Amid American Malaise, Canada Envy Returns

(Feb. 3) -- When political acrimony and dysfunction crescendo in the United States, Americans of a certain persuasion tend to look longingly at the relative calm and order they perceive across its northern border. The feeling hit them after the divisive 2000 presidential election and again after George W. Bush won a second term. Now, even as temperatures plunge to 10 degrees Fahrenheit in Montreal, Canada envy seems to be reaching such a feverish pitch that even some Canadians are starting to think it's gone too far.

Paul Krugman, the Nobel Prize-winning economist and New York Times columnist, has long been an admirer of the great Canadian way. In his latest column, he looks north to bolster his conviction that U.S. banks need to be reined in by tighter regulation.

Echoing an argument heard since the white-knuckle weeks of September 2008, he notes that in Canada there were no major bank failures, no subprime mortgage crises and no massive government bailouts. The reason: Canadian regulators kept Toronto's Bay Street banks from over-leveraging their assets and limited their ability to package debt into what turned out to be securitized time bombs, like the infamous collateral debt obligations.

"The United States used to have a boring banking system, but Reagan-era deregulation made things dangerously interesting," Krugman writes. "Canada, by contrast, has maintained a happy tedium."

Meanwhile, in The Daily Beast, Edward Alden of the Council of Foreign Relations sees further evidence of Canadian probity in the announcement of and subsequent debate over President Barack Obama's proposed 2010 budget. The prospect of budget shortfalls for years to come, and the government borrowing that will necessitate, puts the U.S. on "a road to ruin," he argues -- one that Canada itself was on in the 1990s (when Alden was the Financial Times correspondent in Toronto) until its politicians mustered the moxie to put on the brakes.

"In the 1990s, after running more than two decades of budget deficits that had resulted in 35 cents of every dollar in revenue going to interest payments, the Canadian political elite finally got scared," Alden writes. The Conservatives played against type by imposing unpopular new taxes, and once they were turned out, the Liberals matched them by dialing back spending.

It took "years of half-measures and political recrimination before [Canada's] leaders finally mustered the vision and political courage to do what was needed," Alden continues, arguing that the U.S. politicians must do the same.

Along with their regulatory and fiscal virtue, there's even evidence that Canadians are more generous than Americans, at least in their response to the plight of Haiti. By latest estimates, total U.S. individual donations toward Haiti relief come to $560 million. Though there are only about a tenth as many Canadians as there are Americans, they've contributed $78 million -- and the Canadian government has pledged to match those donations one-to-one.

Still, there are plenty of reasons for Canada to hold back on crowing. The country's 8.4 percent unemployment rate may be lower than the U.S.'s 10 percent, but it is still painfully high. And there's cold comfort to be had in the U.S. economic woes, since Canada's economy depends greatly on U.S. demand for oil and other commodities -- and on the health of U.S. companies like General Motors.

What's more, Canadian politics are hardly a game of patty-cake. On Dec. 30, Conservative Prime Minister Stephen Harper prorogued -- or suspended -- Parliament until March, thus avoiding any unseemly debates on Canada's actions in Afghanistan while the Winter Olympics draw the world's attention to Vancouver.

The opposition is apoplectic over the action, but all it can do is protest. It is, after all, the prime minister's constitutional prerogative to sideline the legislature -- one that might elicit a little Canada envy on the part of Obama, who has no such option for dealing with what he sees as Republican obstructionism.

And even while many U.S. liberals lament the missed chance to introduce a single-payer health insurance plan of the sort that keeps Canadian health expenditures lower and life expectancy higher, events in Canada this week have spotlighted that system's drawbacks. The premier of Newfoundland, Danny Williams, is heading to the U.S. this week for heart surgery he can't get under his province's health plan (although The Toronto Sun has reported that Williams, a public health care critic, could have had the procedure done elsewhere in the country).

All of which might help temper what the Toronto Globe and Mail's London-based columnist Leah McLaren saw last month as a growing smugness on the part of Canadians.

"Some of us live in places where the economy is in the toilet, and we'd rather not be constantly reminded of how the recession left you so 'relatively unscathed' that you're building a new wing on the cottage," she wrote in an open letter to her compatriots. "Didn't your mother ever tell you it's not polite to brag?"