Foreign Correspondent: Economic Controls


Don Mills, Ontario. Rather than strictly limiting the growth of the money supply (currently 10-15 percent) or attempting to balance the federal budget, the Trudeau regime has introduced wage and price controls—a move which is sure to leave inflation unchecked, create shortages, and lead the Canadian people closer to a fascistic state.

Controls will apply under select conditions: (1) to firms employing more than 500 people, (2) to construction firms employing more than 20 people, (3) federal government employees. These controls apply to wages and prices. Prices may be raised only if costs increase and must be lowered if costs decrease. Wages may be raised a maximum of 10 percent or $600 and no more than $2,400 annually. In his speech of October 13, the Prime Minister stated that "in this way, profits and profit margins will be strictly controlled."

Trudeau warned that if the controls do not work, "the government may be forced to impose mandatory, comprehensive, all-embracing price and income controls upon every man and woman in Canada."

In addition to the already obvious argument that wage and price controls have never worked anywhere, there are a number of other arguments against the Trudeau system unique to the Canadian political situation.

An Anti-Inflation Review Board monitors and enforces the new law. The present machinery consists of a tribunal and about 200 employees. It is painfully apparent that such a small body will not be able to control the Canadian economy. It will not, therefore, succeed in keeping prices at an artificially low level. To combat the size of the body, the finance minister, Donald MacDonald, suggested that citizens report price increases to the Board through a toll-free number. This is unlikely to work very well because a system of informants requires monetary reward or blackmail and Canada is not yet totally run by the Soviet KGB.

It is, therefore, probable that Trudeau will announce the implementation of those further economic controls of which he warned in his speech on October 13. The entire situation begins to look more and more like some kind of a sinister plot to subject Canadians to complete economic control by destroying, in gradual steps, what there is left of the free market. The scenario is not a particularly palatable one because the introduction of economic controls usually presages control on other areas of human activity.

However, the act of imposing controls, whether they remain permanent or not, is not nearly as serious as the philosophical principle underlying those controls and underlying the reaction of the Canadian people to those controls. The anti-business principle is evident in Trudeau's speech. "In the scramble for security, it is the big and powerful who are winning, at the expense of those who are unable to protect themselves." Although everyone loses by governmental inflationary monetary policy, it is the larger business interests which are to be penalized simply because they are large business interests. It is utterly fallacious to maintain that large businesses prosper at the expense of everyone.

As stated by Trudeau, the government is intent on curbing corporate profits. Productivity cannot rise unless profits rise. The absurdity of the Trudeau plan is apparent in its self-contradictory nature. Purporting to curb inflation, the Trudeau regime has imposed controls designed to penalize the productive. Considering current-day attitudes towards business, Trudeau's appeal for support of his controls is an emotional one and is likely to succeed on this level.

The "destroy-the-producer" syndrome is most evident in the initial reaction of Canadian businessmen. In spite of the spectre of a five-year imprisonment and a $10,000 fine, Canadian business, in the form of the three major business associations, has expressed support for the imposition of controls. The Canadian Chamber of Commerce and the Canadian Manufacturers Association both applauded the government for taking a firm stand on inflation. The Canadian Federation of Independent Business, while neither condemning nor supporting the controls, blandly promised to watch the government for infractions of its own guidelines. Nowhere was there a dissenting voice among Canadian businessmen.

That Canadian business would support a destruction of rights of property on this scale belies their ignorance, not only of economic theory, but more fundamentally, of any concept of rights, The dangers inherent in the suppression of property rights manifest themselves in the steady erosion of liberty. Those most to blame for this erosion are those against whom it is directed; those who choose to sanction it and thus applaud their own enslavement.

It is more than likely that Canadians will find themselves subjected to greater control by an ever-increasing bureaucracy within the next three years (the running time of the controls). It is likely that by the 1978 elections the free market will have been completely replaced by government interventionism. The complete suppression of property rights means the end of all freedom. Unless vigorous opposition on the part of those most affected by these preliminary controls arises soon, it may be too late to voice any objections at all.

[After Mr. Keerma sent in this report, Prime Minister Trudeau gave several controversial radio and TV interviews in which he spoke of the death of the free market system, the need for a larger government role in "running institutions," and the possibility of further controls. These harsh words created quite a stir, with many publicly calling Trudeau a fascist or a communist. Joe Morris, head of the Canadian Labor Congress, pleaded for all labor to fight the trend towards "a 1984-type big brother state" and "government by decree." Business leaders have finally organized write-in campaigns for donations to fight Trudeau's program. Four Ottawa electoral district presidents of Trudeau's own Liberal Party have criticized him; four more in Toronto have denounced the government's economic policies, and Liberal provincial government ministers in Nova Scotia have also opposed the controls program. Trudeau is unlikely to have improved his standing by his January trip to Cuba, where he praised Fidel Castro in these terms: "I'd rate him A-1. All kinds of superlatives. I've never seen a charismatic leader before. I'm really impressed." If a man's values can be judged by his heroes, Canadians had better watch out. —Ed.]