It’s no wonder The Third Eye was a bestseller. Not only did the 1953 autobiography of Tibetan Lama Tuesday Lobsang Rampa offer insight into a mysterious kingdom recently seized by the People’s Republic of China, but life as a monk was an endless adventure.   

Rampa joined a lamasery as a boy and soon underwent an operation that drilled into the bone above his nose to open his third eye, granting him clairvoyant powers used to perform counterespionage in the Dalai Lama’s court. He encountered yetis and discovered the mummified body of his previous incarnation, moments that left him with sage and witty spiritual insights.

The Third Eye moved 500,000 copies in two years, giving many Western readers their first exposure to Buddhism and the plight of Tibet under Mao’s boot. It was also complete gibberish. Explorer and Tibetologist Heinrich Harrer, whose Seven Years in Tibet had been released a year prior, was so offended that he hired a private detective who revealed that Rampa was a London clerk named Cyril Henry Hoskin. 

A 1958 Daily Express report exposed Hoskin. Undeterred, reprintings and future books explained that in 1949 he fell out of a tree while trying to photograph an owl, and as he recovered a Tibetan monk projecting his spirit across the globe approached him. Hoskin agreed to welcome the monk’s soul into his body, and thus a lifetime of knowledge was acquired. Convenient limitations prevented the ability to speak Tibetan from inclusion in the package. 

To escape the badgering British press, Hoskin and his wife decamped for Dublin. When that distance proved insufficient, they fled to Canada. They settled in Saint John, where acquaintances recall signs of wealth: an upscale apartment, a secretary, a modern car and driver, a clock gifted to the veterinarian who cared for his precious cats. Future mayor Sam Davis was among his friends. Not bad for a high school dropout. 

But Hoskin struggled to adapt to life in Canada. In 1964 he wrote Living With the Lama, although in a stroke of either marketing or insanity he claimed to have merely translated it “from the Siamese Cat language” after his Fifi Greywhiskers telepathically dictated it to him. For a book meant to shine a light on how animals are smarter than we give them credit for, there are a lot of complaints about taxes. Canada was called “so uncultured, so unfriendly” and “a cold, cruel country, with no civilised amenities such as one would have in Europe.” The cost of living was too high, the winters too cold, and the prime minister too rude to respond to his letters. Perhaps we really are trapped in an endless cycle. 

Hoskin would rack up over a dozen different Canadian addresses, bouncing around Ontario and Quebec before making his way to the “more cultured, more civilised” Vancouver. He became a Canadian citizen and continued to write, each book more ridiculous than the last. Before joining the Englishman’s body, Rampa supposedly served as an air ambulance pilot in World War II, survived capture and torture, and escaped a prison camp near Hiroshima the day the bomb was dropped. 

In Vancouver, Hoskin settled in a West End hotel. According to his secretary’s self-published memoir, he enjoyed the waterfront views but otherwise found Vancouver trying. He couldn’t replicate The Third Eye’s success, it had been a struggle to find a home that would accommodate his cats, and health issues necessitated the use of a wheelchair in a city unfriendly to it. Hoskin grew reclusive as his work branched out to explore aliens, premonitions of future wars, and Christ’s previously undocumented escapades.   

Another relocation took Hoskin to Calgary, where he finally embraced Canadian life. 1976’s As it Was, which added even more improbable claims to his biography, was “Dedicated to The City of Calgary, where I have had peace and quiet and freedom from interference in my personal affairs.” He died there in 1981, leaving his future royalties to charities for cats. 

Hoskin, depending on your own sense of charity, was either a shameless con artist or a misguided believer in his own ludicrousness. While a review had called The Third Eye “juvenile fiction,” some scholars credit it for sparking their interest in Tibet. Tibet had long fascinated the Western world; the race to sneak into forbidden Lhasa had been a thrilling if morally dubious last gasp of imperial adventure and China’s violent annexation had created a crisis that needed publicity. Hoskin was Tibet’s strangest ally in its struggle for freedom. 

He was also a vanguard for New Age gibberish, work that will forever be believed no matter how often it’s debunked. A website dedicated to Hoskin claims his every word is “very true as you will discover if you remain open minded.” He added his ramblings to a bottomless slop that leads credulous believers to dangerous junk science, or at least to an annoying belief in the power of horoscopes. 

