How Has Increasing Productivity Changed Life in Canada?
Increases in labour productivity allow people to consume more goods and services. How have rising consumption levels affected daily life—and people’s expectations— over the last few generations?
Even over relatively short periods of time, such as 30 years, living standards for Canadians have changed dramatically. In the 1986-2016 period, average labour productivity has risen tremendously, (although it slowed in the 1980s and recently), as did the quantity of consumer goods people owned. In 1986 the population of Canada was 26.2 million people. It had risen to almost 36.4 million by 2016. Thus, the population increased by almost 39 percent in that time. But the value of consumer durables owned by households increased by 315 percent (from 153.4 billion to 637.1 billion).
Do additional goods make people happier? Are Canadians’ lives better today because they now own more cars and appliances than they did in the early 1960s?
Note: Data from CANSIM Table 378-0121and 378-0049.
2.Are Canadians Better Off Today?
Canadians have more material goods today than they had in the 1950s. Does this mean that life in the 2010s is better than it was in the 1950s and 1960s?
Do more goods and services compensate adequately for the environmental problems and rapid changes of life today?
Although the average house has more square feet and more appliances than it had 50 years ago, does that outweigh the fear that causes us to keep our doors locked? Does being able to buy many fruits and vegetables year-round improve lives enough to make up for the additional pollution, which causes increased respiratory problems? Is it more important to be able to drive two hours to work that is interesting and challenging than to breathe clean air? Does having several cars in the garage compensate for urban congestion? Does the exhilaration of new products and services outweigh the disruption in our lives caused by rapid and extensive change?
Robert, Frank. Luxury Fever. New York: Free Press, 1999.
3.Is Economics a Science?
What is a science? Does the term science apply to economics? If economists cannot predict accurately what will happen in the future, can we claim that economics is a science?
If one defines as a body of knowledge gained by investigation that will allow one to predict future outcomes, can economics be considered a science? Although economists argue that they follow scientific methods to learn about economic interactions, can they claim true scientific rigor? In economics it is difficult to carry out controlled experiments such as those undertaken by physicists, biologists, and chemists; and, in most cases, we can’t even repeat experiments for verification. The economy is influenced by a myriad of factors; sorting out what is cause and what is effect is quite difficult. With so many factors changing at once, together with shocks such as weather, earthquakes, riots, and changes in people’s preferences, it’s tough to figure out the effects of changes in policy. However, economic theory does allow us to predict the direction of change if not its exact magnitude.
4.Is Macroeconomics Linked to the Modern Industrial Society?
Many topics in macroeconomics are closely linked to our urban money-based economy. Inflation, unemployment, business cycles, growth, and the balance of trade have all been the concerns of leaders for long periods of time, yet they tended to have limited impact on the common person until the end of the nineteenth century. You may ask your students to think about why this is true.
In the middle of the nineteenth century, a large percentage of the Canadian population lived in farms. Much of their commerce was based on barter—trading the products of their fields and forests for flour, cloth, powder, and shot. In a society in which many produced their own food and clothing, questions of inflation, unemployment, and balance of trade had little effect on the common person. Such questions applied mostly to those who lived in the cities or those involved in international trade.
Inflation and unemployment became concerns as people moved from mostly subsistence farming to either cash crops or urban wage employment. Because today’s workers specialize in the production of a particular good in exchange for money income, they are more subject to the vagaries of inflation and unemployment.
5.Do Economic Conditions Change the Outcome of Elections?
Many commentators believe that the condition of the economy with respect to unemployment and growth influence the outcome of general elections.
For instance, if the economy is sluggish or undergoing a recession during an election, the incumbent party may be defeated. The poor state of the Canadian economy in the early 1990s was clearly an important factor in the Conservative government’s dramatic defeat in November 1993. Although economic conditions are not the only factor that influences voters, they may play a major role. Is this good or bad? Economic policies often take effect only after long delays. Quick-fix changes may lead to more problems later on. While no one argues that bad economic policy should be encouraged, are there problems with politicians being concerned with short-run results that improve their electoral chances, rather than long-run solutions?