Good news:Unemployment falls to 6.5 % in Canada,5.8% in United States

Posted on November 7, 2014 by haroldchorneyeconomist

The U.S. Bureau of Statistics and Statistics Canada released the unemployment numbers and their respective monthly labour force surveys this morning and the results are good. Its a pity the American electorate didn’t see the numbers before the mid term elections as they would have confirmed that the Obama stimulus and Federal reserve policies had worked, albeit imperfectly just as Canadians can see that keeping interest rates low and increasing deficit spending after the crash have also contributed to economic recovery in Canada.In the U.S. the participation rate is still on the low side not reaching the level that prevailed in 2007 , perhaps because in part of demographic factors and real wages are still not growing fast enough but the headline rate is now down to 5.8 % and the broader measure U6 is down to the 11.5 % range. There is more work to be down but the developments are positive and the Fed and the Obama government deserve credit for this.In Canada unemployment remains elevated at 7.7% in Québec which is foolishly implementing austerity. But Ontario’s rate has fallen to 6.5 % which is good for both Ontario and the national economy.

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Japan increases its use of Quantitative Easing in effort to overcome deflation:stocks rise in response,Keynes on front cover of Business Week

Posted on November 3, 2014 by haroldchorneyeconomist

The Governor of the Bank of Japan(BOJ) several days ago announced that the Bank would greatly increase its purchase of government debt financing bonds and expand its asset base and thereby its monetary base in a major effort to reverse deflation and restore inflation targeted at 2 %. At the same time the Government pension investment fund announced it would increase its buying of stocks and decrease its holding of government bonds . The BOJ will increase its purchase of both government debt and stock based Nikkei ETFs. Doing the latter is regarded as qualitative easing because it adds riskier equity assets as opposed to government bonds which finance the national debt. It has an immediate impact along with the decision by the pension investment fund to expand equity purchases on stock market values.So Japan continues on this QE supplemented Keynesian course. We shall see what the outcome is over the next year. Meanwhile John Maynard Keynes is featured on the cover of Business Week magazine for a major story reviewing Keynes and advocating a return to his policies of defict financed spending to push the global economy away from recession and toward more rapid growth. The article is well worth reading particularly for readers who would like an introduction to Keynes in non technical language.

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The technique of deficit finance and the multiplier reviewed

Posted on October 18, 2014 by haroldchorneyeconomist

I am republishing below a post I wrote trying to explain the multiplier as an effective policy tool embedded in Keynesian deficit finance. It first appeared in my older blog on blogspot Harold Chorney political economist in the middle of the financial crisis.Alongside my post on my current blog on the multiplier it is I think a useful guide.It was posted here on haroldchorneyeconomist as Some notes on the multiplier, April 4, 2012.

The technique of deficit finance
January 17, 2008 11:30 pm

The stimulus package being discussed in Washington will temporarily increase the American federal government deficit in order to inject a positive fiscal impulse to the economy. There seems to be, perhaps understandably, a fair bit of confusion about how such a stimulus can work to counter the recessionary forces now underway in the American manufacturing, housing and financial sectors of the American economy. First one should understand the assumptions that lie behind the theory of deficit finance as well as some statistical facts about the history of deficits and surpluses and the business cycle in the US.
First of all, whenever the government spends on programs or transfer payments more than it takes in in revenues the government will run a deficit. This deficit can be measured and financed in a variety of ways and it can be spent on a variety of programs or tax reductions.In terms of measurement it seems sensible to view expenditures on infrastructure as long term investments and treat them accordingly in the public accounts.

In addition most economists who advocate deficit finance to counter an economic downturn assume that for every dollar spent directly there will be at least another dollar or possibly $.66 of additional spending that will be induced by the original expenditure. Some economists would suggest that the multiplier would be larger others that it would be smaller.

This multiplier is bound up with what is called the Keynesian or more accurately Kahnian multiplier(named after the brilliant British Jewish economist R.F.Kahn who was a very close colleague of Keynes at Cambridge , one of the first economists to develop the idea and who made a major contribution to the General Theory.)

