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

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 U.S. 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 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 has 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, that terrible word, the entire world into the smartphone age. And he was spectacularly successful as a businessman and an innovator, and a Canadian businessman and innovator.
But I've known Jim for 15 years, and he resigned from BlackBerry a 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 yet incisive and critically minded thinkers that I've met. Very well-connected, very competent, 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 ourselves 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 future that looks 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 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, what he's maneuvering towards, and why we set ourself 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 generally 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 Carney's ideas, as put forward in his book, Values, for better or worse. And I would say mostly for worse.
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, 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 Polyev who leads the Conservatives and the positive signs within his budding administration of what there's evidence accruing 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 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. 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 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 the first thing I thought I might do for all of you desperate Canadians who are watching with your mouths opened exactly what's happening to your country is to grill Jim a little bit about his background or ask him politely even about his background so that you understand why I'm talking to him and why it might be useful to follow along with the conversation 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 put that in a broader context. Like you've had a lot of experience on the economic side, business side, political side in Canada, but also in the United States and internationally.
And you've chosen to stay in Canada, and you're a staunch 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 great to be with you. Yeah, we've known each other for 15 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. For me with RIM...
There were nine very good students, by the way. Yes, prodigies.
Yeah. So with me with RIM, it's the greatest.
I mean, first of all, I believe capitalism is, in a liberal democracy, is the best form for human flourishing in the world. And I'm an ardent fan of capitalism, entrepreneurship, technology, innovation.
And that created the framework for me to be partners with Mike Lazaridis as co-CEOs to create BlackBerry, something we took that really globalized the smartphone, grew it from an idea to $20 billion in over 150 countries around the world. And it's remarkable.
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 the way it works in the ground. And so that's what shaped my experience at RIM.
As I said, we grew it to $20 billion. I retired at the end of 2011 when we had 5.2 billion in revenue on a $20 billion year and moved on to other things and Mike stayed with it.
So yeah, that was my experience. And you've stayed active as a businessman.
Sure. Well, and in all sorts of other realms since then as well.
Sure, sure. It's not like your involvement on the economic side practically or conceptually ended when you retired.
And so, I've been watching that over the last 15 years too. You have developed expertise in a broad variety of areas

and you set up political think tank as well at Waterloo,

which is where we are today.

And so you're-

And I also do, most of my time is still

with my businesses around the world.

I spend two thirds to three quarters of my time

with my businesses in North America, tech and other,

and in Europe and the Middle East. So yeah, most of my, I'm still fundamentally a businessman.
Right, right. You're right.
Well, and I've seen you branch out, I suppose, or what, pursue the development of your ideas on the conceptual side in parallel to your continuing as a businessman over, let's say, the last 15 years. And you and I have gone to DC a couple of times 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 a digital age.
Yeah. So 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 want you to take the floor here and lay out for Canadian listeners and for the international audience as well, exactly the nature of Canada's, we'll say specifically, economic situation now and even over the last 30 years. And so let's start with an analysis of the reality on the ground and then a causal analysis of how we got there.
Sure, sure. And again, I come at this as an ardent capitalist, so I'm going to explain how capitalism works.

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 produce them with efficiency and scale.
And you 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 what are called tariffs or border adjustments.

And that's the traditional economy.

And Canada does that pretty well.

It set up 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 upskilling of workers, they create domestic tax base, and you get lots of these positive spillovers and the the headquarters gets good performance, and everything works great. 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 U.S.
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 U.S. led a five-year exercise to globalize intellectual property rights.
And it was called TRIPS, the Trade-Related Aspects for Intellectual Property Systems, I think something like that. And so the world shifted to amassing IP assets and collecting a rent.
So it stopped being a production-based economy only and it became a two-legged race. Liberalizing markets, capital and labor through production economy, ricardian 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 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 amass wealth. And we did that in three ways.
We were very productive in the natural resource economy, on the 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 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 the 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 rules shifted radically in 1994, and we stayed there. Is that approximately right? 100%.
And that's interesting because that's at the time we were 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 NAFTA agreement with extensive intellectual property provisions, which was new. And the TRIPS agreement of the World Trade Organization, which was the globalization of the IP system.
But what's interesting is domestically in Canada, later that year, they published a book called The Orange Book. Who's they? Industry Canada, the Government of Canada.
It published an orange book, and you can see it on the web, called Building a More Innovative 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 a revolution had occurred. Yeah.
Okay, so let's the original sin. So let's delve 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 why were these new arrangements radical? 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 U.S.
understood that if it was to be 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 creative industries.
That went to all the value adds that are on top of basic resources as well. Yeah.
Intangibles are now 90% of the value of the S&P 500. That's where all the money's been.
So define intangibles again for everybody. Well, intangible asset is an asset.
When you have 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. Right, so it's finite in supply.
It's finite, but the design of this jacket is not finite. It's non-rivalrous.
A million people can have that design where that's not designed 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.
So they own a fence.

