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Posts Tagged ‘The Heritage Foundation’

Bald Eagle

Despite the United States being founded as a limited government whose powers are “few and defined,” you wouldn’t know it by comparing it to Canada’s federal government in 2011.

It’s part of the reason why the conservative Heritage Foundation has ranked Canada as more economically free than the U.S. in 2010 and 2011.

If you still think Canada is more socialist than the United States, the joke’s on you, and here are some of the reasons why.

Unlike the U.S., Canada has:

  • No federal welfare program for individuals
  • No federal equivalent to Medicaid
  • No federal food stamps program
  • No federal department of education
  • No federal school lunch program
  • No federal department of housing and urban development
  • No national securities regulator
  • No federal police force in every province

This, despite the U.S. Constitution reserving all undelegated powers to the States and the people, respectively, while Canada’s Constitution reserves those powers to the federal government, showing that a constitution is ultimately as good as you make it.

Who’s socialist now?

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On July 12, 2010, Dr. Stan Monteith featured a discussion on illegal immigration and mentioned Canada’s temporary worker program for agricultural workers from Mexico and Latin America, like the system the U.S. had back in the 1960s.

Minimum wage is now $10.25 an hour in Canada’s largest province, Ontario, where most of the workers work, and with a 96 cent Canadian dollar, vis-a-vis the USD, it doesn’t seem to put their farmers at an economic disadvantage.

Previously, I wrote about Australia’s minimum wage of $15 an hour, which is more than double the U.S. federal minimum wage, and that didn’t stop the conservative Heritage Foundation from ranking Australia as more economically free than the U.S. Both countries even compared very closely on the metrics that are most relevant to business freedom and wages.

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The conservative Heritage Foundation ranked Australia as the third most economically free country in the world in 2010, while the U.S. came in eighth place.

As of June 2010, Australia’s minimum wage is $15 an hour, while the U.S. federal minimum wage is nearly half that, at $7.25 an hour.

Economics textbooks present the overly simplistic notion that minimum wages higher than the market floor results in higher unemployment. At the time of publication of this index, Australia had an unemployment rate of 4.2% and the U.S. had a rate of 9.4%.

The two most important metrics relative to the impact of minimum wage on economic freedom the report measured, compare favourably between the two countries, showing that Australia isn’t relying on other far higher economic metrics to compensate. Business freedom was rated 90.3 in Australia and 91.3 in the U.S., and Labor freedom was rated 94.9 in Australia and 94.8 in the U.S.

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Euromoney publishes a semi-annual “Credit Risk Rating” of 185 sovereign countries.

In their latest publication, from March 2010, eight of the top 10 are “European socialist welfare states,” as they are commonly referred to as.

Rounding out the top 10 are: Norway, Luxembourg, Switzerland, Denmark, Finland, Sweden, Austria, Canada, the Netherlands, and Australia.

Hong Kong and Singapore didn’t make the cut, despite being seen as among the most economically free countries, as one 2010 report ranked them.

Canada continues to buck old perceptions of being less economically free and successful than the U.S., by being ranked more economically free by the conservative Heritage Foundation’s 2010 Index of Economic Freedom,¬†and more tax competitive for business, by Big Four accounting firm KPMG in their 2010 report.

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Big Four accounting firm, KPMG, released their “Competitiveness Alternatives 2010, Special Report: Focus on Tax” that ranks Canada as the second-most tax friendly country for business out of 10. They are: Mexico, Canada, the Netherlands, Australia, the United Kingdom, the United States, Germany, Italy, Japan and France.

In 2008, Canada was ranked third, while the U.S. was ranked fifth.

This report follows the conservative Heritage Foundation’s 2010 Index of Economic Freedom report,¬†ranking of Canada as more economically free than the United States, and is further confirmation of the pro-business climate in Canada today.

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With Western Union, I priced a ‘Money in Minutes’ online and agent money transfer of $1000 USD from America’s financial capital, New York City, to Iraq, and from New York City to Canada.

The service fee was only $19.99 from New York City to Iraq, but was $86.00 to Canada — 430% more.

Similarly, MoneyGram’s agent 10-minute money transfer fee for $1000 USD was only $16 from the U.S. to Iraq, but was $61 to Canada — 381% more.

This, despite Canada’s deep economic integration with the U.S. through NAFTA and the SPP, the world’s largest bilateral trading relationship among individual countries, their membership in the G-8 and G-20, being ranked #7 and #8 in economic freedom according to the Heritage Foundation, Canada having the soundest banking system in the world according to the World Economic Forum, and bigger economies of scale.

Previously, I wrote about how it’s cheaper to send a text message to Iraq than to the United States.

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With the conservative Heritage Foundation’s 2010 ranking of Canada as more economically free than the United States, the CIA’s overstatement of Canada’s government intervention in the economy is particularly striking.

From Canada’s Economy section of the CIA’s World Factbook, we see:

GDP (official exchange rate):
$1.335 trillion (2009 est.)

Budget:
revenues: $514.5 billion
expenditures: $547.2 billion (2009 est.)

Government spending is reported to be 41% of Canada’s GDP in 2009.

From the United States‘ Economy page, we see:

GDP (official exchange rate):
$14.43 trillion (2009 est.)

Budget:
revenues: $1.914 trillion
expenditures: $3.615 trillion (2009 est.)

Government spending is reported to be 25% of the United States’ GDP in 2009.

From the official U.S. federal budget numbers for 2009, total spending was $3.518 trillion. The CIA’s estimate was off by less than 3%.

From Canada’s federal budget numbers for 2009, total spending was $237.8 billion or only 17.8% of Canada’s GDP, seven percentage points lower than that of the U.S., with the CIA’s estimate off by more than 200%.

Since both countries have federal governments, and the CIA is reporting the federal budget numbers for the U.S., the same should be true for Canada.

As further evidence the CIA’s data for Canada’s government spending is incorrect, the conservative Heritage Foundation ranked Canada as more economically free than the United States in 2010. If Canada truly had 41% of its GDP tied up in government spending versus 25% for the U.S, how could and why would the Heritage Foundation rank Canada as more economically free?

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