Bill Anderson bander@uwindsor Ontario Research Chair in Cross-Border Transportation Policy
Cdn Century UWindsor-2010!03!18
Transcript of Cdn Century UWindsor-2010!03!18
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The Canadian CenturyThe Canadian CenturyMoving Out of Americas ShadowMoving Out of Americas Shadow
Jason ClemensDirector of Research, Pacific ResearchFellow, Macdonald-Laurier Institute
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Presentation OutlinePresentation Outline
Lauriers Vision and PrinciplesLauriers Vision and Principlesfor Prosperityfor Prosperity
Canada Loses Its WayCanada Loses Its Way
The Redemptive DecadeThe Redemptive Decade
U.S. Loses the ScriptU.S. Loses the Script
The Canadian CenturyThe Canadian Century
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The Canadian Century:The Canadian Century:Lauriers Aspiration forLauriers Aspiration for
CanadaCanada
Canada has been modest in its history,Canada has been modest in its history,although its history, in my estimation,although its history, in my estimation,
is only commencing. It is commencing in thisis only commencing. It is commencing in this
century. The nineteenth century was the century ofcentury. The nineteenth century was the century ofthe United States. I think we can claim that Canadathe United States. I think we can claim that Canadawill fill the twentieth century."will fill the twentieth century."
Sir Wilfrid Laurier, 1904Sir Wilfrid Laurier, 1904
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Lauriers Principles forLauriers Principles forProsperityProsperity
Prosperity grows from libertysProsperity grows from libertyssoil.soil.
Limited government, light taxes,Limited government, light taxes,and fiscal discipline.and fiscal discipline.
SelfSelf--confident engagement withconfident engagement withthe Americans.the Americans.
Free trade.Free trade.
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Canadas 1965Canadas 1965--95 Experiment95 Experiment
Deviating from Lauriers VisionDeviating from Lauriers Vision
Deficits & Debt TradeDiversion
IncreasingDependency
Higher Taxes
MountingDebt
Increasing Unemployment
Stagflation
StagnatingInvestmentIncreasingInterestRates
RisingInflation
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Federal Revenues and SpendingFederal Revenues and Spending(1961(1961--1993)1993)
10 00%
12 00%
14 00%
16 00%
18 00%
20 00%
22 00%
24 00%
26 00%
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
er
en
G
Spending Revenues
1965:Rev 15 3%Exp 15 0%
1992:Rev 18 6%Exp 23 5%
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Federal Deficit / SurplusFederal Deficit / Surplus(1961(1961--1993)1993)
-7 00%
-6 00%
- 00%
-4 00%
-3 00%
-2 00%
-1 00%
0 00%
1 00%
2 00%
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
e
rce
t
fGD
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Federal Accumulated DebtFederal Accumulated Debt(1961(1961--1996)1996)
10 00%
20 00%
0 00%
40 00%
0 00%
60 00%
70 00%
80 00%
90 00%
196119
6219
6319
6419
6519
6619
6719
6819
6919
7019
7119
7219
7319
7419
7519
7619
7719
7819
7919
8019
8119
8219
8319
8419
8519
8619
8719
8819
8919
9019
9119
9219
9319
9419
9519
96
erce
t
GD
1976:
2%
1996:78
%
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Federal Interest CostsFederal Interest Costs(1961(1961--199 )199 )
0 00%
00%
10 00%
1 00%
20 00%
2 00%
0 00%
00%
0 00%
196119
6219
6319
6419
6519
6619
6719
6819
6919
7019
7119
7219
7319
7419
7519
7619
7719
7819
7919
8019
8119
8219
8319
8419
8519
8619
8719
8819
8919
9019
9119
9219
9319
94
er
en
to
otal
ee
n
es
19
:10
2%
1990:
6%199
:
0 %
1961:11
9%
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Provinces ExacerbateProvinces ExacerbateProblemsProblems
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Provincial Revenues and SpendingProvincial Revenues and Spending(1961(1961--199 )199 )
1
1
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
Percen
o
P
Revenues Spending
196
:Rev 1
.
