Canada finds itself in the throes of a scarcity crisis that threatens the very fabric of our socioeconomic and cultural tapestry. Plunging housing affordability, declining health-care capacity, surging infrastructure costs, and an economy that has stagnated on a per-person basis are not one-off challenges, but alarming indicators of a country teetering on decline. It is stirring a raucous national dialogue about the economy, and the paths ahead for our future.
Earlier this month, The Globe and Mail columnist Andrew Coyne laid out a sobering picture worth repeating: Canada is no longer one of the world’s wealthiest countries. Making the case that the economy has experienced a lost decade, it cited alarming facts, including that real GDP per capita—a measure of national income per person—retreated to levels last seen nine years ago. More alarming is the projection by the OECD that Canada will face the slowest per-person growth of its 38 members through 2060.
Bloomberg columnist Tyler Cowen refuted these concerns on Wednesday, pointing to growth in overall GDP and median incomes and making a compelling case for YIMBY policies to fix skyrocketing housing costs. He implied that Canadians should accept that we can’t produce the attractive jobs or industries that power growth like Americans can. Cowen argued that America will increase its relative lead “no matter what Canada does,” and we should be grateful for the benefits of American innovation. Hogwash.
Cowen’s idea of standard economic performance for Canada belies a generation of underperformance that we’ve accepted as normal. Once standing as the world’s sixth wealthiest country in 1981, Canada now ranks below the OECD median, outpaced by now wealthier peers. The country’s productivity growth, a measure that typically signifies fewer hours of work for equivalent or better income, ranked us as the second lowest over the same period. To bring matters home, in 1990, the median inflation-adjusted income for a single earner aged 25-54 in Toronto was $54,310. In 2023, it was $54,643, an increase of less than 1 percent in 34 years. Meanwhile, the inflation-adjusted costs of homeownership and rent have more than doubled. These facts point to the painful reality of our “zero-sum” economy, where one person’s gain spells another’s loss, a path fraught with potentially severe consequences if not rectified.
A generation of growth without growth
Nowhere is the shift to a zero-sum economy more acutely felt than in Canada’s housing market, where the fundamental dreams of homeownership and the possibility of starting a family have slipped beyond the grasp of most. Skyrocketing prices and soaring rents have entrenched a chasm between the property-owning class and those left floundering in their wake. In housing, older Canadians have effectively cannibalized the future wealth and prospects of the young, hoarding opportunities to maintain their own standard of living at their children’s expense. This compounds the myriad challenges already awaiting the next generation, including the weight of high public debt, aging infrastructure, the financial strain of supporting an increasingly elderly population, and the imperative to address climate change.
The crisis has been dramatically worsened by a constellation of policy blunders. Beyond a mismanaged temporary immigration system, a labyrinth of broken housing policies—marked by draconian land use restrictions, punitive taxation, and byzantine approval processes—is crippling our economy rather than buoying it. These misguided policies exacerbate the housing shortfall while applying intolerable pressure on our infrastructure. All of this occurs within a national context starkly devoid of the requisite economic growth to underpin or broaden the capacity of our systems.
A generation is now coming of age having only experienced an illusion of growth but never the real thing. Canadian cities are bustling with construction, governments are rolling out ambitious (and expensive) infrastructure projects, and housing-rich Canadians have experienced unprecedented gains in net worth that ultimately mask stagnation. This phenomenon, akin to “growth without growth,” reveals a troubling reality: Canada’s economy, propped up by population increases, is not translating into improved living standards for its citizens. This vicious cycle of policy failure and economic stagnation threatens to rip through the threads of Canada’s national identity.
Prolonged scarcity is dangerous territory
Growth is more than just a statistic. It signifies the potential for material well-being to improve across the board, fostering a climate of social trust in business, government, and community. Growth is the bedrock of win-win economic outcomes, where the general condition improves for the majority. Growth raises government capacity by increasing revenues per person without raising taxes. Growth raises capital for business investment without harming consumers. Growth creates competition for people, who benefit from higher wages and greater opportunities. Fundamentally, growth is the objective of optimistic cultures. But, when growth falters, as it has markedly done in Canada, it shifts societal attitudes towards a hoarding mentality. If allowed to fester, zero-sum thinking will erode the Canadian social contract, harm generosity, undermine faith in fairness, encourage anti-social activity (such as rent-seeking and corruption), and could lead Canada to a far uglier place.
