Canadian households are now richer on average than Americans, according to Stephen Marche:
“On July 1, Canada Day, Canadians awoke to a startling, if pleasant, piece of news: For the first time in recent history, the average Canadian is richer than the average American.
According to data from Environics Analytics WealthScapes published in the Globe and Mail, the net worth of the average Canadian household in 2011 was $363,202, while the average American household’s net worth was $319,970.
A few days later, Canada and the U.S. both released the latest job figures. Canada’s unemployment rate fell, again, to 7.2 per cent, and America’s was a stagnant 8.2 per cent. Canada continues to thrive while the U.S. struggles to find its way out of an intractable economic crisis and a political sine curve of hope and despair.
The difference grows starker by the month: The Canadian system is working; the American system is not.”
Marche calls Canada’s superior model “a hardheaded (even ruthless), fiscally conservative form of socialism.”
I couldn’t find the study from Environics etc. The numbers don’t seem to align with the Fed’s recent figures (see page 17 of Changes in U.S. Family Finances from 2007 to 2010: Evidence from the Survey of Consumer Finances). The Fed looks at U.S. family (not household) net worth in 2010 (not 2011). It finds a median net worth of $77,300 and a mean of $498,800—so I wonder about the definitions. Still, the main thing going on is pretty obvious. The net worth of U.S. families fell sharply between 2007 and 2010 because of the collapse in U.S. house prices. Median net worth fell by nearly 40 per cent; mean net worth by nearly 15 per cent. Canada hasn’t had a house price collapse (though looking at prices in Toronto makes me want to say, “not yet”).
I don’t know whether I’d put Canada’s success in avoiding a house-price collapse down to hard-headed socialism, or to having smaller, more cautious, and better regulated universal banks.
I do think it’s a shame Americans aren’t more curious about what goes on in Canada: There’s a lot to learn, especially from its health-care system. But you can also exaggerate the differences—as people in both countries are apt to do. General government spending in the United States was 41.9 per cent of GDP in 2011; in Canada it was 43.2 per cent. (In 2007, before the recession intervened, the figures were 36.9 per cent for the US and 39.4 per cent for Canada.) I guess that makes the difference between hard-headed socialism and red-in-tooth-and-claw capitalism about 2 percentage points of GDP.
Reihan Salam makes some interesting comments on the piece, and winds up puzzled that the gap in net worth between Canada and the U.S. isn’t even bigger.
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