- - Tuesday, April 22, 2014

ANALYSIS/OPINION:

There are important economic lessons the United States can learn from politicians in other countries to achieve long-term success. Former Canadian Finance Minister Jim Flaherty was one of them.

Mr. Flaherty unexpectedly passed away on April 10 from a heart attack. Although the 64-year-old had suffered from an autoimmune skin disease, he had previously stated his decision to leave public life in March was unrelated to his condition.

It was a tragic end for this intelligent, talented and friendly individual. Mr. Flaherty, a lawyer who lived in Whitby, Ontario, had been in politics for nearly two decades. He’s part of a small, select group to have served as a provincial and federal finance minister.

A small-“c” conservative by personal conviction, Mr. Flaherty was well-liked and greatly admired across the aisle. Touching tributes from right-leaning political allies such as Prime Minister Stephen Harper and former Reform Party leader Preston Manning, and left-leaning political rivals such as NDP leader Thomas Mulcair and former Ontario NDP premier Bob Rae showed the affection they held for him.

As Mr. Harper said in his deeply personal eulogy on April 16, ” … it is a fact that Jim, as fiercely partisan as he was, was also genuinely liked and respected by his opponents, liked by his enemies. That’s something in this business, something I envy. I can’t even get my friends to like me.”

The admiration Canadians had for Mr. Flaherty was shared by his American and international counterparts. The longest-serving finance minister among Group of Seven countries had earned their respect for his financial acumen and economic stewardship during the global economic crisis.

Mr. Flaherty forged a unique strategy (along with Mr. Harper) to lead Canada through the choppy financial waters.

He balanced a large deficit with a significant stimulus package during the worst of the crisis. The Canadian banks were, therefore, able to avoid a liquidity failure, which would have torn apart the economy in short order.

Mr. Flaherty also made sure the economy didn’t fall into a financial black hole during this difficult deficit period.

For instance, long-term expenditures and the bloated bureaucracy were kept in check. Personal and corporate income-tax rates remained stable. There was no sudden shift toward more state-run programs and publicly funded social services. The housing market didn’t explode or turn into a U.S.-style subprime mortgage crisis. Tax-free savings accounts were introduced to increase a person’s investment income. The penny was also phased out to save millions in taxpayer dollars.

In the past couple of years, Mr. Flaherty had started a strong — and successful — push back toward fiscal conservatism and financial responsibility. This will help propel Canada to a balanced budget by 2015.

Americans of all political stripes were impressed with Mr. Flaherty’s strategy. Henry M. Paulson Jr., Treasury secretary under President George W. Bush, called it “masterful … when he talked, you listened to what he said.” Jacob Lew, Treasury secretary under President Obama, declared he was “a devoted advocate for sound fiscal policy.” Tim Adams, a former international policy adviser for the Treasury, said there “was no starry-eyes pursuit of great dreams. It was: What can we do now? How can we can achieve real-time objectives.” Even the Nasdaq paid tribute to Mr. Flaherty in Times Square upon hearing the news of his death.

Certainly, the Canadian economy isn’t perfect. Extensive amounts of government interference and state regulation still exist. There are restrictive policies when it comes to foreign competition and trade liberalization. Private enterprise is paid a great deal of lip service, but those lips often remain silent when it comes to increasing privatization.

That’s with a Tory government in power, mind you. It’s enough to make a small-“c” conservative cry (and often has).

Even so, the Canadian economy is currently one of the strongest and most successful among the Group of 20 countries because Mr. Flaherty was willing to make tough decisions and political sacrifices to avoid financial pitfalls. He protected his country in the worst of times, and steered it back to a position of fiscal prudence when the bad patches were finally over.

That’s a financial lesson all of us can learn, and Mr. Flaherty deserves to be praised and remembered for his sage economic policies.

Joe Oliver, the current Tory finance minister, will oversee the important moment when Canada’s budget is balanced once more. Yet it’s fair to say the impressive spirit of a beaming Jim Flaherty will surely be in the House of Commons that day, too.

Michael Taube is a contributor to The Washington Times.

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