Periods of residence in Europe and Asia have made me aware of the often-wide gap between how we Canadians perceive our own country and investment scene, and how we are looked upon by the international community. Canada tends to enjoy a remarkably favourable reputation among non-Canadians—an asset Canadians themselves often overlook, as we’re either preoccupied with our own internal problems or because of our inherent national modesty.

On the world stage, Canada’s politicians impress international onlookers on average, even while domestic audiences can be suppressing their groans at hearing all-too-familiar words. Of course, perspectives on Canada differ among Canadians themselves. Just a few weeks after he was elected, Justin Trudeau surprised many Canadians by telling the New York Times Magazine that he was now prime minister of the “first post-national state.” He added, “There is no core identity, no mainstream in Canada.”

The Prime Minister’s remarks were not without precedence. A half-century ago, media guru Marshall McLuhan (a friend of Justin Trudeau’s father) made a characteristically humorous and intellectually provocative remark by saying…

“Canada is the only country in the world that knows how to live without an identity.”

Exactly what McLuhan meant was far from clear to most people at the time, but he did hasten to clarify that what he said was not a criticism, by adding…

“Any sense of identity we have is our sense of destiny.”

So, it might be concluded that Canada considers itself to be a somewhat experimental nation, seeking greater tolerance of diversity and greater social responsibility while eschewing a single cultural identity.

A Switzerland of North America?

Whatever the extent of agreement among Canadians about what Canada is, external perceptions of Canada run along lines similar to the opinion shared by the famous actor-writer-director-humourist Sir Peter Ustinov. Ustinov viewed Canada as a North American version of Switzerland, describing Toronto as “New York run by the Swiss.”

Those who share Ustinov’s opinion see the two countries as sharing features in common, such as responsible economic management, financial probity, political neutrality, a history of efforts to broker world peace, grand mountain scenery, and snowy winter weather, as well as a blend of languages and cultures that co-exist within national borders. I would add one more similarity to that list that is not usually cited, which is the facade of political stability and cohesion that masks an often clumsy, confusing political system: the autonomy of its cantons and the use of plebiscites in the case of more directly democratic Switzerland, and the quagmire of federal-provincial-municipal governance compounded by east-west and anglophone-francophone conflicts in Canada.

This is where the similarities end, however. Switzerland has none of our abundant natural resources or our geographic scope and scale, and Canada is relatively free from the taint of corruption that comes from being an international tax haven and protector of secrecy.

In central and eastern Europe, the word “Canada” has a local vernacular meaning similar to that of El Dorado, an empire of untold riches and gold. Sophisticated non-Canadians, of course, realize that this is not an accurate description of Canada, but that common regard of Canada as a land of plenty with lots of capital can help to open doors in business.

In Asia, Canada’s appeal lies mostly in its perceived political stability, greater understanding of cultural differences, proximity to the large U.S. economy, relatively good social services, spacious and clean environment, and comparative openness to immigrants. High levels of taxation that require world income to be included in taxable income and lacklustre business growth opportunities are seen as Canada’s main disadvantages.

High levels of respect from the U.K.

On the investment scene, the Canadian financial profession and its practices—and Canadian business generally—are held in very high regard in the United Kingdom. In fact, Canadian financial executives and managers are often rated higher than their British counterparts, despite the U.K.’s centuries-old role as the financial centre of the world and the weight of its past industrial might. If our neighbours to the south can be described as viewing Canada with benign neglect, the view from across the pond is one of benign respect, and two high-profile transatlantic recruitments in recent years exemplify this attitude.

Dame Moyra Greene was hired from Canada in 2010 to turn around the Royal Mail, a venerable British institution, and prepare it for public flotation. Her recruitment was based on her success as CEO of Canada Post. Greene was awarded the rank of Dame Commander of the British Empire (DBE) in recognition of her services.

Mark Carney was hired away from his role as Bank of Canada governor to become Governor of the Bank of England based on his success in keeping Canada safe during the global financial crisis and thereafter. Carney served for seven years as BoE governor, and was recently appointed as a UN special envoy for climate action and finance.

Both were recruited partly because Canadians were seen as bringing fresh acumen to a somewhat tired Britain. A secondary reason (though less openly articulated) was that both Greene and Carney lacked the political and social-class baggage that attaches itself even today to prominent Britons in all British fields. This “untaintedness” and a British belief in our hardy work ethic, formed in childhood from images of lumberjacks, miners, oil men, and beavers, serves Canadians well in the U.K. and is a form of pro-Canadian bias that we are wise to exploit.

Canadian chartered banks and investment dealers have long capitalized on this bias—although, when they have started to believe their own press clippings, trouble has ensued.

