David McWilliams is in his Dublin basement, in full-on lockdown, lamenting how in two weeks Ireland has gone from the best to the worst European country in the pandemic. “I think the moral of the story there is: Don’t let the Irish out for Christmas.”
He is told of our politicians fleeing for warmer holiday climes despite public health discouragement. “Ours aren’t that dumb. They used to be. But in the pandemic there are basic rules of engagement, and one of them is don’t (insert common two-word swearing term here) out of the country.”
The world’s third-most-followed economist has been training his eyes on the coronavirus for the tea leaves and ever-more instalments to his spectacular, contrarian prophecies – he of the 2008 financial crisis/Brexit/Donald Trump presidency predictions trifecta.
He is the keynote speaker for the virtual CFA Society Vancouver annual forecast dinner on January 14. He has so many ideas that it’s doubtful these examples will spoil his spiel:
•Budget deficits “will narrow much quicker than you think” once the recovery starts.
•Income support programs are the likely extension of pandemic relief measures, once people get used to a cheque each month from the government and “the market’s not freaked out about it.… People say, well, maybe this should be permanent.… Remember, income tax in the beginning was supposed to be temporary.”
•The certainty of “significant commercial real estate defaults all over the world, not because they’re particularly overvalued but because people’s lives have changed.” If it buckles banks, the support of 2008 will not be there this time.
•China has emerged stronger in the pandemic. It is its century, and “Canada has played a clever game” in encouraging investment and immigration, even though it is “illogical” to discourage housing ownership. Besides, “they’re not buying apartments in Vancouver because they love you, [they’re] buying apartments in Vancouver as an insurance policy.”
•Free money for investors is “encouraging the most risky behaviour … and penalizing the most parsimonious behaviour … a recipe for political instability.”
•Joe Biden will be able to tackle inequity and climate change and has “an opportunity to probably be a little bit Bernie-ish in policy” now that the Democrats are in control.
•“Inequity in America demands a wealth tax, it’s quite obvious to me,” but for reasons he cannot fathom, poorer people are more opposed to one than are the rich, even though evidence is clear you are more upwardly mobile in heavily-taxed Europe than in America.
•Trump’s legacy “will be very poor because he’s lost everything politically”; it “will not be economic, it will be cultural.”
•Trump’s disavowal of multilateral institutions has lost America its respect and “what Biden will have to do is really build bridges with China.”
McWilliams, who came overseas in the 1980s as a student to tend summertime bar at Ontario Place in Toronto, progressed through the Irish Central Bank, the UBS Bank and the Banque Nationale de Paris as an economist, then converted his gifts for communication and popularization of economics into five books, a twice-weekly column, a batch of documentaries and a weekly podcast. Along the way he has created an economics/standup comedy festival (Kilkenomics), a literary one (Dalkey Book Festival) and the prominent Global Irish Forum. He teaches, too, at Trinity College’s business school.
When he has a second to inhale, he is discerning the larger pandemic lessons. It will seem a paradox for someone so frenetic to hail something slow, but he wonders if there is a message for Canada, America and western Europe in the Japan of the last 30 years and its “demographically driven, post-crash, post-balance sheet recession problem.”
“What they have done is they’ve simply recycled the savings of the country through their treasury market. I think we could be into something like that, too.… So my sense is that we just have to begin to look at the world in [terms of] slow growth, higher debts, lower interest rates, lower return on investment – maybe even ‘return of investment’ might end up being our watchword. And that I think is something that we just have to get our head around: that the America of the 1960s, ’70s and ’80s – this go, go, go, we can have everything, we can have it now, we can consume more than we have – may well turn back into something that looks and smells a bit more like Japan.
“And if you’ve been to Japan, Japan is not a bad place to be.” •
(Our two-part podcast of this conversation is at biv.com this week.)
Kirk LaPointe is publisher and editor-in-chief of BIV and vice-president, editorial, of Glacier Media.