The Canadian public healthcare system has not been perfect, but it’s the privately owned facilities that have failed badly. Mario Seccareccia on theAnalysis.news podcast with Paul Jay.
Transcript
Paul Jay
Hi, I’m Paul Jay, and welcome to theAnalysis.news podcast. Mario Seccareccia is an emeritus professor at the Department of Economics, University of Ottawa, where since 1978 he taught macroeconomics, monetary theory, labor economics, and the history of economic thought. He’s also the editor of the International Journal of Political Economy.
Paul Jay
We’re going to talk about the Canadian mostly public health care system. I say mostly because there is a public health insurance plan. The hospitals almost entirely with a very odd and very small exception are publicly owned. So this is more than just public health insurance. This is a public hospital system. Look at that to some extent compared to the American almost entirely, either, for profit or big non-profits like a Johns Hopkins, which actually operate as if they were for profit.
Paul Jay
And there’s also some state publicly owned hospitals. But the big players are the for profits and the not profit, not for profits, which act and operate in a very uncoordinated manner, the way all for profits do. And we’re going to have some comparison to that to Canada. Then we’re going to look at the economic side of things. So, Mario, thanks for joining me.
Mario Seccareccia
Glad to be on.
Paul Jay
So start with comparing how Canada has responded to the Covid pandemic. As I say, a mostly public system as compared to a mostly private system in the United States.
Mario Seccareccia
Well, it responded in a way, which I would argue was correct. In what sense? In the sense that what our political authorities did, which is not quite what happened in the U.S., at least, is that they decided that they would let primarily the experts in this case, you know, the medical profession, that the experts, the epidemiologists and so on to, you know, to not dictate, but obviously advise and ultimately follow on what they were suggesting to do.
Mario Seccareccia
So in that regard, what we had. It is a certain respect for those who knew something about what was going on and to follow on that rather than to lead. You know, as I think in the case of the U.S., what happened where you get all these mixed messages coming from the various authorities and conflicting ones at that. There was a sense of unity here. I would argue that was not quite the case in the US and more like what was, let’s say you would find in some of these other countries like New Zealand that did so well, for instance, or Australia.
Mario Seccareccia
There was a sense of unity there. And, in fact, a sense of purpose. And even all political parties to a large extent, they tended to support the government without really questioning anything. I mean, also the government, which is in a rather protectionist position politically because it’s been a minority government. You know, we have a parliamentary system here. And as a minority government, they could you know, if there’s any, you know, let’s say unity within the opposition that could bring down the government.
Mario Seccareccia
So in that regard, it was in a difficult position to be able to impose very much. So it had to be done by consensus, largely with these other parties. You know, whether it be on the right, which would be the Conservative Party or on the left, which would be the new Democratic Party. So in that regard, as I said, there was something good about that.
Mario Seccareccia
I think most Canadians appreciate that.
Paul Jay
In terms of the ability of the public system to respond in a way that the private more private system didn’t. Did that really express itself and if so, how?
Mario Seccareccia
Well, it expressed itself pretty well. And in what sense, in that here you had, we have had already access should say something, which is that we have already gone through something, some, what is it, 15 or 17 years ago with the Saar’s epidemic that exploded in Toronto. And therefore, we have had already you know, we had let’s call we had been trained to some extent in the hospital system to deal with that. Our hospital system was well trained for that.
Mario Seccareccia
And it did accommodate in fact, we had lots of capacity because at the same time, as you know, we had many people who would rather than go to a hospital avoided during the epidemic. And therefore, we actually had very little problems in dealing with that in most places, not everywhere, but in most places except in the major metropolitan areas. But even there, nothing compared to what happened, let’s say, in Europe., or indeed in the United States.
Mario Seccareccia
So in that regard, it was. Well, I would say not fully prepared, you know. Obviously, nobody was expecting this. But it was prepared as much as one can be in the circumstances. So, again, that is not where the problem lies.
Paul Jay
I would argue that there was an article in The New York Times about a month ago, I guess, which compared the outcome in British Columbia to the outcome in Massachusetts. And the the death rate in Massachusetts was significantly higher. And it was described that the public system was able to marshal resources and coordinate hospitals because the public system could simply order one hospital say specialize in cancer and another hospital could take on more of the Covid load.
