Monday, January 27, 2014

Of course Canada is more business-friendly than the United States

A recent report from Bloomberg News ranks Canada as the second-best country in which to do business, behind Hong Kong and ahead of the United States. This comes on the heels of a survey by the Wall Street Journal and the Heritage Foundation, in which Canada was rated sixth in economic freedom, while the United States came in twelfth.

To anyone who has done business in both countries, this comes as no shock.

Indeed, the only surprising thing about these reports and the surrounding analysis is that Americans continue to be flabbergasted each time their system of high taxes and crippling regulation, backed up by a draconian prosecution regime, is revealed not to be working.

As I explained to Fox News Channel’s Tucker Carlson last year, not only are Canada’s personal and corporate tax rates lower than those of the United States, the compliance burden of the American system – including the international theft perpetrated by the Internal Revenue Service in the form of its worldwide reporting requirements – makes serfs of its citizens and renders the country inhospitable to business.

Reports of Canada’s economic success usually give credit to Prime Minister Stephen Harper, and that’s fair enough. But there is nothing novel to Harper’s approach. Politicians of many parties in numerous countries have opted to reduce tax rates as a means to increase revenue and entice capital. It is only relative to other modern Western leaders, to whom the concept of growing an economy by shrinking the government has seemingly never occurred, that Harper’s approach seems revolutionary.

From a policy perspective, Harper bears little resemblance to the hard-right, puppy-eating Sith Lord his liberal detractors imagine. As just one example, despite enjoying a Parliamentary majority – which amounts to near-dictatorial powers until the next election – Harper’s Conservatives have just enacted one of the environmental movement’s most absurd agenda items (and this is some distinction) in the form of a ban on incandescent light bulbs.

Fair or not, Harper’s image is bloodless and cold. He is not a smiley sort, and this is perhaps a good thing as his attempts to seem cheerful result in a Bond-villain rictus that puts no one at ease. While this may satisfy some people’s notion of a heartless conservative, the test of a political leader is the effectiveness of his policies, not how chummy he comes off while spending other people’s money.

For the United States, this demonstrates that electing leaders on the basis of demographic superficialities and big government populism, even as their policies harm the same middle class they purport to help, is a path to economic mediocrity and worse.

But elected leaders are only part of the problem. America’s administrative state, wherein myriad regulations are drafted and enforced by anonymous, unaccountable bureaucrats, smothers the prospects of small business. This distinction is important, as large corporations are better able to absorb the costs of massive regulation – and indeed, can lobby to have those regulations crafted in their favor – while small business is the lifeblood of a vibrant economy, creating two-thirds of the new jobs in America.

An entrepreneur seeking access to North American markets would be positively loopy to choose the United States over Canada. Apart from America’s crushing regulatory and tax requirements, its fearsome prosecution apparatus stands ready to mete out harsh punishments for mistakes or non-compliance. This rapacious, unforgiving system, for which incarceration is the default solution, informs the cruel irony that the “Land of the Free” holds more prisoners than any other country on Earth.

As a matter of commerce, justice, or just day-to-day living, America is one of the least-free developed nations in the world. In almost every respect, not only is Canada a more liberty-minded environment than the United States, it isn’t even close.

Theo Caldwell is an author, investor, and a former Member of the New York Stock Exchange, the Chicago Board Options Exchange, the American Stock Exchange and the Kansas City Board of Trade.  He can be reached at