wages and prices
The first ever peacetime wage controls were introduced by Trudeau in 1975. What were the justifications in public debate that led the way for these controls? Support your claim with researched evidence.
Between 1975 and 1978, the Trudeau government introduced peacetime wage and price controls in response to exceptionally high inflation rates.
However, Wage and price controls are government restrictions on the rate at which wages and prices may rise during a specific time period. They are most often imposed during wartime to prevent profiteering and steep rises in the price of rare consumer goods.
Many nations, including Canada, instituted a system of both price controls and rationing during WWII to prevent the exploiting and steeply rising prices that might otherwise have resulted from wartime shortages. These measures were largely uncontrolled in the postwar period. Controls were primarily used as an attempt to combat inflation and financial policies were used to reduce unemployment. The experiences with this type of policy combination were largely unsuccessful.
Subsequently, economists have realized that if controls are to be successful, they must be viewed as a complement to, rather than a substitute for economic policy. While high inflation can eventually be controlled by significant lowering of money-supply growth rates, the process may be long and may involve painfully high unemployment. Controls are seen by some economists as a means of overcoming the strong momentum of high price and wage increases and hence help the transition to lower inflation.
Canada's only experience in peacetime with controls occurred in response to the exceptionally high inflation rates of 1974-75. The federal Anti-Inflation Act established a 3-year controls system. Wage guidelines were binding on all firms with 500 or more employees, on all federal employees, and (with the agreement of the majority of provincial governments) on most other public-sector employees.
Between 1975 and 1978, the Trudeau government introduced peacetime wage and price controls in response to exceptionally high inflation rates.
However, Wage and price controls are government restrictions on the rate at which wages and prices may rise during a specific time period. They are most often imposed during wartime to prevent profiteering and steep rises in the price of rare consumer goods.
Many nations, including Canada, instituted a system of both price controls and rationing during WWII to prevent the exploiting and steeply rising prices that might otherwise have resulted from wartime shortages. These measures were largely uncontrolled in the postwar period. Controls were primarily used as an attempt to combat inflation and financial policies were used to reduce unemployment. The experiences with this type of policy combination were largely unsuccessful.
Subsequently, economists have realized that if controls are to be successful, they must be viewed as a complement to, rather than a substitute for economic policy. While high inflation can eventually be controlled by significant lowering of money-supply growth rates, the process may be long and may involve painfully high unemployment. Controls are seen by some economists as a means of overcoming the strong momentum of high price and wage increases and hence help the transition to lower inflation.
Canada's only experience in peacetime with controls occurred in response to the exceptionally high inflation rates of 1974-75. The federal Anti-Inflation Act established a 3-year controls system. Wage guidelines were binding on all firms with 500 or more employees, on all federal employees, and (with the agreement of the majority of provincial governments) on most other public-sector employees.