Imagine that you earn $33,000 a year. It is a moderate income. But you like to spend money, and so you habitually spend about $2,000 more each year than you bring in in income. Five years ago, you were $50,000 in debt. As a result of your recent overspending, you are now $60,000 in debt.
But then, this year, you get sick, and you cannot work as much. Your income drops below $30,000. You have some additional expenses in order to deal with the effects of the sickness, but you decide to respond to the situation by spending more than $70,000 this year. That is $40,000 more than your income this year. In fact, it is considerably more than twice your income for the year. You are not sure of the exact amount because you have been too busy to make a household budget for the year.
As a result, your debt has risen to well over $100,000. Interest rates have been very low in recent years, but you have still been spending $2,000 or more every year just to pay the interest on your debt. Now, even though interest rates have dropped even lower, you have doubled your debt, and that means you might soon be paying much more just to cover the interest. If interest rates rise to what they were a couple of years ago, your interest payments could consume 15% to 20% of your income. If interest rates rise even more, the interest charges would consume an even larger portion of your income. You are in a very vulnerable position.
Already, your bank is becoming hesitant to lend you more money, and if it does, it might charge you a higher interest rate. You could turn to other lenders, but they would charge you even more. If that happens, you would likely be unable to pay all of your bills. You could lose your car or be evicted from your residence. You could be facing serious suffering. And there would be no easy way out.
Even worse, included in your current spending are some long-range commitments. You have made agreements to continue to spend at levels higher than your income even beyond this year. And you are even making plans to do some additional spending. As a result, it will be very difficult for you to lower your spending to a level even close to the level of your income, let alone making any effort to pay off your accumulated debt. You are in deep financial trouble.
You might ask: What kind of incompetent idiot would practice such an irresponsible approach to financial management?
The Canadian government under Justin Trudeau, of course. Except that instead of an annual income of $33,000, the government had an annual income of $330 billion. And instead of spending $40,000 more than its income this year, the government is spending an estimated $400 billion more than its income, more than twice as much as it is bringing in. And instead of a debt of over $100,000, the government has accumulated a debt of over $1 trillion. But the ratios and the incredible level of mismanagement are the same.
The hoopla over this year’s NHL draft lottery highlights once again the value of an NHL superstar. The New York Rangers won the lottery and thus the “Lafreniere Cup” That is, the Rangers get to make the first selection among this year’s crop of young hockey players. They are expected to choose high-scoring left winger Alexis Lafreniere, reputed to be the best young prospect. The expectation is that this will turn the Rangers into “a contender” a team with a good chance of winning the Stanley Cup.
This highlights the value of the NHL superstar. Every NHL general manager, it seems, wants to build his team around at least one superstar, a “generational player,” a $12 million man.
With a salary cap of $81.5 million and a roster of 23 players for each team, the average NHL player is paid about $3.5 million per season.
NHL forwards are especially evaluated according to offensive production (goals plus assists). So, a player being paid $1 million is counted on to produce only about 10 points a season, a $3 million player is expected to produce about 30 points, a $6 million player should produce 60 points a season, a $9 million player should produce 90 points a season, and a $12 million player, the true superstar, should produce about 120 points.
This often works out in a very general way. Connor McDavid, the NHL’s highest paid player at $12.5 million, produced 116 points in 78 games in the 2018-2019 season. (A full season is 82 games, but McDavid missed 4 games due to injury.) In the COVID-shortened 2019-2020 season, McDavid had 97 points in 64 games, the equivalent of 124 points in an 82-game season.
When down by a goal late in a game, a team’s general manager and coach would surely like to have one or more of these superstars to put onto the ice.
There are two flaws with this approach. The first is that offensive production is only one aspect of determining a forward’s value. We also need to ask: Is the $12 million player twice as good defensively as a $6 million player? The answer is: Not usually. Also, does the $12 million player get injured only half as often?
The other flaw is that hockey is a team game. Because of the salary cap, the more $12 million players a team has, the more $1 million and $2 million players it is likely to have.
I wrote an article on this issue last year, pointing out that of the 12 highest paid players in the league, only five made the playoffs and none made the Stanley Cup final. That is, having a superstar seems to make a team less likely to win.
The results were even more stark in 2019-2020:
• Edmonton oilers had the highest paid player (Connor McDavid). The team finished 12th in the regular season, but lost in the qualifying round and did not make the playoffs.
• The New York Rangers had the second highest paid player (Artemi Panarin). The team finished 18th in the regular season, was swept in three straight games in the qualifying round, and did not make the playoffs.
• The Toronto Maple Leafs had the third, sixth, and seventh highest paid players (Auston Matthews, John Tavares, and Mitch Marner). The team finished 13th in the regular season, but lost in the qualifying round and did not make the playoffs.
• The San Jose Sharks had the fourth highest paid player (Erik Karlsson). The team finished 29th (out of 31 teams in the league) in the regular season and did not make the playoffs.
• The Los Angeles Kings had the fifth and eleventh highest paid players (Drew Doughty and Anze Kopitar). The team finished 28th in the regular season and did not make the playoffs.
