No, Canada Isn’t Evil

Did you know that more North American cars are manufactured in Ontario than in Michigan?

Unfortunately, our country’s political tensions are so elevated that anyone who even suggests the possibility that another country may do something better than the U.S. is labeled unpatriotic. Of course, those suggestions are made because the person making them cares deeply about our country’s future, but that point often gets ignored.

Fareed Zakaria of Time Magazine penned an interested piece in the 2/16 issue entitled “The Canadian Solution.” In it he points out several areas in which Canada’s government policies appear to be working better than ours. Maybe if we finally can admit that not everything we do in the U.S. turns out to be perfectly right, we can begin to at least consider other kinds of policies without being labeled un-American.

It became clear from President Obama address last night that healthcare reform will be on his agenda in 2009. A likely focus for such reform will be making sure that every American has health insurance. Such a task will undoubtedly be bad-mouthed by many, labeled as socialism.

“Let the free market work, we can’t be socialists like Canada and France!,” they’ll say. The free market is usually great, but if you have been diagnosed with a disease and lose your job and employer-based insurance plan, you often can’t turn to private health insurance provided by the free market. Either the insurance company will refuse to cover you at all (because they won’t make a profit on someone who is sick), or they’ll charge you a few thousand dollars a month, which obviously you can’t afford. The free market works most of the time, but not all of the time, as the sub-prime bubble has taught us so well.

Zakaria’s article uses evidence from Canada to try and show us that sometimes other countries get things right more often that we do. Simply pointing out facts does not make Zakaria unpatriotic, it simply suggests that he believes we should keep an open mind about certain important issues. After all, if our system isn’t working very well, but we refuse to adopt the ideas of other countries, then how can we ever expect to make improvements?

Below are some excerpts from Zakaria’s article:

“Guess which country, alone in the industrialized world, has not faced a single bank failure, calls for bailouts or government intervention in the financial or mortgage sectors. Yup, it’s Canada. In 2008, the World Economic Forum ranked Canada’s banking system the healthiest in the world. America’s ranked 40th, Britain’s 44th.”

“Canada has also been shielded from the worst aspects of this crisis because its housing prices have not fluctuated as wildly as those in the United States. Home prices are down 25 percent in the United States, but only half as much in Canada. Why? Well, the Canadian tax code does not provide the massive incentive for overconsumption that the U.S. code does: interest on your mortgage isn’t deductible up north. In addition, home loans in the United States are “non-recourse,” which basically means that if you go belly up on a bad mortgage, it’s mostly the bank’s problem. In Canada, it’s yours.”

“Ah, but you’ve heard American politicians wax eloquent on the need for these expensive programs (interest deductibility alone costs the federal government $100 billion a year) because they allow the average Joe to fulfill the American Dream of owning a home. Sixty-eight percent of Americans own their own homes. And the rate of Canadian homeownership? It’s 68.4 percent.”

“Its health-care system is cheaper than America’s by far (accounting for 9.7 percent of GDP, versus 15.2 percent here), and yet does better on all major indexes. Life expectancy in Canada is 81 years, versus 78 in the United States; “healthy life expectancy” is 72 years, versus 69. American car companies have moved so many jobs to Canada to take advantage of lower health-care costs that since 2004, Ontario and not Michigan has been North America’s largest car-producing region.”

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5 Thoughts on “No, Canada Isn’t Evil

  1. shepherd on February 25, 2009 at 6:33 PM said:


    Thoughtful post. One thing that has always bothered me about saying that the free market will work for healthcare. Healthcare is different from most free market industries. It strikes me as being a lot more like utilities, where you have a lot of little localized monopolies (call them hospitals) rather than true free market competition. Oryou have protected patents that greatly increase drug costs. This is merely an idea I’ve had, but I have no expertise in the field, so I’m not sure if it has any validity. I wondered what you thought and whether it has any bearing on the discussion of Canada’s healthcare system.

  2. I certainly found it very strange when I lived in the US that everyone always wanted to reinvent the wheel when developing policy rather than seeing what was best practice in other countries. Here in Australia the first impulse in reviewing government policy is to survey practice in other countries first.

  3. Well, there *is* a certain benefit in getting used to rely on your own ideas and NOT just copying from the outside world.

    Leaning towards either side too much can be dangerous, though – at one end you may become extremely inefficient and costly while trying to discover the wheel, while at the other you may just stop using your head and copy and paste instead (a common practice in Eastern Europe).

    Back to the US healthcare system, it seems to me the problem here is not the free market, but the lack of it, actually. Healthcare is long dictated by a few giant pharmaceutical companies quite possibly operating a cartel (I may never be able to prove it, but reality proves it best) and nobody standing in their way.

  4. Chad Brand on February 25, 2009 at 8:37 PM said:

    Well, I’ll add two points, from different ends of the spectrum.

    First, there is no doubt that the U.S. healthcare system is not a true free market that would promote competition and therefore efficient pricing. Are there any other goods and services that consumers consistently need/use that have such little transparency as to price? Does anyone have any idea what various health services should cost, or actually do cost? Without price transparency and the ability to shop at least in part based on price (obviously sometimes people are more important), the free market really doesn’t apply to the U.S. system fully. And of course the healthcare providers love this because they have most of the power.

    On the other hand, I have always understood why other countries preferred to take the profit-seeking element out of healthcare completely. When you are dealing with life and death, should the ability to make a profit really come into play at all, let alone be at the top of the list? I can see why many Americans don’t think so. Maybe capitalism isn’t the solution to every single aspect of life, even if you live in a country that embraces capitalism.

    It’s a tough issue, for sure, but it is not hard to understand why the public seems to be moving toward supporting universal healthcare more and more as time goes on. Over time you will either go up against the profit-seeking healthcare industry beast directly, or know someone close to you who did.

  5. demarketeer on February 25, 2009 at 9:52 PM said:

    Despite many of the superficial similarities between the two countries, Canada and the US have very different business cultures stemming from the relative geopolitical positions of the two countries.

    Canada is a relatively inward-looking country because of its cultural and linguistic diversity (with Quebec separatism a constant threat) and obvious fear of domination from its 10x bigger neighbour.

    If Canada’s banks were permitted to run amok in this past boom like their US cousins, they surely would have. Two things stopped this. Fear of voter wrath — the banks are highly unpopular for the hefty fees they charge due to their protected status. Anything perceived as giving them more power is a third rail issue politically.

    Second, since there are relatively few institutions, the government has an unofficial policy of keeping tabs on their operations very closely and “encouraging” them to stop activities deemed risky.

    It’s not hard to understand why — one financial crisis could leave Canada in a desperate situation and potentially swallowed into the US. Crazy or not, it is this fear that keeps the country fiscally and economically conservative, despite Canada’s image as a liberal hippie paradise in the US.

    Thus, the lessons from Canada are not about 18:1 vs. 26:1 leverage ratios. They are cultural and about someone keeping the national interest in mind and not blindly following ideology.

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