Why Mexicans Don't Drink Molson. Andrea Mandel-Campbell

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СКАЧАТЬ Canadian ones? Pointing to a United Nations survey of world values, the economist noted that Canadians are among the “happiest” people on earth. And who wouldn’t be? Thanks to a combination of sheer luck and relatively little effort, Canadians are among the wealthiest people on the planet. But while most blithely shrug their shoulders and go about their business, some have glimpsed the future; and they are scared.

      “Unfortunately, today I’m nervous,” says Deszö Horváth, dean of York University’s Schulich School of Business. “Canada, by default, not by design, again became raw-materials-oriented as China’s demand for raw materials and energy has created a total dislocation in the world. We can live on raw materials and oil and gas, but it’s going to go down one day, and unless we develop an alternate corporate structure here, we’re not going to be a very successful nation in the future.” Alvin Segal, the chairman of Montreal’s Peerless Clothing, was less sanguine. “We’re a make-believe country, and our make-believe country is falling apart. We can’t compete with the world — we have nothing to offer,” he says. “We’re going on American coattails. We have space galore, we’re too liberal and we’re spoiled.”

      The telltale signs of the country’s stealthy slide, say observers, are all around us. Despite years of respectable, at times enviable, economic growth, foreign investment into Canada has virtually dried up. Dubbed the “canary in the mineshaft” by the Conference Board, Canada’s share of world FDI has more than halved over the past twenty-five years to 3 per cent in 2003— levels not seen since the Great Depression of the 1930s.⁴¹ “No one seems to care (about Canada),” admits a puzzled John Klassen, assistant deputy minister of International Trade Canada’s investment branch. In contrast, the United States remains atop the global charts, second only to the United Kingdom. Its share of NAFTA-bound investment, along with Mexico’s, has grown at the expense of Canada, which has watched its continental take decline by 30 per cent over a decade.⁴²

      For Chris Lindal, executive vice-president of Ontario homebuilder Viceroy Homes, the most damning proof of Canada’s waning allure is China, where a torrent of foreign money has glossed over rampant corruption and political oppression to build gleaming, modern cities that would put Toronto to shame. “This is hugely serious,” he says. “Resource-wise and freedom-wise, we are one of the best countries in the world. So why aren’t we attracting mammoth amounts of capital investment? We are not. Shanghai is. The rest of the world is passing us by in leaps and bounds, and we don’t even realize it.”

      What many Canadians don’t realize is that the dearth of new investment is having a direct effect on their wallets, says Lindal, by helping to hold down wages and sucking the life out of what should be steadily rising living standards. While wages have recently been creeping up on the back of Alberta’s oil boom, Canadians’ take-home pay has been “stagnating” for years under the twin weights of high taxes and low salaries. Personal disposable income has dropped from 80.5 per cent of U.S. levels in 1985 to 67.7 per cent in 2003, according to the C.D. Howe Institute.⁴³ “The economic well-being of the average Canadian,” concluded the td Bank in 2005, “has barely advanced in 15 years.”⁴⁴ Not surprisingly, Canada has gone from having the fifth-highest gdp per capita in the world in 1990 to tenth spot today, surpassed along the way by Ireland, Denmark, Norway, Australia and Austria. Of course, it hasn’t been all downhill — to keep up appearances, Canadians have racked up the highest level of personal indebtedness in their history.

      The relative decline in prosperity is a harbinger for the country’s other major Achilles heel: productivity, or output per worker. A synonym for competitiveness and a driver of living standards, productivity hinges on investment in things like technology, machinery and equipment, research and development, and human capital. Without it, output per worker drops, and so do wages.

      Canada’s productivity has fallen off dramatically over the past half century, sliding from its third-place ranking among developed countries in 1960 to seventeenth in 2004.* Between 2000 and 2005 it grew just 6.7 per cent (and actually contracted in 2006), while in the United States output per worker expanded by a phenomenal 21.7 per cent. The cumulative effect is a Canadian business sector only 74 per cent as productive as that of the United States — its poorest showing since the mid-1950s and a dramatic drop from 1999, when it registered a comparative productivity of 82 per cent.⁴⁵ The lacklustre performance can be measured in dollar bills. The Institute for Competitiveness and Prosperity calculates Canada’s growing income gap with the United States at $8,700 per person or an additional $12,100 in after-tax disposable income per family.⁴⁶ In 1981 the gap was less than half that, and at the current rate of decline Canadians are expected to earn 50 per cent as much as Americans within twenty-five years.⁴⁷

      Some argue that the U.S. “productivity miracle” is a chimera that obscures the cost of competitiveness. In its bid to innovate, offshore and outsource, the United States cut 3.3 million manufacturing jobs between 1998 and 2003, while Canada’s employment swelled as business substituted capital with cheap labour to bolster output. But what was thought to be the triumph of a kinder, gentler alternative is turning out to be a pyrrhic victory.

      The combination of China’s ascendancy and the sudden rise in the Canadian dollar after two decades as a bottom feeder effectively pulled the rug out from under the well-trodden path of least resistance. Between 2003 and 2006, some 300,000 manufacturing jobs were lost as the forestry, furniture and automotive industries hemorrhaged jobs. The number could reach 400,000 by 2007, as close to seven hundred manufacturers went bankrupt in 2005 alone, squeezed by a high dollar, skyrocketing energy prices and shrinking shipments to the United States. The sudden decline had economists busy slashing optimistic growth forecasts for 2007 as Ontario, hit with the bulk of the job losses, flirted with a recession.

      With the sector teetering dangerously on the brink, many manufacturers see little choice but to move south of the border to remain competitive. Celestica, Gildan Activewear, Distinctive Designs Furniture, Grant Forest Products, Exco Technologies and E.H. Price, among others, are shifting production south of the border. “If we don’t get the productivity, then we’ll just switch our production to the U.S.,” warns Jim Pattison, whose vast holdings include timber, fisheries and food packaging.⁴⁸ As Gerry Price, CEO of Winnipeg-based E.H. Price, explains: “All our plants are highly productive. However, the reality is that all of the niche products we build in Winnipeg could be made even more profitably in Phoenix.

      There’s no economic reason to continue operating in Winnipeg, other than it’s my home.”⁴⁹ This is not to say that jobs aren’t being created. In 2006, new jobs, particularly in the higher-paying professional and managerial ranks, were springing up like weeds on the back of the Alberta oil boom. But for the most part, Canada has largely been churning out temporary McJobs while relying on self-employment and government to pick up the slack. Between 2000 and 2004, job growth was driven by restaurant work and new security personnel, clerical and retail sales jobs, which both grew by 15 per cent.⁵⁰

      One of the big winners has been the telemarketing industry. According to Site Selection Canada, a company that helps American outsourcers set up in Canada, six thousand call centres have been established here over the past decade, creating 400,000 jobs. The jobs pay on average $12.45 an hour and have been portrayed as the magic bullet for towns from Sault Ste. Marie to Red Deer, all struggling with shuttered industries and declining populations. And it’s not just small towns that are jumping on the call centre bandwagon. In Ottawa, considered to be Canada’s high-tech hub, research-intensive jobs at companies like Corel and jds Uniphase have quietly migrated south, replaced by the call centre operations of the likes of U.S. computer giant, Dell.⁵¹

      In one magazine article, an American telemarketing company sang the praises of a cheap workforce in which 67 per cent of employees have a post-secondary degree. “You could still pay a Canadian less money [than an American] and have a college graduate, for God’s sake, doing the work for you,” enthused the company’s general manager. “You’re dealing with СКАЧАТЬ