They own a fence.

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's pretty obvious in retrospect

that the world virtualized in the

1990s when the net burst onto the scene. I guess one of the early things that happened there,

and this is kind of relevant to this, was... Missions to Mars, driverless cars,

AI chatbots. Feels like we're already living in the future.
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Robinhood Crypto is licensed to engage in virtual currency business activity by the New York State Department of Financial Services. What was the early music underground sharing? Oh, 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.
The physical artifacts no longer signified ownership of the information. And so, well, Napster obviously eventually morphed into Spotify, but that completely transformed that industry.
So the essential issue here is that in the 1990s and since then, 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, 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's delve into that.
Yeah, and when you physically own something, it's kind of not contested most of the time. It's unambiguous.
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 cards. And so a bunch of judicial decisions framed the opening for Google to do search.
We see the same thing happening right now with the AI companies fighting over the right to scrape data, for example, and derive the patterns that are underneath. Yeah.
And that's a principle of fair use. Because 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, do the weights embody expressive content that fundamentally takes away the revenue of the owner? Or even replaces the owner. Well, I mean, yeah, replaces and takes away the revenue are two sides of the same coin.
And then at that point, the courts have to weigh in because intellectual property is not a natural right. 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 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 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 why did we not notice what we were doing and what did we miss? Yeah, and there's some good questions there.
I mean, one is that Milton Friedman talks a lot about free markets, but that predates the knowledge-based economy and then the data-driven economy. Right, and he's a favorite of the libertarian free market type.
Well, but the issue is the nature of these laws is to introduce friction to grant monopolies. So free trade agreements in a 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.
And the courts as well. With the courts interpreting that to advance state interest, advance their- So it becomes an instrument of geostrategic projection because if you control the valuable assets, you're more secure and you're more rich.
And so it was a two-legged race, spreading liberalization of markets, capital, and labor. Yeah, which we did reasonably well at.
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'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, 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 our production economy constructs, 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? Is it a failure with our business leaders? Is it a failure in the education system? Like 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 Baltic or the 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 last place in GDP per capita of the top 50 developed countries in the world.
Is that in GDP increase or? Well, GDP per capita performance, which is, you can call it the worst decrease. Yeah.
You know, we're last place in performance. Of 50 developed countries.
Of the 50 developed countries. Of the 50 over the last 10 years.
And in the last 40 years, we're last place in the OECD in productivity, in growing that. And then we're forecast to be last place in the next 40 years.
So we've pretty well cemented. We've got 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.
Right. So actually an index of your productivity and your wealth, 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 dollar.
Catastrophic. Catastrophic.
Right. And the direction is downward.
So the Americans are going to get richer. Yeah.
And the Canadians are going to get poorer. Yeah.
And we could be in a situation in five 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.
Sure. Okay, so what do you think, if we don't wake up and we look out 10 years, what's the difference between Canada and the U.S.
economically? Well, as I've said rhetorically, we become Puerto Rico without a passport. We'll be very poor in terms of quality of life and what we can buy 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 healthcare, the public safety, the social services, the heat, all the things that we value of being a prosperous, sophisticated country.
And we've seen those come under stress in this last era. Okay, so let's detail out that a little bit.
It's expensive. It hurts a lot when you don't do well in this.
Right. Okay, so our housing is prohibitively expensive, not only in absolute sense, but also in comparison to the Americans.
Our healthcare 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 poorer in terms of per capita GDP than Mississippi, which is the Americans' most poverty-stricken state.

