We Can Learn from What Canada Does Right

[one...two...tree 2,762]

By Fareed Zakaria, Newsweek

The legendary editor of The New Republic, Michael Kinsley, once held a "Boring Headline Contest" and decided that the winner was "Worthwhile Canadian Initiative." Twenty-two years later, the magazine was rescued from its economic troubles by a Canadian media company, which should have taught us Americans to be a bit more humble. Now there is even more striking evidence of Canada's virtues. Guess which country, alone in the industrialized world, has not faced a single bank failure, calls for bailouts or government intervention in the financial or mortgage sectors. Yup, it's Canada. In 2008, the World Economic Forum ranked Canada's banking system the healthiest in the world. America's ranked 40th, Britain's 44th.

Canada has done more than survive this financial crisis. The country is positively thriving in it. Canadian banks are well capitalized and poised to take advantage of opportunities that American and European banks cannot seize. The Toronto Dominion Bank, for example, was the 15th-largest bank in North America one year ago. Now it is the fifth-largest. It hasn't grown in size; the others have all shrunk.

So what accounts for the genius of the Canadians? Common sense. Over the past 15 years, as the United States and Europe loosened regulations on their financial industries, the Canadians refused to follow suit, seeing the old rules as useful shock absorbers. Canadian banks are typically leveraged at 18 to 1—compared with U.S. banks at 26 to 1 and European banks at a frightening 61 to 1. Partly this reflects Canada's more risk-averse business culture, but it is also a product of old-fashioned rules on banking.

Canada has also been shielded from the worst aspects of this crisis because its housing prices have not fluctuated as wildly as those in the United States. Home prices are down 25 percent in the United States, but only half as much in Canada. Why? Well, the Canadian tax code does not provide the massive incentive for overconsumption that the U.S. code does: interest on your mortgage isn't deductible up north. In addition, home loans in the United States are "non-recourse," which basically means that if you go belly up on a bad mortgage, it's mostly the bank's problem. In Canada, it's yours. Ah, but you've heard American politicians wax eloquent on the need for these expensive programs—interest deductibility alone costs the federal government $100 billion a year—because they allow the average Joe to fulfill the American Dream of owning a home. Sixty-eight percent of Americans own their own homes. And the rate of Canadian homeownership? It's 68.4 percent.

Canada has been remarkably responsible over the past decade or so. It has had 12 years of budget surpluses, and can now spend money to fuel a recovery from a strong position. The government has restructured the national pension system, placing it on a firm fiscal footing, unlike our own insolvent Social Security. Its health-care system is cheaper than America's by far (accounting for 9.7 percent of GDP, versus 15.2 percent here), and yet does better on all major indexes. Life expectancy in Canada is 81 years, versus 78 in the United States; "healthy life expectancy" is 72 years, versus 69. American car companies have moved so many jobs to Canada to take advantage of lower health-care costs that since 2004, Ontario and not Michigan has been North America's largest car-producing region.

I could go on. The U.S. currently has a brain-dead immigration system. We issue a small number of work visas and green cards, turning away from our shores thousands of talented students who want to stay and work here. Canada, by contrast, has no limit on the number of skilled migrants who can move to the country. They can apply on their own for a Canadian Skilled Worker Visa, which allows them to become perfectly legal "permanent residents" in Canada—no need for a sponsoring employer, or even a job. Visas are awarded based on education level, work experience, age and language abilities. If a prospective immigrant earns 67 points out of 100 total (holding a Ph.D. is worth 25 points, for instance), he or she can become a full-time, legal resident of Canada.

Companies are noticing. In 2007 Microsoft, frustrated by its inability to hire foreign graduate students in the United States, decided to open a research center in Vancouver. The company's announcement noted that it would staff the center with "highly skilled people affected by immigration issues in the U.S." So the brightest Chinese and Indian software engineers are attracted to the United States, trained by American universities, then thrown out of the country and picked up by Canada—where most of them will work, innovate and pay taxes for the rest of their lives.

If President Obama is looking for smart government, there is much he, and all of us, could learn from our quiet—OK, sometimes boring—neighbor to the north. Meanwhile, in the councils of the financial world, Canada is pushing for new rules for financial institutions that would reflect its approach. This strikes me as, well, a worthwhile Canadian initiative.

http://www.newsweek.com/id/183670

Edited February 9, 2009 by Mister Fancypants

[alienlovechild 75]

Canada, by contrast, has no limit on the number of skilled migrants who can move to the country.

