Image via WikipediaWashington — Whatever else they’ve thought about their neighbor to the north, Americans have almost never looked to Canada as a role model.
Indeed, during the long, bitter push to revamp the U.S. health care system, opponents repeatedly warned that if we weren’t careful, we could end up with a medical system like Canada’s.
But on health care, and such crucial issues as the deficit, unemployment, immigration and prospering in the global economy, Canada seems to be outperforming the United States. And in doing so, it is offering examples of successful strategies that Americans might consider.
While the United States, Japan and much of Europe are struggling with massive fiscal deficits, Canada’s financial house is tidy and secure. Most economists say it will take years for the United States to make up the 8 million-plus jobs lost during the recession, but Canada — despite its historic role as a major supplier for the still-troubled U.S. auto industry — already has recovered essentially all of the jobs it lost.
Meanwhile, as Americans continue their grueling battle over immigration, Canadians have united behind a policy that emphasizes opening the door to tens of thousands of skilled professionals, entrepreneurs and other productive workers who have played an important role in strengthening the Canadian economy.
Granted, Canada’s problem with illegal immigration is smaller, and its economy does not match the scale and dynamic productivity of the world’s largest. But on the most troubling issues of the day, the U.S. is locked in near-paralyzing political and ideological debates, while those issues are hardly raising eyebrows in Canada.
“We did a lot of things right going into the financial crisis,” said Glen Hodgson, senior vice president at the Conference Board of Canada, a business-membership and research group in Ottawa.
One of the most important, he said: Back in the 1990s, Canada cleaned up the fiscal mess that most every developed nation is now facing.
Earlier that decade, Canada too was straining from years of excessive government spending that bloated the nation’s total debts, to 70 percent of annual economic output — a figure the U.S. is projected to approach in two years.
As with Greece, Portugal and Spain this year, Canada’s credit rating was downgraded in the early 1990s, sharply raising its borrowing costs. With its economy suffering and pressure mounting from international investors — Wall Street bankers in particular — Canadian officials slashed spending for social programs and shifted more of the cost burden to provincial governments, which almost everyone in Canada felt.
With the economic downturn, Canada pumped up public spending to stimulate growth, as other nations did. Still, its fiscal shortfall this year is projected at $33 billion, comfortably below the 3 percent-of-GDP threshold that economists consider a manageable level of debt.
Washington’s deficit this fiscal year is estimated by the Congressional Budget Office at $1.35 trillion — or 9.2 percent of projected GDP.
The United States’ larger size — its population and economy are roughly 10 times those of Canada — makes direct comparisons difficult. And many Canadians readily acknowledge that American entrepreneurship and productivity are enviably stronger.
“U.S. businesses are certainly looking at lessons learned from Canada,” said Bart van Ark, chief economist at the Conference Board in New York. “In a nutshell, Canada has been very pragmatic in dealing with the economy.”
Canada’s approach to immigration is one example. With one of the highest immigration rates in the world, Canada has been receiving about 250,000 permanent residents annually. About one-fourth of the new arrivals gain entry through family relations, but more than 60 percent are admitted as “economic immigrants” — that is, skilled workers, entrepreneurs and investors.
In the U.S., it’s basically the reverse: Most of the 1 million-plus permanent residents received annually have been family-sponsored; only about 1 in 7 are admitted based on employment preferences. That is, Washington emphasizes bringing in family members of immigrants already in the U.S. Ottawa puts the emphasis on admitting those who can contribute to the economy.