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BLAKE DOYLE: Flattening the economic demand destruction curve

Finance Minister Darlene Compton speaks about the capital budget during a media briefing on Friday. The PC government released its $156 million capital budget Friday morning.
P.E.I. Finance Minister Darlene Compton is shown in this file photo. P.E.I. may have a unique opportunity to be a leader and beacon to viral management and economic recovery, writes Blake Doyle. If the collective will allows, we could be a case study. And if action is swift, we can still capture our prime summer export season. - SaltWire file photo

The coronavirus (COVID-19 strain) pandemic will enter a new phase in its insidious journey this month.

We have adapted, largely, to the directives and steadfast guidance of P.E.I.'s chief public health officer. We have accepted governments' reactive policy approaches. (I must state I am pleased with the speed at which policy has been deployed under these circumstances. Actions made in haste can be amended, but an absence of decisions is impossible to recover from.)

April will be a period of heightened stress and challenge if economic leadership does not emerge.

Government’s role now is to plot a course and reassure the public there is a strategy. Convince citizens that the policy directives were part of a bigger strategy, and that we will come through this and what things look like on the other side of the pandemic. Without a focal point on the horizon, peoples' "feared nerves" will turn to "frayed nerves". Isolation, unemployment and unclear direction will spread discontent faster than a virus.

Our economic curve has inverted. We need to flatten the economic curve by concentrating on returning demand to our economy. The consequences of the virus are substantial; the impacts of a failed economy are arguably far worse.

Self-protectionist and myopic trade policies would be a disaster to our global economy. But Prince Edward Island may need to become an insulated economy for a few quarters. We are monitoring traffic at all our provincial entry points and discouraging unnecessary visitation. If we could control community transmission could we stabilize a micro-economy? Manage the virus, resume the economy.

We can’t fully eradicate the virus, but we may be able to control it enough to restart our economic microcosm. Can we open restaurants, hair salons and gymnasiums? Can we create dynamic internal trade within our borders until a vaccine is found? What are the long-term consequences to cutting off exposure to the world, and could we flourish for a few quarters independently? If the situation is controlled, our sanitized exports would be demanded as far as we could ship.

P.E.I. may have a unique opportunity to be a leader and beacon to viral management and economic recovery. If the collective will allows, we could be a case study. And if action is swift, we can still capture our prime summer export season.

A statistic I have long lamented is the disproportionately high percentage of government employees we have in the province relative to private sector. As businesses continue to collapse, the sustained incomes of the public sector could be the necessary catalyst to revive private industry, if induced to do so. This is the most natural employment creator we are blessed with.

We need leaders to seek creative capital inflows to offset government obligations and give people confidence to shop locally and spend! Staycations welcome local stimulus multipliers. If we choose not to take decisive action, we are facing unemployment rates much greater than the Depression and no clear ignitor to restart our economic job creators. Time is very short to act.

We have at best several quarters of unsettled economic destruction. But I am feeling more optimistic about what we will look like on the other side of this calamity. Already many government, business and health processes have been "creatively-destructed". We have rapidly adapted and in many cases are succeeding. The month of April is our pivot-point, and we will be brutally measured by our collective approach.


Blake Doyle is The Guardian's small business columnist. He can be reached at blake@islandrecruiting.com.

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