Should we sacrifice Grandma for the GDP? That more or less sums up the debate in much of the U.S. media over the past week, ever since U.S. President Donald Trump mused aloud to a Fox News reporter about relaxing the already patchy American shutdown of social and economic activity in time for Easter – a position he has since recanted.
Underlying Mr. Trump’s initial impulse were several supporting assumptions: that the impact of the coronavirus epidemic is unlikely to be far out of line with previous experience, especially with the flu; that it mostly affects the elderly; and that the economic costs of the kind of social-distancing measures governments have imposed to date are too great, even in the short term, to be justified.
Ergo: sorry, Grandma. Mr. Trump didn’t say so explicitly, but a number of his more idolatrous supporters did: If some number of the elderly have to die prematurely to save the economy, so be it. Or as Mr. Trump put it, on Twitter, “WE CANNOT LET THE CURE BE WORSE THAN THE PROBLEM.”
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There’s lots wrong with this. The threat represented by the coronavirus is orders of magnitude worse than the flu. The flu kills roughly 60,000 Americans annually, at most; the coronavirus could kill as many as 2.2 million, according to an influential study by experts at the Imperial College of London. Death rates are much lower for the non-elderly, but not insignificant; nor, as important, are hospitalization rates. And an overwhelmed hospital system would lead to many more needless deaths, not just among coronavirus sufferers, but patients with other conditions.
What’s not entirely wrong, however, is the notion that economic costs must be taken into account even as we try to save lives. This is a point lost on those whose response to Mr. Trump’s musings was, as his presumptive Democratic rival Joe Biden put it, that “no life is worth losing to add one more point to the Dow.” Maybe not the Dow, but the economy? How many lives saved is worth how many trillions of dollars of lost output, lost jobs and everything that goes with either? Or let me put it even more provocatively: How much is one life worth?
If the answer is “any amount” or “infinite,” that is not a position that anyone actually believes, whether about other people’s lives or even their own. Mr. Trump’s half-right on this: We do not shut down the entire economy in response to the flu each year, or in response to similar carnage on the roads. (One suspects the difference is novelty: If the automobile had just been invented, and it were known in advance that it would kill at least 36,000 Americans every year, I doubt it would be allowed on the market.)
So we are not talking about saving every life, or preventing every death from COVID-19: We are trying to stave off a calamity, to prevent a truly catastrophic loss of life. The “cure” is admittedly blunt, and costly in the short-run. But it is working. The average growth rate in the number of cases, worldwide, is down to less than 10 per cent a day – not salvation by any means, but a third as fast as a month ago. The Imperial College experts, in a new study, estimate that social-distancing measures enacted across 11 European countries have saved 59,000 lives to date – 38,000 in Italy alone.
Is it worth it? Let’s stipulate that the trade-off between fighting the epidemic and saving the economy is not so stark as might be imagined. An economic collapse would surely cost a lot of lives in different ways; conversely, leaving the epidemic to rage unopposed would lead to a great deal of lost output on its own. But accepting that a shutdown saves more lives and costs more output versus the alternative, what are the terms of the trade-off?
There is actually something of an industry among economists in assessing these things, based not on some ghoulish calculus of their own, but people’s own “revealed preferences.” You’re thinking of buying a smoke detector for your home, at a cost of x dollars, knowing it would reduce your chances of dying in a fire by y per cent. You decide it’s not worth it. Presto: you have just assigned a value to your own life, equal to x/y. Studies of these and other decisions yield remarkably consistent results: a “value of statistical life,” as reported in the Washington Post and FiveThirtyEight, of US$9-million to US$11-million.
Suppose, then, that social distancing succeeds in reducing the U.S. death toll from 2.2 million, the worst-case scenario, to “only” 100,000. That’s a cool US$21-trillion in lives saved, worth about as much as the entire U.S. GDP. Save Grandma.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
VICTORIA – British Columbia is forecasting a record budget deficit and a rising debt of almost $129 billion less than two weeks before the start of a provincial election campaign where economic stability and future progress are expected to be major issues.
