Illusions of Someday

It is wonderful to see the sun out and people outdoors again. Walking, running, and biking. Experiencing a little ray of sunshine and occasionally, just occasionally, a smile and a friendly hello.

Cities and provinces are preparing their re-opening plans with great enthusiasm. Curves are being flattened. People are believing there is a light at the end of the tunnel. Normal days will soon return.

Or will they?  To quote one of the greatest Canadians of all time …

“With illusions of someday cast in a golden light                                               No dress rehearsal, this is our life.”

Before we start thinking that we will be allowed to return to normal, let us explore three factors affecting human emotions and contemplate how motivated our elected decision-makers will be to return life back to normal:

Dependency:  Almost 70% of Canadians are receiving weekly and monthly cheques from the Government of Canada to meet their basic living or commercial needs. Decisions may be made to reduce these payments over time, but what politician would be motivated to eliminate them all together?

Fear:  Consumption of mass media has had a profound effect on human entrancement and in the instilling of fear. Perceptions of risk, health, and safety have little to do with science or empirical evidence; rather, they are shaped by cultural assumptions about human vulnerability. Will the fear of a second wave or non-immunity handcuff our elected officials and perpetually prevent the end of social distancing?

Control:  Every morning, elected officials get to emerge in front of a microphone and robotically tell us that “we need unlimited spending authority” and “we will not resume parliament” and “here is some more money” and “we have your back” and that “we will get through this … together.” Do they really want to return back to normal or even understand what the old normal actually was?

Daily foreshadowing messages are being delivered to set expectations that measures could be in place for months, that re-opening will require a coordinated national response, and that even as things are able to start getting back to normal, they won’t be back to normal.

This is really interesting territory we are entering into. Even though we can re-open the economy, will we?

Or maybe we should be prepared to “sit silently and listen to our thoughts.”

The Golden Share

It feels like five years.

But it is only the start of “Week Five” since the Government of Alberta and Ontario issued their States of Emergency. So much has happened. So much hurt has occurred. And so much money has been printed.

Government support programs started with individuals, then households, then medium-sized business, then small business, and then anyone else that slipped through the cracks.

But don’t take your eye off the ball.  What happens next matters.

As we move into Week Five, the attention will turn to Canada’s large corporations, the major employers in the country, the owners/operators of our natural resources, and the stewards of our critical/sovereign infrastructure.

Airlines, ports, railways, grain terminals, energy producers, financial institutions, pipeline companies, pulp mills, and power generators/distributors will all need credit facilities, and the Government of Canada will be the lender out of necessity, and in our national interest.

But those loans may likely come with a Golden Share.

The golden share concept originated in 1975, accompanying the Petro-Canada Public Participation Act, that prevented foreign ownership above 20%, sheltered a critical Canadian asset from any unwanted takeovers, but left its stock depressed versus rivals because of the reduced chances of a takeover. Petro-Canada’s golden share was held by the Government of Canada and was absolved with the Suncor acquisition to create a globally competitive, Canadian-based integrated energy company.

In the weeks to come, as the federal government contemplates extending credit to our largest and most vital large companies, there is a high probability that the golden share re-emerges as part of the Canadian economic landscape, forever changing our ability to attract foreign capital, access international markets, and build global brands.

This is an important signpost on the road to recovery.

It is also an important signpost on nationalizing our industries.

The Long Road Ahead

There are two types of people in the world. Those who drain their gas tanks almost to empty before they refill, and those that keep their tanks topped up in case they run into an emergency.

Much discussion has occurred about how long the COVID-19 Coronavirus will last, and how we should prepare as companies or as households.  Although no one knows for certain, it would be wise to expect a long road ahead, with once reliable gas stations often closed along the way.

Fill up your tank, a couple of jerrycans, and fill them up at every opportunity you see. This is going to be a long road trip through the desert of despair, and you don’t want to run out of staying power before the trip is over.

