Full Comment - Mark Carney has already started seriously harming the economy

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00:01:11.320 Ready for you.

00:01:16.220 Ontario tabled their provincial budget last week, and, well, the best we can say about

00:01:21.380 it is at least Ontario has a budget, because federally, we're not going to get one.

00:01:25.500 Hello, and welcome to the Full Comment Podcast.

00:01:27.580 My name's Brian Lilly, your host, and today, looking at the fiscal situation in Canada,

00:01:32.380 the debt levels that we have, our economic performance, is it going in the right direction?

00:01:38.240 So many things happening right now, and everything, of course, is being blamed on Donald Trump

00:01:43.400 and the tariffs, and there's some validity in certain instances to that, but it's not the

00:01:48.200 whole story.

00:01:49.680 I want to bring in an old friend of mine, Ian Lee, professor of economics at Carleton University,

00:01:53.940 well-versed in all of this, to help me break it down, or to use another friend's least

00:02:00.000 favorite word, to unpack it.

00:02:02.180 Hello, Ian.

00:02:02.680 Welcome.

00:02:04.320 A good afternoon, Brian, and thank you for inviting me.

00:02:08.100 Let me ask you off the top.

00:02:11.200 You were one of the people that said we shouldn't have retaliatory counter-tariffs at the beginning,

00:02:16.520 right?

00:02:16.740 Yeah, I did.

00:02:17.780 Okay, so how do you react to the news?

00:02:19.700 Because anyone that said we shouldn't have retaliatory tariffs was pretty much,

00:02:23.940 labeled a traitor.

00:02:26.060 You were, why weren't you standing up for Canada?

00:02:30.180 How do you react to the report from Oxford Economics, reported by Bloomberg, by Canadian

00:02:34.860 Press, that we have effectively reduced our tariffs to nothing?

00:02:39.840 We've suspended them.

00:02:41.180 We've eliminated them or put them at near zero.

00:02:44.680 Does that make the Carney government the elbows-up liberals, traitors?

00:02:50.300 I really do appreciate that you asked that question, because I was against tariffs from

00:02:54.000 the very, from the jump, from the get-go.

00:02:55.680 And not because I was just coming up capriciously.

00:02:58.060 I'd studied this long before Trump came along, because it's a long-term issue in economics and

00:03:04.160 public policy.

00:03:04.840 I mean, literally going back to Adam Smith, for God's sake, 250 years ago, you know, and

00:03:10.360 the research on this by econometricians, economists, is that tariffs are, plain and simple, a tax.

00:03:17.440 It's a tax on your own people.

00:03:20.160 And unless one thinks that taxes are really good and great for economic growth, and I don't

00:03:24.940 think most people believe that.

00:03:26.160 They're seen as necessary, yes, because we have to fund government to provide our programs.

00:03:32.160 But it has long been understood that taxes are, cool the economy.

00:03:37.560 They don't enhance the economy.

00:03:39.460 They slow it down.

00:03:40.620 They're contractionary.

00:03:42.220 And putting taxes on ourselves to get at Donald Trump, who's across the border, I thought was 1.00

00:03:47.860 really, really stupid. 1.00

00:03:49.060 It was, you know, cutting off your nose to spite your face. 1.00

00:03:51.380 But you mentioned something.

00:03:53.080 I did get emails from people, literally, who did accuse me, complete strangers, who accused

00:03:57.520 me of being a traitor, saying, you don't love your country.

00:04:00.200 You're just a Trump lover.

00:04:01.520 And I would very patiently and politely and respectfully write back and put a couple of

00:04:05.760 citations into a couple of these economic studies, you know, showing that they're so

00:04:09.640 how harmful they are.

00:04:11.360 But to your point, and this disturbs me, what the Carney government appears to be doing,

00:04:19.620 they're doing the right thing.

00:04:20.440 If indeed this reporting is accurate, and I have no reason to believe it isn't, I think

00:04:25.080 it is correct that the government has surreptitiously, you know, when nobody's looking in the middle

00:04:30.180 of the night when the lights are off, rolled back the tariffs or canceled them or abrogated

00:04:36.340 them.

00:04:37.080 That's the right thing to do.

00:04:39.380 But the point is, is that they are speaking often.

00:04:42.900 They're saying, we're going to do A, and then they do the contrary of A.

00:04:46.440 They do Z. 0.93

00:04:46.880 You know, he came out and said, we're for pipelines.

00:04:49.780 And then we have Guibo only two days ago saying, no, no, no, we don't even need pipelines.

00:04:53.960 And then Dominic LeBlanc on, I believe it was Radio Canada, it was one of the French programs,

00:04:59.840 said the same thing.

00:05:00.600 Oh, no.

00:05:01.400 We're talking about energy corridors for hydroelectricity lines and for rail lines and things

00:05:08.320 like that.

00:05:08.620 We're not talking oil pipelines.

00:05:10.320 And Brian, why, you know, some people listening could say, well, you know, you're just getting

00:05:14.660 your knickers in a knot because politicians will be politicians.

00:05:18.100 Actually, no, that's not why my knickers are in a knot.

00:05:21.320 It's because I'm a former banker way back when.

00:05:24.380 I was nine years in banking before I went back to grad school and then became a professor.

00:05:28.740 And I have been teaching this stuff for literally 38 years about economic growth and what are the

00:05:34.520 conditions for economic growth and how do you encourage capital investment, which is the

00:05:38.520 single, one of the most important economic metrics of all, because that creates the jobs

00:05:42.140 of tomorrow.

00:05:43.980 Philip Cross came into my class just before the pandemic and said exactly the same thing.

00:05:48.780 You want to know how an economy is going to look like in two or three years?

00:05:51.520 From now, go look at capital, private capital investment today, because that creates the

00:05:56.120 factories, the jobs, the investment in companies that creates the jobs of tomorrow.

00:06:00.380 I'm afraid to ask how we're doing today.

00:06:02.480 We're doing terribly.

00:06:03.300 I'll get to that.

00:06:04.040 And so what I'm saying is when you have a government acting like this, where they're

00:06:09.620 shilly, I'm just going to use plain sort of colloquial English, when they shilly 1.00

00:06:13.680 shally, you know, you know, that famous vaudeville line, yes, we have no bananas.

00:06:18.800 I mean, you can almost characterize that about anything that the, this government does on

00:06:22.380 economics, you know, yes, we're for pipelines.

00:06:24.980 No, we're not.

00:06:25.700 Pipelines.

00:06:26.200 A friend put it this way, Ian, and you'll appreciate this old, uh, it's a paraphrase of an

00:06:30.400 old Canadian term, uh, pipelines if necessary, but not necessarily pipelines.

00:06:36.860 And so again, people could say, well, so what, you know, they're just spinning.

00:06:40.120 That's what politicians do. 0.99

00:06:41.280 It sends messages to very serious people that have lots of money.

00:06:46.380 That's not me.

00:06:47.000 I'm just a poor professor, but the people who make the decisions to build a billion dollar

00:06:51.980 new plant or a $5 billion plant or a $10 billion plant, there's serious capital investment

00:06:57.420 decisions, when they look at the leaders of the country, these aren't, these aren't professors,

00:07:03.040 these aren't NGOs, these aren't journalists.

00:07:05.680 These are the people who make the economic decisions, the laws and the regulations.

00:07:09.980 And when they see how the people at the top are acting so unseriously and in such a contradictory

00:07:16.520 manner, it connotes and suggests instability and connotes confusion at the top.

00:07:24.300 And that is not the message you want to send out to capital investors, to people who are going

00:07:29.520 to invest billions over a very long period of time.

00:07:32.580 And so we don't have a consistency of message because they're trying to, I'll use another

00:07:37.760 old fashioned, uh, and I like it.

00:07:39.840 It's a very rough, crude English. 0.99

00:07:42.020 They're trying to suck and blow at the same time. 0.98

00:07:44.600 And you know, when it comes to economics of, of this kind of, these kinds of issues, that 0.99

00:07:49.500 is the worst possible thing that they can do.

