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Alicia Planincic: Yes, it’s an emergency—Canada’s productivity record lagging other wealthy countries

Commentary

Senior Deputy Governor of the Bank of Canada Carolyn Rogers during a news conference in Ottawa, May 9, 2024. Justin Tang/The Canadian Press.

In March, the Bank of Canada declared that Canada’s productivity problem is an emergency. And that improving it “needs to be a priority for everyone.”

Productivity is the amount of goods and services produced for a given amount of “input,” often measured by GDP per hour worked. Importantly, a more productive economy is the only thing that leads to sustained wage growth without feeding inflation.

Canada’s productivity is not only low but has failed to show strong progress for decades.

As of 1985, Canadian workers produced $37 of value per hour worked compared to $43 in the U.S.—around 87 percent of U.S. levels. By 2022, productivity had reached $53 per hour worked in Canada but $74 in the U.S., leaving us at just 72 percent of U.S. levels (all figures in USD).

It’s not just that we’re falling behind the U.S., either. Relative to a dozen other comparably rich countries, Canada saw the least growth of any assessed, except Italy. Countries like Germany, France, and Sweden that used to be on relatively equal footing with Canada have all left us in the dust. Meanwhile, many countries that used to trail Canada (like Australia, the U.K., Finland, and Iceland) now boast a productivity advantage. Overall, Canada’s ranking has fallen from 8th to 12th.

Graphic credit: Janice Nelson. 

Canada’s low and sluggish productivity isn’t a matter of Canadians not working hard enough. Productivity is high when workers have what they need—the tools, skills, and technologies—to do good work most efficiently. Think of a lumberjack cutting down trees; having a chainsaw allows them to cut far more, and more quickly, than with an axe. Canada’s poor performance suggests our economy is running on old tools and technologies with limited investment—all of which, it turns out, are true.

There is no shortage of explanations for why that is. But improving Canada’s productivity may not require that we settle on its precise cause(s) to get to reasonable solutions. To reverse the trend that is otherwise set to continue, Canada will need to figure out how to best incentivize investment in the kinds of things required—e.g., research, technology, and innovation—to enhance productivity; and more critically assess the kinds of policies that will stymie it.

This post was originally published by the Business Council of Alberta at businesscouncilab.com.

Michael Bonner: Defenders of the liberal faith feel the fire

Commentary

A woman takes a moment for herself as police and protestors clash, Wednesday, Jan. 6, 2021, at the Capitol in Washington. Julio Cortez/AP Photo.

What does it mean to be a conservative or a liberal in the United States of America?

The question is less strange than it may seem. American liberals and conservatives both hark back to the revolutionary founding of their country. Both claim either to fulfill or to renew the principles animating that revolution. Both profess a doctrine of liberty and equality. Either side calls the other tyrannical, and each believes that it alone promotes freedom. So, depending on your perspective, you could argue either that America has no conservatives, because everyone appeals to liberal principles, or that it has no liberals, because all appeal to a tradition.

The American arch-conservative George F. Will addressed this matter in his book The Conservative Sensibility. He admits that America has no school of European-style conservatism founded on aristocracy, hierarchy, and so on. The old Tories fled to Britain or Canada, and there is no counter-revolutionary party left. Instead, Will says, American conservatism aims to preserve the conditions that made the American Revolution possible. If you think through what Will is saying, you arrive at a paradox: American conservatives are liberals. So we may well ask: what are conservatives who do not agree with that characterisation?

Robert Kagan has the answer.

His new book Rebellion: How Anti-Liberalism is Tearing America Apart—Again asserts that all Americans are, or should be, liberal revolutionaries animated by the spirit of 1776. And yet, the principles of that revolution, he says, have always been resisted by an allegedly “conservative” faction which either wants rights and freedoms only for itself or which rejects liberalism altogether. The conservative, anti-liberal faction was ascendant in the old slave-holding South, was not actually crushed in the Civil War, and has lately made up the Tea Party and MAGA movements.

And if, says Kagan, Trump is re-elected, anti-liberalism will triumph over the Constitution, and that will be the end of the American Republic. Those who watched the recent presidential debate may struggle with the theory that only Joe Biden can or should save American democracy. But that is the force of Kagan’s book, and we shall know whether he is right soon enough.

