An article in Bloomberg News by Stephen Marche, the author of “How Shakespeare Changed Everything” caught my eye earlier this week. The title of the article is “Canada richer than US.” Per Marche, “According to data from Environics Analytics Wealthscapes published in the Globe and Mail, the net worth of the average Canadian household in 2011 was $363,202 while the average American household’s net worth was $319,970. This is the first time in recent history that this has occurred. Not having seen the study, I would not be surprised if the Canadian wealth distribution is more egalitarian as well, meaning the US probably has many more on the high-end of the curve, but fewer on the bottom end.
Why is this so? Marche notes a combined “fiscally conservative form of socialism” and a little bit of luck. The luck resides in the richness of natural resources which produces dividends unrelated to public policy. Yet, while Canada has a greater reach with its social programs, national health care being the most successful, it also has cut spending when needed and decreased taxes on corporations permitting them to reinvest in their business. What is also interesting is Canada’s embracing of regulation actually resisting calls to deregulate.
Unlike the US, banks are heavily regulated in Canada and have had tighter loan-loss and reserve requirements for some time. In fact, the big banks were not permitted to merge and as a result of all of the above, the stability of banks facilitated the stability of the housing market. This housing stability and less unemployment are key reasons for the better comparative wealth position. Many used to believe this conservative banking posture was quaint and growth inhibiting, but I do not think that argument would be as supported today.
From this article, I learned that Canada is very open to immigration, but it has to be done in the right way. There is a mandatory one-year prison sentence on illegal immigrants and the majority of Canadians favor deportation of illegal immigrants. So, while their borders are open to immigrants, there is a sense of fairness that it must be done according to Hoyle. I think many Americans would support this concept, but our problem seems to be the transition from what we have today to this premise.
I think Marche highlighted this last example to note that Canadians have a common sense belief in fairness. Regulations exist for a reason. Canadians might say, “Yes, we have our freedoms and we do believe in growth and wealth creation, but we do have some rules of the road.” I think in the US, we have people who sometimes forget that key point. Regulations are not growth inhibitors. If they were then how would one explain how so many trucking firms and airlines went belly up after deregulation in the 1980’s. How would one explain how US banks got the all messed up after Glass-Stegal was repealed in the late 1990’s which let banks be more than just banks?
However, I don’t want to end this post without reference to the Canadian National Health Care system. Canada along with every other first world country with a national health care system, rates more highly in quality of care than the US. Please refer to the World Health Organization (WHO) rankings for this analysis. The spreading of cost over more people and the assurance of preventive and acute care helps the Canadian population have higher overall quality of care than in the US. Further, while the Affordable Care Act is addressing the expansion of coverage in the US, until fully implemented, we have too many people in the US without care. So, many of our folks in poverty cannot afford health care and when crises occur, they must tap what few assets they have. This is the reason for my earlier hypothesis on Canada having a better wealth distribution than we have. Their citizens need not dig deep in their pockets to pay for health care on the spot or have to forego care.
Before the “yes, but” comments arise from some, let me state an obvious point. No country or health care system is perfect and there are problems that can be highlighted. This is one reason I highlight the WHO studies as the US health care system is the most expensive in the world, but rates down the list in quality. My main thrust is to say we don’t have all the answers here in the US and we should look at what is successful in other countries. Before I left my old global company, I used to tell clients one of the advantages of being a global company is you can adopt the better ideas germinated elsewhere and improve your model here. If Australia, UK, Canada or Singapore had a better construct, we could learn from it and bring it to the US. The arrogance of some US leaders that we must be the best at everything is in and of itself growth inhibiting. We should be global in our inventorying of good ideas and we could look north to start with.
Canada has shown you can be fiscally conservative, growth-oriented capitalists and socialists at the same time. And, before others say we cannot do that here, let me make two final points. First, Justice Ruth Bader Ginsburg noted in a New York Law Review excerpt from a speech she made, that if she was creating a constitution from scratch, she would be more inclined to use “The Canadian Charter of Rights and Freedoms” than the US Constitution. I found that quite interesting. Second, before my conservative friends shout socialism. please note that Social Security is a form of socialism. Medicare and Medicaid are forms of socialism. So, we are growth-minded capitalists here in the US, but we have a system in place that tries not to let people fall through the cracks, so we are socialists, as well.
The US is still a pretty neat place, but I think we could learn a few things from our Canadian friends. O’ Canada, you most definitely rock. I knew I liked the band “Rush” for some reason.