The year 2021 is still largely unwritten. Once the world returns to a semblance of pre-pandemic normalcy, what will the new normal look like? Will a more inclusive, climate-focused economic recovery start to take shape? Is the groundwork currently being laid? Or will the year close with growing social unrest, political upheaval, and a continuing slide toward the climate abyss?
The 2020 pandemic worldwide has exposed the devastation wrought by decades of trickle-down economics. The world's richest 2,153 individuals control more wealth than the poorest 4.6 billion. The wealth of the world’s 10 richest people grew by US$540 billion since the beginning of the pandemic.
As destructive as it has been, COVID-19 is but a prelude to a climate apocalypse. The IPCC 1.5 C special global warming report concluded the world must reduce more than half of its greenhouse gas emissions by 2030 in order to maintain a two-thirds chance of limiting global warming to 1.5 C. Its effects are already overwhelming the planet.
Millions of people, predominantly in the global south, are experiencing the unprecedented devastation: wildfires, floods, droughts, temperature extremes, melting polar ice caps, species extinction, death and disease. The 2020 United Nations Climate Adaptation Gap report released in January finds that rich nation governments are not taking sufficient financial and enforcement measures needed to adapt to climate impacts.
In Canada, the four-decades-long neoliberal policy dominance has driven inequality to record levels, shredded our social safety net, and exposed our inaction on climate. According to a recent Canadian Centre for Policy Alternatives report, CEO pay is now 202 times more than that of the average worker. They are paid mainly through stock-based awards, which are taxed at half the rate of the average worker’s earnings. This is roughly a 10-fold jump since the late 1970s: A level of inequality that if left unchecked, threatens to disrupt our economic system, degrade our democracy, and delay climate action.
The pandemic has temporarily loosened the corporate stranglehold on the economic policy agenda. Though far from perfect, proactive government leadership is back. After years in the shadows, the Bank of Canada has also stepped up, holding the bulk of federal and provincial government debt issued in 2020 to prevent economic collapse.
Does this mean the corporate sector will willingly relinquish its power? Will the guardians of economic orthodoxy surrender to a new paradigm? Will the government under the new cohort of public service leaders — Mark Carney, Tiff Macklem, Michael Sabia — move in a new direction?
Corporate elite gatherings, notably the World Economic Forum, profess the need for a “great reset.” Its founder and chair Klaus Schwab stated: “Free-market fundamentalism has eroded worker rights and economic security, triggered a deregulatory race to the bottom and ruinous tax competition, and enabled the emergence of massive new global monopolies.
“Trade, taxation, and competition rules that reflect decades of neoliberal influence will now have to be revised.”
"As destructive as it has been, COVID-19 is but a prelude to a climate apocalypse," writes Bruce Campbell. #cdnpoli #climatechange
What are we supposed to make of this rhetorical about-face?
Joel Bakan, in his sequel to The Corporation, concludes that despite all the posturing about its changed role, the corporation’s character is fundamentally the same: The “pathological pursuit of profit and power.” Corporations will “do good” only if it is good for shareholder value. The corporate architecture of persuasion — advertising, lobbying, political donations, funding of like-minded think tanks, threats to leave, etc. — remains very much in place.
Despite Liberal government promises over the last five years: tax the wealthy, clamp down on tax avoidance, break up monopolies, implement pharmacare, child care, etc. — proposed measures that are toxic in the eyes of the plutocracy — little has changed before now.
On the 2020 Climate Change Performance Index (CCPI), which ranks 63 countries on their progress on reducing GHG emissions, energy consumption, renewable energies and climate policy — Canada was 54th overall. In December, the government released its long-awaited climate plan featuring a major increase in its carbon tax. This will undoubtedly boost the credibility of its carbon commitments and improve its abysmal climate performance rating. But there is much more to be done.
Right-wing politicians and like-minded media pundits are pushing back against the run-up in federal deficit spending over the last year. The goal is to pre-emptively silence conversations about tax increases and amplify the call for program cuts once the COVID-19 crisis is over and recovery is underway.