• The Chicago Blackhawks had the eighth and tenth highest paid players (Jonathon Toews and Patrick Kane). The team finished 23rd in the regular season, won its qualifying round in an upset to make the playoffs, but lost in five games in the first round of the playoffs.
• The Montreal Canadiens had the ninth highest paid player (Carey Price). The team finished 24th in the regular season, won its qualifying round in an upset to make the playoffs, but lost in six games in the first round of the playoffs.
• The Buffalo Sabres had the twelfth highest paid player (Jack Eichel). The team finished 25th in the regular season and did not make the playoffs.
• The Florida Panthers had the thirteenth highest paid player (Sergei Bobrovsky). The team finished 15th in the regular season, but lost in the qualifying round and did not make the playoffs.
The bottom line is that 10 of the 13 highest paid players in the league played on teams that did not make the playoffs, an astounding statistic considering that slightly more than half of the teams currently make the playoffs. The other three highly paid players were on the two teams that had the worst records of all playoff teams. They made the playoffs as a result of unexpected upsets in the qualifying round, but lost in the first round of the playoffs. This means that none of the highest paid players advanced beyond the first round of the playoffs and that together the 13 highest paid players managed to win a grand total of three playoff games.
There is a lesson here for other teams contemplating declaring their rising young stars to be superstars and offering them salaries of over $10 million. (Obvious examples are the Vancouver Canucks’ Elias Pettersson and Quinn Hughes.) The same lesson applies to teams contemplating signing free agents from other teams to similar contracts. The lesson is—don’t do it. The obvious conclusion is that at least some of the teams mentioned above failed to excel, not in spite of having a superstar, but because of it.
Whether he is eventually impeached, is defeated in an election, completes the maximum two terms, or is abducted by aliens—there will come a time when Donald Trump is no longer president of the United States. At that point, what will happen? Will the nation return to the state of idyllic perfection that existed before Trump was elected, as many of Trump’s opponents suggest?
Here is the reality. After Trump:
1. US society will be deeply divided. Donald Trump did not create the massive social, political, and cultural chasms that currently divide the nation. Trump certainly exacerbated those divisions and exploited them for his own political gain, but he did not create them. Before blaming everything on Trump, his opponents should consider how they have also contributed to the divisions, which in part led people to vote for Trump in the first place. They should also consider what their vicious personal attacks on Trump and all who voted for him are still contributing to the divisions. Labeling all Trump voters as racists, morons, and criminals is hardly going to contribute to the healing of the nation or to convince Trump voters to vote for his opponent. Trump labels any negative publicity “fake news,” but this resonated because voters were already distrustful of biased and even untruthful news coverage on all sides. It is said that the first casualty in any war is truth, and the culture wars in the US have left many Americans disillusioned and distrustful, unsure of what or who to believe.
2. The immigration crisis will remain. That there are tens of millions of illegal immigrants in the US—without rights, security, health care, social service benefits, education, or marketable skills—is a humanitarian tragedy. Those who claim to support them often use them as a source of cheap, under-the-table labor. The unscrupulous exploit them in worse ways. Trump’s “wall,” if it was more impregnable than is currently the case, would leave a seething mass of desperate people clamoring at the gates. As it is, his porous wall allows people into the country but shunts them into detention centers. But throwing open the gates and allowing a further flood of immigrants could overwhelm social support systems and create further strains on the American social fabric. Naïve optimism will not pay the enormous costs required. There is no easy solution to this issue.
3. The US will continue to deal with racism. Racism is a feature of every society on earth. The US has a particularly virulent strain of it in the form of white supremacy, embodied most clearly in the Ku Klux Klan. There is a very understandable collateral strain among the black population of fear, mistrust, and hatred of whites. It takes a long time to bring healing after centuries of injustice. The United States is a multiracial society, and there are numerous other racial tensions that are less focused and less virulent but still real. It must be said that there has been considerable progress in reducing racism in the US over the past 70 years. As is the case with the social, political, and cultural divisions, Donald Trump did not create racism in the US, although he has encouraged it and made use of it for his own benefit. Still, when Trump is gone, racism will remain.
4. The US will have a very dysfunctional political system. The US prides itself on being the bastion of freedom and democracy and a model for other nations. The reality is far from the ideal. A significant percentage of American citizens are not registered to vote, and yet, since the 1970s, almost half of registered voters have failed to vote in presidential elections. (The percentage has ranged from 49% to 58%.) The turnout is much lower among “visible minorities” and lower income groups. It takes millions of dollars to run for Congress and hundreds of millions to run for president. The dictum that anyone can grow up to be president is nonsense. Successful candidates owe their election to wealthy donors and organizations (such as the National Rifle Association, Planned Parenthood, corporations, and unions). After the election, these donors often expect to be repaid for their donations by favorable legislation and government contracts. This system also tends to favor those who have spent a long time currying favor with those who have the money, which explains why so many senior citizens run for president. Furthermore, power in the US government is divided among the president, Senate, and House of Representatives, not to mention states and cities. At the federal level, it is often easier to block things from being done than to do them. The result is that decisions are often determined by backroom deals.
