Canada’s Role in a Shifting Global Order — with Mark Carney

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Speaker 12 Episode 344, Route 344 is a highway located in Columbia County, New York. In 1944, Danny DeVita was born and the U.S.
sent 100 million cans of spam to soldiers overseas.

Speaker 12 What did the cannibal say when he ate his first can of spam? Oh my god, this is the greatest thing since sliced fret.

Speaker 12 I like that. Okay, that's not good.
You want a dick joke? Okay, I am sick of getting spam emails saying I can make my penis eight inches. I know how to do that already.
I folded in half.

Speaker 12 Go, go, go.

Speaker 12 Welcome to the 344th episode of the Prof G-Pod. What's happening? The dog is booked.

Speaker 12 The dog is a Palm Beach dog.

Speaker 12 I'm staying at a place called The Colony, which is sort of, if the Beverly Hills Hotel had an adjacent property in Florida that was not as nice, but, you know, sort of like Glen Eagles has something called Glen Eagles Townhouse in Edinburgh.

Speaker 12 If this sounds like a total conversation of privilege, i.e. douchebag, trust your instincts, but they have a

Speaker 12 property in Edinburgh that's not nearly as nice. This would be the less nice version of the Berlios Hotel.
I think it's a fantastic, I don't know, fantastic. I think it's an, I'm, a hotel's my hobby.

Speaker 12 What's your hobby? Well, I read a lot of nonfiction or I do a lot of yoga. No, not me.
I go to nice hotels. It's my hobby.
I won't travel to cities. I'll travel to nice hotels.

Speaker 12 By the way, if you're looking for a rec on any hotel in almost any city, Daddy is where you come.

Speaker 12 Anyways, this is a small data point and a larger theme, and that is there is an emerging cohort of services, companies, and hotels, and hospitality and restaurants that I refer to as 64.

Speaker 12 And that is six-star prices with four-star service. And what's happened is the following.
The cohort that's grown the fastest in the United States is not Latinos. It's not seniors.

Speaker 12 It's the super wealthy or even just the wealthy. They have absolutely crushed it.
And these folks like to spend money.

Speaker 12 And not only has their income gone up or their wealth has gone up, but their mentality has changed since COVID. It's sort of, you only live once, YOLO, let's get out there, let's travel.

Speaker 12 A lot of them had pent-up demand to travel from COVID. And they realized that, you know, we all meet the same end.
We all come into this world in diapers.

Speaker 12 We all leave in diapers, but the reality is we all leave. And so luxury travel has just boomed.
And there's a natural gating supply constraint, and that's the following.

Speaker 12 To build a luxury hotel probably takes the better part of a decade. By the time you find the financing, find a location, get the zoning, the permitting, construct the thing, train, get everyone.

Speaker 12 It takes 10 years. So there is an absolute supply-demand imbalance right now.
The Bareley's Hotel, where I stay when I go to LA, which is wonderful, which is wonderful. It's like the Disney of hotels.

Speaker 12 You have the Pirates of the Caribbean and then Space Mountain. You have the counter, you have the great restaurant next to the pool, then you have the polo lounge.
It's Disneyland.

Speaker 12 You never need to go anywhere else. And I love it because everyone will come see me there.
Pre-COVID, it was about $700, $800. COVID, it dropped to $400.

Speaker 12 I was one of those guys traveling during COVID. And then now it's $1,800 for a room.

Speaker 12 Six-star travel, and no one feels sorry for anyone here, has seen inflation, I think, that's probably greater than any category because massive increase in demand would choke supply.

Speaker 12 The outcropping from that, or one of the manifestations of that, is that you can now stay at a hotel. like this one where they have six star prices.

Speaker 12 I won't tell you what I'm spending on my room for four-star service. And what they do is a cultural phenomenon, and that is they try and throw people at the problem.

Speaker 12 And that is they hire a lot of people who are these nice young people that my guess is they underpay, that are not interested in being in the services industry for very long.

Speaker 12 This is a transition job, and that's fine. I parked cars in college, and I was a pool boy at the Montreal Hotel.
Anyways, the 64 hotel, six-star prices, four-star service.

Speaker 12 The problem is when we hit any sort of speed bump, this shit's going to get wrecked. I mean, this, you're going to see declines in room rates of 70%.

Speaker 12 And that is companies have to figure out how much they price. I think pricing is artistic saying, they price perfectly to demand and raise prices when they have power?

Speaker 12 Or do they decide, like the four seasons in some other places, even when they could raise their prices, they don't because it pisses people off and creates ill will.

Speaker 12 And that's what they're doing here. They're monetizing the shit out of this place and throwing weddings and bot mitzvahs.

Speaker 12 And they are, instead of catering to their current consumers, they're renting out the pool if they see an opportunity to make another 10 or 20,000 bucks. And I get it.

Speaker 12 They probably spent a lot of money to buy this place and fix it up, and they're very ROI focused, but they're trading off goodwill and a reputation.

Speaker 12 The Beverly Hills Hotel or the Hotel DuCap would never, ever do anything that gets in the way of the guest experience, if you will.

Speaker 13 God, I'm just hearing this.

Speaker 12 I sound obnoxious. Anyways, this is, you're going to see in the travel industry and the hospitality industry, a massive decline, I believe, in pricing.
Why is that?