Finance Minister Katrine Conroy, who has announced her retirement and will not seek re-election in the Oct. 19 vote, said Tuesday her final budget update as minister predicts a deficit of $8.9 billion, up $1.1 billion from a forecast she made earlier this year.
Conroy said she acknowledges “challenges” facing B.C., including three consecutive deficit budgets, but expected improved economic growth where the province will start to “turn a corner.”
The $8.9 billion deficit forecast for 2024-2025 is followed by annual deficit projections of $6.7 billion and $6.1 billion in 2026-2027, Conroy said at a news conference outlining the government’s first quarterly financial update.
Conroy said lower corporate income tax and natural resource revenues and the increased cost of fighting wildfires have had some of the largest impacts on the budget.
“I want to acknowledge the economic uncertainties,” she said. “While global inflation is showing signs of easing and we’ve seen cuts to the Bank of Canada interest rates, we know that the challenges are not over.”
Conroy said wildfire response costs are expected to total $886 million this year, more than $650 million higher than originally forecast.
Corporate income tax revenue is forecast to be $638 million lower as a result of federal government updates and natural resource revenues are down $299 million due to lower prices for natural gas, lumber and electricity, she said.
Debt-servicing costs are also forecast to be $344 million higher due to the larger debt balance, the current interest rate and accelerated borrowing to ensure services and capital projects are maintained through the province’s election period, said Conroy.
B.C.’s economic growth is expected to strengthen over the next three years, but the timing of a return to a balanced budget will fall to another minister, said Conroy, who was addressing what likely would be her last news conference as Minister of Finance.
The election is expected to be called on Sept. 21, with the vote set for Oct. 19.
“While we are a strong province, people are facing challenges,” she said. “We have never shied away from taking those challenges head on, because we want to keep British Columbians secure and help them build good lives now and for the long term. With the investments we’re making and the actions we’re taking to support people and build a stronger economy, we’ve started to turn a corner.”
Premier David Eby said before the fiscal forecast was released Tuesday that the New Democrat government remains committed to providing services and supports for people in British Columbia and cuts are not on his agenda.
Eby said people have been hurt by high interest costs and the province is facing budget pressures connected to low resource prices, high wildfire costs and struggling global economies.
The premier said that now is not the time to reduce supports and services for people.
Last month’s year-end report for the 2023-2024 budget saw the province post a budget deficit of $5.035 billion, down from the previous forecast of $5.9 billion.
Eby said he expects government financial priorities to become a major issue during the upcoming election, with the NDP pledging to continue to fund services and the B.C. Conservatives looking to make cuts.
This report by The Canadian Press was first published Sept. 10, 2024.
Note to readers: This is a corrected story. A previous version said the debt would be going up to more than $129 billion. In fact, it will be almost $129 billion.
NANAIMO, B.C. – Former Bank of Canada governor Mark Carney says he’ll be advising the Liberal party to flip some the challenges posed by an increasingly divided and dangerous world into an economic opportunity for Canada.
But he won’t say what his specific advice will be on economic issues that are politically divisive in Canada, like the carbon tax.
He presented his vision for the Liberals’ economic policy at the party’s caucus retreat in Nanaimo, B.C. today, after he agreed to help the party prepare for the next election as chair of a Liberal task force on economic growth.
Carney has been touted as a possible leadership contender to replace Justin Trudeau, who has said he has tried to coax Carney into politics for years.
Carney says if the prime minister asks him to do something he will do it to the best of his ability, but won’t elaborate on whether the new adviser role could lead to him adding his name to a ballot in the next election.
Finance Minister Chrystia Freeland says she has been taking advice from Carney for years, and that his new position won’t infringe on her role.
This report by The Canadian Press was first published Sept. 10, 2024.
