Pessimism about our economy rarely pays off in the long run.
Time and time again when we were feeling particularly glum about the financial picture in the world, 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 Gross Domestic Product, that which goes on elsewhere ultimately will determine our future.
There is no denying that the current post-crisis recovery is very different animal from the typical business rebound. Superficially, the numbers look strong.
GDP has move higher, but considering the previous, massive contraction, that 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-tern 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. Those moves only are “kicking the can down the road.”
Of course, unemployment remains too high, particularly among youth. Problems 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 employer’s incentives to hiring the low skilled, all should be forthcoming. Streaming the decline in low-skilled workers will require massive education reforms to boost skills.
The housing industry 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.