5. The US government will run massive deficits. The US government, no matter which party is in power, has run a deficit every year since 2001, and the annual deficit was over $1 trillion a year before COVID-19. It is difficult to find any current political candidate supporting a return to balanced budgets.
6. The US will be a very violent society. The number of mass shootings in the US is far greater than that of almost any other nation on earth. Fearful, heavily-armed, trigger-happy police officers encounter fearful, heavily-armed, trigger-happy citizens every night and every day, not to mention fearful, heavily armed, trigger-happy citizens encountering each other. The problem is not just guns, even though the nation is awash in automatic weaponry. The problem lies deep in American culture. The US spends far more on its military than any other nation on earth. From the American Revolution and the Civil War to John Wayne, Rambo, and John Wick, Americans have habitually seen force and violence as a primary tool to achieve social goals. There is no evidence that will change anytime soon.
7. COVID-19 will be a serious problem. Since the social, political, and cultural chasms and the dysfunctional political system will still be in place, the disjointed and inconsistent response to the pandemic will also remain. While Trump has encouraged it, the fiercely independent spirit that las led so many Americans to resist lockdowns, masks, and other health measures did not start with Trump. There might be a better and more coherent approach to the pandemic at the federal level when Donald Trump is no longer president, but it is unlikely to achieve the level of health and safety achieved in many other countries. The United States is a very troubled and broken society, and its problems run far deeper than any one politician.
Cataclysmic historical events are often followed by massive social changes. The effects of such events are complex, varied, and unpredictable. As well, these effects interact with the effects of a host of other events and developments, so that the direct causes of change can never be determined. Consider the following.
The Black Death
The Black Death or bubonic plague arrived in Italy from Asia in October 1347. Over the next five years, the disease killed about 20 million Europeans, about a third of Europe’s population. The worldwide death toll has been estimated to have been 70 million or more. Significant outbreaks of the disease happened again and again in Europe over the next two or three centuries.
The impacts of the Black Death in Europe are particularly well documented. One of the most obvious results of the Black Death was great fear and a morbid fascination with death. One of the common themes of art in that period was the “La Danse Macabre” or “The Dance of Death”—depictions of skeletons marching toward the grave.
This focus on death in turn had various offshoots. One of these was the search for scapegoats. People feared that the plague was caused by evil people poisoning the water supply or casting spells. The “witch hunts’’ of this era are well known, but the victims included Jews, minority Christian groups, and virtually anybody who fell under suspicion. The Inquisition, a process established by Roman Catholic bishops to check on the spiritual welfare of their dioceses, became a vehicle of oppression wielded by political and religious rulers. Those suspected of evil intent were often tortured until they confessed. They routinely admitted to fantastic tales of witchcraft and black magic, with most of the details being suggested by the interrogators. There were still some practitioners of ancient pagan religions in Europe, but most of the confessions were pure fiction, made up by people who had never dabbled in witchcraft but who were willing to say anything to satisfy their torturers. The suspects were then usually executed in horrible fashion. Mobs of fearful citizens also took vengeance on suspected enemies without any pretense of due process.
But not all of the consequences were bad. Cataclysmic disasters often clear the path for reconstruction of something better. In the face of death, many Europeans became dissatisfied with the means to salvation then being offered by a corrupt Roman Catholic Church—which in practice often consisted of nothing more than performing superficial rituals or paying money. The search for certainty of salvation and a more meaningful connection to God was a significant contributor to the rapid spread of the Protestant Reformation (which in turn also led to significant reforms in the Roman Catholic Church).
There were also socio-economic consequences. The rapid decrease in population meant that marginal farmland was abandoned, so per acre crop yields increased—there was more food. The shortage of workers gave the lowest classes more leverage, leading to the breakdown of feudalism. Many serfs (essentially slaves) became freedmen and were able to negotiate better terms with the upper classes who owned the land. The poor were better off. The aftermath of the plague increased opportunities and accelerated economic growth. There was a flowering of the arts and culture. These improvements cannot be solely attributed to the plague, but the plague was one of many factors in their development.
The Spanish Flu
The Spanish flu struck in 1918-1919 and killed between 17 million and 50 million people worldwide. It was one of a series of cataclysmic events in the middle of the 20th century, and it is difficult to disentangle the separate consequences of these events. The flu struck right after World War One (1914-1918), which had killed 15-22 million people.
There was a recession after the war, and the returning soldiers had trouble finding work. Nevertheless, there was some optimism. Some Christians literally saw World War One as “the war to end all wars” and Armageddon and expected the world to transition into the millennial reign of Christ. Alcohol had been outlawed, women had been given the vote, and many expected the world to be a gentler, more civilized place. Some considered the returning soldiers, part of the victorious army in Armageddon, to be exceptionally godly men who would become church pastors and lead a crusade for moral betterment. The reality was that many of the returning soldiers were deeply traumatized, hardened, and immoral. The Roaring Twenties were an orgy of excess, secularization, and pleasure-seeking.
