Juno News - Why is Canada so expensive and will government spending help？ (Ft. Chris Spoke)

00:00:00.000 Buying a house in Canada is becoming increasingly difficult and unaffordable, particularly in the

00:00:04.580 major cities. Governments have now acknowledged the problem and they're starting to throw

00:00:08.060 money at it. But will that actually help? I'm Candice Malcolm and this is The Candice Malcolm Show.

00:00:23.560 Everyone, thank you so much for tuning into the podcast today. So as we saw in last week's budget,

00:00:29.000 the government has acknowledged the fact that there is a housing crisis in Canada. They have

00:00:34.280 pledged to spend $10 billion from the budget, from your money, from borrowed money, to help ease the

00:00:41.480 problem of Canada's housing crisis. So joining me today to talk about this issue and to figure out

00:00:47.740 whether this money is going to actually help people buy homes, I'm very pleased today to be joined by

00:00:52.580 Chris Spoke. Chris Spoke is the founder and CEO of August, which is a boutique agency that designs

00:00:58.560 and builds digital products. In 2017, he launched YIMBY, which stands for Yes In My Backyard Advocacy

00:01:05.040 Group, Housing Matters, which aims to advance the cause of land use liberalization in Toronto in

00:01:10.740 order to solve the urban housing problem. Chris is a contributor over at The Hub. He also has a

00:01:15.440 newsletter on Substack. Chris, thank you so much for joining us. It's great to have you.

00:01:19.840 Yeah, thanks for having me.

00:01:20.720 Okay, so first, what was your reaction of the budget? Do you think that this $10 million in

00:01:26.560 spending is a good start to addressing this issue?

00:01:30.640 So I had a few reactions. The first reaction, you know, I expected to be disappointed in the

00:01:36.200 diagnosis of the housing problem. I expected there to be kind of a lot of hand-waving around the need

00:01:40.700 for more low market rate or affordable housing without any real addressing the fact that we just

00:01:45.940 don't have enough housing at all, you know, market rate or otherwise. And when I read the budget,

00:01:50.500 there was a lot of good kind of supply side YIMBY type language, like there were quotes in there that

00:01:56.100 could have been from pieces that I've written, like, if we want housing to be more affordable,

00:01:59.540 we need to build more housing. There was an acknowledgement that the reason why we're not

00:02:03.540 building more housing is because there are systemic constraints, regulatory constraints. So I thought

00:02:08.900 I thought that was all good. I think Christopher Freeland kind of understands the YIMBY argument. 0.83

00:02:13.300 The YIMBY argument very succinctly put is that housing is expensive because there's not enough

00:02:17.540 of it. And whenever you have a situation where a lot of people are chasing after kind of like an

00:02:21.940 insufficient amount of stuff, they bid prices up. And that's what we've seen with housing.

00:02:28.180 What I'm less sure about is whether, you know, throwing money at the problem will solve it. I mean,

00:02:34.820 ultimately, again, housing is expensive because there's not enough of it. There's not enough of it,

00:02:38.340 mostly because our cities enact rules and regulations that make it harder to build

00:02:43.540 housing than it should be. And it's not clear to me that you solve that with more money as opposed

00:02:48.740 to kind of like getting into the weeds and uprooting some of these things. One of the things that was

00:02:54.660 kind of directionally addressing this problem was it's called the new housing accelerator fund.

00:02:59.300 So in the federal budget, they've set $4 billion aside that they want to spend over five years to kind of

00:03:04.020 consent municipalities to upzone or expedite maybe their approvals process to get more housing built

00:03:09.940 and completed and braw online for occupancy. And I think the real test for this government will be,

00:03:17.300 you know, how aggressive they are in getting that money out to cities and ensuring that it's being

00:03:21.860 used most effectively. So basically ensuring that the municipalities are doing their part of the

00:03:27.940 bargain and actually meaningfully up zoning, meaningfully allowing for more housing supply than they

00:03:32.500 otherwise would. Well, that's part of the issue. Whenever I end up talking about housing with

00:03:37.380 people, they always say, oh, well, it's a municipal issue. The feds can't really do anything about it

00:03:41.140 without sort of stepping in on the jurisdiction. I know that Pierre Polyev has been talking a lot about

00:03:46.420 the sort of things that he would do. So what do you think of that sort of dilemma of, you know,

00:03:52.660 letting municipalities govern their own business, leaving things up to the province, letting individual

00:03:57.540 provinces? I mean, the idea is that you could kind of have competing jurisdictions, right? Vancouver is like

00:04:01.940 pricing itself out of the affordability game. Young people just don't want to live in Vancouver. It's

00:04:06.500 a spectacular, beautiful city. I grew up there and you have this amazing lifestyle and sort of the

