Canada Gets It Right

The American financial system, economy, housing and equity markets continue to plummet. With President Obama's signature on the stimulus today, immense efforts are now underway to unfreeze credit and jolt demand back into place. Meanwhile, north of the border, our unpretentious Canadian neighbors furnish an example of responsible, comprehensive thinking we would do well to emulate.

We have brought most of our current woe on ourselves by following foolish ideology and by our unwillingness to address critical issues. Newsweek's insightful foreign affairs columnist Fareed Zakaria profiles how Canada gets it right in "Worthwhile Canadian Initiative" in the magazine's February 16 issue. You can go to the original here.

For starters, Canada refused to go along with the deregulate at all costs banking ethic. As Zakaria reports, "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." As a result, Canada is the only country, "in the industrialized world," that, despite crisis all around it in the past year, "has not faced a single bank failure, calls for bailouts or government intervention in the financial or mortgage sectors." Canada's banking system is currently rated "the healthiest in the world" by the World Economic Forum. Ours comes in at number 40. Its largest bank, Toronto Dominion has gone from the 15th largest bank in North America a year ago to number 5 now. Why? "It hasn't grown in size; the others have all shrunk."

Canada has also confronted serious fiscal issues our politicians have been afraid to tackle honestly. For one, it's "had 12 years of budget surpluses and can now spend money to fuel a recovery from a strong position." Its counterpart to our Social Security has been put on a sound actuarial footing. Its integrated health system costs just 9.7% of GDP, compared to our 15.2%, and delivers far better results in terms of longevity and healthy years of life. An ominous result is that, "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."

Canada also has a far more intelligent immigration system. "Visas are awarded on educational level, work experience, age and language abilities. If a prospective immigrant earns 67 points out of 100 total (holding a Ph.D. is worth 25points, for instance), he or she can become a full-time, legal resident of Canada." Microsoft recently opened a research center in Vancouver to, the company announcement said, take advantage of "highly skilled people affected by immigration issues in the U.S." As Zakaria puts it, "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 and pay taxes for the rest of their lives."

There are a lot of good examples to be found in our quiet neighbor to the north. We would do well to carefully study their model for application to some our own difficulties with finance, housing, competitiveness, health care and immigration. Feelings of superiority and a refusal to learn from others are dubious luxuries we can ill afford in these times.