COVID-19 may be a dress rehearsal for the rolling catastrophic events that cities like Vancouver face in the coming years. But is Vancouver and the real estate market ready for ongoing economic shocks? Founding Principal of Resilient Cities Catalyst Jeb Brugmann joins Adam & Matt to talk about the COVID-19 crisis, the idea of the resilient city, and Vancouver’s relative strengths and weaknesses in the face of future adversity. But it ain’t all doom and gloom: VREP may steal Jeb’s Monday Beer night idea for when we get through this. And the first one is on us!
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Who is Jeb Brugmann?
Jeb is the Founding Principal at Resilient Cities Catalyst (RCC). He has been working with cities to establish practices for sustainability, social equity and justice for over 35 years. He was the founder of ICLEI – Local Governments for Sustainability in the late 1980’s to help cities take on climate change and greenhouse gas emissions. This organization has more than 1,000 cities involved today. Jeb has a history of working with low income communities around the world, which led him to the notion of resilient cities and to start Resilient Cities Catalyst, which tackles what urban resilience is and uses shocks like the current COVID-19 (Coronavirus) pandemic to understand where the vulnerabilities are and help make investments during the recovery period to build a more resilient condition going forward.
Are we facing more economic shocks today than we were in the past?
Economies stabilized after World War II. There has been great financial, social and political stability that has lasted most of our lives. We also had environmental stability. Now, we are in an time of tremendous unpredictability which creates vulnerabilities. Climate change, global economies being interconnected, political forces that are unwinding the institutional order – these things are creating many uncertainties and vulnerabilities.
As we come out of COVID-19 (Coronavirus), which we will, we need to understand what made our economies most fragile and what new infrastructure of support and institutions are needed so that we are not taken off guard by the next shock.
Why is it so important to focus on the Municipal level?
Working with cities and municipalities was a career trajectory Jeb selected back in the 1980’s because the effects of the crisis at that time (refugee, environmental issues, ozone depletion) were beginning to show in our cities. People had been moving to cities rapidly since the 1950’s and cities are very important. The global supply chain that people refer to is a supply chain around the world that goes from city to city to city. For example, the Port of Vancouver is crucial for Canada’s economy. It was important to focus on the grass roots and to determine what could be done and to create relationships between municipalities and city governments and in turn national and international governments, so you can see how things that are needed to achieve action on a global scale can trickle down from the international level to the grass roots level.
How has Canada done so far in facing the COVID-19 (Coronavirus) crisis?
Canada has shown a stability of government during COVID-19 that is not being shown in the United States. The parties in Canada are aligning around the common program and the message to people about what needs to happen. Canada has also had a positive response with the financial relief. The government understands that it is best for businesses not to have to layoff their workforces and they have been providing stimulus for businesses to prevent this. If people are laid off, they fall out of the workforce into the unemployment pool and it is difficult to connect these people with jobs after the economy starts its recovery. If you want to have an efficient recovery after a crisis, keeping people on payroll is better for the people and better for the business. Small business is still the backbone of the economy and needs to be focused on – this is fundamental to resilience. Canada’s response has been positive, especially when compared to other countries like the United States and Brazil.
What does a resilient economy recovering from COVID-19 (Coronavirus) look like? What does an economic recovery look like?
Every city and regional government need to look at where the biggest cascading failure has shown up. This is just beginning right now, but it will be visible down the line. For example, businesses are now closed, businesses won’t pay their rent, this will impact people that have invested in property, this will affect how property finance will be treated. If you focus on a ground floor business, like a restaurant. How will this affect business going forward? Will customers continue to show up in the same numbers after the crisis? In what ways will restaurants have to buffer themselves against shocks like this in the future? There are all types of cascading events to consider. The small business world has only started to see the extent of shocks from COVID-19. We have to help small businesses understand their vulnerabilities and help them build business continuity plans. Small business in an ecosystem that includes various factors; it includes the property side, the proprietor, the supplier, all the households in that catchment area. The recovery needs to be anchored in the concept of complete communities. We need to understand that small business is part of a node of commercial and social life. As neighbourhoods change, small businesses need to be supported to move along with this change. There shouldn’t be 10-year lags in areas as they change and they are without small businesses relevant to the communities. Small businesses need to be supported to adjust to the changing community and change with it.
How do communities make the shift for resilience and to supporting local businesses versus always looking to international chains and big box stores?
Wal-Mart and Amazon are optimizing value for consumers tremendously and that is why they are so successful. The price, the quality and choice create value for all types of customers. This value does not provide the infrastructure a society needs to get through a shock. The infrastructure needed is a place where there is social cohesion and a social relationship and a community service orientation. This is what small businesses provide. So, how can we value this value that small businesses add to the community, beyond the cheap price or superior selection. If we are going to economically value these small businesses, we need to make sure there are established backup funds (rainy day funds) for these businesses to provide relief during future shocks of this kind so that they can continue to operate.
