We need to do better

Shelly Hagan, Bloomberg‘s Ottawa based Canadian economics reporter, says, in a recent (7 Jan 20) article, that “Economists expect Canada and the U.S. to compete for the top spot for growth among the Group of Seven countries in 2020, yet the latest population data reveal the two nations have starkly different forces driving their expansions.” The growth forecast for the G7 countries is anaemic, to say the least:

Screen Shot 2020-01-07 at 06.51.17

Forecast made by (unnamed) economists surveyed by Bloomberg News. 

Ms Hagan says that “The data show the two countries are relying on different drivers to counter the global trend of aging demographics. While Canada has turned to robust immigration to grow output, the U.S. has done a better job of tapping its domestic workforce and generating productivity gains.

This points to two of my regular thoughts:

But, it cannot be one or the other. America is being more productive for two main reasons:

  • It has some HUGE natural advantages ~ 325+ million people live in a (generally) comfortable landmass with (mostly) adequate water and a moderate climate. Canada, by contrast, has only a few people who live in a long, narrow strip that hugs the US border; and
  • America is also running HUGE deficits, but, it is even worse in Canada, and not enough of it, in either country, is self-liquidating debt. Put simply: it is OK, even ‘good’ and productive to borrow, especially when interest rates are low, to fund e.g. infrastructure expansion and maintenance ~ things that help our economy to grow. It is not good to borrow in order to fund social programmes ~ that means we are living on credit, living beyond our means. It is actually bad to borrow to fund foreign aid.

America is also more competitive than Canada in world markets because its whole society is more ‘open’ than is Canada’s (or Europe’s or Asia’s). Notwithstanding the current Trump government, America has been, for more than 150 years, “open for business” and, broadly, a free and fair trader. Of course, there are protectionists in the USA ~ but until Donald Trump, they were, mostly, Democrats. Under President Trump America is becoming somewhat less competitive. But Canada is not rising in that area, either.

The challenge for Canada is to claw our way back up into the “top ten” (Singapore, USA, Hong Kong, the Netherlands, Switzerland, Japan, Germany, Sweden the UK and Denmark)  in global economic (trade) competitiveness. We are, usually, on most “top ten” lists with most of those same countries ~ their socio-economic and cultural mores are not radically different from ours. To get there we have to pass (become more competitive than) Finland, Taiwan and South Korea. That does not mean that Canadians have to work harder ~ Canadians are not lazy. It does mean that we have to work smarter. It also means that governments have to be less intrusive, they have to stop trying to make corporations into social policy agencies. Governments, above all, must stop treating your and my private property as a common good.

Canada needs a renewed, economically prudent and socially moderate liberal, political party. The Conservative Party of Canada is the one best positioned to be that “renewed” party … IF it selects the right leader in June. A lot of Conservatives, from one wing of the Party, will be arguing against immigration. They will take the narrow, very short term view that each new immigrant is a net drain on the economy (which is, generally, true for refugees and for some immigrants for the first year or so) and they will ignore the fact that almost all immigrants and many refugees, too, become net contributors to Canada in fairly short order. Many other Conservatives, from another wing of the Party, will argue that the welfare state is sacrosanct, a “sacred trust” and it must never be reformed to make it work more efficiently and effectively in order to produce the greatest good for the greatest number. We must hope that most Conservatives are, like most Canadians, in the moderate middle, between those two wings and will favour policies that are best for Canada, at large.

Canada needs to do better … to do that it needs better leadership, maybe from one of these people:

 

 

 

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