00:04:11.860 leisure opportunities are incredible. But when it comes to young families and homes, you're just

00:04:17.540 not there. I grew up in a very family friendly area right in the center of Vancouver neighborhood

00:04:22.420 Carisdale. And you go there today and there's just not really a lot of families anymore because it's

00:04:26.740 just become one of those places that's so unaffordable. So what do you think to that argument of,

00:04:32.260 it's not really a federal government's job, leave it up to the provinces and the cities and they can

00:04:35.940 compete? Yeah, I think there's like two parts of the argument. There's one, should the federal

00:04:40.820 government do anything about it? And then the second is, if the answer to that question is yes,

00:04:45.140 then what could they do about it? Because you do have these kind of like jurisdictional issues.

00:04:49.220 I think on the first question, I think you kind of have to. Conservative Party is having a leadership

00:04:54.740 race right now. You have a few candidates kind of lining up hoping that they win that spot and they

00:05:00.420 kind of enter the next general election as the leader of the Conservative Party. I think it's

00:05:04.020 hard to make the case that whoever that person is shouldn't address what is probably the number

00:05:09.060 one issue for a large and growing number of Canadians. I mean, we saw in the last general 0.94

00:05:13.540 election, just last year, not that long ago, the National Post surveyed people on what were their

00:05:19.140 kind of election priorities, like policy priorities. And the number one was cost of living. And number three

00:05:24.820 was housing. And that's kind of like repeating the same point. So I think that I think that the

00:05:29.940 federal government has to have something to say about runaway housing costs. And the fact that you

00:05:34.100 have a whole generation really being priced out of homeownership, which we see as somewhat, you know,

00:05:38.820 a part of what we think about the Canadian dream. I also think that there's this national productivity

00:05:44.100 problem that gets worse, if you don't make it easier for smart, ambitious young people to move to the most

00:05:50.900 productive regions in the country, if we allow housing prices to be kind of the obstacle to

00:05:55.860 moving to where all the good jobs are, ultimately, that will kind of show itself in national productivity

00:06:02.500 statistics and ultimately GDP growth. Well, no, it's interesting, you mentioned that point that like,

00:06:06.740 you want productive people to end up in the same places, because then they become more productive.

00:06:10.740 And I know that the government has often tried to create these sort of hubs in places like

00:06:14.580 Waterloo, Ontario, or in Toronto, Vancouver, seems to me increasingly, especially with COVID,

00:06:19.140 what we just saw is that people are leaving those areas, right? Like everyone used to go to the

00:06:22.900 Silicon Valley to start a tech company, they don't anymore, they go to Dallas, or they go to Austin,

00:06:27.300 they go to Miami, and you kind of see people leaving poorly governed places in the United States,

00:06:33.060 go to go to kind of freer, more affordable places where there are these new kind of upstart

00:06:38.980 tech communities. I know you're a tech guy, you're heavily involved in this sort of tech community as

00:06:43.620 a founder. And I'm wondering if you see anything like that happening in Canada, where people are

00:06:48.260 moving to places that are more affordable, like maybe someplace like Saskatoon, or somewhere even

00:06:53.940 in Ontario that's outside of the GTA, because they're just getting priced out of the expensive

00:06:57.780 markets there. Yeah, I think that's right. I think so, kind of like the way I approach this

00:07:03.380 is thinking of cities as primarily labor markets, people move to cities for access to the jobs that

00:07:07.940 those cities offer. And typically, the larger the city, the greater the opportunity to specialize in

00:07:12.020 trade. And this is why you have kind of really niche jobs in cities, which you might not have in

00:07:16.740 smaller towns or rural areas, and also why productivity rates and wages are higher in

00:07:21.060 cities. And yeah, what you're seeing in the US is people kind of leaving some cities for other cities,

00:07:26.740 but they typically still go to cities, there are these agglomeration effects. And if you look at

00:07:30.740 the tech community, I mean, a lot of them are going to Austin or Miami, because more of their peers and

00:07:36.180 other tech workers are going to Austin, Miami. So they're still trying to like establish this critical

00:07:39.940 mass of people in these areas. And I think this kind of this reflects a general approach that you have

00:07:45.860 when you're faced with bad governments, right, you could you could exercise your voice, you could

00:07:49.140 try to vote for change or lobby for change, or you could exercise your right to exit and to kind of go

00:07:53.700 somewhere that's a little bit a little bit better. Maybe it's easier to move from San Francisco to

00:07:57.860 Austin than it is to upend San Francisco's municipal government. I think the challenge that we have in

00:08:02.820 Canada is that we don't have as many options in terms of like better governed cities that still have

00:08:08.580 a dense enough agglomeration of, you know, workers in whatever sector is interesting to you,

00:08:14.180 to make it this kind of like laboratory of democracy or like menu or this like menu long menu of options

00:08:21.380 to choose from. Most of our cities where most of our big cities are extremely expensive and the small

00:08:27.460 cities that aren't yet expensive are typically the cities that haven't seen great employment prospects.

