The Canada's Economic Ideology

Question 1

The economic ideology that has been expressed by the minister of finance in the above articles is neo-conservatism. A neo-conservatism ideology talks about an economic system, that private sector owns most of the means of production which means less government intervention. "On an economic level, the neo-conservatives believe that the social democratic programs should be cut, that taxes should be lowered, and that state corporations should be privatized as much as possible. Supply side economics dominate as opposed to Keynesian economics. The state must be strong enough to remove the vestiges of socialism such as high taxes and expensive social programs, to police the market order, to make the economy more productive and finally to uphold the social and political order". (http://www.allempires.com/article/index.php?q=Neo_Conservatism,Feb 24th 2011). This philosophy states that minimal yet strong centralized government is present with a free yet synchronized market. As one would conclude, "there is espousal, on the one hand, of the completely free market and , correspondingly, a minimalist role for government but, on the other hand, there is a necessity for a strong government to uphold law and order and to control market when necessary"(Eaton: 43).

According to the minister of finance in the above articles he mentions that he's more comfortable with an increase in business investment which will result government to end the stimulus measures which means he wants the private sector to be the leader of the current economy.

Canada's economy started moving from a government based public sector towards a private sector after the World War II. "Therefore the government has started been involving in wide variety of fields from health care to transportation, to community and social services". (Barrows and Wesson: 189) "This view of contracting- out has led to the notion of the "contract state", in which there is diminished role for government as the provider of goods and services and more focus on government as a policy development agency, with service delivery through a more efficient and effective private sector". (Barrows and Wesson: 198).Besides neo conservatives believe that welfare costs should be reduced; as a result the government has taken place in providing those services and making the private sector to handle the economy development through industrial expansion, business investments, trading etc.

Furthermore as mentioned in the article the finance minister wants all the provinces to balance their books by 2015. Therefore the finance minister is more concerned about this neo-conservatism economic ideology as he knows that the private sector based economy is able to reach his targets easily than a public sector based economy. Same sort of situation appeared in New Zealand around 1988s due to the high public sector expenditures. "In order to improve public management, the government of New Zealand reformed the budget and tax systems; instituted measures to make public sector employment conditions on a par with those in the private sector; privatized many crown corporations and contracted-out many activities; and improved the government's information and accounting systems".( Barrows and Wesson: 195).

"But while the public sector can sow the seeds of productivity gains, it is up to the private sector to reap the harvest. And it is time for business to step up and deliver. This means that they have to get on with investing, developing new markets, innovating, and finding new, more efficient ways of organizing and executing production". (http://www.banqueducanada.ca/en/speeches/2011/sp020211.html, March 2nd 2011). Therefore Private sector has to go on with the new proposed set of laws formed by the ideology applied by government in order to place Canada as one of the most reliable and healthiest systems in comparison to the rest of the world.

Question 2

The stimulus measures proposed by the federal government are going to switch the Canadian economy from public sector to the private sector. This decision in ending government stimulus spending will increase business investments and exports. "Canadian policy makers should be careful in removing stimulus to ensure the economic recovery lasts and to encourage private investment, Linamar Corp. Chief Executive Officer Linda Hasenfratz said. I don't think you want to do anything rapidly, you want to be cautious," Hasenfratz said in a telephone interview. "What we went through last year wasn't a typical recession, it was more significant." (http://www.businessweek.com/news/2010-07-12/linamar-s-hasenfratz-says-canada-stimulus-should-end-slowly.html, March 2nd 2011). Therefore government stimulus spending should be reduced, gradually by encouraging the private sector to take place the current economy but not when the country is recovering from a recession.

As proposed by the minister of finance they focusing on debts and deficits other than a stimulus package. The United States follow the other way around. Since Canada's recovery is been stronger than the United States this could be an advantage in achieving global competitiveness.

Finance minister Jim Flaherty mention about this spending cuts recently saying that "We can always end up a little bit more, a little bit less, depending on a whole variety of factors,". "I think our estimates are proving to be about right and we're on track." (http://www.theglobeandmail.com/news/politics/no-dramatic-spending-cuts-in-the-offing-says-flaherty/article1847923/,March 2nd, 2011). This shows that this time finance department is really trying a different path on recovering from recession and mainly balancing their books by 2015.

According to the articles given, the government is taking steps to provide tax breaks in order to encourage and increase investments. Reduction on taxes is essential as it will directly affect the consumers and businesses since more money will allow them to increase their expenditures and investments. If citizens begin to purchase more and business begins to invest more, this will boost the economy and more assistance in financing large businesses will increase jobs for the nation resulting in higher employment. This will then create higher production in Canada ensuring more exporting, which will again benefit the economy with more money coming into the country. "With the United States--our major trading partner-- experiencing its worst recession since the Great Depression, our exports were particularly hard hit, falling more than 16 per cent. And with a moderate US recovery through 2010, an appreciating Canadian dollar, and relatively strong domestic demand supporting

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