1970’s-90’s: Economic Downturn, Division, and Debt And the Information Age

1. 1970’s-90’s: Economic Downturn, Division, and Debt And the Information Age

2. The Information Age • “Communication Revolution” • New tech: 70’s rapid pace of advance: computers and communication Tech changing how we work, play, communicate • Cost of air travel falls. More international travel. • Satellite TV: more stations. Cheaper long distance telephone calls. Easier to communicate for personal or business purposes abroad.

3. By early 1980s possible to own personal computer • Beginning of 2000s, over half of Canadian homes have computers • Telecommuting to work at home • Machines can work faster, reduce labor cost (and need) • ‘New economy’ – knowledge, skills, ability to adapt more valuable than manual labour or old skills

4. Downturn • 50s-60s : Prosperity and optimism • 70s: economic downturn • 1973 OPEC oil embargo (Western countries support Israel) – up to 400% spike overnight • Prices rise, inflation spiral • Businesses failing: costs up, demand down • Unemployment: highest level since Great Depression

5. Inflation • Inflation: economic condition that occurs when prices rise very quickly • “Normal” inflation of 2-4% per year • Late 1970s : several years with 10% or higher inflation • Less purchasing power of dollar – stretches household budgets • More women have to work – dual income families

6. Regionalism • Separatism in Quebec • Anti-Ottawa/Central Canada sentiment in West (“western alienation” • Ottawa’s policies favour central Canada at expense of West- e.g. oil • Economic downturn, rising unemployment = more concern about U.S. influence on Canadian economy (1973 FIRA) • Natural resource industries hit harder by recession: • Atlantic Canada fishing, forestry mining and fishing in BC • Regional disparity – economic gap between regions of Canada. Central Canada (On. and Qu.) fare better • Trudeau increases transfer payments

7. National Energy Program • Trudeau’s response to OPEC crisis • Freezes Alberta oil prices below world levels to keep cost of oil down for Canadians • Tariff on oil sold to US to make up for oil imported from OPEC countries • Alberta: prevented from getting fair market value for oil they sold, increases alienation from Central • Goals of NEP: • Make Canada self-sufficient in oil • Reduce use of, dependency on fossil fuels: encourage consumers to switch from oil to gas and electric sources of power.

8. Trudeau retires: • Defeated by Conservative leader Joe Clark, 1979 • Clark’s budget defeated by House of Commons (vote of non-confidence) • Trudeau re-elected 1980 • Constitution Act signed in 1982 • Announces official retirement: June, 1984

9. Debt Crisis Trudeau expanding social services: expensive • Government operates at deficit (expenditures greater than revenues) • Businesses fail, jobs lost = less tax collected, more spending on welfare and unemployment insurance = borrowing $ • Trudeau 1984: $160 billion of federal government debt

10. Mulroney & Neo-Liberalism • Mulroney: Progressive Conservatives win 1984 • Promise to address Canada’s economic problems. • Following U.S. (Reagan) and Britain (Thatcher) : neoliberalism • Cutting back role of government in economy and government spending • More power to corporations and wealthy individuals – tax breaks, will reinvest and create new jobs (trickle-down) • Tries to reduce debt by cutting social services and programs • ‘Stimulate economy’ through cutting taxes and free trade • Thought would increase employment and therefore tax revenue

11. Chretien – 1990’s • Conservatives’ plan didn’t work: recession 1990. • More need welfare/unemployment insurance and fewer taxes again. Debt increases. Forced to increase taxes. Lose 1993 election. • Jean Chretien and Liberals – inherit $466 billion in debt • Liberal solution: inject $ into economy • Keynesian, worked post WWII • To create jobs, works spend earnings and boost economy • $6 billion spent on public works projects (roads, bridges, etc.) • 1994 interest rates up – will increase cost of debt • Liberals decide can’t afford big government, have to cut social spending

12. Martin • Chretien’s Minister of Finance: cuts federal spending, opposes raising revenue (tax) as solution. • Loss of civil service jobs, decreased provincial transfer payments • Deficit does get smaller but Canadians pay for it – less government services, cutbacks • university and college tuition goes up   • Aging population, expensive new drugs and technology: health care costs, but less $ for • hospitals closed, staff reduced, length of hospital stays reduced • Some go to U.S. b/c believe Canadian care no longer good enough

13. How do you think Canada should deal with economic crises and poverty? • How much responsibility should be on • Individuals? • Government (Federal or Provincial or Municipal)? • Community and private charity? • Are you worried about what level of health care, pension, and other social services will be there for you when you are older? • Are you worried about the state of the economy now, in your future? Do you think it will get better or worse?