How can a country overcome a crisis?
How can it reinvent itself, change, transform?
These are two of the questions you asked us in the comments section, here on VisualPolitik.
Well, my friends, I think we can say that the economy usually evolves through cycles.
That is, a growth phase is sooner or later always followed by a crisis, and then this
crisis is followed by a new growth phase.
And so on….
For example, since World War II, the US has undergone 11 complete economic cycles, that
is, both growth and crisis years.
However, my friends...
Things aren’t always that simple…
sometimes…
leaving a crisis is very, very hard.
So much so that decades could go by;
so much so, that even a rich and prosperous country can... stop being one.
Because don’t think that this only affects emerging countries, not at all.
Even the richest countries can suffer this type of deep crisis… usually due to political
reasons, or rather, bad policies.
But, yes, my friends, a country can even escape these deepest of crises.
We saw it here on VISUALPOLITIK with, for example, the case of New Zealand, which after
undergoing a very harsh crisis managed to completely overturn their situation.
Well... in this video we’ll show another example... that of Canada!
Yes, you heard me right.
Did you know that Canada almost went bankrupt?
Well, listen up.
Canada is one of the richest, freest, most prosperous countries with the highest quality
of life on the planet.
It doesn’t even matter what ranking we use:
It can be the United Nations HDI, the Corruption Perception Index of Transparency International,
the Fraser Institute’s Human Freedom Index or the Legatum Prosperity Index.
In all of them, Canada is always among the highest on the list...
But this video isn’t about rankings...
so... just one more.
See, in the latest ranking of the best countries prepared by US News magazine and the Wharton
School, Canada appears as the second best country to live in the world.
So, it’s pretty clear, as we already saw on this channel, Canada, dear viewers, is
very popular right now.
However, things in Canada weren’t always this happy.
There was a time, in the 60s and especially in the 70s, where everything was about to
collapse.
(THE DISASTER)
For years, Canada was very similar to the United States, it was practically its twin
brother:
It had a very small government, the country was very decentralized and taxes were very
similar… of course, the idea then was to compete to attract investment and thus, also,
people from abroad, immigrants.
However, this all changed at the end of the 60s.
At that time Canada sought to distance itself from the United States and to try a new political
and economic model.
The great architect of this "revolution" was, Pierre Trudeau, yes, the father of the current
Prime Minister, Justin Trudeau.
Of course...
father and son’s politics are by no means the same.
It looks like Justin Trudeau did his homework.
But... let's not stray from the subject too much.
The fact is that Trudeau’s father governed Canada virtually uninterrupted, between 1968
and 1984...
And the fact is that throughout these 16 years in power the country changed a lot.
See, Trudeau wanted to implement a new political model in Canada, which was a bit different
from Washington’s capitalism and somewhat closer to Soviet Moscow’s collectivism.
(“As against the "invisible hand" of Adam Smith, there has to be a visible hand of politicians
whose objective is to have the kind of society that is caring and humane”.
Pierre Trudeau.)
In fact, in international politics, one of the things the prime minister was best-known
for was his close friendship with Fidel Castro.
In any case, the truth is that we could say that Trudeau's father went a bit far:
he raised taxes a lot, increased public spending, nationalized companies and because he thought
that all international trade and investment was bad, due to competition... he decided
to set up barriers
UMMM... barriers?
Who does that sound like?
If that weren’t enough, he also made the Central Bank print banknotes to spare, to
expand credit and finance the government.
Does this recipe sound familiar?
Well, the result of all this, my friends, is that within a few years, the deficit, unemployment
and inflation rates put the whole country up against the ropes.
So, of course, when in 1984 Pierre Trudeau left office, he did so with the lowest popularity
level for a Canadian prime minister in decades.
Only 2 out of 10 Canadians still supported him
And it was then that Canadian citizens had to make a very important decision.
(THE CHANGE)
In the September 1984 elections, the Conservatives won an overwhelming victory.
It was clear that the country could not continue along Trudeau’s path.
The new Prime Minister, Brian Mulroney, decided to reverse the situation and began to strengthen
ties with President Ronald Reagan.
A new era had begun...
Over the next 10 years the Conservative government did many things to improve Canada's economy:
For example, it lowered taxes, negotiated NAFTA, the North American Free Trade Agreement
that unites Canada, the US and Mexico,
And following in Margaret Thatcher’s steps, launched an ambitious plan to privatize large
public companies, such as Air Canada and Petro-Canada.