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 not able to provide, they're skipping meals or children are unable to be fed what they need.
So you're not secure in providing the food to your home. Okay, so one in four.
Yeah, that's really, 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 related an 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. Yeah, and in, I mean, in the United States, they have, you know, the White House has an office of IP, you know, it has an IP caucus.
And they have, and he said he's a very, he runs a global IP, international IP association that everybody knows. Right, so that's dealing with ownership of intellectual property.
Yeah, and he says all these other countries have IP attaches, but he never comes across an IP attache of Canada. Right.
So the Americans have a council of businessmen 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's an IP business.
Right. And all they do is concentrate on analyzing the ownership structure of abstracted property.
And changing it to their favor. Right, informing the government and legislating and negotiating so that that works in the favor of the U.S.
And then 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 as instruments of regulatory remote control to extract the rentier economy to their home country's benefit. Okay, USMCA, detailed out.
That's Canada's trade agreement signed under Trump six, seven years. Right, and that's trumpeted often as, so to speak, as a free trade agreement.
But you say in a million words, there's no reference 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 now.
We don't even know the battle exists. It's an instrument for regulatory remote control.
Okay, tell me what that means, regulatory remote control. They set the rules for how we manage our IP systems, regulate our healthcare, put in standards, 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 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 prosperity.
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 contracts.
That's what you do. Okay, so let me drill down into this a little bit.
Tell me, yeah, well, that's why I'm talking to you.

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 in a given corporate domain of how the American advantage in control of such things has worked to Canada's detriment.
Now, one of the battles you fought, I know, was with the smart city folks. Do you want to, is that a good example of? Yeah, yeah.
Okay, so let's delve into that a little bit to make it concrete. Yeah, 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 came packaged in a pretty nice, shiny box.
We'll have smart cities. We'll have much more effective information flow.
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 pertaining to all the 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 I wind this back and walk into it? So you ask Canada's, we talk 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. In 1989, we signed the original Canada-U.S.
free trade agreement. And that was liberalizing all these things.
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 doesn't do anything.
Right. And so you could think about that as the libertarian dream, but also the libertarian abdication of responsibility, both at the same time.
And that was Canada's economic orthodoxy. And maybe there was some value in that orthodoxy when we were fundamentally a resource and leg one economy.
And it's part of one leg, it's necessary but not sufficient. Okay.
Even with regard to that leg. Yeah, no.
But certainly not sufficient in a knowledge economy. So then what happened was, we had an economic thinking capacity in 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 committee. You know, the U.S.
has 50-year-old, if you go to the U.S. trade representative and search advisory committees, they have 26 advisory committees, 700 experts, been together for 50 years.
Tremendous insertion of sophistication. Right, and these are smart, dedicated, and 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. Yeah.
But when you make yourself blind,

you're not able to see this leg two come along

because you're done.

Right, and 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,

so this was around 92,

we shut down our economic council to save money.

So it's, yeah, it's getting... 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 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. 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, talk about well if it's still relevant let's talk about what happened why that 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.
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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 let me put one more step into this and then I'll go to the Google part.
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... When you sell your 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 run it. And all the taxes and all the wealth effects happen at the home country.
Yeah, we don't 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.
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 centralized... And the Canadian people are paid less.
They tend to have ancillary roles. 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 thinking of the Google sidewalk was like setting up 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 step in the grave for the country. Okay, so now I think we're getting a little closer to understanding at least some of the reasons why Canada came up short since the 1990s.
Now, there's more to the story than this, but one of the things that you intimated was that maybe the Mulroney, I'm not blaming him, but I'll just use him as an example, Mulroney 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 his leadership predated the knowledge economy. Right, 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. Well, the government is making the market and manufactures the assets in the market and it changes them 100 times a day in the knowledge economy.
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 that there's been an abdication of responsibility on the political front and the justification for that has been something like, well, the free market will take care of it.
And so that means even the conservatives so far haven't, none of the political parties have addressed this problem essentially in 30 years. That's the situation.
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, 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 D.C., 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 are failing or have failed? Or is that? No.
Okay, so that's a reasonable coverage of our- Yeah, and what bothers me so much about this, you have this country with so much potential. 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 economic structure is much closer to Russia's right now because of this abdication.
And so you also mentioned in Google really quickly that the taxpayers in Canada spent 30 years funding the fundamental artificial intelligence at University of Toronto and in Alberta. So the number three AI research center in the world is in Alberta, in Edmonton.
Number five is in 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've also foregone- 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 healthcare and public safety along the way versus a deficit- And paychecks that can afford a house. And better paychecks versus a deficit that is eroding those services.
Well, and we've also foregone, the analysis I've looked at, also suggested in the last 10 years under Trudeau, we've foregone $650 million worth of potential leg one investment as well. Because one of the other things that's happened in Canada, 650 billion.

Yeah, billion.

Yeah, yeah, yeah.

And by the way, real quick,

also, we also invented

fundamental technology for battery,

taxpayer funded from Dalhousie

that we transferred to Tesla.

No economic benefit to Canada.

The prof gets the research papers.

