Canada is a massive country and the development and linkages across the country have been defined as sparse – like a necklace. How do you see Canada managing this geographic challenge and how could it do better?
There are only 35 million people in Canada and you don’t have economies of scale. Because of this, you move things South to the US. With the exception of the Maritimes and barely Vancouver, every single provinces predominant trade partner is the United States, not Canada. Canada has one East-West corridor that snakes through the Canadian Shield; it’s easier to go South. The water routes take you South, the road routes and the land routes take you South. It is impossible to get out of this in an economically viable manner.
It has been argued that Canada’s carrying capacity is one person per arable acre. This means we could be a population of 130 million. The Century Initiative is arguing for 100 million people by 2100. What’s your point of view on a larger population for Canada?
I think 100 million is a great goal. I have some words of warning and some words of advice. My warning is to look at the Australian case. They tried to get 50 million by 2000 and there was a significant backlash (Australia First movements). This was because they settled people in the North, and these regions were deeply conservative and did not take well to immigration.
Some advice would be to consider one of Canada’s assets: land. Give land to people, as Canada has done historically to support settlement across the prairies. That said, Canada’s history and challenges with the First Nations would make this near impossible. Taking additional land and giving it to foreigners is an attractive incentive for immigrants, but a major challenge domestically. Canada needs to think about how to attract people to places outside of the major cities and to help them put down roots.
All that said, Canada is definitely a multicultural society and probably the best example of a fusion culture in the world right now.
80% of people in Canada live in urban centers. Cities will likely continue to be how Canada grows. How do you see urban development and the densification of cities taking place in Canada?
You can build up, and Canada has done this. Toronto is a good example, but also a reminder that family formation becomes more difficult in dense cities. We have seen this problem in Europe, and this is probably the number one or number two reason that European demography has peaked. When you’re in a suburban area with a quarter of an acre, why not have seven kids? However, if you have a one- or two-bedroom apartment, there is no place to fit five people and there’s only so far you can go. You spend all this effort to bring in people, but if you put them in high-rises, they will not have kids above the replacement rate.
Canada does need to think about population growth outside of cities. Building up mid-cities cities may be possible in Canada, but in other parts of the world, incentivizing people to move to one area doesn’t usually hold. Korea is a great example. Half the population lives in the greater Seoul area. It’s not a big land mass but there was an effort in the mid-80s to diversify from the capital. They tried building secondary cities all over the place and as soon as people got the opportunity to they moved. There’s more to a city than buildings.
Given the demographic challenges that Canada faces, how can Canada address the economic challenges that lie ahead?
In terms of ways Canada can do better and face the demographic challenges that loom in the not-too-distant future, the country has a couple options. One is that Canada finds can find a way to slice national spending by, conservatively, a third. This is a huge amount – more than your entire pension system.
Another option, and I think this is the most likely one, would be attracting a vast amount of capital and a large number of global citizens to Canada – especially as a lot of the rest of the world breaks down. Canada is a very attractive destination for a mix of reasons, however; immigrants are currently only going to go to three cities—as will the money—unless you can find some way to better distribute it.
What role do you think immigration plays in the economy? For Canada specifically, do you think that immigration can help offset the challenges with an aging population?
The type of migrant that Canada attracts is fundamentally different than the type of migrant that the United States attracts because you can walk to the United States from Central America. Our average Mexican migrant age is 18 so that helps us. The average age of potential migrants in Canada is 46. While they are highly skilled, they won’t have enough time to pay into the system before they get their pension—and this is really bad from an economic standpoint. If Canada could attract immigrants who are 15-20 years younger, one could see more family formation. These are people who can still have kids. But it isn’t until people get older that they are able to afford a move to Canada.
In the US, the immigrants who arrive are not as skilled and established as those who go to Canada. The US immigrant population is younger and that adjusts the American wage structure down. In many ways that makes the United States far more economically diverse. If you’ve got a lot of low- and mid-skilled labour that keeps coming in every single year, it allows you to do things with your manufacturing and supply chains that you can’t do in Canada. One of the downsides of getting all this highly skilled labour is that they’re older, so they don’t consume—they produce. It’s great that you’re in NAFTA and that the US is next door, but the more lop-sided that population gets, the more you need outside trade access and that’s becoming less and less of a possibility—especially since you only really have one core manufacturing hub and that’s Greater Toronto.
If you were going to pose some advice for Canada, how could we do better? What do we need to do?
With the aging Canadian population and American baby boomers south of the border, there’s a real opportunity in geriatric research and technology. In everything from life extension to work life extension you have the perfect lab and because of the capital coming in you have the money to pay for it. This could quite possibly be the biggest growth industry in the Western world. Certainly healthcare innovation has that potential.