The Federal Open Market Committee report indicates a decline in output and employment. Household spending has been increasing gradually though there have been several constraints such as high unemployment rates, tight credit, and slight income growth. The United States is the biggest trading partner to Canada and economic slumps within the American economy affect the Canadian economy negatively as well. Such a decline in output will affect the Canadian economy since a decline in goods that Canada obtains from the United States will mean the country will lack them and have to find other countries to trade with.
In addition, the low output will result in American businesses importing less goods from Canada that they use in the process of producing their goods. The high unemployment will affect Canadian labor based on the large number of Canadians who work in the United States. During an economic recession as this one most foreign workers lack unemployment in other countries as governments give first priority to their domestic workers first.
As such, American nationals would be considered first during employment exercises while the Canadians will be left out and stay unemployed until the economy is seen to have recovered. The role of the state in a global world The worlds today is a global one with people from different countries, social backgrounds and cultures interacting on a daily basis. States are part of these interactions as well as they encompass the geographical boundaries that divide our continents into smaller units. States exist as a result of a host of reasons such as political, historical, economic, social, cultural and militaristic.
States form different corners of the world are carrying out trade with one another as a result of the growth of the idea of competitive advantage that allows countries to export what they have in abundance and import what they lack. Apart from trade, there are numerous organizations and agreements around the world that have brought numerous countries together in pursuit of common goals so as to create a modern world that is safe and productive to live in. As such, a state has to find a way to effectively take part in such a global world despite having its own independent political, social, cultural, and corporate way of doing things.
This requires states to come up with policies that will enable them to actively take part within the global world without compromising their independence (Plattner, 2002). This creates the need for due attention to the theoretical rationales of the state’s formation that ensure that the state remains pertinent in the global world. This is in line with the fact that domestic policies can not be made to treat the economy as a closed entity but need to consider the implications and counterbalancing effects that arise from globalization.
The state has a role in the global world that is aimed at legislating its policies that protect its domestic market as well as give opportunity for its country’s participation in globalization. Labor unions in a global world Globalization has grown over the years and has now become an important part of our corporate and social lives. Labor is one of the institutions that have been greatly affected by globalization as businesses and institutions are now able to employ individuals from anywhere in the world as far as they have the required skills and knowledge needed for the job.
With the growth of capitalism and international trade, most companies realized the only way to stay in business and continue making huge profits was to cut down on overall expenses and labor costs were one of the expenses cut. The growth of globalization has also lead to the development of outsourcing where businesses have some of the operations carried out by other institutions that are specialized in that field and therefore do not have to employ people to carry out those jobs internally.
Most businesses are opening factories in foreign markets that have cheaper labor such as China and Indonesia. As such, labor unions have responded in order to protect their domestic workers from the increasing amount of unemployment that could result from the employment of foreign workers who could be asking for lower wages and salaries as compared to the domestic workers. Labor unions have responded to globalization by engaging in several strategies that limit the negative effects of globalization on labor.
One such strategy has been the opposition towards free trade initiatives and agreements involving several countries. One such agreement has been the North American Free Trade Agreement by asking for there to be provisions within the agreement for the inclusion of a charter that would entail a number of labor principles that would be put into effect and enforced by both domestic and international courts. Secondly, labor unions have began to organize regional as well as international organizations that seek to harmonize the labor needs of their members.
This is the case especially for multinational companies that operate in several countries where unions facilitate workers from the different factories in the various countries to be able to have collective bargaining of their needs (Herod, 2002). Thirdly, labor unions have been involved in the process of developing labor regulations that are incorporated in most business codes of conduct. Due to the possibility of business including legally correct phrases that could be detrimental to workers when effected and which would affect workers negatively.
By have access to the policy formulation stage, unions are able to prevent the inclusion of such codes and policies that would end up leaving workers at a disadvantaged position. How the federal government responded to growing labor militancy The onset of the depression found the provincial as well as municipal governments in debt following expansion in infrastructure. This was at a time when Mackenzie was the prime minister and he held the belief that the crisis would pass thus failed to provide aid to the provinces.
The federal government was reluctant in making efforts of reviving the economy that followed the depression (Robert, 2009). After the depression the government started a relief plan faced with mounting pressure from World War 1 veterans who demanded to be protected from poverty that was known as the New Deal The federal government under R. B Bennett campaigned on high tariffs as well as large scale spending. The federal government also increased welfare and assistance programs as well as programs intended to increase work opportunities.
This was a move that led the federal government to more deficit (Neatby, 1963). This worsened the situation based on the fact that it caused a great number of government employees to loose their jobs as well as the cancelation of many public works projects that were underway. The federal government had a burden of the Canadian National Railway that had been highly affected by the depression. The government has as well taken over a number of railways that were bankrupt and out-of-date over the period of the world war.
This increased the debt that the government had to a massive sum that was hard to be repaid at the time based on the hard financial time that the nation faced. The decrease in trade had made the Canadian National Railway to loose substantial amounts of funds a crisis that had been worsened by the depression. This created a burden for the federal government on the basis that it had to bail out the CNR baring in mind that the government was as well facing other debts. The failure of the federal government to revive the economy led to its defeat by the liberal party. The future for Keynesian economics
Keynesian economics is struggling as it seems to have a dimming future. Since the 1970s when Keynesian economics faced a significant decline due to its failure as a result of the resultant high inflation rates and economic recessions, there has been an emergence of monetarism. In the 1980s, classical as well as supply-side economics have increasingly challenged the appropriateness of Keynesian economics further (Rousseas, 1986). As a result, Keynesian economists have responded to this decline and have created new schools of thought based on early Keynesian economics. These are
• The neoclassical Keynesianism • The post-Keynesianism • The new Keynesianism All these school of thoughts have emerged mainly as a response to the criticisms that new classical economists have raised against Keynesian economics (Gordon, 1990). Due to the focus on the demand side, Keynesian economics has proved to be important especially during economic revival after recessions as was witnessed after the recent 2008-2009 global recession where most affected countries engaged in Keynesian economics by providing economic stimulus packages aimed at reviving the economy again.
This is based on the Keynesian view that markets usually lack a mechanism to self correct themselves and therefore government interventions are required to restore the economy once again. References Gordon, R. J. (1990). “What Is New-Keynesian Economics? ” Journal of Economic Literature 28, no. 3 1115–1171. Herod, A. (2002). “Organizing globally, organizing locally: union spatial strategy in a global economy. ” In Harrod, J. & Robert, O. Global Unions?
Theory and Strategies of organized labor in the global political economy. London: Routledge. Neatby, H. B. (1963). William Lyon Mackenzie King, 1924-1932: The Lonely Heights. Toronto: University of Toronto Press. Plattner, M. (2002). “Globalization and Self-Government”, Journal of Democracy 13(3): 54-67. Robert, L. (2009). “The Workplace and Economic Crisis: Canadian Textile Firms, 1929-1935,” Enterprise and Society, Vol. 10 Issue 3, pp 498-528. Rousseas, S. (1986). Post-Keynesian Monetary Economics. London: Macmillan.