Canada Continues To Waste Our Economic Potential

On a per capita basis, we should be the wealthiest country on Earth. We’re far from it.

Imagine for a moment the following place:

A vast, open territory full of nearly endless space.

Immense natural resources, with almost every valuable resource available in large quantities within their borders.

A highly-educated population.

A high level of technological proficiency.

An alliance with the world’s most powerful and wealthy nations.

A border with only one nation, a nation that happens to have the world’s largest economy and most powerful military.

Deep economic and military integration with the world’s pre-eminent superpower.

Wouldn’t you expect a nation fitting that description to be the wealthiest nation on Earth, on a per-capita basis?

Or, at least in the top five?

And, if a country in the aforementioned position wasn’t in the top five, wouldn’t you question why they were squandering their potential?

Of course, you know that we’re talking about Canada here.

According to the IMF, the estimate for Canada’s per capita GDP measured in US Dollars is $49,222.

That puts us 24th on the list, behind countries such as Belgium, Germany, Austria, Finland, the Netherlands, Australia, Norway, Switzerland, and more.

Additionally, we are far back from the United States, where the per capita GDP is $68,309.

If Canada was in 3rd, or 4th, or even 5th place, it would be understandable, as some of the top spots are held by tax havens.

Still though, Canada’s position on the list is quite a disappointment given all the advantages our nation has.

Now, before some people claim that ‘cold weather’ holds Canada back, consider that nations such as Iceland, Norway, Sweden, and Finland are all above Canada.

Norway for example is a very cold country, with large oil reserves.

Sounds familiar, doesn’t it?

Their GDP per capita is estimated at $81,995, far ahead of Canada.

Some countries that are close behind Canada also illustrate how our potential is being wasted.

Consider that Israel has a per capita GDP of $47,602.

Israel is located in a part of the world that is extremely hostile, and the country has very few natural resources.

Yet, they manage to be almost as wealthy on a per capita basis as Canada, despite having none of the advantages Canada has.

Israel consistently reaches and exceeds their economic potential, while Canada wastes much of ours.

And our economic weakness cannot be blamed on Covid: Indeed, as noted by the Business Council of British Columbia in 2019, Canada’s economy has been weak for quite some time:

“Canada’s real GDP per person has not increased in almost two years – since 2017 Q2 (Figure 1). Looking further back, GDP per person has increased by only 5.6% in total since the peak of the last business cycle in early 2008. That works out to an annual growth rate over 11 years of around 0.5%, about half the pace achieved by the U.S. (which was the epicentre of the global financial crisis) and the OECD average for the same period. All of Canada’s net gains were concentrated in two short periods: from 2013 to 2015 and the first half of 2017. For the rest of the time, the economy has either been static or recovering lost ground after negative shocks.”

Additionally – and keep in mind this was written in 2019 – GDP per capita (the only thing that actually matters in terms of measuring our individual standard of living) has not been going up:

“Overall, notwithstanding strong population and employment growth and low unemployment, Canada’s economic fundamentals look shaky. Business investment per capita and per worker is lower than 11 years ago. Rapid population growth is contributing to higher employment, total hours worked and aggregate GDP, but it’s not boosting GDP per person. That means the economy is not generating meaningful gains in living standards.”

Canada’s economy is even weaker now, with inflation further eroding our already stagnating standard of living, massive debt and deficits weighing us down, and a rapid return to high immigration levels pushing down wages.

What does economic growth really mean?

The interesting thing about reality is that it exists whether we acknowledge it or not.

Humans are great at manipulating statistics to obscure what is really happening, but that manipulation can’t change the underlying truth.

In measurements of our economy, we repeatedly hear about overall GDP growth, and the labour market.

We hear about how many jobs were added, and how big our overall GDP is.

Yet, those are quite easy numbers for the government to manipulate.

Large and constant immigration increases, combined with massive money printing can easily give the impression of economic growth, since there are more people in the country every year, and more ‘money’ in the system.

Thus, measured in Canadian Dollars, and overall GDP figures, Canada is certainly ‘growing’.

But that doesn’t mean anything.

Consider the following?

Which country has the biggest economy, Indonesia or Iceland?

It’s not even close.

Indonesia’s total GDP is just over $1 trillion.

Iceland’s total GDP is $21.7 billion.

Yet, since wealth matters to us on the personal level, as in our own experience on a day-to-day basis, the average person in Iceland is much wealthier than the average person in Indonesia, and has a far higher standard of living.

Iceland’s per capita GDP is $65,273, while Indonesia’s is $4,256.

If half of Indonesia’s population moved to Iceland all at once, Iceland’s overall GDP would surely surge, but the standard of living of people in Iceland would collapse.

So, for a country to measure it’s wealth in overall GDP while ignoring per capita GDP is a huge mistake.

Of course, Canada’s political class would like to ignore per capita GDP, because a look at that number demonstrates how weak our economy truly is.

According to the World Bank (their numbers tend to differ slightly from the IMF, though the relation of most countries on the list is similar), Canada’s per capita GDP in 2007 was $44,659.

In 2020, Canada’s per capita GDP as measured by the World Bank was $43,241.

That’s negative real GDP growth per capita over a period of 14 years.

In a world of rapidly advancing technology, which should mean rapidly advancing productivity, those are absolutely horrendous numbers.

And it’s why so many people in this country feel as if they’ve been stuck for so long, and feel they aren’t getting any further ahead, because they aren’t getting any further ahead, and our country is indeed stuck.

Until Canada brings in large tax cuts, reduces regulations, re-embraces our energy sector, brings immigration to a level that doesn’t artificially depress wages, returns to sound money, and cuts government spending, our country will continue to waste our astounding potential.

No amount of wishful thinking, economic delusion, or political correctness can change that reality.

Spencer Fernando

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