| dc.description.abstract | The Canadian government encouraged agricultural settlement on the prairies in the late nineteenth century. A few decades later the region was the world’s largest exporter of wheat. Many academics credit the ‘wheat boom’ with transforming Canada into a developed country and view the government’s role in promoting prairie agriculture in a positive light. The emergence of a broad-based agrarian populist movement, fueled by farmers’ discontent, and the collapse of the wheat boom during the Depression of the 1930s are inconsistent with this interpretation of events. Political pressure led to regulation of grain marketing, handling and transportation, and federal government institutions played a dominant role in prairie agriculture in the immediate post-war period. The unintended consequences of these interventions contributed to a second flare-up of popular discontent and ultimately led to a sharp reduction in government involvement in the sector. The unwinding of several key initiatives in recent decades illustrates the circumstances under which longstanding policy initiatives may be reversed in order to avert a looming crisis. The New Institutional Economics and the work of Joseph Schumpeter provide a framework for examining the reciprocal influence between institutions and economic performance. Schumpeter’s insights into why institutions are modified in ways that affect the trajectory and rate of technical change are used to explain how government intervention amplified the wheat boom, exacerbated the damage done during the ensuing downturn and contributed to the declining competitiveness of prairie agriculture after World War II. The history of prairie agriculture illustrates the origins of support for intervention, its enduring popularity, its cumulative economic costs and, ultimately, why it was unsustainable. It highlights the importance of the questions ‘who benefits?’, ‘who pays?’ and ‘who decides?’ when government intervention is advanced as a solution to an economic crisis | en_US |