00:07:51.760 Well, let's talk about the fact that we're not going to have a federal budget.

00:07:56.020 Um, there's a lot to criticize in the Ontario budget, as I said, off the top, but at least

00:08:01.360 they have one.

00:08:02.040 Yes.

00:08:02.500 And we can judge them by not only what's there, but then by how they perform.

00:08:07.960 Mark Carney, all through the liberal leadership and during the election, kept repeating

00:08:14.520 the line.

00:08:14.960 I want to play the clip here because he, he repeated this ad nauseum.

00:08:19.900 I've learned a few things from long experience in crises.

00:08:24.660 And the first is that plan beats no plan.

00:08:28.160 All right, Ian, you heard him.

00:08:29.280 A plan beats no plan.

00:08:31.300 Um, well, a budget is the country's fiscal plan and we're not going to have one.

00:08:38.400 Do you buy this?

00:08:39.860 Any of the excuses that are coming out?

00:08:42.080 Like, well, the election just happened.

00:08:43.820 There's not enough time.

00:08:45.540 We'll get an economic update in the fall.

00:08:47.680 There's too many unknowns due to Trump.

00:08:49.580 You know, you can blame anything on Donald Trump these days.

00:08:52.520 It's your get out of jail free card.

00:08:54.420 Do you put any credence in any of the excuses for Canada not having a budget?

00:08:59.200 And to me, that brings it back to what you were just talking about.

00:09:02.600 Large capital investments, uh, people looking for where to build a factory, build a plant,

00:09:09.280 invest their money, create jobs.

00:09:11.120 I think it's going to spook them.

00:09:12.860 Of course it is.

00:09:13.640 Uh, to your question, um, you know, and, and the liberals and I'm not, I'm not a partisan.

00:09:17.920 I don't belong to any political party.

00:09:19.340 I do not donate money.

00:09:20.300 And any journalist can look that up.

00:09:21.680 I donate no zero money to any political party in the last 40 years.

00:09:25.740 And thirdly, I do not allow lawn signs on my lawns, federal, provincial, or even municipal

00:09:30.820 where there's no party.

00:09:31.820 So I have a point of view for sure, because I believe in capitalism.

00:09:35.220 I believe in markets, but I'm not a partisan.

00:09:37.440 But the liberals did really push the fact, you know, look, Mr. Carney's highly educated.

00:09:41.800 He's got lots of experience.

00:09:42.660 Look at his CV.

00:09:43.600 Well, I want to just very briefly mention my CV.

00:09:46.300 Very briefly.

00:09:47.340 I've lived in Ottawa all my life.

00:09:49.680 I've worked not only in university, but I previously worked in the head office of Canada

00:09:53.360 Post in corporate finance and banking.

00:09:54.780 And something I haven't talked about, because it hasn't really come up, is I worked for

00:09:59.180 a short time in the Privy Council office.

00:10:02.340 That's the office that supports the Prime Minister of Canada.

00:10:04.660 My father was in the government for 42 years.

00:10:06.940 My partner was in the government of Canada for 35 years.

00:10:09.700 So I'm very, very, and I've studied, my master's and PhD is actually in economic public policy,

00:10:14.920 economic decision making.

00:10:16.400 And so I'm very aware of how the machinery of government works.

00:10:21.460 And I know people at the finance ministry, and there it is staffed by roughly 800 professionals,

00:10:28.020 highly educated economists, mostly mathematicians, econometricians, statisticians, but mostly

00:10:33.140 economists.

00:10:33.620 And the idea, which is what they're suggesting subliminally, that finance doesn't have a clue

00:10:40.180 what's going on in the Canadian economy, is just preposterous nonsense.

00:10:45.180 They have these massive models, a massive model of the Canadian economy running on these incredibly

00:10:53.100 powerful computers with thousands of variables that map right to the second where the Canadian

00:11:00.060 economy is.

00:11:00.800 It's an input-output analysis.

00:11:02.280 I don't want to get into the weeds.

00:11:03.700 Suffice to say, I mean, they literally know to the minute with the revenues flowing in

00:11:08.500 and the tax revenues flowing in.

00:11:11.440 And remember, every employer in Canada, private and public, has to submit their taxes once a

00:11:16.600 month and list all the people working there.

00:11:18.660 So they know literally with a lag of 30 days who's working and how many people are working

00:11:23.200 and who's not.

00:11:23.760 So the idea that they said, well, we don't really know what's going on, they didn't quite

00:11:28.340 put it that boldly, is just absolutely factually false.

00:11:32.420 That is not true.

00:11:34.840 Ian Brody is a guy who's been around politics a long time.

00:11:37.780 He's a political science professor at the University of Calgary, but I don't want to insult

00:11:42.160 him.

00:11:42.700 That's not his best qualification.

00:11:44.720 He has practical experience in politics and in government.

00:11:48.140 He was Stephen Harper's chief of staff for the first two and a half years of the Harper

00:11:52.780 government.

00:11:54.160 He said, look, due to the models that you're talking about, the finance department could

00:11:59.840 have a budget out in two weeks.

00:12:02.280 I think two days, in my opinion.

00:12:05.520 And others are still saying, you know, people supporting the carny liberals, it's the true 0.53

00:12:10.200 and on crowd has really just shifted gears and they're off on Trudeau now.

00:12:15.820 So they're saying, oh, no, they're off on Carney now.

00:12:19.080 They're saying, no, this couldn't possibly be done.

00:12:22.680 This has the potential to hurt our credit rating, which changes how much we pay in interest

00:12:30.040 on the massive debt.

00:12:31.700 We're already scheduled to be spending $54 billion this year on the debt charges, not

00:12:38.020 paying down the debt.

00:12:38.980 That's just the interest payment that we have to make.

00:12:41.820 That's more than we're spending on a whole pile of departments and programs.

00:12:47.880 It's more than we're spending on the Canada health transfer this year.

00:12:51.440 And that could go up as a result of this, couldn't it?

00:12:54.700 Yes, it can.

00:12:55.320 But let me just go back for a moment so people don't think I'm exaggerating when I said

00:12:58.380 two days.

00:12:59.100 People don't realize, I really mean this.

00:13:01.140 I think there's large numbers of people who don't realize how instantaneous everything

00:13:05.060 is.

00:13:05.500 And that's because of something I've talked about a lot with Canada Post, and I'm not changing

00:13:09.640 the subject of Canada Post, but what I call the digitization of everything informational.

00:13:14.140 In the old days, when I grew up, I'm a boomer.

00:13:16.820 You know, file cabinets, you know, physical checks put in an envelope with a little postage

00:13:21.360 stamp.

00:13:21.980 Those days are gone.

00:13:23.780 The entire government of Canada is 100% digitized.

00:13:27.720 So are the banking system and the payment system.

00:13:31.120 So is the remittance of taxes from all the companies across Canada.

00:13:34.980 They don't have a courier take a check once a month to the CRA.

00:13:39.000 The money is transferred electronically instantaneously.

00:13:43.600 So what I'm trying to say is finance has a model that is based on this digitized information.

00:13:50.860 They have data flowing in, aggregated data from the CRA.

00:13:54.860 I don't mean that they can look at the individual tax return.

00:13:57.420 They've got the aggregate data flowing in by the minute.

00:14:00.240 It's like Walmart.

00:14:01.080 Walmart is most famous for wiring up all of their stores in the mid-80s.

00:14:04.880 It was a Harvard Business School case study.

00:14:06.620 All of their stores are wired up so that in Bentonville, Arkansas, they know how much,

00:14:10.960 how many units of ketchup are being sold at Walmart, Billingsbridge, Ottawa at 2 p.m.

00:14:16.740 on May the 16th.

00:14:18.800 That's how real time the data is.

00:14:20.800 The government of Canada has an awesome IT digital reporting system.

00:14:25.800 So that's the first point.

