I’d like to thank the teachers and students of Brantford Collegiate Institute for inviting me to speak to them as part of their “Mustang Day”, which appears to me to be a kind of career information day. I heard students talking about a presentation a police officer gave, and a discussion about post secondary scholarships. I was up against some competition, but about a dozen students signed up to hear me speak about the life of a writer. I spoke, giving an edited version of my presentation, coupled with some exercises, and the students asked a number of questions.
It is always a thrill to attend these events, and meeting young people thinking about the possibilities of writing as a career. And even though I warned them that one doesn’t get rich writing, these kids seem a dedicated bunch, which made them a joy to talk to.
So, thanks again to Ms. Bobbie Henley for helping to put this event together and bringing me out to Brantford, and thanks again to the students of Brantford Collegiate for making me feel so welcome!
Is Canada Recession-Resistant?
As bad as the economic news is here in Canada, and despite the fact that the worst could still be yet to come, I’ve been increasingly perplexed at why, as the American economy tanks, the Canadian economy appears to be employing the ‘stance of the coyote’.
You would think, with our trade surplus transforming into a deficit for the first time in thirty years, and with the economy of our single largest trading partner on the wane, that Canadians would be feeling this recession a lot more than they are. But we’re not. It used to be said that when the American economy sneezes, Canada catches cold, but no more.
Back in August, a strange, almost unheard of event took place: the United States unemployment rate surpassed that of Canada. That’s amazing. In the past thirty years, the United States experienced double-digit unemployment rates only once (just barely in 1982), while Canada has seen it twice (1982-5 and 1991-4). During the mid 1990s, while the United States enjoyed “full employment” with an unemployment rate of under five percent, Canada’s unemployment rate remained frustratingly in the 6% range. You have to go back to 1973 before you have a year when a lower percentage of Canadians were unemployed compared to Americans.
So, how did we do it? I asked a similar question in 2004 when Canada managed to avoid a recession that America experienced, for the first time since Eisenhower was president. Back then, I speculated that Canada’s higher tax rates, with the associated balanced budgets, might be helping, along with American demand for our energy, and the fact that we might finally be reaping the benefits of free trade. The non-partisan blogger Nunc Scio offers up other suggestions why Canada appears to be recession-resistent. Add these to your list:
- Centralized banking regulation has protected Canadian financial institutions from toxic debt and collapse in other countries;
- Our “single payer” model of public healthcare reduces complexity and per-person cost compared to the American model. More importantly, Canadian(s) retain health coverage even if they are unemployed. In the USA, if you lose your job, you lose your private insurance; and
- Canadian employment insurance replaces more lost wages than the American system (78 per cent as opposed to 52 per cent).
Of course, none of these provisions are possible without public support. The really interesting idea in the NYT article is that the structure of Canadian society allows for greater recession resilience. Lower income inequality and norms of mutual support (linked to our multiculturalism) create public support for the measures that have so far insulated Canada from the more serious depredations of the recession. There’s a reason why you don’t see mass foreclosures and bankruptcy in Canada, and it has a lot to do with how we conduct ourselves as a society.
It would seem that the neo-conservative option of deregulating everything and disparaging everything to do with government in the drive for lower tax rates not only helped cause the financial implosion in the United States, but is also subjects citizens with the full effect of economic downturns. It’s not really surprising, isn’t it? Even my high school economics teacher, while he raged about socialist spending and waste, noted that such investments probably made things like the Great Depression harder to repeat, since the poor were never allowed to become destitute, and could thus continue to contribute to the economy.
And somehow in some people’s eyes, this is a bad thing. Weird.
It’s all leading me more and more to say that government regulation and our social safety nets appears to be good for our capitalist economies.