The Munk Debates Podcast - Friday Focus: Autumn of Discontent – Rocket Man

Episode Date: November 4, 2022

Friday Focus provides listeners with a focused, half-hour masterclass on the big issues, events and trends driving the news and current events. The show features Janice Gross Stein, the founding director of the Munk School of Global Affairs and bestselling author, in conversation with Rudyard Griffiths, Chair and moderator of the Munk Debates.  The following is a sample of the Munk Debates’ weekly current affairs podcast, Friday Focus.   On this week’s edition of the Friday Focus podcast, Janice and Rudyard start the show with a discussion of the confluence of factors bearing down on Canada this autumn, from labour unrest to overflowing emergency rooms to persistent inflation. What force is driving up Canadians’ collective misery index? Janice and Rudyard share their thoughts and come to a surprising conclusion. The donors only second half of the program explores what is happening in North Korea and the reason for the latest round of missile launches threatening regional security. Is Kim Jong-un a rational actor? And what, if anything, can be done to reign in his belligerent behaviour? This podcast is a project of the Munk Debates, a Canadian charitable organization dedicated to fostering civil and substantive public dialogue. More information at www.munkdebates.com.Become a Munk Donor ($50 annually) to get 72-hour advanced access to the full length editions of Friday Focus and Munk Dialogues. Go to www.munkdebates.com to sign up. Hosted on Acast. See acast.com/privacy for more information.

The following is a complimentary excerpt of this week's edition of the Friday Focus podcast by The Monk Debates. To access full-length editions of each and every episode, along with all kinds of great additional benefits and perks, become a donor to the Monk debates. You can do that for as little as $25 a year, and you'll receive each and every year 50 Friday Focus episodes at full length. It's all available right now on our website. in just a few simple clicks. Triple W. The Monk Debates.com. Look for the Friday Focus option in our navigation bar, the top right of the website. Make your donation and we will send you each and every Friday a link to listen to the

full-length edition of this program. Thanks in advance for your generous contribution. Hello, Friday Focus listeners. Redier Griffiths here, your host and moderator. Welcome to this. It's our regular podcast program. week where we give you a look at the issues and ideas shaping the news, going deeper behind the scenes to provide some original analysis and insights. We do this each and every Friday with Janice Gross Stein, the founding director of the Monk School of Global Affairs, an internationally renowned scholar and author.

Janice, great to be in conversation with you. What are we now? Wow. The fourth of November. fall is here, but it is beautiful in this part of the world, really exceptional. That doesn't compensate, Roger, for the angry parents all around us. Before we go to the topic that everybody is talking about, school closures, constitutional debates, you name it, it is, as we thought, maybe turning into a bit of an autumn of our

discontents. We'll have to see whether the winter gets added. to that. Let's dive into the week before I do that, though. I just want to signal to our listeners that we have announced a fall debate. We're going to be in person at Roy Thompson Hall on November 30th. Our resolution, be it resolved, don't trust mainstream media, an all-star cast on hand for your debating pleasure, Malcolm Gladwell, and Michelle Goldberg from the New York Times, Ladwell from the New Yorker going up against Matt Taibi, a kind of sensation on substack, this new kind of platform for alternative publishing, and Douglas Murray, the UK journalist and bestselling author and prolific debater. So a chance for all of us to get back in the flesh in person at Roy Thompson Hall. You can get your tickets right now as a Monk debate member. We've sent you various emails, but if you can't find those, just go to our website,

at triple W monkdebates.com. Follow the links for the November 30 debate. And we will lead you to the Roy Thompson Hall box office. Janice, you're coming as my guest, of course. I am. And I've been already been asked, which side of this resolution are you on? And I am scrupulously trying to stay neutral until I hear the arguments. And then you and I will have a go at it after the show as we all.

always do privately. Yeah, our spring debate had a wonderful, like, 30% swing in opinion, our debate on the Ukraine, which is always so satisfying to see because it means of people's minds, their ideas, their theory of the case was really changed by that hour and a half at Roy Thompson Hall. So I'm curious on this topic, I too am a bit torn about mainstream media. It's obviously essential to our democracy, but in the same time, there are many ways that it's kind of letting us down. So I'm really curious to see if we get another big swing in public opinion in the hall on November 30.

