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What Obama And The U.S. Need To Learn From Canada

Happy Canada Day!Image by Ian Muttoo via Flickr
Guest Article by:
Shaun Rein, 06.14.10, 12:45 PM EDT

To start with, it has a healthy financial system and affordable higher education.

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. Also, the banks' chiefs have never received huge bonuses like Lloyd Blankfein at Goldman Sachs ( GS - news - people ). In other words, the banking system has been forced to be conservative--as a banking system should be.
Canada also has good immigration and education policies that have set it up for continued strength. There are lessons President Obama can learn from Canada as worries of a double-dip recession in the U.S. linger.
For the past week I've been in Montreal speaking at the International Economic Forum of the Americas. The other speakers have included former Federal Reserve Chairman Paul Volcker, Former British Prime Minister John Major, French Minister of Foreign Affairs Bernard Kouchner and several central bank heads from Europe. Perhaps the best speech, though, came from Jean Charest, the premier of the province of Quebec. Where most of the speakers focused on trade and economics, Charest said that Quebec needs to continue to attract the best people from around the world to come to work there. This is something that is going all wrong in the U.S., as America erects yet more obstacles to immigration in the name of preserving American jobs. Those anti-immigration policies are foolish and will hurt America in the long term.
Let me tell you a story to illustrate just how absurd America's immigration policy has become. I recently interviewed a young Harvard graduate who also was a Rhodes scholar at Oxford University. He was one of the most impressive young people I've ever met. He had an offer in hand from one of the big private equity firms in New York--but despite his credentials, he couldn't get a working visa. Yes, a Harvard graduate and Rhodes scholar with a job offer in hand was unable to get a visa from the U.S. government. As a result, I was sitting with him in Shanghai interviewing him to join my firm, as he desperately sought another job.
This young man is exactly the kind of person America, or for that matter any nation, needs. Why couldn't he get a working visa? Because immigration is an issue that has become so freighted with fear that people can't think about it rationally. This has been especially true recently, as scared people like the Tea Partiers have looked for scapegoats for America's economic mess--though in reality the pendulum has been swinging this way since Sept. 11, 2001. Immigrants are easy targets, but rarely are they the problem.


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