The dominant economic story in Canada and other Western economies over the past two decades or so has been what former U.S. Treasury Secretary Larry Summers has termed “secular stagnation.” It refers to a new economic equilibrium in which we’re stuck in something of a “two-percent trap.” The political economy consequences of this sustained period of economic slowdown have been significant. 

There may however be good news on the horizon. It’s quite possible that we look back on December 2022 and the release of ChatGPT as the moment that our economies started to get back to higher rates of productivity and economic growth.  

Let’s start with the source of the problem. There have been various explanations for the onset of secular stagnation including flat-lined business investment, aging demographics, sluggish productivity, and a lack of technological progress. The relative role of these different factors is the subject of considerable debate. So are our prospects for overcoming them. 

Nobel Prize-winning economist Paul Romer is a bit more optimistic than others on this question. He has argued that a key explanation for today’s slow growth is that we haven’t quite yet figured out how to fully realize the economic benefits of the internet and progress in computing across the economy. His main point is that there’s typically a lag between the development of a general-purpose technology and its effects on productivity and economic growth. 

In particular, he cites the past research of Stanford University economist Paul David which sought to understand the so-called “productivity paradox”: the strange fact that the modern computer revolution hasn’t expressed itself in productivity gains. David’s analysis finds a historical analogy in the story of electricity and its “diffusion lag” into widespread uses at the turn of the twentieth century. 

His key insight is that it takes time to realize the productivity-enhancing applications of general-purpose technologies like electricity or the internet. In the former case, for instance, it took about two decades to start to observe significant productivity gains from the electrification of manufacturing and other industrial processes. The 20-year lag was due to a number of factors including a lack of business knowledge about the nascent technology, the need for accompanying investments in parallel systems (including, for instance, converting manufacturing plants from water or steam to electricity), and the gradual emergence of applications for electrical technologies captured in our statistical measurements. 

David concluded from this historical comparison:

[there is] the existence of special difficulties in the commercialization of novel (information) technologies that need to be overcome before the mass of information-users can benefit in their roles as producers, and do so in ways that reflected by our traditional, market-oriented indicators of productivity. 

One cannot help but think that ChatGPT is a nascent sign that we’re overcoming these obstacles and finally on the path to reaping the productivity gains of modern computing power. The new, AI-driven prototype understands natural human language and is capable of generating detailed human-like written text based on the reservoir of internet facts and information. It seems poised to finally deliver on the much-anticipated promise of machine learning models. 

The potential for this new technology could be significant. Consider that it’s already capable of generating essay responses to exam queries that university professors say would be given full marks if submitted in an undergraduate class. In the medium term, it may replace Google as the primary means by which we leverage the internet’s infinite capacity for human knowledge because of its ability to optimize and synthesize. And, over the long term, as the technology improves, it has the potential to both augment and disrupt a wide range of sectors and professional functions. As The Hub’s executive director Rudyard Griffiths recently wrote: “It’s hard not to come away from using ChatGPT without the sense that this is something big.”

Summers agrees. He’s described ChatGPT and its underlying technology as on par with the printing press and electricity in terms of representing “a profound thing for humanity” with the potential to trigger “a profound change in the way that we are all going to be working.” 

There’s already been considerable discussion about its downsides including the risk of widespread labour disruption, the possibilities for politically-motivated censorship, and even that it will make the process of knowledge gathering too efficient. 

Yet so much of this commentary fails to reckon with its positive-sum potential. The real story here isn’t its possible negative effects on the economy and society. It’s ChatGPT’s potential to help us extract ourselves from the secular stagnation that has come to manifest itself in stagnate living standards, collective pessimism about the future, and growing political polarization. 

Higher rates of productivity and economic growth may not be a cure-all to these problems besetting the modern age but they’re a necessary condition. The practical and scalable usages of artificial intelligence and machine learning have the potential to break Western economies out of the two-percent trap and get back to an age of renewed growth and optimism. The consequences are unpredictable yet undoubtedly exciting. 

One high-profile Silicon Valley entrepreneur put it this way: “ChatGPT is one of those rare moments in technology where you see a glimmer of how everything is going to be different going forward.”

Twenty years of disappointing economic performance has contributed to a rise of nostalgia in so much of our culture and politics. Donald Trump’s slogan of “Make America Great Again” is only its most famous expression. ChatGPT represents a way out of its backward-looking, zero-sum grip.

A different future is once again visible. That’s good news for our economy, politics, and society. 

As someone who has been in and around Canadian Conservative politics for more than twenty years, a common critique that I’ve regularly confronted is that conservatism is fundamentally concerned with the interests of the wealthy and well-connected. It can conjure up images of bankers and oilmen in the minds of many. 

Even though the modern Conservative Party has the old Reform Party’s egalitarian impulses embedded in its DNA, these elitist perceptions still persist. I’ve observed focus groups over the years for instance where one frequently hears claims like “conservatives are for the rich” or “conservatives don’t care about people like me.” 