00:08:32.020 So you have a lot of people, for example, in Toronto moving to Hamilton, Hamilton's no longer affordable.

00:08:36.180 So now they're moving out to Halifax. And Halifax is a bit more affordable, but you don't have the same job

00:08:40.900 opportunities that you might have in the GTA. So I think it's a bit of both. I think that you put

00:08:45.300 pressure on municipal politicians by showing them that they're going to lose the opportunity to benefit

00:08:50.020 from, you know, young, productive tax paying workers. But I think there is still something

00:08:54.500 to be said for trying to improve governance. I think there's something to be said for people

00:08:58.340 who stay back in San Francisco to try to improve land use in San Francisco, because it's kind of like

00:09:03.940 this golden goose, um, that you'd rather bring back, that's been dying, that you'd rather bring back to

00:09:08.820 life than just kind of like try to find another golden goose to some extent.

00:09:12.740 Is there a city in Canada that you can point to as a good example? I remember seeing a presentation

00:09:17.300 a few years ago that compared the urban density in Vancouver and compared it to New York City.

00:09:22.660 And I mean, at one point, I'm sure 100, 150 years ago, there were a lot of single family homes in and

00:09:28.020 around New York. And that has turned all into apartments and brownstones and that kind of thing.

00:09:31.940 And the expectation in New York is not that you live in a single family home, where as in Vancouver,

00:09:36.340 there's very much still the expectation, people don't want to, they want to protect the beauty

00:09:41.060 of the neighborhood, the natural character, you see that all around Toronto, these neighborhoods

00:09:45.220 that are so close to downtown. And yet, if you feel like you're out in the in the suburbs, because

00:09:51.300 because there's just beautiful yards and lawns and, and people live this sort of very spread out

00:09:57.300 lifestyle. Whereas again, in big, dense American and cities all over the world, Europe, Asia, they don't

00:10:03.780 have that expectation. So I'm just wondering if there are any examples in Canada that have moved

00:10:08.500 more towards the dense multi unit model, or whether it's a Canadian problem? Why is it happening in so

00:10:15.140 many of the cities across the country? Yeah, so whenever you see like a detached house with a big

00:10:20.340 backyard in something like a big city urban center, which what you certainly see very near Toronto's

00:10:25.700 downtown and Vancouver's downtown, it's almost always I mean, I mean, it's pretty much always because

00:10:30.340 of zoning, like there's a higher and better use for that land, if it were unconstrained,

00:10:34.660 more people want to live in these downtown cores, again, for access to these downtown jobs.

00:10:38.340 And the reason why you're not seeing that redevelopment to a higher and better use is

00:10:41.620 because there's some sort of regulatory constraint, and mostly that's mostly zoning.

00:10:46.020 So New York has the benefit of having been mostly built up tree zoning. So the really aggressive

00:10:52.180 kind of like separation of land uses and really prescriptive land use zoning that we see today,

00:10:57.300 really came into effect in the 60s and 70s and have been ramping up and becoming more prescriptive

00:11:02.020 and more descriptive ever since. And again, like Toronto over the last 20 years has started to grow

00:11:09.780 into it, you know, something like the idea of a global city, it was a little bit sleepy in the 1960s,

00:11:15.460 whereas Manhattan went through its transformation of like a lot of farmland to detached houses,

00:11:20.580 to maybe three story, four story walk ups to tenements and high rises in the early 1900s. And

00:11:26.260 all of that happened pre zoning pre aggressive zoning, at least. So in Canada, where you'll see

00:11:32.500 most of that, so let's say kind of like an older urban built form, where it's a little bit more

00:11:37.380 dense, and you don't see big 50 foot wide frontages and single detached homes near downtown,

00:11:43.300 you have to look at our older cities, like Montreal is more dense in its urban core than

00:11:47.380 Toronto is, and Toronto is more dense in its urban core than Calgary is. And it's because the,

00:11:51.860 you know, the later and later, more recently that the cities have been developed, the more likely

00:11:56.260 they were to have been constrained by modern zoning. So let's talk a little bit about the NIMBY

00:12:02.020 concern, because it seems like Canada is becoming very much a country of haves versus have nots. The

00:12:06.340 politics of it is that, you know, a lot of Canadians like, like you are a voice and concern over the lack

00:12:11.620 of housing, lack of opportunity for buying houses for young families or young Canadians. Whereas on the

00:12:17.060 other side of the coin, you have all these people that own homes are perfectly happy with the rapid

