As posted on National Post – Full Commentary: http://fullcomment.nationalpost.com/2012/07/19/pierre-poilievre-the-u-s-talks-about-free-markets-canada-has-one/
The U.S. talks about free markets. Canada has one.
July 19, 2012
Jonathan Kay is correct to point out that Canada’s economy is outperforming America’s, but he is completely wrong about the causes. The subprime crisis and resulting recession were not the product of “free market euphoria” in the U.S., as Kay suggests. Precisely the opposite.
In an attempt to expand home ownership, presidents from Carter to Bush Jr. introduced rules that forced banks to offer mortgages to people who would otherwise not qualify for them. Washington then ordered government-sponsored enterprises such as Freddie Mac and Fannie Mae to insure these “subprime” mortgages.
According to a 2010 World Bank Report on the U.S. Financial Crisis, Freddie and Fannie bought an estimated 47% of these toxic mortgages. Harvard financial historian Niall Ferguson indicates that the amount of mortgage debt backed by these government-sponsored enterprises grew from $200-million in 1980 to $4-trillion in 2007. The government pumped so much air into the housing bubble that, in 2008, it burst.
More broadly, regulation and protectionism have grown in the U.S., and federal government spending is now 24% of the American economy. In Canada, by contrast, the federal government is 16% of our GDP. According to the Washington-based Heritage Foundation, our agenda of streamlined regulations, free trade and low spending have made Canada the sixth freest economy in the world (with the U.S. coming in 10th).
While the American right preaches free enterprise, Canada practices it. That — and not the oxymoron of “hard-headed socialism” — is the reason for our success.