Failure or Success in the Time of Trump | Jim Balsillie | EP 530

president Trump has proclaimed that my country should become the 51st state we have brilliant innovators we have brilliant researchers we come up with Earth changing ideas what did we do wrong what did we misunderstand and what did we fail to apply moving forward so the number three AI Research Center in the world is in Edmonton number five is in Toronto we gave essentially all that away to other US tech companies I think Trump has made a strategic mistake because America's got an unbelievable deal from Canada you know we actually have the opportunity to make this

country Roar If We Choose Wisely what do you think needs to be [Music] done hello everybody this is a podcast that you might think of as primarily for Canadians but it's really for anybody who's trying to understand the world where Trump looms large it's been a particularity of the last 10 years that Canadian politics has become interesting internationally not least because the things that are happening everywhere in the west affect everywhere else in the west and so this is a good case in point now Canada is in a particularly strange position at the moment because

president Trump has first of all proclaimed that my country should become the 51st state and also lambasted us with some very heavy duty economic measures in the form of tariffs and this is really put the cat among the canaries in Canada and so the timing of this interview with my guest today could hardly be better I'm speaking with Jim balsley and Jim was co-ceo of Research In Motion the inventors of the Blackberry and so Jim is responsible for better or worse for transitioning the that terrible word the entire world into the smartphone age and he

was spectacularly successful as a businessman and an innovator um and a Canadian businessman and innovator but I've known Jim for 15 years and he resigned from Blackberry good while ago and he's been equally successful as an entrepreneur and innovator since then so it wasn't a One-Shot Wonder large as that Wonder was Jim is one of the most reliable and good-natured and and yet incisive and critically minded thinkers that I've met very well-connected very competent um a very good man all things considered and I'm not saying that lightly given the importance of this discussion I wanted

to find someone I could bring to Canadians to discuss the perilous situation that we find ourself in and so we started the conversation really with an analysis of Canada's economic performance which to put it mildly over the last 30 years has not been good we rank at the bottom of the pack with regards to the developed Nations and we're now making 60 cents for every dollar that the Americans make in terms of our production that's not good and the trend is downhill and the prognosis by Financial analysts is that we'll continue that downhill trend for

the next 40 years so that's not good and we Face terribly High housing prices and a an and a future that looks Inc increasingly unstable and narrow especially in comparison to the Americans not good so I spent time with Jim analyzing why that's the case and part of the reason is is that that we brought a resource and classic production economy mentality to the realities of the last 30 years we've made this digital transformation and the rules of the new world are not the same as the rules of the old world and we're not playing

well in that new set of rules first of all partly because we're not actually helping formulate the rules to our benefit and we need to do that and so we talked about the shortcomings of a purely free market hands-off libertarian approach to the new economy and then we talked about Trump and what he's up to and why um what he's maneuvering towards and why we set oursel up to be susceptible to that and then we talked and this is equally relevant about the leadership options that Canada faces which are very much akin to the leadership

options faced by voters all around the world on the one hand the liberal party in Canada that's currently ruling and general does in Canada headed until recently by Justin Trudeau has now had a replacement of leadership that's pending tomorrow and Mark Carney has stepped in he used to be the governor of the bank of England as well as the Bank of Canada it's a fair bit of international experience appears on the surface to be a highly credible individual and we assessed carne's ideas as put forward in his book values uh for better or worse and

I would say mostly for Worse um if you like Trudeau and everything that's transpired under him you're going to love Carney because he's basically Trudeau on steroids and so um well you can evaluate for yourself as a consequence of this discussion if you're a Canadian or anyone else who has to deal with Canada whether or not that's a good idea we talked about Pierre PV who leads the conservatives and the positive signs within his budding administration of a of what there's evidence acur that he's beginning to Grapple with the complexities of the new digital age

and provides a real alternative a beckoning alternative we hope for Canadians perplexed by the new world and their position in it and so all of that with Jim balsley and it's it's a very important podcast at minimum for Canadians but also for anyone who wants to understand the realities of the New World Order so a lot has changed well in the world in recent years but a lot for the world in Canada since Mr Trump was elected uh and he's been rampaging around for better or worse like a bull in the china shop and a

fair bit of that has come Canada's way and so I've been thinking through that uh for a variety of from a variety of angles and for a variety of reasons and one of the things I wanted to do was to reach out to the people I know who have a clue and invite them to discuss with me what the current situation is and I don't know anyone in Canada who's best situated to do that than Jim balsley man I've known for about 15 years we've worked on a variety of projects together got to know each

other and that's been a real privilege and so first thing I thought I might do for all of you desperate Canadians who are watching with your mouth open exactly what's happening to your country is to uh Grill Jim a little bit about his background or ask him politely even about his background so that you understand um why I'm talking to him and why it might be useful to uh you follow along with the conversation and and learn along with me and so Jim you're best known for Blackberry yeah so you want to tell us a

little bit about that but I but but put that in a broader context like you've had uh a lot of exper experience on the economic side business side political side in Canada but also in the United States and internationally and so and you've chosen to stay in Canada and you're a staunched patriot for reasons that we'll go into but you also understand and I think uniquely what Canada faces and how that's come about so well I think we should start by talking about your experience first sure and it's a it's great to be with you

yeah we've we've known each other for 15 years years you were also my wife's Professor 25 years ago when there were nine students in your class so my gosh what a journey congratulations for you uh for me with Rim we nine very good students by the way yes prodigies yeah uh so so with me with Rim uh it's the greatest I mean first of all uh I believe capitalism is the in a liberal democracy is the best form for human flourishing in the world and and I'm an AR fan of capitalism entrepreneurship Technology Innovation and

that created the framework for me to be partners with my with Michel lazaritas as co- CEOs to create Blackberry uh something we took that really globalized the smartphone uh grew it from an idea to2 billion dollar in over 150 countries around the world and it's remarkable you you prosper Beyond Your Wildest Dreams you change the world and you also learn how the world works and I very quickly learned and had very good mentors in the United States that the way I'd been explained how the economy works is very very different than where the way it

works in the ground and so that's that's what shaped my experience at Rim uh as I said uh we grew it to $20 billion I retired uh in the the end of 2011 when we had 5.2 billion in Revenue on a 20 billion dollar year and moved on to other things and Mike stayed with it so so yeah it that's that was my experience and and you've stayed active as a businessman well in all sorts of other Realms since then as well so it's not like your involvement on the economic side practically or conceptually ended

when you retired and so and I've been watching that over the last 15 years too you you have uh developed expertise in a broad variety of areas and you set up political think tank as well at waterl which is where we are today yeah and so you're you're I also do most of my time is deal with my businesses around the world I spend 2third to three4 of my time with my businesses in North America Tech and other in and in Europe and the Middle East so yeah most of my I'm still fundamentally a businessman

an Entre right right you're right well and I've seen you Branch out I suppose or or uh what pursue the development of your ideas on the conceptual side in parallel to your continuing as a businessman over over let's say last the last 15 years and you and I have gone to DC a couple of times and and began to work with relatively distinguished political leaders in Congress and in the Senate there on a variety of issues like digital rights and rights in the digital age yeah yeah so we we have some joint understanding of how

things work in Washington as well which is also useful when considering Canada in relationship to the world we thought we'd start by talking about I I want you to take the uh the floor here and layout for Canadian listeners and for the international audience as well exactly the nature of Canada's we we'll say specifically economic situation now and even over the last 30 years and so so let's start with an analysis of of the reality on the ground and then a causal analysis of how we got there sure sure and again again I come at

this as an ardan capitalist so I'm going to explain how capitalism works and and and Canada's issue in this and why the Us and other like type economies have thrived so much in this changed era and the traditional economy is a production economy where you manufacture goods and you you produce them with efficiency and scale and you you uh sell them at a positive margin and you fundamentally compete on cost and the purpose of trade agreements was to get rid of friction of moving those products or or what are called tariffs or border adjustments and

that's the traditional economy and Canada does does that pretty well it set up foreign Tech Branch or foreign Branch plants they brought technology they brought Machinery they brought Capital they brought management and when you set up these plants they create domestic Supply chains they create upscaling of workers they cre create uh domestic tax base and you get lots of these positive spillovers and the headquarters gets good performance and everything works great and and that was Canada's Prosperity Canada had tremendous Prosperity post World War II really up until the early 1990s about 30 years ago the

