Seeking Alpha
Profile| Send Message|
( followers)

This column first appeared in Forbes.

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. 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.

Trying to protect American jobs, politicians have implemented absurd rules that have kept companies that received bailout money, like JPMorgan Chase (NYSE:JPM) or Bank of America (NYSE:BAC), from hiring foreigners. That is short-sighted. What made American great was being a haven for the very best from around the world, like Albert Einstein, or Sergey Brin, the cofounder of Google (NASDAQ:GOOG), or Pierre Omidyar, the founder of eBay (NASDAQ:EBAY). The best from Vietnam and other troubled countries poured into the U.S. in the post-World War II years. America's benefit? Their brains and money helped create more jobs for all the rest of us.

The U.S. cannot afford increasing economic protectionism and trade wars. Even more important, it cannot afford protectionism in the labor pool. Jean Charest gets that, and America should too.

Also, Canada has done a better job than the U.S. at making university education affordable. This is critical, as far too many of our young people are graduating burdened with debt and with limited job prospects. There is a vicious cycle where even middling universities charge higher tuition fees to build ever better gyms to attract more students. At some point, the insanity must stop, and universities must get back to the business of teaching while charging affordable tuition.


I went to college at McGill University, in Montreal, one of the leading universities in Canada. The tuition there for non-Quebec residents is less than $7,000 a year, and it's just $3,500 for Quebec residents. As an international student, I had to pay a little more, but I was able to graduate debt-free, which allowed me to do what I wanted to do rather than what would pay the bills.

Contrast that with the skyrocketing tuition fees in the U.S. For example, Drexel University charges tuition of more than $30,000 a year. Drexel is a fine school, but how many of its graduates can realistically depend on getting jobs that will pay enough to justify such an investment?

Canada has more to offer us than hockey players and Jim Carrey and Rachel McAdams. If we Americans paid more attention to our neighbor to the north, we'd find plenty of sensible ideas on financial regulation, immigration and education that would help us keep our economy in better health.

Oh yes. They have universal health care, too.

Disclosure: No positions

Source: What Obama and the U.S. Need to Learn From Canada