Financial regulation has kept Canadians happy and economically secure

Suppose the U.S. government had posted a budget surplus in 12 of the past 13 years. Suppose not a single major American financial institution had failed or needed a government bailout. Suppose the U.S. economy grew at an annual rate of 6.1 percent in the first quarter of this year, rather than at 2.7 percent.

Wouldn't that make you happy?

These cheering economic indicators happen to be reality in Canada. They did not come about because Canadians are more virtuous or they don't have subprime mortgages (they do) or they didn't keep interest rates very low (their rates were much like ours). What Canada had was a civic culture that wanted government to regulate financial activity.

What we in the United States have is an elite willing to risk everyone else's economic security to enable a few hotshots to win big at the casino of recklessness and fraud — while maintaining a variety of taxpayer backstops to reduce their risks. The joint never gets closed, also thanks to the large numbers of ordinary citizens trained to holler "socialism" every time the government tries to set a ground rule. A satanic belief in the rightness of free markets to punish the unsophisticated almost halted the creation of a Consumer Financial Protection Bureau.

Canada has long had its Financial Consumer Agency, which stops the craziest of lending practices. Canada regulates mortgage terms so that borrowers — be they greedy, reckless or plain suckers — are less likely to crumple when, sometime down the road, an interest rate jumps.

Yell all you want about Americans who borrowed beyond their means. Canada had rules that stopped people from borrowing beyond their means. As a result, Canada was spared a U.S.-style housing bubble, which was fed in part by the ability of little people to borrow big and use the money to bid up home prices.

By the way, Canadian home prices rose almost 14 percent in May from a year earlier. And the World Economic Forum now ranks Canada's banking system the safest on Earth.

There are differences in the two countries' situations that do give Canada an advantage. One is Canada's enormous wealth of natural resources, especially oil. Another is the United States' role as keeper of global security — a job that other countries are all-too-pleased to give us. This greatly cuts the amount Canada must spend on its defense.

But Canada's smart government regulation is its own creation. That may make it harder for a few financial wizards to score a quick fortune, but it keeps the economy on an even keel. Merchants, manufacturers and other economic players don't have their customers hauling off huge cartloads of stuff one year and then filing for bankruptcy the next. They can plan for the future.

Canada's health-care system likewise makes budgeting for operating expenses far more predictable for employers. The Canadian single-payer system is not my health-care ideal. I prefer the multi-payer setup in France — or the emerging American health-care system, if the reforms can control costs. But the vast majority of Canadians are content with their medical care.

So how are Canadian businesses doing these days relative to ours? It's true that the Standard & Poor's index of 500 large U.S. companies has done pretty well this year. But the Toronto exchange's index of large-cap Canadian stocks did 27 percent better.

Periodic booms and busts don't have to be Americans' fate. Some people get very rich off them. But for ordinary folk, slow and steady wins the race. Support for letting government install some speed bumps to enhance their financial stability has left Canadians fat and happy. We could live the same way.

Providence Journal columnist Froma Harrop's column appears regularly on editorial pages of The Times. Her e-mail address is fharrop@projo.com