January 20, 2024
HERE'S MY TAKE
For those of us not in construction, it’s very difficult to look at recently poured foundations and “see” the new house that will one day stand there. I get more from the architects’ drawings or even the floor plan on the blueprint than I get from standing on an empty lot staring at concrete. But I know that the foundation matters greatly. In fact, its shape and reliability are far more consequential to what ultimately will be built than the plans that I am looking at. Plans can be adjusted even after the foundation is poured. The options, however, are constrained by the foundation.
This metaphor came to mind when trying to make sense of the housing debate that is front-page news these days. Most of the coverage considers the problem in economic terms. There is a lack of housing supply and everything from zoning laws, labour policy that has produced a shortage of skilled tradespeople, and broader economic policies that affect investment all contribute. There’s a fair bit of NIMBYism (Not in My Back Yard) too. Current homeowners can be all in favour of policies that increase the supply of housing notionally, but still don’t mind what property inflation has done to their own home values. However, given that it takes time to build new housing supply, even the most ambitious initiatives that might come out of next week’s federal cabinet retreat where this issue is a major agenda item will take years to make an impact. Supply side solutions get buried in the policy-speak. They don’t deal realistically with the challenges of a young family needing an affordable home with more bedrooms to accommodate the baby who will arrive within nine months regardless of whether the bedroom is ready.
That brings us to the demand side of the equation. For some time there has been a consensus that Canada needs more people if we are going to flourish economically. Whether we need 100 million by 2100 as the Century Initiative suggests is not clear, but most recognize we need more. (The Century Initiative is a civil society network with a proposal that was never formally adopted or even extensively debated when it first showed up a few years back, but their ideas are seemingly framing much policy development on this file.) Workforce demographics suggest we have an oversupply of the 65+ crowd (who require more social and health system support while contributing much less to the economy at this stage) and an undersupply of workers to produce the goods and services we need (and the taxes that their work provides to pay for that social and health security). Since we’re only having 1.4 or so kids per woman (2.1 is the number required for a society’s population level to remain stable), immigration seems to be the way forward.
So what happens when we mix all of these factors in? A decade ago, we were starting construction on about 190,000 new homes per year. In 2023, we began construction on roughly 240,000 homes. The demand side was easier to adjust. We’ve gone from almost 270,000 immigrants in 2013-14 to almost 470,000 immigrants (not counting refugees, temporary workers, and international students) in 2022-23. The accumulated shortage in the housing supply now is measured by millions.
Whenever there are numbers and debates, economists jump in with fancy terms. This week it was “population trap” which, according to a new National Bank report, now describes our predicament. I don’t recall it from the economics classes I’ve taken, but the report defines it as a situation “where no increase in living standards is possible because the population is growing so fast that all available savings are needed to maintain the existing capital-labour ratio.” In other words, our capital is just enough to cover the basic staples of life, leaving nothing for investing in growth. Andrew Coyne dismissed all this, arguing it’s just cover for Canada’s low productivity compared with other jurisdictions.
There’s truth in all of the above and yet none of this really tells the whole story, which most of us realise is part of this debate. It’s not a problem that is simply economic in nature that will be solved through policies or complex formulas. Mind you, ignoring that dimension (as the federal government has seemingly done by ignoring the policy reports it received two years ago predicting this crisis) doesn’t help.
The short story is this: we haven’t got the common moral vocabulary to address the non-economic issues at play here.
That moral vocabulary is critical to understanding three factors that contribute to the demand side: family formation, fertility, and immigration. These are all sensitive issues, but we must deal with them. In 1971, most households consisted of parents with children with an average number of people per household of around 3.5 people per household. Today the norm is still parents with kids, but the average number of people per household was 2.5 in 2021 and likely continues downward. The old supply of 2,500 square feet of suburban space with three or four bedrooms still exists, but fewer people live there. So, the expected norm of square footage per person in a home has increased dramatically.
On the fertility side, my Cardus colleagues have issued the first report of its kind showing that for all sorts of reasons, the average Canadian woman is having 0.5 fewer children than she wants. Could our expected square footage-per-person be a factor here? Related to all this is the question of childcare. Even where governments do address it, they don’t do so in terms of removing childbearing barriers and enhancing women's choice. Rather, it’s all about female participation rates in the labour force and their contribution to GDP. Paid childcare is part of the GDP; unpaid isn’t. The framing of a childcare plan that doesn’t start with the choices for childcare (or even family formation and fertility decisions) that mothers might make but rather with a particular idealised form (in this case, not-for-profit institutional daycare delivery) is part of the mix, but that conversation is barely being held.
And then there is the cultural challenge of talking about immigration. Canadians are generally pretty smug about this. We recognise rightly that Canada has succeeded in bringing people from diverse cultural backgrounds to live alongside each other in relative peace, fitting our multicultural ideal. But wanting to celebrate that fact does complicate having honest conversation about difficult cultural issues. The incorporation of diaspora politics (which the post-October 7th protests have starkly put in our faces) with the barely concealed racism, often blunt anti-Semitism, and disruption of social peace is challenging. Social peace and stability are necessary not just so we don’t have to spend money on security and order, nor because we want to be nice, but also to preserve the trust required for our economic and political systems to work well. Even if all of the very impolite public stuff is overcome, the reality is that there are probably 50 seats in parliament where issues of foreign policy in other parts of the world (especially the Middle East, Ukraine-Russia, India, and China) may influence how Canadians vote in federal elections. It’s a delicate dance for our political parties seeking to win a majority government on domestic issues when there are a significant number of seats in play where what you think about what’s happening abroad will shape the choice of candidates. The math gets muddy because different seats are available depending on which side of each issue you take. Politicians rarely acknowledge how much this factors into their political calculus. Frankly, these aren’t easy things to discuss because no matter what you say, you are likely to offend some significant group.
