By DAN HOROWITZ
A former professor of economics at the University of Toronto believes the economy will bounce back quickly after the shock of the coronavirus is over.
“The good news is that once the shock is over, and once this virus is permanently under control, the economy as a whole should come back quite rapidly,” Jack L. Carr, professor emeritus at the university, said.
The problem, he said, is no one knows how long until the effects of the virus will be over. “This uncertainty adds a great deal of risk to our economy.”
Carr spoke to The CJR on a wide variety of economic issues, including how the Canadian government has performed and why Israel doesn’t appear to be suffering as badly as Canada.
Carr said we are not in a recession yet and it’s unlikely we’ll have another Great Depression.
“The general term for a recession is two quarters of negative growth. We aren’t there yet,” Carr said.
“And, really, a depression is just a very bad recession. When people think of a depression they think of the Great Depression which lasted for four years from 1929 to 1933. Back then unemployment was between 25 and 30 per cent. Although we may experience that same level of unemployment sometime in the future, this is not a depression, and it certainly won’t last for four years,” he said.
Carr said the Canadian government has taken proper measures to ensure the health of financial institutions. “Unlike the Great Depression where there was a major financial collapse and there were runs on banks, and people lining up outside their financial institutions in a frenzy to get their money out, this is not the case today,” says Carr.
“Our government did everything it could to prevent a major financial collapse. They helped individuals financially whose lives were affected by COVID-19, they created business bailout programs and gave out small business loans – some of which were forgivable. They’ve done what they could do. Of course, these programs and payments will create more debt, debt that we will all ultimately pay for through our taxes.”
He believes we could get the economy back on track faster if we only put restrictions on the most vulnerable in our community. He said young people, teens and those in their 20s and 30s, should be allowed back to stores, restaurants and have social gatherings. “Meanwhile, I would keep older people, and others who are compromised, at home.”
He does predict, however, financial problems for certain Jewish institutions such as summer camps and day schools.
“There’s no doubt that the Jewish summer camps which have been cancelled this year, as well as employees of those camps, have suffered,” he said. “They haven’t earned any revenue, they’re not getting a return on their camp land. Jewish kids who might have had a job as a counsellor will not earn that income.”
He also hinted that some parents might be reluctant to pay the “big bucks” if day schools don’t open up and their children have to continue with distance learning.
“My guess is that Jewish day schools are going to have more financial problems as a result of this. In addition, if Jewish day schools are not open it will make it much more difficult for Jewish mothers and fathers to engage in gainful employment.”
Touching on Israel, Carr said the Jewish state’s economy wasn’t as badly affected.
“Maybe it’s due to good policy, but they are certainly doing better (than Canada and the United States). Their schools have reopened, as have their beaches and their restaurants – with some restrictions, of course. Israelis have always been resilient, and I’d say they have shown us that they are more resilient again. Fortunately the Israeli economy looks like it’s going to recover from COVID fairly rapidly.”