Father Raymond J. de Souza explains why Canada’s financial success story can’t be easily replicated by Europe or the United States:
The slaying of the deficit by Paul Martin saved Canada from the sovereign debt turmoil now afflicting Europe and America. While full credit is due to Mr. Martin, and it is gratifying to see other countries look to our experience, the turnaround in fiscal policy that Canada achieved in the 1990s is simply impossible to achieve in Europe or the United States in the near term. When we had our debt crisis, sparked by downgrades of the federal government’s credit rating between 1993 and 1995, we could make tough choices with the prospect of almost immediate results. No country has that option today.
That is only partly due to politics. Many have observed that the Liberal majority government of the day had the power to take dramatic action. That understates the case. Not only did the Grits have a majority, they had the near-certainty of another majority in 1997, given the disarray among the four opposition parties. The Chrétien government of 1995 was the most electorally secure government in Canadian history. No other country — not even Canada — has that circumstance today.
[. . .]
Europe and America face weak economic growth, rising debt service costs and no tax reforms to provide robust new streams of revenue. Even if granted the vast powers of the Chrétien government — not for nothing was it called the “friendly dictatorship” — neither Europe nor America have a path to slaying their deficits, aside from ever more brutal spending cuts. And indeed, if serious spending cuts add to unemployment and, in the short term, restrain economic growth, then the deficit may not shrink as welfare costs rise and revenues shrink.
Canada did well to respond to our crisis in the 1990s. We were lucky to have had it when we did.
Paul Martin offloaded his problem on the provinces. They cut transfers much more then they cut spending in any other way.
I am tired of hearing how he did such a great job! I am in the military, and at that time they downsized the military and froze our salaries for 4 years. Frozen means just that, no one got a raise, no incentive increases and no cost of living increases. They also downsized the public service and froze their salaries. Today the public service has balloned way past the cuts they endured in the 90’s and the military is still stuck at 65,000. I wish that there were more media outlets that would tell that story!
Comment by Dwayne — August 11, 2011 @ 17:36
While I’m one of the last people to cheer on any kind of taxation at all (beyond the minimum needed to support the “nightwatchman state” — armed forces, police, and courts), it makes a lot of sense to delegate the responsibility for all the things governments have taken it upon themselves to do, to the lowest administrative level. “Subsidiarity” I think the Eurocrats called it, while centralizing as much as they possibly could. One size certainly _doesn’t_ fit all, so what might work in downtown Toronto is not likely the right solution for Peterborough or Nepean or Timmins.
Not like the federal government hadn’t already learned that there was no constituency that would actually fight for military funding . . . I was in the militia in the mid- to late-70s, and our officers went without pay for several months to pay the troops a small part of our salaries (I think it worked out to 1 half-day’s pay per month). We could fire off our entire year’s worth of ammunition in about five minutes, and blank ammo counted the same as ball. We not only drove vehicles older than ourselves, we drove vehicles our grandparents had qualified on in the Korean War era!
Canada has been cashing in that “peace dividend” since approximately 1968.
Comment by Nicholas — August 11, 2011 @ 22:12