SITTING ON THE LID
Bishop, Jordan
IN CANADA SITTENG ON THE LID Early in October, before Canadians celebrated Thanksgiving, the Ottawa rumor circuit buzzed with stories of a new anti-inflation package. It was to be, in a word,...
...In other words, there must be rough justice for union contracts, but where productivity is measured in terms of fees-for-service, it will be encouraged...
...In short, there will be an increase in overall governmental spending accompanied by some drastic cuts in programs...
...Trudeau candidly admits that for the moment at least the "free enterprise" system is unworkable, that it has...
...The government is in fact faced with a serious credibility problem...
...Nothing is left of Trudeau's "just society" of 1968 except the people in charge...
...In other words, the program provides for business as usual at the top...
...reton in Nova Scotia...
...The "just society" has been replaced by a new slogan: "Our status is quo, and we aim to keep it that way...
...Growth is, officially, the only answer to the problems of the poor...
...Trudeau's plea for a change of lifestyle and expectations, 20 have since seen 20 or 30 television "adverts" from banks, finance companies and corporations promising easy credit...
...The program is as regressive as Canada's hidden 12 percent federal sales tax...
...Less than two weeks before Christmas, the P.M...
...The Board also rejected the settlement reached after a bitter 40-odd day postal strike, but this decision, in the face of an almost certain resumption of the strike, was overturned by the Cabinet...
...governments do not make that kind of admission...
...What has actually been cut are projected expenditures in a budget that has yet to be approved...
...The liberals have in effect introduced a new system, or perhaps a new name for the system which has already been in existence for a number of years (except for those who continue to think that "free enterprise" is a reality...
...succeeded only in inducing, simultaneously, a high rate of inflation and a high rate of unemployment...
...It would in fact be hard to find a better example of Marx's thesis concerning the class bias of governments in a capitalist society than the present program...
...The government of course cannot admit that there is any "fat" to trim...
...A 10 percent increase for someone making $7,000 a year- (more or less the official poverty line) is $700-if you can get it, Ten percent of $24,000 is $2,400-and you probably can get it...
...Pay raises are limited to eight percent in all companies employing more than 500 hundred workers, for construction firms employing 20 or more, and for all federal government employees...
...There is, of course, the surtax on higher incomes announced by Mr...
...This can be stretched by two percent for increased productivity, and in the case of groups that have fallen behind, yet another two percent...
...Local Initiative Programs (LIP) will be cut, Opportunities for Youth (OFY), the Company of Young Canadians (CYC, largely social action groups) and Information Canada will be abolished...
...Ed Broadbent, the NDP leader, noted that the freezing of family allowances win cost low-income families $27 per child next year (family allowances had been indexed to the cost of living), while the surtax would mean an extra $10 in taxes for someone making $35,000...
...Meanwhile, the Council recommended that some stimulation of the economy is needed to avoid aggravating an already high rate of unemployment: "What we're saying is do not forget that while you combat inflation you have 7.3 percent of the labor force unemployed...
...The Council suggested that the country is entering a period of slow growth, that immigration policies may have to be revised to meet a projected labor shortage in the 1980s, that the problem of inflation is such that some form or other of controls may have to be imposed for an indefinite period...
...As for the cuts in governmental expenditures, Robert Stanfield, the leader of the opposition, has described them as a con game...
...Cuts are promised in almost every area except defense and law enforcement...
...Jean-Luc Pepin, head of the newly-formed Inflation Control Board, had publicly promised "rough justice" and had vetoed a contract reached by striking high school teachers in Toronto, another by workers at De Haviland Aircraft, and a third by paper-mill workers in New Brunswick...
...Stanfield, leader of the opposition, had made a strong plea for prices and incomes controls in the last federal election, and is in a sense committed to the idea in principle...
...The program appears to be positively designed not only to maintain but to increase income differentials in favor of the affluent...
...This is established not in absolute figures such as Britain's six-pound-per-week ceiling on wage increases, but on a percentage basis designed to widen the gap between rich and poor and preserve the present distribution of wealth...
...His objection to the Liberal program is that it is too long-39 months-and that measures taken with respect to governmental spending are more a matter of public relations than of fiscal reality...
...The problem is not inflation as such, but the fact that wage pressures threaten to price Canadian goods out of foreign markets...
...Conservative critics note that no attempt has really been made to "trim the fat" from the federal budget...
...Labor unions have claimed that the program promises effective wage controls and illusory price controls...
...JORDAN BISHOP (Jordan Bishop, a regular contributor, teaches at the College of Cape Breton in Nova Scotia...
...Trudeau was emphatic that controls would affect professional incomes-doctors, lawyers, engineers and accountants were mentioned-as well as dividends...
...On Thanksgiving day the Prime Minister, the Honorable Pierre Elliott Trudeau, broke the news on a nationwide television hookup: inflation had gotten out of hand, and a radical change in life-style was imperative...
...No mention was made of capital gains or of money that is "made" rather than "earned...
...Meanwhile in Ottawa, finance minister Donald Mac-donald had clarified the issue with respect to professional incomes...
...In response to the crisis, the government that had sailed into office a year earlier on the rejection of wage and price controls now proposed to use its comfortable majority for a sweeping, long-term regime of controls...
...In fact, one may assume that for every Canadian who heard Mr...
...But as Mr...
...It is clear that those at the bottom are expected to lead the way in renouncing rising expectations, while those at the top may be faced at worst with a hard choice between champagne and caviar...
...Productivity must be maintained, and professionals must not be penalized for increasing productivity...
...Mr...
...Prices are to be controlled through careful monitoring of costs and profits, although the effects of this may not be seen for six months...
...Others have suggested that the program promises hard and effective wage controls coupled with a governmentally-supported "cost-plus" regime for business...
...No attempt has been made to limit consumer demand by tightening consumer credit...
...Free enterprise is officially dead, with the distribution of wealth frozen to the status quo...
...It is clear that the main thrust of the program is to control wages...
...On December 22, the Economic Council of Canada came out with a pessimistic report on Canada's economic future...
...Trudeau in his pre-Christmas speech...
...This admission may constitute the big divergence between the Trudeau government and the Tory opposition, between the government's program of long-term, perhaps indefinite economic controls and the Tory's projected short-term controls...
...It will not apply to increases totaling less than $600, and for higher levels, a limit of $2,400 has been imposed...
...It is, he claims, needed to break the "inflationary psychology...
...It was to be, in a word, "frightening...
...The free enterprise system and collective bargaining can no longer be trusted to maintain the status quo, so another, more effective system must be devised for that purpose...
...In other words, the free enterprise system is to be replaced by a controlled economy that keeps a lid on wages and guarantees profits for industry...
...Trudeau has strongly insisted that Canadians must change their lifestyles, that the wave of rising expectations must be curbed lest the whole economy crumble...
...By the time of the unveiling of the complete program in Parliament, a number of doubtful points had been cleared up...
...again appeared as the legislation for the program cleared Parliament, to announce sweeping cuts in governmental spending, a surtax on incomes over $30,000 and the freezing of parliamentary and upper-bracket civil service By this time it had become fairly clear that the real problem, in the eyes of the Ottawa government, was not the old one of too many dollars chasing too few goods in the Canadian market...
...Stanfield and other critics poted, the proposed cuts are designed to limit proposed increases in proposed governmental spending to something like 15 percent of mis year's budget...
...Domestically-induced inflation is officially diagnosed as "cost-push" rather than "demand-pull," and the principal remedy is a long-term program of wage and income controls...
Vol. 103 • April 1976 • No. 8
