1. The Evolution of the Canadian Economy Free Trade Vs Protectionism The Great Depression Wartime Economy Free Trade and NAFTA

2. Free Trade Vs Protectionism The state of the economy at any time affects all Canadians The state of the economy at any time affects all Canadians The role of free trade and government intervention have had dramatic impact on our economy The role of free trade and government intervention have had dramatic impact on our economy 19 th century Canadian trade policy alternated between more and less trade with the U.S. 19 th century Canadian trade policy alternated between more and less trade with the U.S. Protectionism (1878) came with the National Policy Protectionism (1878) came with the National Policy

3. Free Trade Vs Protectionism Tariff protection allowed Canadian businesses to prosper, but left the Canadian hinterland with an economic burden Tariff protection allowed Canadian businesses to prosper, but left the Canadian hinterland with an economic burden Tariffs inflated prices for Canadian products Tariffs inflated prices for Canadian products Western farmers could not afford to buy cheaper American products and were forced to purchase more expensive Canadian ones, as well as pay transportation costs for delivery Western farmers could not afford to buy cheaper American products and were forced to purchase more expensive Canadian ones, as well as pay transportation costs for delivery Farmer banded together and lobbied the government for freer trade with the U.S. Farmer banded together and lobbied the government for freer trade with the U.S. PM Laurier negotiated a deal to reduce tariffs on many products – some to satisfy the needs of farmers. PM Laurier negotiated a deal to reduce tariffs on many products – some to satisfy the needs of farmers.

4. Free Trade Vs Protectionism Laurier came under fire by the official opposition and lobbying groups opposed to free trade Laurier came under fire by the official opposition and lobbying groups opposed to free trade In the following election he lost to Robert Borden (from Nova Scotia) – the free trade deal was beaten In the following election he lost to Robert Borden (from Nova Scotia) – the free trade deal was beaten

5. The Great Depression October 29, 1929 – “Black Tuesday” October 29, 1929 – “Black Tuesday” Caused by a massive sell-off of corporate stock causing the value to plummet (remember – supply and demand?) Caused by a massive sell-off of corporate stock causing the value to plummet (remember – supply and demand?) Unemployment was rampant and the nation was plagued by poverty Unemployment was rampant and the nation was plagued by poverty

6. The Great Depression Then Liberal PM William Lyon Mackenzie King adopted a laissez-faire (do nothing) attitude towards the problem Then Liberal PM William Lyon Mackenzie King adopted a laissez-faire (do nothing) attitude towards the problem The Liberals were defeated by the Conservatives as a result led by R.B. Bennett The Liberals were defeated by the Conservatives as a result led by R.B. Bennett He introduced ineffective legislation to solve the problem He introduced ineffective legislation to solve the problem

7. The Great Depression Bennett later adopted the practice of Keynesian economics – create jobs and lower interest rates Bennett later adopted the practice of Keynesian economics – create jobs and lower interest rates Keynesian economics Keynesian economics The liberals returned to power in 1935 and appointed the Rowell-Sirois commission to investigate the Canadian economy which after much debate resulted in a national unemployment insurance program The liberals returned to power in 1935 and appointed the Rowell-Sirois commission to investigate the Canadian economy which after much debate resulted in a national unemployment insurance program

8. Wartime Economy To protect the economy during WWII the federal government did the following: To protect the economy during WWII the federal government did the following: 1. Froze wages 2. Froze prices 3. Implemented a mandatory savings plan 4. Food rationing 5. Victory Bonds 6. Introduced personal and corporate income tax These interventions paid off by keeping inflation in check and allowed the economy to grow These interventions paid off by keeping inflation in check and allowed the economy to grow This resulted in a higher standard of living This resulted in a higher standard of living

9. Free Trade Canada and U.S. ultimately reached a free trade deal in October of 1987 title the Free Trade Agreement Canada and U.S. ultimately reached a free trade deal in October of 1987 title the Free Trade Agreement Advocates argued: access to huge U.S. market, improve trade relations Advocates argued: access to huge U.S. market, improve trade relations Opposition: lead to commercial union, threaten Canadian cultural and political sovereignty, weaken our economy Opposition: lead to commercial union, threaten Canadian cultural and political sovereignty, weaken our economy The Liberals and Conservatives ironically switched sides on the issue The Liberals and Conservatives ironically switched sides on the issue

10. Free Trade 1994 the FTA was expanded to include Mexico and became the North American Free Trade Agreement (NAFTA) 1994 the FTA was expanded to include Mexico and became the North American Free Trade Agreement (NAFTA) The largest free trade zone in the world The largest free trade zone in the world

11. Case Study 12 1. Please read, and record vocabulary words from, chapter 10. 2. What is protectionism? What was the argument against this movement? 3. How did The Great Depression impact Canada? What was the government response? What brought the Canadian economy out of the depression?

12. Case Study 12 4.According to Keynesian economics government should intervene in business to maintain the development of an economy. Should government intervene, or should big business be totally free without any intervention? Why? 5.What is the FTA? NAFTA? Please fully explain each. 6.Respond to the connections block on page 118. 7.Respond to the caption question for figure 10.5 on page 126.