In this episode, I speak with author Laurent Carboneau about his new book, "At the Trough: The Rise and Rise of Canada's Corporate Welfare Bums". We talk about how the Liberals are running on a platform of cutting taxes, cutting benefits, and increasing the deficit.
00:13:41.700The other thing you've got to wonder, as somebody else is pointing out in the newsroom,
00:13:45.800boy, if there was a plan for this, if you were on the inside,
00:13:49.940if you actually knew what the president was up to, boy, you could really make out well, couldn't you?
00:13:56.500You know, you could watch as the markets tumble down, way down there, and then you could buy like crazy because, boy, with the Dow going up 2,000 points in like an hour today, people buying into some select stocks really made out very, very well today.
00:14:13.080I don't, to be honest, though, I don't think there's that much planning behind what President Trump does, but I don't think he's purposely doing this.0.94
00:14:25.220I think he just does whatever the hell rattles through that strange orange brain of his.
00:14:30.420But trying to predict what Trump is going to do, I might as well bet the horses for as far as that goes to try and make any money.
00:14:39.460But it's getting tiresome, and it's heavily impacting the Canadian election, which is unfortunate.
00:14:44.020If there's any time for 40 days, we should be just looking at our own leadership, at all of the parties, at all of the options, and discussing those, and discussing policy.
00:14:52.020policy. It's during a campaign. I know, you know, Trump has no reason to care what's going on up
00:14:57.600here. Unfortunately, though, this is the first election in my living memory where the actions
00:15:02.680of a foreign government have far more impact on our current election campaign than the actions
00:15:07.220of our own candidates. And it's pretty darn frustrating. It's frustrating for us as a news
00:15:10.920outlet to try and cover the election when the bloody tariffs are constantly keeping the things
00:15:16.120in the scroll, but we'll do what we can. Okay, so I'm going to get on to my guest, Laurent Carboneau.
00:15:23.080He wrote a book, as I said, at the trough, The Rise of Canada's Corporate Welfare Bums. And it's
00:15:29.620a good read, and it's a fun one. He coined the term, Valdmanis, the Rasputin of the Rock. I mean,
00:15:35.520that's just brilliant. I couldn't imagine those words coming out, but it was a great descriptor.
00:15:40.500So, I mean, he adds some great levity in the writing on a subject that is typically pretty
00:15:44.280dry but very important and it's very timely right now as we're having these economic discussions so
00:15:49.240if we bring Mr. Carboneau in thank you very much for joining us today. Yeah delighted to you thanks
00:15:54.400Corey. So as I said I mean this is pretty timely and it's an issue that really does transcend
00:16:00.740progressive or conservative politics because historically as your book lays out all the way
00:16:06.240through Canadian history parties of both stripes have both heavily participated in corporate
00:16:12.520welfare yeah everyone's been a very eager practitioner at some point and everyone's
00:16:16.440been a very eager critic at some point kind of depending on who happens to be in power and who
00:16:20.540controls the purse string so yeah it's an interesting project i think that you know i
00:16:24.520was kind of looking at it first from the perspective of you know what have the last
00:16:28.180eight ten years looked like and then it just kept kind of suggesting itself like well can you really
00:16:32.920get all of that if you don't understand sort of how we got here and how we kind of built up this
00:16:36.500apparatus and ended up going back to you know the railways and the national policy and giving it a
00:16:41.080pretty thorough look from the founding of Canada onwards. Well, and our railways certainly were
00:16:46.460some heavily subsidized in a number of ways, juggernauts, and really not necessarily the
00:16:51.040nicest corporate actors on the Canadian landscape back then. No, not a bit. Yeah, we ended up
00:16:56.820subsidizing them to the tune of a very, very appreciable, I would say, I think it was multiples
00:17:02.360of the federal budget at the time, obviously staged out over a certain number of years,
00:17:06.360but really tremendous fiscal outlays that were paid for.
00:17:10.580You know, you're just talking about tariffs by tariffs,
00:17:13.820very, very heavy tariffs paid for by, you know,
00:17:16.120Canadians for everyday goods and services and all of that largesse,
00:17:20.780you know, some of it, of course, going to actually build a railway,
00:17:23.300but a lot of it getting scooped up by financial engineering that the railways
00:17:26.600did to kind of, you know, inflate their own stock claim dividends
00:17:31.040and also try to buy out their own competitors that weren't being subsidized.