Paul Jay
And at the time, it looked like the Canadian death rates were about 50 percent of the American.
Paul Jay
But over time, in fact, the numbers have started getting closer to each other.
Paul Jay
And last I saw that, it was only about a 20 percent difference.
Paul Jay
And then there was another interesting article, which is, if you take out New York City, which simply doesn’t have a parallel in Canada, because the size and the concentration of people that the American numbers weren’t all that drastically different. Canada was still a little bit better, but not not as much better as it all looked earlier on.
Mario Seccareccia
Yeah, I agree with you that the we’ve narrowed somewhat, but we’re still I think the gap is bigger than that. I mean, I was looking at the numbers for June first day, today and whether it be in terms of the cases, as well as the deaths. France, in the case, when we look at the cases, I calculated that it was around five point six per 1000 in the U.S. In Canada was two point four per 1000. So it’s like double or even lower in the case of the U.S..
Mario Seccareccia
In the case of the death, though, it’s not as good sort as big vis-à-vis of it is deaths per 100,000 here. We’re thirty two point four in the U.S. While in Canada with nineteen point five. So clearly, we have not been doing well we’re doing better. Whatever you want to call it compared to. Yes. Yes. But certainly we were not you know, we’re nowhere. There’s something to be proud about here. When was the hard part of the problem here?
Paul Jay
And it’s kind of ironic that, you know, Trump always ridicules China and other places. You can’t trust their numbers.
Paul Jay
But from what I can understand, you really can’t trust American numbers because inherently a lot of deaths that really are related to Covid are not being called Covid just to just to make the numbers look bad.
Mario Seccareccia
Some countries actually think Russia was the one that was saying there were such few deaths because all of these people died from some other things, which is true. Obviously, they got pneumonia, but which is an opportunistic kind of disease that appears with Covid. Did you? And if you die from that, therefore, you’re not dying from Covid or something obviously. No, this is the absurdity of some of these measures. But I mean, I’m assuming that it’s similar the way we’ve defined them between the two countries, which may not be the case.
Mario Seccareccia
And also, in terms of the coverage, not the testing done. To what extent they are similar. The other problem is we really don’t know. Is that the tip of the iceberg or to what extent? These are problems of measurement, God forbid. We don’t know here. You know, there’s no way of knowing. So we’re kind of comparing things that in some cases might be comparing apples and oranges again. You know, we’re not.
Paul Jay
Well, one article that was written about this that was very critical of the Canadian response, said that it’s not it’s like he didn’t say this.
Paul Jay
I am. It’s like shooting fish in a barrel to compare a candidate in the United States. You’re comparing a country with the public health care system to a country that’s led by a man that thinks you can drink bleach.
Paul Jay
And it’s you know, and if you compare the Canadian’s response, an outcome to some of the countries in Europe, even France, Germany and certainly Australia and New Zealand, actually Canada doesn’t look all that good.
Paul Jay
And that the response from the Canadians has not been as coordinated and as measured as it should have been. So what forgetting the comparison to the U.S.?
Mario Seccareccia
Yes.
Paul Jay
What do you make of how Canada’s response?
Mario Seccareccia
Well, I think that’s where the problem lies, in the way in which we have what I could call almost a Balkanized system, which sometimes actually works. OK, because, you know, the idea being that if the more it’s controlled by a province vis-à-vis the whole federal government, because we have such huge regional differences in Canada. Sometimes it could actually work in our favor. But in this case, it hasn’t worked so well in terms of what things have, you know, how these provincial parties have been handling it. To give an example, to show you the big difference, because much of the deaths, of course, you know, what is it?
Mario Seccareccia
Over 80 percent of them were seniors and most of them, indeed, were from these long, long, long term care facilities up there. Some of them private. Some are public, by the way. Now, what’s interesting is the way this happened. You know, because that’s where it got the bulk, you know, the core of all these deaths where they come from.
Paul Jay
I mean, I think it’s important to say when we’re comparing the American and Canadian numbers, this is really an important factor because the reason the Canadian numbers are so high is because of the long term care facilities, the senior nursing homes. And while some republic, the majority are private. Exactly. Largest number of deaths are in private.
Mario Seccareccia
Privately, yes, that’s correct. And I could tell you what’s important here compare British Columbia and let’s say Ontario. In the case of British Columbia, they start having the same problems that we had here in Ontario with these seniors homes.
