NDP March on Parkdale - High Park

Not to be picky, and not as if it matters, but the Conservative's name was David Hutcheon.

Sorry, I'm allowed one anal retentive moment daily. :)

Sookie, the commentator above, clearly understands nothing about the recession of the early 1990s; because every economic statistic out there suggests that Rae was entirely blameless for the recession, which has to be laid squarely at the doors of the Bank of Canada and of Brian Mulroney, who supported Bank Governor Crow in his mad zero-inflation policies. Rather, Rae and the NDP's wise governance were the only thing that kept the Ontario economy afloat.

In the second quarter of 1990, the Canadian economy moved from slowdown to outright recession. The recession would last, technically, for four quarters. Since the U.S. entered recession around two quarters after Canada, conditions south of the border cannot be said to have triggered the Canadian recession. At most, the ensuing downturn in the U.S., and the associated worldwide recession of the early 1990s, can be held to have exacerbated a recession already triggered by domestic forces -- to whit, historical high real interest rates. However, despite an economic recession, monetary restraint continued into 1991, as the Bank Rate stayed in double figures throughout the first quarter of the year. Although the Bank Rate was lowered to under 8 percent by year's end, the differential between Canadian and U.S. short term interest rates remained great, averaging over 3 1/3 percentage points for the year as a whole. More striking still is the huge increase in real interest rates that Crow's policies occasioned. The real Bank Rate increased every year, from 4 percent in 1987 to 5.69 percent in 1988 to an all-time peak of 8.26 percent in 1990, before stabilizing at around 5.5 percent until 1995.

According to economic superstar Pierre Fortin, former President of the Canadian Economics Association:

"From the beginning of 1990 to the end of 1993, Canada experienced a long slide in economic activity and employment that was followed by a short-lived recovery in 1994 and a relapse in 1995 and 1996. The accompanying employment and output losses exceed anything we have known since the Great Depression of the 1930s, and they surpass the losses experienced by other industrial countries since 1990. The last decade of this century will arguably be remembered as the decade of The Great Canadian Slump. There can be no mistake about the true magnitude of the slump. The cumulative employment loss [from] 1990 to [1994] amounts to 30 per cent of the loss suffered during the Great Depression, and twice that of 1982-6. The current slump is second to none in the postwar period. ...[W]ith high and volatile domestic interest rates and neutral or restrictive fiscal policy, domestic demand for Canadian goods remained understandably depressed. Canadians had to wait until ... the interest rate decline of 1995-96 before a sustained recovery could really begin.

In the midst of this carnage, which were exacerbated by the adjustment costs from the Free Trade deal, the Conservatives reduced their matching funding formula for provincial welfare outlays under the Canada Assistance Plan (CAP). Like federal relief payments in the 1930s, payments under the CAP for the three richest provinces (Ontario, BC, and Alberta) would not be allowed to increase more than 5 percent annually. This meant that those three provinces were now unexpectedly facing far larger than expected bills for welfare, in the middle of a recession. In Ontario between 1990 and 1993 (the province with the most welfare recipients and highest benefits), the federal contribution to welfare spending dropped from 50 percent to 28 percent. As a result, the Federal Government directly transferred, between 1990 and 1993, over $20 billion of debt to Ontario.

Bob Rae, far from causing the recession, by his courageous semi-Keynesian policies actually saved Ontario, and had the highest growth rate of any province when he left power in 1995. The man is a God.

Sookie:

As the child of teachers, I remember full well some of the hardships he inflicted on our province, believe me there.

Trev:

Thanks, that's what I get for making a post at 2am. Consider it corrected.

Tom:

While you are correct that Rae was not the sole cause for the recession, it would be tragically incorrect to imply that he was blameless. Especially with the spiraling debt (which directly lead to Harris and the Common-Sense revolution) and his betrayal of the public service, Rae still has a lot to apologise for.

To Paul: I suppose it depends what your priorities are. I don't think the NDP has ever had an ability to run things from an economic standpoint. Harris wasn't about to spend money the province didn't have, the cuts he made were horrible but this province was in over its head - esp after all the money Rae was borrowing had put us in serious deficit.

To Tom: It's my understanding that Mulroney was able to keep inflation in an acceptable range during this very difficult time and therefore keep the economy on track while Ontario was falling apart.

To Tricia: I'm pretty thankful Sylvia Watson didn't make it in either. On a political note, I don't trust her and on a personal one, I hear she's a nasty and unfriendly neighbor.

To St. Dan: Thanks for opening up the political dialogue.