Canadian Foreign Policy I Agree With?

It’s not very often these days that I read something in the news about Canada’s Foreign Policy that I agree with.  For an example, here’s some of the stuff I tend to disagree with and read about most often:

• Government of Canada refuses to petition the US government for the return of child soldier being held at the Guantanamo Prison.
• Government of Canada may have known their prisoners were subject to torture in Afghanistan
• Government of Canada will not request that the USA return a Canadian Citizen on death row to Canada for imprisonment.
• Government of Canada will not open discussion on family planning while promoting maternal health at the G8 summit.
• Government of Canada leads the charge against a moratorium on hunting and fishing Polar Bears and Bluefin Tuna.
• Government of Canada does not want a legally binding climate change agreement at the Copenhagen summit.

Then today, I find this gem:

“And some nations, including Canada, oppose any new bank taxes.”

It came out of this article http://news.bbc.co.uk/2/hi/business/8633455.stm.  Surprisingly enough, in this rare case, I can actually say that I agree with the Government of Canada.  The idea of taxing banks to put money away for the next round of bailouts is in my opinion a very poor solution to this problem.  First, having this tax will give international banks a feeling that they are insured.  Instead of forcing them to operate more soundly and conservatively, they will instinctively feel that they can afford to take extra risks.  If things go bad, they will just get their tax dollars back in the form of a bailout, and it will be business as usual.  If things go well, they will be making huge profits, and realizing their past extraneously large bonuses.

Second, as long as one country refuses to adopt this tax, there will be a quick move of headquarters of major banks to this new tax free haven. The implications of this could be far reaching, especially if this tax free haven also has lax regulations, allowing banks all the freedom they need to bring about the next global financial crisis.

The way I would deal with this problem is through regulation.  By forcing banks to keep a certain portion of their assets in low-risk, cash like investments, regulating risky debt based investment hedging and derivatives, and ensuring the lending criteria on loans are significantly stringent enough to ensure that those likely to default are not eligible for loans in the first place.

All in all, Canada seems to have a good track record of strong banks capable of surviving the economic crisis.  Our regulation system should be the standard the world looks to emulate.  Or more specifically the actions of our banks should be emulated.  Adopting a new, untested tax regime is not the answer.

Tags: news, politics

This entry was posted on Wednesday, April 21st, 2010 at 5:30 pm and is filed under politics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.