Mario Seccareccia
And what happened in the case of British Columbia is something to this know to show how it how that change averted so many problems that there could have also occurred and did occur in Ontario and Quebec. For instance, which is that the government axed have basically extended control through the hospital system of all of the long term care facilities in British Columbia. So in other words, they tried to impose the norms that they would have applied to the hospital system as such.
Mario Seccareccia
So I’ll give you a simple example right away. They prevented any worker having more than one job they start paying them more. Than in the case of Ontario, they did start giving premiums at some point. But initially what happened was that they had to think of it. This is you know, many of these people are often fairly poor people. You know, immigrants who take up these jobs in these senior homes. And many of them were holding more than one job. In some cases as much as three.
Mario Seccareccia
They would go through different, let’s say, health care facilities and work to get these, you know, a decent income. And what happened there, of course, was that once one of these health, these workers caught it, they quickly brought it and they extended it to the to the various homes to deal with it. So it just blew up in our face, literally. I mean, this is what happened there. And this has something to do with the way in which these these places are run.
Mario Seccareccia
They’re huge problems there. And it has mostly to do with the for profit, obviously, nature of this business. Obviously, some of these homes were run a lot better than others, of course. That’s where the bulk of the deaths come from. Not anywhere else.
Paul Jay
Not the public system. In fact, the Ontario government now has had to take over several of the privately owned
Mario Seccareccia
Exactly
senior homes, and they had to send in to some of the homes they actually sent the Canadian army in. I guess the Canadian listeners will know this, but Americans want the Canadian army actually had to go in and take over some of these places that they were. And the soldiers were just appalled at what they saw.
Mario Seccareccia
Now, they did a report
Paul Jay
Exactly
Mario Seccareccia
on that end, and it was appalling what they found. Now, again, I wish to emphasize that this applies primarily to the private sector ones, but not completely. You know, the problem here is that you have provincial governments, even where they were semi public or aînés public, as they call them, in Quebec. And so what you had is a very loose administration. All kinds of problems in hiring, the way in which these workers, as I was saying before, if you got them to be working at three places at the same time. Well, it’s going to spread very quickly.
Mario Seccareccia
And so you have all of this happening in a context where, as I say, you’ve got an epidemic, but the hospital system was actually doing pretty well. And it’s just that what happened in these homes, as I said, just is mind boggling, you know, in the context of, you know, what the what we saw there, to the extent that even our own provincial prime minister, of course, is mother in law, was one of them.
Mario Seccareccia
So it has, I think, scared. Certainly it shook up the political authorities to the extent that now, at least in this province. And I also think in Quebec, where the bulk of them, again, happened, it’s not anywhere else in Canada. It’s primarily Quebec and Ontario where you’ve seen this. And that’s where also the bulk of the population happens to be, of course. But as I said, this didn’t happen in British Columbia.
Mario Seccareccia
It started it initially began that way in March. But then it quickly got it under control. The stimulus program, the United States has been critiqued for the fact that a large amount of the money, billions and billions of dollars are going to literally prop up the stock market to buy junk bonds, to buy corporate debt.
Paul Jay
Is the same thing happening in Canada. And compare the economic response between the two countries.
Mario Seccareccia
Well, we have to compare it both on the monetary and on the fiscal side here on the monetary side. I would say that it’s somewhat similar. I mean, they essentially did something that they used the same kind of recipe, if you want to call it, that was used for the global financial crisis. You know, was it almost a dozen years ago? And on the monetary side, of course, what they did is engage in what the U.S. Fed is also doing, which is QE
Mario Seccareccia
quantitative easing with what they were doing is buying up a lot of securities, mostly government especially, which is interesting because this is something that they hadn’t done before with provincial government securities and government bonds and so on. Provincial governors in this case, that really helped a great deal our provinces in terms of loosening up, so to speak these markets, you know, that they could access funding and borrowing at very low rates. So in that regard, it I think it is helpful in that sense.
Mario Seccareccia
And the U.S., I would say that something similar. So an analysis they the Bank of Canada, the banks in any I mean, there’s any problem indeed, whether it be in the banking sector and so on. They were ready to support it, provide, you know, credit and so on, provide funds, you know, provide liquidity literally virtually on demand, which I think is not unlike what was also on the U.S. The difference, I would argue, is more on the fiscal side.
