Is Canada a poor nation in a rich country? Canada’s nosedive in GDP per capita & most other measures of human thriving beg the question. Today, I’ll focus on a major root cause and a law you’ve never heard of.
Price’s Law
Price's Law states
that productive output is heavily skewed toward a small number of individuals.
In any domain comprising N individuals, 50%+ of the work is accomplished by the
square root of N. For example, in a group of 100 people, roughly 10 individuals
will provide half the value. (Note: Lotka’s Law says the results are even more
heavily skewed).
How does this relate
to Canada’s sinking GDP per person? Canada’s population is roughly 40 million.
Price’s Law suggests that Square Root (40,000,0000), or ~ 6,300 people provide
50%+ of the Canada’s output.
Price’s Law & Canada’s Malaise
Canada’s brain drain
to America is real. Canadian net emigration—a data series maintained by Statistics Canada—reached 65,372 in
2024-25, the highest level in the 50-year data series. The Hub article I
reference reports that emigrants are disproportionately young & well
educated. Business founders are over-represented. In fact, Canadian start-up
founders in the US outnumber those who stay put. According to Bank of
Canada research, roughly 40 percent of Canadians who would rank in the top 1 percent of
earners have emigrated south, along with 30-50 percent of the next nine
percentiles. Canadian-born individuals in the U.S. are more educated than
native-born Americans, and cluster in top income brackets. The study finds
these top earners account for three-quarters of the Canada-U.S. GDP per adult
gap and up to two-thirds of the labor productivity gap. Taken together, the
report concludes, “These patterns suggest Canada is losing precisely the people
needed to reverse its productivity decline.”
The exodus includes
people like my erstwhile neighbour, Paul, a gifted engineer who skedaddled to join
a leading US AI firm. He reminds of all the extraordinary French, English,
German and Canadian expats I’ve met in Singapore. When I ask, ‘Why did you
leave?’ they give me a droll look as if to say, ‘Are you kidding?’ Canada’s surging
antisemitism has exacerbated the problem.
Many of us have Jewish friends & colleagues who have left or are
thinking of leaving.
Why Do the Best & Brightest Leave Canada?
My friend Paul rhymed
off the reasons for me:
·
The Compensation & Equity (Options)
Gap
·
Tax System Competitiveness: Canada's
personal marginal tax rates exceed 50% in provinces like Ontario, Quebec &
British Columbia, and kick in at much lower thresholds than in the US.
·
The Startup and Capital Deficit
·
Cost of Living
Where does this leave the Great White North? In my 2025 articles contrasting the Canada & Singapore, I proposed a (humble) road map
back to prosperity. Job One: reward, promote, and celebrate our best
& brightest. Don’t punish them for their success. Rationalize the tax
system & regulatory system. Unleash their genius, sing their praises, and
pat them on the back. If not, they’ll skedaddle & we’ll keep sinking.
Anxious to deflect
attention, our elites continually invoke the ‘ogre down South’, but even that
tactic is wearing thin. Recently, a senior governing party member proposed
imposing a $ 500,000 exit tax on educated Canadians leaving – a splendidly
Soviet response. Once can only hope this was not a serious proposal. (What’s
next – barb wire & re-education?)
This gives me no
pleasure, and I have no partisan axe to grind.
In fact, I believe our PM is sincere & capable and wish him well.
His thankless challenge is to clean up a decade of malfeasance and restore a
once-great country. Rewarding, promoting and celebrating our stars is a crucial
first step.
Best wishes,
Pascal Dennis, co-author of Harnessing Digital Disruption