The way that the multiplier works is derived from the mathematical formula for summing up the total of a geometric series. For example let us assume that the series is 1+ v + v(v) + v(v)(v) +….= 1/(1-v) if -1 is less than v and v is less than 1.
(see Robert Barro, Macroeconomics, p.508)

The formula for the multiplier is then 1/1-mpc where mpc is the marginal propensity to consume equivalent to v in the above geometric progression.

In other words the percentage of the last additional dollar you receive that you spend. It also matters where you spend the money. If you spend it on goods and services produced in the country the multiplier is much larger than on goods and services produced elsewhere but sold in the country by a local sales staff. These leakages plus monies received which are not spent but either saved or hoarded are subtractions from the overall multiplier impact.

So lets begin with some statistical facts. The current American deficit is about 1.7 % of the US GDP. The GDP is 13.97 trillion dollars( as of the end of the third quarter 2007) so the deficit is around 244 billion dollars. A 1 % stimulus package would increase the deficit by a further 140 billion, a 2 % package by 280 billion a 3 % package by 420 billion. During the war years 1943, 44 and 45 the deficit rose above 15% of the GDP peaking at over 31 % in 1943. A 3-5 % deficit is very modest indeed in comparison.

If we assumed a multiplier effect of secondary increases in expenditures traceable to the initial injection of 140 billion and a multiplier of 1.5(not all economists would agree that it would be that large, others might suggest it would be larger) the total impact of a one time injection would be $210 billion .

Total accumulated gross Federal debt of 9196.5 billion is currently(the net product of previous deficits and surpluses) 65.7 % of the GDP. During the war years 1942-45 this ratio reached 119 %of the GDP.

To finance this without raising interest rates the Fed Reserve can either buy bonds originally issued by the Treasury but currently held by individuals or financial houses for some of this additional amount thereby creating high powered money that partly offsets the sale of bonds by the Treasury which finances the deficit and then sell some of these bonds to the general community of investors or it can simply expand the money stock. If it does the former however and the financial markets resist the interest rate that the bonds are offered at, the Fed will have to purchase an equivalent further offsetting amount and or inject further high powered money into the system.Later as the economy recovers it can and should withdraw some of the stimulus by selling these bonds back to the investing markets.

(For a thorough discussion of these techniques and the operations of the Fed and the treasury see the work of Robert Eisner , a former president of the American Economics Association and late Professor of Economics at Northwestern University in Chicago where he taught macroeconomics. I had the pleasure of discussing these themes with Eisner in person in Montreal when I brought him to lecture to my students in 1988. Robert Eisner, How Real is the Federal Deficit, pp.131-135.New York;The Free Press, 1986. Eisner’s research and his book was supported by research grants from the National Science Foundation.)

The point is that true Keynesian stimulus involves the scissors effect of a fiscal stimulus financed by by a supportive monetary policy. This is why monetarists like Karl Brunner insist that Keynesianism would only work with the creation of high powered money. But that is a debate for another time.

In the current environment in the financial markets I would think that these bonds will be viewed as highly desirable investments. The more that the Fed purchases the bonds the greater the stimulus however. Strict monetarists will argue that this will also lead to higher inflation in the medium to long run.

Keynesians would not necessarily agree arguing that with a slowing economy and higher unemployment the stimulus will increase largely output rather than prices. Later as unemployment drops some of the stimulus will be transferred to the price side of (P.O i.e.average prices times units of output) at which time the Fed can sell more of the debt to the market.

Once the money is spent on tax rebates, infrastructure projects, food stamps and environmental projects it is received as income by both taxpayers and employees who are hired to work in these projects or who are hired by the private sector who because of the stimulus project have experienced a greater demand for their products or services and have changed their mood from pessimistic contraction to optimistic expansion.

The additional money injected circulates in the economy. Much of it depending on the average marginal propensity to consume will be spent again and recirculate throughout the economy changing expectations from pessimistic ones to optimistic ones.