00:14:26.820 They could, when I said two days, I'm sure they could produce it if I went to, if I was

00:14:29.840 the prime minister and said, guys, Mr. Deputy Minister, can you give me a printout on the

00:14:34.080 statement by, you know, 5 o'clock this afternoon, I'm sure you could do it.

00:14:37.240 Because the data is really...

00:14:37.960 Well, but then you've got to add in all the political language, get it translated, and

00:14:41.920 then you've got to get it printed.

00:14:43.040 Sure, sure.

00:14:43.380 But the actual numbers, they could do quickly.

00:14:45.200 Right.

00:14:45.540 Now, to your point, and again, this brings it back to the, my grave concern about this,

00:14:51.240 is that we already are facing massive uncertainty in Canada because of the Trump tariffs, but

00:14:55.940 not just because of the Trump tariffs.

00:14:57.600 Because of these deficits and the contradictory messaging coming out of the government of

00:15:02.080 Canada, contradictory messaging coming out of Premier Ford's government in Ontario.

00:15:06.560 You know, and there is some, we can talk about that later.

00:15:09.400 And so, again, if I was an investor, I'm talking somebody with billions at my command.

00:15:15.120 So I could put a new plant, a critical minerals plant in Canada, or a new auto plant.

00:15:19.880 And I'm looking at this, and I'm seeing a government that says they can't even produce a financial

00:15:26.220 statement, even though these investors are very sophisticated people.

00:15:31.000 They know the digitization of everything in terms of corporations and governments.

00:15:35.000 And this must be, they must be sitting there saying, you know, these guys are playing games.

00:15:40.100 These guys can't be trusted.

00:15:41.420 They're not sweet shooters.

00:15:42.760 I've talked to people who have helped land the multi-billion dollar investments in this

00:15:46.620 country, in the private sector, in the public sector, people who've been around, bringing

00:15:51.420 them, landing them here.

00:15:53.320 And anything will spook these guys, because you're always up against two or three other

00:15:58.160 potential locations.

00:15:59.320 That's right.

00:15:59.980 And anything you do that makes them say, eh, you know what, Ohio's looking better.

00:16:05.080 Yep.

00:16:06.360 That hurts you big time.

00:16:07.940 I want to tell you a quick story, if I could, Brian.

00:16:10.160 I had about 10 years ago, I had a very, very senior vice president from GE International.

00:16:15.540 And his title was Country Risk Management.

00:16:18.760 And I found out about him, and I talked to him on the phone, and I said, I really want

00:16:22.240 you to come here to my class.

00:16:23.500 He did.

00:16:24.400 He was fascinating.

00:16:25.140 A German-American, spoke five or six languages.

00:16:27.620 And he was talking about how an enormous monster corporation, which is what GE Capital

00:16:33.800 was at the time.

00:16:34.840 This was GE Capital, the investment arm of GE.

00:16:37.680 And they had billions and billions to invest.

00:16:40.240 I said, how do you decide?

00:16:41.620 Because you're in countries around the world.

00:16:43.160 You're in Brazil, you're in Australia, you're in France, you're in Italy, you're all over

00:16:46.860 the place.

00:16:47.680 He says, we take, we study every country very carefully.

00:16:50.040 That's why my office exists.

00:16:51.840 And he said, we're looking.

00:16:52.700 I said, what are you looking at?

00:16:53.480 He said, the obvious things, you know, the inflation rate, the level of education in

00:16:56.540 the country, unemployment.

00:16:57.960 But then we look at the intangibles.

00:17:00.020 What's the investment climate?

00:17:01.840 What is the attitude of the government towards private capital investment?

00:17:05.760 And then he says, we create reports, very confidential, of course, for the top people

00:17:10.740 at GE.

00:17:12.140 And so my point is, this goes on in any large, serious, multinational.

00:17:16.760 And when you look at the stuff that's going on in Canada, and again, so people don't think

00:17:20.900 I'm just beating up on the federal government.

00:17:22.600 I can say the same things about the government of Ontario.

00:17:25.500 And so they're looking at this and they're seeing instability, incoherence, confusion,

00:17:32.520 contradictory.

00:17:33.200 So on the incoherence, I want to play the clip so people can hear what Stephen Gebo

00:17:38.280 said.

00:17:38.980 This is the day after Mark Carney did a big interview with Vashti Capello's CTV.

00:17:43.300 Yes.

00:17:43.620 And I thought it was a great interview.

00:17:45.500 Yes.

00:17:46.000 I thought she pushed him hard.

00:17:47.520 I thought he, you know, gave real answers, including saying yes to a pipeline.

00:17:51.600 And then the next day, out comes his minister of heritage, who apparently has veto power over

00:17:57.300 pipeline, saying this.

00:17:58.560 River Smith is saying that you're anti-pipeline still.

00:18:00.860 What do you say in response to her concerns just broadly about the cabinet?

00:18:04.340 And how do you deal with national unity?

00:18:06.400 How do you address that right now?

00:18:07.960 So on pipelines, people should remember that we bought a pipeline, Trans Mountain, and that

00:18:14.120 is only used right now about 40% capacity.

00:18:18.540 So I think before we start talking about building an entire new pipeline, maybe we should maximize

00:18:24.120 the use of existing infrastructure.

00:18:26.800 And the Canadian Energy Regulator, as well as the International Energy Agency, are telling

00:18:31.460 us that probably by 2028, 2029, demand for oil will peak globally, and it will also peak

00:18:38.720 in Canada.

00:18:40.240 So as far as I know, there are no investors right now.

00:18:42.620 There are no companies that are saying that they want to build an east-west pipeline.

00:18:46.020 And as you know, these things are built by companies, not governments.

00:18:49.240 So that investment climate, there's two things, and I'll pick on a provincial government, not

00:18:55.020 just the federal liberals.

00:18:58.660 We all think that we need to invest more.

00:19:02.220 Not everyone, I guess, but the consensus seems to be to respond to Trump, to really liberate

00:19:07.260 our economy.

00:19:08.040 We've got to invest in our oil and gas sector.

00:19:11.540 We've got to get these products out of the ground, off to markets.

00:19:14.640 And so then you have Guy Beau coming out saying, no, we don't need any more pipelines.

00:19:19.320 And by the way, we're going to hit peak oil, so we don't even need oil in two years.

00:19:24.480 And then Danielle Smith, well, she's not promoting separatism, but there is a big separatism push,

00:19:31.640 and there are people within her party that want it.

00:19:34.540 That has to affect investment decisions as well.

00:19:37.980 So that if they did say, yeah, okay, we'll do a pipeline, well, you're really not sure

00:19:44.000 if you're one of the companies that would build one.

00:19:46.840 You're not sure, okay, is it stable politically in Alberta, and will the federal government

00:19:53.660 actually follow through on this or change their mind halfway through?

00:19:57.220 Exactly.

00:19:58.020 And when Guy Beau did that, I watched the Vashie interview.

00:20:00.600 I thought it was an excellent interview.

00:20:01.780 I thought his responses were fair, measured, you know, didn't always agree with all of them,

00:20:06.880 but, you know, that's his take.

00:20:08.400 Okay, that's fine.

00:20:09.660 But when I saw Guy Beau's comment and the lack of response from the prime minister,

00:20:17.900 given, this isn't about correcting a cabinet minister who made a mistake accidentally.

00:20:24.260 I don't believe it was an accident, by the way.

00:20:26.180 I don't.

00:20:26.660 I believe it was very deliberate.

00:20:28.380 And the fact that the prime minister didn't step in, because this goes to the very core of

00:20:33.180 his claimed vision for Canada to become an energy superpower.

00:20:37.640 This isn't talking about, I don't know, bicycle lanes in Toronto.

00:20:40.500 This is a really huge, huge, huge issue.

00:20:43.700 He didn't publicly rebuke him and say, to the effect, you know, he's just new in the job.

00:20:50.480 This is not the policy of the government of Canada.

00:20:53.860 I categorically, you know, not condemn, you didn't have to go that far,

00:20:58.820 simply say, this statement does not represent the vision of the view of the governor candidate.

