Flaherty, Carney must resist urge to bail out Europe
Our finance minister and the Governor of the Bank of Canada appear to be hearing loud and clear from a lot of Canadians these days.
Jim Flaherty and Mark Carney are also, quite rightly, being courted by the movers and shakers at such international institutions as the International Monetary Fund and the World Bank.
Canada's financial health is relatively robust compared to our southern neighbours in the United States and most of Europe. As I have said before, neither prosperity nor poverty are accidents. In most cases they are the consequence of certain time-tested principles being followed or ignored. This truism applies to individuals, communities or nations.
For example, if an individual or a nation continues to live beyond their means, borrowing without a vigorous, timely and realistic plan to pay off the debt, bankruptcy and impoverishment will be the eventual result.
If people live in a jurisdiction that has highly punitive rates of taxation, then individual and collective incentive will be stifled.
The consequence will be that the innovators, investors and job creators will leave for more liberal jurisdictions, resulting in increased poverty levels for those who remain. If individual citizens are confined by a regime that does not allow them to freely buy and sell their own property, then they too will never achieve true financial or social freedom.
All that to say that the present enviable fiscal position in which Canada finds itself is not mere happenstance: It is the result of a concentrated effort on the part of the federal government and some provincial governments to maintain relatively stable fiscal programs.
By that I mean there is a plan to keep government spending somewhat under control, to have realistic deficit and debt reduction targets and to keep taxes at competitive rates.
However it should be noted that these types of policies are only in place because somewhat of a majority of Canadians want them there. No government can maintain a platform like this unless there is public support for it. So the real credit for Canada's relatively healthy fiscal position goes to the citizens of Canada who support it.
It was only about three weeks ago that one of the most stark and gripping examples of the consequences of following or not following principles that lead to prosperity was played out right before my eyes.
I was on business in Seoul, South Korea. I witnessed all around me the effects of a robust market economy and a vibrant democracy. World-class cities, thriving rural areas and minimal unemployment were all evidences of a productive and free society.
As a matter of coincidence, at precisely the same time that I was in South Korea, my wife was in North Korea. Its population is the same genetic stock of good people who live south of the border. Yet poverty, deprivation and despair was everywhere.
People with the same history, the same geography and the same DNA. The only difference was the framework of government policies under which the two populations live.
With all due respect to our European friends, most working Canadians differ from many of the citizens in places such as France, Greece and Spain.
We still believe that a work-week of approximately 40 hours is not unreasonable. Unlike the majority of the citizens of France, we are not ready to boot out the government because we don't have the right to retire at the age of 60. Most of us do not enjoy or fitfully demand paid holidays of 12 to 16 weeks a year. Most of us are not fooled by a government that tries to camouflage ongoing massive deficit spending by calling it a policy of "growth."
In Canada most of us work hard, play hard and believe in a fairly high level of personal responsibility. We try to help our neighbours when we can and we don't expect government to cough up taxpayer dollars for every human problem that comes along. Though at times we flirt with the notion of cradle-to-grave government support, we haven't yet totally married that idea as many of our European friends have.
The main reason many European countries are now dealing with out-of-control debt and deficits, high taxes, and increasingly shabby credit ratings is their governments are refusing to rein in unsustainable spending.
That is certainly their choice. And it appears to be the choice of the people who vote them into office.
Unfortunately, they are somehow of the misguided view that taxpayers from other countries, including Canada, are going to be willing to have our hard-earned dollars siphoned off to pay for their more extravagant spending practices.
The message that I believe Jim Flaherty and Mark Carney are hearing from Canadians is that we want no part of that.
The IMF and World Bank should be informed in no uncertain terms that Canadian taxpayers and workers will not take kindly to our tax dollar dollars being put at risk supporting people who will not take the necessary steps to bring their own spending under control.
We must not give in to the false argument that unless we bail these countries out the world economy will crater. Canada can best help ailing economies in other countries by asking them to follow our example.
We have a proud record of helping others who get hit with catastrophes that are beyond their control. That will continue.
However, the catastrophe that some of these European countries are hurtling towards is actually not beyond their control. They simply do not want to control it. Minister Flaherty and Governor Carney need to pass the message along from most Canadians that our pockets have limits. France and Spain and Greece will have to pick their own.