OTTAWA and HALIFAX — An expert who has been tracking 75 years of income inequality and economic growth argues Canada is on the brink of a massive change in policy direction as a result of COVID-19’s impact.
Lars Osberg, McCulloch Professor of Economics at Dalhousie University and research associate with the Canadian Centre for Policy Alternatives (CCPA), has written a new report that predicts that allocating the burdens of economic contraction will be a key policy problem in the post-COVID-19 world.
“The massive shock of the pandemic is driving an urgent rethink in economic policy and showing just how quickly major policy changes can happen,” says Osberg, who is available for expert commentary on what lies ahead.
“There is growing consensus that the post-COVID-19 world can’t be shaped by the same political faith that relied on tax cuts and austerity, globalization and toleration of entrenched income inequality to produce the economic growth that would solve all our problems.”
Although the pandemic is still ongoing, its impacts on market income inequality are already clearly K shaped: recovery at the top of the income ladder but worsening misery at the bottom. Job losses have been particularly concentrated among low wage workers who are disproportionately female, young and racialized.
Canada’s millennial generation was hard-hit by the Great Recession of 2008. They entered the gig economy and worsening income inequality of the 2000s, are incurring major earnings losses in the COVID-19 recession and will bear the costs of climate change. Their life experiences differ significantly from the economic security experienced by the baby boomers who grew up in the 1950s and 1960s when full employment and balanced growth were top policy priorities.
“As with most grand bargains, economic policy is shaped by historical context,” says Osberg. “The pandemic is the formative experience of a generation and will shape its lifetime political perspectives, influencing decisions for many years to come.”
Canada isn’t alone in realizing that a new paradigm for economic policy is needed. Osberg points to the remarkable speed at which “building back better” and the Green New Deal have become mainstream perspectives among international organizations, the E.U. and Biden administration in the U.S.
“In the ‘before times’ of 2019, many observers viewed these proposals for increased public spending, supported by tax reform, as impractical fringe ideas,” says Osberg. “COVID-19 has showed us just how quickly that can change.”
The full report, From Keynesian Consensus to Neo-Liberalism to the Green New Deal: 75 years of income inequality in Canada, is available for download on the CCPA website.
For interviews contact: Alyssa O’Dell, CCPA media and public relations officer, at 343-998-7575 or [email protected].