Coronavirus (Covid-19) Pandemic Leads Us Into A
Wartime Economy
by Maj (ret'd) CORNELIU E. CHISU, CD, PMSC,
FEC, CET, P. Eng.
Former Member of Parliament Pickering-Scarborough East

  As we go deeper and deeper into the pandemic state we can see the wartime analogy more and more clearly. It seems that we are in a War Word 3 (WW3) situation, the only difference being, that the enemy does not use conventional or nuclear weaponry to kill people, but a very simple creature, a creature of which we do not even know if it is alive or dead; the virus called Covid-19. This conflict touches practically every country in the world. We are not talking of systems of government or alliances or power influences anymore, because the virus attacks everyone, rich and poor, powerful and powerless, believer and non-believer alike.
Here in Canada we are in the process of seeing the government borrowing massive amounts of money, close to 10 per cent of the GDP, into bankrolling equally massive amounts of spending. This sort of spending only happened in recent memory, during WW2. The central bank has reduced its prime rate dramatically to salvage the economy. In these early stages of the pandemic we have already seen close to one million people applying for employment insurance as of 16th of March. That number could rocket higher to 4 million, given that more than 2 million Canadians are without permanent work arrangements, according to RBC Economics.  The economic situation  is devastating, especially in Alberta, where the price of oil e is collapsing to previously unseen lows due to infighting between Saudi Arabia and Russia, on top of the Covid-19 pandemic.
One by one, provinces are declaring a state of emergency, with the forced closure of restaurants, public events and non essential businesses. It is left to the federal government to react in the future, if required, to declare a national state of emergency.
Here we clearly see a real wartime economy evolving, which is designed to do one thing above all: win the war against the enemy - in this case, the virus. Everything else is subordinated to that singular objective. Productive resources that might have been devoted to making consumer goods are diverted to the medical devices industry instead, and by and large the public accepts the sacrifice, in part because it's temporary.
The containment of the pandemic is essential and citizens are asked to contribute. It must be a collective effort based on individual responsibility.
For a couple of weeks now we have seen a completely different approach to the economy. Gone are the days of sterile economic punditry. Hot potatoes are everywhere, deficits aren't the devil's handiwork anymore, printing money to pay off debt is not so crazy after all, and basic income for the people is not taboo anymore.  It looks like industrial policy is back in style in order to convert normal production to war like measures to combat the virus.
Food, drugs, medical supplies such as ventilators are, or will soon be, in great demand. Welcome to the survivalist economy, where production is stripped down to bare bones; things that people cannot do without or they will literally die.
Governments at all levels have declared local food stores an essential service, drug companies are racing to find treatments and vaccines, and auto manufacturers are retooling their plants to produce life-saving medical equipment.
But what about the rest of the economy?
Money will be beyond tight. Every purchase will have to be weighed and calibrated. Middle-class people who took casual consumption for granted will tell their kids to use both sides of every scrap of paper and save not only leftover bits of dinner in the fridge, but even bacon drippings. The impact of this change cannot be overstated. It goes beyond businesses, economies and borders. It goes to the very core of our consumption-fuelled society. It will affect not only the people and companies who produce goods and services but our world views as well. Reusing and repurposing will not be virtues, they will become absolute necessities.
Whether it will represent a short-term period of personal austerity or a permanent paradigm shift remains to be seen. But for the next few months, or even years, it will be the new reality. Small businesses will go under in droves as demand for their products dries up and delivery channels are shut down.
The biggest casualty of this new reality might be the digital economy, previously heralded as the economy of the future. The most obvious victims will be online services for which demand will precipitously decline, such as travel apps and travel ads, when you have nowhere to go. This crisis will also affect online media platforms. No products, no money, no ads, no jobs.
Of course, not everyone will suffer in the new economy. Indeed, some sectors may actually thrive, but it will be a painful readjustment. This new reality is thus not an immediate and total economic shutdown.
We will see a domino effect as one business falls, another gets taken down, and yet another will rise in a quick succession.  This will provoke a cascade of further consequences.
This rapidly evolving new economic world will raise important considerations for the civil service, politicians and policy-makers as they attempt to navigate this new reality and stop the bleeding. They'd better be well prepared for these dramatic changes.
Instead of aiding every sector equally and immediately, they will need to monitor and project where the fallout lands and target help accordingly as each wave of dislocation moves through. They will need to consider social impacts, including crime that could flourish in this new environment. They will need to sustain people so they do not have to make harmful choices to survive, choices that could have long-term personal and social consequences once the virus is subdued and lockdowns are lifted.
This crisis will end one day and human ingenuity and the desire to survive are two constants that have triumphed over the darkest challenges, from plagues to famines to wars.
But what our lives will look like after the Covid-19 crisis recedes will depend on the choices we make right now as we navigate the crisis.
From staying at home to staying afloat, citizens and governments need to work together to come out better on the other side.
Are we prepared for this new reality?