ADMS 1010 MIDTERM REVIEW.docx

ADMS 1010 MIDTERM REVIEW Introduction • Organizations are: 1. Social entities 2. Goal directed Goals of.. Government Business • Societal welfare  "Peace, order & good gov't"  "Jobs, growth & prosperity" $ • Economic domain • Profit maximization • Re-election • Making money 2. Deliberately structured & coordinated 3. Linked to environment • Mutual Dependence: • Mercantilism vs. Market Liberalism - Approaches to gov't involvement in the economy: Mercantilism Market Liberalism • Partnerships with private capitalist • Individual liberty. enterprises. • The private ownership of  To secure gov't support property. in 'the national interest'. • The rule of law. • The diffusion of both political power to maximize the social and economic well-being of individuals. • Neo-Mercantilism:  Use of protective tariffs (taxes on imports) and regulations: • Develop infant industries • Shared economic interest between gov't and commercial class • Domestic expansion  Development and protection of 'strategic' industries: Ex. Banking, Rail/Air transport etc. • Distributive Policies:  Redistribution of economic opportunities and benefits: • Public interest • Fairness • Equal opportunity • Correction of market failures  Done through subsidies, taxes, regulatory preference • Political Ideologies in Canada: • Political Ideologies continued: Neo-Liberalism Neo-Conservatism • Accept basic free market principles. • Gov't should be limited. • Shift profits of country to benefit citizens equally.  To make country better. • Distinctive Features of Canada's history:  Rich in natural resources  Multi-cultural  Close relationship with the USA  Federal system The Foundations of Canada's Economy • Hierarchy of Canada: Queen → Governor General • Beer Store Case: LCBO: - Gov't owned and run - Crown corp. vs. Beer Store: - Foreign owned - Gov't regulations • Constitution Act (BNAAct), 1867: o Federal structure o Dominion formed (Canada Day) • Federalism - the sharing of power between national and provincial/state gov'ts.  Divides power; provinces have the same authority as the federal gov't.  Main challenge: Different interests National Strategy Regional Interests • Fed. state must attempt to • Fed. state must attempt to build a national strategy. appease regional interests. • Nation building projects, • Regionalism: The shared national identity, national identification of citizens with economic strategy etc. a region as a distinct political/ social community based on different interests and political, economic, and social structures.  Canada's Transfer Payment Policy: • Transfer payments are used to redistribute Canada's wealth fairly between provinces. • A collection of fiscal equalization processes.  Equalization Payments: • Used to redistribute Canada's wealth fairly between the provinces. o Canada must help poorer areas with tax dollars generated in Alberta, BC, Saskatchewan, and NFL.  Send more money to Ottawa than they receive services. • A province that does not receive these payments = "have province" • A province that does receive these payments = "have not province" • Division of Powers in Canadian Federalism: Select Federal Select Provincial  the public debt  direct taxation within the province  the regulation of trade and in order to the raising of a revenue commerce for provincial purposes  postal service  the establishment, maintenance,  the census and statistics and management of hospitals,  militia, military and naval service, asylums and charities and defence  municipal institutions in the province  sea coast and inland fisheries  currency, coinage and legal tender  shop, saloon, tavern, auctioneer,  copyrights. and other licences in order to the  natives, and lands reserved for the raising of a revenue for provincial, natives local, or municipal purposes  the solemnization of marriage in  naturalization and aliens the province  generally all matters of a merely local or private nature in the province • Centralization: • Constitution/ BNAAct granted the dominion exclusive authority over: o Banking o Currency o Interest o Related issues • Key Economic Challenges at Confederation: 1. Trust in the Banking System • Undermined by numerous bank failures. • Limitation to: o Trade o Financing new development 2. Common Currency • Numerous currencies, multiple valuations • Question of national unity • Economic Context at Confederation: o 38 separate Canadian banks; Bank of Montreal with 25% of all assets. o Dissolution of the Bank of Upper Canada • Overextend in the canal and railway businesses • Double liability clause, but no enforcement o First bank of the US:  Became the model for the Canadian banking system. o Free banking (US): • Licensing of banks reverted to the states • Anyone with capital could open a branch • Flood of fraudulent money - highlighted need for single national issuer of currency. • Capitalization - Meant to ensure sufficient reserves underlying the money supply. • Double Liability - Shareholders are liable for investments and bank debt upon insolvency. • Bank Liabilities - Limiting bank notes that can be issued. • Parliamentary Review - Ensuring a re-examination of old laws. • THE DIAMOND OF SUSTAINABLE GROWTH: HR: Enabling Political Systems • Unify economically relevant territory • Establish order, rule of law - protect life, liberty and property. • Education, health • Address social and wealth inequalities. Effective Financial Systems • Able to transfer surplus funds to areas of need. • Banks, capital markets, limited-liability corps. Vibrant Entrepreneurship • Development of new: o Products and services o Markets o Combinations of land, labour and capital Sophisticated Managerial Capability • Required for large, complex organizations • To realize economies of scale/scope • Predicated on robust education Canada Expands - Agriculture and Manufacturing • The Staples Theory of National Economic Development: o A theory of economic growth o The premise: Export of a few dominant natural resources (i.e. "staples") shaped the economy and social/political systems. o Evidence:  Canada a colonial dependency  Regions dependent on export of a single dominant resource: • New France: Fur → Hats • NFL: Fish (Cod) →Fish & Chips • New Brunswick: Trees → To fight wars (Ex. build ships etc.) o Differing Views:  The staples/ export economy led to continuing dependency and economic underdevelopment. • NFL: Beyond cod, they didn't develop → became dependant. • Timber: From cutting trees to equipment manufacturing, chemicals and hydroelectric power. o Feed into that resource and develop.  The staples/ export economy provided the foundations or a more developed industrialized economy. • Early Colonial Era: o Statism: The view that the state has a major, necessary, and legitimate role in directing the economy, either directly through state-owned enterprises and other types of machinery of government, or indirectly through economic planning. o Clinetelism: The exchange of goods and services for political support, often involving an implicit or explicit quid-pro-quo. • Late Colonial Era: o Loss of British Imperial Preference (1840's): Unnilateral removal of tariff dutiese that favoured British territories, including Canada. o Reciprocity Treaty with US (1854-1866): Allowed tariff-free access to more than 90% of the existing trade between the US and Canada (i.e. a free-trade agreement) • Early National Era: o The National Policy:  The context: • US revoke reciprocity and erect high tariff barriers • Economic depression through the 1870's  A mix of policy initiatives: • Protective tariffs and selective gov't subsidies • Transcontinental railroad • Western settlement • Protectionism - The economic policy of restraining trade between states through methods such as tariffs on imported goods, restrictive quotas, and a variety of other government regulations designed to allow (according to proponents) "fair comp