The greed of the 1920s resulted in the stock market crash in 1929, and the world descended into the Great Depression of the 1930s. There was massive unemployment, poverty, starvation, homelessness, sickness, and death. One anomaly was that those who still had money and a steady income could afford to buy luxury goods, since labor was cheap and prices were low. In the 1930s, there was a large increase in the number of homes with such goods as radios and refrigerators. Yet this wealth was in sharp contrast to the deepening poverty of the masses. At the same time, record heat waves caused drought, food shortages, and famine, spawning descriptive terms such as “the Dust Bowl” and “the Dirty Thirties.” To date, I have found no completely satisfactory explanation for this heat wave or why it occurred at the same as the financial collapse. Some observers saw the multiplied catastrophes as a divine punishment. One might think that the desperate situation might have led to a religious revival, but the secularization trend of the 1920s continued. Instead of a return to God, the desperate longing for solutions encouraged the rise of brutal dictatorships in Germany, Italy, Spain, the Soviet Union, Japan, and other countries.
These dictatorships led to World War Two (1939-1945), which killed another 70-85 million people. It might have been expected that this further global conflict, following the other cataclysmic events of the twentieth century, would lead to further economic decline and further secularization. Instead, the 1950s saw a massive economic upturn and increased worldwide prosperity. Reconstruction transformed Western Europe and Japan. In North America, most of the returning soldiers found jobs, married, and had children (the Baby Boom), resulting in a renewal of family life and the rise of suburbs. Secularization continued in Europe, but there was a major (and completely unexpected) rise in church attendance in North America, as well as renewed missionary outreach in the Third World. There was also a decline in European imperialism, as former colonies became independent nations.
COVID-19
So far, the COVID-19 pandemic has not produced death tolls anywhere near those of the earlier cataclysmic events. This is partly due to improved medical knowledge and treatments and the increased ability of governments to impose lockdowns and quarantines. But is there anything we can learn from earlier history that could tell us what might happen as a result of this current pandemic?
It is clear that cataclysmic events have massive repercussions in the social, cultural, economic, ideological, and political spheres—repercussions that are complex, interconnected, and eminently unpredictable.
Yet some vague outlines of change are beginning to appear. While the death toll for COVID-19 remains relatively low so far, there has already been massive economic dislocation from which it will take a long time to recover. Many jobs have been permanently lost, and many businesses have closed or will close. International trade will remain disrupted for years. There are already indications of increased levels of fear, conspiracy theories, scapegoating, racism, and extremism. Some leaders, in both dictatorships and democracies, have taken advantage of the situation to increase their power. (The Canadian prime minister’s suspension of parliament is not an isolated event.) Whatever ultimately happens, for good or ill, is not yet known. There will undoubtedly be surprises.
It is reassuring that God has promised to work for good in all things (Romans 8:28), in all times, places, and events. And so should we.
It was announced this week that Justin Trudeau’s government is giving $300-$500 each to 6.7 million Canadian seniors, at a total cost of $2.5 billion. We seniors will accept the money, of course. We don’t have a choice. For most of us, it will automatically be deposited into our bank accounts. But how many of us among the 6.7 million seniors can be said to really NEED this money?
Oh, some of us do, for sure, but those individuals likely need more than that every year and not just in a pandemic year.
Furthermore, we should be clear that Trudeau is doing this with borrowed money. That is, he is not so much giving us this money as lending it to us. We will have to pay it back. Well, not us individually, of course, but all of us taxpayers collectively. And we will have to pay back not just the $2.5 billion that Trudeau is giving to seniors but also the hundreds of billions that he has “given” to other Canadians since the COVID-19 pandemic started. More likely, we and our children and grandchildren will be paying interest on this debt for many generations to come. And it is not as if seniors will use the money they have been given to stimulate and help restart the Canadian economy. With stores and so much else shut down, there is little to spend it on. Many of us may simply put it in the bank and sit on it. At least, until our taxes come due.
Leaders, particularly political leaders should always be looking one step ahead—at least one step ahead and preferably more. This is something that has not generally been happening. In this crisis, Canadian leaders have done better than some leaders in some other countries, but not much. The fact is that we have often been one step behind rather than one step ahead. We are reacting rather than planning. Consider:
• In the good economic times of the last five years since Justin Trudeau was first elected Prime Minister, the Canadian government should have been trying to slowly pay down the government’s debt and save for a rainy day. Instead, the Trudeau government racked up an additional $100 billion in debt. When the Trudeau Liberals took power, the annual budget was close to balanced, but there was an accumulated debt of over $600 billion, equal to total government revenue for about two years. After five years, the accumulated debt had risen to over $700 billion. This shortsighted plan to buy votes in the present at the expense of fiscal sustainability in the future was inexcusable.
• Despite the experience of previous epidemics such as SARS, Canada was not prepared for a pandemic. We did not have a sufficient quantity of plans and equipment ready to fight the epidemic. For personal protective equipment, we were (and still are) dependent on cheap imports from the very country which is the source of many recent outbreaks.
• Canadian leaders were slow to react to the pandemic. They did not close the border and implement isolation orders fast enough to prevent COVID-19 from infecting tens of thousands of people in Canada.
• When Canadian leaders did close the borders and lock down much of the country, they did so without considering the huge financial cost of shutting down the economy.
