Oh Canada!

The above is a graphic from a blog entry at the National Post newspaper site. It shows government as a percent of GDP. (Note for the non-Canadians: National Post is a right wing newspaper previously owned by the financial manipulator Conrad Black who is currently squatting at no cost to the Canadian taxpayer in a US jail).

In his first 100 days in office, President Barack Obama favoured us with a visit, said very gracious things about us, made supporting our Afghan mission politically respectable again, offered to help out our economy by buying maple leaf cookies for his daughters and hit approval ratings not seen since Trudeaumania. On the other hand, no sooner had Air Force One landed back in Washington than his Agriculture Department announced new meat-labelling rules that will hit our exporters hard. Still, Mr. Obama has subsequently made clear that his campaign promise to renegotiate NAFTA is no longer operative, which is good for us.

If the President’s direct effect on Canada has been minimal, his sideswipe effects have been substantial and his post-100 Days influence offers up new strategic possibilities for us, including repositioning ourselves as North America’s market-friendlier half.

The sideswipe effects include quasi-nationalization of two car companies, which forced us to follow suit or lose plants to the United States, and his continuation of the Bush policy of mega-bucks for banks, which induced the Bank of Canada to provide comparable loans to our supposedly much healthier banks lest free money for U.S. banks cause them competitive disadvantage.

But if the sideswipes have forced greater intervention here, Mr. Obama’s long-term influence may move in the other direction. You may have been as struck as I was by the graph Jason Clemens and Neils Veldhuis published here yesterday (reproduced above). It shows government expenditure in Canada and the United States over the last 60 years as a share of the two countries’ respective GDPs.

From 1950 to about 1968, when the afore-mentioned Trudeaumania hit us, the Canada and U.S. lines track pretty closely. For the 25 years after that, while the U.S. line continues on a very gradual upward trend, ours climbs a mountain. We peak in the early 1990s with public spending at Scandinavian — and scandalous! — levels of over 50% of GDP.

But then our spending starts declining (as a share of GDP, though not in absolute terms). Some of the improvement is cyclical, reflecting recovery from the early-1990s recession. But the decline continues on into good economic times, to the extent that now public spending is virtually the same share of the two countries’ GDPs.

It goes on... but as a joke that is enough of a taste for you to appreciate it. Of course the blogger is deadly serious. As a right winger he is opposed to government. I'm willing to pay for government if it gets me a decent civil society.

What I find fascinating is that the US is now ballooning in the size of government. While in Canada that buys us health care, in the US it buys wars in third world countries. I think Canada gets the better return on its government "investment".

What the blog entry doesn't dwell on is that the crash-and-burn economic follies of Bush 43 will mean that US taxes will have to go higher. Currently Canadian government spending is down, but the effects of the US crash means that government spending as a share of the economy will rise here as well.

While I'm OK with government spending to buy social goods. I'm outraged at an increasing share of government spending required to fix economic problems caused by buccaneer economics of fringe right wing lunatics who trash an economy to make their quick bucks. I would think Americans would be even more upset since their government spending will pretty well double that of Canada's to fix the problems that extreme laissez-faire economic ideology from Bush 43 and the lingering costs of his war of choice in Iraq will have on taxpayers down south.