Canada is caught in a “population trap” for the first time in modern history and needs to limit immigration to escape it, say economists with the National Bank of Canada.
A population trap, according to Oxford dictionary, is when the population is growing so fast that all available savings are needed to maintain the existing capital–labour ratio, making any increase in living standards impossible.
Article content It’s historically been seen in emerging economies, and escape requires either an increase in savings, a cut in population growth, or both.
National Bank’s report joins the growing chorus of concern that the influx of newcomers over the past two years, many of whom are temporary workers or students, is too much for the economy to handle. Others caution there could be economic repercussions if Ottawa cuts off the flow too quickly.
Canada’s population grew by 1.2 million in 2023, a “staggering” amount when you consider that the next biggest surge was when Newfoundland joined the nation in 1949, says the report by National Bank economists Stéfane Marion and Alexandra Ducharme.
From a global perspective Canada’s population growth of 3.2 per cent last year was five times higher than the average of Organisation for Economic Co-operation and Development nations.
“We currently lack the infrastructure and capital stock in this country to adequately absorb current population growth and improve our standard of living,” said the economists.
No where is this strain more evident than in housing, they say.
National says the shortfall has reached a record of only one housing start for every 4.2 people entering the working-age population. The historical average is 1.8.
Government programs are underway to address this, but to meet demand and reduce housing inflation, Canada would need to double its housing construction capacity to about 700,000 starts a year, “an unattainable goal,” according to the economists.
“More worrisome is the fact that the decline is not simply due to a lack of housing infrastructure,” they said.
Excessive population growth is also impeding economic well-being, they argue. A fact they say is underscored by real gross domestic product growth per capita stagnating for six years in a row.
Capital stock, the physical and financial resources used to create value in an economy, has failed to keep up with population growth. Private non-residential capital stock has been falling for seven years, National says, and is now is at the same level as in 2012, while it is at a record high in the United States.
According to National calculations, capital stock per capita plummeted to about 1.5 per cent in 2023, compared with a high of almost 4.5 per cent in the 1960s.
Article content “This means that our population is growing so fast that we do not have enough savings to stabilize our capital-labour ratio and achieve an increase in GDP per capita,” the economists said. “Simply put, Canada is in a population trap for the first time in modern history.”
If Canada is to improve its productivity, policy makers must set population targets against the constraint of our capital stock, they argue.
“At this point, we believe that our country’s annual total population growth should not exceed 300,000 to 500,000 if we are to escape the population trap.”
Average asking rents in Canada hit a record high of $2,178 in December 2023, up 8.6 per cent from the year before. Over the past two years, rents have increased by 22 per cent or an average of $390 a month, said Urbanation in its January Rentals.ca report.
One-bedroom apartment rents increased the most, rising 12.7 per cent over the past year to reach an average of $1,932.
Article content Alberta saw the biggest hikes with rents shooting up 15.6 per cent to reach an average of $1,691. In 2022, rents in this western city rose almost 17 per cent.
But British Columbia kept the distinction of Canada’s most expensive market for apartments. The average rent here was $2,500 in December, even after slipping 1.4 per cent lower in 2023. The year before B.C. apartment rents soared 18.5 per cent.
Same old conversation … pointing the problem at common people with little to no money at the bottom and saying that they are all to blame for the countries problems.
The problem are the rich idiots at the top who are hording wealth and blocking the ability of those at the bottom from gaining any measure of wealth or ability to take care of themselves. The rich siphon wealth from the poor and then blame the poor for being poor and that someone should do something about it.
Do something about wealth inequity in this country and it will solve a host of social problems we are facing. In order to fix the country, you have to help the people who exist in the country and are the basis for making the economy possible. Trying to fix the economy first while never dealing with poverty and completely ignoring runaway capitalism is like trying to change a blown tire while the car is still moving and blaming the passengers for the problem.
Preach!
I feel like this article should probably at least note that we’re talking about “The National Bank of Canada which is the sixth largest commercial bank in Canada”, not “The Bank of Canada which is a Crown Corporation and Canada’s Central Bank”.
Yeah, it’s a bit confusing that the National Bank of Canada is not the national bank of Canada which is just the Bank of Canada.
Here’s the report that the article is based on.
I’m not an economist but it’s the internet so I’m not going to let that stop me from telling you what I think.
The graph that shows the year over year variation of real capital per capita shows growth every year except for 2022 and 2023 (flat, and negative respectively).
That’s the news. For the first time since 1960 (where the graph begins) Canada has less capital per person at the end of the year than at the beginning.
They talk about population growth and immigration. (Births & immigration minus deaths & emigration) and capital:labor ratios, but they don’t talk about retirements.
These economists are complaining that boomers are retiring but not dying. (Population up productivity down).