Mario Seccareccia
I mean, we’ve had really adopted a whole lot of measures. Now, some of them were to support businesses. Yes. And in some cases, they were providing support for maintaining jobs, in these and these businesses by literally paying, what is it, three quarters or whatever of their salaries there to maintain them on the payroll at the time. But also, there was a lot of direct transfers, not only through unemployment insurance, which is also the case in the West, but also through direct, again, transfers to all kinds of people that would not normally have been touched by, you know, through unemployment insurance in this case.
Mario Seccareccia
So any self-employed. They were all pretty much guaranteed here at two thousand dollars per month. As an example. But you have all kinds of transfers of this nature that were put in place. Was not the case in the U.S. to the same extent at all. And this, I would argue, is where the bulk of the differences would lie. Now, this suggests that there were no problems. I mean, they did they put up a lot of money and huge transfers, whether it be for individual workers primarily, but also for, you know, students.
Mario Seccareccia
I mean, I’ll give an example. Students, they’re guaranteed, was a thousand two hundred fifty. But because, of course, they know who could find a job here during the summer months until September. They’re all getting that. And we therefore have done a great deal in terms of putting in money directly into the hands of the individuals. This, of course, is not without certain problems. And I would argue that some critics of this fiscal largesse, whatever, have criticized it.
Mario Seccareccia
Not so much because we’re spending so much money. I’ll go now. Some of them are starting to cry about it here, like our former prime minister Harper recently wrote in The Wall Street Journal that we’re building up too much debt kind of thing. But more importantly, what was the problem here is that many of these types of.
Mario Seccareccia
transfers, you had to apply for that. Now people have to do it online. How many people could do it online? Now, clearly, this could be a problem. Could you access it? Will everybody apply if they need it type of thing? Well, that could, of course, have been better run. Some have argued that we should have had instead was almost a kind of universal income where everybody got, you know, whatever it was, two thousand or whatever, and they would automatically get it because, of course, you know, we could do it through the Canada Revenue Agency here that would have the addresses and names of everybody who had paid taxes last year.
Mario Seccareccia
So I’m just saying that there could have been some better ways of dealing with this, but they did spend a lot of money. In fact, just to give an example, what we’re talking about here is the government the federal deficit jumped from, what was it, twenty four point nine billion in twenty nineteen twenty twenty. And now for this fiscal year, twenty twenty one to about 260 billion. So more than ten fold increase in a matter of months, literally in a few months.
Paul Jay
This crisis is far from over. And the subsidies they’ve been giving to people, which is barely enough to live. But it’s something. It’s something that they’re about.
Paul Jay
They’re going to run out and they’re going to run out. There’s no reason to think they’re going to not need another two hundred billion.
Paul Jay
How long can they keep this up? Or I shouldn’t say, can they? Are they willing to maybe because?
Mario Seccareccia
This is their thing. I think they can. But will they do it is the issue. Right now, there’s been in fact, I could say here that there was as I think I emphasized it earlier. There was an incredible unity on the part of all the political parties that they wanted to get things done quickly. And they did. There was never any serious disagreement. There was a consensus. So if you look at March and April, you would find you really have a hard time finding any real conflict here over issues.
Mario Seccareccia
But, you know, let’s say between the conservatives and the Liberal Party or whatever, where it became now, as as soon as we’re seeing things, you know and now, that curve is sort of going down there to some extent. You know, as as things are starting to open up and what has been happening is that unity is slowly kind of coming apart, unraveling, and it’s over this issue of the deficit or debt. So those on the left, I think, there is strong support.
Mario Seccareccia
So whether it be by if you think of the new Democratic Party people or even within the Liberal Party, and I would say even the majority still within the Liberal Party. Although there are right and left sort of leaning kinds of liberals. The vast majority, I still think has strong support for continuing to provide those kind of benefits if needed in the next while. But the Conservative Party now is starting to cry that the sky will fall with the current debt ratios that had been built up.
Mario Seccareccia
Now, to what extent have they gone up? They’re not even near what you find in the U.S. Ironically, and certainly nothing like, I don’t know, some countries like Japan. But they’re arguing that somehow there’s going to be real problem in the future because, you know, somehow there would be a problem of sustainability here. And that debt, that deficits that will continue to be running their course into the next war, which I think will have to happen, you know, because things are not necessarily improving quickly enough.
