I just finished reading Adam Tooze’s “The Deluge,” a history of how U.S. economic power changed the course of history during the world wars. It’s almost impossible for people today to realize what a big shift this was — to much of the world’s population, the United States has always been the Big Country, the driver of markets, innovation and geopolitical stability.
Right now, U.S. hegemony is waning. With only a quarter the population of China, there is essentially no chance that the U.S. can continue to reign supreme in the economic sphere unless China suffers a stunning collapse. But in the longer run, what shifts can we expect in the balance of economic power? Expect the U.S. to make a comeback, since its openness to immigration allows the country’s population to keep growing even after fertility levels out. India’s huge population, of course, will make it a great economic power as well.
But during the next couple of centuries, there is another country that I think has a surprisingly good chance of becoming an economic and cultural superpower. That country is Canada.
With a population of only 31.5 million (in 2013), a famously frigid climate and a below-replacement fertility rate, Canada would seem an unlikely candidate to become a superpower. But Canada has three huge, fundamental strengths that will almost certainly be telling in the long run. These are natural resources, good government and an almost unbelievably tolerant and open culture.
In terms of natural resources, Canada is almost unmatched. In terms of renewable freshwater — the best candidate for the essential scarce resource of the next two centuries — Canada is exceeded only by the U.S. and Brazil. Its percentage of arable land, at 4.6 percent, is relatively small, but this probably will increase as climate change proceeds and the glaciers retreat. Basically, there is room for a lot more people in Canada.
Good government is another hallmark of Canadian strength. Canada regularly ranks in the top 10 least-corrupt countries in the world, according to Transparency International. The U.S., in comparison, only makes it to the lower reaches of the top 20. That’s especially impressive given Canada’s rich endowment of fossil fuels, which usually causes countries to become more corrupt — a phenomenon known as the Resource Curse. Canada’s institutions, derived from the very best of the U.K., are rock solid.
It is probably because of these high-quality institutions that Canada was able to implement universal health care. Whatever you think of the merits of universal health care, it definitely requires that citizens trust their government. In a country as spread-out and diverse as Canada, attaining a level of public trust equivalent to that received by the ethnically homogeneous countries of Europe is quite a feat.
And Canada’s strong institutions have allowed it to implement less controversial economic policies, such as a low corporate tax rate (15 percent, compared with the U. S.’s 35 percent). Basically, Canada can usually get things done a lot better than the U.S.
But the biggest win for Canadian institutions is its immigration policy. While the U.S.’s immigration system focuses on family reunification, Canada focuses on recruiting the best and the brightest. The country’s Federal Skilled Worker Program assigns prospective immigrants “points” based on language skills, education, work experience, age, existing job offers and a catch-all category called “adaptability.” This is a program for permanent immigration, unlike the U.S.’s H-1B program for temporary guest workers.
Over time, this flood of talent can be expected to make Canada one of the centers of the new world economy, whose driving forces will be research and innovation. Canada now has a net annual immigration rate of about 0.57 percent of its population. This is already a rapid pace, corresponding to about a half-million immigrants a year. But with its strong record of assimilation, Canada might be able to increase this rate. As climate change makes the country less frigid, the country will certainly become a more attractive destination.
It may be centuries before Canada competes with the likes of the U.S. in terms of total population, since it is starting from such a low base. But in terms of an educated, high-skilled population, Canada may soon become pre-eminent. That could turn Canada into a global Silicon Valley or Singapore, but with lower inequality. It could be for the 22nd century what the Netherlands was for the 17th.
What would the rise of Canada mean for geopolitics and global culture? I can only imagine that it will lead to good things. Canada is one of the world’s freest countries, an unflagging supporter of tolerance, openness and human rights. Its immigration system will make it one of the world’s most multiracial countries, if not the most. A century from now, it may be the maple leaf, not the stars and stripes, that is respected as the global standard of freedom and democracy.
So keep an eye on the big country to the north — it could be headed for very important, very good things. And in the meantime, the U.S. should think about reforming its creaky institutions to keep up.
Noah Smith is an assistant professor of finance at Stony Brook University and a freelance writer for a number of finance and business publications. For more columns from Bloomberg View, visit bloomberg.com/view.