“Canada’s in a full-blown economic growth crisis, which is homegrown and due largely to poor government policy,” said Philip Cross, senior fellow at the Fraser Institute and author of “What is Behind Canada’s Growth Crisis?”
Mr. Cross, formerly a chief economic analyst for Statistics Canada, said from 2013 to 2022 per-person GDP in Canada grew by just 0.8 percent after adjusting for inflation. That may not mean much to someone who is not an economist, he noted, but the effects in the real world can be profound.
“GDP is just a fancy name for income,” Mr. Cross told The Epoch Times. “Just look at the despair that young people feel in this country about their future; about ever having a home. You'll see what the negative effect of an absence of economic growth for nearly a decade has on people.”
And while it may be tempting to pin the blame on the pandemic, Mr. Cross said the numbers indicate it’s been a growing problem for a long time.
“If you really want to see where the Canadian economy is headed, look at business investment where we’re down over 20 percent over the last decade, while the U.S. has been up over 20 percent. Look at exports, the most concrete manifestation of our competitiveness, where again, we’re down over the last decade, while the U.S. has been up over 10 percent.”
Factors
The study blames a variety of factors for Canada’s slow growth in comparison to the United States: low rates of business formation, regulatory uncertainty, barriers to investment (particularly in the resources sector), and restrictions on internal trade. The study also cites the “faltering confidence of foreign investors in Canada” and “low levels of productivity and innovation.”“One manifestation of chronic weak business investment and low productivity is the OECD’s forecast that Canada’s per capita GDP growth between 2020 and 2060 will be the lowest among its 29 member nations,” says the document.
The study points to the fact that Canada’s rate of growth has been gradually dropping for decades—from over 6 percent in the late 1940s to 5 percent in the 1950s and 1960s, to 4 percent in the 1970s, 3 percent in the 1980s, and 2 percent in the 1990s. The study said it briefly grew to 3.5 percent between 2000 and 2007, before dropping down to current levels.
The study added that the numbers are important for several reasons, not least of which slow growth can threaten a country’s social fabric.
Mr. Cross said in recent decades periods of slow economic growth have also tended to feed calls for “redistribution of income” and similar economic policies, instead of a focus on income creation.
“And you see that in, for example, the exaggerated discussions about the ‘one percent’—this idea that there’s this very small cabal of people who somehow are taking all the money and denying it from the rest of us, and that’s why I can’t afford to buy a home,” he said.
“It leads to policies that actually just make things worse. If you focus on just the redistribution of income, you’re ignoring the creation of income, which is how we all get better off.”
Mr. Cross said that a change is needed in Canadian culture so that entrepreneurship and innovation are more highly valued.
“Without a culture that supports entrepreneurship and innovation, even the best policies and institutions will produce disappointing results … Raising growth requires a resurrection of Canadians’ faith in the ability of Canada’s businesses to compete in the global marketplace,” said the study.
He stressed that’s one of the study’s key points.
“I think it’s that whole mentality, of just looking to government to solve all our problems. No, we’re going to have to solve these problems ourselves, as Canadians. And trust me, as somebody who worked in government for 36 years … do you think governments are going to come up with the creative solutions to get out of this mess?” he said.
“Policies are important and bad policies certainly contributed to the mess we’re in … But there’s been a shift in how Canadians think about the economy over the last 10 years. And it’s been a shift in the wrong direction. And we’ve got to get away from this reflexive turning to government to solve all our problems. We have to say, ‘how can we harness the innovative and entrepreneurship in the private sector to make it work for all Canadians?’”
