Canadians have cause for economic optimism – by David Olive (Toronto Star – November 14, 2012)

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

Jim Flaherty’s forecast Tuesday of a weaker global economy, a bigger 2012 deficit than previously anticipated and a delay in the balancing of Ottawa books is likely to trigger the kind of headlines that get folks wringing their hands.

Canada’s 1.4 million unemployed workers will fear an even longer wait for a decent job. A middle class that’s been struggling for three decades to make ends meet will doubt that a revival in household-income growth is close at hand.

Yet the cause for optimism should be driven home hard and relentlessly. Optimism does tend to be a self-fulfilling prophesy, and we have plenty to be realistically hopeful about.

The assessment of Canada released last week by the Paris-based Organization for Economic Co-operation and Development (OECD) is quite stunningly positive, though overshadowed by Flaherty’s hints Tuesday that we might not be able balance the budget quite as soon as the 2015-16 deadline set in his March 2012 budget.

The OECD forecasts Canada continuing to outpace its Group of Seven peers in economic growth over the next 50 years. And it has us lagging, slightly, only Japan in the arguably more important measure of per-capita GDP growth during the next half century.

The OECD sees Canadian GDP growth averaging 2.2 per cent annually over the next half century, with only the U.S. and Britain, each at 2.1 per cent, coming close among G7 countries.

Curiously, for all the whinging about laggard Canadian productivity growth that has been part of our economic discourse for decades, the OECD says Canada will not enjoy the spectacular growth rates that Italy, Greece and South Korea could reap if only they would adopt market-liberalizing practices. That’s because Canada is already at or near “best practices” in economic efficiency, the OECD concludes.

I’d argue differently, that there’s tremendous potential for even higher-than-forecast Canadian GDP and household income growth.

Canada remains unforgivably slothful in integrating new Canadians into high-skill, high-paying jobs. Newly-arrived Indians, South Koreans, Iranians and Hong Kongers, eager to launch new businesses and create employment in their adopted homeland, face disappointment over the red tape that impedes their progress.

And our branch-plant economy, the world’s largest, does indeed lag many of our competitors in productivity and new-product development. That’s because offshore absentee owners stint on Canadian R&D and leading-edge technology. As do far too many locally owned enterprises, as Bank of Canada Governor Mark Carney has properly lectured CEOs more than once in recent months.

For the rest of this article, please go to the Toronto Star website:–canadians-have-cause-for-economic-optimism