• Once the lockdown was in place, the Canadian government quickly realized that it would have to replace the lost income or many Canadians would be forced to stop isolating and try to return to work. So, the Trudeau government has been eagerly “shoveling money out the door.” Justin Trudeau has been treating this crisis as a never-ending election campaign. Every morning, he makes a “motherhood” speech, mouthing platitudes and making a new spending announcement. This has been so successful that he has convinced Canadians that there is an endless supply of federal money. Every time he gives money to one group, three more groups line up with their hand out to get their share.
In the current crisis, everyone is convinced that it is necessary for the federal government to spend money quickly, so convinced that no one is even thinking about whether it is all being spent wisely and no one is thinking about how we are going to pay it all back. We are told that the time for thinking about that will be after the crisis is over. But the whole point of leadership is that leaders should be looking at least one step ahead. Anyone can respond to a crisis by spending money. Now is precisely the time when leaders should be planning what to do once the pandemic is over. They should be taking steps now to deal with the next crisis, not just the current one.
And the next crisis is most likely debt. Everyone knows that the federal government is currently running a large deficit, but how large? To put this into perspective, Canada’s Gross Domestic Product (GDP, the total of all economic activity in the country has been amounting to somewhere around $1.7 to $1.8 trillion, a little less than $2 trillion a year. The federal government accounts for a large chunk of that. The federal government budget (proposed, not actual) for the 2019-2020 year was $355.6 billion, but revenues were projected to be less than that, $338.8 billion, resulting in a deficit of about $16.8 billion. This has been typical of this government. In their five years in power, the Trudeau government has been running annual deficits of close to $20 billion.
With the arrival of the COVID-19 pandemic and the lockdown, all of that changed. The government has announced new spending programs amounting to hundreds of billions of dollars. At the same time, federal government revenue has been dropping as businesses and individuals lose income and therefore pay less in taxes. Because of this, a few weeks ago, the Parliamentary Budget Office estimated the 2020-2021 deficit to be over $250 billion, and it has been rising rapidly with new spending announcements since then. In fact, things are changing so quickly that no one (including the federal cabinet apparently) knows exactly what spending and revenue will actually be. The government has yet to present a revised budget for the year we are in. The annual deficit is quickly reaching the same level as the entire government budget for last year.
And next year is not going to be much better because the pandemic and lockdown are expected to continue. Even if a vaccine is developed and things return to normal the year after that, things won’t return to normal. By that time, many Canadian businesses may have gone bankrupt. The tourist industry, the oil industry, and many other industries are struggling and will need years to recover. It will be terribly difficult for us to climb out of the recession we are in. Government spending will have to remain high, and government tax revenue will remain low. The government will be under pressure to stimulate the economy but will be unable to do so because it will already be deeply in debt and won’t have the money.
Looked at another way, at the beginning of this year, the Canadian government debt, accumulated over decades, had risen to over $700 billion. But in the next two or three years, at the current rate of spending, that astronomical $700 billion could have doubled or more. The interest payments on our current debt are about $30 billion a year. Three years from now, interest payments will likely have risen to over $60 billion a year, even with record low interest rates. That means that 20 percent of government revenue could be spent just paying interest on our debt. That is over $60 billion a year sucked out of a Canadian economy that will already be struggling mightily. Since there are about 37 million Canadians, almost $1,000 in taxes per Canadian goes to pay interest every year. In three years, the amount will be $2,000 or more. For a family of four, the annual interest charges will amount to $8,000. That is simply not sustainable.
Now is the time to plan for the next crisis. Restructuring should already be taking place. One place to start would be to slash the high salaries of politicians and top-ranking bureaucrats. Another step would be to analyze more closely what is being spent now to see how much of it is necessary and is being spent wisely. Another step would be to prepare Canadians for the sacrifices and hardships that inevitably lie ahead instead of handing them more money and blithely assuring them that everything will be fine. It won’t be.
In his daily media briefings, Prime Minister Justin Trudeau has taken pains to reassure Canadians that all will be well. “Don’t worry. We will all get through this together,” is the message he puts out, and the message is endlessly repeated by others. Don’t worry about paying your rent or your mortgage—the government is developing solutions for you. Don’t worry about losing your job—the government will replace your income. Don’t worry about your business—the government will provide loans and grants and tax rebates to see you through. Don’t worry about being short of money—the government is sending extra money your way. Don’t worry about getting sick with COVID-19 or anything else—the government will provide the hospital beds, the equipment, and the human resources to treat you.
And there you have the promise of the modern welfare state—the government will solve all your problems.
The reality is that government can’t solve all problems. There are economic forces and social forces and diseases and natural disasters that are beyond any government’s control. A government can (and should) mitigate the effects of a disaster, but often it can’t prevent the disaster or completely shield its citizens from the negative consequences.
While reassurances might calm public fears and prevent panic, promising that everything will be fine will not adequately prepare us for what might lie ahead. It will not steel us for the sacrifices many of us will have to make. It will take courage for workers in essential services to keep working at the risk of their own lives; bland assurances will not work for them.