Unfortunately, the solutions are fairly easy but it would be political suicide for anyone who would even dare to actually propose anything that would ruffle the feathers of the vested interests, the powerful or (God forbid /s) the wealthiest 10%, or the “untouchable” 0.1%.
On one side Simplify/Regularize the tax code by eliminating all ambiguity :
- by removing exceptions and loopholes for corporation and individuals (it only helps the wealthy with “top gun” accountants to “legally” avoid/reduce taxes).
- pre-filled tax declaration should be expanded or made automatic for every individuals with simple tax situations (they should not be worrying about taxes and tax credits when their income in lower than a inflation indexed preset treshold)
- make everyone’s tax information public or accessible for every citizens similar to Tax transparency in Finland (PDF) it helps prevent/detect/reduce social inequalities and keep every one accountable toward each others
- exclude tax filling softwares and companies whom have vested interest in making tax declarations as complex and as unintelligible as possible by lobbying government
- increase the progressive taxe rate for higher income brackets, add new higher brackets (over 60%) for yearly income over a million, over tens of millions, over hundreds of millions, etc…
- eliminate Religious Tax Exemptions as they have been [abused and misappropriated more often without any real public oversight] (https://centreforinquiry.ca/religious-institutions-and-your-tax-dollars/)
- increase financing and auditing of Canada Revenue Agency to help better pursue, prosecute and recover wealth hidden in tax Havens, or create a new separate branch of the CRA tasked exclusively to handle corporate tax shenanigans/evasion and deep pocketed individuals
On the other side, beyond the well meaning but hastily half-baked (I am unqualified to properly evaluate such plan) Canada’s Housing Action Plan, we should create a long term Strategic Urbanization and Cooperative Housing Fund somewhat akin to the Strategic Innovation Fund whereas :
- local-first sustainability, durability, climate change mitigation/adaptation and energy efficiency are prioritized and audited/inspected for renovations and all new future developments
- refrain housing from switching owners too frequently (control exaggerated speculation) or make public a historical record of all inspections reports, renovations, purchase price, owners and in case of an auction make the bidding process, name and amount of bidder transparent to all participants (better overall)
- limit to let’s say 3 to 6 (anything beyond 10 becomes onerous) the numbers of residential building/house/condominium/apartment complex/senior housing/long-term care home a corporation, partnership or a individual can own/manage. 67000 homes owned and managed by a single entity is far beyond reasonable.
- favor and help fund Mass Timber projects instead of concrete construction, by using prefab Cross-Laminated Timber (CLT) and Laminated Strand Lumber (LSL) for multistory residential habitation. By increasing Mass Timber adoption we help sequester more and more carbon into inert materials (although technically still combustible on the outermost layer).
- prioritize housing co-ops projects that aim to offer affordable housing similar to namely in British-Colombia or in Québec - Interloge (PDF)
- (not a immediate priority, but crucial for the future of Canada) help set up a publicly accessible, interoperable, provincially and municipally controlled and constantly evolving : 5 years/10 years/25 years/50 years/100 years/200 years development roadmaps of natural, public, private and industrial lands/sectors/infrastructures/housing. Doing so will ensure everyone is on the same page with what is happening and what are proposed to happen in their neighborhood within their and their childrens lifetime. Everyone, from scientists to farmers, from residents to international students, from local business owners to local homeless, should be able to submit justified concerns/updates/changes/refusals to any future proposals/projects. Likewise, project proponents should be able to convince, demonstrate, allay, include, update, justifiably dismiss or preallocate equitable compensation publicly. By the time the yearly roadmap is on its way, anything without consensus or majority approval should be reported into the future or rejected, thus no surprise should remain (excepting a archeological/historical discovery or unforeseen dangers/accidents during excavation/construction/renovation).
Well that became more of a long winded exasperation on my part…
But thank you for reading my probably pointless TedTalk®©™ 🤣
Article content “This means that our population is growing so fast that we do not have enough savings to stabilize our capital-labour ratio and achieve an increase in GDP per capita,” the economists said. “Simply put, Canada is in a population trap for the first time in modern history.”
How on earth can they square this sentence with other stories out about CEO compensation, corporate profits and the share of national wealth by the top-10 and top-1% being higher than ever. How are we “not productive” when we have a tax code and official government policy that favours hoarding of cash over investment in business?
What fucking hypocrites the Financial Post is staffed by.
The problem isn’t that we don’t have enough milk in the bottle, it’s that someone keeps stealing the cream and leaving the rest of us with water.
The problem isn’t a growing tax base - because that’s the awesome reason for immigration - but people living longer.
So either start murdering blue-hairs or find a better solution than cutting off the feet to improve dancing.
So either start murdering
blue-hairsthe rich or find a better solution than cutting off the feet to improve dancing.Dump the wealth of the top 1% across the other 99 and you won’t be so mad at boomers.
