Ian Lee reveals the alarming economic reality facing Canada
Episode Stats
Words per Minute
180.25858
Summary
In Canada, poverty is at its worst level since records began, and the unemployment rate has hit 15%. But what exactly is going on with Canada s finances? In this episode, we talk to economist and author Ian Lee about the facts.
Transcript
00:00:05.100
The economy has some very turbulent times ahead, no?
00:00:07.780
Not according to Prime Minister Justin Trudeau and his Liberal government.
00:00:11.480
In fact, Finance Minister Christy Freeland says this year's budget, released in April,
00:00:16.120
was about, quote, healing the economic wounds left by the COVID recession,
00:00:20.700
meeting the urgent needs of today, and about building for the long term.
00:00:24.780
She adds it's a plan that embraces this moment of global transformation
00:00:31.040
I'm sorry, but can we get a fact check on all of that?
00:00:33.680
Canada is seeing the largest deficits and debts ever, breaking the $1 trillion debt mark.
00:00:41.180
Is all of this massive spending happening right now going to create a better, imminent future?
00:00:46.400
And will a government-mandated green economy fly?
00:00:49.400
Well, our guest today does not care about government spin.
00:00:53.760
Professor Ian Lee dishes the unvarnished truth,
00:00:55.980
whether it's in front of his students at the Sprott School of Business at Carleton University,
00:00:59.360
or in front of politicians during his many appearances before the House of Commons Finance Committee.
00:01:04.560
Ian, thanks so much for joining us on the show.
00:01:15.880
I think that's a much more appropriate question than these, you know, debates over the solvency of the federal government.
00:01:22.400
I mean, federal governments have printing presses, and, you know, U.S. has the Federal Reserve, we have the Bank of Canada.
00:01:28.280
But I think, and this has been my criticism since March of a year ago,
00:01:33.240
the government has been making the argument that our social safety net has collapsed,
00:01:39.360
poverty is skyrocketing, inequality is skyrocketing, and I have studied the numbers.
00:01:44.240
I have created slide decks called Enduring Canadian Urban Legends.
00:01:51.640
It's at the lowest level ever in the history of Canada.
00:01:55.700
This is StatsCan data down to 8.7% from 15% in the mid-90s,
00:02:01.880
from 25% of Canadians, one in four in the 60s when I was a child.
00:02:07.420
So poverty has been going down, down, down, not up, up, up, as they claim.
00:02:14.080
It is actually, if one looks at the StatsCan data and the OECD data, we are below the OECD average,
00:02:25.060
Most of them are European, very progressive countries.
00:02:30.760
And if the government looked at the monetary policy report of its own governor that they appointed,
00:02:35.080
last September, he had a wonderful graph in his report from StatsCan showing that the top 1% share of income peaked in 2006.
00:02:44.620
It's being claimed by the government that the wealthy are getting wealthier and richer at the expense of everybody else.
00:02:53.600
Okay, but Ian, let me ask you this, though, because a lot of people are going to interrupt,
00:02:59.480
We're in a pandemic right now, and we've just got to go rampant spending.
00:03:03.460
Yes, the deficit, the debt right now is $1.1 trillion.
00:03:07.460
The deficit is just a massive $354 billion projected for 2020, and we've got to do it.
00:03:15.680
That's what Justin Trudeau is saying, because of extraordinary times.
00:03:20.160
To answer that question, I argue that they misdiagnosed the problem in the first place.
00:03:32.520
And so it was not necessary to spend these gargantuan amounts of money.
00:03:38.020
Should we have responded to those people in the 90-10 economy as The Economist magazine has characterized it?
00:03:48.720
What they said is, oh, my God, large numbers of Canadians, large numbers of the economy have fallen over the cliff, almost reduced eating cat food and dog food.
00:03:56.920
When you look at the data, and I'm talking at the worst days, March, April 2020, okay, the unemployment rate soared to 15%.
00:04:09.160
That meant 85% of Canadians continued to work and be paid.
00:04:14.680
Other than the unique situation of Laurentian, which had nothing to do, in my view, with COVID, and I'm aware of that situation, there was no university professor laid off in Canada.
00:04:25.940
There was no big bank laid off, employee laid off.
00:04:28.500
There was no municipal public servant laid off at OC Transpo in Ottawa or the Toronto Transit Commission.
