00:00:00.000The same issue, of course, that existed 100 years ago is the issue now that when all of this does die down, and at some point it will, where exactly is the government going to come up with the money to pay for all of these projects?
00:00:11.640If they're profitable, then great. They'll generate tax revenue from the profits on these projects.
00:00:17.400But if these are merely nation-building exercises, or if these are things to merely twiddle our thumbs while we wait for things to settle between Canada and the U.S., then we're going to have to look at future taxpayers.
00:00:28.180That's the next generation up where we're going to say, sorry, folks, your taxes are going to have to be higher because you need to pay for your parents while they live through the Trump years.
00:00:41.240Today on True Patriot Love, I'm lucky enough to have back Moshe Lander, a senior professor or senior lecturer at Concordia University in lovely Montreal, which I just was actually through your city.
00:00:53.920i should have given you a call but uh next time through i am going to uh do it because we're there
00:00:59.760for tpl local uh how you doing i'm well thanks good good so gdp we talked about it and we we
00:01:07.680last time we spoke we hit on it and i said explain to me where we're out on this gp gdp technical
00:01:15.280recession recession perspective and you came and you gave me a great explanation of what gdp was
00:01:22.960and we talked about a little bit but then fast forward to today and we got the news i think a
00:01:28.400week ago that we've seen some growth and quite frankly we've restated the numbers
00:01:34.800for the first quarter and basically the first quarter was was flat so so what happened you
00:01:41.280know this technical recession everything in your mind what have you seen and what's happening in
00:01:46.720in the economy right now that has led it to this conclusion sure so the technical
00:01:50.960recession was because we got two consecutive quarters of GDP that were declining. And so that
00:01:56.220does meet the technical definition. But the thing is that when you release the numbers, it's not the
00:02:01.680final number. It's often subject to revisions. Statistics Canada is constantly getting more and
00:02:07.580better data, especially the further back that you go. So as they got more and more data about what
00:02:12.760happened in the first quarter of the year, it turns out that that mildly negative number turns
00:02:17.560out to have been mildly positive, like you said, flat. And so because we no longer had the two
00:02:23.300consecutive quarters of declining GDP, then you can no longer call it a recession. And so that's
00:02:27.660the last time we talked when I said, I don't really believe this is a recession. That's just
00:02:31.280in the way that the data is collected. What we've now seen is a first look at the second quarter
00:02:35.740GDP numbers. And in fact, there was strong growth, strong enough growth that we haven't even seen in
00:02:40.940the last three years or so, and strong enough that would be reminiscent of an economy that would be
00:02:45.720growing rather rapidly, even by 1980s or 1990s standards. So, you know, it shows that resilience
00:02:51.960of the Canadian economy, but it also shows that the Canadian economy reacts very strongly to what's
00:02:57.320going on around it. And in the second quarter, that was where we saw a partial opening of the
00:03:01.780Strait of Hormuz. Trump was at his quietest in terms of menacing Canada with 51st state talk
00:03:06.960and tariff talk. And so not surprisingly, then the economy came roaring back because it's
00:03:11.600fundamentally looking to grow. And it's the outside factors that are constraining it and
00:03:16.720hemming it in. Do you think Moshe, you know, and for most Canadians, you know, we have about a 3.2
00:03:24.600trillion GDP, right? That's in Canadian dollars, you know, 2.4 trillion in US dollars.