Mario Seccareccia
And so in that regard, I would say that, yes, there is a problem there. But it’s a political problem. And I have a feeling that the majority still within that political class there believe that it’s necessary to continue along that path. But, you know, there is a strong, strong disagreement.
Paul Jay
Is there a limit to how far the deficit can go? How much can they keep subsidizing what?
Mario Seccareccia
Well, I think there is. It all depends what we mean by that. There’s no I mean, the money that the federal government could pull out of the Bank of Canada. There’s no limit, obviously, I would argue. But there are limits in the sense of tolerance. And as I said, primarily politically, because, in fact, the the real issue is not whether it’s feasible, whether it’s actually possible to continue running a deficit. Yes, you can indeed.
Mario Seccareccia
If you look at a country like Japan, just to give that example. Yes, we have. Well, they have a debt ratio, public debt ratio of about two hundred and fifty percent. Canada is is now what is about 100 percent. Right. Probably slightly a little above that right now. And we were what, at eighty nine. And this is in terms of gross debt to GDP, not the net debt GDP, which again I should warn, but the nuance here.
Mario Seccareccia
But whatever indicator you would like to look at, we’re still pretty low in comparison practically to most countries on this planet. So if you want to use that as a kind of indicator, if you were to even do a kind of simple averaging of all, at least Western countries, we’re way below the average. We’re close to Germany and some of these other countries that have low debt ratios. We’re nowhere like the U.S. Must be around 120, I think, right now.
Mario Seccareccia
So we are way below that. And there’s a lot of room to maneuver. Also, historically, if you look at ever since they came to power, the liberals in 2015, they have not been worried about the deficit so much, as they are about the deficit, the debt to GDP ratio. What they’ve been arguing all the time and indeed throughout, even their first mandate in the last year. What they were arguing was that as long as we can maintain relatively stable that debt ratio over time, we should be able to continue running deficits as long as GDP grows.
Mario Seccareccia
Now, obviously, in the current context, that’s not happening. You know, we’re spending a lot of money and GDP collapsed. But if and when things start to improve and this is the whole thing. How quickly will that happen?
Mario Seccareccia
My feeling is that it will not be a big issue again.Unless we have a very long and prolonged period of recovery, which is the most likely scenario now, isn’t it?
Mario Seccareccia
I think so. But, you know, it’s it’s interesting here that even in this case and as I was emphasizing, there’s a lot of tolerance on, I would say, even within the liberal governing Liberal Party right now to increase it further that ratio. So because they know at the end that this is not because of some wasteful spending here as it is because these are necessary steps to maintain an economy and to maintain a population, you know, in relatively good healthy conditions here.
Paul Jay
So if I understand this correctly, in the final analysis, isn’t this issue of debt?
Paul Jay
It’s not just related to GDP, but it’s related to how much wealth does the country have? And if you actually just look at the amount of wealth a Canada has or United States has, there is enough wealth there to pay people to stay at home for a long time.
Paul Jay
The problem is that wealth is in very few hands and they don’t want to, let, go of it. So at some point, if you really are concerned about the debt, you have to get at that wealth, which means taxation.
Paul Jay
Am I misunderstanding this?
Mario Seccareccia
Let me explain here. It is true that if we want to continue running at ratio’s maintaining ratios, zero debt to GDP that are not going to explode as they did recently. You will have to start raising taxes. And obviously, that’s where you’re going to have the big debate. But I wish to emphasize that there’s been a lot of tolerance to allow that ratio of debt to GDP to jump up quickly. It will become progressively more difficult to do so.
Mario Seccareccia
But I still think there’s tolerance for it now politically, OK? That’s right.
Paul Jay
But the reason is what?
Mario Seccareccia
Yeah.
Paul Jay
Like, if you take a very poor country that doesn’t have many resources and lives on the edge all the time.
Paul Jay
You know, a small country in Africa say. They can’t do this because they won’t have foreign currency device to import stuff. They’ll pay a fortune in interest rates to borrow. They’ll get totally clobbered by international capital.
Paul Jay
But but countries that have so much wealth here, they could sustain for a long time if they’re willing.