US culminated a multi-year effort to birth the knowledge-based economy of intellectual property and so this culminated with putting in the NAFTA agreement extensive intellectual property Provisions in 1994 but also in the World Trade Organization the US LED uh a five-year exercise to globalize intellectual property rights and it was called trips the trade related aspects for intellectual property uh systems I think something like that and so the world shifted to massing uh IP assets and collecting a rent so it it stopped being a production-based eon economy only and it became a two-legged race liberalizing markets Capital

uh and and uh labor through production economy recard and comparative advantage of making things to a parallel race of enclosing knowledge using agreements to spread friction and Monopoly to capture a rent based on an idea okay let me let me summarize that okay so that I can make sure I got it so that everybody is clear about what happened and when and so if I get any of it wrong tell me so after World War II Canada's been one of the world's wealthiest countries and a lot of that's emerged after World War II and we've

certainly competed with the Americans well up till the 1990s let's say in terms of our ability to am wealth and we did that in three ways right we're we we're very productive we were very productive in the natural resource economy on the mat manufacturing side and in finance Canada was outstanding and so then in the 1990s I was in Boston and I can remember the weeks at Harvard when uh Netscape emerged and the internet started to become the dominant force that it is and I could feel the excitement in the US at that time I

was there from like ' 92 to '98 and that place was just optimistic beyond belief and just bursting at the seams that was in the Clinton era right and that's exactly the time that you're pointing to where this shift occurred so the ground that Canada had been occupying resources manufacturing and finance was based on a certain understanding of the economy and a certain set of rules and what you're telling everyone trying to tell everyone in Canada that the ground rulle shifted radically in 1994 and we stayed there is that is that approximately right 100% And

and that's interesting because that's at the time we're also doing blackberry and my mentors were in commercialization were in the US and helping me in Washington and all the different things we had to do to navigate but I think the original sin in Canada was in 1994 early 1994 Canada signed two agreements the na agreement with extensive intellectual property Provisions which was new and the and the trips agreement of the World Trade Organization which was the globalization of the IP okay uh system but what's interesting is domestically in Canada later that year they published a

book called the Orange book building uh industry Canada the government of Canada y it published an orange book and you can see it on the web called building a more Innovative Canada Canada and this is six months after we signed these two treaties and they talk about Innovation is all about jobs yeah and they make no reference to the two IP treaties that were the underpinning of innovation that they signed earlier that year right so the revolution occurred but it didn't have any follow-up consequences for the reconceptualization of Canada's economy they didn't know what revolution

had occurred yeah that's the that's the original sin in my let Del into that a little bit because it's so important and it's been difficult for me to understand this so I'm sure it's difficult for our political leaders and for Canadians as a whole so what why were these new Arrangements radical but so that first but equally importantly or more importantly why did they not work to Canada's Advantage like what did we do wrong what did we know what are they what did we misunderstand and what did we fail to apply moving forward well the

US understood that if it was to be strong strong and prosperous Rich powerful and secure it had to Corral this knowledge so the world moved from open science open knowledge to closed science and monopolized knowledge that you had to get a rent you had to pay a rent for the permission to use somebody else's intellectual property and that went to software technology it went to Pharmaceuticals it went to manufacturing technology it went to uh creative industry and right that went to all the value ads that are on top of basic resources as in yeah in

tangibles are now 90% of the value of thep 500 that's where all the money's been and so so Define intangibles again for everybody well intangible asset is an asset when you have a a physical asset like this jacket is a physical asset I own it that's called a positive right but the design and only one person can wear it at a time that's called rivalrous so it's finite in Supply it's finite but the design of this jacket is not finite it's it's it's nonrival risk a million people can have that design and at the wear

that design at the same time and the person who owns that design has a negative right that says I have the legal right to stop you from using that design MH so they own a fence they own a fence and and the economy shifted from producing getting rich from producing jackets alone to extracting a rent for the design of that jacket okay so in the 1990s and I think this should be clear to everybody it was it's pretty obvious in retrospect that the world virtualized in the 1990s when the when the N burst onto the

scene you could I guess one of the early things that happened there and this kind of relevant to this was uh what was the early music Underground Napster Napster Napster that's right because all of a sudden music became virtualized and then it was everywhere and the people who owned the physical artifacts like records for example well records ceased to exist that the the physical artifacts no longer signified ownership of the of the information and so well Napster obviously eventually morphed into Spotify but that completely transformed that industry so the so the essential issue here is

that in the 1990s and since and the goods themselves virtualized and Canada signed agreements pertaining to that but for some reason this is also what I'd like to understand for some reason we didn't really understand what had changed or what we'd signed so so how deep is this problem what have been the consequences and why the hell didn't we play the game well other countries did so let let's delve into that yeah and and when you when you physically own something it's kind of not contested most of the time it's it's unambiguous but but ownership

of an idea evolves literally hundreds of times a day different standards and so Napster is an idea where there was very intense copyright issues that shut down Napster but there was a dozen very substantial copyright cases for Google were you allowed to bring a snippet forward and if you remember all the owners of this content were litigating from New York City to say stop Google and Google ran the the cards and so a bunch of judicial decisions framed the opening for Google to do search what does the future hold for business ask nine experts you'll

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example and derive the patterns that are underneath yeah and that's a principle of fair use cuz when you index something and you show it forward to somebody and then give a link to that content is that taking away their revenue and they argued no in the original search but now in AI the do the weights embody expressive content that fundamentally takes away the the revenue of the owner and that's or even replaces the owner well that I mean yeah replaces and takes away the revenue are two sides of the same core and then at that

point uh the courts have to weigh in because because intellectual property is not a natural right it's it's a social bargain whereas your physical possession is pretty much kind of a natural right my home is my home it's more self-evident it's self-evident but these are evolving Bargains for social good okay so so that's a very crucial Point as far as I'm concerned because one of the things that you and I have discussed constantly and that I'm still trying to wrap my mind around is the interplay between the social contract that you just described which is

the legal framework that guarantees and governs ownership and the operation of the free market economy and we'll return to this one of the things that you've pointed out to me and I think maybe I've even learned is that the libertarian types who insist that if we pull the regulatory framework back and just let the free market operate that that riches will emerge automatically that presupposition is not as valid as we might hope in an information age because there's a contract underneath defining what constitutes ownership that has to be worked out before the free market can

even operate and that's from what I've understood from you in our discussions that's exactly where Canada went wrong we signed these agreements okay now so was there something what did we miss with the agreements well what did the agreements specify and and why did we not notice what we were doing and what did we miss yeah and and there's some good questions there I mean one is that that Milton Freedman talked a lot about free markets but that predates the knowledge based economy and then the datadriven economy right's a favorite of the libertarian Market but

the issue is is the nature of these laws is to introduce friction to Grant monopolies so free trade agreements in production economy are to spread competition but then these agreements went to stronger and stronger enforcement of intellectual property rights to spread monopolies and the market and the government designs and changes the definition of ownership all the time for courts as well with the courts uh interpreting that to advance State interest Advance their so it it becomes an instrument of geostrategic pro projection because if you control the valuable assets you're more secure and you're more rich

and so it it it it it was a two-legged race spreading liberalization of markets Capital uh and labor yeah which we did reasonably and then enclosing and monopolizing knowledge right which we didn't understand and didn't do well at but other countries did it very very well okay well let okay well let's delve into that was there something did we miss the boat with regards to the agreements as such like were we out negotiated no no we signed the same agreements as everybody else but as I said to you I think the original sin was that

1994 December 1994 orange book by industry Canada that talks about building a more Innovative economy that it's about better jobs and more efficiency which are production economy constructs yeah and never references the two seismic treaties that the country signed six months earlier okay so is that a failure with regard to our political leadership or is it a failure with our Business Leaders is it a failure in the education system like you you've pointed out to me let me list off some countries so the United States did this well China did this well Switzerland did this

well the um Bal or the uh Nordic states did this well the countries that are thriving around the world the developed countries that are thriving around the world seem to understand this and move forward and what's Canada's comparative situation over the last 30 years well Canada in the last 10 years has been the last place in GDP per capita of the top 50 uh developed countries in the world in the last in GDP increase or or G well GDP per capita performance which is performance so you can call it the worst decrease yeah you know

we're we're we're worst place last place in performance in benefit in 50 developed countries of the 50 developed of the 50 over the last 10 years and in the last 40 years we're last place in the oecd and productivity in growing that so so we we're and then we're forecast to be last place in the next 40 years so we we've pretty well 100 years we're cemented last place okay so I want to take that apart because I want everybody who's listening to understand so let's start with GDP per capita okay so GDP gross domestic

product is an index and make sure I get the words right here is an index of overall economic productivity for the country as a whole and then you can divide that by the number of people and calculate how much each person is producing and then you can compare countries by that it's a proxy for paycheck per worker right right and it's a quality of your paycheck what's that it's a quality of your paycheck per worker yeah right so actually an index of your productivity and your wealth and an index of what you have in your

