{"id":824,"date":"2021-11-11T14:38:40","date_gmt":"2021-11-11T19:38:40","guid":{"rendered":"https:\/\/pressbooks.library.ryerson.ca\/pandemicpublicpolicy\/?post_type=chapter&p=824"},"modified":"2022-01-17T12:51:50","modified_gmt":"2022-01-17T17:51:50","slug":"did-this-weeks-economic-policy-statements-go-far-enough","status":"publish","type":"chapter","link":"https:\/\/pressbooks.library.torontomu.ca\/pandemicpublicpolicy\/chapter\/did-this-weeks-economic-policy-statements-go-far-enough\/","title":{"raw":"4d. \"Did this week\u2019s economic policy statements go far enough?\"","rendered":"4d. “Did this week\u2019s economic policy statements go far enough?”"},"content":{"raw":"
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Did this week\u2019s economic policy statements go far enough?<\/a><\/span><\/h1>\r\n<\/div>\r\n
First Policy Response<\/em>, OCTOBER 30, 2020\u00a0<\/span>| <\/span>IN\u00a0ECONOMIC POLICY<\/a><\/span>\u00a0<\/span>| <\/span>BY\u00a0KARIM BARDEESY<\/a>\u00a0AND\u00a0MATTHEW MENDELSOHN<\/a><\/span><\/span><\/div>\r\n<\/div>\r\n
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The federal government issued three big updates this week about Canada\u2019s approaches to economic and public health policy for the COVID-19 recovery. On Wednesday, <\/span>Finance Minister Chrystia Freeland<\/span><\/a> delivered a virtual keynote speech to the Toronto Global Forum, and <\/span>Bank of Canada Governor Tiff Macklem<\/span><\/a> unveiled the central bank\u2019s latest monetary policy report. Meanwhile, Chief Public Health Officer <\/span>Dr. Theresa Tam<\/span><\/a> delivered her annual report on the state of public health in Canada.<\/span><\/p>\r\n

Policy watchers had been keeping a close eye on these developments to signal Canada\u2019s policy priorities for the recovery, but there were mixed reactions on whether they went far enough in setting an agenda \u2014 including among the FPR team. FPR directors Karim Bardeesy and Matthew Mendelsohn share two different takes.<\/span><\/p>\r\n\r\n<\/div>\r\n<\/div>\r\n<\/div>\r\n<\/div>\r\n<\/div>\r\n<\/div>\r\n<\/div>\r\n<\/div>\r\n<\/div>\r\n<\/div>\r\n