We have fundamental technology

for mRNA out of UBC

that we don't have any economic benefit for 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 is an orthodoxy 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.
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 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 has been blessed with this immense geographic landscape and endless natural resources, that we've allowed ourselves to sit on our haunches, so to speak.
Absolutely not. Absolutely not.
That's a false myth perpetrated by the policy community that thinks they've done it right when they've done it exactly wrong to manufacture an excuse why their strategies didn't work. The U.S.
is, I believe now, the largest oil producer in the world. Yeah.
Don't see any resource curse there. The Scandinavians, Finland, Norway, Sweden, Denmark,

tremendous productivity and prosperity and innovation,

absolutely bursting with resources. Right, they've managed both.

Yeah, so does the Germans.

Yeah, but has Canada allowed its reliance

on natural resources to justify not delving into these more?

But 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 curse of being...
But others with lots of resources are extraordinary. They're world-leading.
Right, so this is the curse of being lackadaisical in the face of resource plenty. Yeah.
As well as these other problems. The curse of false myths by those who have failed us.
Yeah. Okay.
Okay. Well, let's move.
Okay, good. I think we fleshed that out recently.
And they've got lots of other ones of complacency and they use that. 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 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 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 end game is, but it's obvious. Okay, well, tell us what you think Trump is doing and why you think we've elaborate on why we've, how we've set ourself up to be the recipient of his peculiar largesse.
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 phrase for strategic U-turns coined by Milton Friedman. Right.
The darling of the free market. The darling of the free market.
Because he famously said in the late 60s, we're all Keynesians now. So he spent 20 years fighting Keynes.
And then when there's a crisis with Nixon and they had to respond to it with a bunch of new monetary and fiscal structures, he said, well, we're all Keynesians now. Keynes was an interventionist compared to Friedman.
And Friedman 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 attune your behavior to the facts on the ground. So if you are a Friedmanite in this contemporary reality, then attune, period.
And so- Like to the realities of the new ownership doctrines in the knowledge economy, for example. And the nature of the geopolitical era of strategic behavior.
So, responding very specifically to what you said, the question you asked on Trump, when you go to an intangibles economy, when you're producing economy, you trade on a principle called comparative advantage. Yeah, lay that out.
Well, comparative advantage, it was done by David Riccardian 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 cups 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 this.
So if you make a cup for $2 and a saucer for $1, and I make a cup for $3 and a saucer for $2, now 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 100% more expensive.
So if I ship you cups and you ship me saucers, that will rise the tide of everybody. So everybody has an incentive to trade on physical goods based on comparative advantage.
Yeah. So I can offer you my best and you can offer 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 Riccardi and comparative advantage.
Okay, that's a material-based core principle of liberalizing trade. Now, when you go to an ideas 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 or you can be the landlord 10 out of 10 times. It's not a cooperative system anymore.
It's a rivalrous system. And what that means is if you're a big, strong guy.
You get everything. 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, Trump 1.0.
Biden took all of those things and added many more, which you can read it and I won't go into them now, but he did many very substantial strategic elements of behavior. Trump first, then Biden.
Biden did more than Trump. In relationship to Canada.
Yeah, and then Trump took it to a whole nother 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, 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 very profitable for a nation state to pick on a weak state, especially one that has some good assets to pick 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 is- And we still don't really understand that. And that's part of the reason we've been so susceptible to Trump's maneuvers in the last two months.
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 important.
It's the only thing that matters. It really matters a lot, yeah.
And so we're paying a very, very 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 add.
And now, and what was happening to Canada, and the US played a very clever game and 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.

Right.

So we own all the ideas.

Well, if you get really good, you can start to own some too, but you've got to be very

high functioning, of which the Western Europeans and the Southeast Asians are.

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That's preborn.com slash Jordan. 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 rauke out under the economy, which is a form of neo-feudalism, that you have to pay a tax to the sovereign.

And there's an aristocracy and then there's a non-aristocracy.

Well, we're going.

That's what I mean by public without a passport.

Yeah, yeah. Yeah.
And here we are. Here we are.

okay so detail out for me and for the canadians and everyone who's listening what you think exactly 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 liberals 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 post-national state with no real identity, that our strength was our diversity. that leg one, 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, there is a virtualized economy, but we don't own any of it. And, you know, when I looked at Carney'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'm trying to spend most of my time with you today

characterizing what's going on.

