Canadians now wealthier than Americans

[MadImmortalMan]

Surprised this has just happened, thought it had always been the case.

No. Until recently, the following was true:

1. The Canadian dollar was worth less than the US dollar;
2. Canadians were, on average, poorer than Americans; and
3. Canadian tax rates were in pretty well all cases higher than US tax rates.

The issue was always whether the Canadian emphasis on (relatively) more socialism in things like medicare and on "peace, order and good government" was worth these drawbacks.

Over the past few years, all three points have changed. The Canadian dollar is now on par with the US dollar. In some jurisdictions and for some classes of taxpayer, Canadian tax rates are now lower. And now, on average, Canadians are more wealthy. 

As to why, you'd have to ask an economist, but I suspect it is a combination of things:

1. Higher resource prices - Canada sells lots of resources like oil;
2. The financial crisis hit the US much harder than Canada - for example, Canada lacked the subprime mortgages situation the US had;
3. The US spent lots of money on foreign wars.

4: Canada got some admirable fiscal sanity in the 90s.

[DGuller]

At least we have true fixed rate mortgages.

[alfred russel]

4: Canada got some admirable fiscal sanity in the 90s.

So did the US. 

[Valmy]

So did the US. 

Fighting wars with no bond drives and no increase in taxes has historically been a proven success.

[alfred russel]

At least we have true fixed rate mortgages.

And we are going to whip their ass in the medal count at the Olympics.

[Valmy]

And we are going to whip their ass in the medal count at the Olympics.

America...FUCK YEAH!

[garbon]

At least we have true fixed rate mortgages.

And we are going to whip their ass in the medal count at the Olympics.

USA! USA!

[Barrister]

Surprised this has just happened, thought it had always been the case.

No. Until recently, the following was true:

1. The Canadian dollar was worth less than the US dollar;
2. Canadians were, on average, poorer than Americans; and
3. Canadian tax rates were in pretty well all cases higher than US tax rates.

The issue was always whether the Canadian emphasis on (relatively) more socialism in things like medicare and on "peace, order and good government" was worth these drawbacks.

Over the past few years, all three points have changed. The Canadian dollar is now on par with the US dollar. In some jurisdictions and for some classes of taxpayer, Canadian tax rates are now lower. And now, on average, Canadians are more wealthy. 

As to why, you'd have to ask an economist, but I suspect it is a combination of things:

1. Higher resource prices - Canada sells lots of resources like oil;
2. The financial crisis hit the US much harder than Canada - for example, Canada lacked the subprime mortgages situation the US had;
3. The US spent lots of money on foreign wars.

The original article says the primary reason for the change is housing prices - the drop in housing values in the US since '08 is what has dropped overall household values (since most people's assets are tied up in their homes).

[derspiess]

The original article says the primary reason for the change is housing prices - the drop in housing values in the US since '08 is what has dropped overall household values (since most people's assets are tied up in their homes).

Average net wealth for US families fell 40% between 2007 and 2010.  I guess that'll do it.

[Barrister]

The original article says the primary reason for the change is housing prices - the drop in housing values in the US since '08 is what has dropped overall household values (since most people's assets are tied up in their homes).

Average net wealth for US families fell 40% between 2007 and 2010.  I guess that'll do it.

Yup.

Which goes to show - in 2007 US families were almost 40% wealthier than Canadian families.

[derspiess]

Yup.

Which goes to show - in 2007 US families were almost 40% wealthier than Canadian families.

T'was fool's gold

[Malthus]

The original article says the primary reason for the change is housing prices - the drop in housing values in the US since '08 is what has dropped overall household values (since most people's assets are tied up in their homes).

Certainly, that's my second factor. I don't think that's the whole story though - Canada weathered the storm better because of resources and not paying as much for foreign adventures.

[crazy canuck]

The original article says the primary reason for the change is housing prices - the drop in housing values in the US since '08 is what has dropped overall household values (since most people's assets are tied up in their homes).

Certainly, that's my second factor. I don't think that's the whole story though - Canada weathered the storm better because of resources and not paying as much for foreign adventures.

Not sure the resources had much to do with it.  When the crisis hit the prices for resources also went into the tank.  What saved us is we did not emulate the US and deregulate our financial industry.  You will recall Martin was under a lot of pressure to do just that back in the day.

When the US housing market picks up again they will inevitably become wealthier than us.  But they will still have the world's worst run medical system.  I am content with the trade off.

[DGuller]

Don't you have to cross the border to see an American doctor if you get a cold or a strep throat?

[Neil]

Don't you have to cross the border to see an American doctor if you get a cold or a strep throat?

Why would you see a doctor for a cold?