It’s a lot like wartime

The federal government’s virus pandemic response is being likened to Canada’s entry into the Second World War, in one important respect. That of course is the spending of huge amounts of money it doesn’t have.

The debt will be enormous. We’ll be digging ourselves out of the hole for years. But we have been there before, as observers have been noting in recent days. One of them is John Ibbotson of the Toronto Globe & Mail. In his column Ibbotson quoted a University of Toronto professor saying this year’s deficit is about the same as the first full year of WWII.

The spending then was of course on different things. Manufacture of ships, airplanes and other war materiel was a big part of it and all of that created jobs. A lot of the spending this time around is to put money in the pockets of people who don’t have jobs. That is obviously not sustainable. Neither is the support program that covers 75 per cent of the salaries of companies that can’t otherwise afford to stay in business.

There is a big risk involved in becoming used to such a subsidy. Pain is guaranteed when it dries up. The transition back to regular business might be too much for some.

But the good news, according to Ibbotson, is in how well Canada recovered, post-war, in spite of those gigantic war debts. It took only two years after the war ended for government to post a surplus, he writes.

“There will be bills to pay,” he says. “But we should be able to pay them without sacrificing the quality of life of future generations.”

It’s been done before. That’s not a guarantee of anything, but it does indicate the current economic dilemma doesn’t have to be the end of the world as we know it.

Share this post

Post Comment