00:03:33.500um was it was it inventory being reduced in canada to get ready for tariffs like you know it was was
00:03:42.500it protectionist trade that we were starting to see because you know gdp in the u.s actually or
00:03:48.440sorry the trade deficit in the u.s skyrocketed in the second quarter so you saw the u.s was seeing
00:03:54.240sort of way more imports than exports you saw us and i don't know about you know up in montreal i
00:04:00.120know where you were kind of uh through the second quarter but we were doing tpl local shows across
00:04:06.360canada and i was shocked when we went through montreal the number of trucks we were encountering
00:04:12.680all i know it's busy all the time but it was really you know i said to char i said you know
00:04:17.640this is really busy like like it seemed like we were in like this this really crazed logistics
00:04:23.720flow of getting uh trucks going and coming across the border and and you know is that what you were
00:04:30.200seeing yeah well actually most of the second quarter i was actually in my home in calgary
00:04:34.520uh i only work in montreal but you know the phenomenon in alberta was little changed than
00:04:39.160what you were seeing uh in the eastern part of the country uh businesses are not silly and when
00:04:44.200you make these announcements months in advance that tariffs are coming then yeah you're going
00:04:47.880to see this advancement of production where everybody's going to uh try and produce a
00:04:52.920little bit extra and dump it across the border to avoid those tariffs it's not just good for
00:04:57.400canadian businesses it's good for american consumers as well and even if those american
00:05:01.080consumers are themselves american businesses that are consuming our products to further refine it
00:05:06.520for the final consumer uh nobody likes tariffs and you know i i can understand then why uh given
00:05:12.840enough lead time everybody's going to try and race to beat it and we saw that even 18 months
00:05:17.560ago with that announcement of liberation day uh everybody was falling all over themselves
00:05:21.880to get as many of the goods and services across into the u.s as possible so that they could escape
00:05:25.640the tariffs yeah now you know and that was you saw this huge spike in uh light trucks i know that
00:05:33.560that skyrocketed up um and we you know it was interesting to see now do you think this is the
00:05:39.480interesting thing now coming out of the third quarter right so now we have tariffs on you know
00:05:45.320uh was shocking i did a i did a um a speech in front of a group the other day a business
00:05:51.160association and i did it with jim lang and i i set the uh was asked to do it a few months ago and i
00:05:58.200said if i would have been here if you would ask me a few months ago if i would be here today
00:06:04.200um and talking about tariffs i would have told you no i would have told you i've been talking
00:06:09.320about guzma but you know today i'm talking to you about the impacts on your business association
00:06:15.000from tariffs and so now we're seeing you know we saw this like as you mentioned this almost record
00:06:21.000spike in gdp uh second quarter now third quarter comes are we going to see a record plummet because
00:06:27.960now it's interesting how you know we're seeing this kind of a funny graph of ups and downs yeah
00:06:34.840i don't know necessarily that it's going to be a record plummet but yeah there's probably going to
00:06:37.960be a decrease in economic activity those tariffs and counter tariffs are occurring in the third
00:06:42.680quarter and the escalation of this trade war is occurring in the third quarter as well so it's
00:06:46.920going to be really difficult for the economy to sustain itself and i think what a lot of
00:06:51.000businesses are doing at this point is looking at the tariffs and counter tariffs and saying
00:06:54.840uh all right maybe now is not the time to expand our production now is the time to maybe postpone
00:07:00.280projects that otherwise would have been profitable if not for the uncertain trade war that's going on
00:07:05.880and if they're not postponing them they might be outright cancelling those projects and of course
00:07:11.080the worst case scenario imaginable is that Trump said 18 months ago that to anybody that wants to
00:07:16.260escape tariffs, the solution is you come set up in the U.S. and you never have to worry about this
00:07:20.960again. There are some Canadian businesses that are going to say, I don't want to operate in Canada
00:07:25.600anymore. So beyond just postponing and cancelling projects, they might continue these projects,
00:07:30.380but from an American address. And that would be, of course, bad for the economy, because now we
00:07:35.260lose that component of our GDP. Right. Now, governments, you know, and this is interesting
00:07:40.500because we're hearing more and more about this.
00:07:42.860So the 27 major projects and all these, you know, a CP Rail project,
00:07:49.480all these big projects being announced, right?
00:07:52.140And I was taking a look, you know, before the show,
00:07:54.540I kind of jumped onto Stats Canada and I started going through
00:07:57.380what makes up the $3.2 trillion in GDP, you know,
00:08:02.700because I always got to get my mind around it.
