Bloomberg News is reporting that Canadians are richer than Americans for the first time in recent history. The Canadian government has pursued a fiscally conservative form of socialism that cut back on social programs while resisting the world-wide trend to deregulate the financial industry. The Great Recession has been relatively mild as a stable housing market and banking system helped Canadians maintain their overall net worth as Americans watch their net worth decline lower and lower.
Policy has played a significant part as well, though. Both liberals and conservatives in the U.S. have tried to use the Canadian example to promote their arguments: The left says Canada shows the rewards of financial regulation and socialism, while the right likes to vaunt the brutal cuts made to Canadian social programs in the 1990s, which set the stage for economic recovery.
The truth is that both sides are right. Since the 1990s, Canada has pursued a hardheaded (even ruthless), fiscally conservative form of socialism. Its originator was Paul Martin, who was finance minister for most of the ’90s, and served a stint as prime minister from 2003 to 2006. Alone among finance ministers in the Group of Eight nations, he “resisted the siren call of deregulation,” in his words, and insisted that the banks tighten their loan-loss and reserve requirements. He also made a courageous decision not to allow Canadian banks to merge, even though their chief executives claimed they would never be globally competitive unless they did. The stability of Canadian banks and the concomitant stability in the housing market provide the clearest explanation for why Canadians are richer than Americans today.
Will the Democrats and Republicans stop pissing, moaning and groaning about every little petty political grievance in Washington, D.C., to do what is right for the country?
Oh, hell no. That would be… Canadian.