The dangers of prolonged economic hardship are not unknown. Recent history offers stark lessons in the form of the Great Depression and post-First World War Weimar Germany, where scarcity led not only to material deprivation but to societal fractures that culminated in one of humanity’s ugliest genocides. While one should not sensationalize, prolonged periods of economic hardship create fertile soil for populists and extremists who capitalize on the pain of communities turned inward; scapegoating outsiders and succumbing to protectionism and nativism. Ugly politics supports ugly policies, which supports ugly politics, becoming a self-reinforcing cycle that is incredibly difficult to stop. Canada, despite its modern advancements, is not shielded from these forces and is not the only liberal democracy facing them.
This scarcity mindset has already led to an unsettling rise in nativism and xenophobia, with reported hate crimes more than doubling since 2015. Immigrants, once celebrated as the lifeblood of our economy, are increasingly blamed for our problems despite the reality that many have been exploited and offered false promises of achieving the Canadian Dream. Additionally, there’s growing intolerance towards marginalized communities, including the LGBTQ+ community, rising antisemitism, and a concerning number of Canadians adopting beliefs in conspiracy theories. These trends signal a decline in open-mindedness and serve as a potential harbinger for the adoption of fringe political ideologies and inward-looking perspectives in the future.
Shoppers walk past a boarded-up storefront in downtown Montreal, Dec. 19, 2023. Christinne Muschi/The Canadian Press.
Toward an abundance economy
Despite the current challenges, it is essential to remember that Canada remains an exceedingly wealthy nation, blessed with abundant natural resources, significant capital, strong trading relationships, and a highly educated population that is deeply integrated into the global talent pool. This wealth underscores the shock of our present stagnation, which derives not from external forces but the consequences of our own bad choices.
Zero-sum attitudes now riddle our political and economic discourse and fundamentally contradict the tenets of liberal democratic capitalism in Canada, which has historically championed a positive-sum worldview. A blueprint for Canadian prosperity is there should we choose to adopt it: it requires the melding of political and economic freedoms with security, safety, and opportunity, all underpinned by robust property rights, a welfare state that uplifts without stifling, and a government that facilitates rather than dictates.
The antidote to our challenges is to embrace an “abundance” mindset. This implies a political priority to ensure that the essentials for robust social health—such as housing, energy, health care, and transportation—are plentiful and give people options. Systemic reforms must address the housing crisis head-on, significantly boost productivity, and ensure that the basics—crucial for a high-quality life—are within everyone’s reach.
Achieving these outcomes demands leadership and bold action, including the possibility of the federal government devolving taxation powers to provinces in exchange for reforms. Such reforms should aim to eliminate interprovincial trade barriers, clarify jurisdictions, centralize regulatory frameworks, boost competition in Canada’s private sector, revamp land use and municipal governance, and reform the tax code. Furthermore, there’s an urgent need to overhaul public infrastructure procurement and construction practices, where poor state capacity has unnecessarily inflated the cost of building social and physical infrastructure. The challenge we face is not the magnitude of government expenditure but the extent of its overcomplication, overreach, and waste.
By weaving together the principles of liberal democracy with an ethos of abundance, Canada has the opportunity to rejuvenate its economy and reforge a path toward widespread prosperity. Crucially, immediate action is necessary to avert the onset of a negative feedback loop, where economic, social, political, and cultural downturns become intertwined and self-perpetuating. Canada’s potential future is beautiful, contingent on our collective desire and resolve to break out of this zero-sum economy threatening to hold us back. This future requires a collective commitment to dismantling systemic barriers that impede progress. Canada’s brighter tomorrow hinges on our willingness to reimagine and rebuild—a nation where success is common, prosperity is shared, diversity is celebrated, and everyone can thrive.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