00:17:35.440so a pretty tawdry kind of uh corporate affair uh all things considered yeah it's i mean the story
00:17:42.600just never seems to change so it was the people on the ground working they get nailed with the
00:17:46.320tariffs and again the irony of how these this is working uh that was the case in the canadian
00:17:50.900agriculture a lot they had to pay tariffs on farm implements that gave government revenue the
00:17:55.940government gave that revenue to the railways and the railways would then gouge the farmers to
00:17:59.580transport the implements and the crops uh with railway fares but i mean i guess the case is kind
00:18:05.240of made would the railways have been built without government uh direct intervention like that yeah
00:18:10.300probably not right like the government very consciously made the decision you know on kind
00:18:15.120of national interest grounds that we needed a railway to the pacific and they were probably
00:18:19.400right to do that uh you know at a certain level and of course that was part of bc joining
00:18:23.360confederation was they would get the railway within a certain number of years which we
00:18:26.440promised we didn't actually keep but we did end up building it the real like thesis behind it was
00:18:31.280that if you built it fast enough, then you'd have a lot of settlements sort of follow along the line
00:18:37.300of the railroad. That ended up not really happening on the timescale that, you know,
00:18:41.400people thought it would. And I think, you know, in hindsight, we probably overpaid for the railroad,
00:18:46.060especially considering that, you know, as I mentioned, a lot of it went into this kind of
00:18:50.160financial engineering and sort of profiteering versus actually building the thing. So, you know,
00:18:55.580in hindsight, they kind of had their eyes bigger than their stomachs and went into and made a bad
00:19:00.000deal, you know, based on a lot of hype and on a lot of, you know, just wanting to be seen to be
00:19:06.520doing something versus making a considered policy decision, which is a thing, a theme we see time
00:19:11.300and time again in Canadian history. Yeah. And I mean, the subsidies left, I guess, a tangible
00:19:16.140asset. I mean, the railway still provided a service that helped develop the West and unified
00:19:20.480the country end to end, but those policies didn't stop. And we see it at every level of government
00:19:27.840too i mean you know we're getting to contemporary politics i know alberta was terrible uh we we had
00:19:33.120a few corporations mag can novitel the government dove into those and those went completely broke
00:19:38.400and we had nothing left when we were finished with them and the list gets pretty long with these kinds
00:19:41.840of investments yeah it does and and i look at a couple of big provincial mega deals and that's
00:19:47.200the thing is i noticed um you know looking throughout canadian history the the feds will
00:19:51.520tend to do just a constant stream of money going out the door where the provinces will sort of uh
00:19:56.640make these big deals that you know are supposed to be very transformational and uh i look at what
00:20:00.880happened in newfoundland after they joined confederation and it was this just like blitz
00:20:04.560of spending on trying to set up as many industries as possible uh under joey smallwood and as you
00:20:09.680mentioned uh alfred velmanis who was his sort of economic development czar um and then i look as
00:20:16.080well at saskatchewan which set similar trajectory there as uh as alberta big resource projects uh
00:20:22.400you know very much um was seen coming by uh their their counterparties on that at fcl the federated
00:20:29.200co-ops um and then new brunswick which is kind of my my favorite example the brickland car
00:20:34.320uh which was a kind of this cool goal wing sports car that was built in the early 70s in new
00:20:38.960brunswick a little about 3 000 um the government was in for about 20 million dollars on that which
00:20:43.840you know you know the grand scheme of things is not astronomical but for a small poor rural
00:20:48.640province in the 70s is a pretty good chunk of change um they sold 3 000 and uh lost money in
00:20:54.800every single one and they folded after that and it's a kind of a sad more of a sad story than me
00:20:59.160laughing at them i you know i i i used to live in new brunswick love the place uh and it's just
00:21:04.060it's it's disappointing to see that you know governments time and time again sort of prey
00:21:08.920on the hopes of people um to make these bad choices and perhaps you know they're themselves
00:21:13.660preyed upon by these kind of uh sort of corporate hucksters but uh yeah it's a it's a bit of a
00:21:18.560tragic story at the provincial level often yeah no no no i don't i understand the feeling with
00:21:22.840the people in new brunswick that's why i brought up as an albertan i'm a proud albertan but i put
00:21:25.920it we screwed up just as badly with the subsidy game as any other no i mean the rule you would
00:21:32.160think is just to stay out of them i mean the failure record if you're just looking at you
00:21:36.220know the ones that make it versus the ones that fail is terrible and and any you know business
00:21:41.280person looking at a record like that would say i'm not going to invest in something like this but
00:21:44.480we just can't seem to stay out of this uh it's too politically hard to extricate themselves yeah
00:21:49.920it's hard right and and uh janice mckinnon who was uh royal romanos finance minister of the 90s has
00:21:54.800a really good memoir that talks about a lot of this in the context of saskatchewan she mentions
00:21:58.640you know at the end of the day you know a lot of provinces and the federal government are really
