Jonathan Kay: The key to Canada’s economic advantage over the United States? Less income inequality.

[pampango]

Americans would be well-served by looking to Canada for lessons on taming income inequality. As FDR showed the world in the ’30s, sometimes it takes a socialist to save capitalism from itself.

As I’ve argued before, a good way to describe the Canadian economic approach might be “hardheaded socialism,” the term Stephen Marche coined on Bloomberg.com back in July. But many conservatives are allergic to the s-word. So instead, it might be marketed, for American consumption, as the Northern New Deal — an especially apt term, given that the other nations that embrace its policies are Scandinavian nations such as Sweden.

The good news, here in Canada, is that we have so far avoided the massive upsurge in income inequality that has afflicted the United States. As a new TD Economics report indicates, median household income (not average, but median — the difference obviously is important in this context) has been higher in Canada than in the United States since 2006, and income inequality in this country has been flat since the late ’90s. The top 1% of Canadian earners take home about 13% of all income, roughly the same level it was 15 years ago. Household income growth was solid from 1998-2010 across every single income quintile.

What’s the reason for this? According to TD, it’s “rebounding government transfers, rising minimum wages in Canada (up by more than 50% on average nationwide since the late 1990s), and a respectable pace of job creation within several lower-wage areas of the service sector.” TD might have also added a few other factors — such as our well-regulated banking sector, which completely avoided a sub-prime crisis that destroyed $11-trillion in household wealth, and a universal health-care system that ensures working-class families don’t have to hold a yard sale to pay for dialysis or chemotherapy.

[dkf]

1. Also unrestrained fracking and every other known method of extracting fossil fuels from the ground.

[HiPointDem]

2. inequality has been rising in canada, as well as in europe. the entire world is on a similar

trajectory.

[pampango]

6. Good point. Inequality in Canada is better then the US (Europe's is world class) but it is rising

everywhere. It is nothing that cannot be reversed and Canada and Europe have a better chance of doing that than the US.

[Laelth]

3. I agree with the premise of the OP.

However, FDR was no socialist. He was a liberal--nothing more and nothing less. It is liberalism that saves capitalism from its own inherent excesses.

What we lack here in the United States is a healthy, liberal political culture. I would also add that, since Bill Clinton, the United States hasn't had a liberal political party. We could use one of those.

-Laelth

[Honeycombe8]

4. Wish I could move to Canada. But alas, they have strict immigration laws. That has impact

on their economic situation, as well. They don't have immigrants, legal or otherwise, like me, going into their country and using their services without contributing much in return. I would like to go there to retire, but I would suck their resources and not produce enough to be a source of profit for their country. So, they won't let me go there. Which is a bummer. I checked into retiring there. I was thinking I could use their health care system, move my 401k there, and live out the rest of my life in splendor. But their immigration laws are so strict...they specificall prohibit people from "retiring" there, unless they're like really rich or whatever. Which rules me out.

I need to move somewhere to stretch my retirement dollars. My search continues.

[pampango]

5. Immigration into Canada is 2 1/2 times the rate of US immigration. Their laws are strict but liberal

Are they strict about who they let into the country? Yes, but they are very liberal in terms of the number of people they allow to immigrate.

About 2/3 of them are highly-skilled, highly-educated people while the other 1/3 is from family reunification and refugees.

[Honeycombe8]

7. As I said, I would have to be rich to retire there. OR be young enough to be a worker & have a

vocation. It's not how many they let in. It's how much they contribute to the country, money-wise, after they move there.

My plan was to retire there, move my 401k there, and hopefully use their health care system, but they won't allow that. Unless I'm rich.

[pampango]

8. We can wish for an open border with Canada but

I doubt it will happen in our lifetime.

You could make the move you hoped for if you lived in France and wanted to retire in Germany (or Sweden or Italy). Open borders for 27 countries in Europe has been around for a long time but the concept is apparently too "socialist" for our continent.