indicatorThe Owl

Toss the water but keep the baby

Our economic system has a lot going for it

By ATB Economics 4 May 2020 2 min read

As a seven-year-old going to see Star Wars at the Palace Theatre on Calgary’s Stephen Avenue Mall in 1977, I remember thinking “this is the greatest thing ever.” 

The popularity of the Star Wars films is such that fans use today’s date—May fourth—as a way to honour one of the film’s great lines: “may the force be with you.” 

I didn’t understand it when I was seven, but I sensed that it took an army of creative people, investors, accountants, popcorn growers, truck drivers, theatre ushers and so many more to make such a magical experience possible.

Whether it’s a blockbuster film, life-saving drugs, the food supply or comfortable shoes, our economic system’s mix of capitalism, government, international trade and creativity makes a lot of truly fantastic things possible for billions of people.

It’s light years away from perfect and it’s in constant need of maintenance and reform, but our system has delivered a higher standard of living for a larger portion of the human population than anything that has come before it.

Enter COVID-19 and numerous commentators have argued that the pandemic has revealed our economic system to be a house of cards that is bound to collapse and/or so deeply flawed that it needs to be replaced. 

Piled on top of this timely and important discussion is an ugly layer of xenophobia, knee-jerk protectionism and partisanship. In an effort to engage the former while avoiding the latter, it could be argued that the pandemic has revealed not just the weaknesses of our economic system, but also its many strengths. 

The loss of life caused by the pandemic is heartbreaking, but we have managed to avoid anything like the millions upon millions of deaths caused by the Black Death and Spanish Flu. Modern medicine, greater scientific knowledge, public education, better technology and an imperfect—but still highly effective—public policy response help explain this. Standing behind these things is an economic system that facilitates their development and delivery.

In fact, our economic system—warts and all—has generated the wealth and supported the ingenuity that has enabled us to shut down large swathes of economic activity while maintaining essential services. And despite the hardships many face, it will continue to underpin a standard of living unparalleled in human history. 

From its fairness and resilience to its environmental footprint and ability to adapt, we should work hard to improve our economic system and learn as much as we can from this pandemic. But before we throw the baby out with the dirty bathwater and decide our economic system is inherently bad or so weak that it can’t last much longer, it makes sense to also consider the many benefits our amalgam of capitalism, government regulation, open trade, market forces and public services produces. 

After all, Star Wars is not the only good thing our economic system has produced.

Global poverty has declined

Our economic system has helped raise billions out of extreme poverty.

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