Canada and Australia Caught in a Dangerous Population Trap

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Canada and Australia Caught in a Dangerous Population Trap: A Warning for Resource-Rich Nations

Australia, Canada, capital shallowing, economic challenges, Immigration, Infrastructure, living standards, population trap, Productivity, resource-rich nations

Canada and Australia, two resource-rich nations, are currently facing similar economic challenges due to unsustainable levels of immigration. This population boom has resulted in poor productivity, overburdened infrastructure, and a per capita recession in both countries. Economists at the National Bank of Canada and independent economist Gerard Minack warn that 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.

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Canada and Australia Caught in a Dangerous Population Trap
Canada and Australia Caught in a Dangerous Population Trap

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The Population Trap:

The population trap, also known as capital shallowing, occurs when a country’s population grows faster than its capital stock. This leads to a decrease in productivity and living standards, as the existing capital stock is spread too thinly among the growing population. In the case of Canada and Australia, this has resulted in a per capita recession, where the economy is growing, but the population is growing faster, leading to a decline in living standards.

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The Challenge for Resource-Rich Nations:

Resource-rich nations like Canada and Australia have traditionally relied on a population-led growth model, where immigration is used to boost the economy. However, this model has proven unsustainable, as the influx of people has led to overburdened infrastructure, poor productivity, and a decline in living standards. Despite the warning signs, both countries seem to be doubling down on the same strategy, risking more of the same poor economic performance.

The Impact on Productivity:

Productivity is a key driver of economic growth and living standards. However, in Canada and Australia, productivity has been declining due to the population trap. The influx of people has led to a shortage of skilled labour, as well as a shortage of capital to invest in new technologies and infrastructure. This has resulted in poor productivity, as the existing capital stock is spread too thinly among the growing population.

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The Burden on Infrastructure:

The population boom has also led to overburdened infrastructure in both countries. The influx of people has put a strain on existing infrastructure, such as roads, hospitals, and schools. This has resulted in congestion, longer commute times, and a decline in the quality of public services. In addition, the cost of maintaining and upgrading infrastructure has increased, putting a further strain on the economy.

The Decline in Living Standards:

The population trap has also led to a decline in living standards in Canada and Australia. Despite the economy growing, the per capita recession has resulted in a decline in living standards. The influx of people has led to a shortage of affordable housing, as well as a decline in the quality of public services. This has resulted in a decline in the overall quality of life for the average person.

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The Need for a Change in Strategy:

The current population-led growth model in Canada and Australia has proven unsustainable. The influx of people has led to overburdened infrastructure, poor productivity, and a decline in living standards. To address these challenges, both countries need to adopt a new strategy that focuses on increasing productivity and investing in infrastructure.

This could involve investing in new technologies and infrastructure, as well as increasing the skills and education of the workforce. It could also involve reducing immigration levels to a more sustainable level, as well as investing in affordable housing and public services.

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Canada and Australia are currently caught in a dangerous population trap, where the influx of people is leading to poor productivity, overburdened infrastructure, and a decline in living standards. To address these challenges, both countries need to adopt a new strategy that focuses on increasing productivity and investing in infrastructure. By doing so, they can ensure sustainable economic growth and improve the quality of life for their citizens.

Canada and Australia Caught in a Dangerous Population Trap
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