00:22:03.280reliant on you know the commodity prices right and alberta's certainly feeling this right now
00:22:08.000with the price of oil. And the reality is that commodity prices don't come up for reelection,
00:22:11.680but governments do. And governments have to have something to say to people who want them to be
00:22:15.920looking out for their well-being. And I think it's a bit of a tragedy. It's just like there's
00:22:20.640a time and a place for government participation in the economy. And certainly there are countries
00:22:24.420like South Korea, Taiwan, Sweden, and Finland that have worked out ways to do this pretty
00:22:28.860effectively. Finland in a lot of ways and Sweden, their economy both looked a lot like ours 100
00:22:34.300years ago a lot of forestry a lot of agriculture a lot of mining uh and they've managed to become
00:22:39.580you know fairly small countries but real powerhouses in certain parts of the economy with
00:22:43.740real big global players like nokia and ericsson and of course you know south korea has its own
00:22:48.380huge giants taiwan has tsmc making semiconductors um none of that was you know happened by accident
00:22:54.220uh government had a big part in that but the really key distinction between us and them and
00:22:58.380the big difference is that they have built these institutions that are good at making these
00:23:02.860effective decisions and building the kind of infrastructure to sustain that over time where
00:23:07.420we don't right and we never have and it's a it's a real political failing more than it is a failing
00:23:12.300of you know canadians it's just that you know our governments aren't equipped and haven't bothered to
00:23:16.060equip themselves to make these decisions well yeah and the reality is when money goes into companies
00:23:21.100for subsidies whether they fail or succeed there's certain people seem to walk away with some pretty
00:23:25.580full pockets and things uh one of the things you you point out in the book r d is one of their
00:23:30.380favorite kind of areas you can because it's it's more ethereal people you know it's hard to
00:23:36.860compartmentalize exactly what the money was spent on you can just say r d and we want this is our
00:23:41.900end outcome we'd like to see uh but it's hard to track whether the money was effective or not and
00:23:47.180whether it went to the right place yeah and like our system in canada here on research and
00:23:51.900development is really based on the the shred tax credit right which is about four billion dollars
00:23:55.980a year give or take it's gone up and down a bit over the years and the big problem there is is
00:24:00.860you know less the the paper trail administration there's actually a lot of administration a lot
00:24:04.780of overhead you have to be pretty exhaustive and what you're trying to define is research and the
00:24:09.180the cra uh does audit very frequently on this uh if you ask me the big problem with shred is that
00:24:15.020a lot of it ends up going to these really big profitable and large foreign companies that are
00:24:19.980employing a handful of canadians to do research and development work uh that then gets turned
00:24:24.220into ip that gets commercialized abroad uh which is not just profits we're missing out on in canada
00:24:29.580in terms of you know corporate taxes that could pay for things like hospitals and schools it's
00:24:33.420also because they're tied up in ip rights it's blocking canadian companies from competing in
00:24:38.220those areas abroad so we're paying money uh for people to do research that then makes canadian
00:24:43.260companies less competitive on the world stage uh which you know i think if you're looking back
00:24:47.980objectively at you know what we're talking about subsidies you'd want to make your companies more
00:24:52.460competitive abroad and export more uh and in fact like that subsidy in particular is having the
00:24:57.580opposite effect yeah so i mean getting a little more current with something people have been
00:25:02.460worried about what we're seeing is speaking of foreign-owned companies when we're looking at
00:25:05.660like volkswagen and others the the battery plants and it's not looking very good we're not seeing
00:25:10.380the jobs created they of course said they were going to be created but we certainly have seen
00:25:14.780the money go out there uh you know is there going to be a good end to this it's not looking very
00:25:20.780bright right now well the the silver lining such as it is is that a lot of the money won't go out
00:25:25.420the door at all because a lot of this is tied up in production credits so the the idea was for
00:25:29.740every battery they're going to get a certain amount of money back so at some level if they
00:25:34.060don't make the batteries like good you know because it means we won't be wasting money on this
00:25:39.340um you know the other pieces you know you mentioned the the jobs there like i remember
00:25:43.900when they announced this like we were talking about effectively negative unemployment in
00:25:47.340southwestern ontario right so really what we were saying was to local employers you're going to be
00:25:52.700competing with these big subsidized international giants to keep your staff you know while you can
00:25:57.340barely find enough to run your own business right now um so from my point of view like the numbers
00:26:03.260involved are really astronomical but it's not it's just what was the value proposition here right like
00:26:08.780we're going to be assembling batteries which sure has value but we're going to be doing it to
00:26:12.460generate profits abroad so it's as i kind of said in the book it's a green new deal for shareholders
00:26:17.180of Volkswagen and Stellantis rather than a real investment in making Canada more prosperous.
