In 1992, a much younger Bill Clinton managed to pull off a rare in American politics through the use of the oddly memorable , “It’s the economy, stupid”. He defeated an incumbent president who had enjoyed, at one point in his presidency, record-high approval ratings. Americans may have approved of George Bush’s handling of the conflict in the Persian Gulf, but they were hurting at home, and they began to vote in unpredictable ways that led to Clinton’s unlikely victory.
That surprising political during a relatively peaceful time due to economic pain comes to my mind on a regular basis as I read about multinational companies stumbling against the social and economic chaos created by COVID: an old economic reality is being destroyed, and a new economic reality is being created. Right now, in Montréal, we might be able to see that reality most clearly in the retail market, especially in the clothing market. That fact was clear to us throughout the summer, of course: In late July David’s Tea announced that it could only reopen 18 of the 186 pre-pandemic locations it had been operating. Montréal-based clothing giant Reitman’s struggled early and often in the pandemic, which led to the company’s leadership closing a number of the brand’s chains—Addition Elle and Thyme Maternity—and laying off 1,100 retail workers and 300 Montreal head office workers.
These hits against retailers continued this past week: another Montréal-based clothing company, Le Château, filed for credit protection and began the liquidation of its inventory. The fact that this will affect 1,400 employees is , of course, but this Globe and Mail article implicitly and explicitly gets at why Le Château’s losses in the e-market—even before the start of the pandemic—might be worrying to a variety of Canadian retailers. Financiers are the possibility that Christmas will be, for all intents and purposes, cancelled; the way we shop has changed and that change may be permanent; what we wear, what we eat, what we drink, and where we consume those goods have all shifted. Investors, in other words, may not know where to put their money when it comes to retail.
We are, of course, still in the early days of the economic fallout from this crisis. So far Canadians appear to be inclined to vote for incumbents and stability, as we’ve seen this past month in New Brunswick, British Columbia, and Saskatchewan. Tomorrow, Tuesday, November 3, we’ll see if that trend holds south of the border.
by Nathan R. Elliott
Longform read of the week: In an attempt to counter the economic damage that COVID is wreaking on the Canadian economy, the current Liberal government has had to rack up an absolutely astounding national debt to keep workers fed and keep the economy from completely freezing. Canadians aren’t the only ones, of course: the entire planet is eyeing economic deficits that must feel like a bad acid trip to the austerity-minded neo-liberal economists who have been more or less running western capitalism for the past several decades.
An article from The Walrus on Modern Monetary Theory posits why you should stop worrying about deficits and learn to enjoy CERB and CEWS and other future programs that could, as the writer puts it, allow us to invest, collectively in addressing “the social and environmental deficits we’ve been racking up for decades.” Whether or not Modern Monetary Theory proves to be viable remains to be seen; a fundamental change in the way governments approach shaping and intervening in their economies appears inevitable.
1. “David’s Tea will only reopen 18 stores in Canada, down from 186 before the pandemic.” CBC, July 30, 2020. 3 mins. Beginner/Intermediate.
2. “Reitman’s seeks new money, warns on its future as losses grow.” BNN Blomberg, May 2, 2020. 3 mins. Intermediate.
3. “Reitman’s closing Thyme Maternity, Addition Elle brands during Restructuring.” Toronto Star, 3 mins. Intermediate.
4. “Le Château files for creditor protection, will shutter Canadian stores after six decades in business.” The Globe and Mail, Oct 23, 2020. 8 mins. Intermediate.
5. “Shopping Malls are in crisis due to COVID-19—but they’re not dead yet, experts say.” The Toronto Star, Aug 4, 2020. 5 mins. Intermediate.
6. “Why Canada Won’t Go Broke.” The Walrus, Oct 5, 2020. 10 mins. Advanced.