00:08:04.420And every time I do it, it actually surprises me.
00:08:07.640But government spending is a huge component of that, right, with their capital.
00:08:12.100So, you know, in tough times, governments kind of step in and they start to inject capital to keep those growth numbers or those GDP numbers up.
00:08:22.580Yeah, that was, in fact, the proposal put forward by an economist named John Maynard Keynes about 100 years ago.
00:08:31.360At the height of the depression, Keynes was arguing that the easiest way out of it is if you can't induce consumers to spend and they make up the biggest component of the economy, say around 60 percent, give or take, then the government has an unlimited source of funds.
00:08:46.040they can go the nuclear option and print money, or at least they have the capacity to borrow money
00:08:50.140through the bond market at a low interest rate. And they can spend their way out of a deep recession
00:08:57.340to try and keep the economy afloat until consumers get a little more optimistic about what their
00:09:01.800prospects are. And at that point, then they could collect it back in taxes. And sure enough,
00:09:06.280once people started reading Keynes and understanding what he was arguing about,
00:09:10.300this took that situation and undid it rapidly. Someone even argued that the Second World War
00:09:15.340was an economic response to the depression that no greater way for the government to gin up the
00:09:20.400spending than to put it into the military and into infrastructure at the time. I don't know that
00:09:25.780that's necessarily the solution here. But yeah, the government, much the same way that they did
00:09:30.240during COVID when we were unable to spend because we didn't have income that was being generated,
00:09:35.160then the government can jump in and pick up some of the slack. The same issue, of course,
00:09:39.380that existed 100 years ago is the issue now that when all of this does die down, and at some point
00:09:44.440at will. Where exactly is the government going to come up with the money to pay for all of these
00:09:48.640projects? If they're profitable, then great. They'll generate tax revenue from the profits
00:09:54.040on these projects. But if these are merely nation-building exercises, or if these are
00:09:59.560things to merely twiddle our thumbs while we wait for things to settle between Canada and the U.S.,
00:10:04.300then we're going to have to look at future taxpayers. That's the next generation up where
00:10:07.660we're going to say, sorry, folks, your taxes are going to have to be higher because you need to
00:10:11.100pay for your parents while they live through the Trump years. Well, it's interesting. So I was at
00:10:16.060a meeting this morning and there was a bunch of investment people and it was kind of like a
00:10:23.360think tank. We were actually all having a coffee and just throwing ideas about certain issues.
00:10:29.040The one gentleman mentioned that in his group, there's a large discussion or a big discussion
00:10:34.220right now on capital gains again right because we have this we have this huge bubble of um baby
00:10:41.180boomers actually that are now in about huge transfer of wealth scenario which is trillions
00:10:47.340and trillions of dollars being transferred here in canada and throughout north america so they
00:10:52.940were talking again about kind of in order to actually pay for all this to get through these
00:10:57.900bumps we need to actually go back because that's really the only thing moshe i can't think of
00:11:02.700anything else that you could actually be looking at right now eventually i think eventually capital
00:11:07.340distribution has to be some form of taxation on it to actually compensate otherwise i can't think
00:11:14.540of anything else i'm sure there's uh use taxes and other things you could put on but you know
00:11:19.340it's a pretty limited you know i always say tax the tax pool is pretty limited right you either
00:11:23.820gotta hit capital you gotta hit operations you know you can do use taxes i'm sure i'm missing
00:11:30.220a ton but you know is that the next unfortunate scenario that we're looking at well it could be
00:11:37.820uh you know part of this story depends on uh who actually is buying up this government debt
00:11:45.500if canadians are buying the canadian government's debt then what we have going on essentially is an
00:11:50.140intergenerational transfer that we are borrowing money from our future selves uh and then we will
00:11:55.900just pay them back for whatever it is that we're enjoying now if we're spending it on infrastructure
00:11:59.820that's going to last 30, 50, 100 years, that seems a perfectly reasonable exercise where you're going
00:12:05.020to benefit from this infrastructure in the next generation, but somebody has to build it. And so
00:12:09.060it's going to be our generation. And then you'll just get paid back, not just in terms of the bonds
00:12:14.060themselves, but the benefit of that infrastructure existing. If it's foreign countries or foreign
00:12:18.900entities that are buying up that debt, that's something slightly different then because they're
00:12:23.140going to have a claim on these assets without actually owning the assets. And so now what we
00:12:27.900have is an international transfer, not an intergenerational transfer. So it's not necessarily
00:12:32.300a problem if we have all of this debt that's accumulating. And I don't necessarily know that
00:12:37.720we have to go the tax route as a way to try and pay it back, because that next generation can
00:12:42.180always kick the can down the line to the next generation. And as long as somebody is willing
00:12:47.020to absorb that cost, then things should be fine. What we're seeing in the US, though, is that
00:12:52.200there's a small number of alarm bells ringing. It's not getting too loud just yet. But there's
00:12:57.300this worry that American debt is highly desirable, not just to Americans, but to a whole bunch of
00:13:02.740other countries around the world that have been big financers of the American government.