I've only said one normative thing to date 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 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. It's almost certainly illegal, though 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 think this is a fascinating moment. And to sort of, for Canada, to quote the famous Yogi Berra, when you reach a fork in the road, you got to take it.
Right. And so Trump sees Mexico as just a commodified labor to lowest cost for blue collar.
Canada's to commodified labor at white collar workers. And it's all got to be subsidized.
And so I actually think the appeasement, there's a little bit of benefit in appeasement and diplomacy because you inform the US that he may have 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 security-wise. but I don't think I think he's said who what he is he believes that

that

they are the empire

yeah

that you must pay a tax

for the privilege

of

of he is. He believes that they are the empire, that you must pay a tax for the privilege of participating with the empire, interrelating 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 that it's paid for through tariffs. And in economics, in prosperity, in a global system, the number one objective is to improve your terms of trade.
And 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 drives up your GDP per capita through higher terms of trade. And so their thinking is that I'm going to make you pay to come in here.
That's going to enhance 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.
Because it buys less. And you sell it for less too.
Right. So that worsens your terms of trade, 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 some lower economic status entity.

And that is an economic logic being played out to 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 security thing that they're paying attention to.

With regards to the border? Yeah. And there's probably a couple little strategic things they want in the economy, 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 a 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. Okay, now you- Because that's the economic logic that is at play here.
So it's a dominance logic fundamentally. Yeah, it's an economic and security dominance logic.
Okay, now, but 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 in the China show.

I'm angry.

I'm angry about them.

Yeah, yeah.

I'm angry about them.

Yeah, right.

I wake up angry on it because I feel it's wrong at so many levels.

So that's my second normative thing.

I'll shed it.

Now, you be a clinical psychologist, make me feel a little better. And I'm bothered by it.
And I think it's going to hurt one in four people. What about the one in four people that have food insecurity? Like, for goodness sakes, people need food and a home.
And now, really, and you're going to erode the whole system, hurt Canada comparatively more, still hurt America, and vulnerable people are going to pay the largest price. Because what? Because that's how the aristocracy works and let them eat cake.
And yeah, as a proud Canadian and somebody that believes in, you know, my dad was an 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 that part of it is not cool by me. But yeah, we'll go into the misplayed hand by Trump.
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 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 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 to, well, 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. But you have chosen to stay here.
Yeah, of course. And I've doubled down.
Of course. Yeah, yeah, of course.
Yeah, this is my team. This is my country.
This is my home. Your job, it's given me so much.
And as you said, 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 bear. And there's beautiful people who volunteer at food banks, 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 tech economy in the Waterloo area. And 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, you've put your money where your mouth is. It's very rewarding.
It's very meaningful. It's a shame to see it's suboptimized, 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 banning 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 as we speak virtually, the Liberal Party, which is- So we're talking about Trump, his miscalculation.
Yeah, yes. I've never- You want to flesh that out? Yeah, I didn't answer that yet.
I didn't answer that yet because we split two apart. Here, 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 in droves from places like Waterloo to Silicon Valley, adding to the trillions of market cap. Our best ideas invariably are taken by U.S.
companies where they own them and commercialize them. Our best resources like Alberta oil is overwhelmingly shipped raw to 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 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've 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 game going. Let's maybe turn 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 Trump thought he had such dominance. It was kind of like the Russians with the Ukrainians that they would just submit.
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 changed economy with an updated sense of thinking. 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 work towards an appropriate standing and future for the country in this changed world? And I think that potential of the latter one is there and before us.
I'm going to bring all I can to bear 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. Plus, it's his orthodoxy.
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 at it. I think it's going to take a—he's just going to keep tweaking it.
But he's already done the damage because the law doesn't apply anymore. He says you can't have access to the U.S.
market, so move your factories here. Nobody's going to do a press release that says I'm moving my factory in the middle of the night to the U.S.
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 the business realities. 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 interim phase.
And that goes to the point of leadership that you were in. Okay, well, 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 after Trudeau on the Liberal side.
It looks it's the day before the leadership race for the Liberals finalizes and the heir presumptive is clearly Mark Carney. And well, I finished reading and analyzing rather deeply, I would would say Mark Carney's value books and value book which Canadians should know about and read even especially the first couple and last couple of chapters and 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, after outlining what he thinks Canadians' shared values are, which 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 any of the problems that you've described, conceptually or practically. He doesn't address the fact of Canada's failing productivity.
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 to your proclamation that Trump's maneuvering has been counterproductive, is Canadians seem to be rallying behind the liberals.
They were cataclysmically low in the polls, and now they're at something approaching parity. And so, well, that's the spectacle on the Carney side.
And then, well, we have as the primary alternative to that Pierre Polyev and the conservatives. And so, well, enough of a rant on Carney from me.
I'm curious as to, you're not a particularly partisan person from what I've observed. 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 regard to Canadian leadership.

