It has been one hell of a year. I hope we have learned from the experience and that the lessons learned will stand us in good stead in 2022 and beyond because the watchword will be “adjustment.”
Many changes impacting on our daily lives over the next 15 years will flow from the COVID-19 pandemic itself. I expect that, in the future — as is now the case with influenza — yearly shots will be needed to minimize the ongoing impact of the virus. And, until the percentage of the population that is fully vaccinated exceeds 95% prudence will require the use of masks in indoor public spaces.
Moreover, the number of workers returning to offices in urban cores will be lowered for years and probably permanently reduced. Stores and restaurants catering to the hoards of workers that once inhabited office towers during working hours will suffer from lower sales and public transit designed to bring commuters into the city core will experience reduced traffic.
The recent growth trend in online shopping will continue, I expect. Whether that means “bricks and mortar” retailers will continue to migrate online even after the pandemic ends is unclear, however. After staying home for so long, consumers may find entertainment value even in a visit to a Canadian Tire store.
Despite the recent pandemic trend of relocation by city dwellers to more rural settings where they can work remotely, I believe that the long-term trend of migration into cities, large and small, from rural regions of Canada will continue. Most immigrants will also continue to gravitate to cities. The investment in infrastructure and services required to will impact significantly on municipal budgets leading to upward adjustments in property taxes.
The mega-factor influencing our lives will be climate change. Abnormalities in weather from heat waves, to violent rain and wind storms — including more hurricanes and tornadoes — will stress both the capital infrastructure and distribution
Governments that have thus far (for the most part) only implemented the least disruptive policies to deal with climate change will be increasingly under pressure to take really significant steps. These will include both steep increases in the price of carbon pollution and, at the same time, a burgeoning demand for increased alternative energy sources, most particularly nuclear.
That in turn will mean sustained high demand for financing of new capacity for power generation. Coal production for any other purpose than making steel will end and even that will eventually be replaced by substitutes with a lower carbon footprint.
Coincident with these measures to slow climate change, we will need to sharply reduce the use of plastics. The gigantic plastic waste clusters in the oceans need to be eliminated quickly. Marine life and the other positive externalities that vibrant oceans deliver to our global climate depend on this. Expect, however, continuing lobbying by the plastic sector to minimize the adverse impacts of profligate plastic usage. It will require real courage for governments to act on this issue.
For Canada, in particular, we need recognize a basic change in our economic relations with the US. The renegotiated NAFTA treaty is essentially a dead letter as the U.S. becomes much more protectionist in its dealings with all its trading partners. There appears to be little hope that open and rules-based trade relations will resume. American leaders of many political stripes are comfortable taking a strong protectionist stance in sectors such as softwood lumber or aluminum because they have the power to force their position without compensating either Canada or the adversely impacted U.S. sectors.
Finally, the provinces collectively are facing a looming tsunami of costs of health care as the population continues to age. To deal with this factor there will need both a redistribution of total tax revenue between the federal and provincial governments and an overall increase in total taxes. Achieving a suitable resolution will involve a protracted and acrimonious series of negotiations that may well strain national unity.
On the bright side, however, at least we do not face the political standoff so evident in the United States.
For that we should truly be thankful.
Happy New Year.
David Bond is a retired bank economist who lives in Kelowna.