00:13:06.540And because Trump is destabilizing the global order, some of these countries are now looking
00:13:10.940at this debt that they're holding saying, I don't know that I want to do this anymore. I don't know
00:13:14.480that I want to fund you, even though you're offering me security and stability, because I'm
00:13:18.540not even sure that you're offering me security and stability anymore. And so, of course, if
00:13:22.940anything starts to ripple out of the US, it will cross Canadian shores. And so that could all of
00:13:28.000a sudden make our debt look relatively more dangerous too. And that poses a problem. In terms
00:13:32.240of how we can go about collecting through taxes, yeah, capital gains are one of them. But I think
00:13:37.840that it's important to remember that there's always a behavioral response. And I think a lot
00:13:41.620of mistakes that are done when we do these tax analyses is we assume that everybody will just
00:13:45.440continue to stand still. If you increase income taxes too much, guess what? I'm going to stop
00:13:51.040working one day a week and I'm going to go enjoy golf. What's the old joke in Ontario? If you need
00:13:55.360a doctor on a Wednesday, go to a golf course because they've taken this idea of you're taxing
00:14:01.120me so much. I'd rather enjoy my leisure time than an extra 50 grand a year by working.
00:14:06.620It's the same sort of idea here. You start taxing capital gains too much and people are going to
00:14:10.980take their savings and they're going to park it somewhere else. That potentially could hold back
00:14:15.120the long-term capacity of the economy because remember for everybody who's saving, there's
00:14:19.020somebody on the other side who's borrowing that's putting it to a productive use but if you starve
00:14:23.240those borrowers of savings because of capital gains taxes then you starve the ability to create
00:14:28.500infrastructure for the future and that'll hold back the long-term potential of the economy
00:14:32.160yeah no no that's that's so right you know that big transfer you know just to talk about it for
00:14:38.720a minute you know this huge wealth transfer between generations is is you know it's a blessing and a0.94
00:14:44.400curse right so and that's you know you have baby boomers quite frankly who were fairly frugal right0.75
00:14:51.760they bought one house they lived in one house they saved a lot of money they helped their kids
00:14:56.900and now there's that transfer happening or that transfer about to happen and then you know is it
00:15:02.860is it actually going to be beneficial because the the children who didn't grow up with the same
00:15:08.000spending habits will hopefully put that into the economy which then will probably or hopefully
00:15:12.960produce more taxes, more growth, all those good things. You know, you have to hope that some of
00:15:19.260that trend analysis goes in our favor also. Well, the money is always going to stay here
00:15:24.040in Canada, right? So you can't take Canadian dollars and go spend it in foreign countries
00:15:28.020because they don't recognize Canadian dollars as being valuable. So even if you try to exchange
00:15:31.460your Canadian dollars for, say, Mexican pesos, there's somebody on the other side of that
00:15:35.260transaction who's taking those Canadian dollars saying, well, I can put it to you. So the money
00:15:38.980will stay here. I think that our broad issue is, you know, when you have this intergenerational
