Barack Obama likes to tell people that we should thank him for his interventionist economic policies, and that without them, unemployment would be much worse in the US than it is now. For instance, he told Racine that without his economic stimulus, we’d be at 12, 13, even 15% — even though Racine itself is at 14.2% unemployment. D’oh! Otherwise, this looks like a classic Churchill conundrum. Had the UK elected Winston Churchill as Prime Minister in 1936 and he fought Hitler early, forcing him from power, would Churchill have gotten credit for saving Western civilization? Or would he have been seen as a war monger, without the context of tens of millions of dead people in World War II?
Actually, we can test the hypothesis in this case, at least to some extent. The financial collapse also battered our northern neighbor, Canada, although not quite to the same extent it did us. (Canada has more conservative banking and lending policies, which shielded them from the worst of the problems.) Instead of using a blizzard of government spending to correct a downturn in unemployment, Canada tightened its belt and rode it out.
So how do the two compare?
Here’s Canada’s employment chart from their Statistics Canada web site – it shows how many thousands of people are employed.
Where’s the recession? There is no recession in Canada.
And they say:
Employment rose by 93,000 in June, pushing the unemployment rate down 0.2 percentage points to 7.9%. This is the first time the rate has been below the 8% mark since January 2009.
Employment has been on an upward trend since July 2009, increasing by 403,000 (+2.4%). These gains offset nearly all the employment losses observed during the labour market downturn which began in the fall of 2008. The June unemployment rate, however, remained well above the October 2008 rate of 6.2%, due to a large increase in the number of people in the labour force over this period.
Yeah – they actually delivered the sub-8% unemployment rate that Obama promised and failed to deliver. And Ed hazards a guess as to why that may be.
For those who have trouble recognizing it, that’s what a recovery looks like. Canada’s job creation really has gone in the right direction, not simply plateaued at the nadir of the curve. Maybe Canada’s private sector has been hiring because it doesn’t have to worry about the price signals of the massive government interventions created by the Obama administration that the US private sector has to deal with.
We talked before about how businesses fear “bold experimentation” in economic policy from an interventionist government. That’s the kind of thing that causes depressions, by the way.
Canada’s unemployment rate started off HIGHER than ours, and it is not LOWER than ours. How can that be? Their economy is dependent on us! Well, they didn’t act to “stimulate” the economy with massive government spending, and they’ve been signing free trade deals with everybody and their mother in order to diversify their trading so that we don’t take them down with us. And it’s working. Prime Minister Stephen Harper is an F.A. Hayek conservative, not a J.M. Keynes liberal. He doesn’t believe in deficit spending.
Ah, the benefits of electing an economist to run your country, instead of a demagogue community organizer who sues banks and wants to “spread the wealth”.