Mark Carney has already started seriously harming the economy
Episode Stats
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Summary
In this episode of the Full Comment Podcast, I'm joined by economics professor Ian Lee to talk about the impact of tariffs on the Canadian economy and why they should not have been implemented in the first place. Plus, I talk about why I think the tariffs are actually hurting the economy.
Transcript
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Ontario tabled their provincial budget last week, and, well, the best we can say about
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it is at least Ontario has a budget, because federally, we're not going to get one.
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Hello, and welcome to the Full Comment Podcast.
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My name's Brian Lilly, your host, and today, looking at the fiscal situation in Canada,
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the debt levels that we have, our economic performance, is it going in the right direction?
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So many things happening right now, and everything, of course, is being blamed on Donald Trump
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and the tariffs, and there's some validity in certain instances to that, but it's not the
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I want to bring in an old friend of mine, Ian Lee, professor of economics at Carleton University,
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well-versed in all of this, to help me break it down, or to use another friend's least
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A good afternoon, Brian, and thank you for inviting me.
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You were one of the people that said we shouldn't have retaliatory counter-tariffs at the beginning,
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Because anyone that said we shouldn't have retaliatory tariffs was pretty much,
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You were, why weren't you standing up for Canada?
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How do you react to the report from Oxford Economics, reported by Bloomberg, by Canadian
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Press, that we have effectively reduced our tariffs to nothing?
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We've eliminated them or put them at near zero.
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Does that make the Carney government the elbows-up liberals, traitors?
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I really do appreciate that you asked that question, because I was against tariffs from
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And not because I was just coming up capriciously.
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I'd studied this long before Trump came along, because it's a long-term issue in economics and
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I mean, literally going back to Adam Smith, for God's sake, 250 years ago, you know, and
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the research on this by econometricians, economists, is that tariffs are, plain and simple, a tax.
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And unless one thinks that taxes are really good and great for economic growth, and I don't
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They're seen as necessary, yes, because we have to fund government to provide our programs.
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But it has long been understood that taxes are, cool the economy.
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And putting taxes on ourselves to get at Donald Trump, who's across the border, I thought was
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It was, you know, cutting off your nose to spite your face.
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I did get emails from people, literally, who did accuse me, complete strangers, who accused
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me of being a traitor, saying, you don't love your country.
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And I would very patiently and politely and respectfully write back and put a couple of
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citations into a couple of these economic studies, you know, showing that they're so
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But to your point, and this disturbs me, what the Carney government appears to be doing,
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If indeed this reporting is accurate, and I have no reason to believe it isn't, I think
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it is correct that the government has surreptitiously, you know, when nobody's looking in the middle
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of the night when the lights are off, rolled back the tariffs or canceled them or abrogated
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But the point is, is that they are speaking often.
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They're saying, we're going to do A, and then they do the contrary of A.
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You know, he came out and said, we're for pipelines.
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And then we have Guibo only two days ago saying, no, no, no, we don't even need pipelines.
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And then Dominic LeBlanc on, I believe it was Radio Canada, it was one of the French programs,
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We're talking about energy corridors for hydroelectricity lines and for rail lines and things
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And Brian, why, you know, some people listening could say, well, you know, you're just getting
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your knickers in a knot because politicians will be politicians.
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Actually, no, that's not why my knickers are in a knot.
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It's because I'm a former banker way back when.
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I was nine years in banking before I went back to grad school and then became a professor.
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And I have been teaching this stuff for literally 38 years about economic growth and what are the
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conditions for economic growth and how do you encourage capital investment, which is the
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single, one of the most important economic metrics of all, because that creates the jobs
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Philip Cross came into my class just before the pandemic and said exactly the same thing.
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You want to know how an economy is going to look like in two or three years?
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From now, go look at capital, private capital investment today, because that creates the
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factories, the jobs, the investment in companies that creates the jobs of tomorrow.