Investments once postponed will be considered again and a number of them undertaken. As unemployment drops the economy moves from recession to steady growth again.The newly employed both spend their money on goods and service and pay taxes to government. Some of what was spent, but not all, returns to the Federal Government in new tax revenues. As the economy grows larger the debt to GDP ratio provided the interest rates are kept lower than the growth rate in the economy begins to fall.

A little later the actual deficit may well shrink as well.Excess savings that would have subtracted from total aggregate demand because they could not find suitable safe and attractive investment opportunities will now be effectively channelled into attractive investment opportunities.

The stock market beset by uncertainty and insecurity will also begin to experience bullish sentiments. The unemployment rates will drop perhaps by as much as 1 % point as over a million and a half new jobs
are added to the labour force. If the jobs pay on average 40-50,000 dollars the federal and state governments will reap substantial additional tax revenues to help reduce the cost of the stimulus package.

The stimulus package will have done its work.

What might go wrong ? Well the multiplier might be smaller because of leakages to foreign imports. Recipients of the tax rebates might decide not to spend their rebates trying to save them instead, less likely if the rebates disproportionately target moderate and low income people. The Fed may cause interest rates to rise by trying finance the deficit too quickly in the bond markets.

Financial journalist might write influential articles that convince people that the stimulus package won’t work and that interest rates will rise and inflation will result.

Here the collective wisdom of the public which is somewhat more Keynesian than the financial journalists will cancel out most of this kind of negative journalism.

Keynesian rational expectations rather than monetarist ones should prevail !

But for the moment if the members of Congress seize the day and the President co-operates and the package is large enough to do the job, the US can once again demonstrate western leadership in economic policy making that will have far reaching positive consequences.

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Monetized government Debt as a percentage of the broadly defined money supply and the rate of inflation Canada 1950 to 1989

Posted on October 8, 2014 by haroldchorneyeconomist

I am reproducing the following table of data because of its importance in showing that there is no necessary correlation between the percentage of debt that is monetized as a proportion of the broadly defined money stock
and the rate of inflation, contrary to the conventional wisdom. There were years when the central bank held a much smaller proportion of the debt in relation to the money stock and the rate of inflation was higher and there were years when the proportion monetized was much greater and the rate of inflation was very low. My motivation in researching this relationship was wanting to show that Keynesian deficits would not necessarily result in interest rate crowding out as many monetarists claimed and to ensure that this would not happen the central bank had the power and the policy room to keep rates low to allow fiscal stimulus to do its work in reducing unemployment. I first wrote about the issue in 1984 and published the table in the beginning of the 1990s. Our recent experience in the U.S. with a large rise in the percentage of the debt that is monetized through quantitative easing and the stability of low inflation should reinforce the argument that there is no necessary connection provided the level of monetization is within certain limits. Inflation is not a black box experience. Rather it like unemployment is a complex phenomenon in which the structure of markets, the degree of oligopoly power and the strength of trade union wage negotiating power all must be factored in.

