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Fraser Institute

Urban Population Densities in Canada and Abroad—an Update

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From the Fraser Institute

By Steven Globerman and Milagros Palacios

Canadian cities—including Toronto and Vancouver, which are experiencing high and increasing housing costs—can accommodate much more housing supply as they have much lower population densities than other major comparable urban centres around the world, finds a new study by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

“Compared to their international peers, Canadian cities have much lower levels of density, which means there’s an opportunity to expand the supply of housing and perhaps make housing more affordable, too,” said Steven Globerman, Fraser Institute senior fellow and co-author of Urban Population Densities in Canada and Abroad—an Update.

The study, which compares population densities in 30 metropolitan centres in highincome developed countries, finds that Canadian cities are among the least-dense.

Even Vancouver—Canada’s densest major city with 5,750 people per square kilometre—ranks 13th out of 30, and is significantly less dense than San Francisco (6,656 people per square kilometre), a comparable west coast city. In Toronto, there are 4,552 people per square kilometre. In fact, Toronto’s population could double and the city would still be less dense than New York City (10,712). And crucially, Toronto and Vancouver are significantly less dense than many other major cities around the world, including London (10,663) Tokyo (15,531) and Paris (20,360).

“Some of the most desirable, liveable cities in the world have much higher population densities than Canada’s biggest cities,” Globerman said. “Canadian cities can become significantly more dense, and possibly more affordable, without necessarily sacrificing living standards.”

  • Affordable housing in cities is a major public-policy issue in Canada.
  • Zoning and related restrictions on increased construction of multi-family housing in urban centres have been identified by the federal government and several provincial governments as major impediments to affordable housing.
  • Governments are promoting increased population density in urban areas through financial incentives and other initiatives but face opposition from homeowners and other interest groups concerned that density will bring a diminished quality of living.
  • In fact, urban population densities in Canada are relatively low compared to medium- and large-sized cities in other wealthy countries.
  • Moreover, there is no consistent evidence showing that increased urban density leads to a lower quality of living.

 

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Fraser Institute

U.S. election should focus or what works and what doesn’t work

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From the Fraser Institute

By Matthew D. Mitchell

As Republicans and Democrats make their final pitch to voters, they’ve converged on some common themes. Kamala Harris wants to regulate the price of food. Donald Trump wants to regulate the price of credit. Harris wants the tax code to favour the 2.5 per cent of workers who earn tips. So does Trump. Harris wants the government to steer more labour and capital into manufacturing. And so does Trump.

With each of these proposals, the candidates think the United States would be better off if the government made more economic decisions and—by implication—if individual citizens made fewer economic decisions. Both should pay closer attention to Zimbabwe. Yes, Zimbabwe.

Why does a country with abundant natural resources, rich culture and unparalleled beauty have one-sixth the average income of neighbouring Botswana? While we’re at it, why do twice as many children die in infancy in Azerbaijan as across the border in Georgia? Why do Hungarians work 20 per cent longer than their Austrian neighbours but earn 45 per cent less? Why is extreme poverty 200 times more common in Laos than across the Mekong River in Thailand?

Or how about this one: Why were more than one-quarter of Estonians formerly exposed to dangerous levels of air pollution when the country was socialist while today nearly every Estonian breathes clean air in what is ranked the cleanest country in the world.

These are anecdotes. However, the plural of anecdote is data, and through careful and systematic study of the data, we can learn what works and what doesn’t. Unfortunately, the populist economic policies in vogue among Democrats and Republicans do not work.

What does work is economic freedom.

Economic freedoms are a subset of human freedoms. When people have more economic freedom, they are allowed to make more of their own economic choices—choices about work, about buying and selling goods and services, about acquiring and using property, and about forming contracts with others.

For nearly 30 years, the Fraser Institute has been measuring economic freedom across countries. On one hand, governments can stop people from making their own economic choices through taxes, regulations, barriers to trade and manipulation of the value of money (see the proposals of Harris and Trump above). On the other hand, governments can enable individual economic choice by protecting people and their property.

The index published in Fraser’s annual Economic Freedom of the World report incorporates 45 indicators to measure how governments either prevent or enable individual economic choice. The result reveals the degree of economic freedom in 165 countries and territories worldwide, with data going back to 1970.

According to the latest report, comparatively wealthy Botswanans rank 84 places ahead of Zimbabweans in terms of the economic freedom their government permits them. Georgians rank 107 places ahead of Azerbaijanis, Thais rank 60 places ahead of Laotians, and Austrians are 32 places ahead of Hungarians.