Speaker 12 The number of people traveling right now into the U.S.

Speaker 13 is crashing, is crashing.

Speaker 12 Why? Yeah, I used to go, I used to go watch football games at Uncle Sam's every weekend, but guess what? Uncle Sam is a total asshole and he's gone fucking crazy.

Speaker 12 So let's just hold off and let's stick at home. Have you seen those pictures of Toronto International Airport? I think it's called Pearson during Christmas break from last year to this year.

Speaker 12 Last year, packed. Ton of Canadians trying to get down to Palm Beach or to L.A.

Speaker 12 or to Naples or wherever or Miami to get some of that thing called sunshine. This year, lines are empty.
No one's coming to the U.S. Literally, tourism is crashing.
And guess what?

Speaker 12 All this bullshit, all this bullshit around trying to bring back our great manufacturing sector. There are 12 million people who work in manufacturing.

Speaker 12 Do you know how many work in tourism in the U.S.? 13 million. So we have this consensual hallucination that somehow we're going to restore manufacturing by raising prices on everybody.

Speaker 12 Yeah, that doesn't work, folks. But what is working is you're seeing an immediate destruction, an immediate change in the tourism industry that affects and employs 13 million Americans.

Speaker 12 You are going to see not a collapse, but you are going to see real pressure in organizations ranging from Disney to some of the bigger hotel companies to Marriott, when all of a sudden the rates have to drop because we are going to lose at the margins a ton of Canadians, a ton of Mexicans, a ton of Europeans who think, you know what?

Speaker 12 There are a lot of nice places places to travel. There are a lot of nice, I know, let's go to Disneyland, but let's go to Disneyland in Paris, not the one in Orlando, right?

Speaker 12 I know, we want to gamble, let's go to Macau or Monaco instead of going to Vegas. I know, I know, great city.
Let's go to London. Let's not go to New York.

Speaker 12 They have great, they have great theater in London, not in New York. We could not be more stupid right now.
And you're about to see the helm of the bobsled that's going to get hurt, I think, first.

Speaker 12 Well, I don't know who's going to get hurt first. Who's going to get hurt first? I don't know.

Speaker 12 I think travel, I think the travel industry is about to start beginning a series of earnings calls that are just going to get uglier and uglier.

Speaker 13 Let's talk about a few people I talked to this weekend.

Speaker 12 Let's go back to the tariffs.

Speaker 13 The big T.

Speaker 13 That's right.

Speaker 12 Talk to the CEO of a catalog company that does a lot of housewares and homewares.

Speaker 12 And get this, right? $10 million worth of merchandise on a boat coming in from China. This person has to show up with a check for $14.5 million, the 145% tariff that was on as of 10 minutes ago.

Speaker 12 I don't know if it's off, but should it stay when the boat actually docks or the boat, the ship, the tanker, you know, those big fucking things, when it docks at the Port of Long Beach, this person has to show up or their company has to show up with a $14.5 million check.

Speaker 12 Otherwise, they can't offload the stuff. By the way, most people don't really understand what a tariff is.
The stuff comes in, and then the person bringing it in has to pay a tariff to the U.S.

Speaker 12 government. So this person unexpectedly has to find $14.5 million.
That is not easy. That is not easy.
And just to add insult to injury, this person has to go find people to

Speaker 12 go down to the dock and then hire them to relabel and reprice every single item.

Speaker 13 Why?

Speaker 12 Because now the supply chain is so sophisticated in China that they have the factory sew in the labeling and the pricing and the tagging to save time and money.

Speaker 12 So this person has to figure out a way to get down there and undo everything on the products. What does that mean? This person has stopped all shipments from China.

Speaker 12 By the way, unlike many people in the Republicans or people in the Trump administration, my anecdotes are actually true. I'm not lying.

Speaker 12 Second person I talked to, oh, and what is this person doing? It stopped all shipments from China, too expensive, and is going to have to reduce their inventory.

Speaker 12 Their inventory is going to go down, which means not only are the products with this huge tariff going to be marked up, but this person is also going to have to increase their prices to try and get some of that money back with lower supply.

Speaker 12 Maybe she can have

Speaker 12 more elastic pricing, increased prices. So prices are going up, see above, inflation.
But then this person's going to run out of product.

Speaker 12 Then this person also in their next quarterly earnings call is going to have to puke all over the earnings call because this person all of a sudden has to say, well, there was this $14.5 million expense we weren't even planning on.

Speaker 12 That comes right off the bottom line, folks. So what do you have? Oh, also some other conversations I had this weekend.
A German automobile manufacturer called, What Would You Do?

Speaker 12 I'm like, I have no fucking idea. I can't predict what this guy is going to do.
A friend of mine from the fraternity at UCLA

Speaker 12 has built this really lovely little specialty retail or specialty products company.

Speaker 12 You know, when you go to, when you go to a conference and there's branded shit everywhere and you get those, I got like 45 fucking water bottles that say Oracle or NetSuite or ZipRecruiter, and then all the banners and all the logos and the cups and everything that's branded.

Speaker 12 That's a specialty products company. He's built a really nice business, put three kids through school, employed, I think, about 120 people.
I bet it's a 10 or $20 million business. I don't know.