In structure and content, Rebellion is clearly supposed to be something like a narrative of a sea voyage from the American Revolution to the present. Kagan fears that the journey may end in disaster should Trump take the helm again, cast aside the sextant and nautical charts of liberalism, and pilot the ship off the edge of the world. But what actually happens in the book is that Kagan’s ship runs aground within the first few pages. The background narrative continues as a literary equivalent of rear-screen projection, but the ship is not in motion. The impediment is the meaning of liberalism itself.

We can begin with Kagan’s portrayal of the American Revolution. That revolution was shaped by some grave misunderstandings and exaggerations, which Kagan neglects to mention. Here are two examples.

First, the colonists’ vision of the monarch’s power was influenced by earlier generations’ experience of royal absolutism. They expected George III to intervene on their behalf against Parliament. But if this had happened, it would have amounted to the same sort of tyrannical abuse of constitutional norms associated with kings Charles I and James II, which notably had not bothered the colonists; but, when the king did not intervene, the colonists called him a tyrant. Second, they also hated the Quebec Act of 1774 because of all its liberal features. It granted tolerance of Roman Catholicism, allowed the use of the French Civil Code, and aimed to prevent the colonists from infringing on Aboriginal territory in what is now Middle America. So one may well ask in what sense the American Revolution was really liberal in spirit.

Kagan’s attempt to define liberalism is a larger problem. Liberalism’s “sole function,” he says, is “to protect certain fundamental rights of all individuals against the state and the wider community.” John Locke’s “life, liberty, and property” are what Kagan has in mind, and he is curiously impressed by the “‘truly revolutionary” claim that those rights were “inherent in the nature of being human.”

Many surprises follow. Kagan’s liberalism has no roots in the Enlightenment, he insists. Nor, despite the invocation of Locke, does it originate in “all the liberty enjoyed by Englishmen.” As for its purpose, liberalism is not a means of improving human lives, “except by providing a historically unique form of freedom.”

And yet, liberalism is not about progress, except the progress of ever-expanding rights. It has no destination or teleology. It is not the “endpoint of some concept of modernization.” And—I was especially shocked by this—it cannot be justified rationally. Kagan’s liberalism is no “more ‘rational’ or more ‘just’ than the hierarchical worldview that has guided the vast majority of human beings for almost the entirety of recorded history.” Liberalism, says Kagan, is “at root a faith.”

As I said, Kagan’s is a surprising definition, and I suspect that many self-avowed liberals would reject it. Kagan’s definition is a significant climb-down from the more exalted claims that liberalism has made for itself over the past 30 years. And so, I am almost ready to agree with Kagan. His idea that liberalism is a faith is very nearly right, though perhaps not in the way that he intends. Lockean liberalism is “a quasi-Protestant political theology,” as many scholars have called it. And the idea of rights inherent to all persons, which Kagan finds so impressive and revolutionary, is actually a very old Western Christian anthropological claim that Locke did not originate.

One can argue in fact that Lockean liberty makes no sense outside its Christian context, and I think Kagan could potentially be convinced of this also. The American Founders unwisely separated Locke from his theology by asserting that “certain unalienable rights” were “self-evident.” And Kagan himself marshals all the evidence to prove that this assertion was wrong.

It was the liberal constitution of 1789 that permitted slavery for nearly a century, and slave-holding elites constantly appealed to principles of freedom and to property rights. Their opponents did not make convincing counterarguments, so much as opposite appeals to other liberal values. Kagan portrays this contest as one between liberals and anti-liberals; but one may see it more clearly as a fight within liberalism, especially when the South seceded on the same pretext of liberty and property rights invoked by the colonists in 1776. The South was of course defeated in the ensuing Civil War; but, as Kagan reminds us, the South continued to defy the federal government, asserting white supremacism and racial segregation with appeals to rights, liberty, autonomy, and so forth.

Obviously, it would be impossible to argue that slavery was genuinely compatible with liberal principles. But the Founders’ liberalism did not only fail to vanquish it, but liberal principles were also useful in defending it and its similarly loathsome aftermath. Moreover, liberals of the North easily persuaded themselves that their values would gradually prevail in the postbellum South without further intervention—an attitude which prolonged segregation and white supremacism. Self-evident truths, indeed!