Table 3:
Monetized government Debt as a percentage of the broadly defined money supply and the rate of inflation Canada 1950 to 1989.
YEAR
Percentage
Rate of inflation
1989
7.5
3.6
1988
8.3
4.0
1987
9.1
4.5
1986
8.7
2.9
1985
8.3
3.2
1984
9.6
3.5
1983
9.8
5.4
1982
8.8
10.4
1981
10.1
10.6
1980
10.9
11.4
1979
10.3
10.3
1978
10.6
6.4
1977
10.7
7.0
1976
9.9
9.5
1975
11.1
10.7
1974
11.6
15.3
1973
12.0
9.1
1972
12.7
5.0
1971
13.0
3.2
1970
13.6
4.6
1969
14.3
1.1
1968
14.4
3.3
1967
15.8
4.0
1966
16.4
4.4
1965
17.5
3.3
1964
17.6
2.4
1963
18.6
1.9
1962
19.2
1.4
1961
19.4
0.4
1960
19.7
1.3
1959
20.3
2.0
1958
20.2
1.5
1957
20.6
2.1
1956
21.5
3.7
1955
21.2
0.6
1954
22.0
1.6
1953
23.7
-0.2
1952
23.9
4.4
1951
25.0
11.3
1950
22.9
2.4
Source: Calculated from the Bank of Canada Monthly Review and the Canadian Department of Finance Quarterly and Annual reviews 1950 to 1989. The table first appears in Harold Chorney ‘’A Regional Approach to Monetary and Fiscal Policy’’ in J.McCrorie and M.Macdonald, The constitutional future of the Prairie and Atlantic Regions of Canada, Canadian Plains Research Centre, University of Regina, 1992. It is also discussed and reproduced in Harold Chorney ‘Debts, Deficits and Full Employment’’ in D.Drache and R.Boyer, States against Markets:The Limits of Globalization, Routledge, 1996  and the approach as a policy tool in The Deficit:Hysteria and the Current Crisis, The Canadian Centre for Policy Alternatives, Ottawa: 1984, which is largely reproduced in my collection of essays with P.Hansen, Toward A Humanist Political Economy, Montréal&N.Y. Black Rose Press,1992.
My colleagues the late John Hotson of Waterloo and Mario Seccareccia of the Université d’Ottawa also co-authored one of the publications, a pamphlet which sought to popularize the argument entitled The Deficit Made Me Do It.
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Even IMF believes in debt financed public infrastructure: at current low interest rates multiplier may be 3

Posted on October 6, 2014 by haroldchorneyeconomist

According to a commentary by Larry Summers in today’s Financial Times the IMF has pronounced itself finally in favour of major public infrastructure investment financed not by tax increases but by medium and long term borrowing. The current low interests that prevail make it possible for investments in public infrastructure to be financed by the issuance of public debt and more than pay for themselves. In fact, the IMF is arguing that for a given dollar of public investment financed in this way there will be close to a threefold increase in output. That is a multiplier of nearly 3 ! This comes as no surprise to Keynesians like myself who have been arguing precisely this point for decades. But it may well come as a shock to the neo-cons and fiscal conservatives who fill the front ranks of finance ministries the world over including here in Québec. Austerity is quite simply the wrong approach to solving our current economic problem. I have stated it many times.Other Keynesians and post Keynesians have argued it for years. Paul Krugman and Joseph Stiglitz originally cautious about deficits have written about it. Larry Summers has come on board.President Obama supported the position and the U.S. economy benefitted. And lo and behold the anti deficit IMF now argues the same point. Its about time the political establishment embraced this.

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Keynesian stimulus policies bear fruit:US unemployment drops to 5.9% lowest since 2008

Posted on October 3, 2014 by haroldchorneyeconomist

The unemployment rate dropped to 5.9 % in September the lowest rate since 2008.The broadly defined definition of unemployment which includes discouraged workers who have dropped out of labour markets also fell to 11.8 %. This is very good news and if it continues over the next few months the unemployment rate should begin approaching 5 %. Most of the new jobs were in the retail service sector but education and health care also reported gains.So despite all the criticism of the Obama stimulus including the accurate critique that it should have been larger Obama and the former and current heads of the Federal reserve deserve a lot of credit for bucking the tide of anti-Keynesian dogma and carrying through with a joint program of an accommodating monetary policy including quantitative easing and a substantial fiscal stimulus, albeit one that could and should have been larger. Just contrast the American situation with the mess that austerity and tight money has caused in Europe.

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Ed Balls embraces fiscal austerity at Labour Party conference: A Major error

