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The Globe and Mail

Not all boats being lifted by the tide of global trade

Prime Minister Justin Trudeau delivers a speech at a plenary session at the European Parliament in Strasbourg, eastern France, on Feb. 16, 2017, a day after MEPs backed the CETA during a vote.


You'd be hard-pressed to find a sensible economist who'd deny the benefits of trade. The cliché that a rising tide lifts all boats seems to fit. The problem is, it hasn't happened. Not only have some boats not been lifted by globalization – they've been bashed against the rocks, stranded and left to sink while the rest of the world sails on.

Globalization is under threat, most notably in Britain and the United States, where recent referendums and elections have moved those economies into greater isolation. The boats that haven't been lifted are the millions of workers who've been replaced by either cheap labour elsewhere or automation. No one can blame them for being angry. The economy has failed them. They feel hopeless and afraid, and they've connected with political messages that the problem is global trade.

When the United States flung open its borders to trade with China and Mexico, economists underestimated the speed at which entire industries would be ravaged. The devastation started in the 1970s and 80s, but it accelerated in the 90s and 2000s. Now, it's resulted in a U.S. President elected on a platform of building walls and tearing up trade deals.

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Canada – apparently one of the last bastions of open, liberal economics – is still willing to forge ahead with new trade agreements. But Prime Minister Justin Trudeau got it right when he warned the Europeans in a speech last week about the dangers of the Canada-EU Comprehensive Economic and Trade Agreement (CETA). "Now we need to make it work, for your people and mine," he told an audience in France. "If we are successful, CETA will become the blueprint for all ambitious, future trade deals. If we are not, this could well be one of the last."

So how do we do this? How do we prevent boats from sinking as the global tide rises?

The first answer has to be education. Literacy and numeracy skills, the ability to learn new information and a greater understanding and appreciation of different cultures will help Canadians create new opportunities in the global economy. Jobs and industries that don't even exist yet will crop up – but only if we're smart enough to identify them. And education starts in early childhood. We can't wait until students show up at college or university ill-equipped to learn and expand their minds.

Skills development and retraining displaced workers is another common policy response, and it can be helpful. But there are limits to its efficacy, particularly when workers are unwilling or unable to be retrained. And then there is the problem of identifying appropriate skills and industries. Retraining mature workers for industries that don't exist in their economic region isn't going to succeed.

But a third way to prevent sinking boats is strong communities and connectivity. Education and skills upgrade will be limited if people are not in community with others. We have no good way of measuring it (although certain economists have suggested counting the number of bowling alleys in a region as a rough measure of how connected people are). But the importance of interpersonal connections and soft skills cannot be underestimated.

There are plenty of reasons some individuals fall into lives of desperate isolation and loneliness: mental-health issues, substance abuse, an inability to build healthy relationships. Not everyone who is living in poverty is lonely, of course. But loneliness and social isolation is a good predictor of someone's ability to succeed economically – even more so in a global economy that is shifting and morphing quickly.

Income inequality and disparity of opportunity will be the greatest economic challenge for industrialized countries in the 21st century. And while Canadians like to think we are unlike our U.S. neighbours, we are not immune from anger, fear and frustration. If we ignore it, we will suffer the outcomes that other countries are now experiencing.

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Education, skills upgrading and retraining all play a significant role. But community building and social connectivity is just as important. Faith communities, social agencies, volunteer organizations and sports-and-recreation clubs play a part too. We can't just wait for the government to roll out a new program. As we enter into CETA and continue to uphold the benefits of global trade, it's up to Canadians to make it work. That means global trade must work for everyone – especially the boats that risk being capsized by the rising tide.

Todd Hirsch is the Calgary-based chief economist of ATB Financial, and author of the forthcoming book, Spiders in Space: Successfully Adapting to Unwanted Change to be released in early 2017.

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