The Two-Way
3:14 pm
Wed December 21, 2011

Report: Canada's Less Productive, Yet Gaining On U.S. Quality Of Life

Originally published on Wed December 21, 2011 4:09 pm

According to Canada's statistics agency, Canadians are less productive than their U.S. counterparts, yet their standard of living gained 5 percent during the 14 year period they analyzed.

Now, the reasons for that argument are quite complex, but The Wall Street Journal boiled it down to a lesson Americans can take from their neighbors to the north: "Be less productive, live better."

The Montreal Gazette explains Statistics Canada's report:

"While comparisons of labour productivity show that Canada has lagged 17 per cent behind the U.S., the two other measures show that Canada's living standards improved.

"It's the other two measures — real GDP and GNI per capita — that paint a more comprehensive picture, argues analyst Ryan Macdonald, the author of the report.

"Based on real GDP per capita, Canada's living standards improved 5 per cent relative to the U.S."

If you look at Gross National Income per capita, that improvement is 12 percent. Basically what the report is arguing is that while productivity has lagged — perhaps, it says, because the labor market is stronger in Canada — the per-capita purchasing power has improved.

The Journal adds:

"Slipping productivity would be bad news if Canada wasn't a resource-rich, trading nation, said Ryan Macdonald, senior research economist at Statistics Canada and the article's author.

"With so much of the economy based on trade, Canada can transform its stock of assets–in this case, natural resources that the emerging world wants–into goods and services it wants to consume by exchanging them with other nations. And Canada has benefited greatly through increased commodity prices for much of the past decade.

"'It is almost like flying with a tailwind,' Macdonald said in an interview.

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