A New Generation of Conservative Thought

Canadian capitalism roars to victory
Harper shows U.S. how to achieve economic prosperity

By Dr. Grace Vuoto
May 5, 2011


The Canadian economy is outperforming that of the world’s superpower. The Canadian dollar is stronger than America’s—and its 3.3 percent annual growth last year makes America’s 2.9 percent growth look miserable by comparison. In 2011, the Canadian economy is growing faster than any other G-7 nation. As a result of its small-government, pro-business polices, the Canadian Conservative government roared to victory on Monday, signaling an endorsement of Prime Minister Stephen Harper’s masterful stewardship. Since when is it appropriate to say “Canada” and “capitalism” in the same sentence?

It used to be that American conservatives would regularly mock our neighbors to the north as “socialists”—“The Socialist Republic of Canuckistan,” they would sneer. That was back in the day when America espoused limited government and Canadians elected leaders to enlarge the state. Yet, since the later years of the Bush administration, Americans are interventionist and Canadians allow the free market to propel the economy to great heights. And the results are unmistakable: The Canadian economy is thriving while the American one barely has a pulse.

At the heart of this minor miracle is one man: Mr. Harper. He rescued an embattled Conservative Party from near extinction, and rode the tumultuous waves of two minority governments since 2006—one of which recently collapsed on a non-confidence vote in Parliament. And at last, his policies of fiscal conservatism were vindicated at the polls: The Conservatives have the first non-Liberal majority government in 23 years, with a stunning 167 seats out of 308.

Now, the next four years in Canada look as bright as the Florida sunshine. Mr. Harper has a mandate to cut spending. He promises to balance the budget—tame problems by current U.S. standards—by 2014. And he has vowed to lower personal income tax rates.

Canadians have weathered the recent “Great Recession” in the U.S. in a manner that is simply astounding. Usually, when the American economy falters, the Canadian one quickly thereafter suffers the same woes, as Canada is America’s largest trading partner. Yet, not this time. The Canadian banking and mortgage industry did not fall into the same traps as its American counterparts. As a result, the Canadian housing market remained steady, even throughout the worst crisis in America. Ironically, the Wall Street Journal’s Mary Anastasia O’Grady interviewed Canadian Finance Minister Jim Flaherty in a June 26 article titled, “Canada: Land of the Free.” She probed how Canada “avoided the mistakes that led to the housing and banking crash in the U.S.” Since when did Canadians become models for Americans?

And guess who is benefiting from the U.S. housing meltdown? Canadians! They are buying homes in record numbers in Arizona. There has been a million-dollar luxury home sold to a Canadian buyer every week for nearly two years, said the Arizona Business Council at the end of April. In order to escape harsh winters, Canadian “snowbirds” usually vacation in America’s warm and sunny climates. Now, having held on to one home easily in the Great North, they have swooped in to buy vacation homes— or perhaps a better home than their primary residence—in the American South. More than 600,000 Canadians are flocking into Arizona, a state where they are the dominant foreign investors.

Thus, when Canadians kick up their feet for a rest, they will be doing so for years to come on foreign soil, in their very own backyards in Arizona and also in Florida—riding merrily on the backs of all those Americans who overstretched and overreached, bit off more than they could chew and foreclosed their homes, causing values to plummet and homes to fall right into the hands of their neighbors to the North. And with strong Canadian dollars in their pocket—these happy foreigners can buy lots of American electronics, attend the finest U.S. restaurants and even bring home the champagne while they are here a few weeks of the year. While Americans suffer, the good times roll for the merry Canucks.

Americans will soon have to explain to their children that long ago Canadians had an inferiority complex to the world’s superpower along their border. Among many reasons for this was that Americans had such tremendous purchasing power: Americans would raid Canadian stores, lapping so many goods onto their shopping carts it would leave even the check-out clerks gasping with envy.

Now, thanks to Mr. Harper’s policies, Canada’s general sales tax has been slashed—5 percent rather than 7 percent—and Canadians therefore have more money in their pockets. At the same time, Canadian loonies (a dollar coin) with the radiant face of Queen Elizabeth II can be exchanged for an even larger number of U.S. dollars with George Washington on them, and these can be spent anywhere—including on cheap Chinese goods available in U.S.stores.

There was a time when Canadians talked incessantly about the Canadian brain drain: “Why do all our talented professionals flock to the U.S.? How can we stop this?” they would ask. And no matter how many times this was discussed, there were no good answers—no way to compete with the gargantuan U.S. economy. Now, the giant sucking sound can be heard in reverse: With a federal corporate tax rate that will fall to 15 percent in 2012, Canada is saying we are open for business; come this way for investments, come this way for future jobs.

And also dramatic, many Canadians are giving up on the much-vaunted concept of universal public health care. Many are fed up with long lines for routine visits to a doctor and tired of hearing stories about hard-working, tax-paying citizens dying before they get urgent operations. Hence, waves of private alternatives have sprung up to compete with an overburdened, inefficient public health care system. Even Canada’s pride and glory—nationalized health care—is gradually adopting the principles of competition and privatization.

But don’t tell any of this to President Barack Obama. He lives in a golden halo: that of 1970s Canada. Then, in Canada, from the late-1960s until the mid-1980s, there was a flamboyant leader—an intellectual—promising so much that would be new and fabulous. There was a public “mania” for him too. It was called “Trudeaumania” and in many respects it resembled the Obamamania of 2008. Late Prime Minister Pierre Elliott Trudeau brought socialism to Canada which resulted in grinding down the Canadian economy for decades—especially since his policies were adopted by his Liberal successors who would subsequently dominate federal politics. That is, until Canadians realized they could never keep up with their American neighbors who were doing so much better.

It was tough, but Canadians finally grew up: They discovered it is better after all to balance budgets, cut deficits and make the economy business-friendly. They realized competition and capitalism actually helps more Canadians become richer than government handouts. A revolution occurred, without a shot being fired: The Canadian Iron Curtain came tumbling down, allowing for an era of greater economic freedom. Welcome to the new Canada: Looks a lot like the old U.S.A. And the new U.S.A looks a lot like the old Canada.

Canadians are riding high. There are so many “c”-letter words that bring them joy: Les Canadiens, Les Conservatives and Les Capitalistes. It all has a really nice ring to it.

-Dr. Grace Vuoto is the Executive Director of the Edmund Burke Institute for American Renewal.