Canada hasn’t taken out full page ads in American newspapers to brag about it, so maybe few in this country know that our neighbor to the north sailed through the recession with scarcely a nick, and is now eight-months into a strong recovery.
Employment there never dropped below the 2007 level and is now above it, while unemployment in the U.S. still is near 10 percent and is five points below the 2007 level, when the recession began.
What’s their secret? How can a nation that supports a national health care system that covers everyone and costs much less that ours does, rack up so much better economic numbers than we do? Houses are selling like hotcakes there, many above asking price. The Canadian dollar, worth only 77 cents a few years ago, climbed within three cents of parity with our dollar last week.
The Canadian national debt is below 36 percent of its gross national product, and is falling — just a little more than half the U.S. debt level, which is rising.
None of its big banks failed, all remained profitable so none had to be rescued with government money. The reason why appears clear; for years they have been regulated far more strictly than U.S. banks. Their capital requirements are higher. Mortgage re-quirements are more strict, so foreclosures are more rare. The banks there only dabbled in subprime loans and pulled out quickly when troubles surfaced. Canadian bank shareholders have kept bonuses to bank managers modest.
Banking in Canada is much less exciting than it is on Wall Street — and much less threatening to the commonwealth.
PART OF Canada’s economic success is due to the world’s hunger for Canadian oil, gold and other natural resources found in its west. The market for what Canada has to sell abroad has remained strong, providing employment for workers, profits for corporations, taxes for government.
Another part has to do with its cultural values. Bonuses to bankers there can be kept far below those given in the United States because the good of the many is considered superior to the good of the individual. Canadian business executives are more likely, therefore, to raise staff salaries and increase dividends when profits rise, than to make themselves rich.
Are there other lessons Canada can teach to the United States?
Sure, but try to get the members of the United States Congress or U.S. CEOs to go to class in Toronto. My, how demeaning that would be. Unthinkable; totally unthinkable.
— Emerson Lynn, jr.