00:21:03.700 He didn't do that, to my knowledge.

00:21:05.280 I look for a response, a strong...

00:21:07.940 No, he hasn't.

00:21:09.340 And they haven't responded to the, at this point, they haven't responded to the claim

00:21:14.260 that they've eliminated tariffs either.

00:21:16.140 They're being very quiet.

00:21:16.940 So what that, you know what, how I interpreted it, and I figured, you know, if I can figure

00:21:21.300 this out, then I think there's some, some investors a lot smarter than me that can figure

00:21:25.420 this out. 0.96

00:21:26.340 They're doing the dancing again, to use that little phrase, sucking and blowing. 0.76

00:21:31.180 So, so he goes out, Gibbo goes out there and sends messages, dog whistles, whatever you

00:21:36.660 want to call it, to the progressive arm or wing of the liberal party, the so-called red

00:21:41.400 liberals.

00:21:41.720 And then they can say, no, no, no, no, no, we're still going, we're still an energy superpower.

00:21:46.740 So they're saying that to one audience, you know, the, the blue liberals, the business

00:21:50.940 liberals, they're saying, no, we're all for it.

00:21:52.420 We're all in on pipelines.

00:21:53.780 And then they're dog whistling, or maybe more loud than dog whistling to the progressive

00:21:58.120 side of the liberal party saying, no, no, no, no, no, we don't need pipelines.

00:22:01.520 And they may think that this is really clever, politically clever, because that way you're appealing

00:22:06.620 to two bases, to the two bases of the liberal party.

00:22:08.860 But it's not strategically, it's not geopolitically clever, because all this sends is a message

00:22:14.980 to the business community, both in Canada and outside of Canada, they're not to be trusted

00:22:21.200 on their comments about investment in the natural resource sector.

00:22:26.200 I think they unwittingly, unwittingly are sabotaging their own message and sabotaging investment

00:22:32.980 in Canada.

00:22:33.440 I'm using very strong language, because I think I came out of the corporate world, I

00:22:38.000 came out of the capitalist world of banking.

00:22:40.460 And they're very skittish about governments, especially the liberal government, because

00:22:44.080 of the last nine years of Trudeau.

00:22:45.740 So the last thing they should have allowed was Guibo, and I think it was probably orchestrated.

00:22:50.320 But whether it was or wasn't doesn't matter.

00:22:52.440 When he did say it, the prime minister should have very clearly repudiated it publicly on national

00:22:59.620 television.

00:23:00.100 And that has yet to happen.

00:23:04.100 Ian, we have to take a quick break.

00:23:05.500 When we come back, I do want to ask you about whether we are in a recession, headed to one,

00:23:10.480 where things are at, and about Ontario being the sick man of the Canadian economy.

00:23:16.660 More in moments.

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00:23:44.500 This is Tristan Hopper, the host of Canada Did What?

00:23:47.960 Where we unpack the biggest, weirdest, and wildest political moments in Canadian history

00:23:52.700 you thought you knew and tell you what really happened.

00:23:56.300 Stick around at the end of the episode to hear a sample of one of our favourite episodes.

00:24:00.740 If you don't want to stick around, make sure you subscribe to Canada Did What?

00:24:05.120 everywhere you get podcasts.

00:24:06.620 Our new government will be a strong and reliable partner to the provinces, the territories,

00:24:11.400 and to Indigenous peoples.

00:24:13.400 We will reinforce bridges across labour, business, and civil society.

00:24:19.500 And together, we will advance the nation-building investments that will support the core mission

00:24:25.000 of this government, which is to create the strongest economy in the G7, an economy that

00:24:30.240 works for everyone.

00:24:31.220 Mark Carney says we're going to have the strongest economy in the G7, and I guess a lot of voters

00:24:36.600 believed him because he's an economist.

00:24:39.400 I know better than to believe economists Ian Lee.

00:24:41.800 What about you?

00:24:42.660 Are we going to have a...

00:24:44.180 Wait a minute, you're an economist.

00:24:46.100 Are we going to have the strongest economy in the G7, or are we headed towards a recession,

00:24:50.440 as Deloitte said in a report, what, two weeks ago now?

00:24:53.940 There's two separate questions there.

00:24:55.640 And when you look at the data, and I look at it, I pour over it all the time, the OECD data,

00:24:59.620 which I respect enormously.

00:25:01.520 I call it the think tank of the high-income countries, the 37 countries of the OECD, because

00:25:06.040 they donate all the money, including Canada, to funding and running the OECD.

00:25:09.900 So it's the think tank for the 37 wealthiest countries in the world.

00:25:13.960 I also use the IMF data.

00:25:15.800 I also use some of the data from the World Bank, because they have excellent data too,

00:25:19.320 as well as some of the other agencies out there.

00:25:23.240 And everything I'm reading shows that we are in serious, steep, long-term decline, and

00:25:30.080 it accelerated in the last nine years.

00:25:32.920 And I'm talking productivity.

00:25:34.480 I'm talking income per capita.

00:25:37.640 I'm talking R&D.

00:25:39.240 I'm talking innovation.

00:25:40.860 So the idea that we are the strongest country in the OECD just isn't supported empirically

00:25:45.480 by these different international agencies' metrics.

00:25:49.680 In terms of the second question, I think we are going into recession simply because of

00:25:56.660 the uncertainty around everything.

00:25:59.140 And again, it's not just Trump.

00:26:01.280 There's uncertainty about this government.

00:26:03.340 Who's the real Mark Carney?

00:26:04.840 Is it the Mark Carney who says, we're going to push ahead and really pivot to natural resource

00:26:10.300 development, exploitation, and exporting to diversify our economy?

00:26:14.160 Or is it the Mark Carney who winks and wink, wink, nudge, nudge at people like Gebo, who

00:26:20.160 say, no, no, no, we're not going down that road at all.

00:26:22.360 So I think this...

00:26:23.540 I've been looking at just something as simple as the unemployment data.

00:26:27.240 Yeah.

00:26:28.520 Two years ago, we were at 5% nationally.

00:26:31.680 A year ago, we were at 6.1.

00:26:33.360 Now we're at 6.9.

00:26:35.180 Ontario was at 4.9.

00:26:36.980 Two years ago, we were at 6 point something in April, 2024.

00:26:44.300 And now we're at 7.8.

00:26:46.320 We're right behind Newfoundland, you know, trying to take them over for the top spot.

00:26:51.800 Youth unemployment in Alberta is over 17%.

00:26:54.800 Yeah, it's pushing 20%.

00:26:56.120 These are the numbers that, you know, if you can't relate to some of these IMF and OECD

00:27:01.960 reports, you can relate to you being unemployed or your kid not being able to find a job.

00:27:06.820 That's right.

00:27:07.680 And again, coming back to one of my favorite metrics, which is capital investment.

00:27:11.820 And people who say that your eyes glaze over, well, you capital investment, what's that mean?

00:27:14.900 Let me put it really plain English.

00:27:16.940 That is the judgment, the supreme judgment of people with money.

00:27:22.560 If they're saying, uh-uh, no, I'm going to take my investment to Ohio or to Alabama,

00:27:28.460 what they're saying, and by walking away from us, or Honda just moving production to the

00:27:33.760 southern United States, they are, that means they are losing confidence in Canada.

00:27:40.880 You don't move production or shut down a decision to invest in Canada because your confidence in

00:27:47.420 the country is going up.

00:27:49.500 You, that is a, an empirical, that's voting with your wallet.

00:27:53.540 It's, I'll do an analogy.

00:27:55.240 You know, if you know that there's a particular restaurant in downtown Toronto that's developed

00:27:58.560 a reputation for having lousy food, guess what you do?

00:28:01.340 You don't go there anymore.

00:28:02.980 You just vote with your wallet and walk to another restaurant that's an up-and-coming

00:28:06.240 restaurant.

00:28:07.180 It's just like investment.

00:28:08.980 You stay away from the crummy restaurants.

00:28:11.420 Okay, well, why would you put money into a country that you think is declining?

