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Canada did it, why can't we?

Old 09-20-10, 05:09 PM
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Canada did it, why can't we?

Really interesting article. I'd love to hear the Canucks give their point of view.
http://www.humanevents.com/article.php?id=38957
"Our economic fundamentals are much stronger than those of our neighbor to the South. People are nervous, but there isn't the universal pessimism you see in the U.S."—Catherine Harris, Canadian Investment Guide 2010

This summer I attended two conferences, my own FreedomFest in Las Vegas and the Money Show in San Francisco, and in both places the pessimism was palpable and universal. Fear of a double-dip recession, job loss, and a ten-year bear market on Wall Street can do that to a country.

Attendees were frustrated and angry. Peter Schiff summarized the doom-and-gloom atmosphere when he declared, "Between the trillion-dollar unending deficits and the unfunded liabilities, there is no light at the end of the tunnel—other than runaway inflation."

Earlier this year Moody's warned that the U.S. is so stretched to the limit with out-of-control deficits that Moody's may cut the rating for U.S. Treasuries below its perfect AAA rating.

Is there any hope?

Yes! At FreedomFest, we invited Niels Veldhuis, director of fiscal studies of the Fraser Institute, to tell the incredible Canadian success story. He and other Canadians are much more upbeat than Americans. Unlike the U.S., Canada has its act together after overcoming its own fiscal crisis in the mid-1990s. Its major banks did not fail during the financial crisis of 2008, and the Canadian dollar is now selling close to par against the greenback.

Admittedly, Canada had its own stimulus package and is running federal deficits, but among industrial nations, Canada has one of the lowest debt ratios to GDP and one of the fastest economic growth rates since their fiscal reform in 1995.

The Heritage Economic Freedom Index for 2010 reports on Canada: "Elaborate social and welfare-state programs swell overall government expenditures. However, good fiscal management and federal budget surpluses have enabled the economy to undertake stimulus measures without undermining fiscal soundness and long-term economic competitiveness."

In fact, Canada is ranked No. 7 in the Heritage/WSJ Economic Freedom Index, ahead of the United States (now No. 11).

Niels Veldhuis told attendees the incredible story. In 1995, Canada faced a major fiscal crisis similar to the one we are facing today in the United States. Canada was running huge deficits. Inflation, entitlements, and government spending were getting out of control, reaching 53% of GDP. The national debt of Canada had tripled since 1965, and a third of Ottawa's revenues were used just to pay the interest on the debt.

And the Canadian dollar was falling rapidly. There was genuine fear that it might go the way of Mexico, which devalued its peso in 1994.

In January 1995, the Fraser Institute held a major conference in Toronto with the title, "Hitting the Wall: Is Canada Bankrupt?" Afterwards, John Fund wrote an editorial in the Wall Street Journal attacking the Canadian "peso" and labeling Canada "an honorable member of the Third World." That day, the Canadian dollar fell 3 ˝ cents, and Canadian interest rates rose sharply.

The collapse of the "loonie" caught the attention of the prime minister and other government officials, and they decided to act. "Enough is enough," declared Finance Minister Paul Martin.

Canada's Dramatic 1995 Budget Reform

The Liberal Party of Canada announced a new austerity budget, a deliberate anti-Keynesian agenda of "smaller and smarter government." They cut spending by 10% over two years, laid off 60,000 federal workers over three years, and eliminating the deficit in two years. For the next 11 years, Canada ran a surplus, cut the national debt in half, and reduced the size of government from 53% of GDP to today's 39%.

And they did it without raising taxes. In fact, fiscal surpluses coupled with strong economic growth rates allowed Ottawa to cut taxes, including personal income taxes (to 29%), the federal VAT (to 5%), capital gains taxes (to 15%), and the corporate income tax (now approaching 15%). The government has also expanded tax-free savings accounts in Canada.


At the same time, the Chrétien government tackled three "untouchable" entitlement programs: the Canadian Pension Plan (CPP), unemployment insurance, and welfare. There's even talk now of reforming Canada's socialistic healthcare program.

The ten Provinces of Canada got into the act, decreasing spending and deregulating business. Saskatchewan, long a bastion of socialism, deregulated its economy, cut taxes and spending, and saw a miracle of its own. Other provinces have followed suit.

In the beginning, Keynesian economists were alarmed by Ottawa's austerity program and warned of a collapse in "aggregate demand" and employment. They were proven wrong. Canada transformed itself into one of the top performing economies of the world. Real GDP growth averaged 3% since the 1995 reforms, exceeding the economic growth rate of the United States. Canada's job-creation record exceeded the employment growth of all other G-7 countries. Fewer Canadians are on welfare and unemployment insurance. And the Canadian dollar has steadily advanced against major currencies, and once again is close to par with the greenback.

Today Heritage's Economic Freedom Index shows Canada ahead of the United States.

What's most impressive about the Canadian success story is that it happened under the leadership of Jean Chrétien and the Liberal Party of Canada, not the Conservative Party of Brian Mulroney, his predecessor. In fact, Mulroney's party raised the national sales tax to 7% in a vain attempt to solve the fiscal crisis.

