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.
We've all read the criticisms, too many to really go about noting, where Left-seeming supposed progressive politicians make promises to Leftist goals but then turn around and put money into far Right investments.
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With all the predictions of doom and gloom coming from the austerity camp, one would think that Canada was already about to hit the famed (but never seen) "debt wall." Before we get too carried away, however, with the scary debt stuff, consider these two indicators of the fundamental fiscal fragility/stability of Canadian governments.