Canada is a Warning to the Rest of the World!

Canada's economic performance is underperforming its potential despite its abundant natural resources, educated population, and stable institutions. The country's productivity has fallen behind the U.S. due to a lack of competition in key sectors like telecommunications and banking, leading to rent-seeking behavior. The housing market has become a non-productive asset, incentivizing households to prioritize real estate investments over other economic activities. This has created a generational divide, with older Canadians benefiting from rising home values while younger Canadians face unaffordable housing and limited economic opportunities, contributing to a decline in youth happiness. Canada's reliance on the U.S. for trade, particularly in energy, exposes it to economic vulnerabilities, while internal trade barriers further hinder economic growth. Despite these challenges, Canada possesses significant institutional capital and a strong fiscal position, offering potential for reform and renewed economic self-sufficiency.