<img src=http://www.humanevents.com/images/afr08_2e.gif>
Source: Department of Finance Canada

Why did the Liberal Party do it, since they were the party that socialized Canada in the first place?

According to the Fraser Institute, the Canadian leaders got the message because the public and the media demanded change. Everyone, regarding of political affiliation, knew Canada couldn't continue down its "road to serfdom." In particular, they recognized that a third of the government budget was going toward paying the interest on the debt, not government services, and that angered them. Their leaders had the guts to make the hard decisions, and the reforms worked. The Canadian success story is real.

President Obama, are you listening?
Any Canadians know how accurate this is? I know Canada has been in very good financial shape for some time, especially compared to us.
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Old 09-20-10, 05:54 PM
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Re: Canada did it, why can't we?

Canada doesn't feed a ridiculously huge military-industrial complex, for one thing. Also, the most likely don't allow service businesses (banks, insurance companies) to run roughshod over people like they can here.
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Old 09-20-10, 05:57 PM
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Re: Canada did it, why can't we?

This can't be right. All through the health care debate, all I heard was that Canada was a socialist hell hole that nobody in their right mind would want to emulate.
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Old 09-20-10, 06:01 PM
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Re: Canada did it, why can't we?

Oh yeah, eh?
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Old 09-20-10, 06:04 PM
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Re: Canada did it, why can't we?

Originally Posted by Jason View Post
Canada doesn't feed a ridiculously huge military-industrial complex, for one thing. Also, the most likely don't allow service businesses (banks, insurance companies) to run roughshod over people like they can here.
I thought of that as well. But I don't think it matters what you are spending on, only that you do what they did. That would include cutting spending on the military, obviously. But I don't see what is inherent in a military that precludes something like this from working.

Also, it looks like they deregulated things rather than placed more regulations on things. Obviously, I don't know the specifics on that.
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Old 09-20-10, 06:18 PM
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Re: Canada did it, why can't we?

Originally Posted by Jason View Post
Canada doesn't feed a ridiculously huge military-industrial complex, for one thing. Also, the most likely don't allow service businesses (banks, insurance companies) to run roughshod over people like they can here.
Recent article on a related subject:

Canada's armed forces: Fighting to keep fighting
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Old 09-20-10, 06:53 PM
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Re: Canada did it, why can't we?

Canada's positive economic standing is mostly due to their tighter regulation of the banks and financial sector. They don't let the 'financial expert' morons in investment and banking play dice with the economy up there.

This has been written about and discussed rather widely overt the last year, including at the G8 and G20.
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Old 09-20-10, 07:01 PM
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Re: Canada did it, why can't we?

1. Canada is much smaller than the US (population wise) so it's somewhat easier to manage at the Federal level.

2. As per one above, it's easier to engage in "fiscal responsibility" and sell measures that might be more difficult to swallow than in the US where individualism and greed often seems to trump common sense.

3. We (Canada) never believed the absurd notion that "capitalism" (i.e. free market economies) will do just fine if we just leave it alone and let it correct itself. The only place this happens is in economics textbooks.

4. Our banking system is now ranked #1 in the world (yes, we even passed Switzerland). This obviously helped in lessening the damage from the recession. None of the major Canadian banks even came close to beeing in trouble.

5. The above article is fairly accurate except for the Frazer Institute (a right wing think tank) constantly blaming evil socialism for every one of our problems.

6. "Well they don't have a huge military" is a bogus argument.
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Old 09-20-10, 07:45 PM
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Re: Canada did it, why can't we?

Originally Posted by eXcentris View Post
1. Canada is much smaller than the US (population wise) so it's somewhat easier to manage at the Federal level.

2. As per one above, it's easier to engage in "fiscal responsibility" and sell measures that might be more difficult to swallow than in the US where individualism and greed often seems to trump common sense.

3. We (Canada) never believed the absurd notion that "capitalism" (i.e. free market economies) will do just fine if we just leave it alone and let it correct itself. The only place this happens is in economics textbooks.

4. Our banking system is now ranked #1 in the world (yes, we even passed Switzerland). This obviously helped in lessening the damage from the recession. None of the major Canadian banks even came close to beeing in trouble.

5. The above article is fairly accurate except for the Frazer Institute (a right wing think tank) constantly blaming evil socialism for every one of our problems.

6. "Well they don't have a huge military" is a bogus argument.
How did they sell "let's spend less and lay off government workers?" I just can't even imagine a world where our government says that and means it.
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Old 09-20-10, 07:49 PM
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Re: Canada did it, why can't we?

Originally Posted by kvrdave View Post
How did they sell "let's spend less and lay off government workers?" I just can't even imagine a world where our government says that and means it.
One Celine Dion song and the people were moved to tears. Plus hockey.

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Old 09-20-10, 08:07 PM
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Re: Canada did it, why can't we?

