The plunge in oil prices has exposed deep cracks and imbalances in Canada’s economy. Slumping growth and rising joblessness demand positive action and a fundamental change in approach by our governments to grow the economy, create jobs and reduce inequality.
Eight years after the Great Recession we still haven’t fully recovered. Economic growth is a third lower than previous recoveries, we’ve already had a mini-recession and may be entering another one. The immediate response to the global financial crisis averted a depression, but since then governments have relied too much on low interest rates while cutting spending, which slows the economy.
The new federal Liberal government appears on the right track with a stimulus budget boosting spending on infrastructure and some public services. Unfortunately, too many provincial governments are undermining progress with spending cuts and continued austerity.
Increased stimulus spending is a good start, but inequality is holding back economic growth. A healthy economy needs more good jobs and stronger wage growth. Instead of persisting with neoliberal policies that destroy jobs and undermine wages – including “free trade” agreements and privatization – we need to strengthen collective bargaining, raise minimum and public sector wages, and eliminate pay gaps.
Quality public services and universal social programs, including health care, education, and public pensions, don’t just generate good jobs and provide a strong economic boost. They’re also the best way to strengthen equality. Public services and programs need to be improved and expanded.
We also need progressive tax reform, not just to generate funding for public services but also to reduce inequality. Repairing the cracks and rebuilding our economy will take time. We need to start now.