But anyway, people grab your tickets. Come on out. Let's see each other and continue our return to in-person debates at the month debates. Janice, let's now move on to our first topic, which must be what everyone is grappling with across the country as we head into the autumn, a sense that maybe the same. summer once again was a kind of an oasis inside the year in terms of our perceptions of how the country is working or more frankly how it's not working. There seems to be a constellation of stories. We could put them together right now. Pediatric emergency wards overwhelmed. You know, a fiscal update out yesterday from our Minister of Finance, Christopher

Freeland, in a sense, all but acknowledging real downside risks. of a recession next year. Then labor disputes, the entire, much of the entire public school system, Ontario closed, the notwithstanding clause invoked again in the province to force workers back to work. Well, right now, they're not at work. They're on strike today. What do you make of it all, Janice? What's driving this?

Is there some factor force behind these disconnected stories that together you think explains why an autumn of our discontent seems to be upon us. There is, Richard. Clearly, the post-COVID inflation. I think it's the biggest driver here, certainly in terms of wages. We've just come through a period of 8% plus or minus and worse in Europe than it is here. And it's driving up the cost of living. And people whose salaries are lower feel that more because they spend more of their budget on basic stuff like food and rent.

It hits them harder. And many of them are locked in to longer term contracts. Just school teachers, to take one example, got a one and a half percent annual increase in an inflation environment of 8 percent. And even the most optimistic people are governor of the Bank of Canada is hoping to bring inflation down to 2%. It may take him two years. If he does that, their salaries will still not be keeping up with inflation. That is what is firing people up on one side of the strike. But boy, you listen to parents with school-age children and when this,

story began to gather steam this week. Somebody mentioned virtual classes, and I thought the roof would blow open. Parents have just had it. They want their kids in school, in person, and everybody is on a knife edge here. System is not working. Layer on the fact that we have the highest cases of what's called RSV, which is a kind of respiratory flu, pediatrics. cannot take the kids they're getting. There's a shortage of over-the-counter medication for parents.

Many do not have family doctors. And I know that one pediatric court is calling another. Do you have space? Do you have beds? They are converting adult beds to pediatric beds. If you're a parent, you're living a nightmare at this moment. Yeah, I mean, the thread that I would put together through all of it is a kind of crisis on the supply side of our economy. You know, we don't have enough of a lot of things that we seemingly want to need.

Hospital capacity being, you know, one of them. The capacity, I guess, to, you know, hire more people into jobs that would then keep people's expectations. about wages and check because there'd be another person in line there, you know, should someone else say, no, we're not going to give you an 11% wage increase as the, this service workers union within the Ontario Public Service Educational Workers Union has requested. So there's something, Janice, I think that we need to acknowledge, which is a weird shift that I'm struggling with, a kind of psychology of scarcity that seems to have crept up on us over the last two years. In 2019, yes, there were stresses in the healthcare system. Yes, there

of course were labor disputes. I saw some statistic. There's something like 170 strikes in the Ontario public school system, you know, since the 1970s, if you add up all the different unions and all three plus decades. So it's not that these things weren't normal, but their effects seem more acute. And again, I'm just struggling here to understand where is the supply vulnerability coming from? It seems, Jeff, and this is what I'll ask you,

it seems at the end of the day, it's got something to do with people's attitudes about priorities in their lives, the extent to which they're willing to work, what they want, when they want to work in terms of either compensation or add-ons or flexibility. I don't know. I feel like something has changed. And I'm now in a psychology of scarcity, whereas before, if it wasn't abundance, it certainly

wasn't an anxiety that the supply parts of our economy, the supply parts of our society, of our healthcare system, our education system were in a sense failing. I think, let's unpack this one, Roger, because the week was very interesting. Here's the supply chain issue, a shortage of over-the-counter medications. Who would think that, you know, kids aspirin would be scarce, as you put it? So the psychology of scarcity is actually real in some critical areas. that is a COVID-related problem, and particularly a China-related, a zero-COVID-China-related problem, because as we know, 99% of the pharmaceuticals, including the over-counter stuff, have some Chinese component in them, which is astonishing.

