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 – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
