A liberal democracy can survive for a while on institutional strength and widespread agreement. As long as most people are generally satisfied with how things are going (or have made peace with the status quo), it is easy to imagine that something like a social contract will keep things on track. Hamish MacAuley makes a persuasive case that many Canadians came of age politically between the collapse of the Berlin Wall and the 2008 financial crisis, when consensus was widespread and politics seemed optional, thus many chose to stay out. We abandoned democratic governing habits during prosperous times. Instead, we played politics. In response, McGill's Jacob T. Levy advocates for political action that rejects the status quo while also refusing to burn it all down or take our ball and go home. We should participate in politics, even if it is unsatisfying. When the foundations of our democratic structure or the rights of vulnerable people are jeopardized, it makes sense to delegate aut
It's reasonable that Canadians be worried about the future. Thus, Canadians live in a state of well-being that makes much of the rest of the world envious. Is that happiness, nevertheless, sustainable? Will our grandchildren and children fare any better than we did?
Not in the opinion of most Canadians
According to a 2018 Environics survey, 48% of Canadians said they were essentially negative about the state of the world. Sixty-seven percent of Canadians reported in a 2018 survey by the American Pew Research Center that they thought their children will be worse off financially than they were.
Sustainability cannot be measured using metrics that are only applicable for the short term, such as GDP. The G7 leaders acknowledged this fact in their 2018 summit communiqué from Charlevoix, Quebec. The leaders of the largest economies in the world have stated that nations need to start putting together policies that prioritize prosperity and well-being in the long run.
Today's income is measured by GDP. But wealth, the source of future income, is what matters in the long run. More precisely, a nation's chances for the future are determined by its produced, natural, human, financial, and social capital.
The complete wealth portfolio is made up of these five different types of capital together. The basis for generating all the commodities and services—both market and non-market—necessary to maintain well-being is comprehensive wealth. Comprehensive wealth needs to remain steady or increasing over time on a per capita basis in order for well-being to be sustained. If not, the nation is undermining its foundation of productivity and relying more on its inheritance than on forward-thinking development.
This research is one of the few comprehensive wealth evaluations conducted for any nation, as well as the most thorough analysis ever done in Canada. The International Institute for Sustainable Development examined the evolution of comprehensive wealth from 1980 to 2015 using data from Statistics Canada and other trustworthy sources.
Our results imply that Canadians' worries about the future are well-founded. Although Canada's GDP has grown rapidly since 1980, the country's comprehensive wealth has grown far more slowly and is beginning to show serious signs of vulnerability.
Canada's Comprehensive Wealth Has Grown Slowly Overall
From 1980 to 2015, the value of Canada's comprehensive wealth portfolio increased by $701,000 per capita, or an average annual growth rate of 0.23 percent (Figure 1). On the other hand, during the same time period, GDP increased at an average annual rate of 1.31 percent. Stated differently, the GDP expanded at a rate that exceeded five times the growth of the underlying wealth base.
Therefore, when considering comprehensive wealth, Canada's development can be seen as much less remarkable than what its GDP alone would indicate.
Furthermore, the UN claims that Canada has performed the worst among the G7 in terms of overall wealth in recent decades.
Comparatively speaking to its counterparts, Canada is lucky to be prosperous. In terms of comprehensive wealth per capita, the UN rated Canada first out of the G7 countries in a 2018 global survey on the topic (based on methodologies generally consistent with those used above). Its natural capital reserves, which provide the nation a distinct advantage over its contemporaries, are a major factor in its ranking at the top of this list. In 2014, Canada's natural capital was over four times greater than that of the United States, the next closest G7 peer.
Congruent with the results of this investigation, Canada was ranked lowest among the G7 members by the UN in terms of the rise in total wealth at the same time. According to UN estimates, Canada's overall wealth decreased (by 0.25 percent yearly on average) between 1990 and 2014, while the wealth of all other G7 countries increased significantly (Table 1).
It is obvious that other nations are outperforming Canada in terms of guaranteeing the expansion of their comprehensive wealth portfolios, and as a result, they are catching up to Canada. The average comprehensive wealth of the other G7 nations was 53% of Canada's in 1990; by 2014, it had increased to 74%. According to UN estimates, Canada will fall to fifth place in less than a generation (2039) and lose its top spot to Japan in 2024 if current growth rates continue.
Since 1980, Canadian households have accumulated previously unheard-of debt levels.
After 2012, the remainder of the economy became completely dependent on foreign lenders for almost three quarters of investment flows as Canadians began to shift their investments away from financial assets and toward housing. This led to an increase in house prices. The mid-1960s was the last period in which such a significant portion of investment in the Canadian economy came from outside sources.
A significant danger to Canada's whole wealth portfolio is climate change
Global prosperity is threatened by climate change, especially the extremes of wind, precipitation, temperature, and cold. The devastation caused by storms, wildfires, and flooding is increasing.
Since the 1980s, insurance payouts for extreme weather events have increased every five to 10 years, according to the Insurance Bureau of Canada. In Canada, insurance losses exceeding $1 billion were recorded for six years in a row between 2009 and 2014. Conversely, between 1983 and 2008, insured losses hardly amounted to $400 million annually, with only two years surpassing $1 billion in damages.
2013 broke records with $3.4 billion in payouts from floods in Toronto and Alberta, an ice storm in eastern Canada, and other extreme weather. But one particular incident in 2016—the Fort McMurray wildfire—surpassed it. An estimated $3.58 billion worth of insured property losses resulted from the incident. It more than doubled the $1.74 billion amount for the 2013 Alberta floods, making it by far the biggest single compensation for a natural disaster in Canada.
Since then, there have been significant wildfires in the interior of British Columbia that summer and major flooding in Quebec in the spring of 2017. In the spring of 2018, there was extreme flooding in the interior of British Columbia and a record-breaking flood on the Saint John River in New Brunswick. Subsequently, British Columbia had devastating wildfires for the second summer in a row, and severe heat struck Ontario, Quebec (where several people lost their lives), and a large portion of the United States. An extraordinary tornado outbreak that occurred in the fall of 2018 severely damaged houses and infrastructure in eastern Ontario and western Quebec.
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