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| Path: Main Street : Resources & Library : Research Articles : Feature Article |
Canada turns a corner --- part one: the road to here
by Doug JamiesonSeptember 9, 1996; CharityVillage NewsWeek
This is the first instalment of a three-part series about the major, and disruptive changes underway in Canadian society as we approach the millennium. Part Two, Grasping the New Reality , and Part Three, Looking Ahead, are available.
Part One: The Road To Here
You and I are responsible for the mess we're in.
We rode the gravy train for all those years. We took for granted the great, universal health care system provided to Canadians. We gave nary a thought to the artificially low university tuition fees. We actually believed that we were entitled to salaries and wages several times higher than those earned in the so-called developing world for equivalent work. We elected the politicians who promised us roads, bridges, subways, rapid transit lines, giant sports palaces, and impressive public buildings. We put our faith in the big employers --- the big banks, the great natural resources companies, the automobile empires, the government --- to take care of us as employees, providing job security and the opportunity to advance.
We ran a tab for much of it. Economists put some fancy words around it --- Keynesian economics, deficit financing and so on, but it all just means that we put it on the cuff. Governments only have two ways to get the money to pay for this stuff --- by taxing or by borrowing. Mentioning a possible tax increase meant certain defeat at the ballot box, so borrowing seemed an easy way to make everyone happy. In the inflationary, onward-ever-upward 60s, 70s and 80s, it all seemed to make sense. We would pay back debts in cheaper dollars, due to inflation, ran the accepted logic. Only fools failed to see the obvious merits of this course.
Sure, there were a few naysayers predicting catastrophe, but most of us paid little attention to them. They were like those ancient aunts and uncles who had been so affected by the Great Depression, forever unable to make any frivolous expenditure or to embrace the joys of credit and instant gratification.
Then all the assumptions changed. A new kind of information-driven global economy, fuelled by an international free-trade movement, spilled across our borders, taking jobs to far-off places that offered higher productivity. It took a while to sink in, but we finally got the message --- if there were people in Singapore or Arkansas or India or Poland who could do our jobs for a half or a tenth of the pay we demanded, then those people would eventually get our jobs. Good for them, bad for us.
Then the debt chickens came home to roost. Decades of annual deficits had accumulated to create a national debt of staggering proportions. Lenders didn't like that. The Japanese, the Germans and others who were financing our party demanded higher and higher interest rates to offset the increased risk of a total collapse. Some pundits began saying that it would take a crisis --- refusal of investors to buy Canadian government bonds --- to force a return to balanced budgets. Others predicted that the International Monetary Fund would intervene to force fiscal prudence upon the Canadian government.
Meanwhile, back home, government borrowing increased the demand for capital, making it more expensive for companies and individuals to borrow and depressing the rate of economic growth. Housing and industrial construction slumped, as did the purchase of new automobiles. Construction and the automotive industry, traditionally the major sparkplugs for the Canadian economic engine, failed to fire.
While that was going on, information processing and communications technology began to produce net losses in jobs for the first time in living memory. For the past 40 years, technology had always resulted in a net increase in the number of jobs. That is, it had consistently created more new jobs than it had replaced. Now it began to replace entire levels within the hierarchies of large organizations. Those jobs that largely existed to pull information together from diverse sources, and massage it for senior management, became redundant. A computer-based management information system could perform that kind of task faster, cheaper and, often, better.
As if that wasn't enough, the heightened competition in the new open, global markets gave birth to a "re-engineering" movement that swept through organizations everywhere. Scrutinizing the need for every position became standard practice. Organizations wanted to be flat and close to the customer --- translation: we have way too many desk jockeys who come between the people who make the big decisions and the people who make and sell stuff. Thousands more positions were eliminated, and older, more expensive workers were most affected.
And then there was nervous money. The same globalization and technology that had affected trade patterns had also accelerated the international flow of money to speeds inconceivable as recently as the early 80s. Investment-related information was broadcast instantly to anyone who wished to have it, anywhere in the world. A company's poor quarterly results were immediately known by investors around the globe, and they scrambled to sell before share values fell further. Investment time frames became enormously telescoped by the availability of information, and by the new "trading" mentality of money managers forced to compete fiercely with their peers for professional survival.
There were other trends and movements at play during the period, but these were the big ones that underlay the fundamental changes that have led to fear, uncertainty, doubt, hardship, pain.
Debt, globalization, free trade, technology, re-engineering. These are the paving stones on the road that got us here, and "here" appears to be an uncomfortable, even hostile, place.
Part Two, Grasping the New Reality , and Part Three, Looking Ahead, are available.
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