And those snarled supply chains, a great story this week about Foxcom in China that is a lockdown. it makes the, it manufactures the iPhone for Apple. You can just imagine the spillover of that. Now, frankly, kids aspirin is much more important than an iPhone, but we're dealing with the same problem here. That's global. There's not much that local governments can do other than make some very tough and expensive decisions about what they think is essential.

The second thing is, our hospital. systems took a huge hit during COVID, and we have to face this. We have exhausted staff. They are burnt out beyond belief. It is hard for people who don't know someone who is a doctor or a nurse to understand how exhausted this workforce is. They are beat. The frontline staff is beat.

A lot of them are sick. and when a crunch hits, they don't have a surge capacity. That's COVID-related. And the system is cracking is the only way to describe it, Richard. That's going to take money. But as you saw from that, fiscal update, governments have spent an enormous amount keeping the system going. Not a lot left to prime the pump here with new hospital beds.

And more important than the beds is the staff. And there's a long lead time there. There's no quick fix for that. And then there's the interesting phenomenon that you're talking about people's attitude toward work. We're seeing this has changed. So, you know, our financial services sector in the biggest, this is the biggest sector in the downtown part of the city, this life from the universities, two days a week, they're having trouble getting people back into the office two days a week. It is a struggle.

And people, despite a recession, it's very interesting to watch. People are checking out. They don't want to commute. It is not worth it. So, Pat, you know, put all this together. Gummed up global supply chains, exhausted and burnt out staff on the front lines, and a changing attitude toward work in the wake of COVID, and you get, frankly, the enormous challenges that we have now,

where I would describe it in more apocalyptic terms than you do, our systems are broken. Our systems are broken. And we can't face it because it would cost too much money to fix them. Yeah, because I think we should understand this comes on top of, you know, what everyone experienced in the summer, gummed up airports, you know, passport offices that were incapable of renewing, you know, basic documents. There just seems as if the post, our exit from COVID, understandably, maybe because of the disruptions of the system,

it has been and continues to be kind of shambolic. And I guess, Janice, how does this get resolved. I mean, should we anticipate that this isn't effectively the new normal and it will be here for a while and we will have a supply constrained society in a variety of ways. And Aspirin is part of it, but it's also, as you say, workers in essential services. It's a whole bunch of crises of supply. The central banks, they're committed, Janus, to trying to solve this by bringing demand down sharply through higher interest and borrowing costs for everyone to match supply and demand. That's how our monetary policy for the better part of the post-war era has managed this. Does that work anymore?

Is that are we maybe overly optimistic that inflation is going to come down quickly? Because I look at these supply problems we're having, Janice, and I'm not so sure that it's just a question of higher borrowing costs, of crushing demand to get. demand in line with supply. I think some of these supply problems, as you say, are their secular changes. They're shifts in people's attitudes about their priorities, about the nature of work, about a whole bunch of like very fundamental assumptions that maybe we haven't really debated, but we're acting on, we certainly seem like we're acting on them as a society, as an economy. You know, big picture. You and I've talked. about raising interest rates is a fairly blunt instrument to hammer inflation.

