Dismantling the Post.docx

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Western University
Political Science
Political Science 2211E
Adam Harmes

Dismantling the Post-War Economic Order:  Ottawa officially adopted Keynesianism in 1945 Macroeconomic Policy in the Neo-Liberal Era:  Macroeconomic policy includes: o Fiscal policy: power on taxation and spending and the balance between them expressed in budget deficits or surpluses o Monetary policy: to control or influence variables such as money supply, interest rates and exchange rates o Comprehensive wage and price controls  Unattractive option for neo-liberals as a result of the degree of state interventionism  Unnecessary tools if proper fiscal and monetary policies are implemented – neoliberals  Neoliberals agenda on fiscal policy by mid-1970s: o Size of government as expressed by its spending (measured in % of GDP or absolute terms)  Argued government was too large o Balance between revenues and expenditures (expressed by the budget deficit and accumulated public debt to which annual deficits contribute)  Deficits were unacceptable o Taxation system  Needed reform o Priorities in government spending  Spending priorities in need of reallocation  Prime Ministers Jean Chretien and Brian Mulroney both followed through a neo-liberal fiscal agenda  During 1990s recession: o Canadians were receiving fewer service relative to their tax payments o Program expenditure shrank to lessen federal state’s impact on society o Government maintained that further spending cuts are necessary to further deficit reductions  Neo-liberal government are ideologically committed to expenditure restraint and deficit reduction o Evidence suggests deficits and rising public debt are most closely associated with:  foregone tax revenues:  Budget Plan under Chretien focused heavily on expenditure instead of revenue  Impact on equity, loopholes, tax breaks and tax expenditure led to significant shortfall in revenues  high interest rates  Monetary policies led to historically high interest
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