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Book Review: The Canadian Century

The Canadian Century, by Brian Lee Crowley, Jason Clemens and Niels Veldhuis, is an unusually sobering look at political realities in North America, suggests J.J. McCullough. It may prove, he claims, enormously prescient.

J.J. McCullough - July 12, 2010

The Liberal Party became far less identifiably left-wing during this intense era of unabashed fiscal conservatism, but the results seemed to speak for themselves. Canada had gone, the authors triumphantly proclaim, “from a fiscal basket case to the envy of the industrialized world.”

And envy of the world is very much Canada’s natural status, they say. Much as we may like to believe Canada is a nation defined by its ample welfare state and spend-happy government, the Martin-Chretien era was really far more in tune with the country’s historic traditions than the flamboyant Keynesianism of Pierre Trudeau -- airports and fawning biographies notwithstanding.

Is America the new Canada?

It’s in this context of economic self-congratulation that The Canadian Century addresses its second major theme, perhaps best described as a treatise of economic schadenfreude against the United States. While Canada has succeeded in reducing its tax, debt, and spending burdens to manageable levels, the United States “has generally failed to achieve reforms that come even close to matching those achieved in Canada.”

This unto itself is a fairly novel line of argument: how often does one hear the case that Canada has actually bettered the US in terms of competitive tax rates and reining in the welfare state? But the statistics presented are a sobering example of how reality often inconveniently defies popular myth.

In the realm of health care, for instance, even before the costly Obamacare reforms, the United States of America still greatly outspends Canada in the maintenance of its existing publicly-funded regime. As a percentage of total GDP, Canadian health spending hovers around 10 per cent of our gross domestic product, while in the States, most recent estimates peg the number at somewhere near 16 per cent. A side-by-side analysis of other entitlement programs reveals much the same story. U.S. state pensions are far more generous than their Canadian equivalents, for instance, and no American government has yet had the courage to scale back Social Security benefits the way the Chretien administration did in 1998.

The U.S. tax system is also noticeably more socialist than Canada’s, and is only ever reformed in a direction of increased vindictiveness towards the wealthy and successful. Tea Party rhetoric aside, ordinary Americans are simply not taxed very much, yet reap enormously disproportionate benefits funded almost entirely by angrily soaking the country’s richest 20 per cent. The United States engages in a very crude system of taxing large corporations and the wealthy to the virtual exclusion of everything else, particularly consumption. Canada, in contrast, has steadily sought to drift the tax burden away from high incomes and the corporate sector and onto individual purchases, mainly though sales taxes. Though hated by the public, such taxes are enthusiastically applauded by a grateful private sector, who celebrate them as a boon to productivity.

The most sobering comparison of all, however, and the most iconoclastic to America’s reputation as a cold-hearted, state-starving miser, is a a chart on page 137 revealing that there is in fact no practical difference whatsoever between Canada and the United States when it comes to government spending. Under the Obama administration, state spending as a percentage of GDP has sharply risen to an all-time high of 41 per cent compared to Canada’s 43 per cent (which actually represents a fairly significant low for the latter).

More articles by J.J. McCullough