00:04:35.980
In fact, 90% of the economy was doing just fine, and the stats show that crystal clear.
00:04:44.080
And they should have targeted like a laser beam on the 10% that was for sure annihilated.
00:04:50.840
Bars, restaurants, small business in the high-touch sector, you know, barbershops, hair salons, that sort of thing.
00:05:00.100
But it was never, as the prime minister repeatedly claimed and the finance minister, that large numbers of Canadian economy were wiped out, devastated, fallen over the cliff, safety net destroyed.
00:05:12.160
That was never the case from the get-go, which therefore did not justify the monies they spent because we squandered large amounts of resources on people that did not need help.
00:05:24.860
So, Ian, let me ask you this, because we've got a lot of messages coming from the prime minister, from the Bank of Canada, deputy governor, talking about how, well, we also have an opportunity right now, Justin Trudeau said, for a reset.
00:05:38.760
And then if you say, well, he means the great reset, and oh, that's a conspiracy theory.
00:05:42.300
And then you look and you go, no, Paul Baudreau, who's deputy governor of the Bank of Canada, putting out a full proposal, a full PDF, talking about, yes, a great reset and so forth.
00:05:50.940
But this idea that, well, you know, now is our opportunity to re-imagineer the economy in the direction that we want to head.
00:05:59.800
Is the liberal government structuring its spending in a way where they are trying to seize the moment and to, you know, never avoid an opportunity from a crisis?
00:06:13.540
They have claimed to justify their gargantuan levels of spending, that the economy, large numbers of Canadians had fallen over the cliff, and that the safety net was completely fractured, destroyed, broken, whatever word you want.
00:06:28.420
And my point is, when you go through the stats, and I've got a deck I've created using StatsCan only data, PBO, in other words, government stats, not some lobbyist or critic such as myself.
00:06:43.660
These are government statistics showing in every area our social progress has been, we are becoming more and more equal.
00:06:52.680
The inequality is being reduced, poverty is collapsing, elder poverty is collapsing, homelessness, which we, people claim is a huge problem with large numbers homeless, is about one-tenth of one percent.
00:07:08.200
And so what I'm trying to say is their claims, which they asserted repeatedly, are not supported by the factual empirical income data in Canada.
00:07:20.260
And so the alleged need to rebuild the society, build back better was their phrase, was bogus.
00:07:28.680
It was bogus because the economy wasn't, it was a 90-10 economy.
00:07:37.800
That's why house prices have been going through the roof for a year.
00:07:40.400
That's why even in March, April, I could hardly get a parking spot at Home Depot.
00:07:45.440
Large numbers of the economy in Canada were doing fine.
00:07:49.020
Let's talk about that 10 percent though, Ian, because I guess there's a lot of concerns that there are people being left behind.
00:07:55.660
Are we creating a new class, whether it's 10 percent of Canadians or whatever the number is, of forgotten men and women who have been totally screwed over and left behind during this era?
00:08:08.800
I completely disagree with Ms. Freeland who says we've got this serious unemployment crisis in Canada.
00:08:14.960
First off, it peaked at about 15 percent, it's down to eight, and that's in less than 12 months.
00:08:22.320
Secondly, in terms of medium and longer term, and I mean two, three, four years now, we do not have an unemployment crisis.
00:08:31.600
The boomers are exiting in very large numbers, and we are facing already in this country restaurants that can't hire people, trades companies.
00:08:42.820
I deal with tradesmen all the time because of my own renovations where they can't get workers.
00:08:48.120
And so we already are experiencing labor shortages.
00:08:55.080
Well, hold on, but I've also heard stories that because of the generosity of certain government programs, there are some lower wage jobs that places can't fill because people go, well, I'd rather stay on CERB or what have you.
00:09:10.020
To what degree is that actually happening in any sort of noticeable broader way in the economy?
00:09:19.000
If you create the mythology that the safety net is broken and there's massive unemployment, then that gives you the justification to do the social spending to drive up the payouts.
00:09:33.380
And what it's done, and we know it was overly generous because only two countries in the world, and this is OECD and StatsCanData, only two countries saw average income go up as GDP collapsed.
00:09:48.120
Germany, a very wealthy country, progressive country, GDP went down as did income for everybody in the economy.
00:09:56.820
Canada and the U.S. were the only two countries where the GDP collapsed and incomes went up.
