Winnipeg Free Press

Winnipeg Free Press (Newspaper) - November 26, 1981, Winnipeg, Manitoba Winnipeg free november 1981 7 interest Tiedt Ottawa were those or anxious people assembled on parliament Hill last bracing themselves against the raw cold of a dark Ottawa Day to protest the nations High interest rates How deep was the Hurt How Many canadians shared it workaday Ottawa that Grey Satur Day kept its but talked about Little in the near empty stores shopkeepers and shoppers swapped thoughts and anecdotes about the economic hard some had wounds of their some found the financial squeeze challenging some barely noticed some were cynical about the or bewail some were Safe and among the protesters were people who had lost their Homes or their jobs or their businesses farms in the interest rate it had come rather to warn of the devas tation that Lay but interest rates had dropped a lot in the past few work Day Ottawa reminded maybe there Are better times Are there As the wintry Sun broke through Here this there was time to Start gathering answers to that ques and the Wisest answers seemed to be maybe in the next interest rates will move further but More slowly and perhaps not very inflation currently at a per cent rate now guarantees that the free fall can not investors normally must be allowed their real return on their usually mean ing interest charges some three or four per cent above the inflation so the interest rate floor is near at but leading financial authorities suspect contrary to predictions in finance minister Allan Maceachen budget two weeks the inflation rate itself May soon Start to Joan Cohen Ottawa editor the hardships that brought the pro testers to Ottawa Are reflected bleakly these Days in the country key eco nomic Canada May Well be moving into a More painful recession than the ministers budget was ready to that deep economic plunge could begin shortly to squeeze much of the inflation out of the Canadian Economy just possibly outside forces do not work against us on a Lon term this solemn View sees the Canad an Economy being administered some bitter Medicine More Plant More lost a Sharp dip in a timeshare rough wariness would take Over at the consumer pressing hard to move their would come to understand that that excess whether in Low productivity or escalating wages or costly cannot be fobbed off in the in the nation would have its inflation psychology hammered out of it May not happen that the current slowdown could once again turn out to be a Brief encouraged by the Sharp slide in inter est rates Down percentage Points in the four weeks ending 19 radians could be laying plans for new new consumer Pur that will bring the Economy quickly Back to life and almost certainly build up a new round of inflationary there is a feeling abroad in the land that such a fast and ultimately costly recovery is not in the powerful forces have been at work to slow the Economy notably the massive increases in the Price of Energy and unprecedented rises in Bor rowing these effects Are now to be with the Federal government hauling in some billion extra from the pockets of canadians next year to reduce its not lays out the scenario in such painful the governments restraint Effort after All is moving the country in the right i reinforcing the Bank of Cana Das until now lonely ant inflation the governments reduced Bor rowing requirements will mean less Competition in the Money Clearing the Way for a drop in interest rates and thus More productive invest ment in the under the National Energy pro Energy costs will Rise by 19 per cent next after a 29 per cent Rise in wage and salary in creases will be High at around 12 per cent contrary to Maceachen seem unlikely to accelerate food prices for two months now have been abating or holding the interest rate drop is reducing though Canadian interest Levels Are still Well above those in the in part to compensate for our much higher inflation rate Canadian Dollar is showing renewed there Are Many perhaps not least of them being that our Long Federal provincial Energy debate and constitutional conundrum is now be Hind in Many is getting its House in viewing the International financial observers pick out an Assort ment of future trouble the much More than is accustomed to wide swings in the rate of Price and salary in the current there Are some Early signs that labor is ready to moderate its wage and it is quite conceivable inflation will Brake much More rapidly than in such a development would create new problems Here making Cana Dian goods less competitive and Possi Bly raise new doubts about Cana Das economic again eroding the value of our despite the fact that much More than is on a solid course toward economic recon where the Canadian government is struggling to reduce spending pressures by increasing its revenues and trimming its the Ameri cans Are making deep cuts in taxes and budgeting for an increased if these expansionary actions canadians will pay the danger is very real that they will push interest rates preventing our own rates from falling much this increased Drain from the financial markets could Well plunge the into an extended slow growth period producing a painful shrinkage in this country billion annual sales below the in the Best of All possible Canadas economic performance would somewhere Down the Rocky Likely around begin to turn into a Success but we cannot be too there Are shadows now Way Down that and they could turn out to be cd organized demonstration against High interest rates brought the worries of Ordinary canadians to loopholes incentives then demonstrator suggests this is Only roof he can now by Wilson special to the free press Ottawa it is a curious aspect of both the department of finance and much of the press that when the government uses the tax system in an Effort to achieve specific economic goals it creates incentives and no great question of morality or equity Are when the department decides to end an incentive usually after a new group of officials Rise to the top jobs it closes a loophole or ends a tax the matter is abruptly changed from economics to senior officials at the department seem to have two hats available for these one is labelled eco nomic policy maker and the at the stage when the department transforms incentives into loopholes or tax Dodges there is rarely even a nod of recognition at the history of the particular provision involved or the rationale behind a few years Federal officials became convinced from the statistical evidence that provincial rent control Laws were discouraging construction of rental and that a shortage could be As a Means of offsetting they introduced special tax provisions allowing investors to write off the initial costs of a project against other this aspect of the tax Law an incentive aimed at avoid ing a shortage of rental housing As a byproduct of provincial on Bud get night it was transformed into a tax Dodge to be minister of finance Allan Maceachen has since delayed application of the cutoff to avoid disrupting work on projects Al ready under Way or about to two questions unless the government was dead wrong a Short time Back in fearing a shortage of rental housing there is no evidence that it was its next chore will be to find some other Way of