Canada’s large role in building the investment profession

In building up the investment profession from the inefficient network of relationships that it was in the early twentieth century to the more scientifically based field that it is today, Canada has always been seen to contribute much more than its proportionate share of the effort. Canada has more CFAs relative to the size of our capital markets than any other financial centre, and has the second largest CFA society in the world. Three of the last 23 CFA Institute Board Chairs have been Canadians: two of those have been women. And, the only person who has ever served at different times as chair and president/CEO of the Institute—the current CFA Institute president—is also a Canadian. These accomplishments were realized despite Canada accounting for under three percent of global stock market capitalization and two percent of global GDP, and having a currency that is referred to less frequently than the Australian, Singapore, or Hong Kong dollars in media outside of Canada.

A current reputation for financial probity

Canada’s current strong reputation abroad for financial probity has now replaced the reputation it had in past decades for “spectacular Canadian failures”—Bre-X Minerals, Dome Petroleum, Olympia & York, Royal Trustco, Trizec Corporation, and International Semi-tech, to name just a few—and the penny stock swindles of the defunct Vancouver Stock Exchange (I’ll spare those fortunate enough to be too young to remember any more details). But, in some respects, our current reputation has been an undeserved gift. Canadian financial firms have benefitted from protectionist national regulation and, through their innate slowness in catching on to global trends, have been spared the full impact of financial services innovation gone awry—such as junk bonds in the late 1980s, the dot.com craze of the 1990s, and the sub-prime lending and mortgage-backed securities fiasco of the 2000s.

Nonetheless, Canadian chartered banks tend to be more cautious and conservative than many of their international counterparts, notwithstanding a proclivity to make deleterious foreign acquisitions from time to time.

Canada’s reputation abroad for good economic management stems in large part from the deficit-cutting of the 1990s and 2000s, and sometimes owes a little to superficial comparisons of debt-to-GDP ratios calculated based on federal debt only. In Canada, when provincial debt is included, the total government debt-to-GDP ratio becomes 90 percent, compared with 79 percent for the European Union, 81 percent for the U.K., and 107 percent for the U.S. When the total amount of debt in the Canadian economy is taken into account, including household debt, the ratio today is an unprecedented 350 percent.

A poor reflection on our reputation for good economic management is the failure of successive governments of Canada and the province of Alberta to create a large, endowment-like wealth fund from their shares of oil and gas resource revenue, akin to the famous Norwegian sovereign wealth fund. Derived from oil and gas revenues, the Norwegian fund amounts to almost US$1 trillion in a country with a population comparable to Alberta’s. By comparison, the federal government has no such fund and the Alberta Heritage Savings Trust Fund currently stands at a mere C$18 billion.

The Canada Pension Plan, on the other hand, is funded to a material extent and has assets of some C$400 billion, in contrast to the pension plans of many other developed countries, the U.S. and U.K. included, which operate entirely on a pay-as-you go basis.

A bridge between the U.S. and Europe

It has been said that the United States was a capitalist country dragged kicking and screaming into socialism by the Great Depression and intercontinental wars, while Europe was a group of socialist countries dragged into capitalism by economic necessity. In truth, one of the strengths Canada has in the eyes of non-Canadians is that it functions as a kind of bridge between the styles of both the United States and Europe—pairing the consumer-driven culture of the United States with a more socially engaged and sensitive style of government. I think most people would agree that this combination is a good one as long as the right balance is struck. Many Canadians, however, have felt that domestic politics in recent decades has tended to act more like a seesaw or pendulum than a balancing scale, although this perception is not as widespread abroad.

How the relative priorities of governments evolve after the current COVID-19 pandemic in the face of unprecedented measures by world governments to shut down social and economic activity in order to contain the virus remain very much to be seen. It is clear, however, that the severe effects of the worldwide shutdowns have changed the risk-reward calculus for capitalist enterprises for a long time to come, as governments have not to-date provided, and no doubt will never be able to provide, complete compensation. Canada’s handling of the pandemic at time of writing has been viewed relatively positively in other countries.

The favourable opinion of others is a valuable gift

In this new economic and social environment, Canada’s blend of benign tolerance, political rhetoric, and part-real, part-token policies may continue to play quite well on the world stage. However, more self-restraint may be called for to avoid overplaying our hand as a conventional, resource-rich country when we are seeking to lead the world in promoting ecology and addressing climate change.

Canada’s principal economic strength may be that it continues to attract immigrants; it also, to a moderate extent, draws relatively passive foreign capital on the basis of being a politically stable country with an environment comparatively free of discrimination and with a strong system of higher education. It is noteworthy that Canada ranks first among Organisation for Economic Co-operation and Development (OECD) nations in its number of college and university graduates. In other words, Canada may continue to stand out as a good country in which to raise a family and/or escape to from political persecutions or problems overseas. To become a magnet for large-scale foreign capital seeking high returns and low risk, however, Canada will have to do more to improve the environment for businesses.