Quote:
Originally Posted by CliffFletcher
Okay, so take the U.S. with their money printing and inequality out of the rankings.
Why are productivity and GDP per capita falling in Canada relative to Australia, the Netherlands, Ireland, Sweden, etc?
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A lot of reasons. Over different time periods various countries have peaks and valleys at different times, so it varies depending on the time frame. Recently, most of those countries had significantly bigger and more prolonged drops after 2008, so their recent more rapid growth is really just catching up to where they were before. Whereas Canada has seen more continual growth.
Changing demographics also play a role. Real GDP per worker has gone up by 6% in Canada in the last decade vs. 1.9% in Australia and 3.9% in the Netherlands. But Canada has lost more workers relative to its overall population in that span compared to those countries, so overall GDP per capita has lagged.
And GDP per capita really isn't a great measure in a lot of ways. For instance with your Ireland example, their GDP increased by about 26% in 2015. Was it some economic miracle where everyone got 26% richer in a year? No, it was because Apple re-domiciled their intellectual property to Ireland for tax purposes, increasing the GDP significantly overnight. But it was essentially a paper transaction; it's not like the average Irish citizen became richer because of that. And that applies to their GDP in general. Their favorable corporate tax structure ensures that a lot of businesses have headquarters there. That means a lot of money flows through, increasing the GDP, but it doesn't exactly end up in Irish hands to anywhere near the degree that the GDP would imply.
So while it's true that Canada is currently 15th in the OECD in GDP per capita, we are 6th in median income (which is what actually matters), behind Luxembourg, Norway, Switzerland, the US, and Austria. And to bring it back to Ireland, despite having a GDP per capita that's only about 42% as high as Ireland's, Canada's median income is 25% higher than Ireland's.