Forbes: What Obama & U.S. should learn from Canada

Many Americans think mainly of Eskimos and hockey when they think of Canada. Some also think of Michael J. Fox and James Cameron. They should be thinking of a functioning financial system and the most robust economy in the developed world. Unlike the U.S. and Europe, Canada has emerged relatively unscathed from the financial crisis. Its unemployment rate has been improving for the past year and stands at 8.1%. Canada's minister of finance, Jim Flaherty, is already calling for an end to government stimulus, even though the government debt stands at less than 35% of gross domestic product, less than half the level in the U.S.

Why is Canada doing so well while America's doing so poorly? For one thing, its financial regulations have emphasized dullness rather than encouraged exotic financial instruments. The big five banks have never been allowed to merge, and they've only dabbled in investment banking and subprime mortgages.

http://www.forbes.com/2010/06/14/canada ... -rein.html

Interesting article. I will have to read it closer but it is giving a different view than what I am hearing directly from my friends in Canada.

One other reason Canada is looking good right now? They are making a lot of money exporting their oil to the rest of the world.

But riddle me this, the Canadian dollar is equal to ours right now but the poor Canadian book buyer still has to pay a few more dollars per paperback. VAT taxes?

Interesting article Wayne. The Dutch also escaped the mortgage meltdown too, they have a much different system.

As stated by SS109, Canada also benefits from Oil exports, and maybe mineral exports too I think. And their tax system is more broad based to pay for Health and Education. I don't think that would be tolerated here, Americans believe in their "right" to have everything only when the rich pay for it.

I ordered two beers in Montreal one time, I think it was $12 before tip. I think a gallon of gas cost much more too. I don't think Joe-six pack in the US would like those prices. IMO

I also thought the education part in the article was good. Our college costs and student debt is getting to be a problem. We need to find ways to make higher ed more cost effective.

A few other questions I'd like to ask of the author.

Does the Canadian government guarantee home loans to private companies with taxpayer revenues or have government chartered private companies issuing loan guarantees secured with taxpayer money?

What is the population of Canada versus the United States? IIRC, Canada has roughly 10% of our population. To distribute single payer health care for 10x the number of people is not 10x the cost, the equation is more exponential than linear in nature.

Does the Canadian government guarantee student loans? Part of the reason that a college education is so expensive is that the many of the universities are public institutions, meaning taxpayer supported, which means taxpayer funded defined benefit pensions (nearly all of which are underfunded currently). The availability of taxpayer guaranteed student loans ensures a steady revenue stream for the schools from students who would otherwise not be able to afford the education, which gives the universities no reason to keep tuition, not to mention salaries, scholarships, athletics and other aspects of the university financial equation, within reasonable bounds.

Am I saying that our government spending is the source of the problem? You betcha.

OK, that's it!! Here we are having a nice conversation and you decide to bring logic and real numbers into it?? That is not playing fair!! :Whatever: :banned:

P.S. I mostly agree with your post. I don't think many people realize how most mortgages are now 100% govt backed now, and the cost of Fanny/Freddie to taxpayers could make AIG look cheap. ($1 Trillion?) There is no discussion on how to get the gov't out of the mortgage market yet.

As for Education, I do think I read state funding has dropped by nearly 1/2 for higher Ed (in CO), probably due to costs of K1-12 Ed, Medicaid, and lower revenues.

It seems to me $20-30K/year is just too high. The education model has not really changed much over the years, fancy college campuses, sports, tenure for profs. And probably great pensions I bet. Why not a simpler model, maybe 3yr degrees, on-line or video courses, there has to be a more efficient way. I have a friend that said quote "No way am I spending $25K/yr on college so you kids can go party" His kids (2) are in the Army and Navy. That is the second option to student loans. The college benefits for vets are pretty good I think, and I guess they should be.

And I agree - $20K to $30K a year is too high for the yearly bill to attend a university. The problem, as I see it, is that there are too many dollars chasing that commodity, which is why the cost is so exorbitant, and the source of those too many dollars is the whole student loan and Pell Grant program. Without the federal taxpayer guaranteeing the student loans, there would be much less money lent out. Much less money lent out would mean that the cost would have to become something that was realistically affordable in order to have the necessary number of students (or their parents) willing to pay that price. When you have too many dollars chasing too few goods, the cost of that particular good is much higher than it would be if you had too few dollars chasing too many goods. The solution is to limit the dollars available to purchase the goods in this case by eliminating the taxpayer guarantee associated with student loans and other federal sources of money for education. Federal intervention has once again removed any sanity from the marketplace - the only thing that the federal government has shown an ability to do with any semblance of consistency.

PrintSmith wrote: Federal intervention has once again removed any sanity from the marketplace

Sounds familiar. Like the housing meltdown? The trouble is our policy makers believe they are smart enough to intervene, whether it is loan guarantees, setting interest rates, tax policy, setting prices for health care reimbursements, etc.