Liberals in this country are missing a golden opportunity. That thought came when I read an article in the Wall Street Journal about Canada’s mini-boom.
Canada was in our situation in the early 1990s. Government had taken over much of its economy. GDP stunk. Government debt was immense and growing. Interest payments on the debt smothered all. Government ran huge deficits.
The Canadians then did the opposite of what we have been doing. They slashed government spending. Not a mis-print. They cut unemployment benefits by 40 percent. For every dollar they increased taxes, they cut government spending by seven. They sold off the government’s railway and air-traffic-control systems. They cut government jobs by 14 percent. Not a mis-print either.
Very quickly Canada’s economy surged. Turned that fat budget deficit into a surplus. Today, Canada enjoys faster growth and much better job numbers than we do.
Barnes made a few points. One was that spending cuts saved the Canadian economy. Spending cuts, not higher taxes. And the same medicine here would probably have the same results.
Another point was that liberals fashioned these reforms. Politicians from the left did.
Barnes did not write about this, but New Zealand enacted similar reforms in the 1980s. They drastically reduced government’s role in the economy. Sold off dozens of government businesses. Slashed the government’s workforce by 40 percent.
New Zealand politicians did this for reasons similar to those that inspired Canada’s leaders. And they got similar results. Actually, more dramatically successful results. And guess which politicians shaped those NZ reforms? The guys from the left. From the Labour Party.
The best leaders see where most of the people want to move. They fashion programs accordingly. They get in front of the parade. Canadians told pollsters they wanted to reduce the deficit by cutting government spending. And not by raising taxes. Kiwis told pollsters the same. They saw government everywhere. They wanted to see less of it.
