Canada has a modest but powerful value proposition—regardless of race or creed, a person’s hard work is rewarded with social mobility. The Government of Canada (GoC) think tank Policy Horizons is warning that the proposition is disappearing, and may be a distant memory in less than two decades. In a report from the agency, they paint a grim picture resembling a dystopian mashup of a Charles Dickens’ novel meets Terminator. A Canada where wealth & the ability to own a home are determined at birth, hungry households hunt & fish for sustenance in cities, and moving down social classes is the norm. Welcome to Canada in 2040.
Rising Inequality To Become A Fundamental Part of Life In Canada
Canada is suffering from a few hiccups that aren’t characteristic of the country most households grew up in. Home ownership is becoming increasingly out of reach, food banks are seeing record use, and the wealth inequality gap is the widest since the country began to measure it. Many Canadians are in denial about the erosion, while others assume it’s a temporary phase that will be corrected at some point.
However, with little being done to change the course (and a lot being done to amplify it), these trends might become the norm.
The internal government report, published in January but only making the spotlight this week, sees the negative emerging trends becoming fundamentals of the Canadian experience.
“In 2040, upward social mobility is almost unheard of in Canada. Hardly anyone believes that they can build a better life for themselves, or their children, through their own efforts… many worry about sliding down the social order,” writes the report’s authors.
Canada’s economy has long been driven by immigration. It manages to attract some of the world’s top talent looking for a quiet and stable life—an often undervalued asset these days. It also manages to retain a lot of homegrown talent with a system that rewards hard work with progress. However, by 2040 this is unlikely to be the case.
The unfair system evolving with limited socioeconomic mobility becomes a liability. Top global talent won’t find the country to be an attractive pitch, and will stop immigrating here. Our domestic talent will seek “greener pastures,” moving to where they see more opportunities.
Fewer households, especially those with high value skills, will shrink the economy. Negative economic growth tends to compound, with the shrinking economy leading to further degrowth for households.
“While this is neither the desired nor the preferred future, Policy Horizons’ strategic foresight suggests it is plausible,” warns the report’s authors.
Canadians Won’t Own A Home, Move Into Higher Social Classes, Or Have Stability Without Intergenerational Wealth
What’s driving this sudden collapse of social order, turning Canada into a country of haves and have-nots? The report attributes this to six trends that will establish themselves as fundamental to the Canadian experience. Those are:
- Property ownership, and by extension wealth, will become concentrated. As young adults abandon the idea of single-family home ownership and embrace rentals, investors will acquire all of the negotiating power potentially leading to sharp rental price increases.
- The devaluation of post-secondary education. Higher education used to land people on the fast track to upwards social mobility. As the premium is eliminated and costs inflate, it no longer yields the same outcomes.
- Intergenerational wealth is perceived as the only way to get ahead, compounding the gap between the rich and poor. Seeing fewer people get ahead despite hard work will result in declining motivation, and yield poorer productivity.
- The narrowing of socioeconomic interaction further puts up walls around class mobility. As more interactions are determined by algorithms, fewer people are able to network or date outside of their class, eliminating “marrying up.”
- Household aspirations collapse. As hard work fails to pay off, people become demotivated. Fewer people pursue the high-risk, high reward opportunities that drive industries such as entrepreneurship and innovation. This becomes a drag on the whole country.
- The value of human labor is devalued as artificial intelligence (AI) takes over. White collared jobs are captured by machines, with the best performing machines costing the most. Consequently, the wealth disparity is amplified even further as those with wealth can buy higher quality productivity.
These trends are all destabilizing to households, leading the economy to “shrink or become less predictable.” If that’s the case, why would policies fail to address them?
Reduced household confidence produces reduced spending. That leads to reduced revenues for companies, and a weaker job market. Investment capital won’t be prevalent across society, but it will concentrate with “wealthy, older people.”
The report warns this will skew national priorities towards bolstering those investments, potentially at the expense of other priorities. Wait. Isn’t this supposed to be a future report, not a description of the current environment?
Canada’s Rising Inequality May Destabilize The Country
Those in the bottom of the order aren’t the only ones that’ll be hit by this collapse in social order. People will try to find the cause of why they aren’t getting ahead, and begin to attack it. They see recent targets like Big Tech and unions falling into their crosshairs, leading to excessive action to regulate or punish those segments.
Scapegoating is common in 2040, with many blaming immigrants for issues they have little to no influence over. A prime target becomes older generations, who benefited from the upward social mobility but then are seen as “shutting the door.”
In extreme cases, the report sees serious social and political conflicts. People may question the state’s legitimacy, resulting in civil disobedience and tax evasion.
Policy Horizons, the report’s author, is a non-partisan department within Canada’s government. It provides foresight for policymakers, emphasizing they aren’t criticizing specific policies or parties. They’re simply highlighting the path we’re on, and it’s up to policymakers to right the course.
Unfortunately, few are willing to acknowledge the existence of these problems. If no one is willing to acknowledge a problem exists, they’re unlikely to address it or fix it.
Then there’s a more troubling thought—this may be exactly the path some policymakers want, and doubling down on the problem and pitching it as a solution is the desired outcome.
