Pessimism about our economy rarely pays off in the long run.
Time and time again when we were feeling particularly glum, things turn around before we reach any kind of disaster.
While that record is worth noting, Canadians and our counterpart south of the border are despondent. There can be no mistaking the decidedly subpar character of the current economic recovery.
It must be acknowledged that the situation in Canada is far superior to almost any other nation. However, inasmuch as our financial situation is so closely linked to that of the United States and the rest of the world’s GDP, that what goes on elsewhere ultimately will determine our future.
There is no denying the current post-crisis recovery is very different animal from the typical business rebound.
Superficially, the numbers looks strong. GDP has moved higher but considering the previous, massive contraction, this is a far cry from the classic upswing that usually takes place.
Hence, it should come as no surprise that unemployment has not receded very much and that most of us feel as if we remain in a recession.
Recent stimulative measures by governments are doing very little to reverse this problem. What we need are new ways to get out of this failed recovery.
Driven by short-term electoral gimmicks, policy-makers repeatedly seek a quick fix, such as another bailout of a failed institution or moves by governments to inject “money” by government spending.
These moves, however, only are “kicking the can down the road.”
Of course, unemployment remains too high, particularly among youth. Problem for lesser-skilled workers are caused by changes in technology, so job prospects are grim.
Therefore, we require trained workers to meet the needs of high-tech firms and to ward off foreign competition. Job-market reforms, from streamlining and upgrading training to increasing employers’ incentives to hiring the low-skilled, all should be forthcoming.
Stemming the decline in low-skilled workers will require massive education reforms to boost skills.
The housing industry, meanwhile, is extremely worrisome. We must make major sacrifices by curtailing excessively easy lending for mortgages
That will cause short-term pain in favour of long-term stability.
Clearly, what we need now are new strategies to ensure a real, enduring economic recovery.
Bruce Whitestone, an economist, was educated at Yale University (where he graduated with top scholastic honours) and McGill University Graduate School.
For more than 40 years, he’s been involved in Canadian government affairs and the investment community.
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