As a close watcher of Canadian politics, here's the best summary I can offer for those not familiar:
Overal Picture
Canada has seen gdp-per-capita decline for nearly every quarter over the past 3 years. Large stimulus spending during the pandemic fueled the housing crisis and added massive inflation. Stimulating the economy through similarly massive increases in Non-Permanent Residents has kept GDP afloat, but come at the cost of over-burdening public institutions and housing. Contiuing either policy is not possible and deeply unpopular. Canadians now pay more taxes than any US state, have housing more expensive than New York, but with productivity below that of the poorest state and our dollar running a major discount. This while our public instutions are struggling to meet demand.
1. Recurring themes in Canadian Politics
2. Recent history of the federal liberals
3. Current issues facing the government
Recurring Themes in Canadian Politics
- Unlike the U.S. where there are multiple strong centers of politics and commerce (East Cost, West Coast, Texas), Canada political power is centered largely along the St. Lawrence River where most of the country's population lives.
- Trends arising from this include: Quebec receiving, relative to its population, outsized benefits and influence in exchange for remaining part of the country and as result of French speaking requirements for the federal government. Quebec has nearly exited the country several times
- Canada is still largely a resource-based economy and possess an impressive amount of natural resources: oil, natural gas, largest uranium reserves in the world, more freshwater than all other countries combined, etc.
- The concentration of power in the East while most resource development happening in the West, creates a quasi-colonial between the Ontario/Quebec and the younger and resource heavy provinces, particularly the Prairies.
- Economically, Canada priviledges large incumbent businesses and most of its sectors are oligopolies. The reasoning for doing so historically has been to fend of larger, well funded US competitors.
Recent History of the federal liberals
- Liberals have historically have been centrist party, taking popular ideas from both socialist NDP (who have yet to win a federal election) and the federal Conservative party (itself a coaltion of social and fiscal conservatives created by Harper in the 90s).
- 2015 Justin Trudeau came in as the most popular Prime Minister in history with a majority government. Major legislation included legalizing weed and improvements to Child Benefits. The majority was lost in 2019 with Conservatives gaining the popular vote.
Overall Picture - In Detail
- Economic Issue #1: Lagging economy. Canada is still largely a resource based economy (see above) and business investment in that sector, and Canada overall, declined drastically starting in 2015, arguably due to increasing opportunities for resource development in the U.S. and the Canadian Federal Government stance towards non-reweables. Business investment is more a leading indicator, but still a major economic issue for Canada.
- Economic Issue #2: Increased cost of housing. Canadian housing costs in major cities has reached crisis levels even leading up to the pandemic. Our major cities like Toronto and Vancouver are some of the most unaffordable in the world. Most people who have been in Canada have seen housing in their cities go from achieveable-if-expensive (in major regions) to impossibly unaffordable. Most major cities now require 30+ of saving (at the average income) for a downpayment with a salary in the top 1% to purchase a home.
- Economic issue #3: Large inflation, combined with increased costs from consolidated markets with little competition. Not unlike other countries post-pandemic, but reports show major costs of living such as groceries have seen above-inflation levels of price increases due to industry consolidation. I.E. Many parts of Canada have one 2 major suppliers of grociers
- Immigration Issue #1: Non-permanent Residents. Canada has 2 classes of immigrants (aside from Refugees, whih make up a small number): Permanent Residents (PR's) and Non-permanent residents (NPR's). Our PR system is what is widely hailed as one of the best in the world and a point of Canadian pride. The NPR system has been substantially expanded under the Trudeau government and arguably exploited with millions of NPR's entering as temporary workers and university students. NPR's now consist of over 7% of the population (larger than then Indigenous population).
- Social Cohesion: most of Canada's public services (healthcare, teaching, even postal services, etc) have seen substantial degradation and a struggle to meet capacity.
- Lastly, it should be noted that Canada has tax system well above any US state. Historically, most Canadians have not have a problem with this because of the relative strength of our public institutions.
Current Issues facing the Goverment
- If the federal liberals have an election, they will lost most of their seats. They may even lose party status. They will likely avoid this at all costs.
- The federal NDP are not projected to lose seats, but will lose influence they gain by upholding the minority government. They gain little from a federal election.
- Given an early election is not likely and Trudeau is facing revolts internally (his key finance minister and deputy PM resigned publicly in the past few weeks), the choice is to stop parliment while they look for a new PM (trudeau may act as the interim). If they choose an existing MP for PM (maybe Freeland) they risk being associated with a deeply unpopular party. If they chose an outsider (like Mark Carney), they risk just as much backlash for an unelected PM.
Really appreciate the summary! As a Canadian these things feel very obvious but since most of this site is from the US this should help the conversation a lot.
> stimulus spending during the pandemic fueled the housing crisis
not very informed on canadian politics/economy so apologies if it is an obvious question, but what is the connection of stimulus spending and the housing crisis?
* Putting money directly in pockets tends to cause inflation in everything, but especially durable assets. Their relative worth increases compared to currency by simple supply and demand principle, because the supply of currency has increased.
* This sort of double-counts the same phenomenon, but stimulus is largely implemented via interest rate policy. When interest rates fall, people are more willing to pay higher prices for the big-ticket items that will be financed for many years (since the sticker price is offset by lower amortization costs; what people really care about is what their monthly bill will be after all the math is done).