pocket right okay so 10 years 15 years ago Canada was at parity equal with the us or even slightly ahead and now we're the Divergence is 60 cents to the American Store catastrophic catastrophic right and the dire is downward so the Americans are get going to get richer and the Canadians are going to get poorer and we could be in a situation in 5 years where we're what we're half as wealthy as the Americans we're already 60% as wealthy could happen this year it could happen this year okay so what what do you think if

we don't wake up and we look out 10 years what's the difference between Canada and the US economically well I I as I've said rhetorically uh we become Puerto Rico without a passport we'll be very poor uh in terms of quality of life and and what we can buy and and no political representation no clout and we have a beautiful country that both you and I love but it's an expensive country so if you don't have the prosperity you can't pay for the health care the the Ser the sa Public Safety the social services the

heat all the things all the things that we value of being a a prosperous sophisticated country and we've seen those come under stress in this last era okay so let's let's detail out that it's expensive it it it hurts a lot when you don't do well in this right okay so our housing is prohibitively expensive yeah not only an absolute sense but also in comparison to the Americans our Health Care system is under terrible stress the same can be said for the education system where else do you see even Ontario now which was Canada's richest

province is Po in terms of per capita GDP than Mississippi which is the American most poverty-stricken state and and we're on a downhill Trend yes that's all correct yeah and one and a quarter Canadians have food insecurity now Define food insecurity well there's metrics on it but basically they're they're not able to provide they're skipping meals or children are unable to be fed what they need so you're you're tight you're you're not secure in providing the food to your home okay so one in four yeah that's really uh and food bank lines have doubled and

these things these are terrible consequences of economic policy and attention yeah it really hits home okay now so what did Canada do wrong in the aftermath of these agreements that other countries did right you you relate you related a anecdote to me earlier this week some gentleman you were talking to talked about his International experience with committees dealing with IP ownership yeah for sure um yeah and in in uh I mean in United States they have uh uh you know the White House has an office of Ip of you know it has an IP caucus

and they have and he said he's a very he he runs a global IP International IP Association that everybody knows right so that's dealing with ownership of the he say all these other countries have IP attaches but he never comes across an IP attachi of Canada right so the Americans have a council of businessmen and and intellectual property Specialists I presume that's tech people and lawyers who do nothing pharmaceutical and Hollywood and Agriculture and finance it's every sector is at IP business right and all they do is concentrate on analyzing the ownership structure of abstracted

property and and changing it to their favor right informing the government and legislating and negotiating so that that works inserting it into quote unquote trade agreements that don't say trade you can look at the million words of the usmca you will not find the words free trade in it but they use them of instruments of regulatory remote control to extract the rentier economy to their home country's benefit okay usmca detailed out that's the ca Canada's trade agreement signed under Trump uh six seven years right and trumpeted often as so to speak as a free trade

agreement but you say in a million words there's no reference to to free trade and what you're pointing out is that it's not a Free Trade Agreement as conceptualized by people who are thinking about a resource-based economy it's a protracted argument about who owns what virtual property to whose advantage and we're losing that battle we don't even know the battle exists it's an instrument for regulatory remote control yes okay tell me what that means regulatory remote control they they set the rules for how we uh manage our IP systems regulate our health care put in

standards how we manage uh uh who we can how we do our macroeconomic policies who we can do trade agreements with so it's a form of legislative control over the entire Canadian economy yeah it's a seeding of democracy for sure and it also had a provision to Sunset it in six and a half years which created a chronic instability which has come home at this time literally and I was exp trying to explain that this is actually a ticking Time Bomb for Canada what do you mean you were trying to explain that I was writing

and articulating that if you read the agreement it's none of the celebration that's happening in the economic discourse in the media of the country that this is going to erode our prosperity which has happened and it's going to come back with a bomb to supersize the erosion of that well you have to read the agreement and you have to understand it yeah but I read agreements for a living that's what I do all day these are legal economic cont contracts that's what you do okay so let me let me drill down you tell me yeah

well that's why I'm talking to you um because we can benefit from the fact that you do that so I'm going to take a concrete example because I think those are helpful for explaining I know that you tell me if this is a relevant one and if it isn't we'll bring up one that's relevant I want you to explain to people using an example from in a given corporate domain of how the American advantage in control of such things has worked Canada's uh detriment now one of the B battles you fought I know was with

the Smart City uh folks the the do you want to do you want is that a good example of yeah okay so let's delve into that a little bit to make it concrete yeah but but what's interesting about that is that was our government invited Google to privatize our largest city government of our largest city under the Google sidewalk Labs right and that was trumpeted as a Triumph of negotiation for Canada and an immense Economic Opportunity by the prime minister's office yeah right you weren't happy with that and it didn't happen and so it's not

obvious why you weren't happy with that I mean because it come it came packaged in a pretty nice shiny box we'll have Smart cities we'll have much more effective information flow um we're leaping into the 21st century Canada will be at the Forefront of this your objection As I understood it was yeah but Google will own all the data per pertaining to all the behavior behavior of everyone who lives in a city like that and that there's immense economic value in that but also the danger of a kind of totalizing legislative and monitoring control yes

is that yeah can can I wind this back and walk walk into it so you ask Canada's we talked about Canada's original sin and how we got there so in 1989 and I will work into this because you see the original sin 1989 we signed the original uh Canada US for fre trade agreement and that was liberalizing all these things labor that was leg one that was leg one and then because of that all Canada has to do is take its hands off everything forever and do nothing and the smartest person in the room is

the one that builds no capacity and and uh um doesn't do anything right and so that's you could think about that as the libertarian dream but also the libertarian abdication of respons ibility both at the same time that was Canada's economic Orthodoxy and and maybe there was some value in that Orthodoxy when we were fundamentally a resource and leg one economy and it's it's it's part of one leg it's necessary but not sufficient okay even even with regard to that leg Yeah no the production not sufficient in knowledge economy so then what happened was in

we dis we had an economic thinking capacity in the the country called an economic Council which was the equivalent of some of these sophisticated Realms in the United States these IP offices they have trade advisory commit you know the US has 50-year-old if you go to the US trade representative and search advisory committees they have 26 advisory committees six 700 experts been together for 50 years tremendous in insertion of sophistication right and these are smart dedicated patriotic people and they're pushing their country's interest and we shut all that down in Canada because you don't need

to do anything you don't need to know anything you just have to cut taxes cut regulations get out of the way which is the true efficient nature of leg one y but when you make yourself blind you're not able to see this leg two come along because you're done right and leg it's leg two that happens to be kicking the hell out of us at the moment say in the last two months right right so what happened was when when n so this was around 92 we shut down our Economic Council to save money so

it's it's it's yeah it's it's so now the people that it's like taking the instruments off the airplane to save money right because you don't need instruments anymore right so the people with knowledge on the ground and that would be people like you who could have informed our political Leaders with regard to the policies necessary to protect intellectual property for example virtualized property there's no there's no council to do that now there's no communication Network set up to focus on that and there's no interest there's no interest right so even worse no meis it's we

know everything knowledge is we have all the knowledge we ever need knowledge is over just get out of the way right okay so let's talk about well if it's still relevant let's talk about what happened why the Google proposal was dangerous and the other two things that you mentioned to me recently that I thought were relevant was the fact for example that the Google Executives themselves have claimed that the intellectual property they utilized to produce a company that was for a while the largest company in the world and is still unbelievably dominant much of that

came from Canada yeah well okay so so so let me put one let me put one more step into this and then I'll go to the Google part yeah and so what happens is in the production economy when you bring in a foreign Branch plant as I said a few minutes ago you get management technology you get Capital you get skills upgrading of the workers you get a supply chain in a factory of local vendors and you get a tax base based on that activity so you get a lot of positive what are called economic

spillovers from the manufacturing Branch plant when you go to an ideas economy when you buy the company or come in you exfiltrate the IP you exfiltrate the data all of the ownership is back at the headquarters there is no management of any consequence in the in the in the when you sell your uh Peterson Academy into Spain you don't set up a country president and a whole management team it's just you get somebody helping you sell and localize and then it's all run back wherever you you run it and all the taxes and all the

wealth effects happen at Home Country need a Spanish Branch plant exactly and you don't pay taxes in Spain and there's no wealth effect in Spain and there's no management transfer and all that so the spillovers in the tech industry operate exactly opposite pretty much most of the time not absolutely to how they work in the production economy right so using a branch plant mentality when you're dealing with tech companies is a very bad idea disaster right because they also take even if they do hire people in Canada let's say and add to the local economy

in that way they take the intellectual property generated by their employees and pull it back to their Central and the Canadian people are paid less they tend to have anciliary roles they're they're they're subsidized through tax credits and yet all the true wealth effects and if they're really strong and talented they tend to get moved to the US and never come back so that's a hoovering structure there and so the the thinking of the Google sidewalk was like setting up a an a Pulp and Paper Mill in Northern Ontario that this is great not understanding

that they'll own all the IP own all the data have all the security benefits have all the wealth effects have all the control benefits and Canada gets 1% and they get 99% and if you have that subordinate low value added position in technology then you get a low GDP per capita and you can't pay for the country and it gets a second leg to that that you're not secure which is what's happening in the Contemporary leverage and those of us that understand what prosperity and security looks like saying this is catastrophic this will be a

