Canada, Land of Smaller Government, Has Regained All Jobs Lost in 2008-09 vs. U.S. Still Down By -8m
The chart above displays monthly employment levels in the U.S. and Canada back to 2002, and shows that while Canada has now basically recovered all of the jobs that were lost during the recession, the U.S. is still about 8 million jobs below the pre-recession peak employment level. In fact, a recent WSJ article by Jason Clemens points out that "Canada is emerging more quickly from the recession than almost any industrialized country."
How did Canada survive the global slowdown with fewer job losses than the U.S. (-2.3% reduction in employment vs. almost -6% in the U.S.), and how did Canada recover from the recession so much faster that the U.S.? Well, it sure wasn't because Canada raised taxes, like the U.S. is now considering during a fragile recovery. In fact, Canada has actually been aggressively cutting both taxes and government spending, with impressive results in economic performance. Here's more from the WSJ article "Canada, Land of Smaller Government":
"Canadian taxes have also come down at the federal and provincial level. They were reduced with the stated goal of improving incentives for work effort, savings, investment and entrepreneurship. Tellingly, the last three Canadian elections have all had key debates on tax relief—not whether there should be tax cuts but rather what type of tax cuts. Beginning in 2001 under a Liberal government, even the politically sensitive federal corporate income tax rate has been reduced. It is now 18%, down from 28%, and the plan is to reduce it to 15% in 2012. The U.S. federal rate is 35%."
And what about government spending? Accoding to Jason, "If present trends continue, within two or three years Canada will have a smaller government as a share of its economy than the U.S."
Jason concludes that "Americans can learn much by looking north," and maybe the lesson from Canada is that tax cuts along with cuts in government spending are the keys to both improved economic performance and greater fiscal responsibility.