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\r\n\r\n\u00a0<\/span>\r\n\r\nKarim Bardeesy: Without clear priorities, there\u2019s no real plan<\/b>\r\n\r\nThere\u2019s something missing in this week\u2019s trio of reports and speeches from Chrystia Freeland and Tiff Macklem, the lead economic policy-makers in Canada, and Dr. Theresa Tam, the chief public health officer. On their own, they are important pieces of work that sum up the current consensus in their areas, across many countries. But absent other political and policy leadership, they are not enough to guide future decision-making.<\/span>\r\n\r\nFreeland\u2019s speech laid out the arguments for income supports for people and businesses, increased investments in health care, and high deficit spending in a low-interest-rate environment. Macklem\u2019s report laid out the hows and whys of the Bank\u2019s long-term low-interest-rate peg and its bond-buying program. And Tam\u2019s report described the principles of the aggressive public health measures required to contain the virus, and described its disproportionate effects on different populations.<\/span>\r\n\r\nA good measure of policy-making is actually art, not science. That art comes from the confidence \u2014 economic or otherwise \u2014 that is generated by having a coherent mix of policies founded in evidence, and showing a longer-term commitment to them. That\u2019s what a majority of the public, and those who interpret technical policy-making for the public, are looking for.<\/span>\r\n\r\n(Note that all three institutions \u2014 the federal Department of Finance, the Bank of Canada and the Public Health Agency of Canada \u2014 need to continue to make their work, and the concepts that guide them, more understandable to Canadians. This is a project we support through First Policy Response, and it\u2019s good to see Freeland\u2019s candour and plain-spokenness, and Macklem\u2019s recognition of this challenge.)<\/span>\r\n\r\nBut it\u2019s not a real policy discussion to say that interest rates should be kept low for a long time, that we can rely on government borrowing and central bank intervention to sustain people and businesses, that the health system needs emergency investments, or that we will require some sort of fiscal anchor or plan to set limits on borrowing and\/or stave off inflation. Nor is it controversial to observe that the health and other effects of the pandemic are being felt unequally across demographic groups, and that policy measures need to take this into account.<\/span>\r\n\r\nThat\u2019s not to underplay their efforts or observations. But the economic and public health debates have to be nested in a larger debate about the political and public-policy objectives during this fight. And for too long, too many policy leaders have preferred generalities to specifics.<\/span>\r\n\r\nTake the Bank\u2019s statement that it \u201cexpects this growth to be uneven across sectors and choppy over time. Some parts of the economy will simply be unable to completely reopen until a vaccine is widely available, so sectors will recover at very different speeds.\u201d Yes \u2014 but which sectors, at which pace? The risk the Bank has identified is real. Policy guidance could help to resolve it.<\/span>\r\n\r\nCharting a path to recovery will require trade-offs. It\u2019s up to politicians and other leaders to more clearly identify those trade-offs, and to prioritize the most important outcomes in the short- to medium-term. Of course, politicians are loath to make specific prioritizations. They\u2019d rather appeal to broadly-based shared sacrifice, or support for frontline workers, or a generalized desire to \u201cflatten the curve.\u201d But none of these generalized appeals can guide public policy enough. And crucially, that results in politically damaging and confrontational debates about edge cases: Why open malls and not gyms? Why gathering limits for stores but not schools? What should we do about Halloween?<\/span>\r\n\r\nWe need to know what\u2019s most important, in the eyes of our leaders, with more specifics. Is it supporting as much retail spending as possible, while attending to the most vulnerable populations and neighbourhoods? Is it to ensure that we don\u2019t repeat the spring mistakes in long-term care, and making schools and childcare the last facilities to close? Is it to pay special attention to Main Street, or to artists, performers, trainers and others who make our cultural and physical lives fuller?\u00a0<\/span>\r\n\r\nIt\u2019s time for more public leadership around the specific trade-offs, and around what the endgame is with these trade-offs, on what kind of timeline. Just \u201ctrusting\u201d public health officials and the emerging broad economic policy consensus is not a plan.<\/span>\r\n\r\n\u00a0<\/span><\/i>\u00a0<\/span>\r\n\r\nMatthew Mendelsohn: Leaving room for flexibility is the smart policy approach<\/b>\r\n\r\nKarim \u2013 dude! Why are you so negative? How can you say the government doesn\u2019t have a plan? Sure, there are some details to work out, but the two major economic statements lay out a strategic direction for the government and the country: low interest rates for several years and continued significant deficit spending to support Canadians, businesses, organizations, communities and the transition to a carbon-neutral economy. It is pretty clear!<\/span>\r\n\r\nYes, there is some vagueness about timing, but that seems appropriate: Why be specific about when programs will shut down until we know when vaccines will be widely available, and when we have no idea about the nature, pace and timing of economic recovery? I like the idea that the government is remaining flexible and will respond in real time to changing circumstances. That is how good public policy should be done.<\/span>\r\n\r\nAnd yes, some of the programs are still being worked out. The future of the Canada Recovery Benefit is still TBD and the details of some of the programs to accelerate transition to a low-carbon economy are not yet known. But again, that is the right thing to do.<\/span>\r\n\r\nI want the government to get the details for these programs right. I don\u2019t think we should spend the next five years arguing about minutiae but I think the timelines so far have been reasonable. Talk to me again in six months. If we don\u2019t have clarity by the spring, then I\u2019ll be on Team Karim and co-sign your piece.<\/span>\r\n\r\nNow go get your kids ready for Halloween!<\/span>\r\n\r\nKarim Bardeesy<\/span><\/a> is Co-Founder and Executive Director of the Ryerson Leadership Lab and co-director of First Policy Response.<\/span><\/em>\r\n\r\nMatthew Mendelsohn<\/span><\/a> is Visiting Professor at Ryerson University and a co-creator, with the Ryerson Leadership Lab and the Brookfield Institute for Innovation + Entrepreneurship, of First Policy Response.<\/span><\/em>\r\n\r\nKeywords<\/strong>: FPR ORIGINAL<\/a><\/span> <\/span>\r\n\r\nCitation<\/strong>: <\/span>Bardeesy, K., & Mendelsohn, M. (2020). Did this week\u2019s economic policy statements go far enough<\/a><\/span>? <\/span>First Policy Response<\/em>.\u00a0<\/span>\r\n\r\n<\/div>\r\n<\/div>\r\n<\/div>\r\n<\/div>\r\n<\/article>\r\n\r\n
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Quiz<\/h2>\r\nQuiz on Bardeesy & Mendelsohn's article \"Did this week\u2019s economic policy statements go far enough?\"<\/strong>:<\/span>\r\n\r\n[h5p id=\"83\"]\r\n\r\n[h5p id=\"84\"]\r\n\r\n[h5p id=\"85\"]\r\n\r\n[h5p id=\"86\"]\r\n\r\n[h5p id=\"87\"]\r\n\r\nPlease click on this photograph below to learn more about the Bank of Canada<\/strong>:\r\n\r\n[h5p id=\"88\"]\r\n\r\n\"Bank of Canada\"<\/span><\/a>\u00a0<\/span>by\u00a0colros<\/a><\/span><\/span>\u00a0is licensed under\u00a0<\/span>CC BY 2.0<\/a><\/span>","rendered":"
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Did this week\u2019s economic policy statements go far enough?<\/a><\/span><\/h1>\n<\/div>\n
First Policy Response<\/em>, OCTOBER 30, 2020\u00a0<\/span>| <\/span>IN\u00a0ECONOMIC POLICY<\/a><\/span>\u00a0<\/span>| <\/span>BY\u00a0KARIM BARDEESY<\/a>\u00a0AND\u00a0MATTHEW MENDELSOHN<\/a><\/span><\/span><\/div>\n<\/div>\n
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The federal government issued three big updates this week about Canada\u2019s approaches to economic and public health policy for the COVID-19 recovery. On Wednesday, <\/span>Finance Minister Chrystia Freeland<\/span><\/a> delivered a virtual keynote speech to the Toronto Global Forum, and <\/span>Bank of Canada Governor Tiff Macklem<\/span><\/a> unveiled the central bank\u2019s latest monetary policy report. Meanwhile, Chief Public Health Officer <\/span>Dr. Theresa Tam<\/span><\/a> delivered her annual report on the state of public health in Canada.<\/span><\/p>\n

