Keynesianism failed due to improper practice rather than inherent flaws.
People shied away from necessary fiscal measures primarily during prosperous economic times.
Political Predictions
Mark Carney is expected to become the next Prime Minister, indicating a shift in polls favoring liberals against conservatives and NDP.
NDP and Bloc may avoid elections to prevent empowering conservatives.
Conservatives under Pierre Poilievre are hesitant for elections due to unfavorable polling.
Neoliberalism Transition
Key Economic Shifts
Transitioning from Keynesianism to neoliberalism in the 1980s led to radical policy changes.
Emphasis on balanced budgets and fiscal austerity across governments.
Government Actions
Conservatives initiated asset sell-offs under Brian Mulroney, which continued under subsequent liberal governments.
Governments attempted to balance budgets by cutting spending and reducing taxes rather than addressing deficits as per Keynesian principles.
Neoliberal Principles
The neoliberal ideology argues for tax cuts, deregulation, and minimal government intervention.
Money Multiplier Effect: Initial expenditures in an economy can lead to greater overall economic activity due to repeated spending.
Tax cuts aim to stimulate economic activity, fostering growth through individual and corporate spending.
Tax Effects
Tax cuts for lower-income individuals can lead to significant economic stimulus; however, large cuts for the wealthy yield diminishing returns on economic output.
The inequality in tax benefits shows lower-income earners stimulate economies more than wealthy individuals.
Deregulation Impacts
Deregulation is intended to promote investment, yet unregulated industries can lead to public health issues and environmental harm.
Case Studies: Unregulated pollution can lure companies but leads to dire health and safety consequences for communities.
The Role of Regulation
Regulatory frameworks ensure minimum standards for public health, safety, and environmental protection, balancing economic growth with public welfare.
Comparisons between Canadian and US dairy practices illustrate the importance of regulatory standards.
Crowding Out and Privatization
Government Asset Management
Historical ownership of industries by the government aimed at balancing market inefficiencies and protecting public interests.
The debate over privatization reflects on profit vs. public welfare.
Welfare State Retrenchment
Neoliberals critique welfare systems as fostering dependency, viewing programs like Employment Insurance as problematic.
Counter-arguments highlight their role in mitigating economic downturns and supporting consumer spending.
Free Trade Agreements
Comparative Advantage Principles
Example of ice and bananas illustrates how countries benefit from specializing in production based on resource availability.
Free trade can promote efficiency, yet populates the market with cheaper labor goods diminishing domestic manufacturing in developed countries.
Issues with Free Trade
Neoliberal policies that favor free trade can lead to a loss of jobs domestically as companies move operations to lower-cost labor markets.
Crisis of Neoliberalism
Great Recession (2007-2008)
Financial collapse highlighted failures of deregulation in the banking and housing sectors, causing widespread economic instability.
Canadian regulations helped to mitigate damages, preventing a similar crisis in Canada despite a strong push for deregulation.
Government Responses
Economic interventions during crises show shifts back toward Keynesianism despite a lingering neoliberal rhetoric of balanced budgets.
Ongoing debates reflect societal demands for increased government action versus neoliberal policies advocating minimized government roles in the market.
Conclusion
The current state reflects a tension between traditional neoliberal principles and an increasing demand for governmental intervention.
Students tasked with analyzing these dynamics and exploring potential new economic paradigms.
Knowt
Note
Studied by 100 people