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believed like a good libertarian conservative even a classic liberal that eliminating trade barriers would have economic Advantage for Canada and that's a credible argument but for leg one for leg one right and so and his leadership predated the knowledge exactly but the downside of that is that you can rely on an outdated and implausible shallow free market libertarian ideology as a political leader to say all that we have to do is shrink government and get the hell out of the way and we'll get rich but that's a problem when the reality that you're dealing with

is no longer a concrete material resource economy problem and when well the government is making the market it manufactures the Assets in the market and it changes them a 100 times a day in the N economy so so you have to read the million word agreement and you have to understand it and you have to have a plan for getting your words in there to advance your specific interests through your advisory councils which is the opposite of hands-off right and so and so that the there's been an abdication of responsibility on the political front and

justification for that has something like well the free market will take care of it and so that means even the conservatives so far haven't that no none of the political parties have addressed this problem in essentially in 30 years that's the sit okay so now that are there other like we've still got the situation where other countries have done this better than we have and it's not like there aren't libertarian free marketers in the United States and else especially in the US so I still don't is that the only reason okay we were stuck in

a resource economy mindset when we were looking to move ourselves ahead economically we slipped into a free market and irresponsible libertarianism when that was no longer appropriate in the new markets are there other reasons we disbanded all our councils so we're not Consulting the people with on the ground expertise and so now we're playing a backwoods role we look like Rubes when we go down to DC and that's definitely the case because we're negotiating with people whose knowledge about these things is first of all they know that they exist when we don't and second of

all they have like serious high-powered experts who are well eating our lunch like literally and so are there other reasons that we've we are failing or have failed or is that is okay so that's a reasonable coverage of our yeah and when you what bothers me so much about this you have this country with so much potential we've we have brilliant innovators we have brilliant researchers we come up with Earth changing ideas and we don't capitalize on them we give them away so our economic structure should be much more like the Scandinavians in the US

but our econom structure is much closer to Russia's right now because of this abdication and so you also mentioned in Google really quickly that taxpayers in Canada spent 30 years uh funding the fundamental artificial intelligence at University of Toronto and in Alberta so the number three AI Research Center in the world is is in Alberta in Edmonton number five is in uh uh Toronto we gave essentially all that away to Google and other US tech companies so Canada so what kind of loss is that in economic terms do you suppose trillions well we and you

take a trillion away or you take a couple hundred billion dollars of earnings a year on a trillion dollar asset that's the difference between an enormous budget surplus paying for military and health care and Public Safety along the way versus a paychecks that can afford house and better paychecks versus a a a a deficit that is eroding those Services well and we've also foregone the analysis I've looked at also suggest that in the last 10 years under Trudeau we've forgone $650 Million worth of potential like leg one investment as well because one of the other

things that's happened in Canada 650 billion billion yeah yeah yeah by the way real real quick also we also invented fundamental technology for battery taxpayer funded from Del Housey that we transferred to Tesla no economic benefit to Canada the Prof gets the research papers we have fundamental technology for mRNA out of ubbc that we don't have any economic benefit of Canada we have fundamental telecommunications technology which we transferred from a couple dozen researchers in many universities to Huawei with no economic ownership back to Canada this inattention to owning the assets of Ip and data and

is an orthodox in Canada that is inexplicable that puts us that is unique to Canada I've not seen it anywhere else in the world and it's put us in last place okay it's okay so Jim one more thing do you suppose is it possible that this is also another manifestation of what economists call the resource curse so like if you look across the world people like to think that countries with plentiful natural resources are naturally rich but the relationship between natural resource ownership and positioning and wealth it's flat and there is even some indication that

it's negative and which is rather uh paradoxical and you have the counter example of countries like Japan which have virtually no natural resources which are very very wealthy and so is it also the case that because Canada's been blessed with this immense Geographic landscape and endless natural resources that we've allowed ourselves to sit on our haunches so to speak and absolutely that's a false myth per perpetrated by the policy community that thinks they've done it right when they've done it exactly wrong to manufacturing excuse why their strategies didn't work the US is I believe now

the largest oil producer in the world yeah don't see any Rec resource curse there the Scandinavians Finland Norway Sweden Denmark tremendous productivity in prosperity and Innovation absolutely bursting they managed both yeah so has Canada allowed its Reliance on natural resources to justify not delving into these that's not a resource curse if others with resources don't have that curse it's a different kind of curse because you're saying in the resource curse if you have resources you won't be productive right so this is the Cur others with lots of resources are extraordin they're World leading right so

this is the curse of being lacad disal in the face of resource plenty as well as the curs of false myths by those who have failed us yeah okay okay well let's move okay good I think we I think we fleshed that they've got lots of other ones of complacency and they use that and and we'll go at cases in a few minutes on those who use this sitting on dead money complacency stuff but not quite right now because they use that as an excuse mechanism but but let's keep on this well I think the

next thing to do likely is to talk about what's happened since Trump has been elected and the fact that as mentioned earlier he's rampaging around like a bull in a china shop and suggests that Canada is such a weak country now and such a weak and useless country all things considered that for all intents and purposes it might as well be as a totality the 51st state because it has no use in existing on its own and it's parasitical on the US and and then on top of that which is already quite something he's added

these immense tariffs it's clear that he's not particularly happy with the manner in which Canada is governed it's not exactly obvious what his endgame is but it's obvious okay well let tell us what you think Trump is doing and why you think we've elaborate on why we've how we've set oursel up to be the recipient of his peculiar largess yeah sure well I wrote a piece which possibly you can put on a link during this thing called we're all economic nationalists now and the reason I used that was that it's a play it's it's a

praise for strategic u-turns coined by Milton fredman right in the late the darling of the free marketers darling of the free mark because he famously said in the late 60s we're all keynesians now so he spent 20 years fighting canes and then when there's a crisis with Nixon and they had to respond to it with a bunch of new monetary and fiscal uh structures he said well we're all keyy now KES was an interventionist compared to fredman and Freedman was at war with him right he represents the opposite and what he's fundamentally saying is that

economics is a social science not a natural science and you have to tune your behavior to the facts on the ground so if you are a Fred manite in this contemporary reality then attune period And so like to the realities of the new ownership doctrines in the knowledge economy the nature of the geopolitical ra era of strategic Behavior so responding very specifically to what you said the question you asked on Trump when you go to an intangible economy when you're producing economy you trade on a principle of called comparative advantage yeah lay that out well

comparative advantage it was uh done by David Ricardo ricardian comparative advantage that says you may produce cups better than me and even saucers better than me but if I can produce saucers comparatively better than I produce cops relative to you if we trade we're both better off so it's a principle of comparative advantage okay lay that out one more time because everyone needs to understand so if you make a cup for $2 yeah and and a saucer for $1 and I make a cup for $3 and a saucer for $2 I'm going to mess up

my logic here I'm absolutely worse than you on both but I'm comparatively better on cups because I'm only 50% more expensive rather than a 100% more expensive so if I ship you cups and you ship me saucers the rise that will rise the tide of everybody so everybody has an incentive to trade on physical Goods based on comparative advantage y so I can offer you my best and you can offer me your me your best and in consequence even if my best isn't as good as yours we're both going to get wealthier you trade on

on ricardian comparative advantage that's material based that's a four principle of liberalizing trade now when you go to an idea's economy which is based on a principle of restriction and Monopoly somebody wants to be the landlord and somebody has to be the tenant and you can compete on absolute Advantage where you can be the landlord 10 out of 10 times it's not a Cooperative system anymore it's a it's a rivalry system and it and what that means is if you're a big strong guy you get everything you can you you do what's called strategic behavior

and that's what we're experiencing right now and the piece I wrote on we're all economic nationalists now I talk about the Strategic Behavior Trum 1.0 Biden took all of those things and added many more which I you can read it and I won't go into them now but he did many very substantial uh strategic elements of behavior Trump first then Biden Biden relation Canada yeah and then Trump took it to a whole another level very very recently and so it's an era of strategic Behavior which means it's not a Cooperative based system and Canada believed

