Sustainability

When I was growing up in rural Ontario, I always heard the local farmers talk about sustainability. They were talking about the simple things like treating your farm well, using as little pesticides as possible, and ensuring that the next generation of farmers had great land that they could use to feed an ever growing world population. There was a certain pride that they all took in being the keeper of the land, and they all realized that they didn’t ” own” the land, but rather they simply tended it for now, until it was time to pass it on. 

Society as a whole used to care about sustainability to be honest. I think most of us grew up in a time where it was a foregone conclusion to simply leave things better than you found them. Whether it was the replace your divot plus 1 of the local golf course, or reducing pollution wherever possible to leave a better planet to our children, I think we really tried to make the world a better place. 

Of course sustainability also has a great meaning in economic circles. While most of us strive for greater sustainability of the land and the environment, we seem to turn a deaf ear to economic sustainability. All of a sudden it became an episode of the hunger games whereby we were outbidding each other for a piece of real estate. We didn’t seem to much care for the other parties, and with urban sprawl at an all time high, we certain couldn’t give 2 damns about the next generation. All of a sudden we started to live in such a way that the future didn’t matter, and only the present was what was important. We are all guilty of it to some degree, and for the most part everyone reading this was a willing accomplice; helping people fund the opulent lifestyles that they felt they deserved. Quite frankly wwe were so busy pursuing and ensuring we could one up the Joneses’ that we forgot to look at the sustainability of things along the way. Now, I am not talking about environmental sustainability – but rather economic. 

As the chart shows, Canada seems to have a real problem with GDP per capita. It seems we were so damn busy making our own lives better, than somehow everyone is now worse off. The chart was pulled from the Globe and Mail, and it starts in 2015. Of course lots of things happened in 2015, but one of the important things was we elected a party that, while lots of jokes have been made, ” doesn’t really think about economics that much”, and one that thinks ” budgets balance themselves”. Now this was not intended to be a Liberal bashing post – just a factual representation.

We of course are comparing the real GDP growth of Canada to the Southern neighbour we share a border with. The worlds longest stretch of unprotected border. Comparing ourselves to the US is a good comparable, as we are a lot alike. A lot of media sources have claimed that COVID was to blame for Canada’s falling GDP per capita. A lot of people said it was inflation after 2021 that caused the problem. I am sure that a lot of people blame the Central Banking system too. But Canada and the US experienced COVID the same, we both have Central Banks, and inflation was a problem in both countries. So why is the US continuing to do better for the average citizen ( at least in GDP terms ) than Canada? This is where the trumpet of people will bombard my inbox with comments like ” The US has printed 10 trillion dollars, etc. etc.) . I hate to break it to you Scooter, but Canada has had the money printing machines on just as hard, and just as fast since March of 2020. Again, The US printed a lot more, but on a per capita basis, not really. 

Say what you want about the US, but they have some things figured out. Where Canada has gone completely backwards in the last 6 years ( and the trend doesn’t look good either for the future ), the US has figured out a way to grow the average GDP per capita. Why? Well, it is simple really. Canada forgot to innovate. Canada forgot to built great things, be on the cutting edge, and advance world technologies. Canada decided it was better to sink their money, and spend their time trading real estate back and forth to each other. Real estate is a non productive asset class, and it continually took up a larger and larger share of our GDP. Unfortunately, it became such a large part of the economy, that it dwarfed everything else. However, real estate doesn’t innovate,. real estate doesn’t make us more efficient, and real estate doesn’t grow the value of our products and services. No, all real estate does is give us a place to call home. We were so busy as a country worrying about feelings, worrying about whatever political wind blew threw town that day, that we forgot to innovate. Canada used to be on the cutting edge, we used to make some of the best quality items in the world. We were respected, we were revered, and we always found a way. The only thing Canada leads the world in now is Debt to GDP, housing bubbles most likely to pop, and the lowest growth of the G7 developed countries.

All the time we were continuing to see the decline on GDP per capita, the entire time we saw we were becoming less productive as a society, and the entire time we let the US advance further and further ahead, not 1 politician asked the question ” Is this Sustainable”? Not 1 person with the ability to rectify the problem thought it was important enough to really matter. A falling standard of living does not happen overnight. It takes years and years to build this crappy downtrend. It isn’t one decision that makes productivity fall. Likewise, it won’t be one decision to turn things around. It will take a very long time to bring back productivity in Canada, and that is assuming we turn it around now. Canada risks a very real possibility of a lost decade if we continue the way we are. It won’t take much for GDP per capita to retrench back to the 2015 levels. Usually when we talk of lost decades we speak of third world countries, countries that have experienced war, etc. But to see a lost decade in a developed country is a real problem. Japan has been living with that issue for 2 or more decades. Interestingly enough, the housing market was on fire in Japan right before they entered the lost decade or two. Total coincidence I am sure.

The answer of course to this problem is for Canada to go back to how it used to be. Go back to innovating, go back to being productive, and start investing our money into products and services that grow the economy. Of course to do this, housing will have to fall further than where it is now. Many people will not like the comment, and will debate me until the cows come home on that – but it is a fact. Housing needs to go lower than where it is now before we can build back the Canadian economy. In order to make the average citizen better off, we need to make the economy sustainable and productive. Housing going bat shit bonkers overnight was not sustainable. A falling GDP per capita alongside bat shit bonkers housing prices should have set off alarm bells in the halls of Ottawa. 

Falling GDP per capita, growing debt, and an out of control deficit at the Federal level were all ingredients in the shit storm we find the economy in. Everyone knew it, but the people who could have actually changed it didn’t seem to care. It was not sustainable, and it should come as no surprise the mess we are in. But hey, there is tampons in the mens restroom, so I guess the last 8.5 years wasn’t a total waste….