Canada’s Stagnant Standard-Of-Living Is The Biggest Crisis Facing Our Nation

Many other issues, such as unaffordable housing, surging political divisions, declining public services, our underfunded military, and growing public concern over immigration levels, can be linked to the fact that our standard-of-living is falling behind peer nations.

Often, the array of challenges facing a nation can seem overwhelming when each issue is looked at separately.

However, when we see that many issues can be linked back to one core issue, things become more manageable.

The key then is to identify the core problem, and address it.

So, what is Canada’s core problem?

Our stagnant standard-of-living.

Progress requires a rising standard-of-living

For a country to make any sort of consistent progress, it must have a rising standard-of-living. Indeed, everything we usually think of as ‘progress’ and the advancement of civilization is connected to raising living standards.

Rising living standards signify civilizational advancement as they reflect improved quality of life resulting from economic growth, technological progress, and societal evolution. Economically, higher per capita income levels correlate – over time – with improved consumption, improved nutrition, and better housing.

Technologically, rising living standards facilitate better infrastructure, better healthcare, and better access to education.

Socially, rising living standards often correlate with increased life expectancy, increased literacy, and increased individual freedom. As living standards rise, we tend to see value shifts towards more of an emphasis on human dignity and freedom. These improvements indicate societal evolution and progress, where economic, technological, and social advances enhance overall well-being.

There’s a reason that hopeful visions of the future focus on the absence of poverty and the ability to generate significant material abundance with minimal physical effort, while dystopian visions of the future show humanity having been pushed back towards basic subsistence and desperation.

So, when our living standards stagnate, and when we fall behind peer nations, not only is our progress as a country stopping, but we are losing access to a more hopeful and abundant future.

When people feel they are falling behind, social and political divisions start to grow. People are less willing to put up with differences, people become less tolerant, and people become more willing to embrace extreme viewpoints in a desperate effort to restore some kind of progress.

Thus, the fact that Canada’s standard-of-living is showing signs of long-term stagnation should be of deep concern to all of us.

TD Economics report on Canada’s standard of living

If you’ve been reading my work for a while, you’ll know that I have been writing about Canada’s stagnant per capita GDP for quite a while.

Thankfully, awareness of this problem is growing, as the impact of stagnation is increasingly impossible to ignore.

Marc Ercolao, an Economist at TD Economics, recently put together a report titled Mind the Gap: Canada is Falling Behind the Standard-of-Living Curve.

The report makes a point that is essential for Canadians to understand, which is that a focus on the top-line GDP growth numbers is obscuring the weakness of our per capita productivity.

Here are a few key excerpts:

“Economic growth does not necessarily equate to economic prosperity. While aggregate GDP is one thing, standard-of-living is another, and when Canada’s economic performance is adjusted for the rising population count, it reveals a picture that leaves much to be desired. This country’s lagging standing in per-capita GDP is not new, but it has been worsening since the pandemic.”

Canada’s performance has worsened since 2014-2015:

“But when adjusting for the rising population, Canada’s real GDP per capita has been deteriorating for many years (chart 3). At the start of the 1980s, Canada enjoyed an edge against the average of advanced economies of almost US$4,000 while keeping fairly level with U.S. estimates. By 2000, this advantage had all but evaporated, and U.S. per capita GDP had pulled ahead of Canada’s to the tune of over US$8,000. Still, since the 2014-15 oil shock, Canada’s performance has gone from bad to worse. Canadian real GDP per capita has grown at a meagre rate of only +0.4% annually, paling in comparison to the advanced economy average of +1.4%.”

The report also indicates that there is no apparent turnaround coming:

“Unfortunately for Canadians, little turnaround in Canadian living standards appears to be on the horizon. Real GDP per capita has already contracted over the last three quarters and our most recent forecast points to persistent contractions until the end of 2024 (chart 8). In the coming quarters, the economy is expected to suffer a cyclical slowdown as ambitious federal immigration targets continue to prop up population flows. Canada is also one of the few advanced countries that has not recovered its pre-pandemic level of per capita GDP. Longer-term, the OECD projects that Canada will rank dead last amongst OECD members in real GDP per capita growth out until 2060.”

This should be and must be the defining issue of the next election, because our ability to address every other issue depends on us raising our standard of living first.

Spencer Fernando


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