00:28:15.260 And so capital investment is a thermometer of the temperature of the climate of that country.

00:28:21.060 And capital investment is going down in Canada.

00:28:24.740 C.D.

00:28:25.040 Howe has got Research Institute in Toronto, has some excellent data on this and graphs on

00:28:30.340 this, as does the McDonnell-Laurier Institute.

00:28:32.900 And so this is a thermometer, a barometer, thermometer, I don't know whichever one it is, that measures

00:28:39.000 the relative attractiveness of our country relative to other countries.

00:28:44.020 And right now we are in decline.

00:28:45.620 You mentioned Honda, and for the longest time, Premier Ford and then Prime Minister Justin

00:28:51.700 Trudeau were going around bragging about deals like Honda, Stellantis, Volkswagen.

00:28:56.820 The Stellantis plant is up and running.

00:28:58.680 It's not at full capacity yet.

00:29:00.600 Volkswagen is still going forward.

00:29:02.660 And I'm told, yeah, even though the EV sector is shifting, there's still going to be enough

00:29:07.700 business in its parts.

00:29:08.880 So it's not going to shift down to the States because currently not impacted by the tariffs.

00:29:13.520 But Honda, two things.

00:29:15.840 One, the EV market is not going the way that was expected because Trump's pulled out of

00:29:20.660 the EV mandate.

00:29:22.220 Basically, you've got California left and Canada trying to do this, but we're going to have

00:29:27.020 to abandon it as well.

00:29:28.680 So they've paused on their EV investment of about $15 billion, but moving the production,

00:29:36.360 I mean, that is a direct result of the tariffs.

00:29:39.660 I will, you know, I have said time and again that we have to look beyond Trump and the tariffs

00:29:46.200 because he's not the root cause of all of our problems.

00:29:50.520 That's right.

00:29:50.860 But that one he is.

00:29:52.080 On that one, that is a direct result that they don't want their American customers paying

00:29:56.760 25% more for a CRV just because it comes out of Alliston.

00:30:01.840 So I've complained a lot recently about the underlying weakness in the Canadian economy.

00:30:12.000 I'm not the expert in how to fix it, though.

00:30:15.220 As someone that studies economics, where would you come down on this?

00:30:20.000 What are the things that we could be doing but aren't doing, either federal governments

00:30:25.180 or provincial governments?

00:30:27.800 You know, that was my critique of the Ontario budget the other day, by the way, was it's

00:30:32.680 neither fishing or fowl.

00:30:34.340 They're spending a lot, thankfully not as much as I worried they would.

00:30:38.960 But it doesn't address root causes of falling productivity, weakening unemployment, and I

00:30:46.980 don't think the federal government would if they could figure out how to put out a budget.

00:30:50.920 You know, this has been studied today.

00:30:54.540 We're really talking about productivity, which is in steep, steep decline.

00:30:59.080 And Paul Krugman, my goodness me, I never thought I'd be quoting Paul Krugman to you

00:31:02.000 or to anybody, okay, because he's a very progressive economist.

00:31:05.240 But he's also a very good economist, Brian.

00:31:07.260 He is.

00:31:07.660 He's a very, very smart man.

00:31:09.060 I just don't agree with many of his policy solutions.

00:31:12.800 But that doesn't mean he's not a top-notch economist.

00:31:14.920 And he has said, and some other economists have said this too, it's not because Krugman

00:31:19.180 said it, that pretty well the only thing that will raise your standard of living over time

00:31:24.640 is increases in productivity, greater output per worker principally because of innovation.

00:31:31.780 And so now to your point, I testified last fall, I testified many times before the House

00:31:36.720 of Commons Finance Committee, and last fall I almost, I don't know, blew my stack.

00:31:41.260 I mean, I didn't lose control.

00:31:42.200 I don't mean that, but I said, you know, for the last 50 years, and I'm just going to

00:31:47.680 use this term loosely, that John Ibbotson uses the Laurentian elites, have put forward

00:31:52.540 a vision which has been subscribed to by conservatives too.

00:31:55.280 So this isn't a trashing of the liberals.

00:31:57.180 The conservatives, liberals, and NDP have subscribed to what I have summarized into a

00:32:02.580 tight little soundbite, subsidize, protect, and regulate.

00:32:07.480 And they believe that this was the path to prosperity.

00:32:12.460 We now know after 50, 60, 70 years of subsidize, protect, and regulate, and we've seen the steep

00:32:20.260 declines in Canada, that this is the path to a decline in our standard of living.

00:32:26.900 Just as a sidebar, very quickly, a friend of Mark Carney, Mario Draghi, who has his own

00:32:33.260 PhD, thank you very much, in economics from MIT, former governor of the European Central

00:32:38.420 Bank, has a devastating report on the website of the European Commission.

00:32:43.500 He was asked to do a report on European competitiveness, because Carney keeps, not because, Carney keeps

00:32:47.920 saying we've got to pivot to Europe because they're doing so well.

00:32:51.180 No, they're not.

00:32:52.020 But you should read the report of Mario Draghi.

00:32:54.880 He's saying it's a crisis over there, and he is coming.

00:32:58.460 If you read that report, much of what he's saying about Europe applies to Canada.

00:33:03.720 Subsidize, protect, and regulate.

00:33:06.600 And so yesterday on a blog of Krugman, he noted, and he got attacked by people on the

00:33:12.740 left.

00:33:13.400 He just put the date out.

00:33:14.820 People don't know this.

00:33:15.760 As I speak today, the average income per person of the United States is double, double the

00:33:23.460 European Union.

00:33:24.720 Let me repeat that, everybody.

00:33:27.480 U.S. average person makes twice as much as the EU average person.

00:33:33.700 This is stunning, because only 20 years ago, they were about even, Stephen.

00:33:37.300 They were about the same average GDP per capita.

00:33:40.180 Coming back...

00:33:40.620 We're, what, 20, 30% below the Americans?

00:33:43.980 Yes.

00:33:44.140 We're still above the Europeans. 1.00

00:33:45.500 Yes, we are.

00:33:46.360 Yes, we are.

00:33:46.800 But we're well behind the Americans.

00:33:48.800 We're way behind the Americans. 0.67

00:33:49.780 The Americans are now 80,000 GDP per capita, and we're at, I believe, 60.

00:33:53.900 So that's not trivial.

00:33:55.260 But to your question, I don't want to lose my chance to respond to you.

00:34:00.660 This has been studied by Commissions on Productivity, the Bank of Canada.

00:34:04.400 Carolyn Rogers wrote that, gave that wonderful speech last year, time to break the glass.

00:34:08.500 Brian, we've got to kill and destroy protectionism in this country, which, and by the way, Premier Ford used it probably over 100 times in his budget yesterday.

00:34:18.020 I have argued that the word protectionism in economics and public policy is one of the most horrible illnesses that face Canada today.

00:34:28.280 It's also Orwellian.

00:34:30.540 It is truly Orwellian because the whole idea is we're going to save you and protect you from bad things.

00:34:37.080 Protectionism hurts people.

00:34:39.440 It damages people.

00:34:41.120 It causes harm and suffering to people.

00:34:43.240 So when you hear a politician saying, I'm going to protect you, run, run in the opposite direction because they're about to screw you.

00:34:51.060 You're about to get home.

00:34:51.920 Outside of something like supply management.

00:34:54.540 Well, that's one.

00:34:57.100 You know, I'm struggling to think of industries where we have protectionism in Ontario, at least.

00:35:02.820 I would say the LCBO is a classic example of protectionism.

00:35:07.600 It's an indirect form of protectionism.

00:35:09.360 It's kicking out the private sector until they somewhat open it up. 0.76

00:35:11.920 I applaud that.

00:35:13.580 But protectionism, let me back up for a moment because I did sit beside the Competition Bureau director last fall at the House of Commons.

00:35:20.480 He uses different language, but we're both saying the same thing.

00:35:23.020 He uses this language from Schumpeter about we need to have contested markets in every marketplace.