I do applaud Canada for Coffee Crisp bars, The Beachcombers, and for recognizing vinegar as the proper condiment for fries. (hey, I grew up on the border).
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Old 09-20-10, 08:18 PM
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Re: Canada did it, why can't we?

Originally Posted by Ky-Fi View Post
I do applaud Canada for Coffee Crisp bars (hey, I grew up on the border).
Those are in my top 10 things about living here, maybe top 5
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Old 09-20-10, 08:21 PM
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Re: Canada did it, why can't we?

Originally Posted by astrochimp View Post
Those are in my top 10 things about living here, maybe top 5


Oh, and I have to throw in Stompin' Tom Connors too. He KICKS ASS!
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Old 09-20-10, 09:22 PM
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Re: Canada did it, why can't we?

Canada has also given us the awesome web comic Hark, A Vagrant:

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Old 09-20-10, 09:52 PM
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Re: Canada did it, why can't we?

Also take into consideration that Canadians have healing factors which keeps them safe from disease, aging, and injuries.
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Old 09-20-10, 10:02 PM
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Re: Canada did it, why can't we?

Originally Posted by Ky-Fi View Post
I do applaud Canada for Coffee Crisp bars.
"How do you like your coffee??"
"Crisp!"

I'm starting to appreciate Ketchup chips again... and I could never live without Good Host Iced Tea.

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Old 09-21-10, 03:05 AM
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Re: Canada did it, why can't we?

Originally Posted by kvrdave View Post
How did they sell "let's spend less and lay off government workers?" I just can't even imagine a world where our government says that and means it.

Worth a read:

http://www.thecanadianencyclopedia.c...=M1ARTM0010404

Excerpt:

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A poll by the Angus Reid Group indicated that two out of three respondents approved of the (1995) budget, while the government's support actually increased five points - from 58 per cent to 63 per cent.

One reason for that satisfaction is that many Canadians were delighted to have been spared more direct hardship, such as an increase in personal income taxes. The absence of such an increase was enough to leave stillborn predictions of a full-blown taxpayers' revolt. Another reason is that, following the near-collapse of the New Democratic Party on the federal scene, the social-democratic movement in Canada is now largely irrelevant. The only substantive criticism of the budget nationally came from the Reform party - which called the budget "cowardly" because it did not contain even tougher measures. That made it easier for the Liberals, even as they presented the toughest budget of any federal government in recent history, to present themselves as kinder, gentler cost-cutters.

Another factor is that the full impact of the budget will only become evident on a gradual scale over the next three years. It will take that long, for example, for the government to buy out or offer early retirement to 45,000 employees, and for the planned $25 billion in spending cuts to take full effect. Similarly, Ottawa will cut 10 per cent out of the $15.3 billion spent annually on unemployment insurance, but it has not yet said whether that will be by tightening the conditions for eligibility, shortening the period of time for collecting benefits or reducing the size of benefits.
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Old 09-21-10, 10:07 AM
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Re: Canada did it, why can't we?

I wish I could move to Canada.

I have nothing else to contribute to this thread.
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Old 09-21-10, 10:08 AM
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Re: Canada did it, why can't we?

Why can't you?
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Old 09-21-10, 10:27 AM
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Re: Canada did it, why can't we?

Originally Posted by Tracer Bullet View Post
I wish I could move to Canada.

I have nothing else to contribute to this thread.
They don't have libraries in Canada?
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Old 09-21-10, 10:40 AM
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Re: Canada did it, why can't we?

Originally Posted by starman9000 View Post
Why can't you?
I'm missing points. I don't have enough to immigrate to Canada.
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Old 09-21-10, 11:27 AM
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Re: Canada did it, why can't we?

Originally Posted by eXcentris View Post
Thanks. Very interesting. I see no reason the same type of thing can't work here. Seems like fairly simple sound economic policies.
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Old 09-21-10, 02:41 PM
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Re: Canada did it, why can't we?

I wonder if they have government employee unions in Canada like they do here. That post from Excentris seems to say that the public approved of cutting government jobs because the government told the people it would prevent a tax increase. I think if the govment tried that in America the public employee unions have enough power to kill any politician who suggested it, and even if the majority saw the benefit of lower taxes the unionized minority would move to save their jobs and kill the reform.
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Old 09-21-10, 03:17 PM
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Re: Canada did it, why can't we?

Originally Posted by Mabuse View Post
I wonder if they have government employee unions in Canada like they do here.
http://en.wikipedia.org/wiki/Public_...ance_of_Canada
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Old 09-21-10, 10:12 PM
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Re: Canada did it, why can't we?

Originally Posted by Mabuse View Post
I wonder if they have government employee unions in Canada like they do here. That post from Excentris seems to say that the public approved of cutting government jobs because the government told the people it would prevent a tax increase. I think if the govment tried that in America the public employee unions have enough power to kill any politician who suggested it, and even if the majority saw the benefit of lower taxes the unionized minority would move to save their jobs and kill the reform.
Exactly the problem
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