Skip to comments.Not wealthy enough to gloat (If Canada is now richer than the USA, it's not because of socialism)
Posted on 07/18/2012 6:35:48 AM PDT by SeekAndFind
If were richer than Americans, its not because of socialism
A new facteroid circling the media planet suggests Canada is sweeping ahead of the United States economically. Here it is: The average Canadian household had net worth of $363,202 at the end of last year, compared with $319,970 for the average American household.
A surprising number and, in many respects, a heartening statistic to boost the economic confidence of Canadians. How much of a boost? Thats a bigger question. The bald calculation is simple enough: The average Canadian household now looks to be more than $40,000 richer than the average American household, according to data from Environics Analytics of Toronto.
But before Canadians start counting the dollars and heading for the mall, a closer look at the data suggests there may not be as much wealth at hand as the raw numbers suggest. Also in question is whether this Canadian statistical achievement is enough firepower to justify a wave of ideological gloating.
Gloating, unfortunately, appears to be the dominant reaction to the numbers. Canadians are richer than they think, said Michael Adams, president of the Environics Institute, in a recent op-ed in a Canadian newspaper. The risk-averse Canadian tortoise has the lead in the race against the risk-taking American hare, said Mr. Adams.
That was more than two weeks ago. This week, along comes a Bloomberg News column that turned the household wealth story into a grand ideological statement. Hardheaded Socialism Makes Canada Richer Than U.S. A Time magazine blog picked up the idea for American consumption: Watch out, Americans: Your thrifty, socialist neighbours to the north have steadily become richer than you.
The author of the Bloomberg column on the glories of Canadas hardheaded socialism is Stephen Marche, the Canadian writer and novelist. In a dazzling display of broken ideological running, he takes the $40,000 wealth advantage and scores a triumphant liberal/leftist touchdown.
The fact that there were no defensive tackles or linebackers on the field at the time made it an easy triumph for Mr. Marche. Look, Ma. Touchdown.
His column begins with the household data, then turns to a brief mention of Canadas lower 7.2% unemployment compared with the 8.2% U.S. rate, and then quickly concludes: The Canadian system is working; the American system is not. Then, after a few dodges and dekes into immigration policy, social policy, regulation and constitutional issues, Mr. Marche dashes for the headline: What makes Canada better than the United States is hard-headed socialism.
Canada is winning because Canadian governments, Liberal and Conservative, have firmly maintained socialist principles over the years going back to Paul Martins budget cuts in the 1990s. The conclusion is clever: Social programs and robust capitalism are not, as so many would have you believe, inherently opposed propositions. Both are required for meaningful national prosperity, wrote Mr. Marche.
And thus is born a definition of something called hard-headed socialism. Which is presumably better than the old one from the late economist and philosopher Robert Heilbroner: Socialism defined as a centrally planned economy in which the government controls all means of production was the tragic failure of the 20th century. Born of a commitment to remedy the economic and moral defects of capitalism, it has far surpassed capitalism in both economic malfunction and economic cruelty.
Mr. Marches hard-headed socialism is apparently soft at its Canadian centre. Unfortunately, he reaches his conclusion based on an analysis that turns the story of recent Canadian and U.S. economic policy change on its head. The reason some economic data might be moving in Canadas favour is not a function of Canadian socialism winning out over American capitalism. To the extent that the United States is losing economic ground, its a direct result of Americas slide into forms of socialism and Canadas growing base as a more capitalist nation.
The United States is in the beginning phase of a slow decline into a bigger government nation that leans further and further to the left. American socialism is a threat to U.S. economic growth, a threat that is keeping the economy down. The rise of government in the U.S. since the mid-1990s when Canada cut government deficits and spending is traceable in national statistics (See graphic titled American Socialism). Canadian spending and debt once stood well above U.S. levels, but the tables have been turned since then, especially in the past five years under President Barack Obama and the current Congress.
American socialist housing policies, which provided massive incentives for homeownership through scores of government programs and institutions, produced the housing crisis that is at the heart of U.S. economic problems. Compounding those problems today is the growing risk of even greater U.S. socialist intervention in the economy, through regulation of the financial markets and the imposition of national health care regimes such as Obamacare.
In Canada, meanwhile, financial regulatory risk is relatively small. Canadian medicare is on the brink of some kind of capitalist reform. The major lament of the regulatory classes is that Canada has not had as the United States has had for decades a national securities regulator.
As the U.S. slides under the Obama administrations demonstrably leftist and anti-capitalist direction awaiting, perhaps, a Mitt Romney rescue Canadian statistics may begin to look a little healthier, at least by some measures. The household wealth comparison touted by Mr. Marche, however, may not be an indicator Canadians can take to the ideological bank.
The only real boost in Canadian net worth to $363,202 comes from the value of real estate, from the homes and condos that have been soaring in value across the country thanks to rock-bottom mortgage rates.
The actual Environics Analytics data on household wealth also show that while the U.S. government is moving to the socialist left, Americans are still on average fairly capitalistic compared with Canadians. Averages are unreliable, but the same data show that when it comes to holding assets, Americans have way more money in stocks and bonds and bank deposits than Canadians (see table on household wealth).
Even more telling on the socialism-capitalism metre is another Environics Analytics number. Annual disposable income for a Canadian household last year was $58,839. For an American household: $98,467. With this extra cash income, Americans pay for health care and other privately delivered services.
In the end, the big gap may not even exist. No story here, ideological or otherwise.
The unpopped Vancouver real estate bubble alone is big enough to account for the difference - which you can see evidence of in the Real Estate line item on the graphic.
FWIW, just about every other country in the world has a similar requirement except ours. I worked for a company in Japan who had to do the same thing. On top of that, they were required to pay me at least a 10% salary premium over others working the same type of job. Japan has no visa quotas. They rightly believe that the 10% salary premium requirement will limit the number of foreign workers and ensure that only those who are worth the premium get hired.
Why Canada’s Housing Market Didn’t Crash
I see others have noticed it. Canada had no Fannie Mae or Freddie Mac pumping up the bubble.
There is a website out there with photos of various Vancouver properties. Half of them are crack houses, and the rest are homes that sold for over $1 mil. Canadian. You have to try and guess which is which, and it’s darned near impossible.
It's more important to have a nice house in 80% of that country because the winters are miserable.