00:35:28.820 Every, you know, hair shampoo, computers, whatever.

00:35:32.940 A third of the Canadian economy experiences some form of legislated or regulatory protection from either the federal government or the provincial governments.

00:35:40.920 I think the single worst problem facing Canada is protectionism writ large, including, yes, the 200 billion provincial trade barriers imposed by the premiers.

00:35:51.800 And I don't think that the prime minister is going to get rid of them because too many premiers, they love those protections.

00:35:57.780 They claim that they're going to get rid of them, but they don't.

00:35:59.840 They want it.

00:36:00.280 They want them because they think it gives them political benefits.

00:36:03.360 So our number one sin.

00:36:05.540 Bob Canu was just here at Queen's Park signing a memorandum of understanding with Premier Ford saying that they're going to cut them.

00:36:14.020 I hadn't thought of the LCBO as a form of protectionism, though.

00:36:17.160 I've been arguing for years as protectionism.

00:36:20.120 Look, I've agreed with getting rid of it, but I hadn't thought of it in those terms.

00:36:24.700 Brian, they determine what they're buying, and you don't have the choice.

00:36:28.260 I, as an entrepreneur, can't go and say, I'm going to buy these brands from California or New Zealand because the LCBO hasn't approved it.

00:36:33.460 That's the government telling me what I can buy.

00:36:36.320 And you should hear, you want to have fun if you're at an event in Ottawa filled with a lot of diplomats. 0.81

00:36:42.200 Just mention the LCBO to any diplomat, any ambassador or trade rep for a foreign country, and you think, well, that's ridiculous.

00:36:50.700 Why are they getting involved?

00:36:52.100 They're lobbying the LCBO constantly because their producers will get listed, and then six months later, they're taken off.

00:37:00.220 And I've talked to ambassadors who say, the product sold out.

00:37:03.560 The company started investing because they thought, okay, good.

00:37:06.880 I'm in Ontario now.

00:37:08.280 I'm in the big market.

00:37:09.020 And then they, without rhyme or reason, kicked them out.

00:37:11.980 But here's a quick factoid for you.

00:37:14.040 Working on a story about all of the different changes that the Ford government in Ontario is making to alcohol.

00:37:21.860 Still hasn't gone far enough, but it's moving in the right direction, as you said.

00:37:26.160 People freaked out when he allowed beer and wine and ready-to-drink in convenience stores.

00:37:32.260 Convenience stores have seen a 15% boost, which is leading to them being able to stay open.

00:37:37.960 It's leading to them being able to hire more people.

00:37:40.920 Exactly.

00:37:41.220 Invest in their stores.

00:37:42.960 And you go into any major convenience store around your area, you'll probably see the same thing that I am.

00:37:50.640 They're buying you fridges.

00:37:52.220 They're installing you equipment.

00:37:54.020 They've got an extra person on the floor.

00:37:55.900 Yes.

00:37:56.400 Brian, some people listening right now probably think I'm some kind of a right-wing Trumpian, which I'm not, who hates government bureaucrats.

00:38:02.120 I don't.

00:38:02.600 I'm a public servant.

00:38:03.700 I'm in a public university.

00:38:04.980 I'm not in a public...

00:38:05.600 You've been married to a public servant for most of your life.

00:38:08.620 All my neighbors are public servants.

00:38:11.280 This is not about beating up on public servants.

00:38:13.740 It's about the confusion of the Laurentian elites for 50 years.

00:38:17.320 The role of government is to regulate the hockey game.

00:38:21.660 They're supposed to wear the pinstripes, and they blow the whistle and call penalties when someone hooks or trips or cheats or whatever gets in a fight.

00:38:29.600 Their role is not to tell Sidney Crosby when to shoot the puck or how to shoot the puck or to whom to pass the puck.

00:38:38.800 Their job is not to own hockey teams.

00:38:41.900 Their job is to get out of the way and create a level playing field.

00:38:45.440 Yes, we're going to have rules of safety and all those good things.

00:38:49.620 But what's happened in the last 10, 15, 20 years is both federal and provincial, they've been involved in regulating the actual business strategies of individual companies.

00:39:00.100 I testified in the grocery, you know, when the government said, we're going to call them in and tell them to cut their prices.

00:39:07.360 I was just livid.

00:39:09.440 I imagine these are, and I've said it, and I'm going to be very blunt and rude.

00:39:13.800 Our politicians, they're nice people.

00:39:15.880 I'm glad we have MPs.

00:39:17.160 But they are economic and business strategy illiterates.

00:39:21.840 They do not know about how to run an airline.

00:39:24.840 They do not know how to run a grocery store.

00:39:26.680 In fact, Brian, this is a true story, and this is on the record.

00:39:30.040 People can go and look up the tape.

00:39:32.140 I was explaining to them before the House of Commons Finance Committee, the people that passed the laws in this country, they were confusing gross profit margin with net profit margin.

00:39:41.820 And they were talking about the evil profits.

00:39:43.980 And I was explaining to them.

00:39:46.580 I was tutoring them.

00:39:47.540 I was giving a little mini lecture to explain the difference between gross profit margin.

00:39:52.580 And one of them, and it was an NDP, to be fair, got really upset and stopped lecturing us.

00:39:58.420 And I said, listen, you are making comments that are false.

00:40:02.780 You don't even understand the difference between gross profit margin and net profit margin.

00:40:06.620 The grocery stores make 3 to 3.5%, which I said is below what I'm getting on my GIC at Scotiabank.

00:40:12.960 And that is not outrageous profits.

00:40:15.260 And they don't even understand what they're saying, that they're criticizing, that they therefore want to legislate.

00:40:21.100 When you have this kind of grotesque financial ignorance, in our lawmakers, we have a problem, Brian.

00:40:28.700 We have a problem.

00:40:29.240 Oh, absolutely.

00:40:30.420 But you look at the complaints about the profits of Loblaw and how high they are.

00:40:37.440 They're law.

00:40:37.760 And then you break it down into food versus shoppers drug mart.

00:40:41.020 And where do the profits come from shoppers drug mart that drive the Loblaw profit and make it so lucrative?

00:40:48.000 Make up.

00:40:48.580 Are we going to start regulating the price of makeup to bring down the cost of groceries? 0.67

00:40:53.180 I hope not.

00:40:53.940 But Brian, let me go beyond that.

00:40:55.900 We want, I can deconstruct my progressive friends left, right, and center.

00:41:00.420 First off, we want them to make profits because if they don't make profits, they don't pay corporate income taxes.

00:41:05.840 Corporate income taxes are paid on your profits, not on your gross revenue.

00:41:09.300 There are people in this country who are in senior positions who actually don't understand what I just said.

00:41:14.040 They think the tax, the corporate income tax, is on the gross revenues.

00:41:18.040 It's not.

00:41:18.700 If a company is losing money, it pays no taxes.

00:41:21.420 This is crazy.

00:41:22.280 I keep saying we want companies to make lots and lots of money and then hire lots and lots of people who will also pay personal taxes.

00:41:29.040 This fundamental, we have demonized business capital investment.

00:41:32.240 We've demonized making money in this country, and is it any wonder that we are in steep economic decline?

00:41:38.620 I mentioned earlier Ontario being the sick man of Canada.

00:41:42.200 We're no longer the richest province.

00:41:45.400 We're no longer the richest in terms of GDP per capita.

00:41:49.540 That's right.

00:41:51.520 Alberta and British Columbia, well ahead of us.

00:41:53.880 Saskatchewan, ahead of us.

00:41:54.880 That's right.

00:41:57.540 The unemployment rate, as I mentioned, going up and up, and that was climbing well before Trump.

00:42:03.380 What are the issues in Ontario, and how do you fix it?

00:42:10.520 And I'll add a caveat in there.

00:42:12.520 Is any of the problem in Ontario related to the out-of-control immigration, whether we're talking permanent residents or the temporary foreign workers? 0.96

00:42:26.300 Because we heard that that masked a lot of the economic growth.

00:42:30.600 Oh, no, the economy is growing.

