XPost: alt.fan.rush-limbaugh   
   From: slutl@whitehouse.org   
      
   Not reality.   
      
   The perils of per capita GDP: No, Canada is not poorer than Alabama   
      
   Despite lower economic growth per person, most Canadians earn more, live   
   longer and fare better than Americans.   
      
   April 21, 2025   
      
   A line graph showing Canada's GDP per person sliding compared to that of   
   the United States from a peak of 93.9 per cent in 1981 to 75.5 per cent in   
   2021. It stood at 78 per cent in the most recent year, 2023.   
   Canada's per capita GDP has been sliding in relation to that of the United   
   States for 40 years.   
      
      
   This is the second of a two-part analysis of Canada's GDP per capita. The   
   first part can be found here.   
      
   Some business and political commentators cite a growing gap between the per   
   capita GDP of Canada and the U. S. as evidence of Canada's purported   
   economic dysfunction. Some even conclude that because of stagnating per   
   capita GDP, Canada is now poorer than Alabama – a state with widespread   
   poverty, low incomes and short life expectancy.   
      
   This far-fetched conclusion reflects deep flaws in the use of per capita   
   GDP as a measure of prosperity and living standards. As explained in the   
   first part of this commentary, GDP per capita measures total output   
   produced (for money) in a country relative to its population.   
      
   However, this simple ratio ignores important issues such as what is   
   included in GDP, who owns it and how it is distributed. International   
   comparisons are further complicated by necessary adjustments for exchange   
   rates, price levels and population estimates.   
      
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   Comparing GDP per capita between Canada and the U. S. is especially fraught   
   because of other methodological problems. For example, the much larger   
   proportion of unauthorized immigrants living in the U. S. artificially   
   boosts its apparent per capita GDP. There are an estimated 11 million   
   people there who contribute to the numerator (GDP) but are not counted in   
   the denominator (population).   
      
   Similarly, per capita GDP ignores the value of time. In 2023, the average   
   employed American worked 114 hours longer than the average employed   
   Canadian – about three weeks more of full-time work.   
      
   American working hours are among the longest of any OECD country because   
   low wages compel many of them to work extra hours or even second jobs and   
   because there are no legal requirements for paid vacation. Those longer   
   working hours account for much of the Canada-U. S. gap in GDP per capita.   
      
   Another issue is the failure to consider the environmental effects of   
   economic production. Conventional GDP statistics take no account of the   
   costs of pollution. America produces more output per person, but takes   
   fewer measures to protect the environment, which obviously affects the   
   quality of life of current and future generations. Like time, nature is not   
   free.   
      
   These methodological issues cast considerable doubt on the validity of   
   simplistic Canada-U. S. comparisons.   
      
   Attention to Canada's per capita GDP has grown during the current federal   
   election campaign. However, it is important to view the issue through a   
   long-term lens. Canada's per capita GDP has been sliding relative to the U.   
   S. since the early 1980s. The following figure portrays the ratio, based on   
   OECD estimates.   
      
   Thanks to rapid industrialization, Canada largely closed the long-standing   
   disadvantage versus the U. S. from 1950 through 1980. Relative per capita   
   GDP peaked in 1981 at 94 per cent of the U. S. level. It then fell rapidly   
   during the 1980s and early 1990s, to just 81 per cent by 1992. It partially   
   recovered in the late 1990s and 2000s but then fell again in the 2010s.   
      
   After fluctuating during the COVID-19 pandemic, Canada's per capita GDP had   
   fallen by 2023 to 78 per cent of U. S. levels.   
   Data and politics   
      
   There is a natural tendency to put a political spin on economic   
   measurements. However, there is no correlation between which party is in   
   power in Ottawa and the evolution of this ratio.   
      
   Canada's per capita GDP relative to the U. S. rose during Pierre Elliott   
   Trudeau's first years in office but began to fall during his final term. It   
   declined most steeply under Brian Mulroney, was stable during the terms of   
   Jean Chre´tien and Paul Martin, fell during the last years of Stephen   
   Harper's rule and then declined further under Justin Trudeau.   
      
   Canada-U. S. per capita GDP comparisons reflect a complex mix of many   
   determinants, including economic growth, sectoral changes, population   
   growth, immigration, inflation and exchange rates. It is far-fetched to   
   conclude that any government deserves either credit or blame for its   
   trajectory.   
      
   Prosperity depends not just on how much is produced, but how it is   
   distributed. Bank of Canada research shows most of the U. S. advantage in   
   per capita GDP is concentrated among high income earners.   
      
   Three-quarters of the gap in per capita output is captured by higher   
   incomes for the top 10 per cent of Americans. There is little difference in   
   incomes between the bottom 90 per cent in the two countries. The richest 10   
   per cent of Americans receive almost half of all pre-tax income, so their   
   wealth significantly inflates the overall per capita average.   
      
   In fact, most Canadian workers earn higher wages than those in the U. S. It   
   is most accurate to measure typical incomes by the median wage (the halfway   
   point in a distribution), not the average (which can be distorted by very   
   high incomes at the top).   
      
   The median hourly wage in Canada in 2023 was C$28.79 or US$24.61 at the   
   OECD's purchasing power parity exchange rate. The median hourly wage in the   
   U. S. in 2023 was US$23.11. The typical Canadian worker thus earned 6.5 per   
   cent more than their U. S. counterpart, despite lower per capita GDP.   
      
   Perhaps surprisingly, the Canadian worker also paid a lower marginal   
   federal tax rate (20.5 per cent for full-time workers) than their U. S.   
   counterpart (22 per cent).   
      
   Of course, public services, not just private incomes, are also important to   
   living standards. Canada's more extensive health care, public education and   
   other services enhance the quality of life in ways not captured by per   
   capita GDP.   
      
   For example, eight per cent of Americans have no health insurance and one-   
   quarter are underinsured (facing out-of-pocket costs that force many to   
   skip needed care). That takes much of the shine off a higher GDP.   
      
   For all these reasons, it is clear the typical Canadian has a higher   
   standard of living than the typical American. We are healthier, live three   
   years longer, face much less inequality and are happier. These outcomes are   
   not accidents. They reflect deliberate policy choices (including   
   regulation, taxes and public programs) that shape both production and   
   distribution to improve well-being.   
   The decade is not lost   
      
      
   [continued in next message]   
      
   --- SoupGate-Win32 v1.05   
    * Origin: you cannot sedate... all the things you hate (1:229/2)