Canadian Quandary

Canadian Quandary

HARRY G. JOHNSON
Copyright Date: 2005
Pages: 424
https://www.jstor.org/stable/j.ctt80hfq
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  • Book Info
    Canadian Quandary
    Book Description:

    The Canadian Quandary is a collection of unbuttoned pieces written in Johnson's witty and acerbic style between 1958 and 1963. Dealing with Canadian policy on trade and foreign policy, the volume includes Johnson's classic dismemberment of the Canadian nationalist movement. Though Trudeau's Foreign Investment Review Agency and National Energy Policy have long since been dismantled, economic nationalism persists and it is a testament to both the lucidity of Johnson's mind and the vigour and clarity of his writing that many of his opinions on this debate are still fresh, interesting, and relevant.

    eISBN: 978-0-7735-7301-7
    Subjects: Political Science

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Introduction to the Carleton Library Series Edition
    (pp. vii-lvi)
    WILLIAM WATSON

    What a treat is in store for readers of these essays. Harry Gordon Johnson was one of the best economists of the 1950s and 1960s, not just in Canada but worldwide. Had he not died young, in 1977, only seventeen days short of his fifty-fourth birthday, he might have won the Nobel Prize. And yet he was also a controversialist of the first rank. When he chose to be “unbuttoned,” as he put it, he wrote with a caustic and dismissive elegance. In some passages ofThe Canadian Quandaryit is as if H.L. Mencken has left Baltimore and come...

  4. Preface to the Carleton 1977 Library Edition
    (pp. lvii-lxiv)
    Harry G. Johnson
  5. Preface to the 1963 Edition
    (pp. lxv-lxviii)
    HARRY G. JOHNSON
  6. Introduction to the 1963 Edition
    (pp. lxix-lxxviii)

    Among the aspects of Canadian economic policy and thinking about policy problems singled out for criticism in the first two parts of this book, one of the most prominent and pervasive is the worry about the problem, or the alleged problem, of American “domination” of the Canadian economy through direct investment by U.S. corporations in Canada, and the desire to counteract such “domination” by measures to foster Canadian participation in such enterprises. I have consistently maintained that this is a spurious problem, on the grounds that there is no substantive evidence that American enterprises in Canada have acted contrary to...

  7. PART ONE PROSPECTS, PROBLEMS, AND PLANNING
    • 1 Canada’s Economic Prospects
      (pp. 3-10)

      A preliminary report is by definition an unsatisfying document, though it may be an exciting one. The Gordon Commission’sPreliminary Report¹qualifies for the former description, without quite coming up to the latter; for while the prospects of economic growth which it holds out are gratifying in the extreme, its discussion of policy problems is narrowly empirical and pragmatic, uninspired by any consistent philosophy of resource-orientated growth or even of economic policy, and interesting mainly as a reflection of trends in Canadian political opinion and the balance of pressure groups at the end of the second Liberal era.

      Before considering...

    • 2 Problems of Canadian Nationalism
      (pp. 11-20)

      My subject is Canadian nationalism. This is not a subject in which I have a long-established scholarly interest. The growth of nationalist sentiment in Canada during the past five years or so has, however, forced itself on my attention through my professional interests in international trade and monetary policy, as well as through my general interests as a Canadian citizen. As a Canadian, I have been disturbed because nationalism in its recent form seems to me to appeal to, and to reinforce, the most undesirable features of the Canadian national character. In these I include not only the mean and...

    • 3 Canada in a Changing World
      (pp. 21-31)

      Nearly two years of repeated shocks to Canadian conceptions of the world and of Canada’s place in it – and of the capacity of Canada’s political leaders to cope with it – have made it evident to all shades of informed opinion that the world outside Canada’s borders has been changing rapidly; and that some drastic rethinking of all major aspects of Canadian policy, domestic as well as international, is required if Canada is to emerge from the disheartening economic and political stagnation of the past five years and regain the upward path of prosperity and growth. There is no more important...

    • 4 Planning and the Objectives of a Free Enterprise Economy
      (pp. 32-44)

      By planning, of course, we do not mean planning of things in general by people in general, but a special kind of planning – economic planning – by a specific institution – the government. It is as well to make the adjectives explicit, and to recognize that we are discussing governmental economic planning, in order to avoid confusing the issues. On the one hand, planning is not confined to economics: there can be social and educational and other kinds of planning, and many of the problems to which people seek a solution by governmental intervention involve these kinds of planning and not economic...

