Doug Henwood wrote:
>
> I hear this from a lot of Canadians - the implication being that Canada
> didn't have a debt problem. With a structural budget deficit of over 5% of
> GDP in 1991, net government interest payments also over 5% of GDP, and the
> second-highest net government debt position in the G-7 (after Italy), I'd
> say those are numbers too big to ignore. With a net international
> investment position of -41% of GDP in 1996, I'd say that Canada still has a
> debt problem. When you've got a big debt, your creditors call the shots,
> no? Or am I missing something here?
I think the OECD numbers include government enterprises, and in Canada
this means the provinically owned Hydros, who are very large borrowers,
and so skew the comparison a bit if comparable utilities are not
government owned.
However there is no doubt that Canadian capitalism is a big
borrower. It is also true that there was a tendency in the campaign
against free trade to promote a near-conspiracy theory that the Bank of
Canada interest rate hikes were part of a secret side deal to the FTA
itself. In other words, the job losses were blamed on 'free' trade rather
than reflecting something more fundamental about Canadian capitalism.
Still, the articles at the time (including in the WSJ, that Tom Walker
referred to) which compared Canada to Mexico and some other 'third' world
countries are absurd. Linda McQuaig's book provides a great description of
how this was a deliberate campaign to 'convince' us of the need for
austerity. Canada may be a big borrower but it is also itself a major
lender. Total outward FDI is only 5% less than inward FDI. And while total
foreign liabilities are 1.7 times those of total foreign
assets, this ratio has not increased *dramatically* compared to previous
decades. Net foreign liabilities were 42% of GDP in 1996, but they also
hit 42% in 1961. I don't have the figures at hand, but I'd be surprised if
Canada's net foreign liabilities as a share of GDP have increased much
more than that of the OECD average.
Bill Burgess
