Economic Recovery for Canada: A Policy Framework

Kenneth M. Glazier was Chief Librarian Emeritus at the University of Calgary, Alberta.

To tame the lion of inflation was considered, during the past four years, the primary emphasis of government economic policy. Now that inflation has been brought down in Canada to around four per cent, the expected benefits of lower unemployment and interest rates have not come to pass. This treatise by John Cornwall, a professor of economics at Dalhousie University, and Wendy Maclean, an assistant professor of economics at Mount Saint Vincent University in Halifax, is concerned with why the lower inflation rate did not bring the hoped-for results and with the framework for recovery.

The proposed plan for recovery is four-fold: a tax-based incomes policy to control inflation; a stimulation of the economy to achieve full employment; an industrial strategy that concentrates on innovative rather than cost-cutting investment; and measures to accelerate productivity growth, drawing on the Japanese style of management. These general statements are supported with numerous statistics, graphs, and bibliographic notes for further reading.

Some of the statements will surprise the readers, such as “the State must more actively intervene in the economic affairs of the country” (p.3). This plea will go unheeded in Canada, where the popular slogan is for less government intervention (followed by the weasel words “free enterprise”) as the answer to all our problems. Huge budget deficits are not considered alarming because “any attempt to reduce the size of the deficit (in order to bring interest rates down) will depress economic conditions even further, causing more unemployment.” The former Liberal Government will be pleased to know that “the large deficits today are the result of depressed economic conditions, to a large extent induced by the Bank of Canada’s... high interest rate policies of the recent past” (p.69). And the new Conservative government (Sept. 1984) either has not heard of this book or certainly has not heeded it. Certainly the Canadian Institute for Economic Policy, although it is located a stone’s throw from the Parliament Buildings, doesn’t have an influence commensurate with its proximity.