I've been thinking about this for a while, I've often written that there are fundamental difference between Canada and the U.S. and these are widening (despite what the Conservative government thinks) rather than narrowing.
- First, is the nature of the Canadian economy: small and open energy and resource export driven economy. Canada is no Qatar or Kuwait, where energy is 99% of its exports, it is far more balanced that that, energy exports are important but not dominant, but it remains that Canada's strength lays in "heavy things that hurt when you drop them".
- Socially Canada is more homogeneous, and the Caucasian majority doesn't feel threatened...it is important to note that in the U.S. the Caucasian majority is only a few years away from no longer being the majority [BTW I'm not inferring any preference here, but note that the U.S. Tea party was mostly "Angry Whites" -- realizing that their "position" in America's economic system was eroding (the FoxNews "take-back" talk was "code" for "whitey man the barricades!"].
- Canada is not a military "super-power" (in fact we are hardly a military power -- we have been relying on america for our defense -- truth hurts, but its true nevertheless).
- The healthcare issue is supported by a wide consensus (of course some people will always complain) but the reality of our Southern neighbors with regards to health care is not enticing. U.S. healthcare system is a cautionary tail: Maybe our system is not "good enough" or "perfect" but one thing for sure the U.S. system is a disaster! and not something anyone should emulate.
The past 10 years have been very good to Canada and to Canadians in general, for while Canada does have income disparity, it is no where near the scope of what is found in America. which brings me to the meat of my topic: Median Income.
Median income is generally hated by politicians because it represents the absolute middle income -- literally half the population earns more and the other half earns less. Unlike average which can be pulled by the rich getting a lot richer! The American reality is that median income has been static (read falling) for more than a decade.
(source: Medicare Tax Base)
Importantly, from this figure Americans must also subtract health care expenses -- which have been rising at nearly 7% p.a. for over a decade. The earning power of the median American has dropped dramatically.
Looking at Canada:
Shows a very different picture. It is important to note that the '90s were not kind -- Canadian income suffered under Paul Martin's 1995 massive debt correction (our version of Greece), so there is some catching up here. Also the numbers are not strictly comparable, first because we are looking at family and not individual income, and also because of the health care component -- BTW these figures are after tax in both cases!
The housing bubble in the U.S. was driven by "median" American's attempt at maintaining the fiction of income growth (according to some, median income has been stagnant for nearly two decades -- but inflation and other adjustment can make data say anything) that simply didn't exist. As such it is remarkable that Greenspan never did a 2+2 analysis of the data -- which was apparent, house prices were rising while income was stagnant, the only factor that "improved" where interest rates -- by definition there is a lower limit to interest rates (zero if you doubt to thought process). In a sense, Republican politicians are correct that the house crisis "began in Washington". The bubble would have lasted much longer (less intense) had Wall Street not gone crazy in 2004 and refrained from lending money to people who had no means to make even the first mortgage payment!
However, the median income data shows one thing very clearly, is that the Canadian situation (based on our resource rich economy) is very different to that of the Americans doesn't mean we are out of the woods (by any stretch of the imagination), but it does show that those who borrow have seen an absolute increase in the income (average income will grow more quickly), it doesn't mean that Canada's housing market is now near or at bubble level -- Toronto and Vancouver in particular are very frothy.