To this end, these critics are targeting the electorate with a series of deficit myths. Among the most absurd is that governments are like households and must balance their budgets. (In reality, they mean spending cuts, not tax increases.) Such falsehoods ignore basic accounting principles: a $100-billion deficit in the public sector is, by definition, a $100-billion surplus (or reduced debt) in the private sector, households and businesses, whose debts are much higher than that of the government — and unlike the Bank of Canada, cannot their own create money. It is to everyone’s advantage that the government is shouldering this burden during the crisis.
Another is the insidious notion we are leaving this debt burden to our children and grandchildren. Contrast the legacy of higher debt versus the legacy of not spending more to address equity and insecurity disparities exposed by the crisis, or spending to counteract the negative scarring effects workers will face as a result of COVID-related disruptions. Not to mention that the so-called burden we are leaving to our children and grandchildren is, if we fail to act — a recipe for planetary calamity.
Will the Liberal government break with neoliberal orthodoxy and implement enforceable laws and regulations that ensure corporations “do good?” Or will it resume its deferential “partnership” relationship with petroleum, transportation, social media, agribusiness, pharmaceutical giants, and their private equity enablers whose overriding priority is profit and power?
A majority of the Canadians are on board with decisive action on climate change, although there are splits — especially along party lines and geographically. Strong support also exists for reducing inequality through taxes on the wealthy and the strengthening of our social safety net and universal social programs.
Past Liberal government performance — notably during the mid-1990s — does not inspire confidence, especially if it were to gain a majority in an election that could happen this year. Then again, this time the stakes are vastly higher. The federal budget expected in March will provide a clearer picture of its direction.
Will the Bank of Canada revert to business as usual letting financial markets dominate control of money creation with their propensity to lend for climate-unfriendly investment? Or will it continue its monetary leadership directed towards social and climate-related goals?
Will the aforementioned public service leaders shaping government policy take the safe path of incremental change? Or will they take the political leadership on a path of transformative change?
Mark Carney — the UN special envoy on climate change leading preparations for the November 2021 Climate Change Summit in Glasgow (COP 26) — has the ear of the political leadership in Canada and abroad. He told CBC’s Sunday Edition he is committed to putting climate change much higher on the government and corporate agenda, and is working to “make sure the financial system is thinking every day, every minute of every day, about that issue. And it's putting money behind those who are solving the problem — or are part of the solution — and it's taking money away from those who aren't moving fast enough." The evidence suggests his message is increasingly being heard and acted upon.
Bank of Canada governor Tiff Macklem has been deeply involved in efforts to ensure the transition of banks and other financial institutions to sustainable lending activities. In a November speech, Macklem declared “climate change and the transition to low-carbon growth will have profound impacts on virtually every sector of the economy … so we need to understand the implications of climate change for economic growth and inflation.” He has led the bank’s monetary creation initiative supporting fiscal spending during the pandemic. It is expected he will employ so-called quantitative easing (a.k.a. money creation) to underpin government climate and social investment priorities.
A third actor is the new deputy to finance Minister Chrystia Freeland, Michael Sabia. A former corporate executive, Sabia headed the Quebec public sector pension fund, the Caisse de dépôt, where he pioneered renewable energy investments before they were commonplace. He has a reputation as an independent thinker who will shake up the bureaucracy. In a Globe and Mail op-ed (well before he was appointed deputy minister), Sabia wrote that how government acts in the wake of the pandemic will determine citizens’ confidence in our democracy, which has been greatly undermined in recent decades.
Sabia, Freeland, Macklem and Carney evoke the memory of public servants and political leaders who rose to meet the challenge of doing whatever it took to conquer fascism during the Second World War. Will they be instrumental — indispensably, along with an empowered citizenry and emboldened minority Parliament pressure — in making 2021 a turning point, with ambitious emissions reduction commitments accompanied by mandatory, enforceable targets entrenched in law? Or with half-baked and broken promises, will the slide toward the abyss continue? It is still possible to turn things around, but the odds are dwindling. In the words of Bob Dylan: It’s not dark yet, but it’s getting there.