Human adaptability and ingenuity will ensure that the Canadian economy continues to prosper
We have all heard that spending too much screen time on games or social media is not suitable for our well-being. Spending time on news media may be at least as bad for our health and peace of mind.
The old adage ‘if it bleeds, it leads’ has led both traditional and electronic media to spotlight and headline the ugly, the violent and the bad. Even the future is looked at through mud-covered glasses.
Predicting the outlook for the economy is a staple of all business news. And such news has been heralding downturns, recessions and depressions since the beginning of the pandemic. While immediate and effective (though not necessarily efficient) government action saw people and businesses making it through the pandemic, doomsayers feared that financial factors like rising interest rates and bank failures would now be kneecapping the economy.
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One reason for the media’s negative bias is that a headline about the sky falling is much more likely to attract clicks and sell papers than one that says we will be doing fine. Another reason is that factors leading to bad outcomes are usually much more visible than positive ones. History tells us that inflation and bank failures have led to disasters in the past. Less visible and less noted are changing circumstances that can generate different future results.
Canada, the U.S. and elsewhere are now experiencing an acute and widespread shortage of workers. There are more vacant positions than there are unemployed people to fill them, and the job numbers are still growing, albeit somewhat more slowly than before. Unemployment rates are at or close to record lows on both sides of the Canada/U.S. border.
It is hard to foresee a recession when anyone who wants to find work has a choice of jobs, often with rising wages. Stories of massive layoffs in the tech sector are accurate if misleading. Unemployed techies are being snapped up by all the industries that we never used to think of as technical, such as banks, retail and manufacturing. They now need to use automated customer service and data capture systems and implement the latest technological developments, including AI, to remain viable and competitive.
Today’s tight labour markets are unusual. One has to go back to Europe and the Black Death in the 1600s to find a situation where scarce workers had the same bargaining power to increase their wages.
However, there is one other factor that is much more common and leads to a more optimistic economic outlook. That is the human factor. People want to do well. We want our lives and our children’s lives to get better, not worse. Tough times lead to the creative ideas and major efforts to get through them.
Ray Dalio, in his book The Changing World Order, notes that human innovation and effort supported by education are necessary and consistent components of human advancement and are omnipresent when societies prosper.
One example of human adaptability and ingenuity is provided by the currently beleaguered Ukrainians. Although beset by a large and relentless foe, they have mostly managed to keep the lights on, maintain communication, and convince both themselves and their allies that the struggle can lead to a positive result.
A more modest example is the Canadian reaction to inflation. Although government policy is to keep it at two per cent, inflation has recently been as high as 8.1 per cent and is currently around five per cent. Media has been declaring that Canadians cannot cope with this increase. Doubtless there are some for whom this is true. Yet most Canadians are adapting well enough.
Although the cost of living, as measured by Statistics Canada, has increased, consumer expenditures have risen by around two per cent. People adjust by changing their spending patterns that will least affect their lifestyle. We are now buying more no-name products in the grocery store and discovering they are not that different from the higher-priced brands. Eating more meatless meals benefits our health, and skipping an occasional restaurant covers a lot of food price increases.
The predicted economic collapse has not happened yet, nor is it likely to happen any time soon.
It is our own actions and reactions to adversity that keep things looking up.
Dr. Roslyn Kunin is a public speaker, consulting economist and senior fellow of the Canada West Foundation.
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