Speaker 12 And over the last 30 years, slowly but surely, he's told me, everything has moved to China. They just have a better supply chain and they can do shit at a lower cost, right?

Speaker 12 He stopped. He stopped all shipments.
There's no way he can turn to his customers and say, oh.

Speaker 12 This all this logo wear and these logoed fleeces and these banners and this signage for the stage, it was going to cost you $8,000. Now it's going to cost you 21.
He just can't do that.

Speaker 12 So he's going to have to eat all the contracts he's already committed to, right, while paying these tariffs. He has to come up with additional cash flow.

Speaker 12 He said, Scott, this is reminiscent, but worse, worse

Speaker 12 than COVID. It's like my business has come to an end.

Speaker 12 Literally, my business is coming to an end. My guess is he retires.
I don't think he's got...

Speaker 12 it in him to try and figure out all the new supply chain relationships and to come up with the additional capital that's going to be required to support this business moving forward at universities.

Speaker 12 What's going on? Corporations have paused hiring. What's a pause? It's called non-hiring.

Speaker 12 Because if they pause for three or six months, it's not as if when they fire up again, they double their pace of hiring.

Speaker 12 If you pause your hiring for six months, you've basically reduced hiring and employment or new employment at that company by 50% that year because they don't catch up. They just start again.

Speaker 12 And what would you do if you're a large corporation trying to figure out if and what the tariffs will be and how to to plan your business? Do you hire new people?

Speaker 12 No, you think we're just going to press a pause. The worst thing about this, well, that's not true.

Speaker 12 There's a lot of things that are shitty about this, but we've decided to declare war on everyone all at once. The piece of the calculus that is missing here is the following.

Speaker 12 You need to assess when you go to war or you have a negotiation with someone, you need to assess your strengths, right? Your own weaknesses, and then their strengths and their weaknesses.

Speaker 12 And where they have miscalculated is the following. They think their weakness is their dependence upon us.
What they miss is the following. They are not self-aware.

Speaker 12 And that is, Americans' tolerance for pain is incredibly low.

Speaker 12 Women are born with a greater tolerance for pain because they have to endure childbirth, which word has it, and I have personal experience, observational experience here, not actual experience, that in fact, it is the real deal.

Speaker 12 Especially there's a hormone that releases right after childbirth that gives women amnesia. Otherwise, they'd never fucking do it again.
We are the man in this relationship, meaning the U.S.

Speaker 12 has a a much lower tolerance for pain than China. China starves or has starved tens of millions of people when they felt it was in the best interest of the political party or the nation as a whole.

Speaker 12 We fucking freak out when we think that the final episode of The Sopranos was a mistake and start calling our cable company. This is how stupid these people are.
What do we have? Let's review.

Speaker 12 Less hiring. More expenses.
The economy is slowing, which I'm sure the president got all sorts of data points on last week. But meanwhile, interest rates are going up.

Speaker 12 If interest rates and those costs keep going up, it can chase down that consumer sentiment and that certainty. And what do we have? The uncertainty index is at a 40-year high.

Speaker 12 Consumers in America feel more uncertain right now than they did when there was a virus that killed a million people. Think about that.
Think about that. Consumer confidence is crashing.

Speaker 12 So what do we have? What do we have? Less hiring, stagflation or threats of stagflation, which is Latin for we're headed towards a depression if we're we're not careful.

Speaker 12 We have retailers who don't know how to plan their business.

Speaker 12 And we have an administration that has no ability to actually assess the current situation and what our strengths are and our weaknesses are.

Speaker 12 There is no better opponent than someone who overestimates their strengths and is aggressive and gets into the ring with you.

Speaker 12 And quite frankly, just isn't as strong or as quick as they think they are. But they have the hubris to believe that they're awesome.
So they don't train that hard. They don't think that hard.

Speaker 12 They just get in the ring and start flailing wildly. Guess what? In about three months, if not sooner, we're going to wake up and all we're going to see are bright lights.

Speaker 12 We're going to be flat on our ass staring up. And all we would have heard is the ding.
And what was that ding? Stupid tariffs. This is the definition of stupid.

Speaker 12 Okay, with respect to tariffs in today's episode, arguably one of our most important interviews, or I don't know, I think this means we're big time. We're big time.

Speaker 12 We speak with Mark Carney, Canada's 24th Prime Minister and leader of the Liberal Party, sworn in this March.

Speaker 12 We discuss with the Prime Minister the country's economic outlook, how Canada fits into a shifting global order, and whether the U.S.-Canada relationship can be repaired amid rising trade tensions.

Speaker 12 I really enjoyed this conversation with the Prime Minister. He's clearly a very intelligent guy, thoughtful.

Speaker 12 I especially

Speaker 12 enjoyed the end. I asked him some questions more personal in nature.

Speaker 12 We'll ask Prime Minister Carney his thoughts on our relationship and where we go from here.

Speaker 12 Prime Minister, where does this podcast find you?

Speaker 13 I'm in Montreal right now, Professor.

Speaker 12 The majority of the world spends their news as 10 minutes domestic and 20 minutes international. In the U.S., we're kind of self-absorbed, narcissistic.
We don't talk a lot about other countries.

