article

how Canada forgot to plan for its future

[WHAT]

] by said fard @ theglobeandmail.com - fard opines on the state of the Canadian economy,

[WHY]

]

[WHERE]

] READ THE FULL ARTICLE

] http://www.theglobeandmail.com/report-on-business/rob-commentary/canada-forgot-to-plan-for-its-future-by-leaning-on-oil-and-the-loonie/article28083772/

[WHEN]

] 2016-01-11

[EXAMPLE - SUMMARY - manual]

] Canada’s gross domestic product (GDP) grew by 19 per cent between 2010 and 2014. But most of that growth was driven by factors outside Canada’s control.
] Many remain optimistic that petroleum prices will recover, but there is strong reason to believe low prices are here to stay. Unlike previous price vacillations that were created by shocks in supply or demand, the price-setting regime of oil has changed. In the past, prices were set monopolistically by OPEC; they’re now set competitively. there is good reason to believe we are past the glory days of Canada’s oil rush.
] Housing is the only thing keeping the Canadian economy afloat. Unfortunately, as the United States saw in 2008, an overreliance on the housing sector can be a recipe for disaster. We are building a lot more houses than we really need. From 2006 to 2011, Canada’s population grew by 3 per cent while housing stock grew by 7.1 per cent
] As many have argued, evidence suggests that additional production was and is being bought by foreign investors. Indeed, CMHC reports that the share of foreign ownership of condos in Toronto and Vancouver grew by 22 per cent and 51 per cent respectively – in 2015 alone.
] No country in history has been able to sustain continued housing overproduction. Canada needs to plan for a potential post-housing-boom and post-oil-boom economy.
] For the past decade, we have doubled down on an economic plan that has made us less diversified and more susceptible to global economic reverberations beyond our control. Between 2000 and 2013, Canada’s economic complexity index (ECI), a measure of economic diversity, shrank to 0.70 from 1.1. As a point of comparison, the ECI in the United States remained steady over that period. A high ECI protects economies from turbulence and, as its creators have pointed out, it’s also a good predictor of long-term GDP.
] Conversely, when prosperity is a result of a few outside influences, it can vanish as quickly as it appears. In 2015, Canadians got their first taste of this principle when the price of crude collapsed, bringing with it the greatest single-year drop in the value of the Canadian currency.
] So whats a Country to do?
] - Manufacturing, - needs to be retooled, takes time
] Tourism, Tech, Film production - too small to make a big dent
] or far too long, policy makers have been mired in easy economic formulas. Cheap money and a focus on resource exporting and homes have taken priority over what are increasingly recognized as the essential factors behind robust wealth creation: people and cities.
] In a long-term sense, there’s only one thing that creates wealth: technology. Technology allows us to produce more with less – everything else is short-term noise. And most technology is produced in cities. They are home to centres of research, innovation and commerce. Nurturing cities that produce, attract and retain talented people is how mature 21st-century economies continue to develop.
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[HOW-TO]

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[REFERENCE]

] SRC = HN, comments

If the Canadian government is serious about long-term growth, it must focus on how it can build cities and policies that attract people and businesses. But we have not been headed in the right direction on this front.

Our tax and regulatory policies have been directed toward the resource sectors for the past decade, instead of being focused on facilitating new business. Even now, there are proposals to change the treatment of stock options, which would devastate Canada’s fragile startup ecosystem.

Likewise, there has been little political will to develop urban infrastructure. Toronto and Vancouver, for instance, both need serious investments in public transportation but politicians are unwilling to increase taxes to fund badly needed projects. Added to that, housing prices are pushing out some of our most talented people in favour of investors with no meaningful economic ties to our economy. Again, short-term focus and populism have overshadowed prudent policy making.

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