* The pandemic itself directly motivated some demand for housing in smaller centers, as wealthy people got the idea that they could reduce their COVID risk by living somewhere less densely populated. This was also seen in the US e.g. https://www.nytimes.com/2021/04/15/style/rich-people-fled-ne... . Even if they put up their city residences for sale at the same time, they'd have to find buyers. (Housing, as an asset, is not particularly liquid or fungible. While economists strongly agree that rent controls don't work and the way to solve the problem is to build more housing, it also needs to be housing in places where it actually helps. Which is realistically going to require major zoning reform - the simple existence of millions of square kilometers of undeveloped land isn't really relevant.)
Overal Picture
Canada has seen gdp-per-capita decline for nearly every quarter over the past 3 years. Large stimulus spending during the pandemic fueled the housing crisis and added massive inflation. Stimulating the economy through similarly massive increases in Non-Permanent Residents has kept GDP afloat, but come at the cost of over-burdening public institutions and housing. Contiuing either policy is not possible and deeply unpopular. Canadians now pay more taxes than any US state, have housing more expensive than New York, but with productivity below that of the poorest state and our dollar running a major discount. This while our public instutions are struggling to meet demand.
1. Recurring themes in Canadian Politics
2. Recent history of the federal liberals
3. Current issues facing the government
Recurring Themes in Canadian Politics
- Unlike the U.S. where there are multiple strong centers of politics and commerce (East Cost, West Coast, Texas), Canada political power is centered largely along the St. Lawrence River where most of the country's population lives.
- Trends arising from this include: Quebec receiving, relative to its population, outsized benefits and influence in exchange for remaining part of the country and as result of French speaking requirements for the federal government. Quebec has nearly exited the country several times
- Canada is still largely a resource-based economy and possess an impressive amount of natural resources: oil, natural gas, largest uranium reserves in the world, more freshwater than all other countries combined, etc.
- The concentration of power in the East while most resource development happening in the West, creates a quasi-colonial between the Ontario/Quebec and the younger and resource heavy provinces, particularly the Prairies.
- Economically, Canada priviledges large incumbent businesses and most of its sectors are oligopolies. The reasoning for doing so historically has been to fend of larger, well funded US competitors.
Recent History of the federal liberals
- Liberals have historically have been centrist party, taking popular ideas from both socialist NDP (who have yet to win a federal election) and the federal Conservative party (itself a coaltion of social and fiscal conservatives created by Harper in the 90s).
- 2015 Justin Trudeau came in as the most popular Prime Minister in history with a majority government. Major legislation included legalizing weed and improvements to Child Benefits. The majority was lost in 2019 with Conservatives gaining the popular vote.
Overall Picture - In Detail
- Economic Issue #1: Lagging economy. Canada is still largely a resource based economy (see above) and business investment in that sector, and Canada overall, declined drastically starting in 2015, arguably due to increasing opportunities for resource development in the U.S. and the Canadian Federal Government stance towards non-reweables. Business investment is more a leading indicator, but still a major economic issue for Canada.
- Economic Issue #2: Increased cost of housing. Canadian housing costs in major cities has reached crisis levels even leading up to the pandemic. Our major cities like Toronto and Vancouver are some of the most unaffordable in the world. Most people who have been in Canada have seen housing in their cities go from achieveable-if-expensive (in major regions) to impossibly unaffordable. Most major cities now require 30+ of saving (at the average income) for a downpayment with a salary in the top 1% to purchase a home.
- Economic issue #3: Large inflation, combined with increased costs from consolidated markets with little competition. Not unlike other countries post-pandemic, but reports show major costs of living such as groceries have seen above-inflation levels of price increases due to industry consolidation. I.E. Many parts of Canada have one 2 major suppliers of grociers
- Immigration Issue #1: Non-permanent Residents. Canada has 2 classes of immigrants (aside from Refugees, whih make up a small number): Permanent Residents (PR's) and Non-permanent residents (NPR's). Our PR system is what is widely hailed as one of the best in the world and a point of Canadian pride. The NPR system has been substantially expanded under the Trudeau government and arguably exploited with millions of NPR's entering as temporary workers and university students. NPR's now consist of over 7% of the population (larger than then Indigenous population).
- Social Cohesion: most of Canada's public services (healthcare, teaching, even postal services, etc) have seen substantial degradation and a struggle to meet capacity.
- Lastly, it should be noted that Canada has tax system well above any US state. Historically, most Canadians have not have a problem with this because of the relative strength of our public institutions.
Current Issues facing the Goverment
- If the federal liberals have an election, they will lost most of their seats. They may even lose party status. They will likely avoid this at all costs.
- The federal NDP are not projected to lose seats, but will lose influence they gain by upholding the minority government. They gain little from a federal election.
- Given an early election is not likely and Trudeau is facing revolts internally (his key finance minister and deputy PM resigned publicly in the past few weeks), the choice is to stop parliment while they look for a new PM (trudeau may act as the interim). If they choose an existing MP for PM (maybe Freeland) they risk being associated with a deeply unpopular party. If they chose an outsider (like Mark Carney), they risk just as much backlash for an unelected PM.