Speaker 12 I think most people have heard of you, have seen you on TV, but don't know much about you. Can you give us sort of your backstory, your origin story?

Speaker 13 Sure.

Speaker 13 So I was born in the Arctic, the north of Canada, a place called Fort Smith, Northwest Territories.

Speaker 13 I grew up in Edmonton, and those who might follow hockey, it was the days of Wayne Gretzky when he was playing for the Oilers. That was when I was a kid.
I went away to university in the U.S.

Speaker 13 and then I worked on Wall Street or versions of Wall Street. I worked for Goldman Sachs in London and Tokyo and New York and ultimately Canada.

Speaker 13 And then I went in about 20 years ago to become the deputy governor of the Bank of Canada, which is the equivalent of the Federal Reserve in the U.S.,

Speaker 13 and ended up being the governor during the financial crisis of 2008.

Speaker 13 So worked with, you know, through that process of the financial crisis, we had a... quote, good financial crisis.

Speaker 13 If you can have a good financial crisis in Canada, we got through it better than anyone else, emerged stronger. Our banks stayed together.

Speaker 13 And then ultimately, kind of slightly bizarrely,

Speaker 13 I was asked to become governor of the Bank of England. So I became the first foreigners governor of the Bank of England.

Speaker 13 And I did that through the period of the Brexit referendum, as it turned out, and the aftermath of that. And then came back to Canada 2020, right in the middle of COVID.

Speaker 13 I think you probably had a better experience during COVID if I listening to your podcasts, if I read it correctly, than I did. And then

Speaker 13 I did a lot of work on climate change for the United Nations, sort of pro bono, and organizing the financial financial sector to help address climate change.

Speaker 13 But also, at the same time, I worked for Brookfield, which is a big asset manager, and I was chair of Bloomberg. And then, as of the start of January,

Speaker 13 I first ran for the leadership of the Liberal Party, which is one of the main parties here. And winning that, became prime minister about a month ago.
And now I'm running for election.

Speaker 13 We have much, last point, much shorter elections than the United States. Our campaign is 37 days, and we've got two weeks roughly left to go.

Speaker 12 So a big friend of the pod is Ian Brenner, the geopolitical strategist.

Speaker 12 And he was on the pod last week, and he described you as an open, quote, generational mind for Canada on the global stage, close quote. In your view, what role does Canada play on the global stage?

Speaker 13 So we play, I mean, we play several roles. We're a member of the G7.
In fact, we are chair of the G7 this year. So I'm chair of the G7.

Speaker 13 We're a member of the Commonwealth, Commonwealth, which is the old UK grouping. We're a member of the Francophone E, which is obviously the Francophone grouping of about 60 countries.

Speaker 13 So we have our role in several different, let's call it organizations, self-appointed organizations or groupings.

Speaker 13 I think one of the roles we play potentially in the new or the emerging global order is partly based on our assets. We are an energy, an emerging energy superpower in all forms of energy.

Speaker 13 We're one of the largest critical mineral suppliers in the world. We're pretty good in AI.
A lot of people claim that.

Speaker 13 But we're, I think, legitimately claiming that. And so we can play a role as a country that believes in

Speaker 13 open markets, open systems, believes in trade, open ideas, diversity. We can play a role with like-minded countries to kind of reconstruct

Speaker 13 that bit of the international order, which has been,

Speaker 13 I'm in Montreal, they would say boule versais.

Speaker 13 It's been upended in the course of

Speaker 13 more intensively in the last few months, but a process that really began with the financial crisis 15 years ago.

Speaker 12 Aaron Trevor Brears. And just for our listeners, the elephant in the room is tariffs, so I'm going to get to that, but I want to start with if you were to

Speaker 12 so typically in the U.S., and I imagine the same way in Canada, when a new leader is elected, assuming you get elected, they have sort of a honeymoon period and an opportunity to get more done in their first year, more grace, if you will, than in the next two or three years.

Speaker 12 What would you identify as the two or three biggest issues facing Canada, and what's your agenda?

Speaker 12 If you could pick two or three things you're really going to go hard at your first year as Prime Minister, what are those things?

Speaker 13 As you just suggested, I'll set tariffs aside and

Speaker 13 focus in on

Speaker 13 three things.

Speaker 13 First is having free trade actually within Canada. We have

Speaker 13 basically 13 economies here,

Speaker 13 10 different provinces and territories all with their own rules. It's hard to move credentials and sometimes goods and services across the country, far harder than it should be.

Speaker 13 So, a process, a very quick process of free trade.

Speaker 13 And by the way, just to put orders of magnitude on this, you know, a reasonable estimate of the economic benefit of that is bigger than the economic hit from the worst version of the Trump tariffs.

Speaker 13 So, we can kind of give ourselves more than others can. Second thing is, we have a huge housing problem here.

Speaker 13 And particularly, obviously, for younger Canadians, first and foremost, we need to double the rate of housing.

Speaker 13 And we need to, I won't go into all the details, I'm happy to, but we need some major reforms in order to do that.

Speaker 13 We can do it in a way that actually leverages the Canadian supply chain technology and all the lumber we potentially won't be able to send southbound to the U.S. And then the third thing,

Speaker 13 look, the world's fluid. I'm afraid this kind of comes towards tariffs, but

Speaker 13 I think the trading system is going to get reordered fairly quickly.