Posted on September 22, 2014 by haroldchorneyeconomist

The shadow British Chancellor Ed Balls speaking at the Labour party conference has foolishly embraced the fiscal conservative principle of no new deficit financed funding for education or social investment or infrastructure when and if Labour is in office. This despite the fact that the rise in indebtedness is almost entirely due to the crash brought about by the private banking system and deregulation and rise in unemployment that neo-con governments had introduced over the previous several decades.Check out these historical charts on the debt to GDP in the UK.the debt to GDP ratio and the deficit The debt to GDP ratio is nowhere near its historical maximum of over 250 % as the charts illustrate.Furthermore almost 70 % of the UK debt is held by domestic UK investors including the Bank of England .(See in particular the last chart on the page which plots the ratio of public sector debt to the GNP over the period 1692 to the present) The current level of close to 80 % is in fact moderately low when viewed over the history of British finance since 1692. It is currently elevated only because of the crash and crisis and its quite foolish and unnecessary to pledge no debt financed spending on capital account when there is such a large need for it in Britain and the neglect of it has helped fuel right wing political movements like UKIP and nationalist movements like the SNP. I t may seem appealing as a defensive measure against Tory charges of financial lack of discipline but Labour ought to educate their electorate about how damaging austerity has been, what the alternatives are and how to repair the damage. Instead Balls has boxed Labour in with his pledge. Too bad.

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United Kingdom breathes sigh of relief:Scotland votes no 55%to 45% yes,Devolution on the way

Posted on September 19, 2014 by haroldchorneyeconomist

In a hard fought exciting Scottish referendum contest with an overall turnout of 84.6% the No forces have won a clear victory 55.3 % to 44.7% Yes. The final numbers were only completely counted in the early hours of the morning in Scotland but they revealed a clear cut victory for the no side. The no side received 2,001,926 votes compared to the 1,617,989 votes for the yes.Of the 32 councils reporting results the Yes side won only four of them and came very close in one other, Inverclyde known for its ship building industry. The four were Glasgow turnout 75% where the Yes won with 53.5 % of the vote 194,779 votes to the no 169,347 votes,46.5 %; Dundee turnout 78.8% yes 53,620 57.3% no 39,880 42.7 %; North Lanarkshire 84.4% turnout Yes 51.1% 115,783, no 48.9% 110,922 and West Dunbartonshire turnout 87.9% yes 54 % 33,720 and no 46 % 28,776. In most of the other 27 areas the No side won by relatively large margins. Unemployment was higher in the areas which voted yes.

However, the yes side did well enough with 44.7 % of the vote to bring about what looks like will be major changes in terms of additional powers given to the Scottish parliament and consequently a major debate about devolution of comparable powers to Northern Ireland and Wales and perhaps the establishment of an English Assembly and the principle of England’s voters representatives only voting on English issues and policies just as only Scottish MSPs will vote on Scottish issues and similarly for Wales and Northern Ireland. This will be a lively and difficult debate for the UK as a whole with the political parties disagreeing about the character and extent of devolution. For example Labour might well be reluctant to accept totally the principle that Scottish MPs at Westminister not be entitled to vote on devolved issues like health care and education because so many of their MPs come from Scotland and they might lack a majority among English MPs even if they become the Government of the UK after the next election.

At the other end of the spectrum the anti EU party UKIP is a strong advocate of the principle that only English elected MPs should vote on devolved policy areas.

So the road ahead will have many twists and turns as the United Kingdom evolves from a quasi unitary state to a close to federal state. As a Canadian observer I offer my best sentiments and wishes for success for the difficult debates and issues to come. There is much to be learned about the benefits of flexible federalism and sensitivity to regional minorities for healthy polities. We can learn much from each other in this increasingly democratic and integrated world.

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Scotland the brave: the road to the referendum

Posted on September 8, 2014 by haroldchorneyeconomist

The spectre of Scotland voting yes to become independent of Great Britain in ten days haunts the British press and Britain’s political class. Like its cousin the Québec independence movement the Scotland referendum campaign has tightened into an apparently close horse race as the referendum day draws near. Many Canadians who follow politics and particularly Québecers are following this referendum closely. Many Canadians have Scottish or British roots and families. Many of us are very familiar with the excitement or dread that this sort of referendum can produce.The debate in Britain revolves around the traditional issues that bedevil these affairs. What are the terms on which Scotland would separate from its three hundred year old partner? Would Scotland have its own central bank and currency? The Scottish independence movement says it intends to negotiate a currency union with Britain but the Government in London insists that it won’t agree to a currency union. How would the national debt be divided between the newly recreated country of Scotland and its former partner? What role do ideological differences play in the debate? Can we make better sense of the debate by viewing it as a clash between neo-liberal politics and democratic socialist or social democratic politics? What would happen to Wales, England and Northern ireland if Scotland left? If Scotland votes narrowly no will this close call lead to federalist reform in Great Britain ? How much capital flight from Scotland will occur in the final days of the referendum campaign ? What would the consequences be of a yes vote in Scotland in Spain with its Catalan separatists, in Belgium, in France, in Québec ?