The truth is that we are not all going to get through this together. We are not all going to come out the other side unscathed. Some of us are going to die. More of us are going to be sick. Some of us are going to lose our jobs, permanently. Some of us are going to be short of food and other necessities. Some of us are going to lose our houses and our homes. Some of us are going to lose our businesses. Some of us are going to lose our savings and our pensions. There will be strains on our social fabric. Many of us will suffer from isolation, boredom, poverty, depression, anxiety, domestic abuse, and mental illness. Although not as serious or as longlasting as some crises our ancestors faced, this crisis will have costs greater than any government can fix.
Does this mean that we should not all pull together to get through this, to love and help each other, to practice self-isolation and social distancing, to minimize the damage as much as possible? Absolutely not. We should do all of those things and more. We should do all we can to help and to alleviate suffering. That is the only way any of us will get through this at all.
But we should go into this with our eyes open. There will be suffering and pain and loss. We are not all going to get through this unscathed. Sacrificial love will be needed. In another crisis, a much more serious crisis, Winston Churchill promised the British people: “I have nothing to offer but blood, toil, tears and sweat. We have before us an ordeal of the most grievous kind. We have before us many, many long months of struggle and of suffering. You ask, what is our policy?…It is to wage war, by sea, land and air, with all our might and with all the strength that God can give us; to wage war against a monstrous tyranny…You ask, what is our aim? I can answer in one word: It is victory, victory at all costs, victory in spite of all terror, victory, however long and hard the road may be; for without victory, there is no survival…I take up my task with buoyancy and hope. I feel sure that our cause will not be suffered to fail…I feel entitled to claim the aid of all, and I say, ‘Come then, let us go forward together with our united strength.’”
Unique world events offer a unique opportunity to learn new lessons. Here are a few we have had an opportunity to learn recently.
1. It’s a small world. The COVID-19 pandemic has dramatically demonstrated how interconnected the modern world is. A virus from a remote part of China has reached Canada (and almost every other country in the world) through multiple diverse routes. We can no longer pretend that what happens in one place does not matter to those of us in another place. As John Donne observed over three centuries ago, “No man is an island, entire of itself; every man is a piece of the continent, a part of the main…Any man’s death diminishes me, because I am involved in mankind, and therefore never send to know for whom the bells tolls; it tolls for thee.”
2. It is a rich world we live in. Consider the closures and cancellations that have occurred. Sports, both those we enjoy as spectators and those we enjoy as participants. Concerts. Plays. Movies. Church services. Museums. Historic Sites. Swimming pools. Skating rinks. Recreation centres. Restaurants of all varieties. Exercise classes. Schools. Art galleries. Libraries. Bookstores. Ski hills. Planetariums. Zoos. Nature walks. Drop-in centres. Social gatherings. Game nights. Parties. Many of these things are now being denied to us, and they are things that we have often taken for granted. Our temporary loss of these things should remind us of how blessed we have been, and we should be grateful.
3. There is much that remains. Despite its flaws, we have a medical system that is widely accessible; it offers medicines and treatments and knowledge that were not even thought of just a few centuries ago. We should perhaps also be reminded that just as the virus has spread over the world, so also can treatments and vaccines and knowledge be spread, as we learn from each other’s experience. We have governments that, despite their flaws, provide a coordinated effort to deal with plagues and other disasters and that provide law and order. We have a well-developed commercial system that makes food, clothing, and abundant quantities of many other goods from around the world readily available to us. We take it for granted that if we need something, we can simply go to a store and buy it. And, no matter how many churches close, the Church remains, for God is not frightened or hindered by any virus.
4. We can slow global warming. We human beings are being given a golden opportunity to reduce our carbon footprint. The reductions in travel, work, and manufacturing will allow many countries to meet their carbon reduction goals, at least temporarily. But we may also be realizing that this is coming at an enormous economic cost, which will definitely increase human suffering. Going green is not as easy as environmental advocates sometimes naively assert.
5. Social distancing is unnatural. Human beings are social creatures. From the beginning, God said, “It is not good for the man to be alone” (Genesis 2:18). Social distancing and self-isolation have seemed shocking to us. They remind us of the many social interactions that have been available to us. Again, being denied social interaction reminds us of the great blessings of living in society, in families and neighbourhoods and communities and nations, and we should be grateful for that opportunity.
I am a senior citizen with asthma. Therefore, I belong to the “at risk” group. Still, it is unlikely that I will contract COVID-19. It is even less likely that I will die from it. I am not greatly worried. I know that, if not COVID-19, something else will almost certainly kill me sometime in the next couple of decades.
What I am currently more concerned about is the response to COVID-19. Cruise lines have shut down. Airline schedules have been reduced. Sporting events (and whole seasons) have been cancelled. Concerts have been cancelled. Movie filming and movie releases have been postponed. Political rallies have been cancelled. (At least, there is one positive development.) Vacations have been cancelled. Religious services have been cancelled. Schools have been closed. Border restrictions and even travel bans are in place. Workers with the sniffles have been told not to come to work.
The cancellations and closures are meant to be temporary, but there is no guarantee that the crisis will have passed, no likelihood that the disease will have been eliminated, in a month or two months or even two years. Temporary closures could be semi-permanent.