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And so what I'm saying is when you have a government acting like this, where they're
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shilly, I'm just going to use plain sort of colloquial English, when they shilly
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shally, you know, you know, that famous vaudeville line, yes, we have no bananas.
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I mean, you can almost characterize that about anything that the, this government does on
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A friend put it this way, Ian, and you'll appreciate this old, uh, it's a paraphrase of an
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old Canadian term, uh, pipelines if necessary, but not necessarily pipelines.
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And so again, people could say, well, so what, you know, they're just spinning.
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It sends messages to very serious people that have lots of money.
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I'm just a poor professor, but the people who make the decisions to build a billion dollar
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new plant or a $5 billion plant or a $10 billion plant, there's serious capital investment
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decisions, when they look at the leaders of the country, these aren't, these aren't professors,
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These are the people who make the economic decisions, the laws and the regulations.
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And when they see how the people at the top are acting so unseriously and in such a contradictory
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manner, it connotes and suggests instability and connotes confusion at the top.
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And that is not the message you want to send out to capital investors, to people who are going
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to invest billions over a very long period of time.
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And so we don't have a consistency of message because they're trying to, I'll use another
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They're trying to suck and blow at the same time.
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And you know, when it comes to economics of, of this kind of, these kinds of issues, that
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Well, let's talk about the fact that we're not going to have a federal budget.
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Um, there's a lot to criticize in the Ontario budget, as I said, off the top, but at least
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And we can judge them by not only what's there, but then by how they perform.
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Mark Carney, all through the liberal leadership and during the election, kept repeating
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I want to play the clip here because he, he repeated this ad nauseum.
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I've learned a few things from long experience in crises.
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Um, well, a budget is the country's fiscal plan and we're not going to have one.
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You know, you can blame anything on Donald Trump these days.
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Do you put any credence in any of the excuses for Canada not having a budget?
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And to me, that brings it back to what you were just talking about.
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Large capital investments, uh, people looking for where to build a factory, build a plant,
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Uh, to your question, um, you know, and, and the liberals and I'm not, I'm not a partisan.
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I donate no zero money to any political party in the last 40 years.
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And thirdly, I do not allow lawn signs on my lawns, federal, provincial, or even municipal
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So I have a point of view for sure, because I believe in capitalism.
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But the liberals did really push the fact, you know, look, Mr. Carney's highly educated.
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Well, I want to just very briefly mention my CV.
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I've worked not only in university, but I previously worked in the head office of Canada
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And something I haven't talked about, because it hasn't really come up, is I worked for
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That's the office that supports the Prime Minister of Canada.
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My partner was in the government of Canada for 35 years.
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So I'm very, very, and I've studied, my master's and PhD is actually in economic public policy,
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And so I'm very aware of how the machinery of government works.
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And I know people at the finance ministry, and there it is staffed by roughly 800 professionals,
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highly educated economists, mostly mathematicians, econometricians, statisticians, but mostly
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And the idea, which is what they're suggesting subliminally, that finance doesn't have a clue
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what's going on in the Canadian economy, is just preposterous nonsense.
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They have these massive models, a massive model of the Canadian economy running on these incredibly
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powerful computers with thousands of variables that map right to the second where the Canadian
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Suffice to say, I mean, they literally know to the minute with the revenues flowing in
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And remember, every employer in Canada, private and public, has to submit their taxes once a
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So they know literally with a lag of 30 days who's working and how many people are working
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So the idea that they said, well, we don't really know what's going on, they didn't quite
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put it that boldly, is just absolutely factually false.
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Ian Brody is a guy who's been around politics a long time.
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He's a political science professor at the University of Calgary, but I don't want to insult
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He has practical experience in politics and in government.
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He was Stephen Harper's chief of staff for the first two and a half years of the Harper
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He said, look, due to the models that you're talking about, the finance department could
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And others are still saying, you know, people supporting the carny liberals, it's the true
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and on crowd has really just shifted gears and they're off on Trudeau now.
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So they're saying, oh, no, they're off on Carney now.
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They're saying, no, this couldn't possibly be done.