Speaker 13 And so in the course of the first year, the question is: well, who are we going to deepen our relationships with other than the United States?

Speaker 13 And those relationships, last point, are both economic and security. The world's a much more dangerous and divided place.
Security concerns are top of the list.

Speaker 13 So who in Europe or European Union as a whole, UK, who in Asia, where are we going to partnership?

Speaker 13 If I can say one last thing, Scott, is

Speaker 13 just being shaken so hard by what's happening in the United States, Canadians are very open to all of those priorities. Like people are up for big things.

Speaker 13 They're coming together and they're willing to do big things because they know they have to do big things because the world's changed so much.

Speaker 12 Well, let's use that as a segue into tariffs. So I haven't checked my Apple Watch in the last two minutes.
So I don't know the state of things right now. You're...

Speaker 12 My understanding, Canada's our largest trading partner, no?

Speaker 12 We tend to be obsessed with China, but you're our largest trading partner, no?

Speaker 13 Very most important. Yeah.
Yeah.

Speaker 12 So give us the state of play.

Speaker 12 You're the man representing our largest trading partner economically. As

Speaker 12 to the best of your knowledge, describe the state of play between what is happening between the U.S. and Canada.
Where does it sit at this moment?

Speaker 13 So I'll start with the bad news or the...

Speaker 13 as we would call it the unjustified news, which is what tariffs are in place.

Speaker 13 We have still in place today tariffs that were originally justified because of fentanyl, fentanyl coming across the border from Canada. Just for the listeners who haven't tracked this,

Speaker 13 less than 1% of the fentanyl into the United States comes from Canada.

Speaker 13 In fact, you've got a sophisticated audience, so I can say things like 19 basis points of the fentanyl comes across the border from Canada.

Speaker 13 We've taken major steps to reinforce the border, drones, helicopters, other things, and it's fallen by a further 990%

Speaker 13 over the course of the last three months. But those tariffs hit a wide range of goods in Canada, hit a wide range of goods, and there's a few carve-outs for that.

Speaker 13 But it's hitting hundreds of billions of good, and those are 25%

Speaker 13 tariffs from the United States. Then we are also caught, secondly, we're also caught in the steel and aluminum tariffs, which are this, quote,

Speaker 13 national security tariffs, so-called 232 tariffs. We are the largest supplier of aluminum in the United States.

Speaker 13 We're one of the most important suppliers of steel to the United States, and you can roll those up into hundreds of thousands of jobs in the U.S. depending on Canadian steel and aluminum.

Speaker 13 And then the third thing is we are caught in the auto tariffs. As people probably know, but I'll just personalize it.
Well, they wouldn't know this fact.

Speaker 13 There was something called the Auto Pact, which was signed the year I was born, you know, 60 years ago. And we have had an increasingly integrated auto system with the United States for 60 years.

Speaker 13 It got tighter with the Canada-U.S. Free Trade Agreement 40 years ago and then with NAFTA and the successor.
So literally, you know, these companies and the supply chains, the main parts suppliers,

Speaker 13 they are virtually fully integrated. And now, into the middle of this is coming 25% U.S.
tariffs, which are, you know, in an industry,

Speaker 13 as you know, that has 5%, 7% margins. I mean, this is absolutely damaging.
So, we have three sets of tariffs. We are not subject yet to the so-called reciprocal tariffs of the U.S.

Speaker 13 So the state of the relationship is strained, to say the least, least, because all of these tariffs are in violation of what you call USMCA. We call CUSMA, the same

Speaker 13 trade agreement.

Speaker 13 The good news or the better news is that three weeks ago or so, President Trump and I spoke and we agreed that following the Canadian election, there would be the beginning of a negotiation of

Speaker 13 a new comprehensive relationship, economic security. So

Speaker 13 we are in the queue, so to speak, for those discussions.

Speaker 12 Aaron Powell, it strikes me that these actions are about to inspire

Speaker 12 what they envision that is a tremendous amount of deal making, but dealmaking

Speaker 12 around us.

Speaker 12 That this, it just seems logical. And that's a thesis, and I want you to validate or nullify it.

Speaker 12 But if I'm a G7 nation and I have a trading partner that I used to be able to count on that was mutually very prosperous, and now I just not only can't count on them, but have no idea who I'm waking up next to, that it's an incredible motivation to start establishing dialogue with other nations.

Speaker 12 Respond to that thesis. Is Canada aggressively and actively trying to reroute around America right now?

Speaker 13 Well, I would say, you know, trade is a world of and.

Speaker 13 So, you know,

Speaker 13 it's a positive sum game, as you know.

Speaker 13 You do it right, both sides win. It's not a zero-sum game.
So I might not choose the phrase around America, but obviously, you know, look,

Speaker 13 if we've got excess capacity or we have things we're going to develop, I'll use the example of critical minerals, where we're a big player,

Speaker 13 with whom are we going to trade? Who can we rely on? You know,

Speaker 13 we're sitting here, we supply 70% of the potash to the United States, one of the most important components of fertilizer. 70%.

Speaker 13 And there is a 25% tariff being put on potash.