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 data-driven 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 turbocharged this era of intangibles, which is intellectual property, knowledge enclosure, and then data and AI, which is 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 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've got to have something, something there.
Yeah. So that's fine.
Okay, so you mentioned about Carney, then you mentioned about Polly. Yeah.
And I did too read his book because I'm interested in public policy. As people, you've mentioned, you and I are active in Washington, I'm active in Brussels, and I'm also active nationally and subnationally.
And provincially. Well, subnationally, provincially.
And I absolutely see myself as a Canadian, and I always think of Canada when I try to engage in these things, and I'm a passionate Canadian. So a couple, three things in Carney.
He's positioning himself as an outsider when he's been an advisor to Trudeau since 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 Ottawa for decades. So all this thinking structure, and I'm going to get very specific on how Bank of Canada has been 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 Sancredo Bank, he's been, prior to that, he was in Finance Canada. He's been advised.
So he's got to own the Ottawa thinking. Right.
And not as a follower, but as an architect. An architect.
Right. So here's the two or three things on Mark Carney's book that I read.
One, he talks a lot about pricing carbon to affect a transition. And then he's come out with his new policies to subsidize things like heat exchangers and various forms of technology to green your homes and stuff very specifically.
And so what happens is that when you look at Canada, it's good terms of trade. I explained terms of trade earlier.
It's 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, hydrocarbons. Right.
We're not talking about the renewable side. Sorry, hydrocarbons, hydrocarbons.
Hydrocarbons, yeah. Import, or sorry, consumption and export of hydrocarbons overwhelmingly pays for this country.
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Plus a free bottle of fiber and spice. Right.
So we have a fossil fuel economy in large part. That's good terms of trade.
Yes, okay, on the good terms of trade. I'm speaking technically.
Yeah, okay. We have a deficit in intellectual property.
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 trade 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 in outcomes.
Right. And there's not, and today in this conversation, we're unpacking why.

Yeah.

But I'm going to stay on this orthodoxy of Mr. Carney.

Yeah.

So we have very good terms of trade in hydrocarbons, very poor terms of trade in technology products. Yeah.
And so his proposition is that we tax the things that we sell and we subsidize the things that we buy. Right.
So if you want to affect a green transition, and you have this structure, that's called a dichotomy. You have to choose between the economy, paying for the place, or 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.
okay okay so let me take that apart because you say things so calmly when when they're actually

cataclysmic that it's hard to get the right emotional impact. So- This is not normative.
This is economics. I understand.
This is economics 101. Yeah, okay, okay.
So the claim that you're making is that the best performance that Canada has managed economically is on the hydrocarbon side. Correct.
Now, Carney'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 and have to show capital and he wants to transition to a green economy. Right, right.
Which is what we're going to go to in the next part of this discussion. Right, okay.
But the transition is going to be fostered in principle by making what we're good at far more expensive and making what we're bad at cheaper. And thus we'll import what we're bad at and we'll export what we're good at.
That's right. Right.
Which is a path towards... 40 cents to the American dollar in terms of GDP.
And he says that will lead to 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 that says Canada will get its fair share of that transition. Which we haven't.
We've had decade, we've had poll 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 a dollar. And he has nothing to say about how we're going to resolve that dichotomy.
Right. So how we're going to ensure, for example, that we own the consequences of all this innovation.
So that 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 to enforce it better to protect their investments.
And that's it. Yeah.
That's a drive by Nothingberger in the most structural change that I talked about happened where he's been a 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 carney's positioning internationally as well like trudeau has been pushing a green agenda let's along with Guilbeau, 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 follower of those ideas.
But that's not the case with Carney. Carney is a major architect and initiator of such ideas.

Well, it could be, 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 green transition- So even if he's right, it's not going to work. Right.
Yeah. And I'm not making a normative case whether it's a good or bad idea.
Well, that's me making the normative claims. He's just, it's going to fail and it's going to fail in obvious economics.
Okay, and what will failure look like? Well, there's a second leg to the failure. Okay.
That the most profound force in the history of mankind in economics is the data-driven AI economy. And he has nothing to say of data as a factor of production and input to AI and how we have to own and control that and harness our own AI.
He says nothing about it. He has two sentences about be careful about privacy and social media.
And that's it. And so if you look at every market, energy, mining, agriculture, lumber,

they're all AI and, excuse me, IP driven.

And so he has nothing to say about that.

