What to remember from the past two years that could be used to get through the next fifty? That nothing is won in advance. This is partly the answer provided by Jacques Nantel, retired from HEC Montreal and well-known economic personality, in his essay Make it out ! Our consumption between pandemic and climate crisiswhich is hitting bookstores these days.
It must be said, the future is a cluster of big gray clouds. It’s been said before, but over the months the COVID-19 pandemic has taken on the air of a dress rehearsal for this looming climate crisis. In both cases, fighting effectively requires collectively and individually adopting new behaviors, which very often resemble compromises or sacrifices. Unsurprisingly, this is not for everyone.
The collective good despite everything
We have seen for months that the line that separates individual and collective freedoms and duties is quite blurred and it is not drawn in the same place by everyone. The government, the health network, the major central banks, all are singled out. The consumer may look for scapegoats elsewhere, but the way he manages his own budget is bound to change. The day the ‘climate cost’ of cheap plastic goods and services bought from the dollar store is paid directly at the till, there will be no less discontent than it is now against health restrictions aimed at to combat COVID-19.
But those who are worried about seeing the mayhem caused in recent times by opponents of measures to combat COVID-19 continue for decades will be reassured by Jacques Nantel, who sees the positive in all of this.
“Despite everything, the pandemic has brought new collective actions into our individual budgets,” notes the author over the phone. For example, shopping, sourcing masks, and even manufacturing vaccines (or at least the lack thereof) have all taken a strong tangent towards buying local. This is the beginning of a solution to be explored further if we wish to successfully fight against climate change.
“The next big crisis will probably be environmental, but we are heading, economically at least, towards a situation that will be very similar to what it is now due to the pandemic. »
Hence the importance of looking to the past to prepare for the future.
From 2022 to… 1982
There are also more lessons than we think in the great economic events of the past. The runaway inflation the world is experiencing these days is nothing new, and if people remembered what led to near usurious interest rates in the early 1980s, economists are likely to would be a little more alarmed at what is happening now.
There is such an interesting little historical lesson for the readers of Make it out ! that we hope that the Governor of the Bank of Canada, Tiff Macklem, enjoys leafing through French-language economic essays in his spare time. Because the 1982 crisis did not happen overnight. In other words, the effect of the current rise in the cost of living may be felt in ten years if nothing is done today to counter it.
“There are interesting parallels between what we see now and what happened as early as 1972, when we observed the first rise in interest rates that culminated in the events of 1982,” observes Jacques Nantel. “In most economic crises, the first domino to fall is inflation,” he adds. We forget that, in the 1970s, the leaders of the three main unions in Quebec were imprisoned for simply demanding that wages be indexed to the cost of living. »
In most economic crises, the first domino to fall is inflation.
The good news
An expert for years on issues related to household consumption, Jacques Nantel goes through the wallets of Quebecers and Canadians to paint the changing portrait of the national economy. It’s not all bad. We know that confinement and targeted government assistance have enabled Canadians to reduce their level of personal debt historically, as they were forced to consume less and travel less.
This confinement obviously accelerated a digital shift that has been talked about nonstop since mid-March 2020, the moment when the entire economic planet came to a standstill for what was hoped at the time would last only three weeks. Consumers have on the whole adjusted well to this new reality: online shopping has surged, remote working has become the norm, large homes away from city centers have reached record value.
This is good news, given that reaching climate targets for 2050 that aim to reduce our greenhouse gas emissions to zero will require other adaptations of this kind. The last two years have more or less demonstrated that a majority of people are ready to change.
It obviously remains to convince the eternal reactionaries, and a good part of the business world, conservative enough to continue to dream of a return “to the world before”, regrets a little Jacques Nantel. “The business world is good at denying the importance of certain big events. They say that when the stock market goes, everything goes. But let’s just look at the state of our downtowns, where 45% of the space remains unoccupied. During this time, from Valleyfield to Varennes, a new industrial crown has been created which will not go back, that’s for sure.
“We see it, because we have done it: consumers can change their habits in the long term. » Consume less, go into less debt, pollute less. “It wasn’t the parties, but we got there. So can we get out of this? I think so,” concludes the author.
Provided that the first domino leads the following in the right direction…