From: Glenn_Chin@engr.usask.ca
Newsgroups: soc.culture.canada
Subject: Re: 500 New Jobs Per Day
Date: 11 Jan 1993 18:44:06 -0600
Organization: UTexas Mail-to-News Gateway
NNTP-Posting-Host: cs.utexas.edu

From: sitomlin@cantor.math.uwaterloo.ca (Stephen I. Tomlinson)
Date: Mon, 11 Jan 1993 21:27:23 GMT

>The best news of all is that there are lots of reasons to believe that 
>unlike the last two job booms, which ended in painful busts (1981-82 and 
>1990-91), this economic renewal should be steadier and more sustainable:
>
> * The past 2 recessions (1981-82, 1990-91) were each mostly the result 
>   of the Bank of Canada increasing interest rates, intentionally to slow 
>   down the economy, to reduce accelerating inflation.  This recovery has 
>   its inflation at the levels of the 1950's and early 60's, when 
>   recessions were so modest that employment still rose during them
>   (just slower than normal).

In the 1950s and early 60s, foreign economic competition was not as
well-developed as it is today.  After WWII, while other countries were
rebuilding, the economies in Canada and USA were humming along because
of our leads in industrialization and mass education.  In 1960, the US
had one-half of the world's GDP, while it is slightly over 20% today.  In real
terms, the US economy was at its peak around the mid-1960s.  Harvard economist
Michael Porter believes that the US economy has been in decline since
the mid-1960s, a stage all advanced economies go through.  A study of GDP growth
in the US over the past twenty years relative to the 1950s and 1960s supports
Porter's assertion.  Some may argue that the 1981-82 and 1990-91
recessions distort these figures.  The severity of the last two
recessions may indeed be a consequence of the relative declines of the two
advanced North American economies.

(Hopefully, the facts cited above are correct; everything is from memory.)

> * The productivity of workers has been rising faster during the past
>   few years than it has in the past two decades, and companies are
>   vocally emphasizing their renewed emphasis on productivity.

Doesn't productivity always go through the roof shortly after a
recession (technical economic definition)?  Companies pare staff to the bone
during and immediately after a recession.  Therefore, any economic
gains after a recession produce large productivity numbers.  Similarly,
productivity numbers take a beating at the start of a recession, since
staff haven't been laid off yet.

> * Some people believe that some of the job losses from 1990-91 have
>   been because of freer trade (personally, this looks off-base to me,
>   since Canada had the highest job creation rate of any OECD country
>   from 1961-90, a period during which the average tariff fell from
>   about 9% to less than 4%).

Again, there is danger of using optimistic numbers from the 1960s.

With free trade, the fortunes between the upper and lower classes in advanced
economies become wider.  However, I still support free trade, since the
alternative is likely worse.

>Steadily rising employment together with a faster rising standard of living,
>without the certain price of severe busts to come.  This is what our
>federal government and central bank have said they have been putting us
>through the wringer for.

I'm skeptical that the next recession won't result in a severe bust
despite our present low-inflation environment.

>Let's hope that the 5-month trend of 500 new
>jobs per day really signals the beginning of a new prosperity era.

I think Canada's best days in terms of economic prosperity are behind
us.  We have to now work hard to meet the unprecedented foreign competition,
and give reasons to corporations to locate jobs here.  Otherwise, our
debts will continue to spiral and our standard of living decline.


Glenn
Newsgroups: soc.culture.canada,can.politics