Easy to say when Canada doesn't have a massive number of unskilled illegal immigrants. It's also one of the least densely populated nations on Earth which has more to do with the climate and geography than Canadian politics.

[Peikko 1,575]

Canada, by contrast, has no limit on the number of skilled migrants who can move to the country.

Easy to say when Canada doesn't have a massive number of unskilled illegal immigrants. It's also one of the least densely populated nations on Earth which has more to do with the climate and geography than Canadian politics.

Just because the US suffers from a problem with illegal aliens doesn't mean it should stop well qualified, skilled legal migrants from entering. The two should not be interdependent, that's "just cutting of your nose to spite your face".

As for the rest, I don't know, but it does look as though Canada is not going to have the same issues that are facing the rest of the industrialised world. If there is anything they do that is worth learning from then, it would be stupid not to, no?

[DeadPoolX 9]

As I see it, Canadian banks have practically no competition. In Canada there is RBC, TD, CIBC, ScotiaBank and BMO. Unlike the U.S., where there are (or at least were) numerous banking institutions. The competition between banks lead to free savings and checking accounts, both of which are virtually unheard of in Canada.

Is Canadian banking safer? Maybe. It's hard to tell. Maybe Interac helps or the fact that Canadian debit cards are pin-only, whereas in the U.S., you can use your pin or swipe and sign it like a credit card. I doubt banking machines really make a difference (except in the case of usability).

There is some validity to the "illegal alien argument." Banks like BoA offer illegals checking accounts and credit cards. That shouldn't be legal. I could maybe understand a checking account, but a credit card? It's unlikely the illegal will pay the balance and when he doesn't, who cares about the APR?

Sure, it might ruin an illegal's credit rating (whatever that might be as an illegal alien), but somehow, I don't think that matters much in this case.

[HAL 9000 96]

There are illegals in Canada?

[DeadPoolX 9]

There are illegals in Canada?

Well... there are, but I was talking about illegals in the United States.

[Emancipation 2]

There are illegals in Canada?

No.. they are called Migrant workers and they are given documentation after they enter the country..

[w¡n9Nµ7 §£@¥€r 123]

Tim Hortons to share stores with ice-cream chain in U.S

Tim Hortons Inc. is moving to speed its expansion in the United States by co-branding up to 50 locations with Cold Stone Creamery.

Arizona-based Cold Stone Creamery will also welcome Tim Hortons into as many as 50 of its outlets under the agreement to combine coffee shops and ice-cream stands.

...

The 100-store program, starting in spring, will reconfigure locations of the two chains in Michigan, western New York, Ohio, Rhode Island, Maine and Connecticut.

[HAL 9000 96]

There are illegals in Canada?

No.. they are called Migrant workers and they are given documentation after they enter the country..

Cool... yeah. So that changes the illegal-alien cheerleader squad some folks dream about here. The latinamerican friends I have living up there on immigrant visas love Canada although some tell me to only move there if the job offer is worth it. And they do complain about having to reside there an X number of years before leaving... but hey... maybe Canada should market to Mexico a little more to help the anti-immigrantanti-illegal cheerleader crowd here feel less hypertension.

[Ban Hammer 13,355]

There are illegals in Canada?

i was just there for the timbits!

[DeadPoolX 9]

There are illegals in Canada?

i was just there for the timbits!

How about the Royal Timbit Bank?

[Heracles 417]

Canada, by contrast, has no limit on the number of skilled migrants who can move to the country.

Easy to say when Canada doesn't have a massive number of unskilled illegal immigrants. It's also one of the least densely populated nations on Earth which has more to do with the climate and geography than Canadian politics.

Canada also uses the Australian points based immigration system. You cannot just walk your way into the country. If there is a shortage of professionals in a field, they allocate more visa's to it. If there is a surplus they minimize the intake, by means of reducing points given to applicant with those skills.

[HAL 9000 96]

There are illegals in Canada?

i was just there for the timbits!

Gonna have a Tim Horton's up there hold ya at gunpoint!