April 2, 2022
-Spencer Fernando Opinion & Insight
Print more money? Check. Bring in low-wage workers? Check. Boost productivity and generate real growth? Nope.
Japan and Ethiopia have a similar population.
About 125.5 million people live in Japan, whereas just under 118 million people live in Ethiopia.
So, both countries should have a similar GDP and standard of living, right?
Of course not.
It would be comical to even suggest it, given that GDP and the standard of living of a nation is based on much more than raw population totals.
Ethiopia’s per capita GDP is $1,040.
Japan’s is $39,243.
Ethiopia’s population has been growing rapidly, as they were about Canada’s size in 1983 (38 million people).
By contrast, it’s well known that Japan has a slowly-declining population.
I mention these two nations because they demonstrate how population growth and real economic success are two very different things.
Simply increasing your population says nothing about whether productivity is increasing, whether people are living better lives, and whether a nation is more successful.
What actually matters is the per-person productivity of a nation, as illustrated by the per-capita GDP number.
Why am I bringing this up?
Because the Trudeau government appears unable to grasp this basic reality.
Instead, they believe that increasing Canada’s population automatically makes us a wealthier nation.
The latest move in that direction is an increase in the number of low-wage, temporary foreign workers:
“Prime Minister Justin Trudeau’s government is opening up Canada to an increase of temporary foreign workers in a controversial experiment aimed at easing strains on the nation’s overheating economy.
Starting Saturday, the federal government will loosen limits on hiring low-wage employees from abroad, changes that could bring in thousands of additional migrant workers.
The move adds to an intensive effort to ramp up immigration to fill record-high levels of job vacancies as the country faces one of its tightest labor markets in decades.
Critics warn, however, the changes will suppress wages and undermine incentives for companies to make productivity-enhancing investments, while broadening a program that’s been accused of leaving foreign workers vulnerable to exploitation.”
A “controversial experiment.”
That about sums up Trudeau’s economic policies, for which Canadians are now paying the price.
This isn’t to demonize or direct anger at the temporary foreign workers themselves, as you can’t blame someone for wanting to come to a country and potentially improve their circumstances.
The focus is on the impact this will have on Canadian workers, and on the clearly misguided thinking of the Liberal government.
Deficit spending, debasing the currency, and low-wages
It’s difficult to imagine a worse combination for Canadians than rampant deficit spending, the debasing of our currency (thus robbing Canadians of our purchasing power), and wages that aren’t keeping up with inflation.
The deficit spending fuels more borrowing and more money printing which strips our money of value, and low-wages mean Canadians can’t keep up with rising prices.
The answer to this should be to increase productivity. Pressure to raise wages due to a tight-labour market incentivizes the utilization of technology, which leads to greater efficiency and (over-time), lower per-unit prices.
Fiscal responsibility would help to stabilize the value of our money, meaning Canadians can hold on to more of our purchasing power.
And, keeping population increases at a reasonable level would ease some of the insanity in the housing market.
So of course, the Trudeau government is doing the opposite.
They are subjecting Canadians to an ‘experiment’ that will result in lower wages, a lowered standard of living, while further distorting the housing market.
If someone was deliberately trying to make life as unaffordable as possible for Canadians, they would be doing exactly what the Trudeau government is doing.