00:10:01.060
And we did that through borrowing massive amounts of money and distributing it to people.
00:10:06.540
And by making it very generous with essentially no checks and balances, what it did, I mean, if somebody offers me free money, I'm going to take it too.
00:10:15.120
And so what we did was we created this problem that they claim affects large numbers, but it was exacerbated by government policy.
00:10:26.300
And now we're seeing the consequences where trades companies can't find workers, restaurants can't find workers, and that's in turn contributing to inflation, which is going to eventually cause the government to have to increase interest rates to make up for these earlier mistakes, these earlier fiscal mistakes.
00:10:46.300
Well, Ian, I think a lot of people are really confused by the disconnect because you see these reports that, you know, the Dow, Nasdaq, what have you, hit a record high and so forth.
00:10:56.840
And then you go, oh, look, there's crazy bidding wars in my neighborhood in Toronto or in Vancouver or what have you.
00:11:01.780
But then we have restaurants that are pretty much shut in the GTA in Ontario.
00:11:08.920
Then you hear these people who are getting stimulus checks who maybe they don't even need them and so forth.
00:11:14.440
The price of commodities, of copper, of lumber is going up.
00:11:21.460
What does this all mean for the regular person?
00:11:26.240
Anthony, this is demonstrating what I've been arguing.
00:11:44.140
They're filling up the parking lots and driving up the price of lumber doing renovations.
00:11:49.900
10% yes, the restaurants in the GTA and Ottawa and Vancouver and Calgary and elsewhere were annihilated.
00:11:59.200
Nobody will ever quote me, say, suggest that Ian Lee said that there was nobody hurt.
00:12:04.700
10% of the GDP was affected extraordinarily badly.
00:12:13.560
But what they did was they distributed largesse to far more than 10% of the economy.
00:12:24.900
And we, as I said, we drove incomes up as GDP was going down and we gave large amounts of money to businesses and to people who didn't need it.
00:12:34.680
And the evidence for that statement, because people can say that's your opinion, Ian, is that we are sitting in Canada.
00:12:39.600
Some argue it's only $150 billion in bank accounts.
00:12:49.140
In other words, this money was not needed to go buy groceries because if you did, you would have gone and spent it to buy groceries.
00:12:55.980
You wouldn't have put it in the bank account and driven up the savings rate through the roof.
00:13:01.500
That's the evidence that they were far too generous in their paying out these monies.
00:13:08.840
And what it's done is it's reduced their degrees of freedom for future crises.
00:13:13.620
And what are the long-term ramifications of that?
00:13:22.100
I mean, someone has to pay for this down the line.
00:13:25.060
I know Justin Trudeau says the budget will balance itself.
00:13:27.480
It means the economy is going to just grow in such a way that outpaces things.
00:13:32.040
You know, the old saw that you buy your home for a small amount.
00:13:39.780
But does that logic apply to this extraordinary sum?
00:13:47.200
What I'm arguing is they misdiagnosed the problem.
00:13:51.020
They diagnosed the wrong problem that the safety net had collapsed.
00:13:54.620
And the large numbers of Canadians had fallen over the cliff.
00:13:59.040
Maybe 15% at the most of the economy had been devastated.
00:14:03.940
And they didn't diagnose the real problem, which is the aging of society and the concomitant
00:14:13.620
They threw money at just about everything in this country except health care.
00:14:17.600
And health care is the problem facing this country.
00:14:20.200
We are a rapidly aging country, as are all the other Western countries.
00:14:25.040
And the provinces are fiscally, I won't say insolvent, although Newfoundland and Labrador
00:14:31.480
The Parliamentary Budget Office has said most of our provincial governments are financially
00:14:40.460
And the government of Canada did not address that, which is the second real problem facing
00:14:47.500
As GDP growth, the long-term growth declines because of the aging, which everyone agrees,
00:14:54.240
So what we've got is a slowing economy for the next 5, 10, 15, 20, 30 years, which means
00:14:59.800
slower revenues going into the Treasury of federal...
00:15:07.280
The forecast of the impact of aging is that from now through 2050, we are going to see a
00:15:17.300
Some people can shrug and say, who cares about GDP?
00:15:19.500
Remember, GDP is the totality of all the wages and all the salaries and all the incomes and
00:15:24.500
all the pensions of all the people in the country.
00:15:28.160
And we pay taxes as a function of what we're getting, what we're paid.
