Back in 2010, I wrote about the Free State Project, which is based on the idea that libertarians should all move to New Hampshire and turn the state into a free market experiment.
I was impressed when I spoke at one of their conferences and gave them a plug, but more recently I’m running into people who are so discouraged about America’s fiscal outlook that they’re thinking of moving to some other nation.
Wealthy people seem to prefer Switzerland and the Cayman Islands, while middle-class people mostly talk about Australia and Latin America (mainly Costa Rica or Panama).
But maybe Canada is the place to go. It’s now the 5th-freest economy in the world, while the United States has dropped to 18th place.
I’m a big fan of Canada’s fiscal reforms. On several occasions, I’ve explained how Canadian lawmakers boosted economic and fiscal performance by restraining the growth of government spending.
Indeed, Canada is my main example when I explain why the United States should follow my Golden Rule of fiscal policy.
By allowing the private sector to grow faster than the government, Canada has also been able to implement big tax cuts. Heck, they even privatized their air traffic control system.
Canada’s reforms got some positive attention in today’s Wall Street Journal from Mary Anastasia O’Grady.
Former Canadian Prime Minister Paul Martin has a stern warning for the U.S. political class: Get real about the gap between federal revenues and spending, or get ready for disaster. Mr. Martin knows of what he speaks. In 1993, when he was Canada’s finance minister, his country faced a daunting fiscal crisis. …When the Liberal Party government of Prime Minister Jean Chrétien took power in October 1993, Mr. Martin was charged with pulling his nation out of the fiscal death spiral. He did it with deep cuts in federal spending over two years that amounted to 10% of the budget, excluding interest costs. Nothing was spared. Even federal transfers to the provinces to fund Canada’s sacred national health-care system got hit. The federal government also cut and block-granted money for welfare programs to the provinces, giving them almost full control over how the money would be spent. In the 1997 election, the Liberals increased their majority in parliament. The Chrétien government followed with tax cuts starting in 1998 and one of the largest tax cuts—both corporate and personal—in the history of the country in 2000. The Liberals won again in 2000.
In the U.S., by contrast, we’ve degenerated to the point where the central bank is now financing a disturbingly large share of the deficit.
Market discipline doesn’t exist in Washington, which has the “privilege” of an accommodating central bank issuing the world’s reserve currency. The big spenders don’t need to pay attention to pesky numbers. …the Fed bought 77% of all new federal debt last year. It is doing so at rock-bottom interest rates. By holding the short-term fed-funds rate low while it buys up long-term securities, Mr. Bernanke is helping our political class ignore the real cost of rising federal indebtedness.
This doesn’t mean we’re at near-term risk of becoming another Argentina or Zimbabwe, but I definitely don’t like the trend. No wonder the Canadian dollar is now stronger than the dollar.
But that’s a separate issue. This post is mostly about fiscal policy and Canada’s outlook.
In the short run, Canada’s a good bet. Reforms have been implemented, and they happened under a left-of-center government and have been continued more recently by a right-of-center government.
We’ve had bipartisanship in the United States as well, but the wrong kind. For the past 12 years, we’ve endured big spenders from both parties. No wonder Canada now ranks higher.
In the long run, though, I’m not sure Canada’s the right choice. I joke about the cold weather, but I’m more concerned about the fact that the burden of government spending remains too high, consuming about 42 percent of economic output. And even though Canada has implemented some pension reforms, it has a government-run healthcare system that will become a greater burden on taxpayers as the population ages.
This doesn’t mean I’m optimistic about the long-run outlook in the United States. Yes, we can fix our fiscal problems if we cap the growth of spending and implement entitlement reform to address the long-run problem, but I’m not holding my breath expecting those policies.
So I’m back to my original plan of finding somebody to give me millions of dollars so I can escape to the Cayman Islands.
P.S. If you’re thinking of sending me a big check, give me some advance notice. To avoid nasty headaches with the IRS, I should go to the Cayman Islands first and then have somebody give me millions of dollars.
P.P.S. On a more serious note, here’s my video highlighting nations – including Canada – that successfully restrained government spending.
P.P.P.S. The Canadian government also deserves praise for resisting global schemes to raise taxes on the banking sector.
P.P.P.P.S. But there are bad people in Canada, such as the politician who escaped to the U.S. for surgery while leaving ordinary Canadians stuck in long waiting lines.
P.P.P.P.P.S. To close on a light note, here’s a satirical article about American leftists trying to escape to Canada after the 2010 elections.
[…] now, from our (normally) semi-rational northern neighbor, I have a new […]
[…] now, from our (normally) semi-rational northern neighbor, I have a new […]
[…] now, from our (normally) semi-rational northern neighbor, I have a new […]
[…] now, from our (normally) semi-rational northern neighbor, I have a new […]
[…] I joked back in 2012 that supporters of small government in the United States might want to escape to Canada because of […]
[…] now, from our (normally) semi-rational northern neighbor, I have a new […]
[…] now, from our (normally) semi-rational northern neighbor, I have a new […]
[…] While I’m a big fan of Canada, I’m not fully confident about the nation’s long-term […]
[…] P.S. The cartoon is humorous, but there is a serious point to be made about the fight-or-flight response to bad government policy. I’m obviously committed to fighting for liberty, but I don’t blame people who move to other nations in search of more freedom. […]
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Reblogged this on OneSquareLight.
[…] at America. My, even libertarian Cato Institute types (e.g. here; h/t for the above image) are praising the Canadian way of running the economy. Now they do deplore […]
[…] wrote the other day about whether Americans should escape to Canada, Australia, Chile, or some other nation when the entitlement crisis causes a Greek-style […]
[…] wrote the other day about whether Americans should escape to Canada, Australia, Chile, or some other nation when the entitlement crisis causes a Greek-style […]
When the richest leave the states, and the middle class goes to the caymen’s
This poor food stamp person will be the riches of the rich WOW,
[…] Should Advocates of Small Government Escape to Canada? […]
It is truly sad that our country is going down the same path Europe has gone.
[…] Should Advocates of Small Government Escape to Canada? « International Liberty. Share this:TwitterFacebookLinkedInStumbleUponEmailPrintLike this:LikeBe the first to like this. […]
Also you have no Second amendment right to protect yourself. I think I fall on the side of those that say, when my country needs “reforming” I will not be like many other people and flee. I will stay and fight.
Alex
http://charlescarrollsociety.com/
There are no free speech rights in Canada, bad mouth a Muslim and go to prison. If you are young and white with half a brain explore your options in Asia.
Then where do we go for medical care, since so many Canadians have come here (up till now!)?
Of course escaping to any of these destinations, does not mean that you will escape the IRS and all the rules, regs, forms and penalties. As long as you remain a member for the U.S. Citizen ‘Tax, Penalty and Form’ club, you will be required to file your tax return, FBAR and FATCA form every year and pay your taxes back to the Homeland Empire. Also, your foreign bank will be required by FATCA to report all your asset data to the IRS just to be sure you don’t forget.
The only way to be totally free, is renounce your Citizenship and pay your exit taxes to get the U.S. Club let you go. And, if the IRS determines your renouncing was due to tax reasons, then you will be “named and shamed’ and denounced in the Press and in Congress.
Better shelve that fantasy! 🙂