This hasn’t been my own personal experience, by the way. I was drawn to conservatism as a young person in Thunder Bay not because of my blue-blooded pedigree but for the opposite reason: the world of conservatism seemed open and inclusive. It was an intellectual and social context that celebrated meritocracy and rejected hereditary claims to power and status. It was a place for aspirants and strivers. It was the political home of John Diefenbaker, “the boy from Baie Comeau” and Stephen Harper’s decidedly middle-class politics. 

One gets the sense that the gap between my youthful perception and the public’s inegalitarian views about Canadian conservatism may be starting to close. Old ideas about the Left and Right no longer have quite the same explanatory power for understanding politics, class, and culture. 

Think of the commanding heights of modern society. Most of them are today dominated by progressive ideas and voices. That may not be particularly new for universities or non-profit organizations. But it does seem to represent a change in the corporate world. The rise of the knowledge economy has produced a new professional class, as the public intellectual Michael Lind puts it, which occupies the middle layer of corporate culture and subscribes to a set of left-wing views about culture and the economy. 

Progressivism’s growing institutional dominance has pushed conservatives into the counterintuitive position of outsiders. For young people, in particular, conservatism is now something of a countercultural identity. It stands in juxtaposition to the boring, predictable, and ultimately establishmentarian views of their reflexively left-wing professor or human resources manager. 

These trends also extend to politics. A new fault line has emerged in the past several years between the major political parties rooted in a mix of ideology and class. The party leaders, Justin Trudeau and Pierre Poilievre, are themselves proxies for these different sets of experiences and worldviews.  

Prime Minister Trudeau, himself the son of a prime minister, is a perfect stand-in for the Central Canadian progressive establishment that attended schools like McGill University, grew up in and around left-wing civic groups like Katimavik, is fluent in the customs and language of identity politics, critical of the perceived excesses of market capitalism, and confident about the technocratic capacity of the state to engineer particular economic and social outcomes. 

Poilievre, by contrast, was born to a teenage mom, grew up in the west to adopted parents, and attended a solid yet second-tier regional university. He’s come to represent a western-based libertarian populism that rejects identity politics in favour of personal responsibility, lionizes the market’s leveling effects, and is skeptical of the excesses of state action in the economy or society. 

The biggest differences, though, between the two may be as much about culture as ideology or class. The former is generally comfortable with its place in elite Canadian circles. The latter has a bit of a chip on its shoulder. 

The former’s emphasis on income inequality reflects, in broad terms, its generational advantages and preservationist instinct. The latter’s focus on social mobility is instead an expression of its own impatient energy. Trudeau wants to close the gap between rich and poor. Poilievre wants to extend the social ladder to more people. 

If the former is representative of Globe and Mail columnist John Ibbitson’s famously described “Laurentian elite”, the latter may be a voice for the ambitious middle-class products of small- and mid-sized communities across the country who one might characterize as “Lakehead meritocrats.” 

The good news for Canadian Conservatives is that there’s reason to think that the pool of prospective Lakehead meritocrats is bound to grow faster in the coming years as annual immigration levels continue to rise. There are, after all, few acts more indicative of the climber mentality than picking up and moving your family to a new country and culture in search of opportunity for you and your children. Poilievre instinctively understands this point: it’s the story of his wife’s own family. 

It’s also the story of his finance critic Jasraj Singh Hallan who immigrated with his parents to Calgary from the Middle East when he was five years old. His family faced bouts of significant financial insecurity and he was drawn into the trappings of street gangs before a community volunteer helped to put him on a better path that eventually led to a successful homebuilding business and election to the federal Parliament in 2019. 

Hallan’s extraordinary rise to the Conservative Party’s leading voice on economic and fiscal matters is both a powerful affirmation of what he calls “the Canadian dream” and its central place in the Conservative self-image under Poilievre’s leadership. 

If his convention speech from the night of the Conservative leadership result is a sign, we can anticipate that a major part of Poilievre’s ongoing political appeal will be to the Lakehead meritocrats drawn from his own story of social mobility. As he put it in his remarks: 

We will restore Canada’s promise—in a country, where it doesn’t matter who you love. Or if your name is Smith or Singh, Martin or Mohammad, Chang or Charles. A country where the dreamer, farmer, the worker, the entrepreneur, the survivor, the fighter, the ones who get knocked down but keep getting back up and keep going, can achieve their purpose. A country where the son of a teenage mother adopted by two teachers can dare to run for prime minister of Canada.

Notwithstanding this week’s disappointing by-election outcome, Poilievre and the Conservatives would be wise to recommit themselves to this message and identity. It’s one that’s bound to resonate with a large swath of the Canadian population including a new generation of newcomers like Hallan. It certainly would have with my twenty-year-old self back in Thunder Bay.