00:12:20.900 acceleration of costs, they want to protect their neighborhoods, right? They don't want a high rise

00:12:27.540 going in down the street, because they like, you know, they want to protect it for their children,

00:12:31.540 they want the kids to be able to run around and go to parks. And they worry that the, you know,

00:12:34.900 with if it becomes very dense, it'll become dangerous. And all these other problems that you see in

00:12:39.780 cities where people go to neighborhoods to avoid that. So maybe you can walk us through sort of the

00:12:45.780 distinction, like what drives NIMBYism, and what you're trying to do with your EMB organization

00:12:52.180 that's promoting a change to all this. Yeah, so to put a little bit of color

00:12:56.020 around kind of like the NIMBY label. So again, we say that housing is expensive, because there's

00:13:00.420 not enough of it. There's not enough of it mostly because of municipal regulatory supply constraints

00:13:05.140 that make it impossible for us to build as much of it as we need. And the reason why we have those

00:13:09.780 supply constraints is because you know, to your point, a lot of incumbent homeowners enjoy them,

00:13:13.940 quite enjoy them. If you live in a detached neighborhood or house a neighborhood, sorry,

00:13:18.180 rather full of detached houses, you might want it to remain that way, you might like the bill form,

00:13:23.060 the physical character, and you might not want to see, you know, like four story walk up apartment

00:13:27.460 pop up next door with renters who are a little bit more transient, let's say than like longtime homeowners.

00:13:33.380 So that is the problem, like we've reached this equilibrium through a very democratic process

00:13:37.220 of people buying homes in low rise, low density neighborhoods, and then voting to ensure that

00:13:41.940 being never changed. The problem with that is that there's a little bit of a hypocrisy, if not like

00:13:48.820 an outright schizophrenia here, right? Canadians are generally a pretty progressive people, we're very

00:13:54.100 welcoming and open to immigration. And yet somehow that kind of like stops at our neighborhood, right?

00:13:59.620 So we want more people to enter this country to come to the country to participate in the Canadian

00:14:02.980 dream, contribute economically. But we don't want to build the housing that new immigrants need, at least not 1.00

00:14:09.940 in our neighborhoods. And of course, if everybody says, I'm pro new development and new housing,

00:14:14.740 just not in my neighborhood, you know, if everybody in every neighborhood says that,

00:14:18.100 then you just end up building nothing. And that's, that's kind of what we're seeing.

00:14:21.780 I think we're reaching a bit of a tipping point where people who've enjoyed these really runaway

00:14:26.900 housing value gains that have served them quite well, they're now reaching an age and a point where

00:14:32.740 they're thinking like, okay, I remember what it was like in my late 20s to save a little bit of money in a nice,

00:14:38.660 middle class, working class job, and buy a home. But that's not that doesn't seem to be the scenario

00:14:44.020 for my kid who doesn't look like they'll be able to buy a home anytime soon, if ever. It's also not

00:14:49.460 great for these people who might want to live somewhere near their kids and their grandkids,

00:14:52.740 and now their kids and grandkids are moving from, let's say, Toronto to Halifax. So I think it is

00:14:56.980 starting to hit home that there's this incumbent versus new entrant dynamic, which you see in most

00:15:04.100 industries. But in this one, you know, the incumbents might be related to the new entrance,

00:15:08.820 and they're starting to realize, you know, despite the 20-30% gains I've seen over the last 20 years,

00:15:13.220 or rather the last two years, that also means that homeownership has gone that much farther

00:15:18.340 away from my kids. And I think it's becoming a little bit of a problem. There's also this

00:15:23.460 problem with housing, not building enough housing beyond just the affordability thing. So in Toronto,

00:15:28.180 we have a lot of people, again, a lot of progressive people open to immigration, as long as,

00:15:31.940 you know, those immigrants don't build or don't move into any new build rental apartments in their 1.00

00:15:36.500 neighborhoods. They also have environmental concerns, right? But when it comes to cities,

00:15:41.300 people, again, move to cities, because that's where the jobs are. If you don't build up, you have to

00:15:44.580 build out. So you have people who have these, again, kind of schizophrenic views where they're both

00:15:49.460 against infield development in their neighborhoods for NIMI reasons, but they're also against urban

00:15:53.860 expansion and sprawl for environmental reasons. And at some point, like, you have to resolve these

00:15:58.420 contradictions. And I think the way that you resolve them is to allow for a little

00:16:01.940 bit more of a kind of like free market and land use, stronger property rights and less restrictions

00:16:07.540 in terms of what you can build and kind of let entrepreneurs build things that people need.

00:16:12.180 And in this case, that's build housing that people need.

00:16:14.260 It's interesting because during the pandemic, it was like, you know, downtown Toronto just kind

00:16:19.220 of emptied out and you had all these commercial buildings that people just weren't using anymore.