stimulating since this government and its key officials Are extremely statist in their it is quite Likely that some form of subsidization will be preferred to investment the other is that it seems never to have occurred to either Maceachen or his chief officials that questions of morality and equity Are also involved when governments change vital rules in Midstream without giving ample Advance in this Maceachen advisers appear to have understood Nei ther the immediate practical consequences of their action nor that they themselves were engaged in an action lacking equity and eroding the integrity of despite the areas of controversy that have the general thrust of this budget still seems to be it is seriously by a Peculiar moralizing aspect which too often ignores the economic needs of the there Are clearly disincentives to investment that could hardly be less appropriate to the nations current there has been too Little recognition of the reasons Why certain elements of the tax system were introduced in the first it May be in to modify existing provisions for first year depreciation on assets represent ing new the immediate is to make investment somewhat More when inter est rates Are at an Al time record High any action to increase investment costs has an otherworldly As it May make Good religion but it makes silly at first the proposal to tax fully the benefits from Low interest Loans from an employer serves the purpose of equity and is a objection but that begs the question of labor one of the commonest reasons for such Loans is to facilitate the Transfer of employees from areas where housing costs Are moderate for to cities where they Are very such As Toronto or equity As Well As practicality is involved when an employer comes to the assistance of someone whose Transfer forces him to sell a Home and buy one at with no improvement in his some aspects of this budget suggest a Gross Lack of real world experience at the department of palestinian question key to israeli Security i t off Ami by George Mcgovern special to the los Angeles times in the aftermath of the murder of president Anwar Sadat of american leaders and opinion makers were shocked into reexamining the bases of american Power and interest in the Middle it is about time that they did it used to be said that american interests in the Middle East relied on four pillars of Power the Shah of Anwar Sadat Egypt and saudi the last being included for the compelling reason that it possesses 25 per cent of the worlds according to the theory of the four the Industrial worlds need for the american moral commitment to Israel and Protection of everybody against soviet designs could All be taken care of if the regional parties would simply recognize that their own differences were trivial compared to the overarching strategic As perceived in the United Zbigniew Jimmy Carters National Security spoke in sweeping terms of an arc of although it should be noted of recent Only Carters showed real appreciation of the importance of local issues and aspirations in the Middle then the Shah fell for Domestic which undoubtedly were exacerbated by an extravagant military relationship with the United the Reagan stopping Only to blame Carter for the fall of the set out to build around the remaining three Pil Lars a strategic consensus against the soviet thus the Effort has failed and i venture to predict that it will continue to fail for reasons Well known to anyone Pas singly acquainted with the Middle the reason is that All parties in the despite what they Tell the United Are More concerned with one another than they Are with the soviet in the Middle East As it has been Well known for years that inflamed Antis pietism is the Way to Uncle Sams heart and also to his i believe this is True for Israel just As i believe it was True for the More reason that strategic consensus is dead in the water and Likely to remain so is that there is no possibility none whatsoever of any kind of co opera however veiled or be tween saudi Arabia and Israel As Long As the palestinian problem remains the assassination of Sadat prompted assertions with a second pillar gone and with saudi Arabia both hos tile to Israel and alleged to be internally there was nothing left for the United states to do but to place sole Reliance on Israel As the mainstay of american interests in the Middle now i happen to believe even though Many israelis do not that the United states will never sell but Israel is an integral part of the moral cultural world environment in which americans wish to and that is a far More solid guarantee than even the most highly developed strategic relationship is Likely to the theory of the four which was unsound to begin if even More so it is unsound because it offers a one Dimen signal View of strategic reality As the Only and because of its Blind indifference to galvanizing regional such As the ideology of Arab and islamic Solidarity and pales Tinian a soundly based american policy must be in the Case of this would necessitate a continuing commitment to israeli Securi empathy for its but we must also make it Clear to Israel that the United states has other interests in the and that it cannot and will not permit these to be in the Case of saudi which has been a Good and faithful Friend to the United states in All important respects except for its dissent from the Camp David agreements Between Israel and we must learn to forbear in areas where our pressures can bring no Good i do not know whether the in their heart of hearts wish that they could help the Camp David process i do Howe that the leaders of saudi Arabia Are prudent men who have accommodated the United states on Oil production and prices and who firmly believe that if anything in the world is Likely to make them vulnerable to the Fate that befell the it is the crushing embrace of the United states by Extension we frequently ask our friends abroad to appreciate and respect the political restraints on our policy it is entirely reasonable that we should do doonesbury the same for the heart of the matter is and always has been the palestinian More than is what has kept the Middle East in divided the Arab world against itself and robbed Israel of the Security and re pose it has dreamed of for 30 the palestinian question was in a fundamental the undoing of after his trip to Jerusalem on he bore the stigma of having sold out the Arab nation in a separate a general settlement based on the right of unencumbered palestinian self determination in the West Bank and Gaza would not put an end to All the troubles of the Middle but it would put an end to the most important of for the palestinians it would go far to redress a historic for the israelis if they could bring themselves to take what they understandably perceive As a great risk it could be the beginning of the real peace that has eluded them since and not there could be no greater tribute to the memory of Anwar Sadat than a settlement based on the principles he outlined on that memorable Day in George a former demo cratic senator for South is chairman of the Washington based organization americans for common Boyouk Kents work my Myers win th5 fi6htaqaih5t racism about a but you Guys amendment to spot Keyou cow says Biack Finksr Ana woman ;