in the multilateral rules-based order this is a shared Global project and my exhortation is is this is an absolute Advantage era that leads to strategic behavior and if you don't focus on being reasonably Sovereign reasonably strong you become the one they pick on and it's it's very profitable to for a nation state to pick on a weak State especially one that has some good assets to pick and and wither Canada in the era of trump here we go so the virtualization of ownership has radically changed the nature of the international social contract 100% And what

happened was and we still don't really understand that and and that's part of the reason we've been so susceptible to Trump's Maneuvers month and we also thought that it was a multilateral rules-based system where control and ownership of strategic assets doesn't matter and we're learning a very hard lesson that who owns it and controls it is really the only thing that matters it really matters a lot yeah and so we're paying a very very so sorry price for that inattention to our economic policies were giving tens of billions of dollars to foreign battery companies where

we had no domestic control no very small domestic value ad and now and and what was happening to Canada and the US played a very clever game and you Western Europe played along and the southeast Asians got really good at this that they said if you want to play in the production economy leg number one you got to sign up to these rules on leg number two the restri we own all the ideas well if you get really good you can start to own some too but you got to be very high functioning of which

the Western Europeans and the southeast Asians are and now what America's doing is saying just kidding I want the rules for this intangibles economy and I'm now even going to do more strategic behavior and pull the Raga out under the the uh the production economy which is a form of Neo feudalism that you have to pay uh a tax to the sovere uh and there's there's you know there's a you know there's an Aristo aristocracy and then there's a non well we're we're going that's what I mean by by without a passport yeah yeah yeah

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of fiber and spice okay so detail out for me and for the Canadians and everyone who's listening what you think exactly TR what the hell is Trump up to I mean he's put a knot in Canadian's tail and the upside of that is that for the first time certainly in the Trudeau era even the liberal are pretending that they're Patriots and that the Canada has a self-evident reason for existing which is something that Trudeau has formally denied for well for the whole bulk of his political career that we were a postnational state with no real

identity that our strength was our diversity that leg one where is where we had some Advantage was also what an untenable basis for movement into the future that we're going to enter into a green economy that was going to magically make us rich and one of the things you're pointing out is yeah good uh there is a virtualized economy but we don't own any of it so yeah and you know when I looked at carne's book recently values and he talks about this magical economy which I suppose at least in part is a knowledge economy

that's somehow going to emerge if we leave 80% of our fossil fuels in the ground but you might say that it's a little short on detailed plan so okay so what's Trump exactly what do you think Trump is up to yeah I I I I'm I'm trying to spend most of my time with you today characterizing what's going on yeah I've only said one normative thing to date to so far in this which was my belief in capitalism in a liberal democracy as the best way for human flourishing and I'm going to give you what

I ex I plan to be only the second normative thing that I plan to say today that I think that Trump's behavior is unpresidential it's unprovoked it's unkind MH uh it's almost certainly illegal though um though uh um hard to enforce yeah which matters but in the characterization I'm also going to say that I think he miscalculated and it's actually been unwise and is counterproductive to America's interests and actually in Canada's interests if we seize it so I I so I think this is a a fascinating moment and to to sort of for Canada to

to to to quote the famous Yogi Bara when you reach a fork in the road you got to take it right and so uh Trump trump sees uh Mexico as just a commodified labor to lowest cost for blueco collar candidat to commodified labor at uh at white collar workers and it's all got to be subsidized and and and so I I I actually think the appeasement there's a little bit of benefit in appeasement and diplomacy because you inform the us that he may has to dial a few things back a little bit because it's counter

to Americans interests not because he's compassionate to Canada economically or socially or or security wise but I don't think I think is AA he said who what he is he believes that that they are the Empire yeah that you must pay a tax for the privilege of uh of participating with the Empire inter relating with the Empire he wants to rename the Internal Revenue Service the external Revenue Service and that people's taxes domestically can go down in the US and and that it's paid for through tariffs Y and and in economics in prosperity in a

global system the number one objective is to improve your terms of trade in terms of trade is really simple that it's the ratio of the price of what you sell to what you buy and if you get a better price for what you sell your terms of trade go up if you pay more for something that you buy your terms of trade go down and that's the whole game is terms of trade and we thought that it was about comparative advantage get out of the way and America realized that it's about inserting the rent stuff

where you get really high rents which means that dries up your GDP per capital put it through higher terms of trade MH and so their thinking is that I'm going to make you pay to come in here that's going to uh enhance our the prices we get and we believe that's going to deflate your currency because it makes you and deflation of a currency is like a pay decrease and it buys less and it and and and and you sell it for Less too MH right so that worsens your terms of trade which which benefits

America's terms of trade so they're trying to shift the structure of the global economic system where they become effectively aristocratic and everyone else is is some lower stat economic status entity and that is an economic logic being played out to um Mexico and Canada the tricky part is there's not a lot more blood to get out of the stone that is Mexico I think there is a legitimate uh uh security thing that they're paying attention to um with regards to the Border yeah and there's probably a couple little strategic things they want in the economy

uh access to the oil system and owning it and so on but there's a lot of blood to get from the Canadian Prosperity because we're relatively prosperous and rich country eroding as we are there's a lot of gems in there to get so I think his objective if you weaken it enough you go in for the gems and you hold it in a subordinate position because that's the economic logic that is at play here so so it's a dominance logic fundamentally yeah it's an economic and security dominance logic okay now but you you pointed out

that it may well have a paradoxical effect so let's go into that I mean one of the things I've noticed because I'm very ambivalent about Trump's Maneuvers because well he is a bull I'm angry I'm angry about I'm angry about them I wake up angry on it because I feel it it's it's wrong at so many levels so that's my second normative thing I'll I'll shed it now you be a clinical psychologist make me feel a little better and and I'm bothered by it and I think it's going to hurt one in four people what

about the one and four people that have food insecurity like for goodness sakes people need food and a home and now really this and you're going to erode the whole system hurt Canada comparatively more still hurt America and vulnerable PE people are going to pay the largest price because what because that's how the aristocracy works and let them eat cake and um yeah as a proud Canadian and somebody that believes in you my my dad was a electrician I mean these structures I wouldn't have gone to school I wouldn't have had this yeah it violates

all sense of fairness for me so so that part of it is is not uh Not Cool by me but yeah we'll go into the things I would like to know partly for example why you are a proud Canadian why you've stayed here because you didn't have to and so and why you think this country is worth fighting for and then I also want to know what you think about the fact that Trump's Trump uh tromping around has actually seemed to wake Canadians up a bit to help them understand once again that they do in

fact have a country that it might be worth preserving that we should pay attention not only to the resource economy which we've done everything to Scuttle but that we should maybe wake up with regard to while these more sophisticated issues that you've been bringing to light okay so let's start with your feelings about Canada well it's a beautiful country how can you not love the country I mean just because I love it doesn't mean I always like it yeah and those you have chosen to stay here of course yeah and I double down of course

yeah yeah of course yeah this is my team this is my country this is my home uh your job it's given me so much and as you said you know your your obligation is to carry the load you think you can handle yeah so you carry the load that you think is yours that you can bring to and there's beautiful people who volunteer at food banks who who do many wonderful things in this country healthcare workers who care for vulnerable and on and on it goes and so I think yeah well and you've poured your

efforts into developing the uh the tech economy in the Water Area my brother-in-law who's like a tech Maven he thinks that the graduate engineer graduates from this institute in particular are like world top rate and so like me you put your money where your mouth is it's very meaningful it's a shame to see it sub-optimized but do you let the bullies and the elite failure of the last 30 years Prevail when there are so many good people who are trying to advocate for a better country and a better future and if I can provide some

resources and air cover for them as opposed to the baning them well morally what do you think is the right thing to do right and hence this discussion okay so now let's look forward let's look now and forward a little bit and so um as we speak virtually U the liberal party which so we were talking about Trump is miscalculation I've never yeah I didn't answer that yet I didn't answer that yet because we we split toart here I I think Trump has made a strategic mistake because America's got an unbelievable deal from Canada and

as they got this exfiltration of our best graduates tend to leave and droves from places like waterl to Silicon Valley adding to the trillions of market cap our best ideas invariably are taken by us companies where they own them and commercialize them our best resources like our like Alberta oil is overwhelmingly shipped raw to to uh America where it's value added and sold back here American companies come to Canada basically get monopolies for what they sell here in various Technologies and products and pharmaceuticals so it's already a pretty good deal for the US it's an

