Wednesday, December 03, 2008

Stop With The Revolutions Already

With Canada's Opposition parties poised to defeat the sitting Conservative government over what they claim are economic concerns, economics is becoming more of a hot button issue than ever before.

With global economic turmoil provoking tidal waves in Canadian politics, it's becoming as important as ever before for Canadians to understand the economic issues their politicians which to explore.

Produced by PBS in 2002, The Commanding Heights provides a valuable road map of the dominant theoretical schools at work in economic policy today.

For those willing to make the hefty investment -- very nearly a whopping five hours -- The Commanding Heights is an eyeopening film series that can help put the current political situation in perspective.

Part one introduces the ideas of John Maynard Keynes and Friedrich Hayek, the two men who are the defining theorists of modern economics. Keynes favoured controlled economies in which governments essentially save during times of prosperity, then spend during times of economic recession.

Part one of the film examines various key periods in economic history and highlights the successes and failures of each theoretical school. The film examines the Keynesian successes of post-war Germany, Britain and the United States as well as the devastating crashes of the 1970s. It then turns to 1970s and '80s Britain and the United States, and documents the turn toward Hayek's market economics under the guidance of Margaret Thatcher and Ronald Reagan.

This portion of the film puts Keynesianism under the microscope and closely examines its eventual failures. While initially successful in many cases, Keynesianism has had a tendency to lead to an economic collapse as economies eventually stagnate.

A particularly telling example of gross over-regulation turns out to be the American Airline industry, wherein regulations would not allow airlines to compete in terms of price. When Airlines instead tried to compete by offering better perks -- such as better meals -- the regulatory agency in charge literally ends up regulating the size of sandwiches.

Of course, de-regulation has its own consequences. While over-regulation had gross consequences for consumers, de-regulation had almost immediate harmful consequences for workers in related industries -- such as the aircraft manufacturing industry.

Part one of The Commanding Heights sends a resolute message, not only to Canadians, but to citizens of countries around the world: competing Keynesian and market revolutions are leading us to economic disaster over and over again.

Right now Canada's political situation is, in many ways, an indirect consequence of a failed market revolution. It's important that Canadians come to understand these consequences and the course that have led us here so we can pressure our politicians not to repeat the mistakes of the past -- again.

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