Better Cross-country Comparisons Please!

Canadaphile libertarian Will Wilkinson pointed to a piece by Fareed Zakaria arguing Canadian policies have handled the financial crisis better than America. The piece is interesting and worth a read, but I wanted to highlight this part:

Canada has done more than survive this financial crisis. The country is positively thriving in it. Canadian banks are well capitalized and poised to take advantage of opportunities that American and European banks cannot seize.

I don't doubt that the Canadian banking sector is doing better than America's banks. But is the country "thriving"? To my knowledge, they haven't released GDP statistics from the last quarter, but predictions are not optimistic:

In the worst year-over-year performance since August 1991, the economy shrank 0.8 percent compared with November 2007. The Canadian dollar strengthened slightly after the data

Economists, surprised by the swift deterioration from a 0.1 percent decline in October, now expect the fourth-quarter contraction of close to 3 percent. That compares with the Bank of Canada's latest projection of a 2.3 percent decline.

So, roughly a 3% (annualized, I'm assuming) decline in the fourth quarter. The advanced estimates (always subject to revision) are the U.S. declined 3.8%. Now, I'm strongly considered with economic growth, and 1% differences over time matter enormously. But it's absurd to claim that a 3.8% decline is a new Great Depression and a global catastrophe, while a 3% decline is "thriving".

This may seem like needless nitpicking, or defensive nationalism, but it isn't. I'd like nothing better for Canada to really be thriving, as it would not only be good for them, but it would also help pull the U.S. out of recession. But it just doesn't seem to be the case, and it matters. As the U.S. begins tossing aside the failed market economy* and moving towards social democracy, it pays to see just what countries are in fact doing better than others, and why. There will be some great empirical studies that look at what factors help a country prevent or weather banking crises such as the current troubles. Just asserting, sans evidence, that the U.S. is doing terrible compared to other countries isn't sufficient.

[*] Everyone here knows this problem wasn't caused by a free market, but at this point, that fight is almost unwinnable.

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Canada gets a free ride

because they know the US will always defend their borders against invasion. The money the don't spend on defense goes onto welfare and it still isn't enough.

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The most authoritative source of data for cross-country comparisons can be found here.