But environmental protection is only one part of making society sustainable. We must also ensure that the social and financial environments are also sustainable. Social sustainability includes strong family life, access to education, public safety and relative economic equality. If these elements are not present, society is, over time, apt to crumble.
The financial environment also must be sustainable. People need to know that they can financially plan for the future with reasonable assurance that their savings will not be destroyed by say, hyper-inflation and mass unemployment. Ups and downs in the stock market threaten stability. So too does debt, both personal and government.
Long-term financial stability is threatened by the most recent federal budget which continues emergency aid to control the worst effects of the pandemic but also adds new programs and giveaways with no plan to pay for these new expenses. How should these programs be paid for? The government says through economic growth. This is wishful thinking. Long-term economic growth has created the massive threat to environmental stability we now face.
Arguably, economic growth and prosperity also threaten social stability. Our riotous lifestyles have contributed to family breakdown and have created a climate in which people increasingly prefer material possessions to social ties and religious faith.
Moreover, reliance on government debt is playing with fire. We have enjoyed decades of low inflation and decreasing interest rates. But there is no guarantee, or likelihood, that this will continue indefinitely. Government deficits themselves fuel inflation. Once interest rates rise above the rate of economic growth, debt will begin to spiral out of control. Canada may find itself in a situation similar to that of Greece in the aftermath of the 2008 global financial crisis.
Although the Greek crisis followed the global crisis, its causes were mostly internal — excessive public spending, unsustainable debt, rapid increases in wages, rampant tax evasion and an expansion in the use of credit. When government spending grew rapidly so did interest rates. By 2014, millions of Greeks were out of work and 36 per cent of the population was living below the poverty line.
Other features of the Greek situation were, to be sure, different than Canada’s current financial situation. For example, most of Canada’s debt is owed internally while Greece’s debt was largely owed to foreign banks. Canada’s current financial situation is more stable than that of Greece prior to the 2008 crisis. But any country with a skyrocketing debt remains vulnerable, not only to increasing interest rates but also to the whims of financiers.
The only prudent course for a government which values financial sustainability is to pay as you go. That means that if you introduce expensive new programs, you ensure government revenues will pay for those programs. If they won’t, it is morally incumbent on the government to raise taxes. We are playing a fools’ game if we assume that economic growth will and should continue the trajectory of the past.
Climate change has altered the rules of the game. If we want to protect the future of the planet, we must curtail our extraction of natural resources. The transition to a green economy will create new jobs, but whether these jobs will replace those lost in extractive industries is an open question.
In an emergency such as the current pandemic, it is reasonable for governments to run deficits to help those in need and to pay for unforeseen expenses. However, such unpredictable occurrences make it incumbent on governments to run surpluses in normal times to pay off those deficits and to prepare for future emergencies.
In his recent book, Let Us Dream: The Path to a Better Future, Pope Francis wrote, “If we are to come out of this crisis better, we have to recover the knowledge that as a people we have a shared destination.” Solidarity must be a central value. We must be in solidarity with the people of today but also with future generations. The Trudeau government’s recent budget shatters solidarity. It is time for new thinking, thinking which gives the future its due and strives to achieve sustainability in its many forms.
(Argan writes from Edmonton.)