What's the secret to Canada's miracle economy?
No foreclosure crisis. No bank failures. No debt crisis. Low unemployment. A strong currency. Yes, Canada has a lot going for it these days. Here's why.
Americans may be looking north of the border with envy these days. The Canadian dollar – previously an object of mockery – now trades higher than its US counterpart and our banks weathered the global financial crisis with alarming stability. How have Canadians pulled this off?Skip to next paragraph
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We very cleverly situated ourselves next to a superpower with a love of freedom similar to ours, one that we count on to protect us militarily. While we can – and sometimes do with great courage – participate in international missions, it is hardly required. We haven’t had to spend nearly as much (proportionately) on our military as has the United States, nor do we have to take the endless grief and criticism of the rest of the world if we A) act too much, B) act not at all, or C) act incorrectly. Free-riding is good.
We have clung to the quaint notion that banks should be regulated and that one should have income in order to buy a house. Canadian mortgages are “full recourse,” meaning that if your home is under (figurative) water, you cannot simply walk away from payments. This is where our Scottish heritage has come in handy and this is where we are truly conservative. Gays can get married here, but if they want to buy a home and make it fabulous, they had better be able to afford it.
We have not, therefore, suffered a sub-prime crisis, nor have we had to spend a fortune bailing out banks – all have remained solvent. We suffered no crash in real estate; currently, we have a housing boom. Former US Fed Chairman Paul Volcker, speaking in Toronto in 2009, about the financial crisis, said, “It’s interesting that what I’m arguing for looks more like the Canadian system than the American system.”
As our economy has long depended on natural resources, we have not been as squeamish about extracting and exploiting them as have our neighbors. Americans may imagine Canadians romping and canoeing our way across a pristine landscape, but we have not let the equivalent of an Environmental Protection Agency prevent us from making as much as we possibly can from the fact that we have far more oil than we need. Whether it‘s drilling off the coast of Newfoundland or exploiting the politically incorrect oil sands of Alberta, we are willing to go there. (The province of Alberta ranks second, after Saudi Arabia, in global crude oil reserves.) Canada supplies more oil to the United States than anybody else in the world. Americans can forget all that nonsense about supporting hostile regimes every time you rev up your engine. You aren’t supporting terrorists. You are supporting Justin Bieber. So it’s much, much worse.