00:15:45.960transfer that's going on, and because baby boomers have accumulated a lot of wealth,0.65
00:15:49.880what you're creating then is the potential for greater wealth inequality. Those baby boomers0.90
00:15:53.880that were here in Canada leaving money to Canadians, there's this disproportionate amount0.66
00:15:58.840of wealth then that accumulates where, say, immigrants that came post-baby boom, if they
00:16:03.620weren't able to enjoy the ability to accumulate wealth the way that the baby boomers that were
00:16:07.600here in the 1950s and 60s could, then you have this growing inequality. And so what does the
00:16:13.060government do about growing inequality? Even though Canada as a whole is wealthy, if it's
00:16:18.840masking this large degree of inequality, that creates political instability. And who would
00:16:24.040have thought 40 years ago that right-wing parties in this country would be representing the lower
00:16:29.960income, the lower skilled part of society, and that it's somehow the left-wing party or the
00:16:35.240centre-left party that's representing the rich and the business class. This is not the normal
00:16:41.520way of Canadian politics, but as they're trying to figure out the political calculations of how
00:16:46.140to get power, that wealth inequality is now playing out in the way that we're seeing the
00:16:50.020rise of populist politics come back, because that inequality is creating instability, and so it's
00:16:56.080creating frustration. Referendums on separation in Alberta and Quebec are not accidentally occurring
00:17:00.980right now when people are feeling that their hard work and effort is not being compensated
00:17:05.000properly for their feeling that the playing field is stacked against them yeah no no i agree hey
00:17:11.000moshe i gotta ask you so the composition i'm going to jump back for a minute to the composition of
00:17:15.640gdp because this is this to me is very interesting because every time i look at i realize on the on
00:17:21.880the gdp scale all the items in gdp that make up the calculation of expenditures oil um minerals
00:17:30.760are not high on that list right so as we talked about government spending uh believe it or not
00:17:37.400the the largest component of of gdp and i always tell people i know you know this but
00:17:43.560for the audience is retail estate and rental leasing so a real estate sorry real estate
00:17:53.400rental and leasing right so that's the biggest component and i'm always shocked when i hear that
00:18:24.080So the asset itself is not part of GDP,
00:18:27.720but the income that flows from the asset is.
00:18:30.600So if we want to take this outside of economics, and maybe the audience is a little more appreciative of, say, the business component, anybody who takes like an intro business course in high school is exposed to the balance sheet and the income statement, right?
00:18:41.640So when we're calculating GDP, what we're talking about is the income statement part of the story, not the balance sheet.
00:18:46.640The balance sheet is telling me what assets I have, what liabilities I have, right?
00:18:50.260So that type of stuff in Canada would be, you know, the national parks are our assets.
00:18:54.380The oil that is in the ground is an asset.
00:18:57.120The fish that are in the water, that's an asset.
00:18:59.000the forests that stand tall on the coast, that's an asset. That's not part of the GDP calculation.