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This has the potential to hurt our credit rating, which changes how much we pay in interest
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We're already scheduled to be spending $54 billion this year on the debt charges, not
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That's just the interest payment that we have to make.
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That's more than we're spending on a whole pile of departments and programs.
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It's more than we're spending on the Canada health transfer this year.
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And that could go up as a result of this, couldn't it?
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But let me just go back for a moment so people don't think I'm exaggerating when I said
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I think there's large numbers of people who don't realize how instantaneous everything
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And that's because of something I've talked about a lot with Canada Post, and I'm not changing
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the subject of Canada Post, but what I call the digitization of everything informational.
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You know, file cabinets, you know, physical checks put in an envelope with a little postage
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The entire government of Canada is 100% digitized.
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So are the banking system and the payment system.
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So is the remittance of taxes from all the companies across Canada.
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They don't have a courier take a check once a month to the CRA.
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The money is transferred electronically instantaneously.
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So what I'm trying to say is finance has a model that is based on this digitized information.
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They have data flowing in, aggregated data from the CRA.
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I don't mean that they can look at the individual tax return.
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They've got the aggregate data flowing in by the minute.
00:14:01.080
Walmart is most famous for wiring up all of their stores in the mid-80s.
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All of their stores are wired up so that in Bentonville, Arkansas, they know how much,
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how many units of ketchup are being sold at Walmart, Billingsbridge, Ottawa at 2 p.m.
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The government of Canada has an awesome IT digital reporting system.
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They could, when I said two days, I'm sure they could produce it if I went to, if I was
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the prime minister and said, guys, Mr. Deputy Minister, can you give me a printout on the
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statement by, you know, 5 o'clock this afternoon, I'm sure you could do it.
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Well, but then you've got to add in all the political language, get it translated, and
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Now, to your point, and again, this brings it back to the, my grave concern about this,
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is that we already are facing massive uncertainty in Canada because of the Trump tariffs, but
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Because of these deficits and the contradictory messaging coming out of the government of
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Canada, contradictory messaging coming out of Premier Ford's government in Ontario.
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You know, and there is some, we can talk about that later.
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And so, again, if I was an investor, I'm talking somebody with billions at my command.
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So I could put a new plant, a critical minerals plant in Canada, or a new auto plant.
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And I'm looking at this, and I'm seeing a government that says they can't even produce a financial
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statement, even though these investors are very sophisticated people.
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They know the digitization of everything in terms of corporations and governments.
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And this must be, they must be sitting there saying, you know, these guys are playing games.
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I've talked to people who have helped land the multi-billion dollar investments in this
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country, in the private sector, in the public sector, people who've been around, bringing
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And anything will spook these guys, because you're always up against two or three other
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And anything you do that makes them say, eh, you know what, Ohio's looking better.
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I want to tell you a quick story, if I could, Brian.
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I had about 10 years ago, I had a very, very senior vice president from GE International.
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And I found out about him, and I talked to him on the phone, and I said, I really want
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A German-American, spoke five or six languages.
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And he was talking about how an enormous monster corporation, which is what GE Capital
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You're in Brazil, you're in Australia, you're in France, you're in Italy, you're all over
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He says, we take, we study every country very carefully.
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He said, the obvious things, you know, the inflation rate, the level of education in
00:17:01.840
What is the attitude of the government towards private capital investment?
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And then he says, we create reports, very confidential, of course, for the top people
00:17:12.140
And so my point is, this goes on in any large, serious, multinational.
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And when you look at the stuff that's going on in Canada, and again, so people don't think
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I can say the same things about the government of Ontario.
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And so they're looking at this and they're seeing instability, incoherence, confusion,
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So on the incoherence, I want to play the clip so people can hear what Stephen Gebo
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This is the day after Mark Carney did a big interview with Vashti Capello's CTV.
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I thought he, you know, gave real answers, including saying yes to a pipeline.
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And then the next day, out comes his minister of heritage, who apparently has veto power over
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River Smith is saying that you're anti-pipeline still.
