Lots of people are gaming out what post-Corona looks like economically.  Increasingly, we seem to have consensus that 2020 will be the worst year for the global economy since the early 1930s, with GDP drops for the year landing somewhere between 5-10%.  There is considerable debate about the speed of the bounce-back, with people talking about recoveries that V-shaped (i.e. quick), U-shaped (not so quick), or bathtub-shaped. We could be in this a long time: no one really knows the answer to this, but there is consensus that the longer the lockdown lasts, the less likely a V-shaped recovery is.

There is also a debate about what the government can and should do.  To date, what the federal government (and to a lesser extent provincial ones) have been doing is trying to keep the economy in what my colleague Jen Robson at Carleton calls “a medically-induced coma” – that is, stable and somewhere above total collapse.  It is not yet at the point where we can talk about stimulus because there is nothing to stimulate: we’re mostly stuck at home.

By the time we do get around to stimulus, the economy will be considerably smaller than it was a couple of months ago, and we’ll be $100-$150B further in the hole.  That doesn’t necessarily make it more difficult to borrow money for stimulus,  which is probably going to have to be at least that much again, spread out over 18 months or so: as long as inflation stays low (and right now deflation seems like a bigger threat) and bond markets don’t crumble we can borrow our way out of it.  We’re going to end up with WWII-sized deficits, and in the end those are going to have to be paid back the way we paid off WWII-era debt (much higher inflation and/or taxation, which in effect confiscates a fair bit of private wealth), but we can probably spread that over a couple of decades so that it’s not quite so painful. 

If there’s an economic argument to be had, it will be between people who say “thank God we can print money in an emergency” and those who say “look, if we can print money in an emergency, it just shows all limits are artificial and we can print money forever, so why bother paying anything back?” Broadly, within the PSE sector, the former group will be arguing for temporary stimulus in the form of infrastructure spending (KIP 3.0!) and those in the latter will argue for free tuition and a boatload of other spending besides.

Now to an extent that’s fine – we have more attenuated forms of this debate after every recession.  But this episode is, I think, very different.  In the 1930s, the public sector was very small and pretty much everyone in the sector – certainly including staff at universities – took pay cuts that broadly matched the kinds of cuts experienced in the private sector.  This time, we have a massive public sector, which for the most part has ironclad job and pension guarantees and no significant chance of losing salary.  And I have a feeling this is going to have an effect on the way the public will want to see recovery money directed. 

Put it this way: pain will have to at least be seen to be shared.  Main street businesses are going bust every day because they can’t make rent.  Five million people have applied for EI or CERB.  Even where in theory it might make sense to spend stimulus money on projects that involve public sector workers, because the multipliers are higher or whatever, I think it is going to be a very hard sell (except for the health care sector where, I think it is safe to say, there is broad acceptance that those folks deserve every penny).

And so, even though there are lots of good Keynesian reasons to spend more money in higher education both during and after the pandemic, I worry that it will be politically unacceptable to do so, because the sector with its rather good salaries (mostly, anyway) needs to suffer a bit too, for reasons of solidarity.  I think something similar goes for student aid: the idea being floated by some student groups that all students should be eligible for CERB for four months this summer, and thus pocket $8000 (more than most would have earned this summer had they been working full-time) seems unlikely to fly given how many other people are facing massive income losses.  Granted, it seems very unfair that young people are having to go further into debt because of a microbe; but given the sheer number of people and businesses whose incomes and livelihoods are getting blown out of the water right now, it’s a tough case to make that any one group should actually end up better off (arguably so, anyway) as a result of the pandemic.

I am, I hope it is clear, absolutely not arguing for cuts in the sector, or proposing wage givebacks or what have you.  I am arguing, however, a couple of things. 

First: extra effort is de rigeur.  I know everyone works hard.  But look around society right now and see what kinds of extraordinary sacrifices are being made, particularly in the health sector (and at the grocery store).  Like it or not, our sector is going to be judged by whether we are seen to be making similar sacrifices. 

Second: No whinging.  I have no doubt that many institutions are going to be in dire straits.  And it is right and proper for institutions (and sectors) to see if the government can see its way clear to helping to support institutions – which may be extremely important in a recovery – in getting through this crisis without serious damage.  But if the support is not quite what we had hoped, pretty much the worst thing the sector could do is whine about it.  If we go into 2021 with 2 million or more unemployed (which I think is reasonably likely), absolutely no one is going to be sympathetic to a sector with high levels of job security and reasonably good pensions. 

There is a lot of pain out there, and it is growing every day.  It is nobody’s fault.  Government can do a lot to stanch the bleeding, but it cannot hold everyone harmless.  As a sector, let’s govern ourselves accordingly.