There is also an idea called a complementary currency or alternative currency. Just like churches and YMCA’s provide places that people can get support and hold yard sales, complementary currencies are a way that people can sign up to be a dedicated customer to your community small business ecosystem. There are now for-profit currency creating companies as well. These currencies also allow for volunteers that are completing community initiatives to get currency from the government for their time to spend at local businesses. This also creates local infrastructure to help the community to function.
What are the differences between cities like Toronto and Vancouver that could be considered to have a stronger local business community versus other cities where that local community may have been hollowed out?
Cities like Vancouver have a different set of stresses. Vancouver went through a phase of having to remediate sites and to replace declining industries in the resource sector and replace them with the service economy. It also got some needed investment from China. One stress that is common for newly formed households is the decline of housing affordability. Of people in their 20’s, most people are in debt. In their 30’s, they have marginal savings, but nothing significant.
What is interesting is that if you look at households in the United States where adults are earning an average $35,000 / year, these households account for 27% of total GDP in the USA. Contrast this with business investment, that accounts for 18% of GDP. So, if we are not paying attention to these moderate to lower income households and what the stresses are that they are facing, this will result in sudden loses in household wealth or sudden losses in household income, similar to the Global Financial Crisis.
In the world, we are seeing things like the recent rise of Nationalism, the push away from globalization. Where does a focus on local economies fit and is it related to a push away from Globalization?
All of the policies have been focused on fair trade, globalization, and liberalization of markets. We have shifted tremendous resources in favour of that segment of the National economy and have ignored the less sexy, ground level economies in our cities and neighbourhoods. So, this is a prime moment to reelevate the centrality of these that are looking us in the face today.
In the USA, there are big support packages for large businesses, like Boeing. Initially, these support packages were ignoring the small businesses, which has now been corrected. This is a trend though, where the ‘too big to fail’ companies get the support and small businesses and households are left floundering. We are still seeing a declining home ownership rate in the USA and people still haven’t recovered from the Financial Crisis of 2008. This needs to be made up for now.
Is the financial stimulus from the Liberal Government in Canada related to COVID-19 (Coronavirus) sufficient?
As you know, the small businesses sector is a many headed beast. Which one of these sectors will be hit the hardest? We need to see over the coming months and how long the shock will last before we can determine if the current government stimulus will be enough.
There are sectors like tourism, conference business, hotels in Vancouver – these sectors will probably suffer for a long time. Local restaurants may be less hit because they can innovate and provide delivery services and such. Industries that focus on tourism will be hardest hit.
In the longer term, it is important to focus on resilience for cities. At RCC, we have developed strategies to factor risk assessments into the analyzing business sectors. This allows you to target your resources to sectors that are risks, for Vancouver, this would be the threat of earthquakes. The idea would be to develop a strategy for 10 to 20 years of how to build an economy that is more stable that if one sector goes down, the others will still operate.
It is expected that this summer will be one of the hottest summers in recorded history. For example, in Southern California, they will most likely have a large number of wildfires. COVID-19 (Coronavirus) is projected to be bad in the fall as well, so this will cause this region to be facing more than one economic shock at the same time. Unfortunately, we are just not ready for these shocks in North America. This is all the more reason that we need every dollar that is being funded to minimize the immediate shocks happening to focus on the longer-term cascading of these shocks and how to mitigate in the future.
Are you optimistic that we can learn these lessons and learn to adapt to these upcoming economic shocks?
The only good way to live is to wake up in the morning feeling optimistic about what you can do that day. Scientifically though, these shocks we have been experiencing, like COVID-19, the financial crisis, wildfires – these things are just dress rehearsal events for what is to come. There is an urgency for building this social and economic infrastructure we have been discussing. In particular, as climate change accelerates, things will be difficult. In the last 50 years, things have been predictable with weather. This will not be the case and we don’t even know how fast climate change will accelerate and the repercussions we will have. It is hard to be optimistic from a scientific standpoint, based on these facts. That being said, we need to be optimistic and find solutions to these challenges, keep pushing forward and putting the appropriate measures in place. We need all levels of government – Federal, Provincial, City and the neighbourhood level to work together. We can’t ignore the neighbourhood level in the response.
Favourite Neighbourhood in Vancouver: Stanley Park
Favourite Bar or Restaurant in Vancouver: Lower Lonsdale Restaurants (or Left Field in Toronto)
Book that you would recommend everyone read: Winners Take All by Anand Giridharadas
One piece of advice that you would tell your 18-year-old self: It helps to be emotionally prepared for your life ahead and the world you will be living in
Something you have purchased for under $1,000 that has positively changed your life: A second guitar (so I can play alternate tunings without having to retune my regular guitar)
Find out more about Resilient Cities Catalyst.