00:15:32.020
And so with GDP slowing, revenues are slowing to pay back the increasing indebtedness.
00:15:38.680
And the provincial governments do not have a printing press.
00:15:41.780
And Newfoundland and Labrador, as we speak, is insolvent.
00:15:46.720
And the federal government, even though not legally the co-signer, is de facto the guarantor
00:15:53.760
of every provincial government in this country.
00:15:59.540
And they ignore the aging crisis, the health care crisis, and the financial and sustainability
00:16:07.800
Those are the three problems facing our country.
00:16:12.000
So they didn't address the real problems and they squandered money on problems that weren't
00:16:19.200
Ian Lee, speaking of provinces, I want to talk about Alberta in a second.
00:16:21.840
I want to talk about the resource sector in a moment.
00:16:24.180
Before we get to that, though, what you've just said about that 20 years of really not
00:16:29.280
I mean, what does that mean for the average person and their prospects?
00:16:35.640
My kids will have a better life than I did and so forth.
00:16:38.180
And now you've seen more and more headlines, surveys, opinion polls where people go, I'm
00:16:45.340
I do believe that, unfortunately, and I don't say this with any, believe me, it's depressing.
00:16:51.300
But for the next, for the life of my children and my grandchildren, which next 30, 40 years,
00:16:58.920
we're going to see very, almost no increase in the standard of living because the long-term
00:17:12.560
And productivity is the only driver of a long-term increase in our standard of living.
00:17:19.220
GDP is going to be going down because of aging, as they've described.
00:17:22.360
The government squandered huge amounts of money.
00:17:24.380
And so we're going to be paying larger amounts in taxes down the road to service the debt.
00:17:27.760
And I believe, I'm one of those people that believe inflation is rising, which is going
00:17:33.180
to cause interest rates to increase, which will increase, take even more money out of
00:17:40.000
So I'm not predicting doom and gloom and the depression.
00:17:43.380
I'm just saying we are not going to be as well off going forward as we have been for the
00:17:52.040
And then after that, let's talk about the green economy and Justin Trudeau saying he can
00:17:54.920
just snap his fingers and make it magically happen.
00:17:57.240
I take your point when you said, you know, the numbers show 90% actually are still doing
00:18:01.400
all right, 10% being decimated, restaurant industry, hospitality, and so forth.
00:18:05.880
But I know a lot of my friends in Alberta, they're going to raise their hand and say,
00:18:09.460
Because, okay, maybe the paycheck's coming in right now to some degree or what have you.
00:18:12.840
But we have an entire budget that, you know, you open the file, you press control F,
00:18:16.060
you're not really going to see many mentions of Alberta oil sands, all that kind of stuff.
00:18:20.440
Justin Trudeau wants to, you know, as the famous phrase says, phase out the oil sands.
00:18:24.040
But I guarantee if you press control F and search for green and all those phrases,
00:18:27.820
I mean, it's just going to be that, that word's going to be in there with wild abandon
00:18:32.580
I know, you know, I've started saying that Justin Trudeau isn't a prime minister who
00:18:40.060
He's a green activist who happens to have become prime minister.
00:18:42.640
I mean, when you hear him talk about the future and he says that, you know, fair and equitable
00:18:46.100
and this and that, green is actually the first word Trudeau almost always says every time
00:18:56.900
Where they are, you know, the other year you saw they were taken to the streets.
00:19:00.000
They were, they were going to Parliament Hill to say, pay attention to us.
00:19:03.760
And Trudeau seems like he doesn't really want to.
00:19:07.640
If we continue down this path that we're on, this radical elimination of fossil fuels,
00:19:20.360
I believe that there's lots of things that we can do in an economy at the federal level
00:19:24.880
and the provincial level to incrementally in a reasonably and prudent manner respond to
00:19:32.700
the greening of the economy and produce a greener economy, but without the elimination of oil
00:19:43.460
I, if we continue down that path, which has been set up by this government, it's going
00:19:48.600
to turn Alberta, I think, into a have not province.
00:19:53.520
I have family in Alberta and Saskatchewan because of my mother came from Western Canada and I've
00:19:58.500
driven through Saskatchewan and Alberta and the idea that there's huge amounts of alternative
00:20:03.760
resources in Alberta to, to diversify to is nonsensical.