Policy watchers had been keeping a close eye on these developments to signal Canada\u2019s policy priorities for the recovery, but there were mixed reactions on whether they went far enough in setting an agenda \u2014 including among the FPR team. FPR directors Karim Bardeesy and Matthew Mendelsohn share two different takes.<\/span><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

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\n
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\u00a0<\/span><\/p>\n

Karim Bardeesy: Without clear priorities, there\u2019s no real plan<\/b><\/p>\n

There\u2019s something missing in this week\u2019s trio of reports and speeches from Chrystia Freeland and Tiff Macklem, the lead economic policy-makers in Canada, and Dr. Theresa Tam, the chief public health officer. On their own, they are important pieces of work that sum up the current consensus in their areas, across many countries. But absent other political and policy leadership, they are not enough to guide future decision-making.<\/span><\/p>\n

Freeland\u2019s speech laid out the arguments for income supports for people and businesses, increased investments in health care, and high deficit spending in a low-interest-rate environment. Macklem\u2019s report laid out the hows and whys of the Bank\u2019s long-term low-interest-rate peg and its bond-buying program. And Tam\u2019s report described the principles of the aggressive public health measures required to contain the virus, and described its disproportionate effects on different populations.<\/span><\/p>\n

A good measure of policy-making is actually art, not science. That art comes from the confidence \u2014 economic or otherwise \u2014 that is generated by having a coherent mix of policies founded in evidence, and showing a longer-term commitment to them. That\u2019s what a majority of the public, and those who interpret technical policy-making for the public, are looking for.<\/span><\/p>\n

(Note that all three institutions \u2014 the federal Department of Finance, the Bank of Canada and the Public Health Agency of Canada \u2014 need to continue to make their work, and the concepts that guide them, more understandable to Canadians. This is a project we support through First Policy Response, and it\u2019s good to see Freeland\u2019s candour and plain-spokenness, and Macklem\u2019s recognition of this challenge.)<\/span><\/p>\n

But it\u2019s not a real policy discussion to say that interest rates should be kept low for a long time, that we can rely on government borrowing and central bank intervention to sustain people and businesses, that the health system needs emergency investments, or that we will require some sort of fiscal anchor or plan to set limits on borrowing and\/or stave off inflation. Nor is it controversial to observe that the health and other effects of the pandemic are being felt unequally across demographic groups, and that policy measures need to take this into account.<\/span><\/p>\n