00:26:22.320Well, and I, you know, things kind of broke too fast for you to really cover it in the book,
00:26:26.900but you know, I'd like your speculation on it. We're seeing a big temptation probably from both
00:26:32.200countries to really try for introverted economies. If we can't trust the integrated economy we had
00:26:37.840with our Southern neighbors, people asking to subsidize domestic businesses, particularly in
00:26:44.380manufacturing or R&D are probably going to be quite welcomed by the government, but they better be
00:26:49.200aware when they're thinking about throwing money at these ventures because, you know, the shysters0.75
00:26:53.360come out of the woodworks when the time comes, right? Well, we did this once already, right? And
00:26:56.720it was the national policy, right? Where we set up these big tariff walls with the US and then
00:27:00.840US companies came and built branch plants in Canada. And what it left us with was an industrial
00:27:06.840structure that hadn't developed any capacity to innovate, only served our home market, so it
00:27:11.300wasn't especially competitive um and really didn't build the kinds of like big firms that like
00:27:16.400especially in today's economy are what actually drive economic growth um so it was a really bad
00:27:21.720deal for Canada and especially as I mentioned paid for largely by tariffs so everyone was paying more
00:27:26.440to get you know worse quality and I guess this is kind of like the Loblaws effect writ large across
00:27:30.800the entire economy uh is you can't it's to some extent you really want your Canadian companies to
00:27:36.200be competing as far and wide as possible. That's only good for Canadians, really. So I'd be very0.99
00:27:42.280worried about a push to try and do national policy too here. Yeah, it's a government market
00:27:48.640intervention rarely ends well for us, but it doesn't look like we're heading down a path where
00:27:53.400we're going to see less of it in the near future. So I mean, all we can hope for is that they do a
00:27:56.780little more wisely than they used to. Yeah, that would be that would certainly be the best case
00:28:01.140scenario. I think like you, it's, I don't really foresee an end to government participation in the
00:28:06.940economy. I, of course, come from a part of the political spectrum where that's less of an
00:28:10.560intrinsically bad thing. But I obviously am very critical of the way it's been done for most of
00:28:15.240Canadian history. And I do think we can do differently. Well, we have to do differently,
00:28:18.560and I think we can do it better. So here's hoping, I guess, amid a lot of uncertainty here,
00:28:23.460and hopefully what ends up being a bit of a motivator to finally get it right.
00:28:27.280Yeah. Well, I appreciate you writing up on that for part of that series. And just to close us,
00:28:32.560you're the director of policy and research at the Council of Canadian Innovators. Where can
00:28:35.960people find your work in general? Well, canadianinnovators.org is, I write the Moose
00:28:41.380Works blog for my day job. And then, of course, the book is At the Trough, The Rise and Rise of
00:28:45.840Canada's Corporate Welfare Bonds, published by Sutherland House, and a big thanks to them. And
00:28:50.360you findable really wherever fine books are sold. Try your local independent bookstore.
00:28:55.200Great. Well, I appreciate you writing the book and I appreciate you coming on. And guys, yeah,
00:28:58.860this is the book here. I got a copy of it. It's a good read. And this Sutherland series has been
00:29:03.460really good with sort of short, long, expanded essay form sort of books covering some of these
00:29:08.120subjects. So you don't have to read a big, thick, boring book on economy, just a good condensed one
00:29:13.140on the important issues. So, well, thank you again for coming on to talk to us today. And I
00:29:18.400look forward to your future work. Thanks so much, Corey. Really appreciate it.
00:43:49.140The Gladue Principles, based on a past case, forces judges to essentially give a pass whenever possible to Indigenous offenders because of bad, you know, challenges in upbringing and the disadvantages that Indigenous people have had to endure.