00:19:04.840But when you chop down those trees and you sell the lumber, when you take the fish out of the
00:19:09.000water and you sell it at the market, when you extract the oil and you sell the oil,
00:19:12.760that's the stuff that goes into GDP. So, you know, the actual house itself, not part of GDP,
00:19:18.440but the rental income that flows from the Airbnb transaction, that's part of GDP. And it's not
00:19:24.600surprising to me that that's a big component of it, because if you look at the way economic history
00:19:29.460goes for most countries, you start off as like subsistence farmers. Most of the production comes
00:19:34.740from everybody works on the farm. They have their own plot of land. They generate enough produce or
00:19:39.420meat or whatever it is that they're doing on their farm to feed their family with not much else after
00:19:45.580that. At some point, technology comes along or advancement comes along in capital equipment that
00:19:51.880can start to expand their production and not just feed themselves but their neighbors the neighbors
00:19:55.720then go off and find something better to do with their time uh and that's where you end up in you
00:20:00.760know factory and industrial revolution style uh advancement and then after you go to that uh you
00:20:06.760know then you start moving your way up the value chain and at some point you spill over into the
00:20:10.920service sector economy which was the buzzword at the turn of the century and now you're into that
00:20:15.480ai and technology part of things and so you know the idea that we're now producing three point
00:20:20.760whatever trillion dollars worth of goods and services and the vast majority of those are
00:20:24.120actually services rather than goods themselves is economic evolution and most countries go that way
00:20:30.120and so for everybody like trump who's upset that you know the us is not the manufacturing hub of
00:20:34.440the world anymore well it should be they've moved up the value chain and rather than seeing that as
00:20:39.480a sign of success he sees that as a sign of failure and so yes whenever we see the data that
00:20:44.200shows hey canada is moving beyond manufacturing uh that's what happens when you get richer
00:20:49.800right yeah no and that's what you you beat me to the punch because that's where i was going on
00:20:55.000so well done so you know the second biggest item on the gdp sort of scale is manufacturing and then
00:21:01.800of course health care and social assistance we talked about government um finance and insurance
00:21:07.560right so that's that you know investing money you know banking investing that's that and then
00:21:14.440then you move to the professional services and then you get to retail trade and wholesale
00:21:19.800And that's where you're saying. So, you know, his and that's, you know, the Trump argument is that all the manufacturing in, for example, the U.S. has gone so far down that GTP scale that he sees that as a detriment to the country from an employment perspective.
00:21:37.220Right. He's saying, you know, I with this cannot be sustainable because we don't make anything.
00:21:43.060right yeah um you know look he's an old man uh and i don't mean that in a nasty sense but
00:21:50.000no you know he's 80 years old and so when he was in his 30s uh you need to go back 50 years and
00:21:57.340you know that's 1976 and so for anybody who's a parent uh you sometimes end up with this time
00:22:02.360work where you kind of remember your kids always permanently at a certain age and you forget to
00:22:06.160realize that they're aging too uh certainly one of those things that i realized you know when i
00:22:10.140see like Jerry Seinfeld now, he's permanently stuck in that 1990s age where I see him in syndication
00:22:16.400all the time. And then I forget that he's now almost the same age as Trump is. So it's kind
00:22:21.160of the same thing then that if in his time warp, he's remembering an age where American manufacturing
00:22:27.140was the star of the world, then he's nostalgic for something that no longer exists. But rather
00:22:33.280than lament it and say, it's a shame that we're no longer what we used to be, he's failing to
00:22:38.280recognize that there's so much more than what they were then the economy has grown so much more
00:22:43.840population wise the number of people who have jobs is so much higher than it was 50 years ago for all
00:22:49.160of the immigrants that he's blaming for the u.s problems they found jobs too right like it's not
00:22:53.960like there's this lump of labor and all of these people coming in are merely just displacing one
00:22:58.400for another so i'll give you a bad analogy since you mentioned you were uh through montreal recently
00:23:02.620you know about 100 years ago one of the thriving industries in montreal was uh blacksmiths
00:23:08.260uh you know shoeing all of those horses that were clip-clopping around in the famous old part of
00:23:13.800town um when the first car came across the uh champlain bridge or the cartier bridge i imagine
00:23:22.240that all of those blacksmiths looked at themselves and went this can't be good and it wasn't uh
00:23:27.260because within a decade all of those uh horseshoe manufacturers were put out of business but the
00:23:33.500great thing was that while it's true there was this tremendous unemployment that was created in
00:23:37.300that industry, and the industry was effectively wiped out, within 10 years, there was this brand
00:23:42.040new business of metal bashing that nobody would have foreseen if not for the fact that once all
00:23:47.360those cars come across the bridge, they start smashing into each other. And hey, does anybody
00:23:51.240know how to use a hammer and pound metal back into a good shape? All of these unemployed people said,