Why are they AI and IP driven? Well, because the force of it is allowing,

I mean, as Schlumberger,

who's one of the top 10 AI IP owners in the world and the large oil, sorry, Halliburton, sorry, but Schlumberger too, the oil is a digital economy, that you need digital AI and IP to get it out of the ground, get it refined. Right, so even on the resource side, the IP ownership and tech element is increasingly predominant.
It's like the delivery taxicette business. It became IP-driven.
Right, right. The medallion used to be worth $2 million.
It went to zero because it's this superstructure of IP and data. And the same applies to shopping.
Right, so the consequence of virtualization is total. Everywhere.
It even transforms the result. It's horizontal.
And there's no articulation of that. So it's very important.
He lays out a path that affects us to an adverse outcome because of the dichotomy. And he says nothing about the innovation structure adjustment, but he uses further 1970s economic analysis that he says, because he very famously said, businessmen are sitting on dead money.
It's a very famous expression he said. And he said that we use shovels instead of excavators, backhoes, he said that.
Which means we don't invest in technology. So the key is that if you just got, if business people stopped being lazy and they opened up their wallets and just threw it in there, they would do great.
And to understand- So that's actually kind of a variation of the libertarian argument is that- But it's also a variation of complacency. Yes, exactly.
Resource curse complacency. Yeah.
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 my profits this year. Yeah, right.
Yeah. I've dealt with money managers all that time, both for investing companies and me putting my money to work.
I have never met a money manager who says, you know, I'm happy to be third quartile this year rather than first quartile because the fishing's good. Yeah.
And the fact of the matter is- So nobody's sitting back on their laurels. Every 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, that actually means that he doesn't understand the nature of how capital goes in the productivity function.

But he's also shuffling off responsibility.

Well, the issue is if you don't have the IP and you don't have control of the AI function, if you put the money in that, that accrues to the owner of that.

Right.

So it's like you building a house on land you don't own.

Yeah.

And we had 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 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 articulation and framing of we just have to spend more money longer, which is Einstein's definition of insanity, I think is misplaced because he's not resolving the core issue, which is what creates a good investment opportunity in an era of intangibles.
And so I look at his prescriptions and you have to, 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.
Your responsibility is price stability of the money systems, banking stability in the regulatory, compliance of the payment systems. You operate in a narrow but important realm.
But your involvement with the firm and the productivity, that's a very distant part. It seems similar.
Right. So his expertise doesn't transfer.
Well, the metaphor I can say is it's like he's a leading dermatologist. He's a doctor.

And he said, well, I'm a doctor.

I'm going to do 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 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, Candace performed poorly. He has been part of a scene that's performed, 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 a central banker, but he's availing as if he does. Yeah, well, that was one of my impressions in reading the book.
And it makes me nervous because his thinking to me is just a more efficient Trudeau. Yes, much, much more efficient.
More professional. On a much broader scale with much better international connections.
Yeah, but I think efficient in this direction, given what's happened to Canada. Yeah.
Faster and faster in the wrong direction. And we're last place already.
What's below last place? Yeah, well, Canadians, you know, I can understand the conundrum because Carney has an international imprimatur 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, and one of them was outside of Canada. It's the same job.
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 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 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 Polyev. 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 financing.
And so we're presuming that you're attempting to evaluate both of these men and their ideas at the realm of confidence and idea. So tell me about Polyev.
You've had some interaction with him. You've talked to some of his advisors about the issues that we've been describing.
Tell me what you're concluding, what you're seeing. Well, when I wrote that piece about we're all economic nationalists now, that was really a word to the neocons, that if you're a Friedmanite, then be a Friedmanite.
Adjust to the facts on the ground. And I've recently heard some things that are encouraging that seem like the emergence of...
And Mr. Paliyev does not owe us a full campaign yet because the campaign has not started.
So my fulsome evaluation is to be done. But I think Carney's played his cards because he's in a campaign, right? Well, he's written this book too.
He's written a book and he's done a campaign. So I assume that's his playbook.
And Mr. Poliev is imminent, if there's an election imminent, which I think there is.
And so, but he's done some green shoots, which intrigued me. He recently said, we need to take back control of our economy.
We need to be sovereign, secure, and prosperous or something like that. 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 company strong going out to the world.
Well, that's interesting. 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 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 control our data 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?

