Has Canada Become a Jamaican Bobsled Team? 🤔

The Sunday Essay ☕️

Lately, Canada has been getting a lot of attention.

It’s not often that people outside of Canada want to talk about Canada. I’ve found it both interesting and a little surprising to see others express their opinions about what this country is and who Canadians are.

I’ve never considered myself patriotic. I don’t feel pride in being Canadian because pride, to me, is reserved for accomplishments—things I’ve worked hard for. I had no part in being born in Canada, nor shaping this lovely country, so I feel no pride about that. What I do feel is immense gratitude. I feel incredibly fortunate to have been born in a country filled with opportunity and beauty, where hard work is rewarded, and life is governed fairly and predictably.

I am proud of my ancestors, though—of the people who crossed oceans, who spoke no English, and settled in the rugged, frozen prairies of Saskatchewan. Their resilience and determination are something I admire deeply.

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Canada is a complex country. It’s gigantic, yet sparsely populated. We are a landmass larger than the United States, but with a population equivalent to California.

Economically, we are facing significant challenges.

Although nobody should take the “51st state” argument seriously, if Canada were to become a state, it would be the third poorest in the country, right behind Alabama.

Everybody talks about the American debt issue, but Canadian households bear more debt relative to their income than any other G7 country. The average Canadian now spends 15% of their income on debt servicing.

This is a stark shift from 2008 when Canada emerged from the global financial crisis with a healthier balance sheet than any other G7 nation.

One indicator I pay close attention to is corporate investment per worker.

Every year, businesses invest in growth - new technology, new projects, new employees or products. If you take the total number that businesses invest during a calendar year, and divide that by the number of active workers in the country, you get the corporate investment per worker.

In the U.S., businesses invest about $28,000 per worker. In Canada, that number is only $15,000—nearly half.

Corporate investment is what drives future productivity, economic growth, and opportunity. The higher the number, the brighter the future.

Since the COVID-19 pandemic, Canada’s economy has grown slower than any G7 nation (until recently, Germany overtook us), and present corporate investment paints a bleak outlook for the future.

Why?

We have been pretending that we are something we are not, avoiding our strengths.

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Don’t be a Jamaican Bobsled Team

All people, companies, and countries must play to their strengths if they want to be great.

Let me give you an example. I am an athlete. I have always been an athlete. But while I love sports in general, I’m a terrible basketball player. Put me on the court, and I’d embarrass myself and the team.

But in mountain running—steep, technical terrain—I excel. Over years of focused effort, I’ve built a competitive advantage, and have competed in some of the most grueling races in the world.

“Know what you is, and be it.” - Dave Ramsey

I am an endurance runner, not a basketball player.

Businesses are the same - those that try to be everything to everyone, fail. Those who figure out their specialty and double down, succeed.

Countries are no different. Prosperous nations understand their core strengths and double down on them.

For Canada, those strengths are clear (if unpopular - but I will get to that): we have vast natural resources, we have easy-to-navigate geography, we have the world's longest coastline that spans three oceans - allowing direct access to every global market, and the largest shared international land border, on the other side of which is the worlds wealthiest, hungriest customer.

We have product. And we have a direct line to the consumer.

We are not capitalizing on these advantages because we have been sold a narrative discouraging investment in the industries where we outperform the world.

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I understand the resistance to Canada’s natural resource industries like mining, oil and gas.

I have lived much of my life in small towns surrounded by pristine wilderness. Whether hunting, horse-packing, or guiding wildlife expeditions, I grew up with a close and intimate relationship with natural environments.

When I was 19 years old, I tallied the nights that I had slept in a tent that year, and it was 276.

I understand, more than most, what we stand to lose if we are careless with our industries.

However, Canadians have also been sold a false narrative about what our role should be regarding environmental protection and habitat sustainability.

Here is an inconvenient truth: unless we (humans) universally and collectively agree to put down our devices, close our laptops, and abandon technology use and development on a go-forward basis, we will continue to need the minerals that exist in the earth.

So let me ask a facetious question: is it more probable that we continue to extract minerals from the earth, or - that we collectively agree to turn off the lights and call it a day?

Here is another inconvenient truth.

Nobody wants a mine in their backyard. Nor do I. But if, based on the above statement, we agree that mines will be needed, then let me propose something…

Every one of you reading this right now has purchased some cobalt. It's located inside the device on which you are reading this. Canada produces about 5% of the world's cobalt. 75% comes from the Democratic Republic of the Congo.

At the Canadian mine, you will find the world's highest safety, environmental, and social governance standards.

The workers are sufficiently trained and provided with safety equipment, health insurance, retirement plan options, and regulated work hours.

Environmental accidents still happen. But when they happen, they are aggressively reported, guilty parties are held accountable, reclamation projects are funded and measured, and a bad situation becomes notably less bad.

At the comparable cobalt mines in the DRC, workers are not sufficiently trained, don't show up with safety equipment, have no health insurance or retirement plan options, and have no regulated work hours. In reality, and factually, they are frequently 10-year-old boys in flip flops, ankle-deep in toxic chemicals.

Accidents happen far more frequently and are not reported or cleaned up.

So, if we are sincere when we say that we are concerned about the environment, the climate, or the natural habitat, we must also say that Canadians should build the mines in our backyard.

But that depends on whether we are sincere. It is much easier to make noise about our virtues and turn a blind eye to reality.

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Despite a federal government that has pushed for outsourcing our natural resource supply (if the mines aren’t in Canada, that makes Canada green, right??), Canada ranks in the top five global producers of gas, oil, uranium, nickel, lithium and gold.

We produce 30% of the world's potash, a fertilizer that any country that grows food needs, 25% of softwood lumber and 60% of the world's canola.

In other words, if you like to cook, eat or live in a house, Canada is your supplier.

However, Canada’s resource industries have been vilified and regulated out of operation, and consequently, they lack sufficient investment. Our competitive advantage had been shuttered.

The narrative that Canada should abandon its resource sector to pursue conceptual industries like hydrogen power or electric vehicle production is both misguided and damaging. These are fields where Canada has little experience or infrastructure, we are not competitive, and the evidence is in our economic data.

Me, on the basketball court.

By discouraging investment in our core strengths, we’ve hampered growth and reduced future opportunities.

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When our competitive advantage is allowed to flourish and investment is encouraged, we pull more wealth in from the rest of the world, our workers make more money, they buy more goods from more businesses, and the economy grows.

With its natural resources, infrastructure, and expertise, Canada has the potential to be the wealthiest country in the world on a per capita basis.

But if we run away from our competitive advantages and pretend to be something we are not, we will never realize that potential, nor will any future generations.

Canada's greatest contribution to the environment and the global economy is to lead in the responsible development of our resource industries. If we fail to recognize this, we risk leaving future generations with fewer opportunities, less prosperity, and a diminished role on the world stage.

If you want to take a deep dive into the future of Canada’s resource economy - join me next weekend at the Vancouver Resource Investment Conference.

For two days on January 19th and 20th, I will dive deep into the future of the raw materials industries - discussing the world through the lens of the supply and demand of raw materials.

www.VRICMedia.com

Have a great Sunday.

Jay

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VRIC 2025 is 7 days away!

The Vancouver Resource Investment Conference (VRIC) on January 19th & 20th is your opportunity to get answers.

Join 9,000+ investors and hear from 120+ world-class experts on the future of markets, commodities, and global finance.

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• Understand the impact of soaring US debt on markets.

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See you at VRIC,
Jay

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