00:23:57.020man, I would have never imagined that that was a career for me, but here I am. If Trump had come
00:24:01.100into power somewhere in those intervening years, could you imagine him railing against that we
00:24:05.420used to have the greatest blacksmith industry in the world, and we need to fight back and push
00:24:09.680back against these terrible cars and what they're doing to the economy. To us now, that seems
00:24:14.720laughable. But here in the 21st century, we have a president in the largest economy in the world
00:24:19.720that's making that very argument. And there's 100 million Americans went, makes sense. It doesn't
00:24:25.060make sense. Those people might be temporarily unemployed. But there's something coming on the
00:24:30.480other side that we could have never imagined. And just think 25 years ago, when everybody needed a
00:24:34.480website without really knowing what their website could do. And now look at how we've all settled
00:24:39.120into the idea that we understand what websites are. AI is coming. We don't really know what
00:24:43.620it's going to do yet, but somewhere 20, 30 years from now, our descendants are going to be talking
00:24:48.080on a podcast or whatever the equivalent is going to be. And they're going to say, can you imagine
00:24:51.140that these people were scared of what AI was going to do? Look at what it did for us and look at how
00:24:55.600much it freed up our time to go pursue other things that they would have never imagined would
00:24:59.820existing right no no i'm i'm with you you know in canada right now and you know it's interesting
00:25:05.260because we talked about the major projects so part of as as you were mentioning and and and
00:25:11.180how the composition of gdp is income based our expenditure base so you know as we develop uh
00:25:18.380whether it be other opportunities in the resource base they will actually add to our gdp over time
00:25:23.820as they produce and sell off minerals and goods right so and that's why um you know as we see i
00:25:31.740guess uh these companies leave uh unfortunately or they do fewer trade um we backfill with
00:25:42.060government spending you know it's really the uh coming behind and figuring out how i don't not
00:25:48.380to fully subsidize but to incentivize companies to actually re-engage and to to actually backfill
00:25:58.620those lost industries right or create new ones to your point right so my concern right now and this
00:26:04.700is the interesting thing and that you hit on it my my concern right now as we keep having these
00:26:09.740conversations every time we see a damaged industry our first inclination is to go in and actually
00:26:15.820provide a subsidy for that industry right and i think that's it should be provide an incentive
00:26:21.580for the industry not a subsidy and i think as we get going we got to change our speak a little
00:26:26.700because i think our speak is becoming um it's becoming a little almost dangerous in a way
00:26:33.340because we're looking for someone to carry us through a period of time we should look be looking
00:26:39.660for industries and private enterprises to carry us through with new innovative tools that get us
00:26:45.740there and i think uh you know if i had to any comment or recommendation right now is to change
00:26:52.140the speak on how they're talking about it because they're you know we keep having these discussions
00:26:57.100in the news and as we're going you know and politicians stand up they're saying well we
00:27:01.020will support you through this period no no we will you know it's not supporting you through this
00:27:07.260period we will help you transition through this period right it's to me it's kind of being how do
00:27:12.940you say it impeccable with your words and i think that's a little dangerous the way we're not being
00:27:17.820right now yes i agree with you and i i think in part it's because the the voters remember the boss
00:27:25.260the the politicians work for us not the other way around and if you have the boss is poorly informed
00:27:31.420or expects things that are not reasonable to expect then an employee might sometimes do what
00:27:36.620the boss demands without trying to stand up to the boss saying i think you're out of your mind
00:27:40.540uh and so maybe the reason why you and i have to have these conversations is to remind the people
00:27:44.780that are listening if you don't know what's going on out there then it's really difficult to go tell
00:27:49.980your employee the politician what you want from them and they're not going to come back and tell
00:27:54.860you that you're misguided they're going to say okay if that's what you want uh assuming that when
00:27:59.500the damage is done they're going to say hey i'm merely doing what you voted for or i'm not even
00:28:04.700in power anymore so uh you know don't blame me uh i i'm not the one that's responsible for this
00:28:09.980anymore. So you're exactly right. In terms of declining industries, I highlight all the time
00:28:15.100with my students that we have to be careful the way that we view unemployment. I'll give you two
00:28:19.120kind of weird examples. Let's just say my economy consists of 10 people. One person is unemployed
00:28:24.500and nine people are working. The one person who's unemployed is permanently unemployed. They are just
00:28:30.480never going to find a job. In the second scenario, I still have 10 people in my economy, nine have
00:28:35.960jobs. One is unemployed, but the unemployed person is randomly chosen by picking a name
00:28:41.940out of a hat every month. And we just rotate who's going to be unemployed based on the name
00:28:45.620that I pick out. Now, somebody might be unlucky enough that they get drawn two, three times in a
00:28:49.760row, but it really is just a random lot. In both cases, we would have an unemployment rate of 10%.
