2011 Predictions

January 1, 2011

As we round out another decade, thoughts turn to the future. The Canadian Centre for Policy Alternatives’ Hugh Mackenzie, Shauna Mackinnon, Bruce Campbell, Trish Hennessy, Jim Stanford and Armine Yalnizyan weigh in on the issues facing Canada in the years ahead. They flag the economy, social unrest, drift, democracy, dirty oil and corporate Canada as things to watch in 2011 and beyond.


Hugh Mackenzie, CCPA Research Associate

The Economy, Stupid: The biggest problem facing Canada in 2011 is, well, the economy, stupid. Government action or inaction both in Canada and the United States will prolong the economic slowdown in each country. In the United States, the combined effect of the rise of the Tea Party right, the polarization of national politics and the fiscal conservatism dominating state governments will result in a premature withdrawal of economic stimulus there. In Canada, the lack of real political pressure on the Conservatives to continue economic stimulus in the face of a very slow recovery will mean that government policy will actually work against economic recovery. In addition, the delayed recovery in the United States will remind us of the extent to which our economy -- especially that of central Canada -- is tied to the U.S. economy. A second round of stimulus in Canada is required to give our economy time to wait for a recovery in the United States to establish the basis for sustained private-sector driven growth.


Shauna MacKinnon, Director, CCPA Manitoba

Social Unrest: If Canada’s governments continue to ignore the problem of marginalized Canadians, I predict it will lead to greater social unrest -- an increase in poverty-related crime, coming to an inner city near you. This ticking social time bomb is especially relevant in Prairie cities, where the Aboriginal population is growing at a much faster rate than the non-Aboriginal population.  As a result of colonialism and our failure to provide relevant social supports to generations of disenfranchised Aboriginal peoples, the prospects for many Aboriginal youth today are bleak.  Far too many drop out of school and join inner city gangs because it represents hope and belonging in a world of limited options. We have all the research we need to show the current government approach to the problem – criminalizing Aboriginals, or offering them short-term training to feed the low-wage market -- isn’t working. We also have strong evidence that shows Aboriginal peoples are looking for a way out, they’re looking for hope to hang on to. Our Aboriginal peoples represent our deepest historical roots but, also, as one of the fastest growing populations in Canada, they are our future. And we’re failing them. It’s time to ensure they have the tools they need to succeed, or we face a social time bomb that was – and is—wholly preventable.


Bruce Campbell, Executive Director, Canadian Centre for Policy Alternatives

Drift: What concerns me going into 2011 is the continued drift of the Canadian state: from a social state -- which protects and empowers its citizens -- to a low-tax, coercive military-security state -- which benefits corporate interests and the wealthy.  The Conservative government continues to spend massively on the military, the police, and the prison infrastructure. It cancelled public child care and the Kelowna accord for Aboriginal peoples. It opposes expanding the public pension system, opting for privatized pension “solutions” favoured by Bay Street. It has done nothing to improve the public health care system in the key areas such as drugs or home care, and has hinted that it will cut health transfers to the provinces when the current agreement runs out.  During the financial meltdown it put in place a $200 billion safety net for the banks while doing next to nothing for displaced workers. This shift -- likely to accelerate as the campaign to wipe out the deficit becomes a pretext for more social cuts -- breeds resentment by Canadians towards a government whose priorities are increasingly disconnected from people’s needs. 


Trish Hennessy, Director Strategic Issues, Canadian Centre for Policy Alternatives

Democratic Deficit: Every November 11, we remember the Canadians who fought to protect our right to democracy and, yet, it’s a privilege we increasingly take for granted. The last federal election yielded the lowest voter turnout in our history, as many Canadians express shaken faith in the very institution once designed to reflect us – our government. Lack of trust (in our governments and in each other) is a symptom common to developed nations with worsening income inequality. In the U.S., it’s expressing itself through the rise of the Tea Party, higher crime rates, and a deeply polarized public. Canada is not immune to similar social and political unrest. Our democracy cannot survive on auto pilot. Part of the solution going forward: More responsive government (at every level – the people are frustrated), journalism that puts fair and balanced reporting ahead of the ratings game, and more engaged citizens fighting to make themselves heard and to find common ground (why wait for leadership, let’s make the world we want). Some people call it economic democracy, where decision-making powers are shared among the majority of public stakeholders rather than concentrated in the hands of a wealthy, privileged few. Whatever you call it, 2011 could very well be the year that Canadians say, in no uncertain terms: we want in.  


Jim Stanford, CCPA Research Associate

Dirty Oil: Canada's most successful industry next year -- in fact, one of our only successful industries next year -- will be the dirty business of tar sands extraction and processing.  With world oil prices holding steady around $80 (U.S.) per barrel, tar sands producers in northern Alberta pretty much have a license to print money.  Production costs are in the range of $50 per barrel; that leaves $30 per barrel to cream off the top.  Corporate tax cuts, and Alberta's recent capitulation on royalty rates, sweeten the deal even further.  The only significant risk the tar scrapers face is running over budget on their construction costs -- and that is their own fault anyway, since they insist on developing the whole region in an unplanned, helter-skelter "gold rush" process.  No wonder the oil industry is uniquely, lucratively profitable.  It's raked in $100 billion in after-tax profits in the last 5 years alone.  Of course, the rest of us face enormous risks because of this enormous, earth-altering process, which might well collectively constitute the biggest man-made construction ever (eventually exceeding the Great Wall of China).  Environmental risks, geopolitical risks, and economic risks, too: such as the fact that tar sands exports are keeping our dollar at inflated levels (at least 20% above fair value), despite incurring a record-breaking trade deficit.  I have never seen a better case study in how the profit motive can inspire a capitalist economy to mobilize enormous capital, resources, and creativity, in order to move mountains (in this case, literally), but with no guidance whatsoever as to whether or not the resulting activity is helpful or harmful (so long as it is profitable).  Tar sands production will continue to expand in 2011, even as Canada's other export industries languish.


Armine Yalnizyan, senior economist, Canadian Centre for Policy Alternatives

Corporate Canada’s Stash: Canada’s businesses have been sitting on an ever-growing pile of cash, saving right through the recession and early phase of recovery.  This is a completely different pattern from the recessions of the early-1980s and early-1990s, when the business sector accelerated borrowing. We are all waiting for the business sector to step up to the plate, particularly because the feds and provincial governments are eyeing ways to balance their books. But what will businesses spend on, as they start dipping into their treasure chests? Not all investments create jobs. Think mergers and acquisitions. Think offshore growth. Jobs may be lost, not created. There are, of course, solutions. Some nations have capital controls, limiting how much money can flow offshore. That’s not likely to happen in Canada, mostly for cultural reasons. But we could increase taxation on outbound foreign investments. We could also put financial penalties on every job killed through new domestic and foreign “investments”, and use those revenues to create needed infrastructure and jobs in communities across Canada.