Canada, Land of Smaller Government (Infectious Greed | Paul Kedrosky)

Canada, Land of Smaller Government

By Paul Kedrosky · Monday, August 9, 2010 · Discuss (2) · ShareThis

From my friend Jason Clemens at the Pacific Research Institute, how Canada (sic.) is newly the land of smaller government. I don’t agree completely, as Canada has been the beneficiary of a massive, unpriced subsidy – proximity, physical and economic, to the U.S. and its debt-happy consumers – but makes some useful and intriguing points.

Canada, Land of Smaller Government

When Americans look to Canada, they generally think of an ally, though one dominated by socialist economic policies. But the Canada of the 1970s and early 1980s—the era of left-wing Prime Minister Pierre Trudeau—no longer exists. America's northern neighbor has transformed itself economically over the last 20 years.

The Canadian reforms began in 1988 with a U.S. free trade pact that would lead to the North American Free Trade Agreement. But change really began to take off in 1993. A socialist-leaning government in Saskatchewan started by reducing spending and moving towards a balanced budget. This was followed by historic reforms by the Conservatives in Alberta, who relied on spending reductions to balance their budget quickly.

In 1995, the federal government, led by the Liberal Party, passed the most important budget in three generations. Federal spending was reduced almost 10% over two years and federal employment was slashed 14%. By 1998, the federal government was in surplus and reducing the nearly $650 billion national debt. Provincial governments similarly focused on eliminating deficits by paring spending and reducing debt, and then they started to offer tax relief.

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