mark carney : the virtue of productivity in a wicked world remarks by mr mark carney, governor of the bank of canada, to the ottawa economics association, ottawa, ontario, 24 march 2010. * * * it is either brave or foolhardy of the ottawa economics association to organize another conference around canada ’ s perennial challenges of demographics, productivity, and potential growth. the cognoscenti wearily deride these shortcomings even while they acknowledge their importance. 1 after all, who really wants to talk about getting old? similarly, the subject of productivity is described as too dull, or worse, too threatening for canadians. it is said to imply working harder, not smarter, or to promote job losses rather than income gains. these debates are thus thought best confined to the policy wonks, in order that our diagnoses and prescriptions can occur in a parallel, forgotten universe. however, one wonders, who would not want to be productive in their work? is there a child whom we do not want to reach his or her full potential? could what canadians expect of their economy be so very different from what they expect of themselves? our ambitions for the canadian economy should be bold. we are a country of immense strengths and, as demonstrated during the recent crisis, considerable resilience. yet canada does underperform. we are not as productive as we could be. our potential growth is slowing. moreover, this is occurring as the very nature of the global economy, in which we previously thrived, is under threat. this debate can no longer be avoided. what, then, must be done? there are two imperatives – one domestic, one international – to secure strong, sustainable, and balanced economic growth for canada. both recall aesop ’ s fable of the ant and the grasshopper, the moral of which can be best summed up as “ idleness brings want. ” in short, in a wicked world, canada needs productive virtue. canada ’ s slowing potential this conference has already benefited from comprehensive reviews of productivity and potential growth, so i would like to briefly summarize the bank ’ s views ( which are largely in accord with the emerging consensus ). we have a problem : demographic drag will increase in coming years. as the boomer generation ages, labour force participation rates will decline and hours worked will fall. the question is merely one of degree. for some age groups, there is a possibility that participation rates will be higher than currently

. they note that two sectors in particular – mining and oil and gas extraction and manufacturing – account for much of the slowdown in mfp growth in this decade. see j. baldwin and w. gu, “ productivity performance in canada 1961 – 2008 : an update of long - term trends, ” statistics canada, 2009. d. leung, c. meh, and y. terajima, “ productivity in canada : does firm size matter? ” bank of canada review, autumn 2008. available at : http : / / www. bankofcanada. ca / en / review / rev _ autumn2008. html. oecd, economic policy reforms : going for growth, 2010. see the budget plan, department of finance, canada 2010. these core framework policies can be supplemented by measures to foster innovation and commercialization, investments in strategic infrastructure, and incentives for scale. finally, it is vitally important that current global financial sector reform efforts yield a stable and efficient financial system that channels the capital necessary for long - run growth. in general, while there is always more to do, governments have put in place conditions for a productivity revival. business, thus far, has disappointed. in fact, productivity growth fell in the latest recession, the first time this has happened in three decades. looking forward, despite the availability of capital, relatively strong balance sheets and improving economic conditions, corporate canada does not appear ready to invest. investment intentions for 2010 remain modest and largely driven by the public sector. this appears unwise. the coming global winter? there could be tough times ahead. canadian grasshoppers, perhaps basking in the historically easy access to the u. s. market and the relative abundance of resource opportunities, could be in danger of wasting their days in the sun and finding themselves unprepared for the winter to come. canada ’ s productivity challenge is made more pressing by an international economic landscape that is changing dramatically. a powerful and sustained restructuring of the global economy has begun. the pace and volatility of global growth are likely to be quite different than during the so - called “ great moderation ” earlier this decade. the considerable uncertainty about medium - term global prospects will require concerted, co - operative measures to moderate. the second imperative : the g - 20 framework policy - makers must work to ensure that business can operate, as much as possible, in an open and stable global economy. at a minimum, this means living up to the g