00:16:23.060 And a lot of families moved out of Toronto because they didn't have to commute anymore. And

00:16:27.860 maybe they just wanted to get into the into the real estate market wherever they could. So they

00:16:31.460 ended up moving far out. And then and then now, all of a sudden, everyone has to return

00:16:35.380 back to the office. So I hear a lot of people kind of groaning and complaining about having to

00:16:40.340 commute now because they ended up buying so far. I want to touch on the immigration thing that you

00:16:46.020 discussed, because obviously, there's a lot of discussion over what's driving this, right? I know you're

00:16:50.980 much more of a supply side that we just need to build a lot more. But there are obviously demand issues

00:16:55.060 when you when you look at things like Airbnb, taking up space, I completely agree with that,

00:16:59.620 I disagree with that, because I tend to think that people who put their homes on Airbnb, it's usually

00:17:06.820 occasionally, my family and I will go to Vancouver to visit my family will rent an Airbnb house almost

00:17:11.780 every time. It's a family that actually lives in the house, and they'll go on a vacation and they'll

00:17:16.740 rent out their house while they're away to kind of help subsidize the cost of living in a very

00:17:20.660 desirable area. But but but this idea that that you have, I don't know exactly how many new families

00:17:28.980 move to the GTA every year, I imagine, it's a large percentage of Canada's immigration numbers. So for

00:17:35.380 welcoming in 450,000 people a year, we might have 350,000 of those coming into the GTA. You wrote in

00:17:42.260 the hub recently that over the past 10 years in Ontario, there's been an average completion of 70,000

00:17:48.020 new homes per year, that Ontario is that kind of is last in the g7 in terms of per capita housing.

00:17:54.820 And just to catch up, we would need to build 1 million new housing units overnight, just to keep

00:18:00.420 up with this population growth. So can you comment a little bit about the impact of welcoming all these

00:18:07.460 people into Canada, but not having anywhere to house them and what what that's doing to our cities 1.00

00:18:12.100 to to a place like Toronto or Ontario? Yeah, totally. So prices, as we all know, from like

00:18:17.780 our first year microeconomics classes are a function of supply and demand. If the demand for housing

00:18:22.900 increases, because people within the country move from like small towns, rural areas, big cities,

00:18:27.860 and people from around the world move to Canada for access to, you know, everything that Canada has to

00:18:32.180 offer. That's the demand side of things. And if we don't build enough housing for them, then we have

00:18:37.300 limited supply. And ultimately, this resolves itself in rising prices, a higher equilibrium, and people

00:18:43.060 kind of getting priced out and left behind. So that's absolutely right. And you could kind of

00:18:48.100 confront this fact with with, I guess, one or two approaches, you could think that what we need is a

00:18:54.020 supply side solution, which is to build many more homes to accommodate many more people, or with a

00:18:59.780 demand side solution, which is ultimately to somehow have fewer people looking for housing. So that might be

00:19:05.380 a reduction in immigration, it might be like, somehow making cities less attractive relative to smaller

00:19:11.700 towns where housing is a little bit more abundant, or a little bit less scarce, at least. And the way

00:19:16.660 I think about this is kind of like, what is the most productive outcome, I think the supply side

00:19:20.580 solution is really a solution of building a production of entrepreneurship of creating jobs

00:19:25.780 and stuff for people to enjoy and live in. Whereas the demand side solution is ultimately a little bit

00:19:30.660 of a zero sum game, right? It's kind of picking winners and losers, even when we talk about uses of real

00:19:36.020 estate, you know, should this be a long term rental apartment or short term rental apartment, maybe we

00:19:39.780 should outlaw short term rental apartments, it's always this zero sum game that has to come at the

00:19:44.180 cost of something that people want, people want to rent Airbnbs and stay in Airbnbs. Whereas if you

00:19:48.900 build more, that kind of that's a positive sum game, we're expanding the pie, we're making more goods

00:19:53.620 available to more people. Now, that comes at the cost of maybe increased shadow impacts on the

00:19:59.060 neighborhood neighbors, or more more competition for like on street parking, or maybe construction noise for

00:20:05.300 the two years that it takes to build anything. And ultimately, that's what kind of feeds the NIMBY 0.51

00:20:08.900 resistance to these things. But we have to kind of pick our costs, right? Is it better to kind of

00:20:14.340 accept the cost of localized impacts of development, which might mean that if you go downtown Toronto,

00:20:18.980 you won't see beautiful detached houses, you know, just north of the bridge in Rosedale? Or is the cost

00:20:24.660 that we maintain this extremely rigid and restrictive system and exacerbate urban sprawl, make housing

00:20:32.180 completely unaffordable to anybody under the age of let's say 30 or 35, never mind you immigrants who are 1.00

00:20:37.060 entering this with no kind of skin in the game, they haven't benefited from the home equity value

00:20:40.820 increase in the last few years, they're coming into this fresh, we kind of have to pick our costs here.

