What Have We Learned?

Kevin Lynch and Paul Deegan look back over the last ten years and make the following observations:

As we look back over the past decade, there are a number of events that shaped Canada and the world, and they will likely continue to test and challenge us over the next 10 years. As the late American humourist Art Buchwald once wrote, “Whether it’s the best of times or the worst of times, it’s the only time we’ve got.” 

First, adherents of bizarre conspiracy theories are linked together by social media, and the Big Tech companies seem to be doing next to nothing about it. In a recent Wall Street Journal op-ed, US President Joe Biden spelled out the problem, “We need Big Tech companies to take responsibility for the content they spread,” he wrote. “That’s why I’ve long said we must fundamentally reform Section 230 of the Communications Decency Act, which protects tech companies from legal responsibility for content posted on their sites.”

Second, globalization and technological change have left far too many people around the world behind. We live in a world of haves – the well-educated knowledge workers – and the have nots, meaning everybody else. As income and opportunity gaps are growing, so too is despair among those with a middling education and analog skills in today’s digital world.

A minimum wage job simply doesn’t cut it in terms of eking out anything close to a middle-class existence these days. Canada, and every Western democracy for that matter, has to come to grips with wealth and income divides that are rising sharply and rapidly. Education and re-skilling have to be top priorities for policymakers as trade and technology changes the nature and location of jobs. If we fail to bring the disaffected and disenfranchised into the economic and political mainstream, social cohesion will erode to the breaking point.

The pandemic exposed problems in global supply chains, which pushed up the prices of everything from used cars to microchips. Worker shortages put upward pressure on wages and costs. Massive fiscal stimulus from governments was added to the massive liquidity stimulus provided by central bankers. The inevitable result of too much money chasing too few goods was inflation. And the slower central banks were to respond, the more persistent and entrenched inflation became. Whether at the fuel pump or the grocery store check-out, we’ve all learned that the mantra of central bankers — that inflation was “transitory” — was painfully wrong.

And, when it comes to Canada's economy, it's not the best of times:

Canada has a growth problem. For most of the period since 2008, Canada has muddled along with middling growth. That’s a far cry from the prior half-century, when we enjoyed the robust growth that built today’s economic and social infrastructure. With rising interest rates and soaring public debt levels, low productivity and weak innovation, massive public infrastructure deficits, a health care system that is teetering at the brink, the challenges before us are complex and difficult. Painful choices have to be made. We cannot cut our way to stronger growth, we cannot borrow our way to better productivity, and we cannot inflate ourselves out of this trap.

Canada is a trading nation, and a growth plan should begin with strategic investments in trade — enabling infrastructure to make it easier for goods, commodities, services and people to cross our borders. We are blessed with an abundance of natural resources and a well-educated workforce, but our onerous regulatory system makes it almost impossible to build anything. Why does it take three times longer to get a construction permit in Canada compared to the United States? The federal review and approval of infrastructure projects often takes longer than the time to go from shovel in the ground to project completion. Speed matters, and foreign capital is not always patient. As a country, we need to focus on a growth and competitiveness plan to get us out of the hole we have dug for ourselves.

Finally, there is climate change. Economic growth can't be wild and unregulated. And it must be shared:

Climate change poses an existential threat to the planet, but it also presents an incredible economic opportunity. As a nation, we have to come to terms with the duality of the climate change problem: balancing the imperative to phase out of carbon with an adjustment strategy for a sector that is our biggest single export and our highest value-added sector. Demand for gas is not going to disappear for decades, and the question is “whose gas” not “whether gas”. We lack any blueprint of how to replace our carbon-based energy sector over time with something of similar “economic value” and risk a large decline in our living standards as a consequence.

A lot has happened over the last ten years. Given the problems we face, there's a lot of work to do.

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