Government Spending

Report: There's More Economic Freedom in Canada Than the U.S.

The Fraser Institute releases its annual rankings.


They ain't got the kind of law and order/That tends to keep a good man underground

The Fraser Institute, a Vancouver-based free-market think tank, has released its annual report on economic freedom around the world. The Fraser rankings are among the more useful studies of this kind: While there is, as always, room for debate about what measurements the institute should be using and how to properly weigh them, the authors are sufficiently transparent about their sources to let you draw your own conclusions and sufficiently consistent to let you track patterns over time.

The big news for this year—or, technically, the big news for 2010, since that's when the data come from—is that the United States, whose place in the rankings has been declining for a while, has now plunged to number 18. Canada, meanwhile, is tied for number five. The National Post explains what happened:

Canada's economic freedom began to rise under former prime minister Jean Chrétien, who reined in the budget and reduced government spending dramatically….Meanwhile, George W. Bush began to spend—U.S. government consumption went from 17.6% of GDP to 19.5% [from 2000 to 2010], transfers of subsidies went from 13.2% to 16.3% and the government enterprises and investments went from 17.6% of GDP to 22.5%.

"Canada really started moving up in economic freedom under a prime minister that was supposedly from the left side…and the United States started moving down in economic freedom under someone who was supposedly from the right wing, Republican party," said [Fraser Vice-President Fred] McMahon….Stephen Harper's Conservatives expanded the size of government since taking office in 2006, said [Fraser Institute President Niels] Veldhuis, which pulls the ranking down a bit.

The report's top spot went to Hong Kong, which is nominally ruled by communists these days. The U.S. is wedged between Qatar and Kuwait.

Bonus reading: Historical context from David Henderson and Jeet Heer.

Bonus listening:

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  1. On the plus side, Canada has donuts. On the minus side, warm . And ketchup on Everything.

    1. Warm smoothies!

    2. Don’t forget poutine.

    3. I think I’ll put ketchup on that comment.

  2. Yeah, well, just try talking smack about Mohammed there.

  3. Looks wistfully at the withholding on my paycheque, pining for the days I lived in the US.

    Funny, I certainly don’t feel more free.

  4. If you’re curious:

    In this year’s index, Hong Kong retains the highest rating for economic freedom, 8.90 out of 10. The other top 10 nations are: Singapore, 8.69; New Zealand, 8.36; Switzerland, 8.24; Australia, 7.97; Canada, 7.97; Bahrain, 7.94; Mauritius, 7.90; Finland, 7.88; and Chile, 7.84

    1. Lucky you!

    2. I sure would love to live in New Zealand. But not til my parents shuffle off their mortal coils.

  5. Canada’s economic freedom began to rise under former prime minister Jean Chr?tien, who reined in the budget and reduced government spending dramatically

    But this is impossible–Tony informed us that the only way a country becomes prosperous is if government spending expands in perpetuity!

    1. I remember the Chr?tien years… eking out an existence on the frozen tundra, eating what scraps the wolves and polar bears left behind of their kills. Without the government spending our fertile valleys turned into desolation, and neighbour politely turned against neighbour.

      Thank goodness the Conservatives are back to increase that spending. We truly live in Bizarro world.


  7. I’ve never trusted Canadians and I never will.

  8. Meanwhile, George W. Bush began to spend ? U.S. government consumption went from 17.6% of GDP to 19.5% in 2000, transfers of subsidies went from 13.2% to 16.3% and the government enterprises and investments went from 17.6% of GDP to 22.5%.

    Is that 2000 a typo? W was only elected in 2000. I’m not trying to defend his record on spending, I just want to know what they’re talking about.

    1. Yes, 17.6% is the 2000 figure and 19.5% is 2010. Thanks for catching that; I’ll fix it.

  9. I’m not impressed. The fact that the U.S. is only number 18 shows how shitty the rest of the world is. We shouldn’t be in the top 100.

  10. I like how Germany moved in the ranking of sound money from rank 3 in 1980 to rank 18 in 2010.

  11. Worthwhile Canadian Initiative:

    As evidence mounted that rock-bottom interest rates were fuelling house prices and consumer debt loads, Mr. Flaherty has changed mortgage insurance rules four times, each time making it more difficult for consumers to take on housing-related debt.

    While the three previous rounds crimped both housing activity and the demand for credit, economists and real estate industry experts say this latest round, which took effect July 9, looks as if it is having a bigger impact.

    In the face of spiraling housing prices, Canada decided to make the rules for government insured mortgages stricter, not easier.

    1. A better thing to do would be not having government insure mortgages.

  12. I welcome the flood of economic refugees to my shores.

  13. One commentor nicknamed “graftedin” on the National Post posted a interesting point then I decided to quote:
    “Yes and his (Preston Manning) “ridiculous right wing” Ideas were used by the Liberals verbatim. We obviously have a different opinion on what ridiculous is. If you consider more individual liberty, a fair and unhindered free enterprise, property ownership, low or no taxes, a justice system that penalizes criminals justly, a strengthened military ridiculous then we have definitely have a different opinion on ridiculous ideas.

    Interesting thing on Preston Manning when he was in politics he was vilified by the press. Now the same press are calling him an honourable statesman and is well liked by the same press that vilified him. Go figure” and there another

    Note then from 2006 to 2011, Stephen Harper’s government was minority trying to compromise with the Liberals and the NDP but he gained a majority in 2011.

  14. Why do some Americans think its honky dory to head to Canada or Mexico if things go bad, but don’t respect anyone from these countries try to come to the States? Such hypocrites.

  15. It would help your American readers to know that the Fraser Institute is a right-wing think tank which enjoys charitable status despite Canadian law that forbids partisanship in ‘charitable’ orgs. It is not a respected institution in Canada and is widely mocked for its purely conservative slant. So, take the findings and rankings of Fraser with a huge grain of salt.

    1. erd herminem

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