amazing deal and they then they don't have to pay taxes here and the wealth effects aren't shared here so America has got a great deal from Canada an unbelievable deal and Canada says thank you for that would you like fries with this and that's because of this inattention that we' talked about in the second leg and the frog has been cooking one degree at a time for Canada over 30 years and a shrewd person would have said let's keep this good game going let's maybe turn the the deg it up two degrees at a time

but don't turn it up too much that you freak out the Frog and it jumps out of the pot and I think frog Trump thought he had such dominance it was kind of like the Russians with the ukrainians that they would just submit and and what Trump has done has he's been so extreme so out of line that he's actually woken up Canadians to say we're better than this we're capable of being more Sovereign we're capable of being more prosperous I'm not going to take it I'm not going to submit I'm going to invest I'm

going to start to think about this wake up and actually Canadians will start to get their Fair Deal in this change economy with an updated sense of thinking and I that could happen well that's the fork in the road so do they submit and become a subordinate Puerto Rico without a passport or do they respond and build the capacity to vision and and work towards an appropriate standing in future for the country in this change world and I think that potential of the of the latter one is there and before us I'm going to bring

all I can to bear in in encouraging and supporting that potential but it's not certain that that's going to happen it's very clear what Trump's going to do he's not going to back off no he's not a back off sort of guy it's it's it's it's his Orthodoxy M he's more locked in that Orthodoxy than we were in our 30 years of hands off in spite of all the facts that came out it I think it's going to take an he's just going to keep tweaking and it till but he's already done the damage because

the law doesn't apply anymore he says you can't have access to the US market so move your factories here there nobody's going to do a press release that says I'm moving my Factory in the middle of the night to the US the the damage is done for Canada in this current system he barely needs to put tariffs on it anymore just the threat of it is de facto in in the in the business realities uh so the big question is what is Canada going to do in that response to that fork in the road and

if we take the higher potential route we will have a much better future granted a bumpy interterm phase uh and and and that goes to the point of leadership that you were okay okay well let's let's turn to that so we're at the dawn of a transformation in the Canadian political scene at least in principle we have the spectacle of new leadership arising um after Trudeau on the liberal side it looks it's the day before the leadership race for the Liberals finalizes and the air presumptive is clearly Mark Carney and um well I finished reading

and analyzing rather deeply I would say mark carne's value books and value book which Canadians should know about and read even especially the first couple and last couple of chapters and um I've got some questions about that that maybe you can help me sort through so one of the things that Mr Carney says in his book um after outlining what he thinks Canadian shared values are which uh is a very dubious what would you say he makes a very dubious set of arguments which for reasons that I'll go into but one of his more remarkable

claims is relevant to our discussion of these two legs okay so we haven't done too badly on the resource and Manufacturing side even though that's dated we need to maintain what we have there and we need to develop this other attitude but one of the things Carney says very forthrightly is that all of our financial institutions are going to have to be retooled in relationship to the catastrophe of climate change and that 80% of the fossil fuels that are part of what fuels Canada's economy are going to have to stay in the ground and so

Carney is planning to continue the terrible pressure that Trudeau has put on Canada's traditional economy and to magnify that because he's a much more effective administrator and manager than Trudeau and there's nothing there's not anything in his book not one word that deals with any of the things that you've discussed today and so what we have in the spectacle of Carney is someone who thinks that the economy that we already have has to be replaced by some magical new economy that will somehow be both productive and clean and who says who doesn't seem to be

aware at all of the any of the problems that you've described conceptually or practically he doesn't address the fact of Canada is failing productivity it's it's it's a it's as Hollow and empty a book as I've ever had The Misfortune to read and so that seems to be but the problem is and this is maybe somewhat contrary your Proclamation that Trump's maneuvering has been counterproductive is Canadians seem to be rallying behind the Liberals they had being were cataclysmically low in the polls and now they're at something approaching parody and so well that's the spectacle on

the Carney side and then well we have as the primary alternative to that Pier POV and the conservatives and so well enough of a rant on Carney from me I'm curious as to you're not a particular L partisan person from what I've observed you you are more comfortable in the realm of concept and idea and practicalities and so I'm very curious about how you see the current situation with with regard to Canadian leadership I I don't belong to any party and I've given no money to either party okay so and one thing we haven't put

on the table which is very important in our structural conversation we talked about the knowledge-based economy of Ip and that's followed by a datadriven economy that's data and Ai and that that has become this new factor of productivity where it's replacing the human it's controlling the human and that's turbocharge this era of intangibles which is intellectual property knowledge enclosure and then data and AI which is the the the the the control of this factor of production which is really changing everything and also by the way the largest filing of Ip is in AI with 1.5

million patents granted to date and that's very important as I critique these two political options for Canada that we have to when you talk about the things I talk about we haven't fully unpacked Ai and and how it's replacing human capacity and augmenting human capacity but I think everyone agrees it's a monster factor of production it's changing all the rules it's putting trillions of dollars in the economy it's going to change the white color economy completely and you got to you got to have something something there right yeah so that's fine okay so so you

mentioned about Carney then you mentioned about Po and I did too read his book uh because I'm interested in public policy as you as people you've mentioned we're you and I are active in in Washington I'm active in Brussels and I'm also active nationally and subnationally uh um Canada well subnationally provincially and I and I I I absolutely see myself as a Canadian and I always think of Canadia Canada when I when I try to engage in these things and and I'm a passionate Canadian so uh um a couple three things in Carney he's positioning

himself as an outsider yeah when he's been an adviser to Trudeau since uh 2020 and he's chairman of his economic task force but most importantly he's been so he's not an outsider well most importantly he's been a charter member of the Orthodoxy of of Ottawa for decades y so all this thinking structure and and I'm going to get very specific on how Bank of Canada's been a a central actor in selling Canada short in these decades because they've been the keepers of this Orthodoxy and he's been a central as governor of Central Bank he's been

uh prior to that he was in finance Canada he's been advised so he's he's got to own the Ottawa thinking right and not as a follower but as an architect an architect so right so here's the two or three things on uh uh Carney Mark carne's book that I read one he talks a lot about pricing carbon to affect a transition and and then he's come up with his his new uh policies to subsidize things like heat exchangers and yeah various forms of technology to green your homes and stuff very specifically and so what happens

is that when you look at Canada its good terms of trade I explained terms of trade earlier its best terms of trade are in energy that's where we get good money that's where it pays for the country our weakest terms energy defined primarily on the fossil fuel side fossil fuel hydrocarb right we're not talking about the renewable sorry hydrocarbons hydrocarbons hydrocarbons yeah import or sorry consumption and export of hydrocarbons overwhelmingly pays for this country right so we have a fossil fuel economy in large part it that that's good terms of trade okay on the good

terms of trade I'm speaking technically yeah okay we have a deficit in intellectual property we have a we have we're M we're and that would be much more if we included data and Ai and we're major importers of intellectual property and Technology products so we have poor terms of Trades MH in the technology arena in spite of all the things we invent the smart people the government funding over decades and the effectiveness of that even well that's the issue is we're first world in inputs third world and outcomes right and there's not and today in

this conversation we're unpacking why yeah but I'm going to go I'm going to stay on this Orthodoxy of Mr Carney y so we have very good terms of trade in hydrocarbons very poor terms of trade in innov in technology products yep and so his proposition is that we tax the the things that we sell and we subsidize the things that we buy right so if you want to effect a green transition that's and you have this structure that's called a dichotomy you have to choose between the the economy paying for the place or um the

environment in his structural view of the world of scarce natural Capital that we have to deal with and I'm not making a normative comment I'm just talking economically here okay so his prescription will make us poor success in business isn't just about offering an amazing product or service though that's certainly essential what truly sets thriving companies apart is having powerful Reliable Tools working behind the scenes to streamline every aspect of the selling process these are the systems that turn the complex challenge of reaching customers and processing sales into something that feels effortless and natural that's