00:20:45.300 And in my view, I'd much rather take the perspective that abundance is better than scarcity, and we

00:20:52.980 should make housing, which is as fundamental as good as we have in society, as abundant as possible.

00:20:57.700 And I think that leads to a lot of good outcomes.

00:21:00.740 Well, it's sort of fundamentally unfair, as well, to tell these people from around the world,

00:21:04.980 hey, come to Canada, have this great life, you know, of course, a lot of them are going to choose

00:21:08.740 Toronto, because that's the place where they have a community where there are other people who speak

00:21:11.700 their language, where they can find their food, and they can they can find a community of people

00:21:16.980 that they feel comfortable with. And yet, you know, they have no way of being able to easily and unless

00:21:22.660 they're very wealthy, being able to buy into this this market. But then at the same time,

00:21:27.860 at some point, we have to have other attractive places for people to live aside from

00:21:32.820 Toronto, I know a lot of people from all over the country that moved to Toronto, because the type

00:21:36.980 of work that they do, the type of law or the type of tech, there just aren't jobs in other parts of

00:21:41.940 the country. I'm wondering if you if you can comment on just sort of the fact that everyone in Canada

00:21:49.300 wants to go to Toronto, how can you, you know, as an influencer, or as a politician, or as someone in

00:21:55.540 government, how can you create incentives for people to want to go to other cities? And we

00:22:00.500 talked about this earlier in the interview where, you know, you might be able to go afford a place

00:22:04.340 in Halifax, but the job market isn't really there. It's like, it's kind of like the chicken

00:22:07.700 and the egg thing. It's like, you want people to go, but there's no jobs. Well, there's no jobs,

00:22:10.980 because there's no people. How would you how would you like if you were to create a strategy? How would

00:22:16.020 you encourage people to move to cities outside of these sort of very desirable places, Vancouver,

00:22:21.860 Calgary, Toronto, to try to build up the rest of the country with people and have other hubs that

00:22:27.540 are attractive to people? Yeah, so what I'm surprised is that we're not seeing more competition,

00:22:33.780 all these kind of smaller cities that would benefit from a larger tax base and more, let's say,

00:22:37.620 dynamism and vibrancy in their in their cities. I'm surprised that we haven't seen them more

00:22:42.100 proactively court, let's say, Toronto expats. In the US, famously, Mayor Suarez of Miami, like had a

00:22:49.860 concerted marketing plan to get people from Silicon Valley and from San Francisco and the Bay Area to

00:22:55.140 move to Miami specifically. And he was out there kind of like waving the Miami flag and telling

00:22:59.860 everybody why Miami is so great. And we haven't really seen that in Canada. And I'm a little bit

00:23:04.020 surprised. I mean, I mean, the reason why the reason why we probably haven't seen that is that every

00:23:10.100 city government and every mayor is constrained to some extent by the same kind of NIMBY sentiment,

00:23:15.380 so that the existing homeowners in Halifax might not be so happy or excited about Torontonians moving

00:23:21.620 into Halifax and bidding up their neighborhoods and contributing to traffic congestion and all these

00:23:25.700 things. So that's the first point that I would like to see just more competition between cities.

00:23:32.420 I would like to see people understand a little bit better the benefits of density and a growing

00:23:36.580 population as opposed to a declining population and be a little bit more proactive to encourage that.

00:23:42.100 But I do think this has to be somewhat of kind of like a market-led process. I think it's very hard

00:23:46.340 to plan this from the top down to kind of decide, okay, financial services will stay in Toronto,

00:23:51.300 but we're going to move AI to Montreal. This is what the super clusters try to do, right? We're going to

00:23:54.980 move blockchain development to Calgary, AI to Montreal, and basically try to like organize these things

00:24:00.500 from the Ministry of Innovation or something like that. I think ultimately people have to sort

00:24:04.980 themselves out to whatever the market kind of feedback loops are telling them.

00:24:09.460 I do think that COVID has, to your point, enhanced the ability to work remotely. We've seen a lot

00:24:15.220 more of that through COVID necessarily. And now because we've implemented all these systems, people

00:24:19.860 are kind of to some extent sticking with them. So maybe we will see a little bit more of a discount

00:24:25.540 placed on living super close together where you could see someone face-to-face in an office and maybe

00:24:31.060 that increases the relative attractiveness of decentralizing a little bit how we live.

00:24:35.780 But that's also been the promise of the internet since its advent. We haven't really seen that.