00:28:55.180But if we go to the voters and say, how do we support this unemployment? The first scenario
00:29:00.340is very different than the second scenario. The first scenario, that person needs to be retrained.
00:29:05.560There is something that makes them unemployable. And so the government then can provide support
00:29:11.180to that person by figuring out how to get them off the bench and back into the game.
00:29:14.880In the second case, because it's just some random name out of a hat and hey, it happens to be your
00:29:19.040return, there's nothing wrong with giving that person a very large component of their regular
00:29:23.600income because it just happens to be your random chance. And in theory, everybody would be willing
00:29:28.740to contribute to such an insurance scheme because your number might be up next. But in the first
00:29:34.720case, nobody would be willing to contribute to that system because they're going to say,
00:29:37.880I'm not at risk of being unemployed. It's that person there. So don't take my money and help
00:29:42.340them continue to be unemployed. If you're going to take my money, at least help them
00:29:46.160so that it becomes that random second scenario. So I agree with you that if we see industries
00:29:51.940being damaged here by tariffs or whatever, part of the conversation is fine. The tariffs might
00:29:56.280be damaging them, but were they already terminally injured? And this is just accelerating their
00:30:00.980demise. And, you know, the example that always comes to mind when we have these conversations
00:30:04.840to me is the auto industry in Ontario. Auto production in Ontario is down about 50%
00:30:11.220since the turn of the century. And that didn't just happen in the last couple of years with
00:30:15.420Trump. It didn't even happen in the last decade with Trump. It was a steady decline that's been
00:30:19.220going on continuously. So at what point is an Ontario politician prepared to have the conversation
00:30:24.800of, is this maybe an industry in terminal decline? And if it's in terminal decline,
00:30:29.060these tariffs are certainly not helping. But maybe what we need to be looking at is how do we get
00:30:33.540them to their next port of call, rather than providing them with support to wait around until
00:30:38.240the tariffs pass, if what comes on the other side is merely going to be that steady decline into
00:30:42.940irrelevance. I don't think you can win an election in Ontario if you take that approach. But again,
00:30:47.740if the politicians are merely doing what they expect the voters to demand of them, then I think
00:30:53.660the problem here might not be even the politicians, it might be the voters. Yeah, no, no, that's a
00:30:58.200good point but you know i guess what's happening really is it's forcing an outcome and that outcome
00:31:03.300is people will have to change right based on the tariff configuration moshe thank you very much i
00:31:09.560really appreciate it and as always very enlightening thanks for the time um and you know we're gonna
00:31:16.280see the third quarter so i'd love to have you back for the third quarter and then you and i go through
00:31:22.160it because i'm i'm so curious you know i'm kind of hedging on what i think is going to happen but i'd
00:31:26.800to get you back and take a look at that because to me that's when the rubber hits the road
00:31:32.240anytime uh you don't even have to wait for quarterly data so uh you know gdp numbers
00:31:36.320come out monthly same with unemployment figures and inflation and interest rate decisions are
00:31:39.760every six weeks so anytime you want me back happy to join in all right thank you very much have a