According to a July 24, 2023 article in The Toronto Star, a TD Report written by economist Marc Ercolao warns that Canada’s standard-of-living has been on a steep downward roll. Half a century ago we were sixth in the world, in per capita Gross Domestic Product (GDP) which is the truest measure of wealth in any given population. At times we have even ranked ahead of the United States but now we are plummeting like a rock… and will continue to do so according to projections. While some will try to argue that our Gross Domestic Product is rising, they neglect to take into account the huge population growth we’ve recently had, and this is the true measure of wealth, GDP per person.
Dark Clouds Looming?
The TD report states:
“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 among OECD members in real GDP per capita growth out until 2060. This underscores that without fundamental changes to our approach to productivity and growth, Canada’s standard-of-living challenges will persist well into the future…”
You can see a striking depiction of this in this video of the top 15 wealthiest countries by year from 1500 to 2019 (it is fun to watch from the beginning but you may want to roll forward to about 1900 for the purpose of this article.) Pretend it’s a race and watch Canada and Argentina carefully.
Both Argentina and Canada consistently rank in the top 15 from the mid 1800’s onward and briefly during WWII Canada is the second wealthiest country in the world! Watch the Canadian flag drop off the top 15 list in the 1980’s, never to return. For some time Argentina has been wealthier than Canada. But it drops off the list about 1950. Since then it has been an economic basket case with a currency so weak and inflated that you have to buy a house in US dollars as people won’t accept their own currency.
Argentina once had a vigorous middle class which was wiped out by government fiscal mismanagement within a few decades. The reasons included ignoring the very products that brought the country wealth, wasteful and increasing deficit spending and debt. Instead the government invested in heavily subsidized industrial projects which became political footballs and a sinkhole for, rather than source of wealth. The result was hyperinflation and an economy that has had to be bailed out by repeated International Monetary Fund loans. The country remains an economic basket case.
The wealth of Argentina and Canada were both founded on natural resources and agriculture.
What went wrong with Argentina? Its government lost track of what was putting bread and butter on the table and roofs over their heads. In Argentina wheat, beef and mining took care of this. In Canada petroleum, agriculture and mining are major sources of our wealth. Currently over 30% of our exports are made up of one product: petroleum and its derivatives.
Canada would appear to be headed towards the same fate as Argentina. I am sure the people of Argentina believed that their comfortable existence would continue indefinitely. There are quite a few Argentinians living who still remember the prosperous lifestyle that they once had. Now most of the population is poor with a small, moneyed class controlling most of the country.
Sure, climate change has been a major concern in recent years and this has been a challenge for Canadians. Unfortunately, unlike Norway, instead of sensibly managing our hefty petroleum resources we seem to be actively trying to torpedo them. The world will require oil, gas, plastics and fertilizers for many years. All we accomplish by targeting these industries is to raise the incomes of countries with horrendous human rights records. Natural gas produces about half the CO2 of other petroleum products and unlike coal does not produce noxious acid-rain-producing byproducts like sulphur dioxide (which turns to sulphuric acid in the sky). Someone recently and seriously suggested that we pump it into the air over the Arctic to slow down global warming. Duh!
We should be encouraging natural gas production and export in Canada to provide an ethical and less noxious alternative to the coal fired plants that are sprouting up all over Europe and elsewhere in the world since the Ukraine conflict started.
It is us who should be filling this gap. Additionally, threats of curtailing fertilizer use and production forces Canadian farmers to face 30% drops in crop yield and probable insolvency.
Our mineral wealth includes gold, diamonds, rare earths, cobalt, nickel and lithium, the latter four are key products in the electrification of automotive transportation and in the computer industry. I have read many business publications and they rarely consider Canada a serious contender to supply these products because of bureaucracy and unnecessary regulatory complexity.
If we don’t take some positive steps to address these issues many Canadians could be poor, hungry and cold within the next couple of decades. I know as I was flying out of Buenos Aires the day the riots started. But don’t take my word. Just ask someone from Argentina.
Photo Credit
This paper suggests Argentina’s problems stem from spending more than government revenues support. Sounds familiar: https://researchdatabase.minneapolisfed.org/downloads/r781wg13n
This article is well timed for our current situation concerning Argentina. The alignment of the two countries ups and downs makes me wonder if Canada should offer Argentina an opportunity to become an official Territory of Canada. We both have a Federal constitutional system that mirrors each society. I can’t help but think that Argentina would fare much better as a partner to a western country rather than as a member of the BRICS nations. Instead of using the American dollar Argentina could use the Canadian dollar to rebuild its economic strength. It would give Canada the warm national destination that it lacks. We share a lot in common. Food for thought.
Great idea!