00:20:10.480
And, and so that to answer your question, I think that Alberta is facing very, very tough
00:20:16.020
times in terms of their, their, their, the plan.
00:20:19.980
I think when you look at the actual stats and I'm talking natural resources, Canada statistics,
00:20:24.980
and you look at the fact that we are about 75%, 70% of the totality of energy in Canada
00:20:35.260
A quick fact, there's 15 million homes in Canada, 80%, 80% of the 15 million, over 12 million
00:20:46.660
And, and so to say, we're going to throw those out and, and tell everybody they've got to rip
00:20:51.140
out their oil furnace or gas furnace and replace it with the new electric furnace.
00:20:55.120
It's $5,000 a house and rewire the house because you need a heavier electrical supply and rewire
00:21:02.740
the grid across Canada, the second largest country in the world.
00:21:05.780
First off, we're looking at a gargantuan amount of money.
00:21:08.440
I'm doing a study on this right now, by the way, for a, for a think tank here in Ottawa,
00:21:11.860
trying to come up and get a handle on these costs, but it's going to impose enormous costs
00:21:17.360
on us for very marginal benefits because we are 1.5% of the world.
00:21:24.140
The real problem is in China, as, as everyone knows, it's the number one emitter.
00:21:29.660
I'm just saying that destroying Alberta or ruining the financial future of Alberta and
00:21:35.300
imposing enormous costs on Canadians because they heat their, because of the crime of heating
00:21:41.240
their home in January at minus 25 is something that I, I think we're going to have to confront.
00:21:47.520
Is any other country in the world doing this, this aggressively, Ian?
00:21:51.340
I mean, I know the United States says, oh, we're going to kill Keystone XL because I don't
00:21:55.260
know, we care about the environment or what have you.
00:21:56.760
But at the same time, we know Barack Obama said, hey, I built enough pipeline to circle
00:22:03.940
I mean, yes, he talked about his green energy stuff, but he still didn't spite an entire
00:22:09.200
Uh, we got a number of other countries that I think are, are striking a balance.
00:22:12.900
I know in Europe, they're, they're trying to deal with various different, uh, renewable
00:22:15.540
energy things, but I don't think they're screwing over, uh, you know, domestic markets.
00:22:20.020
I mean, I know they don't have, uh, oil, so it's hard to make that, uh, direct comparison
00:22:23.860
there, but I, I just don't see the situation that's happening in Canada where everything is
00:22:28.640
getting shut down and the government seems to revel in it.
00:22:31.860
I don't see that happening anywhere else in the world.
00:22:34.220
It's, uh, probably I'll, uh, gently and respectfully disagree.
00:22:39.280
I think the Europeans are starting to go down a very radical direction as well.
00:22:46.960
It is, it is because the, um, the reason I'm saying that is, uh, I mean, some listeners
00:22:53.060
can say, oh, you're just shrugging off global warming.
00:22:57.420
We know that, you know, there's things that we can do there.
00:23:00.280
We can develop hydrogen much more aggressively using the existing pipeline infrastructure
00:23:05.000
to distribute hydrogen, which is a very clean fuel.
00:23:12.360
They're trying to do it very, very rapidly and put technology that isn't there yet.
00:23:17.720
And at a cost that's going to be a horrendous and it's going to harm many ordinary people.
00:23:23.860
And, and so I'm not saying we shouldn't be transforming.
00:23:26.760
Of course we should on an incremental, prudent, uh, moderate level that doesn't, uh, cause
00:23:33.900
And doesn't industry know that that reasonable timeline better than government is?
00:23:38.680
I mean, I, I know all these major companies, they're putting R and D into all these new
00:23:41.940
initiatives because obviously, you know, you innovate or you atrophy.
00:23:45.360
So, and I would surely imagine that the first company that can bring the electric vehicle
00:23:50.140
or what have you to market at an equal or lesser price point than the, you know, internal
00:23:56.680
They're not going to suppress it because they know that means riches galore.
00:24:00.940
I mean, I know Trudeau thinks it has to be by government fiat, but I feel like the industry
00:24:04.660
is actually just kind of doing the same thing, but doing it in a way that makes sense for
00:24:10.040
the economy and the workers and what the consumer wants.
