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Journeying from Keynesian to Monetarist Canada

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History 2125F/G
Peter Krats

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 again. 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 industrialized world. • 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
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