The benefits of economic freedom go far beyond anecdotes and rankings. As Estonia—once one of the least economically free places in the world and now among the freest—dramatically shows, freer countries tend not only to be more prosperous but greener and healthier.

In fact, economists and other social scientists have conducted nearly 1,000 studies using the index to assess the effect of economic freedom on different aspects of human wellbeing. Their statistical comparisons include hundreds and sometimes thousands of data points and carefully control for other factors like geography, natural resources and disease environment.

Their results overwhelmingly support the idea that when people are permitted more economic freedom, they prosper. Those who live in freer places enjoy higher and faster-growing incomes, better health, longer life, cleaner environments, more tolerance, less violence, lower infant mortality and less poverty.

Economic freedom isn’t the only thing that matters for prosperity. Research suggests that culture and geography matter as well. While policymakers can’t always change people’s attitudes or move mountains, they can permit their citizens more economic freedom. If more did so, more people would enjoy the living standards of Botswana or Estonia and fewer people would be stuck in poverty.

As for the U.S., it remains relatively free and prosperous. Whatever its problems, decades of research cast doubt on the notion that America would be better off with policies that chip away at the ability of Americans to make their own economic choices.

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Economy

Ottawa’s new ‘climate disclosures’ another investment killer

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From the Fraser Institute

By Matthew Lau

The Trudeau government has demonstrated consistently that its policies—including higher capital gains taxes and a hostile regulatory environment—are entirely at odds with what investors want to see. Corporate head offices are fleeing Canada and business investment has declined  significantly since the Trudeau Liberals came to power.

According to the Trudeau government’s emissions reduction plan, “putting a price on pollution is widely recognized as the most efficient means to reduce greenhouse gas emissions.” Fair enough, but a reasonable person might wonder why the same politicians who insist a price mechanism (i.e. carbon tax) is the most efficient policy recently announced relatively inefficient measures such “sustainable investment guidelines” and “mandatory climate disclosures” for large private companies.

The government claims that imposing mandatory climate disclosures will “attract more private capital into Canada’s largest corporations and ensure Canadian businesses can continue to effectively compete as the world races towards net-zero.” That is nonsense. How would politicians Ottawa know better than business owners about how their businesses should attract capital? If making climate disclosures were a good way to help businesses attract capital, the businesses that want to attract capital would make such disclosures voluntarily. There would be no need for a government mandate.

The government has not yet launched the regulatory process for the climate disclosures, so we don’t know exactly how onerous it will be, but one thing is for sure—the disclosures will be expensive and unnecessary, imposing useless costs onto businesses and investors without any measurable benefit, further discouraging investment in Canada. Again, if the disclosures were useful and worthwhile to investors, businesses seeking to attract investment would make them voluntarily.

Even the government’s own announcement casts doubt that increasing business investment is the likely outcome of mandatory climate disclosures. While the government says it’s “sending a clear signal to corporate boards and shareholders, at home and around the world, that Canada is their trusted partner for putting private capital to work in the race to net-zero,” most investors are not looking to put private capital to work to combat climate change. Most investors want to put their capital to work to earn a good financial return, after adjusting for the risk of the investment.

This latest announcement should come as no surprise. The Trudeau government has demonstrated consistently that its policies—including higher capital gains taxes and a hostile regulatory environment—are entirely at odds with what investors want to see. Corporate head offices are fleeing Canada and business investment has declined significantly since the Trudeau Liberals came to power. Capital per worker in Canada is declining due to weak business investment since 2015, and new capital per-Canadian worker in 2024 is barely half of what it is in the United States.

It’s also fair to ask, in the face of these onerous polices—where are the environmental benefits? The government says its climate disclosures are needed for Canada to progress to net-zero emissions and “uphold the Paris climate target of limiting global warming to 1.5°C above pre-industrial levels,” but its net-zero targets are neither feasible nor realistic and the economics literature does not support the 1.5 degrees target.

Finally, when announcing the new climate disclosures, Trudeau Environment Minister Steven Guilbeault said they are an important stepping stone to a cleaner economy, which is a “major economic opportunity.” Yet even the Canada Energy Regulator (a federal agency) projects net-zero policies would reduce real GDP per capita, increase inflation of consumer prices and reduce residential space (in other words, reduce living standards).

A major economic opportunity that will increase business investment? Surely not—mandatory climate disclosures will only further reduce our standard of living and impose useless costs onto business and investors, with the sure effect of reducing investment.

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