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Comment by version_five | Hacker News Reader

I'm guessing its your point, but to spell it out, canada has oligopolies or monopolies, it doesnt have competitors at least in telecom and banking. From what I understand (like the recent Kansas? railway acquisition) CN and CP may actually be more in competition than some other industries. There is some complexity because part of the tradeoff for being granted oligo/monopoly status is the requirement to allow others on their network (e.g. for telco so maybe also for rail - I know they have to let Via, even if it's on a low priority basis). But overall, the business environment in canada is much closer to some kind of aristocracy or feudal system than an actual competitive landscape. Maybe that's true everywhere and just not as easy to see.

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> it doesnt have competitors at least in telecom and banking

To be fair, the high regulation that we have in the banking sector insulated us from a lot of the 2008 financial crisis. So it's not all bad.

The big banks spent the early part of the 2000s complaining loudly about being "left out" of the financial boom happening and wanted to internationalize and merge with US banks, and our government said no. America's regular cycle of financial crises and ruin kind of proves that unrestricted competition should not always be the unconditional goal of a given industry.

In terms of rail (and other infrastructure), keep in mind that our country is bigger than the US and we have 10% of the population. A lot of our monopolies/crown-corps exist because if it wasn't for government subsidies/handouts, none would exist at all.

So it's not always a reasonable argument to say there "should" be competition, when it doesn't make financial sense for new entrants to compete. No one would ever fund the startup costs, because it would take decades to make the money back, if you ever did.

That said, our telco sector does absolutely need a shakeup and competition (better rules for CLECs to use ILEC infrastructure etc).

Thank you for eloquently describing why Canada has chosen a different path than the USA. Banking, for example, is such a clear-cut case of competition not being detrimental for Canadians. For example, I've seen Americans laugh at Canadians on Reddit for not having the Cash app when our equivalent service is available directly from our banks (with a shitty UI, sure) and free. I pay my plumber with e-transfer and couldn't be happier.

> Banking, for example, is such a clear-cut case of competition not being detrimental for Canadians

How much does the average Canadian pay per month for their chequing account?

There are a lot of free options: even more if you consider ones that require a minimum balance. The paid ones though are typically $10-15.

Where they really get you though is in service fees. If you overdraft or do any one of a myriad of options you can get hit with penalty fees. Basically you just have to treat the minimum balance as a hard zero.

You can be pre approved for over draft and pay no fees

Yes, that is probably true: I have kept a minimum balance ever since opening the bank account so I am not really familiar with how it all works. I have heard the horror stories though about how the bank will order the transactions to incur the maximum fees (at $20 or more per transaction) if you miscalculate the balance when the bank account is close to empty.

More an American thing I think, for rbc in Canada it’s a 5$ fee to handle the overdraft.

Until you use your credit card. Interchange fees in Canada are a full 1% higher than in the US, on average. You pay for this in higher prices on goods and services.

Or until you buy something in USD. Foreign exchange fees in Canada are a multiple of what they are south of the border, and Canadian banks ruthlessly protect this business by refusing to bank money service businesses that compete with them.

Canadian banks are the most profitable in the world, and they're really good at making customers think they're not paying that much for the pleasure of feeding the oligopoly.

What does a credit card have to do with overdraft?

Canadian banks are the most profitable in the western world, because we pay the highest fees in the western world.

A lot of it is hidden - Canadian banks charge outrageous sums of money for foreign exchange fees. Credit card interchange fees are reliably a full 1% higher than in the US. e-Transfers are intentionally limited in size so that banks can still make their money on credit card payments etc.

Interac is a bank-owned monopoly, and merchants eat astronomical fees even though it's nominally "free" to send an email money transfer to your plumber.

The more you dig into the Canadian banking ecosystem, the more you realize how powerful it is and how much rent-seeking is really going on.

The amazing part is that they've convinced the average Canadian that this oligopoly is actually good for them. Marketing works!

Anyone working in the financial services space, however, understands that the reality is really much darker than people realize.

This is all true.

What is also true is that Canada has never had anything like the S&L scandal in the 90s or the 2008 US financial crisis where massive swaths of the working class lost much of their savings.

So sure, we have higher fees due to regulatory capture, but I'll take that trade to know that some unregulated finance bros aren't fucking around with my life savings.

Not just higher fees. Our GDP/capita relative to the US has been in steep decline. Cost of living is also higher across the board on everything from food to electronics, above and beyond what straight foreign exchange would suggest.

Gas is more expensive too. Oh, and wages are stagnant (except for in tech), which is a real problem when inflation hits 5% (as it is now). Productivity growth has been basically non-existent for decades.

Can I connect all of this to the banking oligopoly? No, but it's symptomatic of the larger problem: that Canada is a very difficult country to do business in. Ham-handed government regulation in every part of the economy is a huge drag on economic growth.

Some sectors tend to get regulated as utilities rather than businesses, because they tend not to lend themselves to competition.

Railways are a classic example; two railways rarely directly compete with each other (since even if they connect the two same points they probably do so via wildly different routes) and some level of coordination is needed to avoid scheduling conflicts on competing trains.

Canada is a country sized company with a captive audience. This all goes back to the days of the Hudson Bay Company and how Canada was founded.

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