workplace.”

David Macdonald, a senior economist at the Canadian Centre for Policy Alternatives, also sees the care economy as a key aspect of any reconstruction. In particular, he highlights the need to improve long-term care standards.

“Clearly there needs to be a new national strategy on long-term care,” Macdonald says. “People who study it know that there’s been a crisis in long-term care for years, and this [CVOID-19] crisis has really just exposed how bad it is.”

“We can’t keep paying these workers worse than zookeepers, which is what we’ve been doing for 50 years.”

In Quebec, the province hardest hit by COVID-19 in Canada, the large majority of related deaths have occurred in long-term care centres — nursing homes in particular but also retirement homes more broadly. The people who staff Quebec’s nursing homes, which are called CHSLDs, are disproportionately immigrants, filling precarious jobs and generally working in multiple facilities in order to make enough money to live. This dynamic is a key cause of the spread of the coronavirus from facility to facility.

Macdonald says that different levels of government should immediately step in to improve working standards in long-term care facilities. In particular, he recommends using income support measures to boost pay and improve the ratio of workers to patients across the board.

Yalnizyan also highlights the widespread use of temporary placement agencies in hiring long-term care workers. “We have a labour relations problem,” she says. “We can’t keep paying these workers worse than zookeepers, which is what we’ve been doing for 50 years.”

“Here we are, moving into an era where population aging is a big deal,” Yalnizyan says. “It’s going to be introducing a huge new set of challenges to young workers.”

“This generation is going to have to do more heavy lifting than any generation in Canadian history to take care of people that are too young, too old, or too frail to work,” she says. “This is going to be the biggest dependency ratio that we have seen in history.”

Public reconstruction

Due to the closure of significant sections of the economy, some small businesses have gone under, and many more risk the same in the months to come.

“We should be setting up a reconstruction agency to help workers take over failed businesses, with or without compensation,” says Michal Rozworski, an economist and co-author of The People’s Republic of Wal-Mart.

In the meantime, significant cash bailouts are flowing from the government, particularly at the federal level, to prevent bankruptcy. Rozworski says the widespread use of public financing represents an opportunity to democratize the economy.

“Look at bailouts for the airline industry, for example,” he says. “We could say sure we’ll give you money, but we expect to get something from this, a large equity stake. You could do the same thing with housing: cancel rent, and for landlords who need a bailout, we’ll bail you out — but we expect a large equity stake in these properties. And over time, you can take over some of these properties for the public and move towards decommodified housing.”

“The question is whether we bail them out, like we did in 2008, as a temporary measure, or a longer-term transformative program.”

Hébert sees a similar opportunity in the Canadian Emergency Wage Subsidy (CEWS) program, where the federal government pays 75 per cent of wages for workers in companies that have lost revenue during the crisis. He suggests the program be modified to allow for greater economic planning.

If the criteria were changed, the CEWS could allow planners to “make the decision that it’s better that some businesses simply don’t exist,” he says. “We would just need to make sure that the workers at those companies have a strong safety net, and that those workers are given new opportunities for good jobs.”

“There needs to be an element of choice here,” he adds. “We need to choose which enterprises we think are worth saving, and which should stop existing in 2022, 2023, whatever.”

Hébert says this thought led him to the conclusion that the government should begin a massive direct-hiring process for the economic reconstruction. Speaking about Quebec, he said the provincial government should immediately hire 250,000 people to accomplish the types of tasks that will be necessary both to survive the crisis and to address the inequalities that made the pandemic worse.

“We propose not just injecting cash, but also hiring people in key sectors,” he says.

“The idea starts from the principle that we’re going to have a lot of people unemployed, and we’re going to have a lot of tasks that need to be accomplished,” Hébert says. “If we had done it [early in the crisis], we could have maybe avoided some of the worst horror stories that have happened, particularly in CHSLDs.”

"We can’t survive as a species without engaging in a certain level of economic planning"

In addition to the healthcare sector, which he says should be “100 per cent public in terms of financing, while being careful to avoid too much centralization,” he points to the banking sector as another target for nationalization. Doing so could “connect financing to socially beneficial projects,” rather than leaving it to the whims of the managers of financial markets, who are guided by the profit motive.

Hébert and Rozworski both describe the economic crisis associated with COVID-19 as the result of the failure of the market as a distribution mechanism — while many things are produced, people can’t always get what they need.

In place of the market, Rozworski advocates for sharply increased economic planning, which would be possible under a system of increased public ownership of the economy. So far though, he’s not surprised to see that the governing federal Liberals are unwilling to explore those options. “The government is willing to go pretty far on public financing,” he says, “but not on things like public ownership.”

“We can’t survive as a species without engaging in a certain level of economic planning,” Hébert says. “We already needed to do it just because of the ecological questions, now we see it more than ever.”

Green New Deal

“The idea with the Green New Deal,” Hébert says, “is that we’re not just going to reconstruct the economy as it was before. We’re going to do it in a way that prioritizes activity that allows us to survive, to do the climate transition. We’re not just going to hire people to dig and fill holes.”

“You have to look at the sectors that are most impacted by the crisis,” states Rozworski. “So aviation, the oil sector, and so on. You have not just temporarily depressed oil prices, but longer-term price collapses.” This change, he says, is likely to outlast the COVID-19 crisis, because it began years before.

“It’s very costly to run oil sands operations, so owners are pretty reticent to shut them down,” Macdonald says. “But it’s likely that oil sands operations will start to cease in the coming months, because they’re far more expensive to run than what the oil is actually worth.”

“There’s an opportunity,” he says, “to send these people back to work doing things other than oil sands development.”

Rozworski sees an opportunity for “a big program of building green public housing, or taking over and retrofitting existing housing, so that housing becomes considered a public good and not distributed unequally by the market.”

“If you’re able to have public housing in a greater amount,” he says, “you’re able to plan a lot better into how people live, and give people more power over their daily lives in their homes, neighbourhoods, and housing complexes.”

He agrees with Yalnizyan about the centrality of the care economy to a functioning society, stressing that its expansion needs to also be a significant part of any Green New Deal. “Green jobs aren’t just building windmills, but it’s also things like childcare, like senior care,” he says. “The system of for-profit senior care is an atrocity.… Putting that under public control, better staffing, and so on, that’s all green jobs as well.”

All the economists Ricochet spoke with stressed that such an economic transformation must also include improvements to working conditions across the board. Hébert, for his part, advocates for a reduced number of work hours.

“The reduction in the work week is probably a key to address the climate crisis,” he says. “We could move towards an average week of 25 or 28 hours” without a reduction in income. Such measures, he says, could be included in a massive direct-hiring program by the government, or imposed on companies given economic relief measures during the crisis.

“We’re proposing a fundamentally different way of organizing the economy,” Hébert explains, “to dramatically expand the public sector at the expense of the private sector.”

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