At BGE, we are lucky to be in the air filtration business which is considered an essential product/service to maintain healthy indoor air environments in everything from hospitals to commercial buildings to pharmaceutical labs and oil sands plants. We have watched the erosion of consumer activity and demand across all industries in Q1 and, despite the grit shown by our customers, we expect the onslaught to continue. We have prepared for a Q2 (April, May, June) where the overall economy will be down -24% and we have extended our scenario models through to August 31st and December 31st, as we want to ensure we always have gas in the tank.

These timelines are very different than President Trump’s declaration that this will be over by Easter or April 30th.

What will be interesting is how consumers and industries come out of this. It is hard to imagine a declaration stating that “COVID is now over, please go back outside and resume your lives.” Rather, like restarting a manufacturing plant, the economy will likely return to full production in gradual phases. For that, we may want to draw on an augmented version of Maslow’s Hierarchy of Needs and apply it to industry sectors.  Starting at the bottom with the most basic economic needs and working our way up is an interesting view to how to rebuild or reopen the economy. Also of interest are the questions surrounding which industries or human activities simply do not return – a topic of many subsequent posts.



Governments will need to slow the spread of the virus before opening up parts of the economy. By the end of Q2 we should see a movement away from the mandatory lockdown measures to a slow economic reopening based on expanded capacity within the healthcare industry. This may be done by region, or more presumably by a phased approach based on necessity. This may take months, as recurrence of the virus will become the high-risk topic through the summer months.

Regardless, what we know to be true is that many businesses out there have spent the past two months rapidly digitizing every available part of their business model, and are now implementing creative partnerships, processes, technologies, forecasting tools, channels, pricing & terms, and supply chains. These are all overdue improvements to productivity out of necessity, but they also all suggest that when the economy does come back, employment may not return to its original form.

Government support programs, rent & mortgage holidays, utility & tax deferrals, credit & loan facilities are all critical jerrycans to be filled. Debt levels were at all time highs before this all started, and no one is calculating the collective impact of the programs that have been announced.

So, whether you are a business, a non-profit, a household, or an individual, it is important that you keep your tank filled, get your jerrycans before they run out, and prepare yourself for the long, long road ahead.

Relative Advantages at Risk

Like many, I watched both the Canadian and U.S. political debates last week. And like many I shook my head at the shameless pursuit of these potential leaders to get their media sound bites, as opposed to the much needed presentations of progressive economic, environmental and social policies that will advance our respective nations.

In Canada, I blame that on the debate format that allowed for multiple microphones to be on at the same time. In America, I blame that on the presence of Donald Trump.

But as the various caricatures struggled for air time, one thing became incredibly obvious:

Canada’s opposition leaders are on a path to creating an uncompetitive, bureaucratic, socialist state while opposition leaders in the United States are passionately committed to making the American economy the most entrepreneurial, innovative and competitive economy in the world.

And this should concern Canadians.

It should concern us because the advantages Canada has built up during the Obama Administration are at risk, and at risk of reversing rather quickly.

Advantages are relative. And, just as Canada has been successful in the attraction of business, people and investment relative to the U.S. over the past eight years as the Obama Administration was increasing debt, deficits, taxes and bureaucracy … we risk losing our advantage if we start doing the same.

For me, there are only three ballot questions:

  • Do we want to be a high-tax or a low-tax jurisdiction?
  • Do we want big government or small government?
  • Do we want to be a social welfare nation or a globally competitive nation?

I don’t advocate for any one political party – they all have their faults – but I do love my country and all of her potential. We have the world’s second largest land mass with a well-educated and peaceful population and an economy that is inter-connected and inter-dependent from coast to coast. We have the strongest banking system on the globe and a quality of life that ranks us consistently among the Top 5 nations, and consistently considered the most desirable country in the world.

Yes, we have massive work to be done in the areas of Indigenous rights, environmental stewardship, infrastructure investment in our cities and safe energy production and distribution. But, these next steps in Canada’s evolution can only be done on the back of a strong economy where Canadians are all productively working with small, medium and large scale competitive companies and on projects that will build a stronger nation.

From what I saw at the debate the other night, the Canadian opposition leaders are enamored with the Obama Administration, while the American leadership hopefuls are enamored with what we currently have in Canada.

America needs change.

In Canada, we should be seeking improvement … not change.