Canada's prosperity in the 90's through cutting government spending.

Discussion in 'Politics' started by Max E., Jul 13, 2011.

  1. Max E.

    Max E.

    I will give the liberals some credit for this, one as they were in control in the 90's, but it is interesting to note the fact that Canada's government drastically cut spending on social safety nets in the 90's, and unemployment went from 12% to 6%, and the value of the canadian dollar skyrocketed, and Canada has basically been stronger ever since.

    It is also interesting to note that the low tax, low spending conservatives in Canada, are currently kicking the ever loving Bejesus out of Obama in the States right now from an economic standpoint. Canada, which is 1/10th the size created 3 times as many jobs last month as Obama did. And the bank of Canada(canadas version of the fed) has been raising interest rates..... so much for Keynes...Go figure.

    I found this little tidbit off of a documentary someone sent me that Stossel did, anyone who is interested should watch the documentary i posted below, but the article sums the whole thing up.

    (article by john stossel)
    When I think Canada, I think big government. I'm embarrassed that I didn't know that in the mid-'90s, Canada shrank its government. It had to. Its debt level was as bad as ours is today, almost 70 percent of the economy. Canada's finance minister said: "We are in debt up to our eyeballs.
    That can't be sustained."

    Economist David Henderson, a Canadian who left Canada for the United States, remembers when The Wall Street Journal called the Canadian dollar "the peso of the north." It was worth just 72 American cents. "Moody's put the Canadian federal debt on a credit watch," Henderson said.

    The problem, he added, was that Canada had a government safety net that was more like a hammock.

    "When I was growing up in Canada, people who went on unemployment insurance were said to go in the 'pogie.' You could work as little as eight weeks, taking the rest of the year off."

    So in 1995 Canadian leaders cut unemployment benefits and other programs. It happened quietly because it was a liberal government, and liberals didn't want to criticize their own. The result was that Canada's debt stopped increasing. As the government ran budget surpluses, the debt went down.

    "The economy boomed," Henderson said. "Think about what government does. Government wastes most of what it spends, and so just cutting government and having that money in the hands of people means it's going to be used more valuably."

    Canada fired government workers, but unemployment didn't increase. In fact, it fell from 12 percent to 6 percent. Canadian unemployment is still well below ours. And the Canadian dollar rose from just 72 American cents to $1.02 today.

    Canada also raised some taxes. But the spending cuts were much bigger, six to one: agriculture was cut 22 percent; fisheries, 27 percent; natural resources, almost 50 percent.

    "We should learn from Canada's experience that you can cut government substantially," Henderson said. "It is so wasteful. There's so much to cut, without causing much real pain — not causing pain, but helping your economy grow, helping people become better off."

    Henderson added, "We need to move more quickly than the Canadians did. Unfortunately, we're moving more slowly than the Canadians did."

    If we're moving at all.

    While Canada thrives, we pour more money down the hole.

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  2. pspr


    Maybe we will be sneaking into Canada to get a job after another year of Obama.
  3. Max E.

    Max E.

    We may have just found a good reason why AMTRAK is being expanded right by the mexican border.....

    The plan is probably to make it go straight north, so that the illegal immigrants can cross through the states conveniently and make their way into Canada. :D
  4. Ricter


    2006 government expenditures as percent of GDP:
    Canada = 48.2
    US = 19.9.

    2009 tax revenue as percent of GDP:
    Canada = 33.4
    US (all levels) = 26.9.

    Income equality -
    (Note: R/P 10%: The ratio of the average income of the richest 10% is to the poorest 10%; R/P 20%: The ratio of average income of the richest 20% is to the poorest 20%; Gini coefficient, UN; Gini coefficient, CIA.)

    Canada = 9.4; 5.5; 32.6; 32.1
    US = 19.9; 8.4; 40.8; 45.
    (Denmark gini = 24.7; Egypt = 34.4; Tunisia = 39.8; Syria = not available.)
  5. Max E.

    Max E.

    Doesnt change the fact that Canadian's prosperity drastically increased in the 90's when they severely cut spending. And it doesnt change the fact that Canada is grossly out performing the states with a Conservative majority government focused on cutting spending/taxes, as opposed to the Obama plan of increasing government/welfare/taxes.

    Also please explain what these numbers at the bottom are supposed to mean.

    Canada = 9.4; 5.5; 32.6; 32.1
    US = 19.9; 8.4; 40.8; 45.

  6. Ricter


    Canada capitalized well on American booms. It doesn't matter to the seller, in terms of sales, if the buyer is borrowing money to buy your stuff. In other words, Canadian revenues were up--their dollar was (relatively) weak. And Canada is not quite as "adventurous" around the world as the US.

    The numbers at the bottom correspond, respectively, to the four attributes in the note above them.
  7. Max E.

    Max E.

    And now the Canadian dollar is way up, and Canada is the most prosperous country in the G7, Canada has become more prosperous while their dollar has went up, and the bank of Canada has raised rates. They are still cutting spending/taxes, and they are crushing every country in the G7. How do you explain the fact that they have been highly prosperous doing the complete opposite of what Obama is doing?

    In the mid 90's canada drrastically cut spending on welfare programs and unemployment went from 12 to 6%. How does your model explain that?
  8. Max E.

    Max E.

    The price of oil in 1998 was the lowest it had been in inflation adjusted, and nominal dollars for decades, nice try.

    And the Canadian dollar went nowhere but up from the time Canada chopped the government.

    Canada didnt crush their dollar to boost exports like the U..S. is trying.

    LOL at krugman, maybe i should post an Ann coulter article as my response.
  9. Max E.

    Max E.

    Here is a table of those "high" commodity prices you allude to, fact of the matter is that commodity prices were low in the 90's.

    #10     Jul 14, 2011