Toronto v. NYC: When Government reduces Ecosystem Effectiveness

Toronto was one of NYC’s competitors for Amazon’s HQ2, making it to the final round.

Although NYC ultimately won the bid along with Crystal City, Virginia (and then subsequently lost it), it is nevertheless useful to have an idea of what Toronto’s strengths are, and in particular what its comparative advantages are, as they can provide lessons for our startup ecosystem’s future. 

Here, the programs and policies of the city and of the Canadian government stand out as a clear area that is worth noting.

The focus of this short article however, is not to provide an in-depth examination into such areas, or provide an endorsement of them, but to note the basics, thereby observing the importance of effective government as being among the areas that affect NYC’s competitiveness. 

IMMIGRATION

A critical difference between Toronto and NYC is the approach that their respective national governments take when it comes to immigration policy. In terms of a startup ecosystem, this area is important because of the impact it has on workforce issues. 

The efforts of the Trump administration to restrict immigration has received much attention and will not be repeated here other than to note that the basic approach does not encourage the migration of high-skilled foreign workers to our City.

In contrast, at both national and local levels, Canada has policies designed to encourage such migration. 

According to the government website, Canada’s “Fast track visa program,” is for “skilled immigrants who want to settle in Canada permanently and take part in our economy.” Further, speaking of Ontario’s related efforts, Ed Clark, a former CEO of TD Bank speaking in his capacity as an advisor to Ontario’s Premier has said

“The core of the province’s support is a push to increase the number of science, technology, engineering and math (STEM) students that will graduate every year from Ontario’s universities. We already produce 40,000 STEM graduates a year, the second highest number per capita of any jurisdiction in North America. The commitments announced by the government would boost that to 50,000. That’s 10,000 more STEM graduates every year, a 25-per-cent increase over where we are today.” 

According to Enrico Moretti, Canada and Ontario’s approach provides a clear advantage to a city’s ecosystem. He states in “The New Geography of Jobs,” “In the coming decades, successful societies will be the ones that can attract and nurture the most creative workers and entrepreneurs.” He then identifies a supportive immigration policy as being one of two methods to achieve such a successful society. (The other is a more robust Education policy).

He notes Canada’s immigration system as being among those in favor of workers with college and postgraduate degrees.

He also notes that such an immigration policy could “increase America’s human capital at little expense to American taxpayers,” by observing that under such a policy, the U.S. “essentially receives free human capital,” courtesy of the education systems and countries from which a high skilled worker immigrates from. 

HEALTH CARE

The policies of the U.S. and Canada also differ greatly when it comes to health care and especially when it comes to the cost involved to companies including startups, this can have a large impact on a city’s ecosystem. 

Having a form of universal healthcare, which is a key area of focus among candidates in the current democratic primary for U.S. president, all residents in Toronto are covered by the Ontario Health Insurance Plan. Under the Plan, a ‘minimal,’ monthly premium is deducted directly from a person’s salary in tax and covers doctors, specialists and all necessary medical surgery. Co-payments are said to be ‘very low’ or non-existent.  

In the U.S., efforts to create a system of universal healthcare date back to President Franklin Roosevelt’s Committee on Economic Security, which ultimately chose not to include such coverage in the original Social Security Act. 

President Lyndon Johnson later created both MediCare and Medicaid, which continue to be essential components of our healthcare system, but which do not provide universal coverage. 

In the U.S. then, the situation facing NYC workers, larger companies and startups is to a large extent a private insurance system to the extent individuals are not eligible for Medicare of Medicaid. Large companies and unions have often chosen to provide insurance to its employees and members, while smaller companies including startups have struggled to do so, leaving individuals to either purchase insurance for themselves (and families where applicable) or to go without. 

We are careful not to share our opinions on healthcare specifically, in this relatively short article, other than to note potential impact on ecosystems. 

Here, the universal coverage of Toronto’s residents at affordable rates is clearly a factor that larger companies, startups and workers will likely consider and it is not hard to envision that to many, it would likely be a factor in favor of Toronto over NYC.   

CONCLUSION

Canada’s immigration and healthcare policies among other factors have allowed Toronto to become an attractive city for business and technology, prompting a recent Wall Street Journal article entitled, “Silicon Valley Looks North as Tech Giants Expand in Toronto.”

Judging also from the fact that both Toronto and NYC were finalists in Amazon’s HQ2 search, it is clear that Toronto is a competitor to our city’s startup ecosystem and many larger companies, startups and workers will be facing the decision of which city to choose in the decades to come. The competition must be fair and friendly, but it remains a competition nonetheless.

Based on the above brief comparisons above, there is clear room for improvement when it comes to our country’s immigration and health policies in terms of ensuring the success of our cities. And the unfortunate reality is that our ability to affect change at the city level in these areas is severely restricted. 

Toronto’s advantage here is amplified further as the cost of doing business in New York will likely continue to be among the highest among cities, given its’ real estate values, labor costs,  transportation costs and its highly regulated environment among other factors. 

We would argue that it is even more critical then, to develop our city’s comparative advantages with surgical precision to remain competitive and ensure a bright future.



Categories: Comparative Advantage, Global Hub, Uncategorized

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