Donald Trump has half the world laughing and the other half curled up in the fetal position. Never has so much uncertainty been incited by a new U.S. President. Most nations are bracing for the worst – including this one.
One of our biggest concerns is what Mr. Trump will mean for the economy. While there have been diplomatic assurances that Canada will survive the President's protectionist impulses, no one knows for sure precisely what will happen.
There is a lot at stake. The economy here is on shaky ground, and the future doesn't exactly look bright either. At least, that is the view expressed in a recent report that looks at our fiscal prospects in a somewhat different light.
While our political and business leaders have for years used Gross Domestic Product (national income) as the definitive measure of a country's financial health, many are coming to believe it is too narrow a gauge. The world is a far more complicated place than it was when the definition of GDP was developed in the 1930s.
Today, prominent organizations, including the United Nations and the World Bank, have started estimating a nation's "comprehensive wealth," which takes a longer-term and more well-rounded view of the economy and its outlook. How are a country's assets faring over time?
Among other indicators, it evaluates the state of a country's built assets (factories, roads, houses); natural resources (land, water, forests, minerals, fossil fuels); work force (skills and capabilities) and social relations (trust and co-operation among people). These are all essential to a country's capacity to produce goods and services.
On the surface, recent evaluations of this nature have been kind to Canada.
In 2014, the UN, looking at a broad range of economic markers, ranked us No. 1 among G7 nations for wealth per capita. Unfortunately, that is where much of the good news ends. Over that same period of time, the annual growth rate of our wealth was dead last among the same group of G7 partners. So how did we end up No. 1?
"It was our natural capital that drove us into first place," says Robert Smith, lead author of a study done in conjunction with the International Institute for Sustainable Development that looks at Canada in terms of its comprehensive wealth.
In other words, it was done almost singularly on the back of our natural resources. (Canada: hewers of wood, drawers of oil.) But, beyond that piece of positive data, the numbers aren't as flattering.
Consider the following:
- Over a 33-year period from 1980 to 2013, fully 70 per cent of our infrastructure investment was in just two areas – housing and oil and gas
- Canada has seen a 25 per cent decline in the per person value of our natural resource assets since 1980 due to physical depletion of stock and price declines
- Finally, despite more people graduating with post-secondary degrees, an average worker’s lifetime earnings have been essentially stagnant in this country for three-plus decades.
What it says is this: our "wealth," to some extent, is an illusion. We're spending more money every year on goods and services but not growing wealth – the basis for that spending – nearly as fast. Other nations that aren't as reliant on such a narrow range of sources (see natural assets) for economic prosperity are doing better. If nothing else, the downturn in the price of oil should have driven that point home.
Yes, Mr. Trump may approve another pipeline that Alberta can send its oil sands crude through. But that will not change the long-term economic potential for this country, a dilemma we have blatantly ignored while we exploited and enjoyed the fruits of our natural resource bounty.
The fact is our wealth is being depleted in Canada before our eyes. We have for too long put all our eggs in the oil and gas basket, and it is now self-evident how precarious a strategy that is.
We are living today at the cost of tomorrow in this country. We are building up debt while not leaving future generations with a healthy, diversified economy, to help pay for it.
It's not good enough to say: That's someone else's problem. It should be all of ours.