Journeying from Keynesian to Monetarist Canada
• From socially conscious to inflation conscious
• Wage and price controls challenged
o Oct. 1969, 1 million people walk
• By late 70s into 80s, government after government are saying they are open to business
o But when were they ever anti-business? Never, really.
• Said they were going to make gov. smaller, end nationalization and crown corporations,
privatize, and accept N.A.I.R.U (Non-Accelerating Inflation Rate of Unemployment),
simplify/lower taxes, and free trade.
o We do all of things, though it takes years.
• Was government “too big?”
o Not compared to activist level of Europe
o Fractionally less than Americans
o Not especially big spenders of social programs
o USA out-spends us on healthcare (as a % of GDP)
• Was debt a real issue?
o Certainly debt increased (federal), but where does this increase come from?
Half comes from a high interest rate
o 1991 Statistics Canada said that it wasn’t spending, but a drop in federal
revenues and rising debt charges.
• What makes debt a crisis?
o It’s what you make of it, it is just an instrument.
o In a debt crisis, the country has tons of assets. People perceive that the assets
don’t count though.
• 1995. Liberal gov. under Paul Martin: biggest cuts to gov. spending in the
• Neoliberals/monetarists: tax is a bad policy, although Keynesianism had already been
lowering tax pressure
• Pro-business gov. also embraces globalization (i.e. free trade)
o Reisman FTA
o CUFTA (like NAFTA) is with Canada/U.S. For Americans, it’s about access to
Canadian financial sector, banking and insurance, to retail.
• 1988, election on FTA. Majority