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The Downfall of Us All

BY BRETT KITCHEN

The Death of SMEs and Globalization

So lately, like most people, in between changing my youngest’s diapers and trying to teach and entertain my five-year-old son, I’ve found myself stuck inside thinking about how our lives have all changed dramatically in the blink of an eye. Throughout this process, we’ve learned that investing in health care and other critical infrastructure is important and not to be neglected or cut from, but also that our economy is way more fragile than anyone ever truly realized.

The longer this pandemic continues, the greater the economic impact will be. At the same time, if we “steepen” or shorten that curve, the loss of life will be astronomical. The questions at this point are infinite, and the answers are very few and far between. It’s a fine line and one that I think society and the economy are both struggling to balance. This leads me to my next question – what can we do about the economy without triggering a full-on depression; or are we already in one and we just won’t admit it yet?

The lifeblood of the economy in both Canada and USA are SME’s (Small and Medium Enterprises) who are not surprisingly at greatest risk without the backlog of business or financial tools to withstand such a steep downturn in the economy – this is only compounded by the fact that many of North America’s small businesses are made up of restaurants, construction and retail – which were already hanging on by a thread. Sure, Trudeau has enacted measures to help alleviate some of those strains, but what about if you’ve lost 20 or 25% of your business? You are now further behind than other companies who had lost 30% and qualified for the subsidy. There’s no easy fix or any fix for the economy at this point, it has basically come to a standstill, and we are watching first-hand consolidation of wealth and the death of small business as we know it.

SME’s are not like Google or Apple who have been hoarding stockpiles of cash in recent years and are well-positioned to withstand this economic downturn. As a citizen and SME owner, I don’t want to see support given to these multi-billion or trillion-dollar companies (in the case of Microsoft). Sure, the big four: Microsoft, Apple, Google & Amazon (MAGA) – all trillion-dollar companies – have lost 1.1 trillion in capital in just over a month. However, they do not make up the backbone of the economy, people do, and if people can’t take care of the first steps on Maslow’s hierarchy of needs how can we devote attention to restarting the economy?

How do we save our SME’s then? Do we put a stop on mortgage and rent payment during this period and have the government use its tools to support banks through this crisis? That’s not a realistic solution, but I don’t how most Canadians or Americans will finance themselves through this pandemic, (which is expected to last much longer than many of us originally envisioned), without a moratorium on mortgages and rent to alleviate a lot of the overhead facing many of us.

There’s no playbook to stop an economy, (it wasn’t designed to be stopped), which leads me to my next question. When we emerge from this COVID-19 pandemic, how do we restart an economy without our backbone – SMEs? The world will be a MUCH different place when we emerge from this pandemic and depression – a word that most still seem reluctant to use.

In the age of globalism, we’ve never seen any macro factor that has placed such a strain on the movement. With countries economies now crumbling, and the growing number of nationalist decisions being made by Trump and other world leaders, we must ask ourselves… are we looking at a reversal of the globalization movement? Before you dismiss this idea lets take a look at the actions of just President Trump to start. Since the pandemic began, he’s dismissed the virus as a political ploy against him, he’s threatened militarizing the border between Canada and the USA and now he’s withholding PPE from Canadians. Then we have countries like Brazil whose government is disregarding the severity of the situation. The cartels of Brazil have taken it upon themselves to enforce quarantine measures in the streets. Is it really a shock that the Brazilian President – the same guy that is cutting down chunks of the Amazon – is leading in such a reckless and short-sighted manner which is in direct contradiction to common knowledge?

The reality is that countries like the USA, Brazil and China – that are denying COVID-19’s severity and its potential impact – are jeopardizing the rest of the world. This is only compounded when the two largest economies are leading this charge. In the case of China, although they seem to have contained the virus’ impact to a large degree, (only by taking draconian measures), they consistently downplayed the situation and withheld accurate and truthful information – this has long been a staple of the Communist Party of China’s playbook. China’s even gone so far as to arrest whistleblowers during the first days of the pandemic. The CIA recently reported that CCP has SEVERELY underreported cases and deaths – some sources saying the death toll is as much as 60,000 higher than reported.

In the case of the USA, we have a world leader making up facts, (to no ones surprise), and acting in a selfish, egotistical manner. First, Trump denied the seriousness of COVID-19 and directly contradicted the warnings of the CDC, largely out of fear of its impact on the economy and stock market, and most recently has threatened withholding supplies and funding for state governors if they are “not appreciative”. This begs the question, what exactly do Americans have to be appreciative for? Trump, as the President of the USA, is tasked with being the leader of the country. It is to be appreciative and supportive of his citizens and not hold them hostage based upon his personal relationship with individual state governors. What kind of President, or person for that matter, would willfully withhold equipment, support and funding from his citizens leaving them to die for nothing more than an egotistical reason?

It is during this crisis that we’ve identified who TRUE leaders are in this situation and it is not people like Trump or even Trudeau for that matter, it is people like Premier Doug Ford who has been among the most proactive in taking precautionary measures such as being among the first to close schools, and declare a state of emergency. I’ve never been know as a big fan of Doug Ford, but the man has shown the leadership qualities necessary to lead people through this difficult time. He’s personally putting himself at risk picking up and delivering supplies – not as a publicity stunt but because he cares and is a leader – that’s what leaders do, they take charge. 

As we all know, the relationship between China and Canada has been strained for over a year now since the extradition of Huawei CFO – Cathy Meng.  I can say with certainty that the slow actions of the Canadian government were due to their fear of worsening relations with China rather than being proactive and putting Canadians first. Shortly after the pandemic broke out, we were still allowing passengers from China to keep flying into Canada without any testing or screening procedures, (Sorry, handing out a pamphlet hardly qualifies). Canada should have taken a hard line stance and stopped ALL FLIGHTS from China immediately – with exceptions for Canadian citizens of course. Instead, we allowed flights from China regularly and now find ourselves in the position that we are currently in. This measure would not have prevented the virus from making its way to Canada, but surely we could have provided ourselves with a week or two more to prepare for the coming storm.

It’s been a crazy start to the first quarter of 2020, and like everyone else I don’t know when things will improve but with the trends and decisions that I’m seeing around the world is a growing movement away from globalization and a more nationalist outlook.

With so many questions still up in the air, nobody exactly knows how things will play out, but one thing is for certain, despite claims of unity and strengthening of relationships – actions by leaders and the wealthy are indicating otherwise. The road back will be a long one for society and the economy and the world will be a much different place when we come out from this self-imposed hibernation.

 


Brett Kitchen is CDR’s Publisher

 

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