All of these measures are considered necessary and worthwhile in order to contain the spread of the virus. That is a laudable goal and worth it if the measures are successful. However, it is still an open question if these measures will be successful. Infected people can spread the disease before symptoms appear, and it is likely that the disease has already spread to people who have dismissed it as a cold or the flu and who have never been tested.
As well, the response will not be without significant costs and risks. Although the statistics proving it will not be compiled for weeks, it is a good supposition that the response to COVID-10 has created, or will create, a global recession. It is an obvious conclusion and likely inevitable. Whole industries cannot be shut down without it having an effect on the economy.
I am not worried about professional athletes missing a paycheque. It is a different story for the ticket takers, ushers, concession workers, taxi drivers, and other support staff. It is also a different story for the corner stores and small and large businesses that are patronized by these lower level workers.
As is usual, the recession will hit the hardest those least able to deal with it. Some of those currently employed are living paycheque to paycheque. Some who lose their jobs will be unable to pay their rent or their mortgage and will become homeless. Some will not be able to buy their regular medication. Some will not be able to buy enough food. Some will postpone dental work. Some will become depressed and turn to alcohol, drugs, and suicide. As businesses and transportation networks shut down, some needed supplies might no longer be available. Interrupted educations might never be resumed, and that will have long-term consequences. Given the fact that, as of this writing, only one Canadian has so far died of the disease, it is quite possible that the recession will kill more people than COVID-19.
And that is just in affluent countries. The impact in Third World countries will be worse. Most of the workers on cruise ships come from the Third World and depend on that income to support their families. Many Third World countries depend on tourism and on the ability to sell their food and raw materials to wealthy countries.
The Canadian government has promised to eliminate the waiting period for Employment Insurance for workers who lose their jobs or are laid off due to COVID-19 and also to assist companies which have been seriously affected. Of course, it will be difficult to distinguish workers laid off because of the virus from workers laid off because of the resulting economic slowdown. They are victims of the disease as much as the others. Further, Employment Insurance payments are only a partial replacement for employment income. And the government’s $1 billion commitment will be grossly inadequate to counter the economic downturn. Much more will be needed.
Where will the government get the money for all of this? From taxing the income of the unemployed workers and the profits of failing companies? The government can only give out what it takes in from the private economy. The Canadian government can borrow money, of course, but it has already been running massive deficits for several years, and there is a limit to how much lenders will be willing to risk.
COVID-19 is a serious and lethal problem. The cure just might be as bad as the disease.
A few months ago, I was “invited” by Statistics Canada to participate in a “Survey of Financial Security.”
I have always voted in elections, completed my income tax returns, and filled in my census forms. I have nothing to hide. I have even worked as a census taker. But, even so, the scope of this survey seemed unusually intrusive, and I felt uncomfortable with it.
When the government representative phoned to set up an interview to complete the survey, I asked some questions. When she clarified that I was being “invited” to participate and I was not legally required to do so, I politely declined the invitation. I explained that since the prime minister had recently been accused of breaking the law (by interfering in the judicial system to stop the prosecution of SNC-Lavalin), I felt uncomfortable providing the information. The woman explained that the survey was being conducted by a government agency rather than by any particular political party and that my personal financial information would be kept confidential.
However, I felt that if the prime minister could intervene in the judicial process to help some criminal friends of his party avoid prosecution, which he was not legally allowed to do, how could I be sure that he and his colleagues would not also access my personal information, which he was also not legally allowed to do?
Furthermore, the actions of leaders have a profound effect in establishing what is and is not permissible and appropriate. That is, rot at the top will soon permeate a whole organization. If the prime minister can apparently break the law with impunity, then those at the lower levels of the bureaucracy may conclude that it is also acceptable for them to break the law.
In particular, how far could I trust the nice lady who wanted to come to my house and spend 45 minutes combing through the fine details of my finances? For sure, she had been vetted and deemed trustworthy by the government. But then I considered that a majority of Members of Parliament had voted to say that it was perfectly alright for the prime minister to intervene in a judicial process and had voted to block all attempts to investigate his actions. How could I trust her if I could not trust them?
So, I declined. I did not change my mind when the government sent me another letter telling me how important my participation was in order to improve “understanding the social and financial issues facing Canadians today” and to help guide government policy in a long list of areas. I declined again when the nice woman phoned to see if I had reconsidered my position. Besides what I felt was an intrusion into my personal finances, I had also begun to wonder whether the information would in fact be used to guide government policy. I suspected that government policy would more likely be shaped, not by solid research, but by the latest ideological fad or vote-attracting gimmick.
I have since pondered what was behind my decision. I confess I felt some regret and sadness at having refused to participate since I had always fulfilled my civic duties before. Was I just using this opportunity to register a personal protest against something I considered illegal and immoral? Perhaps.
But perhaps also it was a reminder that society and government operate on trust, and when trust is broken, society ceases to function.
Two hundred and eighty million dollars is a slap on the wrist.
It doesn’t take an expert in corporate finance, engineering, or law to understand this. All it requires is a broad perspective and common sense.
On December 18, 2019, SNC-Lavalin, the engineering firm at the heart of 2019’s biggest Canadian political scandal, pleaded guilty to one charge of “fraud over $5,000” and was fined 280 million dollars. This settled a prosecution that had been in process for several years.