00:24:40.260 We've actually seen a concentration in cities and an increase in density in cities. There's something

00:24:45.380 about humans living and operating and interacting closely together that seems appealing. And we all

00:24:51.700 keep paying higher rents than we need to be by moving to big cities and living in smaller units than

00:24:56.980 we otherwise could. So I don't know what I would suggest as like a top-down kind of government-led plan,

00:25:02.660 other than to encourage more cities to adopt more of this kind of like abundant CMB agenda, right? So

00:25:09.780 Halifax could very quickly become as unaffordable as any other city if it doesn't respond to this

00:25:15.460 increased demand by building more housing. So it needs to build more housing. The US benefits from

00:25:20.500 more, I think, pronounced cultural and ideological differences between regions. So the Southeast builds a

00:25:27.540 lot. Texas builds a lot, whereas like the Northeast and Northwest coasts don't. And I think a lot of

00:25:32.820 that is driven by the cultural and ideological differences. In Texas, the idea is like, this is my

00:25:37.300 land. I'm going to build, you know, whatever I want on my land. We don't really have that here.

00:25:41.140 So, I mean, this is a long way of saying, I don't have a great answer for you. I would like to see a few

00:25:45.940 pockets of the country take this challenge as an opportunity for them to kind of grow in stature and in

00:25:51.300 status. And if they did that, maybe, yeah, maybe people would have more than three options for where

00:25:56.900 to live if they want access to the best jobs. And to your point, it's certainly not like a top down, like

00:26:02.580 the Minister of Innovation, whatever that means, can't just decide, okay, we're going to make

00:26:08.260 Montreal the AI capital. Like, yeah, you have to do a bit more than that. And it has to be industry led and

00:26:13.700 people led. You did mention blockchain in Calgary. And I did want to ask you while I have you, we saw

00:26:19.940 Pierre Polyev, the Conservative leader nominee. He was out in London, Ontario. He bought a Sharma

00:26:28.100 using Bitcoin. And he said that he wanted to make Canada the crypto capital of the world or the

00:26:34.500 blockchain capital of the world. I'm wondering if we could just ask you some basic questions,

00:26:38.260 because I know you mentioned on Twitter, you tweeted, I like where this is going. So to people

00:26:42.820 who don't have a background, they don't understand blockchain or crypto, can you just sort of give us a

00:26:47.780 101 lesson here on what it means? And how Canada can accommodate this sort of new industry that

00:26:55.140 we're seeing? I mean, Bitcoin's been around for a decade, but it seems like it's just suddenly become

00:26:59.460 really popular. And so maybe you can comment on that as well. Yeah, so and I'm showing more kind

00:27:04.340 of familiar, well versed with the Bitcoin side of things than the broader blockchain or crypto universe.

00:27:08.900 So Bitcoin very simply is kind of like the first form of money we've had in a very long time that

00:27:13.140 is not that doesn't have its monetary policy decided by a central bank or kind of constrained

00:27:20.500 in any way by a government. So something like we've had the separation of the state and the church and

00:27:26.180 now Bitcoin represents the potential for the separation of the state and money. And it's kind

00:27:32.260 of like an internet native form of money that facilitates transactions and some to some extent

00:27:39.700 acts as a store of value without the need for any third party intermediaries, including government

00:27:46.260 having a say in how it operates. The reason why I'm kind of like, I don't know if excited is

00:27:52.900 the right word, but I like the fact that Pierre is going in this direction is I do think that our

00:27:58.180 money is going, like our lives are going online, so our money is going online. And I think that there

00:28:01.940 are two visions for how the future looks if our money goes online. One vision of the future

00:28:07.540 is within the world of what's called central bank digital currencies. And this is where we decide

00:28:12.580 that paper cash doesn't have the utility that it once had, because we're all operating and

00:28:16.180 transacting online, whether like online explicitly or, you know, with a square point of sale terminal

00:28:23.380 at a coffee shop, we're not exchanging pieces of paper anymore. So just at some point, our money will

00:28:29.860 go online. It might be central bank digital currency, which is, again, fully controlled and governed and

00:28:35.940 regulated by the Bank of Canada, and maybe to a lesser extent, or maybe to a greater extent,

00:28:40.340 depending on how the politics go, the Ministry of Finance and other branches of government. Or you go

00:28:46.420 in this other direction where the online form of money is not defined or dictated or a regulator,

00:28:53.780 anyhow, kind of controlled by the federal government. And I think that that second scenario is probably

00:28:58.980 more hopeful if you care about things like privacy and autonomy and self sovereignty. We've seen

00:29:07.620 very recently, like a lot of federal government actions in, you know, freezing people's bank accounts

00:29:12.980 and that sort of thing that becomes exponentially easier if all money is like a ledger in a Bank of