00:24:13.460
Uh, I was very intrigued by Seamus O'Regan, the liberal cabinet minister of natural resources
00:24:19.260
Canada, who in December, just, just several months ago, four months to five months ago,
00:24:23.320
um, said that, uh, point blank, no caveats that we cannot get to 20, uh, net zero carbon
00:24:33.180
And he was promoting modular nuclear, these small nuclear, uh, uh, production facilities.
00:24:37.800
And the reaction of the environmental movement and of other people in the liberal party was
00:24:44.840
He said something that's well-known to energy economists and energy experts that study this,
00:24:49.720
that we are not physically, it's a technological limitation.
00:24:54.840
It's a lack of resources to rewire the whole grid.
00:24:57.020
It's going to require hundreds of thousands of people going on those trucks that go up in
00:25:00.500
the air to string new wires because the grid to get rid of all the oil and gas requires
00:25:04.940
a five fold increase in the wiring of every street where there's wires, which is every
00:25:13.100
And, and so he was saying the obvious, we're not going to get there without doing some other
00:25:18.660
And he was attacked mercilessly for simply speaking truth to power.
00:25:24.480
And so my point is, is that we're going to do all of this fiddling and, and, and putting
00:25:29.240
on these and, and, and, and expending a large amounts of money for, to try to achieve this
00:25:35.580
reality that in my view, and I think in the view of quite a few people is not achievable
00:25:47.100
If you throw enough money at it or an old house, I would add as an owner of an old house,
00:25:51.080
but it's going to take, I mean, look at the grid, the Canadian electrical association,
00:25:55.240
which is the provincial utilities owned by governments, for goodness sake, including
00:25:59.860
Quebec have said, there is just no way that we can distribute enough electricity over the
00:26:05.940
existing wires across Canada to eliminate all the oil and gas.
00:26:11.000
The, my line to explain this to people is there's no such thing as a wireless electrical
00:26:17.840
You can't beam the electricity up from Pickering power plant in Southern Ontario to Ottawa or
00:26:31.660
And because electricity is only 17% of total energy supplied in Canada, oil and gas is over
00:26:41.880
And so to displace it is going to require massive rebuilding of the grid in the second largest
00:26:52.060
And we've got to restring every electrical wire on every street, every village, every
00:27:01.840
And it's going to acquire massive amounts of money.
00:27:05.540
But the idea that we're going to do this and just flip a switch and presto abracadabra, it's
00:27:10.400
not going to happen in that timeframe, but they're going to spend gargantuan amounts of
00:27:14.400
money discovering what they are refusing to accept.
00:27:18.460
Ian Lee, I want to circle back on something you were saying earlier, talking about that
00:27:22.800
notion, 90% of people actually do an okay, relatively stable, 10% really hurting.
00:27:27.760
And when you broke down those categories, it became clear that of that 10%, none of them
00:27:33.820
And of the 90%, you know, there's an increasing proportion of people who are in the public sector.
00:27:40.460
The phrase has been used, takers versus makers, a lot of reports with that lingo in there.
00:27:46.120
I know many public servants, I know many teachers, you know, to pit up the takers makers thing.
00:27:50.280
But, you know, there's still something to be said about that increasing, you know, off
00:27:56.460
ratio there, the percentage of persons who are in the public sector versus not.
00:28:04.980
I mean, it seems that it's not abating that that number is only increasing.
00:28:13.680
I use a different phrase because I think it's a very accurate phrase.
00:28:16.960
We in the and I'm in the broader public sector.
00:28:21.960
And we are incredibly privileged in the broader public sector.
00:28:32.720
The government of Canada, the pensions are just unbelievable.
00:28:37.260
All the universities, all the colleges, all the schools.
00:28:40.980
And so the broader public sector, which is about 4 million, by the way, out of 20 million
00:28:46.540
There are 20 million Canadians working per stat scan.
00:28:48.920
About 4 million are in the broader public sector.
00:28:51.460
So that's federal, provincial, municipal, plus crown corporations, education, hospitals,
00:29:02.340
They get paid a higher average wage than the private sector.
00:29:09.800
Didn't we call it some sort of, you know, a certain contract where you realized you had
00:29:12.840
job security for life, but it meant you'd get paid, you know, 10% less than the private
00:29:18.380
But now reports have flipped it around, and now you make about 10% more, and you have job
00:29:23.280
But where I'm going with this, I'm just stating factual, you know, self-evident truths.
00:29:28.200
Where I'm going with this is I think that we should be in the pub, as you can tell, I'm
00:29:33.540
probably, I'm very much a minority view in the public sector.