Speaker 13 So when you think about it, well, geez, maybe I might want to take another, I'll call it a commodity, even though critical metals and minerals are more than that.

Speaker 13 If we're going to develop those, maybe we want to develop them with a supply chain to someone who's not going to slap a tariff like that on. So that I'm validating your thesis.

Speaker 13 Yeah, we have begun to intensify discussions with other countries, other trading blocs. We have a pretty good set of

Speaker 13 trade deals in place. We have a free trade deal with Europe.
We have free trade deal. We're part of

Speaker 13 what was called the Trans-Pacific Partnership in Asia. So we have a number of those, but we're looking to reinforce them.

Speaker 13 And look,

Speaker 13 we are hopeful, maybe hopeful isn't the right word, but we're open to, open is a better way to put it, to

Speaker 13 a restart of the U.S. trading relationship,

Speaker 13 provided there's willingness on the other side, and we can come to one of those

Speaker 13 positive sum deals.

Speaker 12 So I would imagine you speak to a lot of other G7 leaders or G20 leaders. What's the general consensus around American leadership right now?

Speaker 12 And I realize that you have more restraint and are a bit more or tangibly more diplomatic, but

Speaker 12 what is the thesis among this group of world leaders around what is going on here?

Speaker 12 How do they explain it? How do you explain it to each other, or can you explain it to each other? Because quite frankly, here in the U.S., a lot of this doesn't even make sense to us.

Speaker 12 And this is our leadership.

Speaker 13 Aaron Ross Powell, Aaron. Well, I think the first thing is to recognize,

Speaker 13 as I have said, and a number of those other leaders have said, including G7 leaders, is that the system as we knew it is over, right? When the anchor of the system

Speaker 13 has done a series of measures that the U.S.

Speaker 13 has done, but also set out a series of objectives, and I'll come back to that, but set out a series of objectives that are just inconsistent with the way the system has been operating for decades, right?

Speaker 13 Basically, since the fall of the Berlin Wall, intensified since then. So, you recognize that that system anchored on the U.S.
is over. That then leads to how do you react to it?

Speaker 13 There's partly the negotiation with the U.S., which you've been focused on, but then it's also how do we deal with each other, which we've also touched on. In terms of what the U.S.

Speaker 13 is trying to accomplish, I think it's, you know, I take, go back to

Speaker 13 Peter Thiel of 10 years ago saying, take Donald Trump literally and seriously, but take him literally and seriously. And, you know, they're looking to

Speaker 13 balance

Speaker 13 to the extent possible to balance trade, which is not the way we think about things, but is the way the U.S. thinks about things.
And you do get into odd situations like Canada where we actually run a

Speaker 13 America has a trade surplus with Canada in goods. The only reason there's an overall deficit with Canada is because of basically oil imports.

Speaker 13 Well, if you don't want our oil imports, that will be a bit of a problem problem for a period of time because

Speaker 13 the only other option for the refineries that take Canadian oil is Venezuela. And that's, you know, they've just banned those imports as well.
So

Speaker 13 it's not, the logic isn't entirely consistent, let's put it that way. But I think at the core, recognizing this desire for more balanced trade.
And so from the U.S.

Speaker 13 administration, question, I think in our mind is there are some industries, autos particularly, aerospace would have another element of this, and then a number of commodity,

Speaker 13 a couple of industries that are so integrated that it's hard to see why for U.S. competitiveness, let alone North American competitiveness, it makes sense to pull them apart.

Speaker 13 That would be our argument. And then there's other industries, forest products, steel, aluminum, as three big examples, where we're

Speaker 13 agriculture, potash, I gave that example, Nickel, I could go on, where we're such huge suppliers and such a safe, secure supplier, again, it doesn't really, to us, make sense that that would be displaced or tariffed.

Speaker 13 So

Speaker 13 we've seen that this, the trade policy is evolving as some of these choke points become more evident. And

Speaker 13 I suspect we will see more. Maybe I'll say one other thing, if I could, which is

Speaker 13 it strikes me a bit

Speaker 13 in the consistencies of U.S. policy is a desire to have some minimum tariff, if possible,

Speaker 13 which

Speaker 13 has a revenue-raising element to it, and I think tied into U.S. tax policy.

Speaker 13 That is also a possibility here.

Speaker 12 My understanding is about 99% of our trade is tariff-free, and that 1% is around things like dairy. Haven't we largely been kind of a trade-free zone between Canada and the U.S.
today?

Speaker 13 Yeah, yeah, we have. And then we have, you know, like any trading partners, you get the odd trade irritant and, you know, a trade dispute, but we have processes to deal with those.
And so we had a,

Speaker 13 you know, we have

Speaker 13 ongoing things around forest products, sometimes steel and aluminum, and that's handled. But yeah, trade is basically tariff-free.
And

Speaker 13 when it's your biggest trading partner, pulling that apart

Speaker 13 is quite costly. It's costly for both.

Speaker 13 From a Canadian perspective, and I'm out on the road, I'm running for office. I'm talking to lots of Canadians up and down.

Speaker 13 There is a very strong sense of, yeah, this is going to cost us, but we are willing to take the price to restructure our economy in a different direction. Like it's been such a sense of,

Speaker 13 I mean, the word that's used is betrayal. So, you know, we signed a deal.
We've had this partnership. We observe it in good faith.
We set up businesses. We, you know, we know lots of Americans.

