A New Report Says Another Quebec Lockdown Could Lead Us To A 'Depression'
On December 15, Quebec Premier François Legault announced that all non-essential retail stores will be closed from December 25 until January 10, inclusively. The announcement has left many locals with a range of questions, including the effects these lockdowns in Quebec could have in the long-term.
Since the start of the pandemic, the provincial government has been reacting to the "waves" of cases, making decisions related to which businesses will close and for how long.
Peter St. Onge, Senior Fellow at the MEI, with Maria Lily Shaw, Economist at the MEI, published a report with Institut Economique de Montréal called "Second Time's the Harm: Repeated Lockdowns Risk Turning a Temporary Downturn into an Ongoing Depression" a day following the announcement.
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Unemployment in Canada is at its "highest level since the Great Depression."
According to the report, at 13.7%, Canada is experiencing its highest unemployment rate since the Great Depression.
It is estimated that 90% of businesses have experienced a devastating drop in revenue, at an average of 70%, and have cut their staff by at least half.
10% of businesses have had to let go of their entire team altogether.
A survey released by the Canadian Federation of Independent Business (CFIB) indicated that 70% of small businesses were worried about the second wave and possible lockdowns. 56% of them stated uncertainty of their ability to survive.
Dan Kelly, CFIB president, says that he received over 60,000 calls from business owners, with some expressing their fear of suicidal ideation should their business have to fold.
Overall, studies have shown that Canadians, in general, are feeling pessimistic about the state of the economy and don't see the end of this Depression-like period coming any time soon.
Extended lockdowns allegedly have a number of "dangers."
The report explains that economic analysis suggests that continuous and repeated lockdowns actually do more harm than good, despite the intention of using them to "save" these small businesses.
We're told that a one-time lockdown causes damage to overall wealth, but economic incentives remain high. However, ongoing or repeated lockdowns, even if with just a few restrictions, lead to small businesses operating with a sense of looming disaster, the report reveals.
In fact, St. Onge compares the state of small businesses across the country to a natural disaster and explains that the longer these lockdowns persist, the more impactful their damage.
The report doubts that lockdowns have many benefits in the long run.
Citing a study by Dominik A. Moser et al, St. Onge suggests that these lockdowns, despite trying to save people from dying of COVID-19, may actually be killing more people, due to the lockdowns' impact on substance abuse, overdose and suicide, among others. The report refers to this as the "disease of despair."
"We have long known that mass unemployment and poverty kill, and we should not lose sight of this when it comes to dealing with COVID-19," says St. Onge.
The researchers bring up the fact that Canadians have never experienced a lockdown of this size, so it is unknown the exact outcome of what it can do to the economy. However, over seven decades of empirical research into economic theory allow academics to say, with assurance, that lockdowns of any size can have significant negative effects on the economy and on society.
St. Onge finishes the report by posing the idea of ending lockdowns overall and, instead, putting resources to protecting vulnerable populations from the virus and from "costly and counterproductive policies."