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not normative this is economics economics 101 yeah okay okay so the claim that you're making is that the best the best performance that Canada has managed economically is on the hydrocarbon side correct now carne's not very happy about the hydrocarbon side because of what he describes as externalities let's say carbon well he thinks they're scarce show capital and he wants wants to transition to a green economy which is what we're going to go to in the next part of this discussion right okay so but the transition is going to be fostered in principle by tax

making what we're good at far more expensive and th making what we're bad at cheaper and thus we'll import what we're bad at right and we'll export Le what we're good at that's right which is a path towards 40 cents to the American dollar in terms of GDP and he says will lead to a uh an innovation transition and that is true because when you price something you signal to the market bring in something else yeah and that's fine that will affect a green transition but he's using a closed economy model right that says Canada

will get its fair share of that transition but which we haven't we've had decade we've had pull positions in these systems over decades we've got really smart people we've invented really good ideas we spent tens and tens of billions of dollars and we have 10 cents on the dollar to show for our dollar and he has nothing to say about how we're going to resolve that Comm uh so how we're going to ensure for example that we own the consequences of all this Innovation we get some of the money for our deficit and in his

book he has one sentence on IP right near the end says intellectual property is becoming increasingly important to companies and therefore we need need to enforce it better to protect their Investments and that's it yeah that's a drive by nothing Burger in the most structural change that I talked about happened where he's been a cent so he's a central actor in in attention to intellectual property right right so we need we need to drive that point home because when I also think this is true with regards to carne's positioning internationally as well like Trudeau has

been pushing a green agenda let's say along with Gilbo for 10 years and he's doing that in the same way that the Europeans are doing that and he's doing that in the same way that the world economic Forum types the Davos intellectuals quasi intellectuals are promoting but my sense of Trudeau and I think this is valid is that he is nothing but a follow of those ideas but that's not the case with Carney Carney is a major architect and initiator of such ideas and then what well could be but but whether that's a good idea

or bad he's using ottawa's failed economic logic of the 70s to affect the norm of a green transition or anything else yes whether a right it's not going to work right yeah and I'm not making a normative case whether it's or bad idea making thetive CLA he's just is it's going to fail and it's going to fail in obvious economics okay and what'll failure look like well and there's a second leg to the failure okay that the the most profound force in the history of mankind in economics is the datadriven AI economy and he has

nothing to say of data as a factor of production an input to Ai and how we have to own and control that and harness our own AI he says nothing about he he said he has two sentences about be careful about privacy and social media and that's it and so to if you look at every market energy mining agriculture Lumber they're all Ai and I excuse me ip driven and so he has nothing to say about that why are they I know and and well because the force of it is allowing I mean as as

schamber who's one of the top 10 aiip owners in the world and the large oil sorry um um um halberton sorry but Shan too uh um the oil is a digital economy that you need digital Ai and IP to get it out of the ground get it refine right so even even on the resource side the IP ownership and and and Tech element is increasingly predominant it's like it's like the delivery taxicat business it became IP driven right right The Medallion used to be worth $2 million it went to zero because it's this super structure

of Ip and data and the same applies to you know shopping right so the consequence of virtualization is total it even even trans horizontal it's horizontal and there's no there's no uh um there's no articulation of that so it's very important he he defines he lays out a path that that affects us to an adverse uh outcome because of the dichotomy and he has his he he he says nothing about the Innovation structure adjustment but he he uses further 1970s economic analysis that he says because he very famously said um people are businessmen are sitting

on dead money it's a very famous expression he said and he said that um we use uh shovels instead of excavators backos he said that which means we don't invest in technology M so the key is that if you just got if business people stopped being lazy and they open up their wallets and just threw it in there they would do great and to that's actually kind of a variation of the libertarian argument is that variation of complacency yes exactly resource C complacency and I've been doing business in this country for 35 years I have

never met a CEO who says I'm just going to take it easy and be on the dock this weekend I don't want to double proph this year right yeah I've dealt with money managers all that time both byy side you know B for investing companies and me putting my money to work I have never met a money manager who says you know I'm rather I'm happy to be third quartile this year rather than first quar because the fishing's good yeah and and the fact of the matter is nobody's sitting back on their Laurel businessman has

this nose that they're sniffing for money and they're sniffing how to make money that's the game everybody does that all day every day and for somebody who's been fundamentally a career civil servant and to make these broad articulations who has never gone out and got a purchase order and traded Canadian Goods globally uh that actually means that he doesn't understand the nature of how Capital goes in the product function well he's also shuffling off responsibility well the issue is is if you don't have the IP yeah and you don't have control the AI function if

you put the money in that that acrs to the owner of that right so it's like you building a house on land you don't own yeah and we had a we had an an economic policy of never owning the land underneath it so and then he says well look if you build a house on that it's going to be a great big beautiful Rich Hotel don't be so lazy where the business kind of goes I know I don't own the land I don't know how to own that land I don't have a public policy that

supports me there but I'm sure not going to turn my dollar into 10 cents now the public Investments have always turned a dollar into 10 cents but that's taxpayer money but if a businessman does that they're quickly bankrupt and out of the business so his his his articulation and framing of we just have to spend more money longer which is Einstein's definition of insanity uh I I I think is misplaced because he's not resol solving the core issue which is what creates a good investment opportunity in an era of intangibles and so I look at

his prescriptions and and you have it's important to understand this for people is that he's a macroeconomist and a central banker and that's a very narrow function you're in job your responsibility is price stability of the money systems banking stability and the regul compliance of the payment systems you operate in a narrow but important realm but your involvement with the firm and the productivity is that's a very distant part it seems similar right so his expertise doesn't trans the metaphor I could say is it's like he's a leading um dermatologist yeah he's a doctor yeah

and he said well I'm a doctor I'm going to do a neurosurgery because that's a doctor and the brain is very close to the face which has got skin so I can do this and and in fact these are very very different Realms that have very different levels of expertise but there seems to be a comfort and a cavalierness weighing into Realms that have can has performed poorly he has been part of a scene that's perform an architect of a scene that's performed poorly and he has no expertise in this realm and no experience he

didn't need to have it as Central Banker but he's availing as if he do yeah well that was one of my impressions in reading the and it makes me nervous because his thinking to me is just a more efficient Trudeau yes much much more efficient much broader scale with much better International connection but I I think efficient in this direction yeah given what's happened to Canada yeah faster and faster and we're last place already we could what's below last place yeah well Canadians you know I can understand the conundrum because Carney has an he has

International impr premature because he was governor of the bank of England and it's very easy and I can understand it for people to think well he's been successful in two complex jobs one of them was outside of Canada it's the same job yeah fair enough fair enough but it's easy for people to presume that that makes him a master of financial strategy in all Dimensions when they don't know the nuances he's a he's a dermatologist and we need a neurosurgeon and they're both on the head but they're different and they're really different all right let's

turn our attention as we're as we're um exhausting our time on the YouTube side let's turn our attention to the person who's the major Contender for the position of prime minister at the moment and that would be pob now you already said and the conservatives you already said that you're stringently and consciously nonpartisan not only in your attitudes but also in your finances and so we're presuming that you're attempting to evaluate both of these men and their ideas at the realm of competence and idea so tell me about POV you've had some interaction with him

you've talked to his some of his advisors about the issues that we've been describing tell me what you what you're concluding what you're seeing well when I wrote that piece about uh we're all economic nationalists now that was really a word to the neocons that if you're a Freedman knite then be a Freedman knite adjust to the facts on the ground and I've recently heard some things that are encouraging that seem like the emergence of and and Mr POV does not owe us a full campaign yet because the campaign has not started so my fullsome

evaluation is to be done but I think I think carne's played his cards because he's in a campaign right he's written a book written book and he done campaign so I assume that's his Playbook and car and Mr PV is is is imminent if there's an election imminent which I think there is uh and so uh but he's he's done some green choots which intrigued me he recently said we need to take back uh control of our economy we need to be Sovereign secure uh and prosperous or something like that and but the fact that

the government has a role of taking back control of our destiny and our security and our sovereignty and our prosperity and our economic entity not as protectionism but to make us strong for a dangerous world and to make our companies strong going out to the world well that's interesting and then and then he has well and you see this as somewhat of a radical departure from Canadian political maneuvering on both sides of the aisle over the last 30 years he's introducing the second leg and and then what I've heard for the first time in 30

years he has an industry critic named Rick Perkins who has said we need to own our ideas we need to C control our data to to build our companies and nobody has said that it was an interview about a month ago and I'm like well where'd that come from and then he's had so where did it come from they're thinking I think they're trying to think they're trying to realize that there's two legs here his trade critic Ryan Williams has been calling for updated trade strategies where we actually figure out how to project Canadian interests

in these games where there's strategic Behavior by nation states uh which is encouraging because that's we should have had it 30 years ago nice to start now uh Michelle rmle has been talking about updated competition strategies where you don't just throw it as one bucket you need to compete in domestic Services more but you need to support our Global Traders more so one is a supporting them into the world one is to compete away monopolis Monopoly rents that hurt consumers again that distinction has not been done for 30 years and and I've heard Michelle rmle

and Adam Chambers talk about helping Canadian companies grow for the benefit and building more capacity in the Civil Service to deal with this change so I see these as green CHS in what seems to be a Loosely emerging poly of Doctrine we we see the Carney Doctrine uh um I I the green we know the Carney do like values is a rather thorough book for all its failings and people tend to do what they say they're going to do so that's laid out you see the emergence of something approximating a poly of do a two-legged