Speaker 13 We like Americans. We listen to American podcasts.
You know, there's such a thing.

Speaker 13 And all of a sudden, you know, we get these, you know, these attacks, which is the way this is viewed, is okay, so it's going to cost us for a period of time, and we'll build out and build with others.

Speaker 12 We'll be right back after a quick break.

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Speaker 12 You were the first non-Brit to serve to run the Bank of England. You're sort of the Beau Jackson of global economic leadership.

Speaker 12 I've compared this, and it might be a crude analogy, but I want you to... I want you to add some color, fill in the blanks here.
I've described these tariffs as the biggest own goal since Brexit.

Speaker 12 What similarities do you see and how does that inform, A, how you respond to this and B, what you think ultimately the outcome is?

Speaker 13 Well, I think

Speaker 13 there are a lot of similarities and it starts with the economics, the economics of what's happening.

Speaker 12 Actually, briefly describe Brexit because just give us the headline news on Brexit.

Speaker 13 So the headline on Brexit is for a variety of reasons and many of them not to do with economics, although it was sold as an economic win.

Speaker 13 But a lot of people, because of reasons of identity and others, voted

Speaker 13 in 2018, if I'll get my dates right, 2016, I guess, no,

Speaker 13 for the UK to leave the European Union.

Speaker 13 And the UK was even more tightly bound in trade and economic relationships with the European Union than Canada is with the United States, including free movement of labor, easy movement of capital, huge trade going both ways.

Speaker 13 And you never had to get your product. If your product met the product standard in the UK, didn't have to worry about it.
You could sell to any country in Europe.

Speaker 13 And so the decision taken, as I say, for a variety of reasons, narrowly, but taken to leave the European Union.

Speaker 13 And I remember when it happened in our view at the time, and remember, this was during a period where it was interest rates were at rock bottom, inflation was too low, people were worried about deflation, blah, blah, blah our view was, okay, what's going to happen is the economy is going to slow.

Speaker 13 Unemployment is going to go up. Inflation is going to go up.
And we at the Bank of England are going to have to raise interest rates when this happens. And by the way, the currency will also go down.

Speaker 13 The currency went down by 20, 25%.

Speaker 13 It's still on the floor relative to where it was, still on the floor because you had a big negative trade shock, a big loss of wealth, basically, future wealth, and the currency market priced it first.

Speaker 13 And exactly what we expected to happen happened. I mean, it happened to happen roughly at the same time as COVID was finishing, but you had a big,

Speaker 13 again, I'm relying on your audience, a big negative supply shock to the economy because you ripped up trading relationships and the productive capacity went down relative to where demand was.

Speaker 13 So that was inflationary. And the combination of that meant UK rates are higher and it's got a bigger inflation problem.
It has had than other economies.

Speaker 13 When you look at what's happening in the U.S., the friction put into its trading relationships is going to cause the same thing. It is going to slow the rate of growth of that economy.

Speaker 13 It is going to affect the dollar. It has affected the dollar negatively, as we've seen.
It's going to push up prices on the margin.

Speaker 13 And so slower economy, higher inflation, higher interest rates, all things being equal. Now, there's a big caveat with what I did, or there's a qualifier is a better way to put it.

Speaker 13 The UK was a much more open economy, much more dependent on Europe. The US is more of a closed economy.
It depends on the world, but it is... It's different orders of magnitude.

Speaker 13 So it's same direction, different orders of magnitude. So I think there are lot of a lot of parallels here.
And I guess maybe the other parallel, if I can add one more, which remains to be seen.

Speaker 13 But the UK, I would say, and I'll get hate mail from UK, some UK listeners, but I would say, based on the polling, it's pretty well understood that the economic impact of Brexit has been negative in the UK.

Speaker 13 Let's say two-thirds of the people now understand that. But the path back to being closer to Europe is very difficult politically.
It's hard to rebuild that consensus. They move very slowly.

Speaker 13 And you think about the situation in the world right now for the UK, boy, there's a lot of logic being closer to Europe

Speaker 13 from

Speaker 13 trade perspective and even from a security perspective. They built this sort of what's called a coalition of the willing with respect to Ukraine because

Speaker 13 the U.S. is pulling back from support for Ukraine.
By the way, Canada has stepped up and is part of that largely European coalition of the willing alongside Australia.

Speaker 13 So there's a logic to going back to that, but it's hard to go back once you've broken up these relationships.

Speaker 13 And, you know, so the next six, 12 months, in my judgment, are going to be quite important for the United States and for the global trading system because the question is, okay, we understand that

Speaker 13 there is a big change, a big break with the old system, but how much of a break is it going to be?

Speaker 13 And is there going to be a relatively open trading system for, I'm using quotations here for those listening, like-minded like-minded countries, broadly like-minded countries.

Speaker 13 You know, I think of the G7 as being pretty like-minded countries, not surprisingly. You know, we value liberty, free speech, open markets in general.

Speaker 13 So are we going to have a relatively open system amongst ourselves? Or is it only going to be with a few countries, or is it going to be with no countries?

