Canada’s Hack-n-Slash Strategy, Once Bemoaned, Now Admired
COMMENTARY—Prospectingjournal.com—It seems that all those years of enduring the “boring country’” stereotype are finally paying off, as the flashier and exciting EU nations are now drooling over Canada’s deficit-destroying tactics of the pre-Harper years.
And what a treat it is for aging Liberals Jean Chrétien and Paul Martin, who must surely feel pressured to help resurrect the image of the drowning Liberal party through international finance meetings. In 1993, the Liberals turned Canada from its “Frozen Mexico” status to a surplus in five years: A combination of axing public service jobs, pulling R&D spending and military cuts. These debt legends are now saving Europe from itself, advising governments on how to spend less and stay rich. Martin shot off to London last year to assist with Britain’s draconian budget strategies; in July, Chrétien’s speech at The Times CEO Summit made him a star.
. . . But all this talk has equated to nothing. Greece is trapped in an endless nightmare, where it can neither exit the EU nor survive without an IMF IV. Spain and Italy are trying to politely say that they are close to broke, Merkel isn’t so popular anymore, Britain is borrowing more (not less), and we all know what it’s like down in the US. Deutsche Bank’s negative scenario forecast shows debt rising steadily to 2015: Germany’s from 81 per cent of GDP to 88, Italy’s from 119 to 126, and Greece’s from 154 to 187.
What gives? First, Canada rode the Chinese commodities boom that started in the 1990s. With recent inflation in China and a financial world still in turmoil, few countries seem to be well-positioned for this. Second, immigration waves led Canada’s aggressive economic expansion; now, over-immigration is a highly debated economic topic. Third, interest rates were falling—now, definitely not. Finally, we had strong leadership, something missing in many EU countries. As the richer EU countries lose the desire to pull up their poor neighbours and politicians lose more ground with their citizens, the Canadian get-out-of-debt “dream” will remain just that—a dream. News reports from the US also mention admiration for their frozen neighbour’s fiscal restraint, with many US politicians actually taking Canada seriously for the first time.
Of course, things are far from perfect here. A recent report shows that one third of Canadians are “embarrassed” of their debt, while household debt is increasing. Also, the Harper government has sunk our deficit to a substantial low.
Yet the OECD just labeled Canada the second happiest country in the world, second only to Australia, whose beaches (understandably) and forced voting (not so much) gave it the edge. I’ll take that. We may not be exciting, like England, or sunny, like Australia, but being a quiet, reserved Canuck with money in the bank is worth it.