Canada needs a national policy to right our economic ship

Robert McGarveyPrime Minister Justin Trudeau has blinked. The recent federal budget was cautious when it should have been bold. It was hesitant and defensive when it should have been a battle cry for Canadian unity and prosperity.

The unpredictable Donald Trump may or may not fulfil his promise to only tweak Canada-U.S. trade. But we know one thing for sure: the United States has changed the rules of international trade. It will put its interests first. And it shows no sign of being hampered by existing agreements or historical norms.

While the world waits for President Trump to act, Canada must take this opportunity to establish a made-in-Canada solution to our economic woes.

It’s no secret that Canadian manufacturing has been hit badly by the same blind forces of globalization that drove Americans to elect Trump. We’re bleeding jobs, investment and growth in our manufacturing heartland. At the same time, global competitors, who suppress their workers and allow environmental free-for-alls, gain unfair advantage over Canadian producers.

On the Canadian Prairies, the situation is dire. Hundreds of thousands of jobs have vanished from the energy industry, whose major projects now lack funds. Not only are oil prices low, hovering in the US$50-a-barrel range, the lingering threat that those prices could again reverse or collapse means major projects may well be uneconomic even if prices recover.

The crisis of Canadian youth is another consequence of our national neglect. “Get an education and you’ll be successful,” was the sage advice we all offered our children. Today, a university education will burden all but the most prosperous families with ten of thousands of dollars in student debt.

Were these children unlucky enough to be raised in one of our major cities, or choose to live there, they can park the dream of home ownership. That is unless they’re prepared to accept another round of debt obligations, this time in the range of hundreds of thousands of dollars.

It’s no wonder young people opt out of the Canadian dream, either living abroad or simply stuck at home.

It’s time for a new national policy in Canada. We need bold action to reverse course before it’s too late.

Such a policy needs to address two major flaws in our thinking. One, it must admit that our complacent trust-the-status-quo mindset is part of the problem. Two, our commitment to globalization must come with a Canada-first policy logic.

Let’s start with energy. Our willingness to submit our energy industry to market forces means Western Canadian crude is sold into U.S. markets at a significant discount, while refineries in Eastern Canada pay much higher world prices to import crude from Saudi Arabia. A national policy should create energy self-sufficiency: Canadians producing and consuming our own (increasingly renewable) energy.

A national housing strategy is just as desperately needed. The open housing market means record low interest rates and often absentee global buyers push up urban house prices beyond the means of normal Canadians. A national policy would seek to bring housing markets back into balance with our economy, making homes accessible and affordable for as many Canadians as possible.

On the world stage, we should only have completely free trade with nations that commit to raising their human rights standards (and therefore wages and working conditions) to western standards. China is negotiating a trade deal with Ottawa. They demand full and free access to Canada’s economy with no strings attached. They’re even demanding the right to import their workers – and their slave-like wages.

A better strategy would be to focus on internal repairs first. The federal government should break down the internal barriers to trade in Canada. And it should start reforming our capital markets so that a greater percentage of domestic investment is focused on Canada. That would help modernize our infrastructure, making our industries more productive and globally competitive.

Canada is a land of promise, but we must admit that the current global status quo erodes our standard of living. We can’t trust the market to solve this problem. In the Trump era, we must control our own destiny.

It will take a new mindset and all the talent and energy we can muster, but we can create a more positive future.

Robert McGarvey is an economic historian and former managing director of Merlin Consulting, a London, U.K.-based consulting firm. Robert’s most recent book is Futuromics: A Guide to Thriving in Capitalism’s Third Wave.

Robert is a Troy Media Thought Leader. Why aren’t you?

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national economic policy

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