However, dear viewers, he didn’t do one thing…
the most difficult and unpopular action: control public spending.
In 1990, the state held more than half of the economy, taxes were still very high, there
was a huge public deficit, and public debt rose like foam.
Conservatives had taken the easiest measures… but at the moment of truth they hadn’t really
shown much commitment.
Therefore, in the following 1993 elections, Pierre Trudeau’s leftist Liberal party won
the elections again... this time, promising a true revolution.
Could Pierre Trudeau's party save Canada?
Given his background, you can’t deny this would’ve have been very difficult to imagine.
But...
my friends, everything was different this time.
The new government wanted to completely change the country’s model once and for all, and
no, they no longer wanted to know anything about Moscow or the Soviet model.
The main idea was that quality of life wasn’t only related to the economy, it depended on
it.
If they wanted to achieve a high quality of life they needed to strengthen Canada’s
economy.
And that’s what they did, especially under the Minister of Finance, Paul Martin, the
true change promoter.
Well, the fact is that within the first years, this leftist government launched a sharp public
spending cut, elimited many unnecessary programs and adjusted spending.
For example, they strongly reduced military spending and many companies’ subsidies.
In just two years, in real terms, spending dropped by 15%.
Under the principle which states that the State shouldn’t do things that companies
can do better, the government decided to continue with the privatization plan... in which they
went as far as privatizing the railways and even the aviation management system.
And, no, planes in Canada haven’t fallen nor have there been more accidents than in
other countries.
On the contrary, Canada’s aviation management system is considered one of the best in the
world.
The fact is that in just 4 years, the situation was under control.
The government had gone from having a huge deficit to a surplus.
Check out this graphic.
Of course, as you can imagine, these measures weren’t easy, but one thing seemed to be
very clear to Canadians, so much so that in the 1997 elections, the liberal, leftist party,
won again, by promising still more careful government spending and, on this occasion,
fewer taxes.
As they said, my friends, their role was to protect and give opportunities to the most
disenfranchised, not to waste everyone's money.
It seems...
sensible.
Don’t you think?
Listen to Paul Martin’s words in 2003, as he reviewed their 10 years in power:
(“We have to build a 21st century economy in Canada for Canadians.
We succeeded in the last 10 years because we did not deviate from our course – balanced
budgets, a continually dropping debt ratio, lower taxes.
We must stay on that course.
[…] We must be a government committed to accountability.
A government that treats taxpayers’ money like it is your money”.
Paul Martin)
My friends, this revolution was a real turning point in Canada’s history.
The change that the country experienced in the 80s and especially in the 90s... allowed
for this country’s situation to change completely.
Canada went from being considered an honorary member of the "third world" by the Wall Street
Journal, due to its public debt problems... to becoming the most fashionable country.
The liberal party hadn’t only solved the country’s problems, they had changed its
model.
In the following years, up until today, all political options opt for the Canadian model.
Mind you, Canada isn’t a tax haven, far from it, but they have understood that companies
need to be cared for and not punished.
Check this out:
You heard that right.
If we take all taxes that companies actually pay into account, this country’s situation
is very advantageous.
In fact, Canada is one of the few developed countries that has been decreasing its taxes
from time to time, for almost 20 years, to make the country more competitive...
And look at how, for example, company taxes have evolved:
And this policy has mostly favored the weakest.
Salaries have grown a lot, this is one of the countries that receives the most immigrants,
and employment rates are very high.
In addition, if all this weren’t enough, in recent years Canada has also become a world
civil liberties champion, as we saw here at VISUALPOLITIK in a previousvideo.
And this, dear viewers, is how Canada managed to escape its greatest crisis.
And by the way, just as it happened in New Zealand and Australia, these reforms were
carried out by leftist parties.
But this isn’t about left or right, it’s about understanding that a strong, competitive
and globally open economy is the best formula to improve everyone’s quality of life.
But, having said that, now it’s your turn.
Do you think Canada is a good role model?
Leave your answer in the comments as well as in this survey.
I really hope you enjoyed this video, please hit like if you did and don’t forget to
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Also, don’t forget to check out our friends at the Reconsider Media Podcast - they provided
the vocals in this episode that were not mine!
And as always, thanks for watching!