Can Productivity Save the Day?
Global Insight assumes that productivity (i.e., employment per real GDP) will advance 1.7% per year over the long term. This pace would match the average productivity gains experienced in Canada during the 1990s and mark a rebound from the disappointing performance of recent years. Can we do better and have sustained productivity growth of 2% or higher over the long term? Not likely. To be fair, all levels of governments profess to support productivity growth. The natural leaning of democratically elected governments, however, is to sometimes prevent the necessary economic adjustments or to intervene in market mechanisms in order to protect the status quo. The protection of the existing economic order often impedes the very mechanism that generates productivity growth—the constant drive to create new products, adjust production processes, form new business ventures, explore new markets, and take competition to ever higher levels. Unfortunately, while this mechanism moves the economy fo
