More government intervention – as a key cause of many of our economic woes – cannot be the solution here.
It’s a well-worn Canadian pastime to laser-focus on the worst aspects of the United States, compare ourselves favourably, and then brag about how much better things are here.
Unfortunately, that approach is not only based on ignorance, it’s also deeply counter-productive.
While the U.S. has its share of issues, it is by far the most economically and militarily powerful nation in the world. It has the world’s most dynamic economy. It is incredibly innovative. And, when compared to other countries over the 100 million person mark, it has by far the highest standard of living.
Further, many of Canada’s strengths are largely a result of our economic ties with the United States, and the protective military shield the United States provides. We depend on the United States for the protection of North America, refuse to adequately fund our own military, and then criticize the U.S. for supposedly being ‘too militarized.’
And now, there’s another problem with comparing ourselves to the U.S.
It turns out, we are falling way behind America when it comes to our per capita GDP.
It’s easy to forget that Canada and the United States had a similar per capita GDP during much of Stephen Harper’s time in office.
In 2011 for example – the year in which the Conservatives won a majority government – Canada’s per capita GDP was $52,223 USD. The U.S. per capita GDP was $50,065.
But now, Canada’s per capita GDP has fallen far behind the United States.
According to the World Bank, Canada’s per capita GDP stands at $54,966 (2022).
U.S. per capita GDP is $76,398 (2022).
Canada has thus almost been stagnant for a decade in terms of our standard of living, while the U.S. has roared ahead.
Canadian Provinces fare poorly when compared to U.S. States
Given the rapidly growing gap between American and Canadian living standards, the following chart is not really a surprise. Still, seeing Canadian provinces compared to American states is quite a sobering experience:
If anyone still question’s that Canada is on a downward spiral under a decade of Trudeau government. Just take a look at our comparable’s. Ontario and Quebec are competing with Alabama and Arkansas. pic.twitter.com/kb8z1MvFiX
— Senator Leo Housakos (@SenatorHousakos) July 16, 2023
Many have zeroed in specifically on the comparison between Ontario and Alabama, and for good reason. Alabama is often derided by people as some sort of ‘backwards’ place, while Ontario is held up as a manufacturing powerhouse.
Yet, Ontario – the supposed economic engine of Canada – barely outpaces Alabama. This doesn’t suggest that Ontario is some sort of total disaster, rather it suggests that American living standards are far higher than Canadians realize.
For example, Alabama is home to a Mazda/Toyota Plant, and Honda plant, a Hyundai plant, a Mercedes-Benz plant, a Navistar plant, and a Toyota Motor plant. Alabama – one of the poorest states in the U.S., is a manufacturing powerhouse in its own right.
Lower taxes, more competition, more wealth
The U.S. is not some sort of perfect free market haven. It has its own subsidies and regulations and government influence over industry like everywhere else. However, the United States is far of a pro-business, pro-free market country than Canada is.
Again, this wasn’t the case under the Harper government. The Harper government was more pro-business than the Obama Administration. But since Justin Trudeau won in 2015, Canada has been steadily moving in a more and more government-centric, anti-business direction.
Now, with radicals like Steven Guilbeault at the forefront of government policy, Canada is a less and less friendly place to do business. And with the massive U.S. market right next door, Canada is missing out on opportunities all over the place.
Even the opportunities we do get, like the Volkswagen and Stellantis plants, come at the cost of truly gigantic subsidies, which are itself a sign that businesses demand a huge premium to make things in Canada.
Embrace free markets and competition
Canada’s stagnant per capita GDP coincides with more and more government intervention, more regulations, and more taxes.
Thus, the solution is to start moving in the opposite direction.
We must embrace free markets and real competition, and that means the government needs to take a step back. If we eliminate the carbon tax, cut personal taxes, reduce regulations on businesses, stop holding back the energy sector, and stop giving out such massive taxpayer-funded subsidies, we can start to unleash the entrepreneurial spirit of Canadians and get our economy back on track.
Spencer Fernando
