Sometimes I enjoy indulging in forum discussions like these. It's like bacon fat, you know it's bad for you but it just tastes so good.
kkgg7, I often hear people and often people who are more greatly concerned with business and economic issues make comments like the US is on the one hand cheaper for consumers and living, and on the other hand less risk adverse. I personally believe these two ideas to be accurate. The question is do these make the US a good place to do business? If consumers expect and demand low prices and the environment is tolerant of risk doesn't that make it a horrible place to do business? If Canada has a climate where consumers are tolerant of high prices and business is risk adverse doesn't that make it a great place to do business? I would never want to base or expand my business in the US if it is risk tolerant and adverse to high prices.
I know your logic but it is not necessarily true.
Canadians are more tolerant of higher prices for the same product because that's what they are always forced to pay. Information is very available these days, and do you think Canadians are happy to pay $1199 for a couch that is sold in the US for $899, to pay $600 to fly to Toronto to Vancouver while an American pays $250 from NYC to San Fran? We buy because they have no other option.
The comes to economic part. US companies can sell at cheaper price because of the massive demand. Business can still thrive despite fierce competition and low price. Consumer demand is also elastic. When price is low, they buy more and companies makes more profits. In Canada, consumers buy less due to higher prices. I for example go shopping a lot less than when I was living in Los Angeles, when everything was incredibly affordable. I go out for movies less, stop driving (insurance being 3 times higher), and probably buy 50% less clothes. Yes, consumers do adjust their behavior, and that affects companies' revenue and profit.
And more importantly, price is high in Canada almost always due to the lack of competition and higher government taxes. Do you think that's an environment that is better for business? In the short term, the lack of competition seems sweet - Air Canada, Rogers etc would have bankrupted 100 times if they do business like this in the US. But in the longer run, companies become complacent and less and less efficient. They don't have the incentive to innovate and cut costs because everything can just be passed to consumers. When there is new market player, everyone gets freaked out because their tradition lazy do-nothing business model will stop working. Think about why all Canadian retailers are so freaked out about the entrance of Target, because they know they can't compete with it and they know if better than anyone else.
For this, I applaud the current government for deregulating the markets such a telecom, retail etc, forcing market players to face reality and be more friendly with consumers. IMO, there are many other markets that need to be reformed, such as auto insurance and airlines. People always use Canada's smaller market (fixed costs spread over fewer consumers) as an excuse as if there is nothing companies can do to improve efficiency and make their services more affordable. But that's far from all the factors. The truth is the business environment doesn't provide any incentive for business to strive for cost efficiency, then why bother?
Honestly, Canada's market is a lot worse than the US both for consumers and companies, and it is a vicious cycle. Last year I was shopping for a tankless water heater (which saves energy by the way), and the prevailing market price is $1800-$2500 in the Toronto market. Then I bought one online for a US companies for $650 shipping and duty included. It is pretty much the same product, and I am not sure anyone can say "isn't it nice that companies are able to charge three time the price since consumers are willing to pay for that?" I don't think anywhere else a tankless waterheater sells for over $2,000, which is marketed as some sort of new cutting-edge technology. In fact, these products have been on the market for years and are what most families use in Asia and Europe (where water tanks are banned in many countries) and are very affordable. Should we interpret it as Canada is business friendly since the price is crazy?
--a four person German household consumes only 4kWt a year). I believe cars will be with us indefinitely; I just speculate that they will not be fuel-powered for too long...