
Pierre Elliot Trudeau, fundraising meeting at the Queen Elizabeth Hotel in Montréal, Québec, 1980.
by Christo Aivalis
Recently many economists have emphasized that since the 1970s in western nations like Canada and the United States, high profits and productivity have been accompanied by stagnating wages, especially for lower income workers. These commentators, including Nobel Laureate Paul Krugman, MIT professors Erik Brynjolfsson and Andrew McAfee, The New York Times’ Steven Greenhouse, and UNIFOR economist Jim Stanford, have argued that in the 1970s, wages became decoupled from profits and productivity, ending a pattern of complementary increases existing since the end of the Second World War. But still, major politicians, including U.S. Presidential Candidate Jeb Bush, say Americans need to work harder before better wages materialize.
Bush’s remarks are not novel. Prime Minister Pierre Elliott Trudeau vocalized similar points in the 70s, arguing that prosperity would not come through better labour legislation or stronger unions. But through weaker labour unions and legislation, which would give job creators more space to create and trickle wealth down. In simple terms, Trudeau’s efforts during the inflationary crisis were primarily about lowering the wages and expectations of Canadians to help bolster corporate profitability and competitiveness, in part helping to initiate the current inequalities between wages and productivity. For example, Trudeau would cast inflation as a psychological malaise amongst the public, a social pathology to be cured, not simply through legislation, but through a public pedagogical effort to lower expectations:
People can only bring inflation down by lowering their expectations…because if we all adjust our incomes downward, then inflation will come down. But if we all think inflation is going up, then we all tend to adjust our incomes upwards and inflation will go up.[1]
With the above statement, and dozens like it, Trudeau stressed that Canadians needed to fight inflation by adjusting their mindsets. To let the status quo prevail was to enable a destructive “we want it all and we want it now…state of mind that can only lead to disaster.” For Trudeau, these unreasonable expectations were rooted in a postwar world where everything was deemed possible. Continue reading →