00:42:31.780 It's doing great.

00:42:32.400 No, you're just adding millions of more people.

00:42:35.700 Yeah.

00:42:35.800 So describe for me why you would say Ontario is the sick man and what they can do.

00:42:44.680 I'll go in reverse because you brought it, you put it onto the table, but immigration.

00:42:49.060 And I will state categorically, I've been a strong supporter of immigration from the time I was very young.

00:42:54.920 And I always bought into and agreed with Brian Mulroney, you know, we are a nation of immigrants.

00:42:59.160 I never, ever once said that we should have uncontrolled immigration.

00:43:06.020 I never once said that we should bring in people who are unqualified and that the economy doesn't need.

00:43:11.080 I've always, I think, like most Canadians or many Canadians believe in controlled immigration,

00:43:16.100 who have the characteristics, the educational credentials or whatever, and that includes the trades that are needed in the Canadian economy.

00:43:24.260 So to your question, I think the problems in Ontario long predate the immigration issues of the last three or four years.

00:43:32.560 The immigration issues of the last three or four years, and I think there's a lot of agreement on what I'm about to say.

00:43:37.480 It's not that we have immigration at all.

00:43:40.400 We need immigration.

00:43:41.420 Our birth rate is at 1.6 and declining.

00:43:44.140 And so we need immigration. 0.68

00:43:45.980 But what the federal liberal government did was they lost control completely.

00:43:52.000 And they went from a system that was widely admired around the world, the Canadian immigration system, based on points,

00:43:56.780 and mostly skewed towards economic migrants as opposed to other categories.

00:44:03.180 And it worked.

00:44:05.580 And then what they did is they blew it up.

00:44:07.240 They literally blew it up.

00:44:08.840 So before they went over the top with the, you know, non-permanent residents being 7.5% of our population, utterly insane, 0.96

00:44:20.580 there were already problems in the immigration system.

00:44:24.600 Because I remember doing stories on labor shortages in things like the trades.

00:44:30.960 And at that point, it was taking four years to get your application processed if you were in the skilled trades economic portfolio.

00:44:39.420 Four years to get your application looked at, and we would have a shortage of, let's say, electricians or plumbers.

00:44:46.960 And we wouldn't do it.

00:44:48.240 But suddenly, we just opened up the faucets.

00:44:51.860 And it's uncontrolled, unskilled labor.

00:44:55.340 And so there's a lot of competition for those Uber Eats and DoorDash delivery guys.

00:44:59.860 And just for your listeners, some of whom may be progressive types, there are some very well-known, what I would call small-l liberal scholars who are studying this,

00:45:11.320 who have, including a couple at McMaster, who have, very good scholars, who have really excoriated the last three or four years,

00:45:19.220 saying that we really messed up badly the immigration system.

00:45:22.340 It is not an argument to going back to zero.

00:45:24.820 It's an argument for having a balanced system that is in balance and with the needs of the economy.

00:45:31.940 But even Trudeau, just about a year ago, 13 months ago, admitted, he said, we're bringing in people faster than we can absorb.

00:45:40.080 Exactly, exactly.

00:45:41.080 And look, I'm all in favor of immigration until my mother annoys me.

00:45:45.460 And then I say, you people should go back to where you came from.

00:45:47.820 But that's a joke between her and I.

00:45:50.980 But can I come back to your question about where did Ontario?

00:45:53.200 But you've got to structure it correctly.

00:45:54.800 Yes, yes, yes.

00:45:55.220 So yeah, let's get back to Ontario.

00:45:56.640 Yeah.

00:45:57.260 I think that the problems of Ontario are very, they mirror largely the problems of the federal government.

00:46:04.140 And that is this belief in, it's, let me put it more broadly.

00:46:09.860 I've been very, very fortunate because I've taught around the world in many developing countries.

00:46:15.260 And I'm talking Cuba.

00:46:16.640 And I don't mean I was on the beaches.

00:46:18.100 I was in downtown Havana at the University of Havana teaching.

00:46:20.920 I've taught in Romania.

00:46:22.000 I've taught in Russia.

00:46:23.220 I've taught in Ukraine.

00:46:25.360 I've taught in Iran 10 times.

00:46:27.640 And so I've been in a lot of countries that were much, had a much lower standard of living than Canada.

00:46:32.240 Much, much lower.

00:46:32.820 Or the States.

00:46:33.700 I also lived twice in the United States on sabbatical.

00:46:36.100 And so I've, and I've studied these countries, the data and so forth.

00:46:40.840 And, you know, the data I was referring to, inflation data, GDP per capita data, innovation data, capital investment data, and so forth.

00:46:48.060 Okay.

00:46:48.240 And what struck me over and over is, is that, and this is really probably going to enrage some of your listeners right now, there is a template in the world for a model system that works.

00:47:01.620 And I'll tell you who it is.

00:47:02.640 It's the United States of America.

00:47:04.200 They are the most dynamic.

00:47:06.540 Sorry, everybody that thinks that Trump is the U.S.

00:47:08.680 Trump is not the U.S.

00:47:09.560 He's just one of 340 million people.

00:47:11.680 He's the president.

00:47:12.420 And he will leave office one day in the near future.

00:47:15.960 The U.S. is the most dynamic country in the world.

00:47:20.460 It is the most innovative country in the world.

00:47:23.140 It's not China. 0.85

00:47:24.120 People think China.

00:47:25.100 I've read all these silly stories about the decline of the American empire and how China is going to overtake the United States.

00:47:30.260 As I speak, average income per person, and this is a good proxy, is $80,000 for the U.S.

00:47:35.660 China, $14,000.

00:47:38.040 $14,000 per person per year.

00:47:39.860 Portugal, I'm just throwing out numbers to you, your listeners.

00:47:43.360 Portugal, $22,000 per person per year.

00:47:45.520 Argentina, $14,000.

00:47:47.200 So where I'm going is the U.S. is the most open economy in the world, save and accept defense, anything related to defense, national security, which, yes, they do regulate.

00:47:57.500 But otherwise, you don't face the plethora of restrictions on you in the States that you face in Ontario or Canada or Europe to go in and open up a business.

00:48:08.340 They throw everything at them.

00:48:10.000 They throw red tape at them. 0.98

00:48:11.180 They throw meaningless, silly bureaucracy. 0.91

00:48:14.520 And there's measures of this, by the way.

00:48:16.880 World Bank has an index called Ease of Doing Business, ranked by country.

00:48:21.640 And Canada does badly on that index.

00:48:24.300 So does Europe.

00:48:24.860 And so what we have to do is open up the economy.

00:48:28.040 We've got to destroy protectionism in all of its manifestations in Canada.

00:48:33.860 And that's basically what Carolyn Rogers said last year, time to break the glass. 1.00

00:48:39.200 We've got to break the glass, open up the economy.

00:48:42.520 We've got to get rid of all the red tape and the protectionism.

00:48:45.660 We've got to get rid of the interprovincial trade barriers.

00:48:48.240 And I don't dispute that we have to become less dependent on the United States.

00:48:53.240 But that is going to mean natural resources because the world, as the Germans showed us, as did the Japanese, they don't want our two-ton SUVs.

00:49:01.760 They don't want our F-150s because they don't drive those vehicles in Europe.

00:49:05.060 And I've been to Europe over 80 times.

00:49:09.080 They don't drive big behemoths.

00:49:11.700 I'm not faulting us.

00:49:13.480 I have an SUV.

00:49:14.500 I'm just saying that those who say we're going to depend on manufacturing to diversify simply don't understand that in China, and I've been teaching in China since 1997, once a year in Shanghai, they do not drive two-ton Lincoln Navigators.

00:49:28.160 They drive little, tiny, four-cylinder putt-putts, like a Fiat, except they're not called Fiat.

00:49:32.580 My cousin in Glasgow picked me up in a Czech-made SUV.

00:49:37.220 It was half the size of the SUVs we'd have here.

