The economic impact of the coronavirus has taken a heavier toll on low-wage earners according to Tomas J Philipson, the chair of the White House Council of Economic Advisers.
In an exclusive interview with the BBC before his reported departure, he said: “There’s a sort of unique impact of this shock in that its very regressive, hitting the low wage part of the economy. Low-wage workers take a bigger hit than higher wage”.
The virus has derailed any progress the US was making in raising the living standards of those on low pay, Prof Philipson said in an interview for Coronavirus: The Economic Shock, in which some of the world’s leading economists and business leaders look at how the gravest economic downturn in nearly a hundred years may change the way we live and work.
“We had enormous success in growing lower wages before the pandemic struck, so this has taken a very regressive toll on the economy,” he argues.
This has political implications for the upcoming November election as President Trump enjoys far higher support among non-college educated voters – often used as a proxy for low vs high wage earners – than among those who have college degrees.
Prof Philipson also plays down the chances of a rapid economic recovery. “I’m not saying we are going to have a v-shaped recovery, in fact the data shows a sort of gradual response.”
However, he also defends the United States’ response to the pandemic and places some of the responsibility Covid-19 in the US at the doors of state governors.
“We were the first country to introduce travel bans from China and were criticised for that. Many state governments run by Democratic governors did not act before the federal government, even though they were free to do so.”
He disagrees that a rise in US economic nationalism has been harmful to the world economy. “I think China was justifiably demonised in the sense that we treated them a lot better selling stuff here than they treated us selling stuff there. I think the president has done a lot to balance that”.
Niall Ferguson, professor of history at Stanford University says the virus has seen economic tensions between the world’s two biggest economies become more than a trade dispute. “It seems to me pretty clear that we’re now in ‘Cold War Two’.
“It’s going to be different from ‘Cold War One’, not least because the US and the Soviet Union were never as economically interdependent as the US and China have become over the last 20 years.
“It’s hard to think of a better illustration of the downsides of globalisation than the extreme vulnerability it exposed to a virus that originated in in China.”This has, he believes, huge economic implications for the entire interconnectedness of the world economy and therefore the size and the health of the global economy.
Globalisation has been credited with lifting hundreds of millions of people out of poverty but has also been blamed for deepening inequality within countries. The virus has operated like an X-ray on the global economic body and its revealed weaknesses and imbalances along economic, gender and ethnic fault lines.
Ursula Burns was the first African American woman to sit on the board of a Fortune 500 company and she now sits on the boards of Nestle, Uber and ExxonMobil. She says business is emerging as an unlikely and welcome ally in the fight against inequality that she says the pandemic has laid bare.
“Amazingly enough, business is starting to be at the centre of that conversation. At the centre because governments around the world are not articulate enough or sensitive enough or informed enough to contribute positively to this conversation. So out of nowhere, businesses start to change the discourse in the world.”
Will business step up? Or will the fight for survival mean savage cost-cutting and mass redundancies compounding the problems of inequality?
In developing countries, where government safety nets are weak and where economies are particularly vulnerable, things may be particularly tough.
It is a point made by Tony Elumelu, who is one of Africa’s most influential businessmen. He is a billionaire banker and founder of the Tony Elumelu Foundation, which invests in start-ups and SMEs (small and medium-sized enterprises) across the continent.
“We have endemic poverty in Africa. Over 80% of our population live from hand to mouth. They go out, they die of Covid. They sit at home, they die of hunger. Then what is better for them to do? It is a bad situation but it gives us all the opportunity to re-set.”
Big business – global corporations – seem ready to reset too. The chairman of Tata Group, Natarajan Chandrasekaran, and Nissan’s chief operating officer, Ashwani Gupta, both believe global business is in the midst of a long-term rethink on how employers organise their workforce and how supply chains and resources will operate. They suggest sustainability may become more of a focus.
In a remarkable broadcasting moment, Mr Chandrasekaran – a titan of global business – looked out across Mumbai and reflected on the change. “You can hear the birds. We can breathe fresh air… on a clear day we can see the stars.”
So will the world grasp this opportunity to change how the world economy works and address pressing challenges that include global inequality and climate change?
Or when the health crises passes will things return to way they were? Will we miss an opportunity to change how the global economy functions for the welfare of us all?
Coronavirus: the Economic Shock is presented by Simon Jack and produced by Kirsty MacKenzie. It includes the thoughts of Nissan’s COO Ashwani Gupta, Nobel prize-winning economists Joseph Stiglitz and Paul Krugman, Facebook founder Mark Zuckerberg, Cisco CEO Chuck Robbins, Tata’s chairman Tata Natarajan Chandrasekaran; former UK prime minister Tony Blair, and Krishnamurthy Subramanian, the chief economic advisor to Indian PM Narendra Modi. It is broadcast on BBC Sounds and BBC World Service.
OTTAWA – Prime Minister Justin Trudeau says the NDP is caving to political pressure from Conservative Leader Pierre Poilievre when it comes to their stance on the consumer carbon price.
Trudeau says he believes Jagmeet Singh and the NDP care about the environment, but it’s “increasingly obvious” that they have “no idea” what to do about climate change.
On Thursday, Singh said the NDP is working on a plan that wouldn’t put the burden of fighting climate change on the backs of workers, but wouldn’t say if that plan would include a consumer carbon price.
Singh’s noncommittal position comes as the NDP tries to frame itself as a credible alternative to the Conservatives in the next federal election.
Poilievre responded to that by releasing a video, pointing out that the NDP has voted time and again in favour of the Liberals’ carbon price.
British Columbia Premier David Eby also changed his tune on Thursday, promising that a re-elected NDP government would scrap the long-standing carbon tax and shift the burden to “big polluters,” if the federal government dropped its requirements.
This report by The Canadian Press was first published Sept. 13, 2024.
Simon Jolin-Barrette, minister responsible for consumer protection, has tabled a bill to force merchants to calculate tips based on the price before tax.
That means on a restaurant bill of $100, suggested tips would be calculated based on $100, not on $114.98 after provincial and federal sales taxes are added.
The bill would also increase the rebate offered to consumers when the price of an item at the cash register is higher than the shelf price, to $15 from $10.
And it would force grocery stores offering a discounted price for several items to clearly list the unit price as well.
Businesses would also have to indicate whether taxes will be added to the price of food products.
This report by The Canadian Press was first published Sept. 12, 2024.
Quebec legislature member Youri Chassin has announced he’s leaving the Coalition Avenir Québec government to sit as an Independent.
He announced the decision shortly after writing an open letter criticizing Premier François Legault’s government for abandoning its principles of smaller government.
In the letter published in Le Journal de Montréal and Le Journal de Québec, Chassin accused the party of falling back on what he called the old formula of throwing money at problems instead of looking to do things differently.
Chassin says public services are more fragile than ever, despite rising spending that pushed the province to a record $11-billion deficit projected in the last budget.
He is the second CAQ member to leave the party in a little more than one week, after economy and energy minister Pierre Fitzgibbon announced Sept. 4 he would leave because he lost motivation to do his job.
Chassin says he has no intention of joining another party and will instead sit as an Independent until the end of his term.
He has represented the Saint-Jérôme riding since the CAQ rose to power in 2018, but has not served in cabinet.
This report by The Canadian Press was first published Sept. 12, 2024.
