Even when Tiger Woods was the most dominant golfer in the world, he was  poor at hitting out of the rough. That might have been because he never tried to perfect that part of his game. Rather than use scarce practice time to correct weaknesses, he doubled down on the things he already did well: driving and putting. It’s hard to argue with the results. 

It might be time to focus on what Canada does well, rather than trying to correct every weakness. Yes, the tax system is a mess, but is it really the thing that holds Canada back? And who thinks the political class is up to the task of broad tax reform? Their efforts would be better used to restore confidence in our approach to immigration, a comparative advantage that is at risk of being wrecked by the national anxiety over housing. 

We need clearer thinking because Ottawa and many provincial capitals are back in the business of industrial policy. That’s an expensive game and governments already are running low on chips. 

They’ve deployed tens of billions of dollars in an attempt to exploit tectonic shifts in technology such as clean energy and artificial intelligence. Some of those bets might eventually pay off, but the immediate returns are meager. Canada could slide into a recession this year, and productivity growth is negative. 

Economic conditions could be worse, but you get the sense that the bleak near-term outlook is causing some concern. It’s easy to understand why. Slow growth could dull the animal spirits that governments are trying to awaken with all their spending, and without business investment, productivity will continue to flounder. If that happens, we will struggle to maintain our quality of life as our aging population retires and the labour pool shrinks. 

“Economic growth, business investment and productivity are an urgent challenge for Canada, if not the most urgent challenge for Canada,” Finance Minister Chrystia Freeland said at a press conference this week. 

Another example of the worry that Canada’s terrible productivity record is causing was Bank of Canada governor Tiff Macklem’s willingness to address the issue at length in my interview with him this week. He has spent most of his term fighting inflation, but even that struggle has been made harder by how little economic output Canadians generate per hour worked. 

Productive economies can absorb price shocks and higher wage demand because businesses have the capacity to handle higher costs without immediately raising prices. We’re about to see why all that matters. The post-pandemic trajectory of inflation and interest rates was similar in the U.S. and Canada, and price pressures have eased in each country at roughly the same rate. 

However, economic growth in the U.S. has remained strong, while Canada’s economy has stalled. The difference is productivity. 

“Where the U.S. really stands out is the strength of its productivity growth,” Macklem said. “That higher productivity growth pays higher wages without creating inflationary pressures. Their disinflation looks pretty similar to other countries, their growth trajectory has clearly been stronger.”  

Maybe the opportunity to observe in real time why productivity matters will prompt us to finally get serious about building resilience, rather than coasting on a strategy that amounts to shipping stuff to the world’s biggest economy, crowding people into the labour force and getting drunk on real estate. 

That worked when globalization was ascendent, baby boomers were still in their primes and interest rates were low. We can count on none of those tailwinds going forward. For the first time in decades, if we want to generate wealth, we’re going to have to earn it. The pandemic and its aftermath has exposed the fragility of the economy we’ve built. 

“We thought that as we came out of the pandemic, as supply chains improved, as new workers were trained and gained experience in their jobs, we’d see productivity pick up,” Macklem said. “We have not seen that yet. And that is a source of concern.”

You get the sense that Macklem is gearing up to join the debate in earnest. He mentioned productivity in passing during remarks in Montreal on Tuesday, but told his audience that it was a topic worthy of a speech of its own. Stay tuned. If what he shared when we spoke was a prelude, he’ll have a lot to say. 

What stood out to me in our interview—we published an extended transcript, because Macklem unpacked his thinking on a range of subjects—was that his top-of-mind advice echoed Tiger Woods’ approach to golf. “You don’t become great by just fixing your weaknesses, you start by doubling down on your strengths,” Macklem said.  

What are Canada’s strengths? If we need to ask the question, maybe that’s part of the problem. Macklem offered these suggestions: a diversified economy, a well-educated workforce and quality universities that are in the middle of the technological disruption that is changing the economy. It sounds like Macklem, a former dean of the University of Toronto’s Rotman School of Management, would start there.

“We’ve got to keep investing in education,” Macklem said. “What I love about education is, we often talk about the trade-off between efficiency and equality; in education, there’s no trade-off. Access to education is the best way to create opportunity for everybody and it’s a great way to grow your economy.”

The current tempest over immigration has revealed the extent to which universities have become dependent on foreign-student fees to pay for the quality education they offer us all. What would Tiger do?  

Kevin Carmichael is The Logic’s economics columnist and editor-at-large. He has spent more than two decades covering economics, business and finance for outlets including Bloomberg News, The Globe and Mail and the Financial Post, where he also served as editor-in-chief.