That\u2019s not to underplay their efforts or observations. But the economic and public health debates have to be nested in a larger debate about the political and public-policy objectives during this fight. And for too long, too many policy leaders have preferred generalities to specifics.<\/span><\/p>\n

Take the Bank\u2019s statement that it \u201cexpects this growth to be uneven across sectors and choppy over time. Some parts of the economy will simply be unable to completely reopen until a vaccine is widely available, so sectors will recover at very different speeds.\u201d Yes \u2014 but which sectors, at which pace? The risk the Bank has identified is real. Policy guidance could help to resolve it.<\/span><\/p>\n

Charting a path to recovery will require trade-offs. It\u2019s up to politicians and other leaders to more clearly identify those trade-offs, and to prioritize the most important outcomes in the short- to medium-term. Of course, politicians are loath to make specific prioritizations. They\u2019d rather appeal to broadly-based shared sacrifice, or support for frontline workers, or a generalized desire to \u201cflatten the curve.\u201d But none of these generalized appeals can guide public policy enough. And crucially, that results in politically damaging and confrontational debates about edge cases: Why open malls and not gyms? Why gathering limits for stores but not schools? What should we do about Halloween?<\/span><\/p>\n

We need to know what\u2019s most important, in the eyes of our leaders, with more specifics. Is it supporting as much retail spending as possible, while attending to the most vulnerable populations and neighbourhoods? Is it to ensure that we don\u2019t repeat the spring mistakes in long-term care, and making schools and childcare the last facilities to close? Is it to pay special attention to Main Street, or to artists, performers, trainers and others who make our cultural and physical lives fuller?\u00a0<\/span><\/p>\n

It\u2019s time for more public leadership around the specific trade-offs, and around what the endgame is with these trade-offs, on what kind of timeline. Just \u201ctrusting\u201d public health officials and the emerging broad economic policy consensus is not a plan.<\/span><\/p>\n

\u00a0<\/span><\/i>\u00a0<\/span><\/p>\n

Matthew Mendelsohn: Leaving room for flexibility is the smart policy approach<\/b><\/p>\n

Karim \u2013 dude! Why are you so negative? How can you say the government doesn\u2019t have a plan? Sure, there are some details to work out, but the two major economic statements lay out a strategic direction for the government and the country: low interest rates for several years and continued significant deficit spending to support Canadians, businesses, organizations, communities and the transition to a carbon-neutral economy. It is pretty clear!<\/span><\/p>\n

Yes, there is some vagueness about timing, but that seems appropriate: Why be specific about when programs will shut down until we know when vaccines will be widely available, and when we have no idea about the nature, pace and timing of economic recovery? I like the idea that the government is remaining flexible and will respond in real time to changing circumstances. That is how good public policy should be done.<\/span><\/p>\n

And yes, some of the programs are still being worked out. The future of the Canada Recovery Benefit is still TBD and the details of some of the programs to accelerate transition to a low-carbon economy are not yet known. But again, that is the right thing to do.<\/span><\/p>\n

I want the government to get the details for these programs right. I don\u2019t think we should spend the next five years arguing about minutiae but I think the timelines so far have been reasonable. Talk to me again in six months. If we don\u2019t have clarity by the spring, then I\u2019ll be on Team Karim and co-sign your piece.<\/span><\/p>\n

Now go get your kids ready for Halloween!<\/span><\/p>\n

Karim Bardeesy<\/span><\/a> is Co-Founder and Executive Director of the Ryerson Leadership Lab and co-director of First Policy Response.<\/span><\/em><\/p>\n

Matthew Mendelsohn<\/span><\/a> is Visiting Professor at Ryerson University and a co-creator, with the Ryerson Leadership Lab and the Brookfield Institute for Innovation + Entrepreneurship, of First Policy Response.<\/span><\/em><\/p>\n

Keywords<\/strong>: FPR ORIGINAL<\/a><\/span> <\/span><\/p>\n

Citation<\/strong>: <\/span>Bardeesy, K., & Mendelsohn, M. (2020). Did this week\u2019s economic policy statements go far enough<\/a><\/span>? <\/span>First Policy Response<\/em>.\u00a0<\/span><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/article>\n

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Quiz<\/h2>\n

Quiz on Bardeesy & Mendelsohn’s article “Did this week\u2019s economic policy statements go far enough?”<\/strong>:<\/span><\/p>\n

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