Canada: Digging Deep Into The Canadian Economy - YouTube

Known for merciless winters, Moraine lake, Maple Syrup, polite people, and not so polite

hockey players…

Canada is a G7 member and the 9th biggest economy in the world by GDP. 

If you are a Canadian watching this video, don’t forget to say sorry in the comment

section, eh?

Canada is a commonwealth country based on the principle of “Peace, Order, and Good

Government”.

Some say it's slightly inclined towards the need for the common good while accepting moderate

limits on individual freedom.

But, Canada is not a socialist country.

It is a capitalistic economy based on the accumulation of capital, production of wealth

based on the wage-labor relationship between the owners and workers, and the means of production

through mostly privately-owned companies generating profits for their owners.

Yes, the country does have a developed social security net.

But many people fail to understand that having welfare programs does not make a country socialist.

You can call it a mixed market economy, but that mixture consists of capitalism and minimum

state regulation, instead of a mixture of capitalism and socialism. 


Canada, just like many developed nations, followed a sequence of transitioning from

a raw-material-based economy to a manufacturing-based economy, and finally transitioning again to

a service-based economy.

In an earlier video, we discussed that most service-based economies happen to somehow

have their service sector around 70% percent of the total GDP.

This pattern is true for the Canadian economy as well. 

Ranked among the top ten countries on Economic Freedom Index, the Canadian economy has some

resemblance with the Australian economy.

Australia has Magpie attacks and Canada has Geese.

Sorry, let us get back to the economic-only similarities.

Both economies are wealthy and industrialized, both have housing bubbles, both are highly

exposed to international trade and commodity prices.

Both are disproportionately reliant on one trading partner… in Australia's case, it's

China, and in Canada’s case, it's the United States.

Both countries are making an effort to diversify their economy.

And both have been keen for more immigrants to boost the economy.

Canada’s fertility rate or should we say the breeding rate is among the lowest.

This rate is below the replacement levels.

On the other hand, it has a growing aging population.

When it comes to the aging population, Canada is no Japan and not even like Germany or Italy,

but with a 17% population over 65 years old it's not far behind.

Further complicating the situation is the combined median age of nearly 42 years.


Let’s put this all together.

A growing number of older people utilizing social and other services without contributing

to the economy… a small working-age population paying for all this… a low birth rate of

children that are supposed to grow up to join the workforce… all this makes the country

incline towards more open immigration policies so a bigger working-age population could be

achieved.

After all, there are only enough taxes you could put on the high earners under the slogans

of “tax the rich”, and you can’t cut back on the social service benefits either

as the existing population is used to of them.

The population problem is the crux of the whole matter.

Bringing more immigrants into the country is more of an economic decision than a moral

one and has nothing to do with the catchwords like diversity, inclusivity, and multiculturalism.

The country is managing its immigration system for the economic benefits of Canada and not

for the immigrants.

The country wants you to contribute to the economy but it also wants you to breed.

Canada has a high foreign-born population that accounts for nearly 8 million people

which is over %21 of its total population. 

Immigrants work hard, they are usually in their working age, they become part of the

taxpaying population, they utilize fewer social services, many of them could accept jobs that

locals are less inclined to carry out.

And most of them are also grateful for letting them enter the country due to the lack of

opportunities back home and other reasons.

And they have better fertility rates relatively.

And they also bring foreign money to increase cash flow.

Rich immigrants bring foreign money to the land although it has a downside that it could

be one of the contributing factors of property prices surge.

Then there are skilled workers who bring their skills, obviously.

However, the government does not have a partnership with private companies so if you don’t get

the job then it's your loss.

Then there are temporary form workers to fill in the jobs that Canadians are less likely

to opt-in.

And last but not the least, student immigrants get to study in some of the highest-ranked

universities in the world.

But for Canadian universities, foreign students are a vital source of income bringing billions

of dollars into the country.

Foreign students have to pay much higher tuition fees than the locals.

It's economically viable for Canada to let the import of money pouring in.

Education is surely a lucrative business. 

Canada is an energy superpower with the third-highest natural resources valued at US$33 trillion.

The country has the third-largest proven petroleum reserves, and it is the fourth-largest oil

exporter in the world with Alberta and Saskatchewan taking the lead.

But, despite sitting on gigantic oil reserves, it also imports oil for domestic consumption

due to various reasons. 

Canada’s oil is supposedly “extra-heavy” and it's more expensive to extract, refine

and transport.

The oil economy can grow and shrink based on the global market prices.

When the price is high, it’s profitable.

When the price is down, It is unprofitable for Canada to sell it.

This is true for any business.

If your competitor offers the same or better product at a lower price, you are out of business.

It makes Canada incline towards oil imports from the US and Saudi Arabia.

Another debate-able reason for importing oil is the lack of new pipelines within the country

that could increase the availability of domestically produced oil.

All these factors make Canada look for alternative energy sources for future energy demand instead

of relying on other countries.

It has comparatively little to do with caring for the environment and more to do with economics.

Canada is a collection of smaller regional economies.

Some regions want to keep the dependence on oil while others wish the economy to go all

green.

Some opinions advocate for a gradual and properly phased shift before it is replaced by alternative

energy sources that are cost-effective as well as reliable.

But no one has a clear answer.

Another reason to move away from oil dependence is the need to diversify the economy.

Almost all Canadian oil exports go to the US.

Staple Thesis is a theory that suggests the export of natural resources from Canada to

other advanced economies has a pervasive impact on the economy as well as on the social and

political systems.

Different stapes like oil, minerals, forestry, fishing, etc. impact the rates of settlement

as well as federal-provincial conflicts.