00:29:36.980
I think that we should be much more humble and drop the arrogance that you hear.
00:29:51.000
And we should be much more sensitive to the demands and the policies that we are imposing
00:29:58.280
on ordinary people who don't live in the Ottawa bubble, that are not part of the Laurentian
00:30:04.820
elites, to use that phrase, the elites of Toronto, Montreal, and Ottawa, who live with, you know,
00:30:11.760
And yet, here we are doing this, I think, radical social engineering that's going to fall
00:30:18.520
disproportionately on people whose incomes are much smaller.
00:30:25.220
They don't lead these privileged lives in the sheltered larger public service that I do.
00:30:31.820
And we have to be, I think, a lot more cognizant of that, because if we aren't, then we're going
00:30:37.740
to facilitate or encourage or create the conditions for a populist demagogue to emerge.
00:30:45.420
And this doesn't make me popular, I can tell you, in the broader public sector.
00:30:49.160
But what are the things that that populist demagogue would say?
00:30:52.220
What are the issues that would be seized upon, that would be exploited?
00:30:56.980
The ordinary people are being exploited by the most privileged people in Canadian society.
00:31:07.740
But I do believe that the most privileged people living in the wealthiest postal codes,
00:31:15.840
Mr. Trudeau overturned the decision to end door-to-door delivery to the 25% of Canadians
00:31:26.280
Well, who are the people that have door-to-door delivery?
00:31:28.940
Well, they're the people in the wealthiest neighborhoods, Rockliffe in Ottawa, Glebe in
00:31:33.740
Ottawa, Beaches in Toronto, Shaughnessy in Vancouver.
00:31:42.100
Well, universal means paying free drugs to everybody, including doctors that make a half
00:31:48.280
This is privileged people lining their own pocket.
00:31:51.160
Or universal daycare saying we're going to give free or massively subsidized daycare not
00:32:00.460
We're going to live it to the people that live in the beaches or live in the fanciest
00:32:04.580
neighborhoods in Toronto or in Montreal, the town of Mount Royal.
00:32:09.840
Because the liberals, that's the thing they are cheerleading the most in the latest budget,
00:32:14.740
They've been talking about doing it for many years.
00:32:16.360
Who knows if they'll ever actually get around to doing what they're promising now.
00:32:19.620
I mean, people feel pretty, you know, once, bit, and twice shy about it all.
00:32:26.100
Because I think people get the idea that this is just being, this daycare is just being given
00:32:33.840
That people are basically being oppressed by not already having access to it.
00:32:37.200
But you're saying there's a lot of wealthy people who are going to be benefiting from
00:32:40.420
At the very beginning of our conversation today, I talked about squandering scarce public resources.
00:32:45.840
I believe that there should, all programs should be targeted.
00:32:49.700
I do not deserve as a professor, a very well-paid professor.
00:32:59.300
It's offensive to suggest that a doctor making a half a million a year should get free drugs
00:33:06.300
The Canada Child Benefit, Ian, I've told you this before.
00:33:08.600
You know how much we get deposited in our account close to, I think it's now $600 a month
00:33:14.880
from the government, which isn't that far less than an Ontario Works welfare payment or disability
00:33:25.200
And yet the government is giving me $600 a month in my account.
00:33:30.620
It didn't work, but I feel like that's the attempt.
00:33:32.960
But this is my larger criticism of this budget and this government.
00:33:37.640
You know, if they said, if they really walked their own talk, which I don't believe they
00:33:41.080
are, they say, we're here for the, you know, the working class and the downtrodden and
00:33:49.340
OK, they're giving benefits to high income people.
00:33:52.560
They're giving benefits to people that live in the wealthiest postal codes in Canada in
00:34:00.740
And my point is, is that we have to target surgically.
00:34:05.580
Surgical targeting to help those who need help, not the people in the most privileged neighborhoods,
00:34:14.040
in the most privileged positions in the broader public service.
00:34:17.380
So this is not a let's bash government argument by me, and it's not a let's ignore everybody.
00:34:23.380
It is that we should be targeting ruthlessly on the people that truly need help, as opposed
00:34:29.880
to universal programs that benefit high income people in the wealthiest postal codes and who
00:34:36.080
have the most privileged positions in Canadian society.