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What do you say in response to her concerns just broadly about the cabinet?
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So on pipelines, people should remember that we bought a pipeline, Trans Mountain, and that
00:18:18.540
So I think before we start talking about building an entire new pipeline, maybe we should maximize
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And the Canadian Energy Regulator, as well as the International Energy Agency, are telling
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us that probably by 2028, 2029, demand for oil will peak globally, and it will also peak
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So as far as I know, there are no investors right now.
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There are no companies that are saying that they want to build an east-west pipeline.
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And as you know, these things are built by companies, not governments.
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So that investment climate, there's two things, and I'll pick on a provincial government, not
00:19:02.220
Not everyone, I guess, but the consensus seems to be to respond to Trump, to really liberate
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We've got to get these products out of the ground, off to markets.
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And so then you have Guy Beau coming out saying, no, we don't need any more pipelines.
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And by the way, we're going to hit peak oil, so we don't even need oil in two years.
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And then Danielle Smith, well, she's not promoting separatism, but there is a big separatism push,
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and there are people within her party that want it.
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That has to affect investment decisions as well.
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So that if they did say, yeah, okay, we'll do a pipeline, well, you're really not sure
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if you're one of the companies that would build one.
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You're not sure, okay, is it stable politically in Alberta, and will the federal government
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actually follow through on this or change their mind halfway through?
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And when Guy Beau did that, I watched the Vashie interview.
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I thought his responses were fair, measured, you know, didn't always agree with all of them,
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But when I saw Guy Beau's comment and the lack of response from the prime minister,
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given, this isn't about correcting a cabinet minister who made a mistake accidentally.
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I don't believe it was an accident, by the way.
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And the fact that the prime minister didn't step in, because this goes to the very core of
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his claimed vision for Canada to become an energy superpower.
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This isn't talking about, I don't know, bicycle lanes in Toronto.
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He didn't publicly rebuke him and say, to the effect, you know, he's just new in the job.
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This is not the policy of the government of Canada.
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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.
00:21:09.340
And they haven't responded to the, at this point, they haven't responded to the claim
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
00:21:26.340
They're doing the dancing again, to use that little phrase, sucking and blowing.
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
00:21:41.720
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.
00:21:53.780
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
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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
00:22:33.440
I'm using very strong language, because I think I came out of the corporate world, I
00:22:40.460
And they're very skittish about governments, especially the liberal government, because
00:22:45.740
So the last thing they should have allowed was Guibo, and I think it was probably orchestrated.
00:22:52.440
When he did say it, the prime minister should have very clearly repudiated it publicly on national
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.
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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
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you thought you knew and tell you what really happened.
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Stick around at the end of the episode to hear a sample of one of our favourite episodes.
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Our new government will be a strong and reliable partner to the provinces, the territories,
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We will reinforce bridges across labour, business, and civil society.
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And together, we will advance the nation-building investments that will support the core mission
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of this government, which is to create the strongest economy in the G7, an economy that
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
00:24:39.400
I know better than to believe economists Ian Lee.
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?
00:24:55.640
And when you look at the data, and I look at it, I pour over it all the time, the OECD data,
00:25:01.520
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.
00:25:15.800
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
00:25:40.860
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
00:26:04.840
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.
00:26:23.540
I've been looking at just something as simple as the unemployment data.
00:26:36.980
Two years ago, we were at 6 point something in April, 2024.
00:26:46.320
We're right behind Newfoundland, you know, trying to take them over for the top spot.
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.
00:27:07.680
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?
00:27:16.940
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
00:27:49.500
You, that is a, an empirical, that's voting with your wallet.
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?
00:28:02.980
You just vote with your wallet and walk to another restaurant that's an up-and-coming
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.
00:28:25.040
Howe has got Research Institute in Toronto, has some excellent data on this and graphs on
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.
00:28:45.620
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.