Exp 1 .
199
:Rev . Exp
.
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Provincial Deficit / SurplusProvincial Deficit / Surplus(1961(1961--1993)1993)
-4 00%
-3 00%
-2 00%
-1 00%
0 00%
1 00%
2 00%
3 00%
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
Pe
rcentofGDP
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Aggregate Provincial DebtAggregate Provincial Debt(19(19 --1996)1996)
1 %
1 %
2 %
2 %
%
%
4 %
4 %
%
%
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
Percento
GDP
19
:1
%
19 :2
6%
1996:49 %
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Provincial Interest CostsProvincial Interest Costs(1961(1961--1995)1995)
0 00%
2 00%
4 00%
6 00%
8 00%
10 00%
12 00%
14 00%
16 00%
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
Percen
to
otal
eve
n
es
19
:6
!6%
1961:4
!4%
1995:14
!9%
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Rise of DependencyRise of Dependency
6
1
1
1
e
cen
of
e
o
p
a
ion
19
19
1
19
19
3
19
19
5
19
6
19
19
19
9
199
1991
199
1993
199
1995
1996
199
anada n a io
Source: Frenetteand Picot (2003); Statistics Canada.
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Total overnment Spending as aTotal overnment Spending as aPercent of DP (19Percent of DP (19 --199 )199 )
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
Percentof
D
P
nited States anada
"
#
.1$
#
1.6 $
" %.
& $
& ".
" $
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The Redemptive DecadeThe Redemptive DecadeReturning to Lauriers PrinciplesReturning to Lauriers Principles
BalancedBudgets Free Trade
ReducedDependency
Lower Taxes
ReducedDebt
Lower Unemployment
Economic Growth
IncreasedInvestmentLowInterestRates
LowInflation
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Federal Revenues and SpendingFederal Revenues and Spending(199(199 -- ))
1 %
1 %
14 %
1 %
1 %
%
%
4 %
%
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
er
en
G
Spending Revenues
199'
:Rev 1 ( ) 0 %Exp
'3
)5%
199(
:
Rev 1( )
3%Exp 1 1 ) 9%' 2 2 ( :
Rev 15)4%
Exp 15) '
%
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Federal Public Sector EmploymentFederal Public Sector Employment
ilitary Federal Employee
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Federal Deficit / SurplusFederal Deficit / Surplus(1961(1961 -- ))
-8 %
- %
-6 %
- %
-4 %
- %
- %
-1 %
%
1 %
%
1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
e
rce
t
fGD
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Federal Accumulated DebtFederal Accumulated Debt(1961(1961-- ))
1 %
%
%
4 %
%
6 %
%
8 %
9 %
196119
6219
6319
6419
6519
6619
6719
6819
6919
7019
7119
7219
7319
7419
7519
7619
7719
7819
7919
8019
8119
8219
8319
8419
8519
8619
8719
8819
8919
9019
9119
9219
9319
9419
9519
9619
9719
9819
9920
0020
0120
0220
0320
0420
0520
0620
07
erce
t
GD
193
6:4 5 6 7
%
1996:3
86 4
%
7 8 8 3 :
47 6 3
%
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Federal Interest CostsFederal Interest Costs(199(199 -- 1 )1 )
%
%
1 %
1 %
%
%
%
%
1994
-95
1995
-96
1996
-97
1997
-98
1998
-99
1999
-00
2000
-01
2001
-02
2002
-03
2003
-04
2004
-05
2005
-06
2006
-07
2007
-08
2008
/09
2009
/10
2010
/11
e
r
ento
e
en
es
1996-99
:@
9A B
%
@ C C9-1
C:
11A D
%
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Redemptive Decade TranscendsRedemptive Decade Transcends
eography and Political Partyeography and Political Party
Alberta
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Provincial Revenues and SpendingProvincial Revenues and Spending(19(19 -- ))
1 %
1 %
%
%
4 %
%
%
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
Percen
o
G
P
Spending Revenues
19 E F :
Rev G F H
1%Exp G F H 4%
199 G :Rev G G H F %Exp G 5 H E %
G F F E :Rev G F H 9%Exp G F H G %
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Provincial Deficit / SurplusProvincial Deficit / Surplus(1993(1993 -- ))
-3 %
-3 %
- %
- %
-1 %
-1 %
- %
%%
1 %
1 %
%
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Pe
rcentofGDP
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Aggregate Provincial DebtAggregate Provincial Debt(1993(1993-- ))
1 %
1 %
%
%
3 %
3 %
4 %
4 %
%
%
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Percento
GDP
199I
:4 I P 4%
Q R R S :4
R P Q%
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Provincial Interest CostsProvincial Interest Costs(199(199 -- ))
%
%
4 %
%
%
1 %
1 %
14 %
1 %
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Per
cento
even
es
1995:14
T9%
U V V W :W T 5%
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Total overnment Spending as aTotal overnment Spending as aPercent of DP (19Percent of DP (19 -- ))
4
4
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
PercentofD
P
nited States anada
X Y.
