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Stimulus programs in response to COVID-19 could have lingering impact, experts say

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COVID-19 stimulus programs could have lingering impact
WATCH: Experts say the costs to revive the country's economy after the novel coronavirus pandemic will likely be with Canadians for years – Apr 15, 2020

The novel coronavirus pandemic could have lingering and substantial economic and political costs, according to a University of Saskatchewan political scientist.

“I think we’re at a critical point in history where, once this is over, we’re going to [have] a recalibration of the relationship between governments and markets,” Joe Garcea said.

Garcea said the rapid spread of COVID-19, and the inability of governments to access the needed health care equipment, will trigger a realignment of the public and private spheres, with states moving to be less reliant on markets.

READ MORE: Coronavirus: Parliament adopts COVID-19 wage subsidy bill

Garcea said the lack of medical supplies needed during the novel coronavirus pandemic showed how dependent people are on markets, and how vulnerable.

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He also said the expansion of the state will occur along a similar extension of the concept of national security because so many people died.

Both steps will result in less reliance on overseas production for items that have proven crucial to citizens’ safety.

He compared the new policies would be similar to other public works.

“The reason we have a post office, the reason we have train services that are run by governments is because there was a sense that the state has the greatest capacity to do what needed to be done,” he said.

READ MORE: Coronavirus: IMF sees worst global recession since 1930s, Canada’s economy to shrink 6.2%

Erika Dyck, a historian at the University of Saskatchewan, said the expansion of government fits a pattern of previous changes, like with the Great Depression begetting employment insurance.

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She was careful to note a crisis doesn’t necessitate an expansion and explained it’s that a global or national disaster exposes a society’s inequalities and galvanizes social movements designed to remedy them.

“The [First World] War, the [1918] flu pandemic, the Depression throughout the 1930s, all of these things continued to hold the government’s feet to the fire, or [allowed groups to] continue to apply the pressure that erupted in a demand for publicly funded health services,” she said.

READ MORE: Coronavirus: Bank of Canada set to detail impact of COVID-19 on the economy

“Food security issues, for example, or housing security, all of these things come to bear in ways that actually could be damaging, even to people who have homes or who have food security. And because of that, it becomes everyone’s problem.”

Dyck said paying for the new social programs — which typically outlast the disaster for which they were designed — could take years.

“The Great Depression, that arguably started in 1929 with the stock market crash. [It] took about 10 years for Saskatchewan to recover,” Dyck said.
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READ MORE: Coronavirus: CERB expanded to some who ran out of EI, part-timers and seasonal workers

The federal government announced a series of programs designed to help Canadians survive the economic damage of the measures in place to prevent the spread of COVID-19, including a $73-billion wage subsidy package Parliament passed last weekend.

Garcea said the debt the programs will incur will have political consequences, with Canadians having to adapt.

“I think people’s expectations are going to be lowered and they’re going to have to wait a bit longer for the governments to be able to deliver some of the things that they want.”

READ MORE: Countries grapple with how to re-open economies amid COVID-19 pandemic

Canadians, he said, will soon be confronted with choices about how to save money — meaning voters will need to decide which political party has the most appealing platform to do just that.

“Regardless of whether [political parties] form government or become the official opposition in future elections… it’s going to be very interesting to see how the ideological balance is recalibrated under these circumstances,” he said.
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Saskatchewan voters are some of the first Canadians who will have to start making those decisions. The provincial election is scheduled for October.

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