But if nothing else, Hoskin was proof that interesting things can actually happen in Calgary. Ms. Greywhiskers didn’t live to see Hoskin make peace with the land of his exile, but I’ll give her the final word regardless: “Canada, we are agreed, is a most uncultured country, and all of us live for the day when we can leave it. However, this book is not a treatise on the faults of Canada, that would fill a complete library, anyway!”

The COVID-19 pandemic, and the economic disruptions it caused, appear to have left deep and long-lasting scars on Canada’s economy. 

The latest data from Statistics Canada measuring the size of Canada’s economy through to the end of 2022 shows we have shifted down to a lower growth path—and one that might be felt for years to come or potentially even be permanent.

Specifically, new quarterly data on Canada’s economy shows a clear and sizable gap between where we are now and where we were previously headed. I plot this below. In the fourth quarter of 2022, the economy is roughly 6.5 percent smaller than its pre-COVID trend.

This is a very large gap. It is equivalent to $180 billion per year in lost output. That’s $4,500 per person in Canada per year. It’s larger than Canada’s entire energy sector. 

While this outcome was foreseeable, it wasn’t a foregone conclusion.

More than a year ago, writing for Maclean’s Charts to Watch in 2022, I raised a concern that “future growth may, unfortunately, be lower for longer.” Whether COVID permanently damages Canada’s economy or whether workplace innovations (like remote work) and policy responses (like childcare) could boost productivity above pre-COVID trends would be revealed by this data.

“Where our economy goes in 2022 will give early indications about which of these two possibilities may be likely,” I wrote. More than a year later, with the data now in, it appears the worse of the two occurred.

Understanding what factors led to this outcome is critical.

This is neither a novel development, to be clear, nor one unique to Canada.

Recent research suggests recessions in general can permanently shift an economy to a lower growth path. The United States experienced this following the financial crisis, for example. Canada was not spared then either. A broad investigation of nearly two dozen OECD economies found countries suffered a permanent ratchet down with only a few examples.

Even normal run-of-the-mill recessions—as opposed to large-scale ones or those following financial crises—may exhibit this pattern.

There are many potential causes. Losing a job may lead some, especially older workers, to permanently withdraw from the labour market. Lasting negative health effects of the pandemic may also be a factor. Investment could also fall, lowering the pace of capital accumulation like machinery and equipment. And productivity growth may slow.

To measure how important each of these factors might be for understanding Canada’s current situation, I use a technique known as “growth accounting”. The intuition is simple.

Labour and capital are critical inputs into the production of nearly all goods and services throughout the economy. Technology, skills, and knowledge each determine how much output we get for any given number of workers and machines—that’s our productivity. Each of these is (imperfectly) measurable, so we can estimate how much increases in employment tend to increase GDP, or how much decreases in capital investment affect GDP, and so on.

I do just that and find lagging productivity growth is the key.

Of the overall drop below pre-COVID trends, productivity accounts for roughly 4 percentage points of the total. That’s about 60 percent of the overall gap between where we are now and where we were previously headed. Productivity growth has been so poor recently it has actually been negative. I estimate it is roughly back to the same level it was at in early 2019.

Lagging investment levels and the country’s overall capital stock, interestingly, account for only a small fraction. Some have pointed to lagging business investment as a central challenge for Canada. And while this is certainly important, it doesn’t appear to account for much of why we remain so far below trend.

It’s therefore labour that accounts for the rest of the decline. I estimate total hours worked in Canada is about 4.4 percent below its pre-COVID trend and accounts for a third of the gap between Canada’s GDP and its prior trend. 

It’s not that we’re working fewer hours individually (though we are a little bit). It’s mainly that there are fewer workers overall due to Canada’s ageing population. 

By the end of 2022, 62 percent of the population was aged 18 to 64 years—that’s down from 64 percent five years earlier, and also below its pre-COVID trend. These small changes can have large effects, given how important labour is to produce almost everything.

Can we boost our longer-term growth rates?

There are options: we can increase our inputs or we can increase our productivity. Demographic challenges are hard to overcome, however. Immigration can partly compensate but comes with considerable challenges of its own. 

That leaves increasing business investment and productivity growth. The list of areas where we can turn to improve this is long. Increasing technology adoption, growing our internal and international trade flows, boosting the level of competition within several protected sectors, enhancing skills training, exploring and enacting tax reforms, easing regulatory burdens, improving transport infrastructure, and so much more, could all yield dividends. 

Each deserves a deeper dive than I can provide here. But one thing is clear: if we cannot reverse recent trends, Canada’s economy risks falling even further behind.