Right, Left and Centre: The Politics of Some Canadians. by Dave Jaffe; Chapter 30, Part Two; A Deficit Hawk Who Believed in Deep Cuts.

      A Deficit Hawk Who Believed in Deep Cuts - Part Two.


    Sandra Gelfand was facing big life pressures in the mid-1970's. She married another Ph.D student who was an American. Yet then the marriage fell apart and she was left alone to take care of their two children. After much hard work she got her Ph.D. Yet she was living in the New England area of the U.S. without a man or a job. Of course she did have an advanced degree. By now she was tired of the United States and felt homesick. She applied for a job with a Canadian bank and she got the job.
     From 1973 and into the 1980's, the economies of most of the western countries fell into a crisis. On the heels of two massive OPEC oil price hikes, inflation went through the roof. Jobless totals took off. And as Milton Friedman had warned in the 1960's, unemployment and inflation rose together. Meanwhile governments ran up massive debts and deficits. Now the old Keynesian models of running and growing the economy broke down. Soon right wing Friedmanite notions moved to the forefront.
    "Democratic socialism," said Peter Jenkins, "or in the continental usage, social democracy was inflationary." The solution? Friedman and his wife Rose Director Friedman thought they had the answers. Monetarism, or control of the money supply was the way to go. Yet as the Friedmans pointed out in their late 1970's best seller called 'Free To Choose'  monetary control was not enough. New sterner measures were required. The power of trade unions must be curbed. Government programs that helped the poor had to be cut to the bone. Tax breaks for the richwere necessary and must be increased. Meanwhile interest rates must go up until they sweep away inflation. Finally governments must stop running deficits  and government debt must be paid down.
     U.S. president Ronald Reagan, British prime minister Margaret Thatcher and Canada's prime minister Jean Chretien and his finance minister Paul Martin followed all or some of the Friedmans' advice. The policies worked to bring inflation and joblessness under control. Yet the cost was high. The poor got poorer, the middle class felt more squeezed and the rich got much richer. Sandra Gelfand embraced all of the Friedmanite policies. "Was the welfare state a dangerous error from the very first moment of its existence?" asked the American socialist Michael Harrington in the 1980's. Harrington replied that its wasn't at all. Yet Gelfand argued that it was.
     Now working one one of the bank towers that lined Toronto's Bay Street, she called for massive cuts to social programs. She told Finance Minister Paul Martin in the 1990's, that his sweeping cuts to social programs didn't go deep enough. He must, she said, make even  a greater effort  to reduce the debt and the deficit. Yet Sandra Gelfand was on a roll. Her hard core conservative economics was now very popular with the leading federal politicians. She was a success.