Politics: Why Canada Still Works

TORONTO, ONTARIO - There seems to be a growing consensus that the political system in the United States is broken. Commentator David Brooks noted recently "If the Republicans refuse to raise taxes, and Democrats refuse to cut spending, then that opens the door for a third party for the first time in my lifetime." If that party is the TEA party--which isn't what Brooks meant--then don't expect much change, as they are even more adamant about their economic positions than the Republicans. Short of a truly epic shift in power this fall, neither side will have the super-majority to get its legislation passed, as the other side will filibuster it in the Senate. Short of unprecedented leadership, the mess will last a substantial amount of time.

Meanwhile, look what happened this week in Canada. The Harper government has announced tightened rules for mortgages in this country. From the US perspective, Canada didn't even have a problem in this regard. There is no foreclosure crisis in Canada, in large part because regulations were never relaxed here in the first place. Yet, there has been long-term concern that people owed too much money, and of speculators acquiring properties just to "flip" them for a profit. As a result, the rules for qualifying for a loan have been tightened, and non-resident owners will be required to put at least 20% down (hardly a radical concept), amongst other new regulations.

The amazing thing is that the new regulations are coming from a Conservative government. That's right, a right-wing party has introduced regulation, and not under pressure from the other parties. Parliament is prorogued anyway, but that wouldn't stop the opposition parties from taking to the airwaves if they thought it was a bad idea. Instead, there is consensus that these steps are economically prudent, and nobody is speaking out against them.

This isn't the first time the Harper government has done something that would be unthinkable for a Republican administration in the US to do. The most notable example was the restructuring of Income Trust laws, which many would interpret as a tax increase (at the very lest, it devalued a lot of investments in companies that had converted to income trusts). That one was also clearly the right thing to do economically, and was unopposed in parliament.

Canada still has a tradition of good government. Conservatives will occasionally introduce regulations and raise revenues. Liberals will occasionally reduce government services. When there's a consensus about what should be done, a government will do it, whether they manage to score political points in the process or not. Fundamentally, it's a much healthier political environment, and I (for one) really appreciate that.