Paul Krugman has written a piece in the NYT in which he argues that Canada is an independent Scottish proxy in North America, a successful much smaller independent country from the U.S. with its own central bank and currency and more left of centre in social and economic policy. So if Scotland wishes the same status it needs to plan for its own currency and central bank something its nationalist leadership has insisted won’t happen. But Canada never broke away from the US. rather it was the US that broke away from British North America a revolution that Canada refused to join. So the analogy is not a good one.Furthermore Canada like the U.S is a continental country with vast resources and a population that is over 35 million people.But Krugman is right to argue the importance of having ones own currency and central bank. Some years ago when the Canadian doller was trading in the low 60cents US band a number of misguided Canadian economists speculated on the wisdom of abandoning our currency in exchange for a new shared currency with the U.S. That would have been a very bad idea and looks particularly foolish now that the currency has traded at above par since then and in the 90cent range recently. I wish the Scots and Britons well in the coming tense days.

Personally I think a respectful rejection of the nationalist side is a better outcome for both Scotland and Great Britain. Creative federalism and devolution can solve most of the complaints. A renewed commitment to full employment and greater support for the NHS would also help considerably. Whatever the outcome from the wilds of the Grampian mountains to the beauty of the south Downs from the delights of Edinburgh to the grandeur of London Britain and Scotland will remain a diverse land rich in history, culture and natural beauty.

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Poli 204/2 2014 course outline

Posted on September 4, 2014 by haroldchorneyeconomist

Poli 204/2 2014
Introduction to Canadian Politics
Professor Harold Chorney
Course outline

The study of Canadian politics is a complex field which draws upon a number of traditions in Canadian political science including institutionalism, political behaviour, political theory, international politics, political economy, history, judicial and constitutional history and economic history. In a broad survey course lasting a single term we can only touch upon a number of key aspects of the field. In my view some knowledge of the key economic and political history of Canada and its initial colonial relationship to Great Britain and France and its relationship to the great republic to the south , the United States is essential in making sense of Canadian politics and its political history. The ongoing debate about the place of Québec in Canada can only be properly understood in the light of Canadian history and the history of the French fact in the founding of the country. Much has changed in Canada over the past half century. In 1941 Canada had a population of about 11.5 million people. Its population today is over 35.2 million. Whereas in the 1940s and fifties the major groups were those of British or French background and people from other ethnicities constituted less than twenty percent of the population this third group has grown substantially in importance. Canada can no longer be understood as a British country or a former French colony. This in strong contrast to the Canada of the early 1950s when both the Union Jack and the Red Ensign flew on the flagpole of my elementary school in Winnipeg and we were considered British subjects. Rather Canadian nationality has come into its own based as it is on a wide range of ethnicities , founding peoples and nations and immigrants from all over the world. We will likely be a nation of more than 40 million in the not too distant future and have in much of the country a strong pan Canadian national sensibility. Yet at the same time Québec maintains its identity as the very successful product of more than 4 centuries of French dominant presence in North America. This French presence and identity is also strong in several other regions of the country notably New Brunswick, Ontario and Manitoba. The partly bilingual character of Canada and the tension over Québec’s place in Canada are creative if difficult elements of the Canadian nation making process.

Text :Eric Mintz, Livianna Tossutti and Christopher Dunn, Canada’s Politics:Democracy, Diversity and Good Government. Pearson , 2014. Available at text bookstore.

Evaluation: An essay due in the first week of November on a topic chosen from a list of possible topics made available in the next two weeks. 50 %. A final exam 50 %.