Paul Jay
And if they, as I say, is, as you say, if you need to they want to worry about the ratio of debt to GDP ratio, then they just they got to tax the rich.
Mario Seccareccia
Well, yeah. I mean, I know where you’re coming from on this, but I’m trying to emphasize that in the case, even when you mentioned is African countries, many of them or even Latin American, so on. The problem there has to do with, you know, the fact that they are they’re heavily indebted in foreign currencies and all kinds of problems. You know, as you could imagine. So this is a case where it’s very difficult for them.
Mario Seccareccia
I mean, the extreme cases are countries like a dollar rise, like Ecuador or something. Obviously, these are countries that really face the crunch at some point because they cannot generate dollars if they are not themselves. If they can’t create it themselves, obviously. So they have to raise taxes inevitably. But most of the G7 countries, I would argue, except in the eurozone side, mean Japan, the United States, Canada. Now, the eurozone is in a different predicament because they’re like a dollarized country.
Mario Seccareccia
They can’t create their own currency. And this is where all the problems like Italy, France and Spain have been fighting with the Germans and so on over ride them over this whole matter. And, but in the case of Canada, United States and Japan, they all have their own sovereign currency and therefore do not face the same difficulties in terms of generating and financing things, if you wish that a country like Italy, France was facing where they had to go heavily in debt.
Mario Seccareccia
You’ve got to borrow in the international financial markets to be able to make ends meet. New spending unless you tax people more. But you cannot continue to tax them to death. But this is not the case in, as I said, in all these countries that have their own sovereign currency. And I wish to emphasize this because it is true that a country like Canada has a lot of wealth. Not only do they have a lot of financial wealth, but also we have a lot of resources in this country that some of these other countries like like Italy or whatever.
Mario Seccareccia
So it could only dream about. At the same time and I want to emphasize the issue is not so much that whether because there’s that wealth that necessarily we could tax more easily. Yes, we could. But that may not be the preference. You know, this is the whole problem. The political preference here is all a matter of whether, you know, at some point you’ll get the these authorities to either buy into one or the other, which is should we go further?
Mario Seccareccia
And, you know, in terms of expanding our, you know, building up our debt or should we start to cut back? And you could only cut back in two ways in terms of reducing that deficit, either by raising taxes or by cutting spending. And they’re going to.
Paul Jay
And obviously, the conservative right wing forces, they want to go back to like an austerity regime. But it’s ridicuous in the middle of a depression.
Mario Seccareccia
Exactly. And there are some who think that way even within the Conservative Party. No, initially nobody until about the middle of May. Nobody within the Conservative Party was ever raising any issues about the spending. But now we’re starting to see what I would call almost a considered attack on the governing Liberal Party here and their policies. And this is coming from the old guard of the former Prime Minister, Stephen Harper. He launched, as you know, as I was saying earlier, he did write this article that was published in The Wall Street Journal.
Mario Seccareccia
And was referring to all kinds of scary scenario about the debt, you know. If you know problems of debt in this country and some of his closest let’s call allies and friends within the Conservative Party, not all of them. As I said, there are people within the Conservative Party who do not buy it still. But there are more and more of them who are, you know, questioning whether we should continue to build up debt. And because, again, what the conservatives mean by that and what historically, that’s the kind of signal here, if we’re building a debt too much, inevitably or eventually, we’re going to have to stop spending or we can have to start raising taxes.
Mario Seccareccia
And of course, taxes is not something that many you know and the Conservative Party care for in higher taxes right now. So that’s the problem here. It’s a big dilemma, but every country on this planet is facing it. And I must say that Canada is perhaps in a much better position than than most countries are. You know, especially when you think of Europe. You were giving some of the good examples of Europe in terms of their ability to get under control.
Mario Seccareccia
You know, the Covid epidemic. But some of these countries right now face a big debt problem and they are fighting over it. And God knows what would be the outcome of that fight, because it could literally lead to an unraveling of the eurozone itself, which is not the case in this country. Nowhere anything like it. We’re not facing these kind of problems.
Paul Jay
Thanks very much for joining us, Mario.
Yeah a pleasure.
And thank you for joining us on theAnalysis.news podcast.
As a Canadian ,I very much appreciated this article .Thank you Paul for this.