Why Did Canada’s Economy Boom When the Burden of Spending Was Sharply Reduced?

Townhall.com ^ | March 6, 2013 | Daniel J. Mitchell

[Kaslin]

In this appearance on Canadian TV, I  debunk anti-sequester hysteria, pointing out that “automatic budget cuts” merely restrain government so that it grows $2.4 trillion over the next 10 years rather than $2.5 trillion.

I also point out that we shouldn’t worry about government employees getting a slight haircut since federal bureaucrats are overcompensated. Moreover, I warn that some agencies may deliberately try to inconvenience people in an attempt to extort more tax revenue.Dan Mitchell Explaining What Americans Can Learn from Canada's Fiscal Restraint in the 1990s

But I think the most important point in the interview was the discussion of what happened in Canada in the 1990s.

This example is important because the Obama White House is making the Keynesian argument that a smaller burden of government spending somehow will translate into less growth and fewer jobs.

Nobody should believe them, of course, since they used this same discredited theory to justify the so-called stimulus and all their predictions were wildly wrong.

But the failed 2009 stimulus showed the bad things that happen when government spending rises. Maybe the big spenders want us to think the relationship doesn’t hold when government gets put on a diet?

Well, here’s some data from the International Monetary Fund showing that the Canadian economy enjoyed very strong growth when policymakers imposed a near-freeze on government outlays between 1992 and 1997.

For more information on this remarkable period of fiscal restraint, as well as evidence of what happened in other nations that curtailed government spending, here’s a video with lots of additional information.Spending Restraint, Part II: Lessons from Canada, Ireland, Slovakia, and New Zealand

By the way, we also have a more recent example of successful budget reductions. Estonia and the other Baltic nations ignored Keynesian snake-oil when the financial crisis hit and instead imposed genuine spending cuts.

The result? Growth has recovered and these nations are doing much better than the European countries that decided that big tax hikes and/or Keynesian spending binges were the right approach.

Paul Krugman, not surprisingly, got this wrong.

[Da Coyote]

Indeed. It appears that the Canadian’s superior intelligence has allowed them to at least place libtards and their lowbrow knowledge anything that is not a “feeling” into a sealed container.

Dear Canada, we are ripe for takeover. Please invade.

We’ll pay...and will help you dispose of liberals after your win.

[Uncle Miltie]

Keynesianism taxes (a.k.a. “prints”) piles of money earned by productive citizens and burns it in a pyre.

[KC_Lion]

Dear Canada, we are ripe for takeover. Please invade.

We’ll pay...and will help you dispose of liberals after your win.

I second that motion ping!

[Buckeye McFrog]

Since we’ve apparently scrapped the “native born” provisions in our Constitution I could sure get behind a
Stephen Harper-Ted Cruz ticket.

[Conserev1]

It’s simple when private enterprise is allowed to grow the tax base goes up. Government cannot create enough jobs to fund the Government! When all Americans have that coveted Gov job that will sustain the 500,000 and the rest are unemployed growth will always cease.
500,000 Gov workers will fill one bucket with water when
3 million workers will fill 300,000 buckets of water!
One bucket of water will not provide the amount of water needed to provide for the 3 million!
And in Essence the 500,000 will die a water starved death!

[Squawk 8888]

Thanks KC_Lion.

To all- please ping me to Canadian topics.

Canada Ping!

[Carry_Okie]

Why Did Canada’s Economy Boom When the Burden of Spending Was Sharply Reduced?

A point that Romnuts never hammered home. A point that Boehner never makes with what little air time he gets. A point that never sees the light of day on Sunday talk shows.

And these idiots say conservatives can't win.

[Carry_Okie]

Dear Canada, we are ripe for takeover. Please invade.

You don't want their gun laws, or their prohibitions on "hate speech."

[Dartman]

We’ll pay...and will help you dispose of liberals after your win.

Forget paying. If you'll help dispose of liberals, it's on the house!!

[mirado]

It’s been a long time since I have remarked on my favorite site and home page site, but I can’t help myself on this one. YOU ARE ABSOLUTELY CORRECT.

Thanks for your observation.