I think 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

This is the first time. 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, which is encouraging because we should have had it 30 years ago.
Nice to start now. Now, Michelle Rempel's 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 supporting them into the world.
One is to compete away monopoly rents that hurt consumers. Again, that distinction has not been done for 30 years.
And I've heard Michelle Rempel 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 shoots in what seems to be a loosely emerging poly of doctrine.
We see the Kearney doctrine. Shoes Seen of the Right.
We know the Carney doctrine. Yeah, we do, yeah.
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 doctrine.
A two-legged race. And if we don't have a two-legged strategy we will be subordinated uh puerto rico puerto rico without a passport if we do have it then the question is are we effective in the capacity building of the political class and the civil service to actually perform okay 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'd like to get a bit more concrete about that. So what you've said was, and I'll paraphrase, you tell me if I've got this right, that independent of Carney'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 rooted, he's got bad economics. It's rooted in the 1970s economics.
It's poor economics. It's poor, 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. And then moralizes that says we've 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 about more and longer. Okay, okay.
Now, on the Polyev 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. But you're 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 following them in discussions? Just following them.
Yeah, following them. I've testified at committees.
Yeah, yeah. Okay, and you're seeing the emergence of something that you think has some promise.
Okay, so let's delve into that a little bit more. 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 enabled them.
33 years ago. But who's counting? Right, right.
That enabled them. Well, those were pretty remarkable three decades, right? It's definitely not 1970 anymore, right? It's probably not even 2010 anymore.
Oh, dear. Right, right.
Okay, and so 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 else would you like to see emerging on the political front that's going to help us deal with our inadequacies in the second leg of this? Well, the dilemmas of the muddling is going to be is we need a neurosurgeon, not a dermatologist.
And say, well, get me a neurosurgeon tomorrow and it's going to take time to train people to be a neurosurgeon. You can't just, you've got to find the expertise where it is and you've 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.
We do bullying in Canada. We don't do discourse.
What do you mean by that? You just ad hominem shut people down and state your dogma, right? You're either free markets or you're North Korea. And somebody says, well, you're just a mean, whatever phobe, and who just wants to be like MAGA.
And in fact, these are very complex, very technical, very nuanced realms 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 responds strategically to that threat- Okay, so now we have an opportunity. We have that opportunity.
So will we build the capacity in our civil service? Will the Conservatives go through a process of actually debating ideas and figuring out this true... Who should they be discussing this with? Like where is the expertise that's available? There's lots of it in the country, but they have to be open to ideas.
Who would they invite to speak? Who would they talk with? There's lots of practitioners and there's no business councils like in the US. Our domestic business councils, except for the Council of Canadian Innovators, are very dominated by foreign interests who are considered Canadian firms, but they represent the foreign firms.
So we need to find people, for example, who have been successful in the new digital realms, who think of Canada first. And they're in there in certain think tanks, certain universities.
There are experts out there, but it has to begin with leadership that says- We're open to this. And I got to, because to have the right answer, but not have everybody with you is not going to work.
Yeah. 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 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.
And you think we have the expertise in Canada? 100%. Why 100%? Because I deal with them with regularity.
But they've been pushed to the frims by the people who cooked this strategy 35 years ago. 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 I'm saying we are where we are because of this flaw.
And you need to bring in new voices. 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 Polyev or Carney chooses to embrace these true experts to design a proper two-legged race, then I think we're going to be okay. Maybe better than okay.
Much better than okay. But I get very nervous about a more efficient Trudeau and the hubristic representation of knowing things that you don't and a little humility with openness to ideas 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're going to be on this journey together. I think our future can be the best yet to come.
But if we fail in that, I think the failure will be... Marked.
Yeah, really bad. Okay, so let me summarize and tell me if I've got it right.
Well, your diagnosis is what? 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 American's dollar is making itself manifest in the lives of ordinary Canadians in dreadful ways.
One in foreign food banks. And getting worse.
And getting worse, right? The trajectory is downhill. And we missed the boat 30 years ago.
And that sounds pretty bad, but the situation you outlined could be- And we missed 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 control of the security and get all the wealth 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 invest them here because the business case is not there, but we could create that through pension funds and Canadian savings. I think 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 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, in agriculture and healthcare and AI and IP.
They see the potential. They see what they give away.
And same with Premier Canoe. So, I see the political leadership at the subnational.
I see green shoots international or national. I see all the fundamentals are there.

You have all the spices in the spice rack if you choose to cook a good meal.

So yeah, I think the potential is there.

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 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. The nature of your existence and identity in a digital age has become mysterious, partly because the behavioral traces that you leave as a consequence of your 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 being capitalized on in a variety of ways that aren't good by legal and illegal actors 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. Pleasure, my friend.
Pleasure talking to you, man. I really appreciate it.
Yeah, and hopefully everybody, you sad 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. 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 choose wisely. And so that seems to be the appropriate thing to do.
So good luck to us on

that front. Thanks again, sir.
Pleasure.