    • 5 Economic Growth and Economic Policy
      (pp. 45-64)

      The past five years have witnessed the development of serious concern about the laggardness of economic growth in the three English-speaking countries of the North Atlantic region – the United Kingdom, the United States, and Canada. In the United States and Canada, slow growth has been associated with other phenomena of economic stagnation – higher average unemployment than was previously considered normal, excess industrial capacity, and weak recoveries from recessions – whereas in the United Kingdom, at least until the past year, slow growth has occurred in the context of a low level of unemployment. The slow rates of growth realized in these...

  8. PART TWO CANADIAN COMMERCIAL POLICY
    • 6 Canada’s Foreign Trade Problems
      (pp. 67-76)

      “Canada’s Foreign Trade Problems” was the subject of one of the two Round Table discussions of the 27th Annual Study Conference of the Canadian Institute of International Affairs, held last June as part of the Conference of Canadian Learned Societies at Queen’s University, Kingston. The Round Table was of more than usual interest, in view of the recent trend in international economic relations towards the formation of regional trading blocs, and the necessity for Canada to formulate her international economic policy afresh in preparation for the GATT negotiations which are due to commence this September. This article is a survey,...

    • 7 The Emergence of Regional Free Trade Areas
      (pp. 77-92)

      The classical case for free trade rests on the economic advantages of specialization and division of labour; and the logic of it is independent of a country’s stage of economic development. The adoption of the policy of free trade by Britain in the nineteenth century, however, coincided with the economic interests of her emerging manufacturing classes, and free trade was in a sense a means of maximizing her gains from her leadership in the industrial revolution. Other countries anxious to industrialize resorted to tariffs as a means of promoting industrialization, and Britain in her turn retreated into protectionism under the...

    • 8 External Economic Policy (I)
      (pp. 93-110)

      The preparation of a paper on Canadian external economic relations is a peculiarly difficult task. On the one hand, external relations in the modern world comprehends a wide and not always interconnected range of issues. On the other hand, especially in Canada, external economic policy is closely connected in many ways with internal political problems and attitudes. It is tempting simply to list the major problem areas and discuss them one by one. However, I shall instead attempt to set my presentation in terms of a single central theme and develop policy proposals in the context of that theme.

      The...

    • 9 External Economic Policy (II)
      (pp. 111-119)

      In presenting my paper on “External Economic Policy” to this Conference, I propose, first, to state the assumptions on which my paper was written, and secondly, to outline my argument very briefly, paying attention to some of the points which may not have been covered in enough detail in the paper to satisfy some of you.

      My assumptions are four in number. The first of them is that we are here to discuss and to deal with Canadian problems and policies and not to develop a platform on which the Liberal Party will win the next election. In other words,...

    • 10 Canadian-American Integration in Face of a Changing World Economy
      (pp. 120-128)

      The title of this paper is couched in extremely ambiguous terms. “Canadian-American economic integration” could refer either to a specific policy for integrating the two economies by, say, forming a free trade area or a customs union, or to a broader concept of economic integration as a condition of close and relatively unrestricted economic interrelationship, the degree of which can be influenced by all sorts of economic policies. Similarly, the phrase “in face of a changing world economy” may be interpreted as carrying an overtone of defiance to the world at large, or simply as a way of asking whether...

    • 11 The Bladen Plan for Increased Protection of the Canadian Automotive Industry
      (pp. 129-162)

      In the nineteen-fifties the traditionally protected Canadian automotive industry suffered increasingly from competition in the domestic and world markets as a result of the development of the European motor industries. Automobile and parts production being an important source of income and employment, and the national car having become in many people’s eyes a sign of industrial adulthood and a fetish of national identity, the difficulties of the Canadian automotive industry naturally prompted widespread discussion and elicited a variety of schemes for improving its situation. In August, 1960, Dean V.W. Bladen was appointed a Royal Commissioner, with the duty of inquiring...

  9. PART THREE MONETARY POLICY
    • 12 Lags in the Effects of Monetary Policy in Canada
      (pp. 165-182)

      In the United States, the United Kingdom, and Canada, monetary policy has in the past twelve years been a major instrument of short-run economic stabilization. Reliance on monetary policy for this purpose involves three main assumptions: that the monetary authority will be quick in recognizing the need for a change in monetary policy and taking appropriate action; that monetary policy is effective in influencing the operation of the economy; and that this influence takes effect with a comparatively short lag. The first two of these assumptions are sufficiently obvious not to require comment; but the third is at least as...

    • 13 Alternative Guiding Principles for the Use of Monetary Policy
      (pp. 183-218)

      This paper is directed to the specific question: what should monetary policy seek to do in the Canadian economy?

