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"Each individual should allow reason to guide his conduct, or like an animal, he will need to be led by a leash."
Diogenes of Sinope


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Thousand Flowers tapestry (15th Century) - Beaune, France (detail)

Wednesday, May 09, 2012

Leadership lessons from Canada

Thomas Mulcair should read Obama should go to Canada for leadership lessons before he starts spouting off about "Dutch Disease" and killing the west's resource sector while raising corporate taxes to finance bloated bureaucratic social engineering schemes:
Canada may be as bland as butter tart, but the country’s economy has been anything but. From 2001 through 2010, it grew faster than any other G-7 country and, alone in that group, it quickly recouped the employment and production losses suffered during the recession. Unemployment today is just over 7 percent – lower than in most developed countries. Though the government’s popularity has sagged with budget cuts of late, Prime Minister Harper continues to enjoy high approval ratings.
Canada’s growth was not built on financial wizardry -- the country boasts some of the soundest banks on earth. (A recent report has accused the government of providing local banks with a “secret” bailout; there was apparently some temporary extension of liquidity at the height of the panic to keep credit flowing, but since then the loans from the government have been repaid.) Nor did it stem from reckless government spending. Chastened by a fiscal crisis in the 1990s, the country cut spending and posted 11 consecutive budget surpluses pre-recession. Consequently, Canada was able to enact a sizeable stimulus program without upending its fiscal stability. That’s how it’s supposed to work.
...
Some may dismiss the Canadian experience as pertinent only to a small country. But Canada is the tenth largest economy in the world – bigger than India or South Korea. No, the Canadian lesson is applicable to the U.S. and it is also simple. Some years ago, Canada set out to attract businesses large and small and it has succeeded. 
It starts with taxes. In the past several years, Canada’s federal corporate tax rate was cut five times; the most recent reduction was in January of this year, when it dropped to 15.0 percent. Together with a provincial tax of 10 percent, the combined corporate tax for Canadian companies is the lowest among the G-7 nations. In the past decade, most developed countries have engaged in a race to the (tax) bottom, with the average OECD rate tumbling six percentage points. Over that period, the U.S. rate barely moved – from 39.3 percent to 39.2 percent. It is true that not all American companies pay taxes at levels that high; but the high rate and complexity of our code is widely viewed as uncompetitive. Also damaging our position, the U.S. is the only OECD country to tax profits earned abroad. 
In addition, Canada boasts the lowest tax rate on new business investments in the G-7; the lowest overall business costs, according to accounting giant KPMG; a tariff-free zone for machinery imports; R&D tax credits; low import tariffs; excellent infrastructure and superb educational opportunities. The upshot of all these efforts? A doubling of foreign direct investment in Canada over the past decade, an inflow more than twice that moving to the U.S. 
It is notable that corporate tax revenues increased during this period, despite the rate reductions. Though there was a recession-induced hit in 2008, revenues quickly rebounded to levels above those taken in under the more onerous tax regime.
Credit where credit is due: much of this happened under the Jean Chretien Liberals, but an NDP government would bring everything to a screeching halt.  Just like what is about to happen in France.

8 comments:

bertie said...

Sorry,the recession started on PM Harper,s watch and was ended on his watch,so PM Harper gets 100% credit for putting Canada in the sound financial position it is in.Chretien had nothing to do with getting us out of it.As a matter of fact,as you should know.The Liberals took,(most people say stole) 50 billion out of the EI fund to balance the budget and the MSM made them hero,s for having a balanced budget.You also should remember how often the Libs would say we are going to have a 3 billion dollar surplus and we ended up with more like 8-9 billion every budget.They had such a surplus because they taxed us so much.You also remember the GST promises every year ,they never kept..Well PM Harper lowered the GST when he promised,so please do not try to give credit to the Liberals for any of the good that is happening under the Conservatives,because were all waiting for the Liberals to pay back all the stolen and missing monies owed to Canada.Again please,let the Liberals die a silent death and quit trying to resurrect them on the coat tails of PM Harper and the Conservatives.

Eric said...

I'm the last person to try to resurrect the Liberals - see this post - and good riddance to them. However, it has to be admitted that Chretien (and Finance Minister Paul Martin) got the ball rolling in 1993 with drastic cuts to federal spending that dwarf anything the Tories have recently done, eliminating the deficit and running a surplus. True, it was done with high taxation rates and moving EI surpluses into general revenue, but it was done.

Harper owns the recovery from the 2008 recession, fair and square, but Chretien and Martin do deserve some credit in this area.

Rich said...

The Government of Brian Mulroney left a 40billion deficit because of a recession: The Liberals in 1993/94 inherited a boom situation and did not have to face ressionary trends. They are not great fiscal managers as the consensus media likes to potray them. They (the Libs) have never had to govern in a recession

Dance...dance to the radio said...

You know the Liberals were all over the Conservatives when they went into deficit.
And that was because the Liberals had a surplus, also called overtaxing us, and used it as a slush fund to buy votes instead of applying it all to the debt.
Now, the Liberals are all over the Conservatives for making public sector cuts to get back into a debt paying position.
They always want it both ways.

Really, which is it Liberals?
You like deficits or you like surpluses.
You can't like both.

I don't mention the NDP because they will never get the chance to run government because like it or not, having a strong Liberal party is the second guarantee that the NDP will never come to power, and it will keep the Conservatives honest.
The first guarantee is good Conservative government.

Cytotoxic said...

"the Liberals in 1993/94 inherited a boom situation and did not have to face ressionary trends."

That's a lie. The government had a lousy economy and bond markets were on the verge of collapse. Paul Martin saved this country.

Rich said...

Dance: One thing the Libs like is to pat themselves on the back that they provide 8 surplus budgets over their 13 years in power and they accuse the Cons of wasting a 12 billion dollar surplus; they neglect to mention that the 12b surplus in 2005, the 13b surplus in 2006, 14b surplus in 2007 went to reduce the national debt of 512billion PMSH inherited. A total of 39 billion dollars in 3 years which made the national debt at 46billion dollars; making Canada in better shape to handle the world recession. Note they did this by lowering corperate personal & gst
taxes

Cytotoxic said...

Well that's great Rich. Too bad the Contards then wiped out all that debt repayment and then a lot with gross overspending.

Dance...dance to the radio said...

Hey Cytotoxic,
You do remember 2008 where the Liberal NDP BQ were threatening to bring down the government if they didn't spend enough money?
You know, the one where the grand wizard Ignatieff put the government on probation?
Where he would issue report cards on the governments progress every three months to see if the government was spending enough money to his taste?

No?
I didn't think so.

Sometimes I think you aren't the douchiest douche who ever douched.
But as always there you go again.

And that's why the Liberals are in such dire straits.

Stand for something.

Even when your party was the government you stood for nothing.

Please tell me exactly what a Liberal is.