00:49:39.380 And so what we've got to do, why I'm telling you that story, and I know you know this, but I'm saying to your listeners, we have to pivot to natural resources.

00:49:46.460 And I don't just mean oil and gas, but yes, I do mean oil and gas.

00:49:49.740 But how about potash?

00:49:51.100 How about uranium fuel for nuclear reactors?

00:49:54.300 Critical minerals in the North.

00:49:55.640 Critical minerals.

00:49:56.460 Ring of fire 25 years later, and it hasn't even got a paved road into the, I mean, that's just shameful of Ontario. 0.97

00:50:02.600 Shameful, the failures of Ontario, when they've got hundreds of billions of dollars of resources sitting in the ring of fire, and they can't even get the damn road built. 0.96

00:50:11.780 Well, I'll say this. 0.94

00:50:14.500 I've been hearing talk about ring of fire going back to Ernie Eves being Premier of Ontario.

00:50:20.620 And then Dalton McGinty said he would get it built.

00:50:22.500 And then Kathleen Wynne, there is some movement right now, and the small modular nuclear reactors are really going to help up there, but you need to build that road.

00:50:33.480 And yet, you know, the federal government kept getting in the way.

00:50:39.780 We, you know, they would say we need to do our own environmental assessment.

00:50:43.580 We need to do this.

00:50:44.400 It was at least two years of fighting the federal government for the provincial government to move forward on building that road.

00:50:53.880 I want to say one more point on this, and I agree with you completely.

00:50:56.820 And I'm from Ottawa.

00:50:58.000 I don't hide it.

00:50:59.000 I've lived here all my life.

00:51:00.320 I love being in Ottawa.

00:51:01.300 It's a great city, blah, blah, blah.

00:51:02.560 Okay.

00:51:03.180 And I have way more friends, I think, in the public sector, just because it's the dominant, it's the anchor tenant in Ottawa.

00:51:09.540 It employs more people than everybody else.

00:51:11.120 Well, you know, I lived up there for 20 years.

00:51:13.700 You can't live in a neighborhood without having friends who are public servants.

00:51:17.800 Precisely.

00:51:18.440 But I have noticed this over my entire lifetime, and it's a mentality.

00:51:24.000 It's an outlook on the world.

00:51:25.780 The number of senior people who are smart people, decent, honorable people, public servants, and there is this ethos in Ottawa.

00:51:32.260 There really is this ethos that we, in Ottawa and in the government, the commanding and control agencies, the Industry Canada and the various other agencies,

00:51:41.800 we have a better understanding of what, where the economy is going and what needs to happen than the people in the private sector.

00:51:50.620 Sean Pine said that about the battery plants.

00:51:52.920 You know, I just thought that was an appalling decision, Brian, and I'll explain why.

00:51:57.020 I know there's people in southern Ontario listening, and I want to get this out.

00:52:01.060 In around 2000, about 2000, maybe up by a year or two, the government of Quebec and the government of Canada decided they were going to make Bombardier their chosen instrument to develop a world-class commercial jetliner to compete with Boeing and Airbus.

00:52:13.340 At the time, I started to condemn it, and I condemned, and people said, don't you understand, they've got great engineers in Quebec.

00:52:19.540 I said, yes, they do.

00:52:21.200 Do you really, really believe that the Airbus, owned by the European governments, are going to say, come on in, Canada, take lots of our market share away, because you're lovely Canadians.

00:52:30.560 Do you think Boeing's going to sit back and say, yeah, come and take some of our market share?

00:52:33.880 I said, those two countries, regions, companies, they're going to retaliate and throw everything at us to make sure that Bombardier fails, and that's exactly what happened.

00:52:43.640 Does anybody really believe that the Chinese, there's three companies, regions in the world that dominate world auto manufacturing, Europe, America, China.

00:52:53.540 Does anybody really believe that the Americans say, come on in, Canada, take market share away from our American companies and jobs in the United States.

00:53:01.080 We love you, because we like you, Canadians.

00:53:03.180 Do you think the Chinese are going to do that? 1.00

00:53:05.220 Do you think the Europeans, they protect their market too?

00:53:07.940 Those three regions are going to do everything possible to make sure our battery plants fail.

00:53:13.620 Fail.

00:53:14.420 Just like Bombardier failed.

00:53:16.840 Well, I don't know how you're going to feel about this, Ian, but there's now a push to get a Canadian government-backed auto company.

00:53:27.480 Make the whole car.

00:53:28.540 It's delusional.

00:53:29.740 Can I put one more fact on the tip before we run out of time?

00:53:31.980 Sergio Marchionne, the brilliant Italian-Canadian CEO of Stellantis, before he tragically died of cancer far too young.

00:53:38.480 He went around giving speeches all over the place saying, the industry is becoming so capital intensive and so R&D, the auto industry.

00:53:46.020 He said it will not support 10 companies.

00:53:47.660 It will only support five.

00:53:48.860 And he was trying to merge Stellantis into GM.

00:53:51.220 And then there's people who are so delusional, they think that this little tiny country of 40 million people, smaller than the state of California, with a GDP smaller than the state of Texas, is going to be able to produce a world-class market, a car, to make cars when the rest of the world can only support maybe five to seven companies.

00:54:09.360 If this isn't delusional, I don't know what is.

00:54:11.580 Ian, I think we'll leave it there.

00:54:13.820 It's been a great conversation as always.

00:54:15.480 Thanks so much.

00:54:16.340 Thanks very much, Brian.

00:54:17.720 Thank you for listening.

00:54:19.000 Full Comment is a post-media podcast.

00:54:21.140 My name is Brian Lilly, your host.

00:54:22.580 This episode was produced by Andre Pru.

00:54:24.580 Theme music by Bryce Hall.

00:54:26.320 Kevin Libin is the executive producer.

00:54:28.520 Make sure you're hitting subscribe on Apple or Spotify, wherever you're getting your podcasts.

00:54:33.720 And help us out.

00:54:34.600 Leave us a review.

00:54:35.560 Send it to your friends.

00:54:37.100 Email it to your aunt, May, and Whitby.

00:54:39.160 Thanks for listening.

00:54:40.000 Until next time, I'm Brian Lilly.

00:54:44.040 Here's that clip from Canada Did What?

00:54:46.600 I promised you.

00:54:49.800 In the late 1960s, you have members of the Montreal Police who can spend their entire shift rushing

00:54:56.280 from one FLQ bombing to another.

00:54:59.580 Here's how New Year's Eve 1968 played out for Robert Cote, a member of the Montreal Police

00:55:05.440 Bomb Squad, which put him at the forefront of fighting the FLQ during this period.

00:55:10.740 He was supposed to be at home with his wife, who had just miscarried twin daughters.

00:55:15.520 But instead, at 11pm, he's called out to Montreal City Hall to investigate a bomb that had just

00:55:21.160 gone off.

00:55:22.260 He's en route with sirens blaring when he's told,

00:55:24.640 actually, don't bother with the exploded bomb, there's an unexploded bomb on the other side

00:55:30.220 of City Hall you have to defuse.

00:55:33.040 And then, right after snipping the wires on the City Hall bomb, Cote has to speed west,

00:55:38.720 where a third bomb has just exploded outside a federal building.

00:55:42.120 The bombings started in April and May of 1963.

00:55:48.040 That's when the first bombings took place.

00:55:50.300 And the Mailbox bombings were the most famous part of the whole thing, which was basically

00:55:56.200 on the Thursday night and Friday night, leading into the Victoria Day weekend in 1963.

00:56:02.980 So, and initially, they started attacking these symbols of federalism, federal institutions,

00:56:09.040 whether it was a Montreal Post Office or a Revenue Canada.

00:56:12.920 But the bombings escalated as time went on, in terms of the size of the bombs and the powerfulness

00:56:20.140 of these bombs.

00:56:22.500 If you want to hear the rest of the story, make sure you subscribe to Canada Did What?

00:56:27.840 Everywhere you get your podcasts.

Full Comment - May 19, 2025

Mark Carney has already started seriously harming the economy

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