Some say that the economy could still evolve and diversify while others suggest it could

permanently get locked into dependency as a resource hinterland.

In simpler words, Canada is used by larger countries for staple resources, and it is

tied to larger markets leaving it less likely to explore its own destiny.

Canada ranks 36th on the Economic Complexity Index, which means its economy is less diversified

among different sectors relative to other countries ranked top on the list.

However, it's still diversified enough, at least much more than Australia.

So, it won’t be right to call it an Oil country as it has other sectors including

real estate, construction, finance & insurance, logging, automobile, etc. 

Canada is the world’s biggest exporter of maple syrup.

It accounts for over 75% of global production.

But, contrary to the assumptions, the sweet stuff does not have the biggest impact on

the economy.

It accounts for around 0.02 to 0.03% of the total GDP.

But, it does have an impact on the economy of specific regions like Quebec where thousands

of jobs rely on the industry.

The region also imports seasonal workers from outside to keep the taps running.

Canadians could confirm in the comment section if the $100 Canadian bill smells like maple

syrup.

Canada has the longest coastline in the world.

It’s among the top contenders that export fish and fishing products.

Lobsters are its top seafood export.

While every election in the US, few people insist they would move to Canada if candidate

so-and-so wins, Canada’s trade and economic propensity are disproportionately dependent

on the United States.

Canada takes full advantage of having the biggest consumer market as its neighbor with

over 75% of its total exports reaching the United States.

As the old saying goes, when the U.S economy catches a cold, the Canadian economy sneezes.

This is true in most cases except for the financial sector.

Canada also gets security benefits for having a neighbor like the United States which has

the highest military expenditure in the world.

Most of the Canadian population is situated roughly hugging the US border.

Canada is smart when it comes to the minimum wage.

The country has no single minimum wage for the entire country.

Instead, the provinces and territories set and impose their own separate minimum wage

rates. 

Canada has one of the highest ‘Household Disposable Income, which is a measure of money

a household is left to spend or save after income taxes have been deducted.

While disposable income is shown off as a shiny number, not many people talk about ‘Discretionary

Income’, which is the amount of income left after all necessities are covered.

Disposable income does not calculate wealth as it does not take into account the cost

of living and average expenditures.

This is how most of the advanced economies are generating working poor with the illusion

of wealth.

On the other hand, discretionary income data is poorly reported by most countries.

Canada is no Switzerland or Norway when it comes to the cost of living, but it’s still

in the top 25 list.

Consumer goods are expensive, although it mostly depends on where you are living within

the country.

Canada is also among the countries with the most expensive childcare when calculated by

the percentage of the couple’s average earnings.

Canada has one of the highest household debts compared to income levels.

These are mainly taken for mortgages and it fuels the housing market.

Canadian household debt as a percentage of disposable income has risen above %170.

Housing in some areas is an obvious bubble with Vancouver and Toronto taking the lead.


Growing the manufacturing sector in Canada is somewhat impractical.

High wages do not allow it to compete against the countries that have a low-wage workforce.

Cheap imports beat out any hopes for a large-scale manufacturing base.

This is making the existing manufacturing industry slowly die out or be dependent on

government subsidies.

Canada has an awesome single-payer health system.

Although it's falsely advertised as a “free healthcare system” and should rather be

called a Publicly Funded Healthcare.

Healthcare spending represents nearly 12% of the country’s GDP.

While some Americans are quick to point out flaws in Canadian healthcare and you can discuss

the comparisons between the US and Canadian healthcare in the comment section below, nonetheless,

Canada’s healthcare system works great for most of the population.  

Agriculture is not Canada’s plus point and accounts for %1.6 of the total economy.

You can partly blame the country’s harsh climate.

There is an abundance of imported food available at a much cheaper price relative to domestically

produced food products.

However, the government does offer protection to some agricultural sectors like dairy and

poultry, against the competition induced by the low price imports and to keep some food

self-sufficiency.

Although this results in higher consumer costs for some products. 

Canada is not the best when it comes to traditional food and cuisine, Poutine is an exception.

Kraft Dinner is also very popular.

Canada has the largest number of doughnut shops per capita.

They also consume the most doughnuts per capita in the world, Tim Hortons is surely a contributing

factor.


Canada is the second biggest country in the world by area.

From Niagara Falls to the Canadian Rockies and having the highest number of lakes in

the world, tourism accounts for 1% of the economy.

It is something that could be expanded to its full potential in the future.

With its early colonial history, Canada has two official languages.

French and English.

Bilingualism throughout Canada results in the duplication of government services like

bilingual signage, forms, advertisements, etc. using the public purse.

A 2012 study revealed that bilingualism costs about $2.4 billion.

Higher education in the country is not a lifetime mortgage that students take decades to repay

like in the US.

Canada has a well-educated population.

The country ranks one of the highest on the tertiary education attainment index.

Although what is referred to as white-collar jobs are in short supply. 

Canada needs more companies like Shopify.

But it has a talent drain problem where tons of skilled workers graduating from universities

can go abroad to the South to enjoy better earnings, a higher consumer base, and a warmer

climate.


 Forget about natural resources.

Any country’s biggest asset is its people.

Canada needs to invest in its people, not by showering more social benefits over them,

but by promoting a culture of entrepreneurial mindsets and innovation.

It has to facilitate its population away from a risk-averse mentality.

So they could make things happen instead of waiting for things to happen to them.

Other than that life is great in Canada!

We are off to Timmies to get some Timbits and a Double-Double.

We hope you have enjoyed the video.

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