Economic Challenges the 1970s Inflation Regionalism and Debt

Economic Challenges & the 1970’s Inflation, Regionalism, and Debt

All Good Things Come to an End… • In the 1960’s idealism was everywhere, wealth created opportunity for many • Canadians thought that growth & progress would continue forever • This new optimism would be severely tested by problems from outside and inside Canada’s borders

The Arab-Israeli Conflict • You have learned about parts of this conflict already • Suez Canal Crisis involved Egypt, Israel, and European Powers • One of the groups covered the Yom Kippur War during the Cold War Unit • The Yom Kippur War helped end Canada’s economic “Boom” period, and contributed to the “Bust” period that followed

Why Does a War in the Middle East Matter to Canada? • Canada, along with the United States, supported Israel during the Yom Kippur War • The oil producing nations of the Organization of Petroleum Exporting Countries (OPEC) were tired of Western nations giving Israel financial and military aid • They decided to stop selling oil to those countries • Economic warfare proved to be more devastating than military conflict

Sabotaging Supply & Demand • Without access to Middle Eastern oil, Canada found itself with less supply but a steadily increasing demand • Rising oil prices created havoc at gas stations, but that was only the beginning • What else would have been affected by a rise in the price of oil?

Domino Effect (Economic Edition) • As prices rose, workers demanded higher wages to keep up • But even with higher wages, ordinary people had less money to spend • As companies slowed production people lost jobs • When people lost jobs they needed to rely on the government to help them, and they weren’t paying taxes

Inflation = Canadian Tensions • The end result of this is called inflation • Inflation occurs when prices/wages/costs all go up at the same time • As people in Canada suffered, they looked for someone to blame • Economics and global politics are hard to understand though… • Instead of learning about the root causes of the oil embargo, they turned on each other

Who Hates Who? • Primary resource companies (forestry, mining, fishing) suffered the most during the economic downturn • Poorer provinces in Atlantic Canada resented Ontario and Quebec for being less affected • Wanted the government to assist them more, felt abandoned by those in charge

Who Hates Who? Part 2 • Western Alienation became a problem in Alberta/Saskatchewan /BC/Manitoba • Also felt that the Federal government was only looking after Ontario/ Quebec • Federal government decided to freeze the price of oil from Alberta & tax it as it entered Eastern Canada • Prevented Albertans from selling oil at the elevated prices of the market

National Energy Program • Canadian government learned a lesson from the oil embargo • Energy independence was of grave importance • Created the National Energy Program (NEP) to increase Canadian oil extraction in Newfoundland the Arctic • Alberta again angry… doesn’t want government to financially aid competition

Reading Time! • From “The Debt Crisis” on pg. 184 to 187 • Answer Questions #1, 2, 4 on page 186