Productivity
When I first went to university forty plus years ago I took economics as an interest. In my second year I decided that a B-Comm might be a great degree and focused on that area of study. I quickly came to the realization that it was not really for me but I still have an underlying understanding of the basics of economics.
A key metric in economics is productivity. A measure of what each individual in the country contributes to the economy. There are many other forms of productivity measures also, such as capital productivity which measures Gross Domestic Product against capital investment and many measurements including multiple axis of comparison but the one most useful in understanding if a country is going to be better off or worse is GDP/hours worked.
While productivity does not tell the whole story of whether a country is in ascendancy or decline, nor does it accurately describe how the average household is managing an accurate picture of both can be deduced through trends over time of these measures. As an example of this, the United States has been measured as being on average 25% of world GDP since the end of WWII. Through the eighties and nineties Europe also produced 25% of the world’s GDP. In the early 2000’s when China began its accent up the economic scale was thought to be able to overtake the US output by the mid 2020’s but what has happened is a plateau of China and a reduction of total GDP for Europe while the United States share of world production has grown to 26%.
There are simple explanations for these changes, maybe the US has grown its population relative to the world. Or maybe the output of each person has risen. Understanding how this change comes about is why productivity is important. It gives clarity to the question of how. Again we turn to the US and now look at per capital GDP. For 2025 that number is close to $90,000 per person, here in Canada it is $55,000. A staggering difference.
But that is not the trend data, simply a snapshot in time. So the change of this number is the better indicator of how Canada is doing relative to others. In 2024 Canada’s per capital GDP rate fell 1.4% compared to the US rate that grew at 1.8%. Overall in the 1970’s Canada’s economy was 10% of the US’s and today it 9% while our population as a percentage of the US has grown for approximately 10% in 1970 to 11% today. By any measure Canada is weakening against the US.
What is the reason for the drop? Are Canadians just less willing to work hard or are there bigger forces at work here?
First it is important to look at wealth generators across both nations. With oil, the US produces 2.5 times the amount of oil that Canada does. But with 10 times the population the advantage goes to Canada. The US produces 8 times the steel, Canada produces 5 times more Aluminum, automobiles are produced 9 times greater numbers in the US, but possibly the two greatest differentiators are IT and Military manufacturing. In each the US dwarfs Canada’s output and here is where the wealth generation comes. Although certainly not spread evenly.
A few years ago Bill Gates was atop the rankings of world’s richest with 70 billion or so. Today Elon has 10 times that and with the IPO of SpaceX next year will likely top 1 trillion dollars. The other wealthy Americans in the tech world have similarity grown geometrically. Compared to the average Joe in the US or Canada these staggering increases in wealth can easily skew data for per person GDP numbers.
A 350 billion dollar swing for Elon is an addition $1000 or so for each American. Canada has nothing to compete with this.
These numbers can certainly be misrepresentative of what’s being experienced on the ground. Take China for instance. You read about the economic miracles of China pulling so many out if poverty, but with 600 million people making less than $140/mth. is that really the truth?
Canada does not have an Elon Musk, we do not have Teslas or Amazons and Facebooks. Of the top 50 com ponies by market cap in Canada only two, Shopify and Constellation Software, would be from the new economy age. The rest are mature industries, finance, resources, transportation, telecommunications, consumer sales and heavy manufacturing. Shopify is certainly a success story but nothing when compared to Facebook, Amazon or Google.
We have no Apples, Microsofts or NVidias. RIM might have been one of these but failed for lack of vision. Nortel Networks had the potential to become the world’s preeminent telecom technology provider until they were plundered by the Chinese in what may be the greatest act of corporate espionage ever. Today our great new ideas are swallowed whole by the tech giants in the US. There is no true tech incubation in Canada and the result is stulted productivity growth.
Canada has great universities capable of turning out brilliant entrepreneurs. While we may have success from time to time creating a revolutionary idea such as RIM did with Blackberry, we do not value the idiosyncratic character of those who build these businesses. Canadian nature is to hide the big character people and when the do become prominent, rip them down. Jim Basillie is a great example, founder and tech guru of RIM, he was their face and as such media constantly worked to tear him down. He also became the face of failure for RIM when he was deposed from the business.
Today he does all kinds of good for the tech work in think tanks and university leadership. But we hear none of it. If we want to grow our country we need to begin celebrating the innovators and entrepreneurs that have and can made our country great. Here is what these great men and women have done to improve our country. Maybe it will inspire the next generation of inventor. You never know where genius will materialize but without the right environment Canada will not be the benefactor.