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Enormous additional new wealth--almost $2 trillion--was entrusted to Canada's financial institutions between 1990 and 1997, so that they now manage $171,000 for every man, woman and child in the country. This huge growth in the financial industry, however, has not been matched by growth in the real economy. On the contrary, judged by crucial economic measures such as job creation, productivity, and household incomes, the 1990s have been the worst decade for the Canadian economy since the 1930s. Why this sharp contrast between lots of money and not enough jobs? Why has the boom in the stock markets been accompanied by a bust in Canada's overall economic performance? These key questions are answered--in great depth and with reams of supportive data--by economist Jim Stanford in his powerful new CCPA book Paper Boom: Why Real Prosperity Requires a New Approach to Canada's Economy. Among his findings: Close to 40% of Canada's financial wealth is now owned by just the top 1% of Canadian society. Stanford strongly disputes the claim that the huge sums of money put into the financial markets are being harnessed to job-creating, productivity-enhancing investments in the real economy that produce useful goods and services. He marshals an impressive array of evidence to dispel the myth that "playing the markets" is an effective way to raise our living standards. In fact, despite the booming financial sector, the share of Canada's GDP devoted to real investment has declined by over 5 percentage points since 1980. Financial investments, he points out, may produce profits and dividends for a few investors, but it is real investment that is needed to boost the economy and create jobs. He shows how the link between financial and real investments has been broken in many places, and stresses the need to devise alternative investment systems that will be more effective in putting our money to work for all Canadians. Econometric tests conducted by the author debunk the argument that the investment slowdown can be attributed to "a poor business climate" or the pressures of the new global economy. Instead he traces the slowdown to three main factors: high real interest rates, slow growth and overcapacity, and a steady decline in business profits since the 1960s. Stanford proposes a wide range of different and innovative policy measures--in such areas as monetary policy, tax reform, and financial regulation--which he argues would ensure that more of the paper boom is translated into real growth and real jobs. Paper Boom has received wide pre-publication acclaim. Author Linda McQuaig calls it "powerful and highly readable." Prof. Myron Gordon hails its "solid economic analysis." Economist Monica Townson calls it "a work of impressive depth and breadth." Economics Prof. Avi Cohen of York University says, "This is a powerful analysis of how to improve productivity and the creation of wealth."
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