None of this even names the most fundamental, and most difficult question. How do Canadian values and the preservation of Canada (not simply as an economically sustainable and politically secure place to live, but as providing the sort of life that we want to pass on to our children) fit into this mix? How you answer that depends on what you think Canadian identity and values are. There’s no consensus answer on that. Prime Minister Trudeau famously told the New York Times shortly after coming to office that Canada was “the first postnational state.” Many interpreted this to mean the prime minister was advocating an identity based on some sort of global citizenship or social group (gender, ethnicity, class) other than Canadian nationality. That, to say the least, is a highly contested view. Many of us view our historic western democratic values (or the culture historically produced by western civilization) as part of the aspiration and what binds us as Canadians (even as we can still critique and learn from parts of our history). But the very challenge of even making basic statements without having to be careful to put into a host of qualifiers illustrates the challenge.
Today’s housing headlines flow from real problems many Canadians face about housing affordability and providing for the immediate issues of life. In Maslow’s hierarchy of needs, sleeping and eating certainly need attention before the more existential questions of identity and nationhood. But the timelines for almost every solution on housing is longer. And underneath it all is the foundation: the deeper cultural and structural questions that most have neither the bandwidth nor the public forum, to say nothing of a shared moral vocabulary, to deal with. But just as the foundations matter when you build a house, with time affecting the look and longevity, ignoring the more basic questions beneath this debate is something we do at our peril.
WHAT I’M READING
Artificial Intelligence and The Pope
AI is a sign of the times. That was the message of the pope’s New Year’s Day message. The Globe and Mail published an editorial by Canadian Cardinal Michael Czerny translating for a broad audience Pope Francis’ concern about the risks and harms of AI and the “technocratic paradigm,” as well his respect for AI’s potential benefits. Cardinal Czerny points to safeguarding human dignity and serving the common good as important metrics for evaluating the application of AI in public life.
The Liberal Party’s Shrinking Tent
Social conservatives have almost become extinct in the Liberal Party. A historical snapshot and analysis of turning points over the past two decades by Geoff Russ at The Hub explains why and considers the consequences for the political landscape of this shift “from influence to irrelevance.”
Understanding Trump’s Appeal
Donald Trump leaves an elephant-sized footprint wherever he goes in the Republican presidential nomination race–but maybe that footprint is not quite as large as it once was. He is also facing more than 90 criminal charges in multiple federal and state legal cases. McKay Coppins at The Atlantic suggests some of Trump’s showman schtick has grown stale. Attending a Trump rally, Coppins observes that the polarising figure seems to rely “on a shorthand legible only to his most dedicated followers” while “his tendency to get lost in rhetorical cul-de-sacs of self-pity and anger wears thin.” Meanwhile, over at The Free Press, Batya Ungar-Sargon saw a Trump in the Iowa primary who still holds sway over working-class Americans “worried about the economy, immigration, [U.S.] foreign entanglements, and the disappearing American Dream—all issues Donald Trump not only talks about but has a solid record on.”
Faith, Rights, and Religious Schools in Canada
A new book, Faith, Rights, and Choice: The Politics of Religious Schools in Canada tracks how different provinces have treated (and in many cases funded) religious schools in Canada for nearly 300 years. Drawing on extensive interviews with policy insiders and archival documentation, Jim Farney and Clark Banack untangle the threads of a complex story that most education policymakers in Canada are unfamiliar with, not to mention parents and general readers. They conclude that “[p]atterns of governance change, driven both by gradual shifts within provinces (such as secularisation) and by outside shocks to provincial politics (including immigration or economic crisis).” The longer story here provides not only valuable historical context, but food for thought for new directions beyond stale debates.
Petty Lies?
It may seem that misleading or even non-existent announcements regarding our leaders’ vacations or medical treatments are an understandable response to public prurience into the private lives of our leaders but Father Raymond de Souza argues that petty lies are consequential and cumulatively lethal to public discourse.
MEANINGFUL METRICS
“Population trap” and “staggering” are terms some economists are starting to use in describing Canada’s immigration levels, according to the Globe and Mail. Those comments come as economists analyse the inflationary implications of how quickly Canada’s population is growing because of immigration. The Globe ran an interesting graph that showed a sudden and stark drop in immigration-fuelled population growth that coincided with the start of the COVID years. By 2023 we were back on track for that growth, but instead of resuming the more gradual growth trajectory of the past, we entered 2024 with a massive influx of new neighbours–many of whom are students or temporary workers. The newspaper quotes Avery Shenfeld, chief economist at CIBC Capital Markets, as saying Canada needed to bring its intake of newcomers “into better balance with the arithmetic of our home-building strategy.”
TAKE IT TO-GO
The Cats That Didn’t Come Back
The old children’s ditty says the “cat came back the very next day,” but a couple of British Columbia cats are soon to be gone for good. In fact, the Egyptian owners of a few “Pacificat” catamarans (which B.C. Ferries pulled out of service and sold for a song decades ago) are hoping to snag $60 million for the trio, according to the Vancouver Sun.
I’ve always enjoyed the ferry ride between Vancouver and Victoria, but I never had a chance to board a Pacificat before officials determined the vessels just weren’t up to scratch. Now those boats float in the bay of Alexandria, Egypt, and will be heading for the scrap heap if no one buys them. I get that the boats were a government boondoggle in B.C., but something just doesn’t smell right about scrapping them. It would be an outcome that really sphinx.
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