Additional reading: I draw upon several other works in Canadian history and Canadian Politics . these include Alvin Finkel and Margaret Conrad’s two volume History of the Canadian Peoples vol.1 Beginning to 1867 (1993) vol.2 3rd ed. 1867 to the present; Stanley Ryerson, French Canada; Unequal Union; Craig Brown, the illustrated history of Canada, 2002; Donald Creighton, The Road to Confederation:The Emergence of Canada; Rand Dyck& Christopher Cochrane Canadian Politics Critical Approaches; Stephen Brooks, Canadian Democracy, Oxford U Press, 2012. Michael Hart, A Trading Nation:Canadian Trade Policy from Confederation to Globalization, 2002. Mel Watkins and W. Easterbrook, Approaches to Canadian Economic History, 1969.

Topics:

1. Introduction and overview.

2. Geography and Economic history the role of the staple in French Canada and British North America.

3. Aboriginal peoples in pre European Canada. Aboriginal Rights and Governance. The Riel rebellions Manitoba and Québec.

4. The conquest and its legacy.Québec nationalism in twentieth and twenty-first century Canada.

5. Democracy and the Liberal democratic state.The 1837 rebellions and the chartists. The roots of confederation and the Canadian constitution.

6. The clash between labour and capital in the nineteenth and twentieth centuries and its impact upon Canadian politics and the political party system.

7. The Canadian economy, the business cycle, free trade , globalization and regional disparities.

8. Canada as an urban nation. The growth of diversity. Canada’s treatment of its minorities. Québec nationalism and Canadian federalism.

9. Canadian political culture and our place in global politics.

10. Political parties, interest groups and social movements. Democratic reform.

11. The constitution and the Charter of Rights. The Federal system and the economics of federalism.

12. The institutions of government: Parliament and the power of the Prime Minister.

13. The judiciary and the courts.

14. Summary and Review.

Essay Assignment: Due the first week in November Write an essay of between 9-10 pages on one of the following topics. The essay must include a bibliography of sources consulted. Sources should include scholarly books, articles from academic journals and where appropriate the quality press, for example The Globe and Mail, The New York Times, Le Devoir. Use a manual of style and proper citation.

Topics:(under construction)
1. “The Quebec Charter of Values was rooted in the Quebec nationalist opposition to Canadian federalism and the nationalists’ rejection of multi-culturalism.” Discuss critically explaining the roots of the debate over values in Quebec, the goal of a secular society in the light of Quebec history and your assessment of the claim that this Charter was simply a legitimate expression of the need to protect Quebec’s culture.

2. How can C.B. Macpherson’s notion of possessive individualism be used to construct a theory of Canadian politics? Explain his theory and explore Canada’s class cleavages and political economy in your essay.

3. Foreign ownership and control of the Canadian economy is still an issue of considerable importance in Canada’s political economy. Explain why and discuss how it has been integrated into our politics in the past and its current status.

4. Does Canada’s voting system of first past the post need to be reformed? What alternative systems are there, how would they work, why would they be better and how could they be implemented.

5.Discuss the power of the Prime Minister and his/her office. What checks if any need to be placed on it?

6. What ought to be Canada’s role in global affairs? Are we a peacemaker or a powder monkey ?

7. Discuss the relationship of Canada to the U.S. Given the close economic integration that the free trade pact has promoted explore what challenges this poses to our sovereignty and independence.

8. Analyze the problem of unemployment. What role has government economic policy played in this problem? What is the role of the Bank of Canada and the Department of Finance in managing this problem? Explain the competing approaches of Keynesianism versus monetarism with respect to this problem.

9. Discuss Canadian economic history from the point of view of staple development. Does staple theory still have explanatory power in the twenty first century?

10. Discuss the struggle for responsible democratic government in Canada and its roots in the 1837 rebellions, the Riel rebellion, the struggle of the suffragettes for women’s voting rights and the struggle of the aboriginal people for their rights.

11. What role have trade unions played in Canada’s political and economic development ? How have they enhanced democracy ?

12. Discuss the evolution of aboriginal rights and governance in Canada.

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