But at the core of raising interest rates, as you just said, right here, is you crush demand and you move fast and you move hard in order to avoid baking in people's expectations and inflation is with us for a long time. So let's go back to the teachers union that originally asked for an 11.5 percent raise. Any government that gave anything like that would be baking in a set of expectations that would spill over into society as a whole that inflation is with us forever. And frankly, it doesn't matter much what the governor does when you start to get really inflationary wage settlements like that. But a big chunk of the problem, as we just said, is not demand. It's supply.

and raising interest rates does nothing, frankly, to deal with the supply problems. In fact, sometimes it makes it worse. So we're looking at a time in history where the instruments, the policy instruments we have at our disposal, in many ways are too blunt to capture the more complex crisis that we have. Because if you're, again, to bring this home, if you're parenting it on, today and you have two kids. One is sick and the other's home from school if you don't have child care. That's partly a result of the global system. We don't have any control over that. That's partly a result of the struggle over wage expectations because I think you and I would both

say teachers have a point. A one and a half percent raise is not enough to compensate for the period in which they're living, but boy, parents don't want to hear any of that. And then your sick kid needs some over-the-counter medication. You can't get it, right? So raising interest rates is not going to solve those problems, and it's going to make at least one of them worse. That's the problem. Two quick comments to wrap up the section.

One, it's interesting to remember that in response to the inflationary problems of the 1970s, the Carter administration deregulated the airline industry to bring down travel costs. Larry Summers today and others have been saying, you know, we have to look at the supply side of our economy to solve this inflation problem. And yes, we can get all political about this super, super fast and see deregulation as a, you know, a right-wing agenda to, you know, allow unfettered capitalism to run wild over society. But the reality is a lot of Canadian society, from whole swaths of agriculture, the dairy industry, to our entire banking sector is basically an oligopoly to large aspects of our cultural industries, all of these are in a sense, have baked into them a lot of

anti-competitive behavior, which creates supply constraints in a versus a more deregulated system. So I just posit that out there as an idea as a way forward. And then my final thought, Janice, is really building on what you said, just to remind people that with these poor education workers, because I am sympathetic here, you know, 1.5% raised that's now been legislated by the Ontario government for those making over 45,000, again, doesn't go anywhere close to compensating the loss in the last 12 months of up to 8% of their purchasing power. And what's important to note is that if in six months from now, inflation has gone down

from 8% to 5%, it's not as if we've had deflation. It just means the rate of the change of inflation has slowed. these workers, all of us, have lost 8% of our purchasing power this year, next year, the year after, the year after that. It has gone for good unless, heaven forbid, you had an extended period of deflation and you actually rolled it back. But that's highly unlikely and definitely not a scenario or situation you want because that would be like depression era type economy.

So what I just want to make people understand is that when inflation goes down, it doesn't mean you get your purchasing power back. It's gone forever. And these workers have lost that forever when they go into the grocery store, when they fill up their car, when they pay for, I don't know, music lessons for their kids, that purchasing power that they were earning through their incomes is evaporated forever. So I think we just have to be sensitive to these people and the extent to which as low income, lower income wage earners, you said it, they're more exposed to inflation. This is real life. Okay. This isn't, you know, some exercise in the back of an envelope. You know, I would just add to that, because I agree that in this year where inflation has been so high to legislate one and a half. I understand why they're doing it because they're crushing expectations, which is, as you said,

and it's partly what you have to do to bring inflation down, but you provoke rage when you do it. But I think it's important for everybody to understand here. Kit paid the biggest price during COVID, frankly. The data are now coming in. They are overwhelming, Richard, reading scores, drop, math scores drop. Kids in those transition years and kids in the last two years of elementary school are moving into middle school, suffered. Kids in middle school, now have to go up with high school. And we're seeing it in the universities. Kids who spent, these kids suffered and less affluent families suffered disproportionately. There is zero willingness now to put kids on the front line of any kind of labor dispute. And so unions that deal with kids are in a different

world than they've ever been before. They're going to have to figure out a strategy to push for higher wages, which does not sacrifice kids, either in the hospitals or in schools. There's no willingness left. And parents have no bandwidth. They have no bandwidth. Totally. Okay. Look, we're going to say goodbye to our Fremont members now. We'll reconvene on the other side of this break with our monk donors. If you'd like to become a monk donor and support the Friday Focus podcast for as little as $25 a year, 50 cents an episode. Go to our website, triple W monk debates.com. Click on Friday Focus on the top right navigation.

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