Tony Coates is celebrating the elimination of the Australian federal government’s net debt. During the 1970s and 1980s, Canada carried a brutal public debt, to the point that our federal government was spending more on interest than on any major government program (healthcare, defence, education — you name it). I suspect that Australia was in a similar situation. It’s a vicious circle, where the government ends up spending more and more but delivering less and less.
The ratio between public debt and GDP in a rich country shows how capable that country is of dealing with its debt; less directly, it also shows how fond that country is of big government (though high debt can also simply indicate undertaxation). With that in mind, the following table destroys a lot of the stereotypes about how well different governments manage their finances and how fond they are of big government:
|Country||Public debt:GDP ratio|
(Source: CIA World Factbook; all figures for 2005.)
Anti-big-government U.S.? Impoverished Spain? Debt-ridden U.K.? Soviet-Canukistan? Forget it. On the other hand, however much Americans may complain about financial mismanagement under their current administration, things could have been worse — at least they didn’t have to deal with five years of Silvio Berlusconi.