` a
` X . X a
X 9. b a
X 9. c a
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And the World Didnt EndAnd the World Didnt End
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Real DP rowthReal DP rowth
Per
e
t
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
a a a era e a a a
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Real DP Per Capita rowthReal DP Per Capita rowth
Per
e
t
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Ca a a era e Ca a a
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Job CreationJob Creation
er
ent
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Cana a era e Cana a
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Gross Fixed Capital FormationGross Fixed Capital Formation
er
en
t
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Canada G7 era e Canada nited tates
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U.S. Loses the ScriptU.S. Loses the Script
Enhancing the Canadian OpportunityEnhancing the Canadian Opportunity
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U.S. Federal Surplus/DeficitU.S. Federal Surplus/Deficit(As a Percent of GDP)(As a Percent of GDP)
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
PercentofGDP
B Update ( arc )
Updated B Projections (Au ust )
B Historical and Baseline Projection ( arc )
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U.S. Federal DebtU.S. Federal Debt(As a Percent of GDP)(As a Percent of GDP)
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
Percentof
GDP
U date ( arc )
U dated Pro ect ons (A st )
stor cal and asel ne Pro ect on ( arc )
d
e
.e
f
g
h
.i f
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U.S. Federal Interest PaymentsU.S. Federal Interest Payments(As a Percent of Revenues)(As a Percent of Revenues)
.
.
.
.
.
.
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
Perce
nt
B U date ( arc )
U dated B Project ons (Au ust )
B H stor cal and Basel ne Project on ( arc )
p q . r s
t . u s
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U.S. Federal SpendingU.S. Federal Spending(As a Percent of GDP)(As a Percent of GDP)
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
PercentofGDP
B Update ( arc )
Updated B Projections (A g st )
B Historical and Baseline Projection ( arc )
v w .x
y
. y
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Other Challenges to the U.S.Other Challenges to the U.S.
Cost of Entitlements (Social Security,Cost of Entitlements (Social Security,Medicare, and Medicaid)Medicare, and Medicaid)
Tax Challenges:Tax Challenges: urdenurden
DesignDesign
DistributionDistribution
Compliance CostsCompliance Costs
Centralized Nature of GovernmentCentralized Nature of Government
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The Canadian CenturyThe Canadian Century
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Canadian Century: Next StepsCanadian Century: Next Steps
Do we aspire to the CanadianDo we aspire to the CanadianCentury?Century?
If soIf so
Return to Lauriers principles.Return to Lauriers principles.
Let the success of the RedemptiveLet the success of the RedemptiveDecade guide us:Decade guide us:
alanced udgets and Debt Reduction.alanced udgets and Debt Reduction.Tax Relief.Tax Relief.
Free Trade.Free Trade.
Engagement with the U.S. and others.Engagement with the U.S. and others.
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Questions & AnswersQuestions & Answers