00:29:02.660
And I'm told, yeah, even though the EV sector is shifting, there's still going to be enough
00:29:08.880
So it's not going to shift down to the States because currently not impacted by the tariffs.
00:29:15.840
One, the EV market is not going the way that was expected because Trump's pulled out of
00:29:22.220
Basically, you've got California left and Canada trying to do this, but we're going to have
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.
00:29:52.080
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.
00:30:15.220
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
00:30:27.800
You know, that was my critique of the Ontario budget the other day, by the way, was it's
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.
00:30:54.540
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.
00:31:09.060
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.
00:31:42.200
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.
00:31:57.180
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.
00:32:52.020
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.
00:33:06.600
And so yesterday on a blog of Krugman, he noted, and he got attacked by people on the
00:33:15.760
As I speak today, the average income per person of the United States is double, double the
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.
00:33:49.780
The Americans are now 80,000 GDP per capita, and we're at, I believe, 60.
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.
00:34:30.540
It is truly Orwellian because the whole idea is we're going to save you and protect you from bad things.
00:34:43.240
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.
00:34:57.100
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.
00:35:09.360
It's kicking out the private sector until they somewhat open it up.
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.
00:36:00.280
They want them because they think it gives them political benefits.
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.
00:36:20.120
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.
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.
00:36:52.100
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.
00:37:09.020
And then they, without rhyme or reason, kicked them out.
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.
00:37:42.960
And you go into any major convenience store around your area, you'll probably see the same thing that I am.
00:37:56.400
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.
00:38:05.600
You've been married to a public servant for most of your life.
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.
00:38:41.900
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.
00:39:09.440
I imagine these are, and I've said it, and I'm going to be very blunt and rude.
00:39:17.160
But they are economic and business strategy illiterates.
00:39:26.680
In fact, Brian, this is a true story, and this is on the record.
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.
00:39:47.540
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.
00:40:15.260
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.
00:40:30.420
But you look at the complaints about the profits of Loblaw and how high they are.
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?
00:40:48.580
Are we going to start regulating the price of makeup to bring down the cost of groceries?
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.
00:41:18.700
If a company is losing money, it pays no taxes.
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.
00:41:45.400
We're no longer the richest in terms of GDP per capita.
00:41:51.520
Alberta and British Columbia, well ahead of us.
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?
00:42:12.520
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?
00:42:26.300
Because we heard that that masked a lot of the economic growth.
00:42:32.400
No, you're just adding millions of more people.
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.
00:43:45.980
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.
00:44:08.840
So before they went over the top with the, you know, non-permanent residents being 7.5% of our population, utterly insane,
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.
00:44:55.340
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.
00:45:24.820
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.
00:45:41.080
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.
00:45:50.980
But can I come back to your question about where did Ontario?
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.
00:46:18.100
I was in downtown Havana at the University of Havana teaching.
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.
00:46:33.700
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.
00:46:48.240
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.
00:47:06.540
Sorry, everybody that thinks that Trump is the U.S.
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.
00:47:25.100
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.
00:47:39.860
Portugal, I'm just throwing out numbers to you, your listeners.
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.
00:48:16.880
World Bank has an index called Ease of Doing Business, ranked by country.
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.
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.
00:49:14.500
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.
00:49:56.460
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.
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.
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.
00:50:44.400
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.
00:51:03.180
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.
00:51:13.700
You can't live in a neighborhood without having friends who are public servants.
00:51:18.440
But I have noticed this over my entire lifetime, and it's a mentality.
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.
00:51:52.920
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.
00:52:21.200
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.
00:53:05.220
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.
00:53:16.840
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.
00:53:29.740
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.
00:53:51.220
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.
00:54:28.520
Make sure you're hitting subscribe on Apple or Spotify, wherever you're getting your podcasts.
00:54:49.800
In the late 1960s, you have members of the Montreal Police who can spend their entire shift rushing
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
00:55:22.260
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
00:55:33.040
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.
00:55:50.300
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
00:56:22.500
If you want to hear the rest of the story, make sure you subscribe to Canada Did What?