00:34:39.020
Hey, and don't get me wrong, I'm happy to get that $600 a month or whatever it is back.
00:34:43.240
But it's like, OK, if you're going to do it, can you just like get rid of this complicated
00:34:53.200
But speaking of situations that I would prefer directions, I would prefer us head in.
00:35:00.300
We began talking about how Canada's finances looking pretty rocky.
00:35:06.960
Massive deficits that, yes, they're projecting they're going to decrease them kind of a little
00:35:11.800
bit over the next few years, but they are still huge.
00:35:14.020
They're still bigger than what they were during 2008, 2009, during the economic crisis there
00:35:19.220
when Canada went into what was then a historic level of deficit.
00:35:29.320
He said, you look at their forecast for the next 30 years and everything's rosy.
00:35:33.060
So long as you assume there's no pandemics for the next 30 years, no recessions, no crises
00:35:50.960
And the worst problem of all is Newfoundland and Labrador is today insolvent.
00:36:02.680
And then we've got the elephant, or should I say the herd of elephants in the room, called
00:36:09.780
And I am one of those pessimists who believe that Ontario is going to hit the wall in the
00:36:15.640
next three or four or five years, and hit the wall in plain English means the bond markets
00:36:20.480
are going to wake up and say, you know what, Ontario, you're just too high risk for us.
00:36:26.660
You look too much like Greece or Argentina, and we are not going to buy your bonds anymore.
00:36:32.420
You seriously think we're that close to that, just a few years away from being Greece?
00:36:35.400
Because, and then the premier will go, and here's the problem, we're back to the federal
00:36:41.280
The premier will have a press conference and say, fellow Canadians, we can't pay our doctors.
00:36:50.800
And there is no premier, no politician of any political party who's going to say, oh, well,
00:36:57.820
The government of Canada will be forced to step in and bail them out.
00:37:02.480
That's why the quote of 50% roughly debt to equity of the federal government is very deceptive
00:37:10.660
The OECD always quotes, as is the IMF, total government debt at all levels of government
00:37:18.220
When you look at the Canadian metric, we are not at 50%.
00:37:24.200
In other words, we're much more heavily indebted than Ms. Freeland tells us we are.
00:37:30.840
And because she gets away with this fiction that, oh, well, the provinces, that's their
00:37:35.160
But that's, we know that they will bail out the provinces.
00:37:38.800
Because this spring, or last year, the bond markets refused to buy the bonds of Newfoundland
00:37:51.440
Now, I know the Bank of Canada said, no, no, no, we're buying other provinces too.
00:37:55.100
Okay, you know, you can slice and dice it any way you want.
00:37:58.340
The reality is the private bond market won't buy their debt.
00:38:02.680
And the government of Canada stepped in, whether innocently or contrived, I really don't care.
00:38:08.600
They stepped in and bought the bonds, which prevented the Newfoundland and Labrador from
00:38:14.860
And what I'm suggesting, and the PBO is saying that most of the provinces are financially
00:38:21.860
So in the, I don't mean 50 or 100 years from now.
00:38:25.160
And as we go forward in this decade, there's going to be further financial crises at the
00:38:30.120
provincial level, which are going to boomerang back on the federal government at a time when
00:38:34.900
interest rates are climbing and the economy is slowing because of aging and healthcare costs
00:38:39.800
are exploding because older people like me consume a lot more healthcare per person per
00:38:44.440
year, according to KIHI, the health institute, and then young people like you.
00:38:52.120
And unfortunately, the budget didn't even talk about the real problems facing our country.
00:38:57.000
They talked about fictitious problems of a collapsing social safety net and huge numbers of Canadians
00:39:03.200
that had fallen over the cliff when it was a 90-10, okay, some say it was 85-15 economy.
00:39:16.460
The point is, the vast majority of Canadians came through this with no problem because they
00:39:24.440
The stuff about Ontario, the stuff about the provinces.
00:39:26.940
And Professor Ian Lee, I thank you so much for giving us this wake-up call here on the show.
00:39:30.820
I hope you give it to the politicians next time you testify in front of the House of
00:39:43.840
This episode was produced by Andre Pru with theme music by Bryce Hall.
00:39:49.760
You can subscribe to Full Comment on Apple Podcasts, Google, Spotify, or wherever you get
00:39:54.540
You can help us by giving us a rating or a review and by telling your friends about us.