When the world plunged into recession in 2008, G20 leaders ostentatiously pledged not to repeat the errors of the 1930s. To hasten economic recovery, they would avoid protectionism and keep trade flowing. Canada's government has been among the loudest voices in this free trade chorus.
This is a gross misreading of actual history. World trade collapsed in the 1930s because of collapsing consumer demand, not protectionism; competitive tariffs were a response to that implosion, not its cause. For the same reason, world trade plunged 12 per cent last year, despite the G20 promises.
Parliament is back this week, and its focus this fall will be on what to do about the economy. The first order of business should be reducing unemployment, but the Conservatives are more interested in reducing the deficit.
Want to reduce the government deficit? Raise business investment? Improve the standard of living? Moving to full employment -- a job for everyone who wants one -- is the way to go. Putting more Canadians back to work will ensure the economy improves.
Is the world, including Canada, headed for the third Great Depression, as New York Times columnist Paul Krugman argues? Watching the results of the Toronto G8/G20 meetings was like hearing news that a giant comet is heading for earth and we are just waiting for impact. Those meetings of the world's largest and/or growing economies committed governments to massive deficit reduction in spite of the real concern that we are facing a the possibility of a so-called "double-dip" recession. That possibility is now a certainty.
Moody's, Standard and Poor's (S&P), and, to a lesser extent, Fitch raked in billions of dollars during the wild prelude to the financial crisis of 2007-2008, which imploded the world economy.
Matt Taibbi, writing at the time for Rolling Stone (June 19, 2013), stated bluntly, "...we now know that the nation's two top ratings companies, Moody's and S&P, have for many years been shameless tools for the banks, willing to give just about anything a high rating in exchange for cash." Between 2002 and 2007, fees for the "Big Three" credit ratings agencies (CRAs) doubled from $3 billion to $6 billion.