Nevertheless, Kagan is very close to identifying the actual flaws in the American republic. Or rather, he has rightly summarised all historical proofs of them, without drawing the right conclusion. He is right to say that many Americans have never fully accepted Lockean liberalism, but he cannot yet see that the American tradition of liberalism has been cut off from its root.

The root of liberalism, as Kagan says, is faith. But liberals no longer believe in it. The theory of natural and inherent equality among all persons comes from the New Testament and was elaborated over many centuries from St Augustine onwards. As historian and philosopher Larry Siedentrop put it, “belief in the moral equality of men created a role for conscience, and that set limits to the claims of any social organisation”—a conviction which requires respect for “the difference between inner conviction and external conformity.”

Remember also that Thomas Jefferson had “sworn upon the altar of God eternal hostility against every form of tyranny over the mind of man,” not because he hated religion, but because the individual person must be free to follow the dictates of his reason and conscience implanted in him by God.

Christianity is also the origin of the secularism and tolerance that Kagan makes so much of. The idea that there is a secular and a religious realm, and that the two must be separated, is a constitutional theory best associated with the 11th-century papacies of Leo IX and Gregory VII. The idea, originally unknown outside Europe, has prevailed ever since, and theories of secularism, tolerance, and religious freedom grow out of it.

Those principles must be in place, as Locke and his epigones knew, not because religion is a pernicious influence on government (as Kagan repeatedly says and implies), but because belief would be insincere without them. Liberalism ought to form the conditions under which authentic beliefs may flourish, for there can be no benefit to anyone if people are forced to conform to what they do not really believe.

Both American theories of a “biblical republic” on the one hand, and utter godlessness on the other, depart from this tradition. In our own irreligious age, demand for external conformity has vanquished respect for inner conviction. And the divorce between liberalism and Christianity has undermined the only justification that liberalism has ever had.

Apart from religion, Kagan’s liberalism has another blind spot. I mean the illiberal, or (to borrow Kagan’s adjective) anti-liberal, excesses of the political Left. For instance, the collapse of American race relations in our own time is in Kagan’s view simply a “reckoning” and “the inevitable by-product of the liberal system the Founders created.” And he asserts that wokery is unfairly vilified by conservative, anti-liberals.

But if Kagan really believes that, it only emphasises how remote he is from Lockean liberalism. The woke hierarchy of oppression and fixation on race and privilege do not aim at equality and unity, but rather division and exactly the sort of “tyranny over the mind of man” that Jefferson hated. DEI initiatives are exclusionary and illiberal also, and they have not raised up minorities so much as empowered a new class of commissars policing everything from speech to Halloween costumes.

The New York Times1619 Project, a re-examination of the history of American slavery, notably teaches that the liberal ideals of the American Constitution were false from the beginning—exactly the same conclusion reached by John C. Calhoun and the other defenders of slavery. By Kagan’s own logic, the two antagonists of wokists and slavers are actually les extrêmes qui se touchent.

If the stakes are really as high as Kagan says, then liberalism requires a much more vigorous and convincing defence than Rebellion provides. Jefferson wrote of the “tree of liberty” which from time to time needs the refreshment of its “natural manure”: the “blood of tyrants and patriots.” This is a dreadful thought that seems to lurk behind Kagan’s assertion that the “people and their beliefs” have always been the problem for liberalism. But if the root of the tree is faith, as Kagan affirms, then nourishing that faith is the only thing that can renew liberalism, not vanquishing unbelievers.

But Kagan’s liberalism takes shape as a non-metaphysical religion that cannot be vindicated by reason; which is no more just than any other worldview; and which has consistently failed to achieve its goals.

So why, one may wonder, should anyone espouse it? And how can a non-believer be convinced? Kagan, like a crypto-Protestant theologian, simply affirms that you either believe it or you do not. The Liberal Elect simply know who they are. No amount of persuasion, but faith alone, can make the American people into liberals. If this is true, and Kagan seems to believe that it is, the track record of that non-theological faith suggests that its future will be very bleak indeed, no matter who wins the next American election.