00:29:20.180 Canada database. So I guess without going too deep into like conspiracy theory territory, I just think

00:29:27.700 it's better and there's a better set of incentives if the money is a little bit out of the government's

00:29:31.860 reach. Well, what a precedent to set that you can freeze the bank accounts of your political

00:29:37.540 adversaries if you don't like what they're doing. I think that that probably awakened a lot of people,

00:29:43.220 not just in Canada, but all over. I was watching on Twitter as sort of some of the leading

00:29:48.500 blockchain and cryptocurrency people were writing essays and writing Twitter threads,

00:29:54.500 concerned about what kind of precedent Trudeau and Chrystia Freeland just set by freezing bank

00:30:00.020 accounts of people that they disagreed with. So just a final question for you about Pierre's

00:30:06.180 announcement. How would Canada do this? How would we situate ourselves and position ourselves as being

00:30:12.020 a leader? I know El Salvador recently adopted crypto or Bitcoin as a legal tender that has to be

00:30:19.060 accepted by all businesses in that country. And they're sort of seen as a, I think they have a young

00:30:23.140 president who's, who's a very apt to these kinds of things. What, what, what could Canada do? And

00:30:28.260 more specifically what, what in Pierre, what Pierre Polly have announced, what, what kind of things can

00:30:33.220 Canada do to, to create the condition to become the leader? Yeah, I think the first thing you could do

00:30:37.940 is, is like somewhat of a Hippocratic approach. So like first do no harm. I think we're going to see a

00:30:42.900 lot more governments kind of crack down on digital currencies explicitly because they don't control them.

00:30:49.060 And, you know, most of our policy at this point is, is a blended kind of fiscal monetary policy,

00:30:55.700 MMT, you know, type of, type of scenario. And that becomes a lot harder to enact. It becomes a lot harder

00:31:00.740 to kind of set the, the, whatever parameters you want for your electoral success through monetary policy,

00:31:06.340 if the money is, is no longer controllable. So I think that a lot of governments will start cracking

00:31:11.700 down on cryptocurrencies and maybe on Bitcoin specifically. So first do no harm. I think, I think,

00:31:17.220 a Pierre Polly of government, let's say that made it explicitly clear that Bitcoin would be allowed,

00:31:22.340 if not encouraged to kind of operate as it does for people to own it, to hold it, to transact in it.

00:31:27.220 That would be very positive on the, on the policy front, kind of beyond that. I think something like,

00:31:33.060 so right now on any foreign exchange trade, there's an exemption. I think your first $200

00:31:38.660 aren't subject to capital gains taxation. I think if you applied something like that to Bitcoin,

00:31:43.460 but with a much higher threshold so that the problem with Bitcoin, people hold Bitcoin,

00:31:47.380 but the reason, one of the reasons why they don't spend it is if you spend your Bitcoin,

00:31:50.580 you're really selling it for whatever you're buying with it. And that's a taxable event.

00:31:55.300 And you're subject to capital gains taxation, if you do that. So I think kind of like,

00:31:59.620 through some similar mechanism to how we deal with Forex, but maybe with a higher threshold,

00:32:03.620 exempt Bitcoin from capital gains taxation, that would kind of right off the bat,

00:32:08.340 maybe just shy of El Salvador, make Canada the friendliest jurisdiction to Bitcoin. So, you know,

00:32:13.780 if I were advising him on his Bitcoin agenda, I might, I might suggest to go there. And then I

00:32:17.940 also think that like the, the, the rhetoric matters. I think if he's rhetorically supportive

00:32:22.740 of innovation in the space and rhetorically supportive of this philosophical idea of a money

00:32:27.220 that's uncontrolled and uncontrollable by government, I think that's encouraging,

00:32:30.900 and you'll see a lot more people participating in the market, including entrepreneurs who will

00:32:34.980 build things that I can't even, you know, anticipate on this call.

00:32:38.020 Great. Well, thanks so much, Chris, for your, for your thoughtful take on, on all of these issues.

00:32:43.380 I hope that the people in power or people advising people in power pay attention to some of the

00:32:49.940 solutions that you had, because certainly when it comes to both affordability and the idea of,

00:32:54.180 of, of having, you know, your assets protected, including your bank accounts, that there's,

00:32:59.380 there's a lot of opportunity that Canada has and to become a leader in, in the tech space as well.

00:33:04.580 So thank you so much for joining us. We really appreciate your time.

00:33:08.260 Thank you. Thanks for having me.

00:33:10.100 Great. That's Chris Spoke. I'm Candace Malcolm, and this is The Candace Malcolm Show.

Juno News - April 12, 2022

Why is Canada so expensive and will government spending help？ (Ft. Chris Spoke)

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