As we enter this period of recession, revisionist history climbs onto the wagon. One of them is recalling programs of wage and price controls enacted by the Canadian government led by Pierre Trudeau. The common remembrance is that there was only wage and price controls. There was a very important third part though which made the first two aspects work. In this day and age, a duplication of that program, with a layoff freeze will go a long way to help the economy.
While this set of policies appear outwardly as anti-business, in effect the grouping of policies enforces a completely pro-business effect. It is a two prong strategy meant to help the commercial take a short term breath much like resuscitating a nearly drowned person.
What the policy does do is defer the knee jerk reaction of bankers to interfere with the business recovery. Bankers who have only a financial interest take a look at the business accounts and recommends cost reductions to struggling business. Too many people in the modern world assume that bankers are part of the business sector. In every way the financial sector to which banking truly belongs anchors it.
Wage, price and layoff controls (WPLC) implemented on a six month re-evaluation cycle takes away the easy route to cost controls. Although every business has unique struggles the basis of obtaining financing remains universal. The easiest way to reduce costs is to reduce labor. The easiest way to spin into recession is to put people out of revenue generating work.
WPLC policies gives that breathing space where banks cannot maintain a stance of forcing businesses into labor practices which deepens the recession cycle. It gives businesses stable financial cycles over several reporting quarters. They can adjust their specific problems in a predictable environment.
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