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wonien -and

fédesal” - government~
. established. the: Terry Fox.
‘Hum ian..:-Award

quitlam.
$25-° million for. cancer,

“across Canada ‘on a tin bic
Last.week's. memories made

~ it, hard to thinkof ‘any bigger 2

UNEMPLOYMENT rates'in
Canada are around 12 per .
cent. Recently,

studies have, predicted that

“the rate may go as high as 17_

per cent in ithe near future ©
and will remain in the two-

digit .range .cyen’ after ‘the _

recession. Yet, only 20'years

ago the Economic Couneil of

Canada had ‘projected a
‘three per cent, unemploy-

ment rate as a reasonable’

target.. What underlies ‘the |

_ difference in these two pro-

jections?
“The populaanswer is that
in recent. years too many :

‘have joined the labor force, —

and automation and impotta
‘are replacing too many |
workers. ,

Canadians generally, “but
especially, unions and politi-
cians, like these popular ex-
planations “because. they
direct attention: to forces
beyond their control. They
also imply. that our free

some |
., government..and_ academic

young: people |

os ‘Montreal:

deficient and more govern-.
‘ment intervention is re-
quired. Unions “and «past:
government policies are im-
plicitly absolved from all...
responsibility. |

“In my. view it is time thet,
Canadians change their
views on the causes of high
‘ unemployment;. These.

, causes are excessively high
wages: and | /government-- |

‘ union: Policies: which’ keop |
‘them high. *
The. popular explanations

of high unemployment are.
correct, but they | are’ in-

complete and: misleading. |
‘Throughout Canada’s history
the labor force has grown:
‘and new... technologies | and |
imports ." have.’ replaced |
workers. In the: past and dur-

‘ing normal’ business condi-:,

tions, wage rates have ad-
justed and . eliminated . the
gap between. the downward-
sloping demand and _ the ,
upward-sloping supply’
curves. Today this adjust-
‘ment mechanism is ignored
and = prevented from
operating.

Many Canadians accept

market. -system, bs. seriowly . the notion, that if cap prices,

#

a teller at the c Maple

are “lower.” ‘more. will be
bought, but they are unwill-
ing to apply the same reason-
‘ing to labor; Yet; why would
our forestry industry not be
able to sell. more. products
and use. more workers | if

_ their labor costs. were lower

and they could undercut the
competition from the United
States'and Scandinavia?

If. lower’ wages can
eliminate ' ‘unémployment,

“then why are they not fall-

‘ing? ‘The explanation is the
unwillingness) of labor’ in

‘cept lower wages.:The ma-
jority of union members:can
be expected to be rehired
when the recession -ends,

After. all, “even. the worst
forecasts predicted that at.
least 83 per cent will be.

working again soon, So why.
should they , make concés-
sion, and “accept lower
wages? :

mall business and non-'

unionized labor -have’ been
forced into accepting lower
income and wages. But in
‘this sector, also, wages can-
not fall below a certain’
minimum | because

oe the Mn Hy

"

~ tand who collected ten grand
*on.the June 15 Western Ex-

unionized, -keY sectors to ac-..

. ‘correct:

_ od

écutive. ability, is: deciding
quickly. and getting
somebody’ else to do ‘the

unemployment insurance,
welfare and other social in-
surance payments set a
floor, Under some of these
programs a person, has to
“edn $6 an hour -to. be better
_ Bie ‘than ; ‘by accepting, Public
Ort. 4 ren "
lost. ‘Canadians reject the
dingrotis that the disease of
high unemployment dis caus-
by ‘excessive wage rates.
They say that, there. must be
a different cause and. cure, I
wished there was.) |"
The public reaction to this
diagnosis is much like that of
, patients who have been told
they are: seriously ill and
need un Idazant: treatment.
‘Disbelief ‘and a ‘search for’
other solutions are the nor-
mal reactions well known by |
doctors..But like in the case,
of, ‘Personal ‘sickriess,” the’
Canadian | sickness: of
unemployment can be cured.
only accepting the cor. -
rect diagnosis'e and taking the -
‘treatment.
(Herbert ‘Grubel is pro-

_ fessoP of economics at

Simon Fraser University and
an: editorial advisor to Van-
couver's Fraser Institute.) a

e

&