Canada's economy has been governed for almost two decades by a doctrine of "permanent recession." Interest rates are deliberately managed to ensure that unemployment never falls too low, producing wage increases, falling profit margins, and feared inflation. Economists have recently debated precisely how much unemployment is desirable-the Bank of Canada used to favour 8.5 percent, now it favors 7 percent-but the underlying philosophy remains the same.

Permanent recession thinking has turned economics upside-down. Unemployment is a good thing, because it restrains inflation and disciplines the labour force. Too much employment is a bad thing. So are wage increases. Yet, most Canadians support themselves through wage income, and hence real wage increases are the main source of improvements in our standard of living. But wage increases might mean lower profits and higher inflation.

In short, an outbreak of prosperity is to be avoided at all cost.

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