race and if we don't have a two-legged strategy we will be subordinated uh uh Puerto Puerto Rico without a passport if we do have it then the question question is are we effective in the capacity building of the political class in the Civil Service to actually perform into it okay when we've while we've been atrophied in this realm for the better part of 30 years okay so let's talk about that a little bit because I I'd like to get a bit more concrete about that so what you've said was and tell I'll paraphrase you tell

me if I've got this right that independent of carne's diagnosis of the need for transformation in our economy your assessment of the strategies that he's put forth so far are first let's say that he hasn't fleshed out anything indicating any understanding whatsoever of the problems that you've described in the second leg of this race he's he's rooted he's got bad economics it's rooted in the 1970s economics it's it's it's poor economics it's poor it's for a doctor it's poor surgery right right and the second problem is is that the plan that he is going to

implement is going to make what we do do well more expensive and less productive and exacerbate our problems on the side of the things that we don't do well with no strategies to resolve that dichotomy okay so that's Mr Carney now and then moralizes that says we got to spend more money longer doing the things we did before because that's the key because people don't see the pot of gold of just opening up your wallets more despite the fact we've been opening up our wallets for decades at enormous amounts it's just just about more and

longer okay okay now on on the POV front well we've talked a little bit about the shortcomings of a strictly libertarian free market view in light of the realities of the new economy um but you are saying that and you've discussed a number of the people that's working with him and these are people that you've had some contact with what as a you're you're following them as in discuss them yeah following them I've testified at committees uh yeah okay and you're seeing the emergence of something that you think has some promise okay so let's let's

delve into that a little bit more um at the beginning of our conversation you pointed out for example that the Americans have developed these councils that Canada scrapped 30 years ago that enable 33 years ago but who's counting right right that enabled them well those were those were pretty remarkable three decades right it's definitely not 1970 anymore right it's probably not even 2010 anymore right right okay and so what would what do you think needs to be done by either of these leaders for that matter to provide Canadian politicians the political system the civil service

with the expertise necessary to develop the policies that would make us competitive with the Cutthroat Americans for example who are definitely charging rampaging down this road at a rate that's really quite miraculous so what what what else would you like to see emerging on the political front that's going to help us deal with our inadequacies in this second leg of this well the dilemmas of the muddling is going to be is we need a neurosurgeon not a dermatologist Y and say well get me a neurosurgeon tomorrow and it's going to take time to train people

to be a neurosurgeon yeah you can't just you got to you've got to find the expertise where it is and you got to build the capacity and that's not going to happen overnight and we have to have Democratic discourse not bullying that's why I said we're all economic nationalists now that's a calling out of the bullies who've been because we don't do discourse what Chang we do we do bullying in Canada we don't do discourse what do you mean by that you just at homonym shut people down and state your Dogma right you're either you

know free markets or you're you're North Korea and somebody says well you're just a mean you know whatever phobe and uh um who just wants to be like magga and in fact these are very complex very technical very nuanced Realms in a in a in a geostrategic era of strategic Behavior and the stakes are enormous and what Trump has done is just laid it all bare it's been going on for decades he just turned the heat up really fast I would say irresponsibly fast and I think he's miscalculated because if the world respond strategically to

that threat okay so now we have an opportunity have that opport so will we build the will we build the capacity in our civil service will the conservatives go through a process of actually debating ideas and figuring out this who should they be discussing this with like where is the expertise that's available there's lots of it in the country but it's they have to be open to ideas and I think who would they invite to speak to who would they talk with there's lots of uh practitioners and and there's there's no business councils like in

the US our our domestic business councils except for the council Canadian Invaders are very dominated by Foreign interests who are considered Canadian firms but they represent the the for we need to find people for example who have been successful in the new who think of Canada first and and and they they're in there in think certain think tanks certain uh universities there are experts out there but it it has to begin with leadership that says we're to this and I got a because to have the right answer but not have everybody with you is not

going to work so I'm not but I don't think we can do a five-year Royal commission that's because it needs to be something quicker and iterative and and so that's the journey but that's the leadership opportunity whichever one of the two articulates that that says this is a two-legged race I need to have updated approaches here uh and you think we have the expertise in Canada this why 100% because I deal with them with regularity but they've been pushed to the Friends by the people who cooked this strategy 35 years ago 35 30 35 years

ago and they're fighting on all they can to protect their legacy of getting it right in spite of this Canadian resource curse and and I'm saying we are where we are because of this flaw and you need to need bring in new voices and and I've funded a new initiative called public policy Shield initiative much more for Young Scholars and young thinkers to come in and architect the future that they want that they're going to inherit and they're going to live in and I think if Pierre PV or Carney chooses to embrace these true experts

to to to design a proper two-legged race then um I think we're going to be okay maybe better than okay even much better than okay but I I get very nervous about a more efficient Trudeau yeah and the the hubristic representation of knowing things that you don't yeah and a little humility with openness to ideas and and a communication structure with Canadians that says I'm involving new smart voices I've got good leaders who are buying into this I'm open to this stuff we we're going to be on this journey together I think our future can

be the best yet yet to come but if we fail in that I think the failure will be um marked yeah really bad okay so let let's let's let me summarize and tell me if I've got it right well your diagnosis is what it's it's dire in that the problems that Canadians face are of sufficient magnitude to be felt the fact that we make 60 cents for the Americans dollar is is making itself manifest in the lives of ordinary Canadians in Dreadful ways one in four in food banks and getting worse and getting worse right

the trajectory is downhill and we missed the boat 30 years ago and like and that sounds pretty bad but the situation you like we miss the boat in the data driven economy of AI so extreme That We're actually inviting Google to own the AI own the IP and control the citizens and have the control of security and get all the we and economic effects from our largest city yeah right okay okay now that could have been followed by a conclusion that we're so far behind that it's hopeless but that isn't the conclusion that you've drawn

the conclusion that you've drawn is that Canada is in fact intrinsically a wealthy country with regard to the first leg Resource Manufacturing Finance the traditional Canadian economy but also with regard to the second is that we do have the expertise here technically we in principle have even the expertise with regards to legislation and governance and negotiation but that because we've had a narrow focus on something like 1970s pre-reformation Freedman free market rhetoric we haven't taken advantage of any of that quite the contrary but we could and we have the resources because the financial resources because

we do have liquid assets to deploy in this country we don't we don't we don't invest them here because the business Cas is not there but we could create that through Pension funds and Canadian savings I think we have to we have to think about what we do spend our personal time and money on and find out that we have more of that I've had as an example considerable interplay with Premier Smith of Alberta and Premier canoe of Manitoba NDP and conservative extremely impressed by how they want to chart this kind of value added future

for their economy I think I think Manitoba has more critical minerals than Ontario does one of the greatest reserves in the world and they want to do value added strategies Premier Smith also wants to do value added strategies in her economy with energy in the Realms we talked about and Agriculture and health care and Ai and IP they see the potential they see what they give away and same with Premier Cano so I I see the political leadership at the subnational I see green shoots International or national I see all the fundamental Dental are there

you have all the spices in the spice rack if you choose to cook a good meal meal so yeah I think the potential is there right so we have great potential upside and pretty dire potential downside yeah right and it's time at the moment for a choice at that fork in the road that we should take and thank you president Trump for finally forcing the issue great well that's a very very good place to end Jim and so for those of you who are watching and listening I'm going to turn as you know to a

continued discussion on The Daily wire side and we're going to change Pace there I went down with Jim last oh well a couple of times in the last year or so to talk about identity in the digital age and that's not something we covered at all today in this side of the podcast uh what the the N the nature of your existence and identity in a digital age is um has become mysterious partly because the behavioral traces that you leave as a consequence of your uh actions your interactions online Define you in ways that you

can barely begin to even understand there's a virtual clone of you in the abstract world and you have absolutely no right to that part of your existence and it's terrible it's terribly dangerous and it's been capitalized on in a variety of ways that aren't good by legal and illegal factors alike and Jim and I have started to with other people have started to think through hopefully at somewhat of a deep level the problems of ownership of your own being in a digital age and we fleshed some of our ideas out when we've gone down to

Washington and so I think we'll spend 20 minutes to half an hour talking about that on the daily wire side so join us there Jim thank you very much pleas talking to you man I really appreciate it yeah hopefully everybody you said Canucks that have been listening to this interchange have a little bit better understanding as I do now about you know what we have done wrong foolishly blindly presumptively um the opportunity that bull in the china shop Trump has presented us with and the fact that you know we actually have the opportunity to make

this country Roar if we if we Choose Wisely and so that seems to be the appropriate thing to do so um good luck to us on that front thanks again sir pleasure sure [Music]