Features | From Pivot Magazine Don’t let populism distract from the real issues 3.11.2019 | Francis Fong Angst over trade and immigration is distracting from the serious economic issues Canada has to address Facebook Twitter Linkedin Email Eighty-one per cent of Canadians believe in continental free trade (Getty Images) It’s hard to comprehend sometimes just how much the global political landscape has been transformed by the rise of populism. The Trump presidency is perhaps the most visible example, but we’ve seen political parties of that ilk gain tremendous momentum across Europe and South America in just the last year. These parties are riding a wave of cultural and economic angst felt by those left behind by the forces of globalization and technological change. In turn, that angst is diverting our conversations toward issues like trade or immigration—issues that are only peripherally related to the economic challenges faced by those the populists are meant to appeal to. Canada is not immune. We still overwhelmingly support immigration—a recent Environics poll showed that 60 per cent of Canadians disagreed with the statement that immigration levels were too high, and 80 per cent felt immigration had a positive impact on the economy. And a reasonable consensus has evolved over the benefits of free trade—a 2017 EKOS/Canadian Press poll indicated that a record 81 per cent of Canadians supported free trade in North America. “I’m willing to bet that wherever you work, a sizable share of the senior leadership of your company is made up of baby boomers.” Yet here we are, having just been thrust into renegotiating NAFTA, and with illegal immigration back in the public consciousness. And that’s a problem. Because with those issues hijacking our national conversation, we are losing sight of other big things that truly matter. For example, Canada is aging. More importantly, one of the largest segments of the population is getting old. The baby boomer generation represents more than one-quarter of all Canadians, and even the youngest among them is turning 54 this year (the oldest is turning 73). In other words, over the next decade or two, we will be seeing more than one out of every four Canadians move into retirement. You might think that just means more opportunities for young people. And you’d be correct. But it has far greater implications than that. Let’s start at the micro level. I’m willing to bet that wherever you work, a sizable share of the senior leadership of your company is made up of baby boomers. Perhaps you are one yourself. Is your company prepared to lose that share of your senior leadership in the next few years? That experience? That institutional knowledge? What about those who own their own firms? Perhaps you yourself are a business owner. How many have succession plans? What happens to all these businesses that don’t? What happens to their communities? More importantly, let’s look at the macro level. Economists like to point to a metric called the old-age dependency ratio. Calculated as the ratio between the working-age population (ages 15-64) and the older population (65+), the dependency ratio gives you a picture of the sustainability of government programs by showing you how many people are supporting the system relative to those primarily drawing from the system. Everything from pensions to the tax system to health care spending are implicated here. “The fact that low birth rates persist means that this problem just gets worse over time.” Back when the baby boomers were first entering the workforce in the 1970s, there were about eight working-age people for every retired person (who also happened to have a lower life expectancy). Today, the ratio is about four to one. In about 20 years, it’ll be two and a half to one. The fact that low birth rates persist means that this problem just gets worse over time. By 2060, the dependency ratio is expected to approach two to one. Keep in mind this is also going to be an environment with much weaker economic growth than what we’re used to. A large, sudden outflow of workers into retirement also means a drag on net labour force growth, which inevitably means lower GDP growth. Two working people for every one retired person. Let that sink in. Think about how well our systems work today with a ratio of four to one. Now think about how well they’ll work if there were half as many people paying into it in a lower-growth environment. And that’s just one of any number of problems that have serious implications for our future prosperity. We haven’t even talked about Canada’s poor track record on productivity growth—the other side of the GDP growth equation that policy-makers hope can make up for lower net labour force growth. But while Canada was averaging 1.5 to 2.1 per cent productivity growth through the 1970s, ’80s and ’90s, in the last 20 years we’ve only averaged about one per cent per year, with few clues as to how to get that number up. “These are all important questions, and more closely related to the economic challenges faced by those disenchanted with the current system.” We’ve also not addressed rising inequality pressures. Policy-makers and academics are in a fierce debate over what to do—how do you raise the outcomes of the bottom 50 per cent of the population without resorting to blunt solutions that might threaten our competitiveness? Do we focus more on investing in education? On skills development? Do we raise taxes on the rich and lower taxes on the poor? To what degree could we even do that without threatening the long-term viability of Canada as a competitive economy? And how do we address the looming threat posed by new technologies like AI or driverless cars to all sorts of medium-skilled, middle-income jobs around the country, likely worsening the level of inequality we see today? These are all important questions, and more closely related to the economic challenges faced by those disenchanted with the current system. But we’re not talking about these issues—at least, not as much as we should be. Instead, we are increasingly being pulled into debates on things like trade and immigration that Canadians thought were largely settled. And that is just infuriating. 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