Europe Isn’t A Caricature
According to the International Monetary Fund, the net public debt of Finland was -59.9 per cent in 2011.
What’s that, you say? Why, yes! That is boring. But please, keep going. I promise there’s an important and relevant point coming and by the end of this column you may even think Finland’s net public debt is interesting. Almost.
Finland isn’t in the news much these days, but Finland is in Europe, and Europe is very much in the news. You know the basics. Greece, the debt crisis, teetering banks, the euro in danger.
You’ve probably also heard that this is the inevitable comeuppance of euro-socialism. “Europe has behaved like an irresponsible teen-ager who had a credit card with no limit for decades,” Doug Finley wrote recently in The Globe and Mail. “They taxed and regulated away any chance of serious economic growth,” he said.
Sorry, “Senator” Doug Finley. That noble office was bestowed up-on Finley by Prime Minister Stephen Harper in gratitude for Finley’s hard work as Conservative campaign manager in the 2006 and 2008 elections. The Conservatives won those elections, you may recall.
And a good thing they did, ac-cording to Finley. “Canada is in the enviable position we are in be-cause of the strong fiscal leadership of Prime Minister Stephen Harper. We have made the tough decisions and will continue to make them. We have reduced spending, cut taxes and promoted economic growth – a model that Europe should look to-ward.”
Several things make this note-worthy. One, Finley is not your average superannuated politico. Two, Finley is not the sort to impulsively condemn European governments, particularly at a time when the Conservative government is negotiating a critical free trade deal with the aforementioned euro-losers. And three, Finley’s op-ed was only the latest in a long line of similar attacks by the Conservatives, including a series of righteous volleys from Conservative MP Pierre Poilievre, who did everything but declare that henceforth french fries would be known as freedom fries on Parliament Hill.
And finally, four, Finley’s op-ed is noteworthy because it is almost entirely twaddle.
Yes, twaddle. I explained why in a column responding to Poilievre. I won’t repeat the same points here.
But in response to that earlier column, Poilievre and others objected to the debt figures I had cited. They were gross debt, they complained. Not net debt. That’s misleading.
Except it’s not. Economists routinely use gross debt figures. But, since they insist, I will now oblige:
According to the IMF, Canada’s net debt in 2011 was 33.3 per cent. That’s good. It’s better than Germany’s (56.1 per cent). It’s better than that of most other developed countries’. And it’s vastly better than that of France (80.4 per cent) and Italy (99.6 per cent).
But it’s worse than Canada’s net debt in 2006 (26.3 per cent), when Stephen Harper took office.
It’s also worse than the 2011 net debt of the Netherlands (31.8 per cent). And it’s much worse than the 2011 net debt of Denmark (2.6 per cent).
And it’s positively horrible com-pared to the net debt of Sweden (-21.4 per cent). And Finland, which, as we have seen, has a net debt of -59.9 per cent.
How can Sweden and Finland have negative net debt? They have overflowing public pension funds. So their total public assets exceed their total public liabilities, which is a sweet position to be in.
Norway is in an even better position, with a net debt of -168.1 per cent, but that’s because they’re making big money from oil, and, unlike Alberta, they’re saving it.
But Finland doesn’t have oil. It has rocks and trees and lakes. It’s like northern Ontario, but with reindeer, pickled herring and Russia for a neighbour. Not a lot of natural advantages, in other words. And it has one of those infamous northern European welfare states that supposedly destroys economies and crushes nations under mountains of debt.
And yet Finland isn’t being crushed. It’s sitting on a giant pile of cash. So are Sweden and Norway. Denmark and the Netherlands are fine, too.
Yes, these countries have higher taxes than we do. That’s how they pay for the social services their people want without piling up debt. But has that stifled economic growth? According to the OECD, the average annual growth rate in Finland and Sweden, between 2000 and 2010, was equal to or higher than in Canada. Norway was a little lower. Only Denmark did poorly. And remember that during that time Canada benefited massively from one of the biggest commodity booms in history, a detail Conservatives seldom mention when they’re praising the Great Helmsman.
Unemployment? In 2011, it was 7.5 per cent in Canada. That’s low relative to most developed countries. In Finland, it was 7.8 per cent. In Denmark, it was 7.7 per cent. In Sweden, it was the same as in Canada. In the Netherlands, it was 4.5 per cent. In Norway, it was 3.3 per cent.
No, this does not mean, and I am not saying, that socialism works, or Europe is fine, or any other broad-brush conclusion.
It means that in trying to make sense of the world around us we need to avoid broad-brush conclusions and pay attention to particulars. And we should have nothing to do with caricatures.
The Conservative portrait of Europe is one such caricature. “Europe” is socialist, indebted, stagnant. “Europe” is this. “Europe” is that. But “Europe” is a big and enormously diverse continent, while the European Union consists of 27 countries as different as Sweden and Bulgaria. Gross generalizations about “Europe” will inevitably obscure as much as they reveal, even if they aren’t crude, disingenuous political propaganda like Senator Finley’s comments.
We are also ill-served by stereo-types at the national level. The number two country on the World Economic Forum’s Global Competitiveness Index is Singapore, the darling of free-marketers everywhere. The United States is number five. No surprise, right? But number one is Switzerland, Sweden is number three and Finland four. Germany, the Netherlands, and Denmark are numbers six through eight. (Despite being blessed with the glorious leadership of Stephen Harper, Canada is only number 12.)
Even at the level of policy, pigeon holes are unhelpful. Denmark, for example, pioneered a policy called “flexicurity,” which provides extensive support for laid-off workers but it also makes it easy for companies to lay off employees. Just try to pigeonhole that.
Of course, reality is not the Conservatives’ concern. Winning is. And the European bogeyman is very useful for that: “Europe” is awful. “Europe” is scary. “Europe” is what the NDP would turn Canada into if they ever get the chance.
The next time you hear a Conservative say something like that, ask him about Finland’s net public debt.