Oh, the things that I’ve seen!

Well, that time has come. Last fall, I announced to my Export Development Canada colleagues that after 17 years, I intended to retire in 2022. It’s been an honour to serve this organization, its noble and worthy mandate, and its growing multitude of customers, who daily brave the frontlines of international trade, taking on the world and succeeding. 

I’m especially grateful to have enjoyed the unflinching support of the various executive teams and boards of directors I’ve served in my 13 years as chief economist at the Crown corporation. I’m gratified that as a quasi-federal public servant, I was able to tell the unvarnished truth about what has gone on in the global economy, how unfolding events have impacted international trade, and most importantly, what the future holds. So, what global issues and events were the big ones during my time in this position?

1. Diversification. I wrote my first piece on this subject in 2006. If it wasn’t revelatory to anyone else, it certainly was to me. I discovered that trade diversification was actually happening; it wasn’t a distant and elusive aspiration, but something that a small group of forward-looking, Canadian entrepreneurs were doing right under our noses. Thanks to them, trade with fast-growing emerging markets was vastly outpacing growth to our traditional export destinations—and within just a few decades—some would be vying for the top spots in Canada’s export standings. Since then, it’s been a personal mission of mine to share this news in the hope of adding many more exporters to their ranks.

2. The global monster-bubble. In 2007, it became increasingly obvious to me that the world economy was more than redlining—it’d been there for years. Even worse than that, globalization had exported this giant bubble of excess activity everywhere. That could only mean one thing: A giant, multi-year correction. Although it was considered very unpopular, we rolled out an EDC economic forecast that called for a major global slowdown. As we refined this view, we pegged it to the latter part of 2008, complete with a collapse in oil prices and our dollar, which at the time, seemed wacky. The rest, as they say, is history. 

3. The near-collapse of the financial system. It’s terrifying to think how close we came to the brink of financial oblivion. The system was wobbling badly ahead of the Great Recession, but it required a huge dose of collective financial genius to hold things together in late 2008 and through the following few years. It’s led to a significant push to reform the financial system, a project that’s still far from perfect or near complete.

4. Policy stimulus. With the economy and its financial system in chaos, big policy stepped in. Regardless of political stripe, big spending was in. Emerging markets ponied up programs, too, that in relative terms, eclipsed the “wealthy world.” But it wasn’t just fiscal stimulus; monetary policy unleashed a tool that until then was just theory. Today, quantitative easing is almost a household phrase. It’s still being used, and seems to have done what it should have—but its functioning and impacts are still poorly understood.

5. The recovery that never was. What followed the 2009 Great Recession was the Great Stagnation. Against the best policy efforts, the economy plodded along, unable to mount anything that resembled a normal recovery. What it left in its wake was a generation of disaffected graduates and long-term unemployed who lost faith in the system—and helped to feed a seething global populist movement, which seems to have adherents in countries all over the world. There were signs of a pickup in 2016, but political turmoil at the time nixed it.

6. COVID-19. If the economy was on its way to a proper recovery—the unemployment rate certainly seemed to say so—then the pandemic stopped it abruptly. What has followed is a stop-start economy that’s really hard to plan for. Businesses don’t know where or when to channel their investments. Consumers are holding onto their cash. The infection rate has become the leading indicator of all leading indicators, but will lose that status as soon as herd immunity is achieved.

7. The economy is fundamentally strong. Despite the pandemic’s best efforts, the economy has remained resilient. This has surprised pundits who boldly proclaimed at the onset of COVID-19 that recovery would be very weak. Not this time; strong evidence of pre-pandemic, pent-up demand suggested that the rebound would be robust, which is precisely why it’s caught the economy unawares. This has led to supply chain woes, labour constraints, inflation and monetary tightening.

The combination of these and other factors has created nascent cynicism about institutions, systems of government, corporate concentration, uses of technology and a host of other foundational elements of society. It’s also led to a distinct disillusionment with capitalism. Cynics can be forgiven in light of the huge market failures or near-failures of the past decade or so. But just possibly capitalism is guilty of the criticism Winston Churchill, former prime minister of the United Kingdom, levied at democracy. In paraphrasing, capitalism is perhaps the worst form of economic system, except for all those other forms that we try from time to time. I suppose it remains to be seen whether capitalism with all its faults will again vindicate itself, or whether we’ll again try one or more of those other forms of economic system.

The bottom line?

I had hoped that by my retirement from EDC, we’d be through the pandemic and forging ahead with economic growth. That wasn’t to be. I want to thank you for your support of these weekly missives—I’ll certainly miss writing and delivering them—and for my work as EDC’s chief economist. I have one more column to write, and after that they’ll be continued by another author—to be introduced in next week’s issue, so please stay tuned.