$280 million seems like a lot of money, but it is far lighter than the penalties that could have been imposed. For instance, SNC-Lavalin could have been barred from bidding on contracts involving the Canadian government for ten years. This would have been huge because a large part of SNC-Lavalin’s business is major public works projects funded by governments. And since most provincial and municipal government projects now receive federal government funding, the company would have been precluded from bidding on many of those projects as well. Consider also that schools, universities, hospitals, bridges, highways, transit projects, and much more are all paid for by governments.
Compared to the loss of such contracts, $280 million is small change. SNC-Lavalin had over $10 billion in revenue in 2018. For such a company, $280 million spread over five years is just a cost of doing business.
Consider also that the charge to which SNC-Lavalin pleaded guilty concerned bribes of $113 million to obtain contracts in the relatively small county of Libya. The company is accused of defrauding Libyan organizations of about $130 million. And this was not an isolated case. The company had already been banned from bidding on many other overseas contracts due to other cases of bribery. In Canada, the company reportedly paid $22.4 million in bribes to obtain a contract worth more than $1.3 billion to build a new complex for McGill University Health Centre (MUHC). MUHC manager Yanaï Elbaz pleaded guilty to four charges on November 26, 2018 and was sentenced to 39 months in prison, MUHC CEO Arthur Porter died in a Panama prison while fighting extradition, and Porter’s wife Mattock Porter was sentenced to 33 months in prison for laundering the bribe money. There were also hints in those cases about possible other bribes involving contracts in Algeria and Alberta. The company has also been investigated for corruption involving the Kerala hydroelectric dam in India, the Jacques-Cartier Bridge repair in Quebec, and the Padma River Bridge in Bangladesh. SNC-Lavalin was also caught making illegal contributions to political parties, particularly the Liberal Party. This might be one reason why the Trudeau government tried so hard to help the company avoid prosecution. It is telling that the company’s stock shot up 14 per cent the day after the Trudeau government was re-elected last October.
That the company got off lightly is indicated by the fact that the company’s stock jumped 20 per cent on news of the settlement. It is also evident in the company’s statement that it “does not anticipate that the (guilty) plea will have any long-term material adverse impact on the company’s overall business.” Even the CBC, often favourably disposed to the Liberal government, reported that SNC-Lavalin got “most of what it wanted” from the plea deal.
This raises the question of why the prosecution agreed to a plea deal. It is not that there was uncertainty over whether the company would be convicted in court. There was no shortage of evidence, and cases against SNC-Lavalin leaders had already resulted in convictions. On December 15, 2019, Sami Bebawi, who carried out the bribery scheme, was found guilty of all five charges he faced.
Did the Prime Minister’s Office put pressure on the prosecution to settle the matter, as it earlier tried to pressure Attorney-General Judy Wilson-Raybould? Crown prosecutor Richard Roy said, “This decision was made independently” and current Attorney General David Lametti was not involved. Of course, previously the prime minister had categorically denied that he and his staff had pressured Wilson-Raybould—until irrefutable evidence surfaced that they had pressured her. The truth is that we will likely never know. If the Prime Minister’s Office has learned anything from that earlier attempt, it is likely that it learned it needs to do a better job of covering its tracks.
There is no hard evidence either way. However, it is surely suspicious that the plea agreement was reached, not at the beginning or end of the trial, but in the middle of it. It was also in the middle of the Christmas rush, when Parliament was no longer in session and the deal would receive little attention. By the time critics had time to notice and analyze the deal, it would be “old news,” too late to protest. The timing seems more politically advantageous than judicially mandated.
After the settlement, Prime Minister Justin Trudeau expressed satisfaction that jobs would not be lost at SNC-Lavalin.
But what would have happened if SNC-Lavalin had lost the opportunity to bid on government contracts? Does that mean that bridges and hospitals and schools would not be built? No. It only means that the contracts would have gone to other, less corrupt engineering firms.
Consider why SNC-Lavalin might have resorted to bribery to obtain contracts. If the company was convinced that bribes were necessary, it suggests that the company was afraid its costs would be deemed too high or the quality of its work too low. Otherwise, it would have been confident it could win the contracts based on merit.
The court case and the relatively light punishment do not necessarily mean that the case is “settled.” It may be settled legally, but a verdict has not yet been fully rendered in the court of public opinion. A company’s success depends on goodwill, on trust. In this case, since it has been established that SNC-Lavalin broke the law to get contracts and it seems clear that it attempted to pervert the judicial system to avoid prosecution, there will inevitably be lingering questions about what else it will do. Can such a company be trusted to comply with environmental protection standards, employee relations standards, and human rights standards? If it will pay bribes in order to make more money, can it be trusted not to cut corners on construction standards and engineering safety to increase its profits? Next time you drive over a bridge designed by SNC-Lavalin, consider whether you are willing to bet your life on a company that has been convicted of fraud. Next time a government awards a contract to SNC-Lavalin, how will you be sure that that award did not come about as a result of a bribe paid to some government official? How far would you trust a politician who trusts a corrupt company? The settlement of the court case does not necessarily restore public trust in the company.