      Monetary policy as traditionally conceived is concerned with shortrun economic stabilization, the damping of the business cycle. This function has come to be expressed customarily in terms of the pursuit of the two objectives of price stability and high employment. Insofar as prices and general economic activity tend to move upwards or downwards together, these two objectives do not conflict, but are essentially the same: a monetary policy directed at stabilizing either one of the price level and the level of...

  10. PART FOUR THE ECONOMICS OF OPULENCE
    • 14 Towards a Generalized Capital Accumulation Approach to Economic Development
      (pp. 221-230)

      The contemporary interest in the economics of education, and more broadly in the economics of all processes connected with the augmentation and application of knowledge, represents a confluence of interests derived from concerns with widely divergent problems. These problems include such matters as the economic value of education, the contribution of education to past economic development in advanced countries, and the role of education and expenditure on increased education in the planned development of underdeveloped countries.¹

      The program of this conference gives primary weight to one avenue of approach to concern with the economics of education, the potency of the...

    • 15 The Political Economy of Opulence
      (pp. 231-246)

      “Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.”¹ Lionel Robbins’ well-known definition of their subject is one which most economists would probably accept, at least as a description of their workaday activities. The definition allows – and it was specifically framed by its author to allow – for the pursuit of other ends than purely material ends; but in practice economists elevate themselves predominantly to the study of the allocation of material means between ends conceived and defined in material terms. Inherent in the way economists set about their task...

    • i6 The Social Policy of an Opulent Society
      (pp. 247-262)

      In the past ten years or so our ideas about the nature of the society in which we live have been changing rapidly. We have become aware that we are an opulent society, by any comparative or historical standard, and that we are becoming progressively more opulent as time goes on, as a more or less automatic consequence of the way our economic institutions function. At the same time, we have become aware that the ultimate sources of our large and growing wealth are very different from what the conventional wisdom of our times would have us believe; that they...

    • 17 Advertising in Today’s Economy
      (pp. 263-278)

      Advertising means the use of messages conveyed by the seller to the buyer by such media as newspapers and magazines, radio and television, billboards and signs, and direct mail, aimed at inducing the buyer to purchase what the seller has to sell. The essential characteristic of advertising is its impersonal character, as contrasted with the personal attentions of salesmen and sales clerks. Both advertising and personal selling are to be distinguished from business activities designed to stimulate sales by making the product more attractive, such as packaging, product design, and merchandise display, and from competition for sales through lower prices,...

    • 18 Apologia for Ad Men
      (pp. 279-288)

      My specific assignment on this occasion is to put myself in the place of an advertising man, and to comment from the point of view of a professional economist on the arguments commonly used in defense of advertising, stating which arguments seem to me valid, and which seem to me to be either weak or downright erroneous.

      The assignment reminds me of an economist colleague of mine, who was a great traveller and an inveterate observer of economic phenomena in all their fascinating manifestations. One time this fellow was in a foreign country, and he wandered into one of the...

  11. PART FIVE THE WORLD CONTEXT
    • 19 International Liquidity – Problems and Plans
      (pp. 291-316)

      The problem of the adequacy of international liquidity has been dramatized by the balance-of-payments problem from which the United States has suffered since 1958, and particularly by the speculation against the dollar in late 1960 which culminated in the sharp rise in the price of gold on the London market to over $40 an ounce. The United States deficit and the speculation against the dollar called attention to the extent to which the United States has assumed (without the deliberate intention of so doing) the position of an international reserve currency country in the postwar period, and has showed both...

    • 20 The Overvaluation of the Dollar
      (pp. 317-330)

      The American economy has for six years been experiencing a phase of mild economic stagnation, a phase which shows little sign of terminating in the near future. Economic stagnation in this context refers to two characteristics of economic performance – a higher average rate of unemployment than previous experience has shown to be necessary to the efficient operation of the economy, and a slower rate of growth of productivity than either historical experience or comparison with the contemporary record of other countries suggests is attainable without economic strain. These two aspects of economic stagnation are obviously interrelated in the case of...

    • 21 Where Is the World Going?
      (pp. 331-346)

      Legend has it that in the old days there lived two giants, one called “Gog” and the other “Magog.” Their fates were to run around and around the world. The giant called “Gog” ran around and around the world forwards, never looking backwards. He wanted to know where he was going, he didn’t care much where he had been, The giant called “Magog” ran around and around the world backwards, never turning his head to look forwards. He didn’t care where he was going, he just wanted to know where he had been.

      An economist’s professional role is to play...