Speaker 13 I mean, that's kind of what to play for here.

Speaker 13 But the system won't, it won't revert to what it was previously.

Speaker 12 Aaron Powell, Jr.: When we're talking about these tariffs, there's a general sense that,

Speaker 12 or Alyssa,

Speaker 12 a talk track from the Trump administration that the U.S.

Speaker 12 has been taken advantage of by its trading partners, including Canada, that they've just got the better end of the deal, and that tariffs will help restore some sort of parity or equity in the relationship.

Speaker 12 Respond to that.

Speaker 13 Well, I mean, we don't obviously we don't see it.

Speaker 13 We don't see it in the following respects because really, again, the way the Trump administration has defined being, quote, taken advantage of is, do you run a trade deficit?

Speaker 13 And we can argue about that definition. I wouldn't, if I lean on my economic training and my experience, I would say, well, that isn't being taken advantage of.

Speaker 13 It's mutual exchange. But the U.S.
runs a surplus with us. The U.S.
sells more to what, if anyone's being taken advantage of, we're being taken advantage of, right?

Speaker 13 Because, I mean, by that definition. And the only place where they run a deficit is, yes, we do ship oil to the United States.

Speaker 13 Now, we happen to ship oil to the United States at a big discount to global prices. So we're being taken advantage of, again, on that definition,

Speaker 13 on the, on the goods trade side. And we're getting taken advantage because we're selling oil at below good prices.
So we, you know. we we want our money back.
No, we don't.

Speaker 13 We still see the broader benefits of the relationship. And, you know, I don't think that that I'll go back to the auto sector.

Speaker 13 It's not going to feel taken advantage of.

Speaker 13 As if these tariffs stay in place. And, you know, as you say, you got to check

Speaker 13 your phone every once in a while just to see where things stand.

Speaker 13 There's a possible exemption on the auto part side that's coming in in the United States,

Speaker 13 which we would have said right, well, we did say right from the start would have to happen because the whole system will grind to a halt without it.

Speaker 13 So some of the mutual advantages will become more, are becoming more apparent, and hopefully

Speaker 13 the U.S. administration can continue to be nimble.

Speaker 12 My understanding is that you ship us cheap energy or cheap oil. You're obviously a very resource-abundant nation.
We apply our IP and refining capability and then we sell it at three times the cost.

Speaker 12 It sounds like it's been pretty mutually beneficial.

Speaker 13 Yep, no, that's absolutely right.

Speaker 12 How do you see this playing out? If you were tempted to speculate what the relationship is around global trade and tariffs on a macro level and then specifically with Canada and the U.S.,

Speaker 12 when you try to plan an economy similar to the way the CEO tries to plan a business, what are you expecting? You have to do scenario planning. Nobody knows.

Speaker 12 But what do you think are the most likely scenarios for how this plays out? Because I mean, this and seriously, Prime Minister, we're all befuddled by this.

Speaker 12 The majority of people who understand economics are are having a difficult time seeing how this is a big win for the U.S. We're just having a difficult time understanding how we win here.

Speaker 12 Maybe more people come to the day. They claim there's 75 nations lining up to cut deals with them.

Speaker 12 Is that the sense you get that nations are lining up to cut a deal with us right now?

Speaker 13 Well, a short answer,

Speaker 13 I don't know, is on that second question.

Speaker 13 There's a few things that happen here. One is that

Speaker 13 there's a risk premium in U.S. assets that wasn't there before.

Speaker 13 And the question is, how big is that risk premium going to settle? Where is it going to sell?

Speaker 13 And that, in part, is going to depend on how coherent the new system is.

Speaker 13 And

Speaker 13 does the U.S. credibly commit to a new system or a series of deals? Remember,

Speaker 13 we have a trading deal with the U.S. that was signed by the the current president,

Speaker 13 which isn't being observed. So I think that's one thing is there's a risk premium on U.S.
assets. And if there's a risk premium on U.S.

Speaker 13 assets, then the cost of all other assets around the world is greater, right? Like since we're still

Speaker 13 priced off of U.S. Treasuries, for example.
So that's one thing. I think the second is

Speaker 13 I do believe that there are a series of like-minded countries. We very much like the U.S.

Speaker 13 to be part of that group, but like-minded countries who will develop deeper trading and security relationships as a consequence of this.

Speaker 13 It's the world of second best. It's not what we would all want, but it's the logical thing to do.
Third thing that's going to happen is that

Speaker 13 there is going to be much greater focus, and I know this for a fact, and well, this will be a fact if

Speaker 13 my party is successful in the elections, a much greater focus on domestic drivers of demand. So building at home, building big infrastructure, building millions of houses,

Speaker 13 building out our own economies,

Speaker 13 more

Speaker 13 domestic procurement, right? In a world where we've got excess steel and aluminum capacity, which we will if the U.S. doesn't change on trade, well, guess whose steel and aluminum we're going to buy

Speaker 13 for a variety of things? Guess what defense procurement we're going to do?

Speaker 13 Right now, we spend about 75% of our defense dollars go to the United States.

Speaker 13 That

Speaker 13 doesn't make a lot of sense if we settle out in a more

Speaker 13 arm's length relationship with the US. And that's true.
If it's true for us, it's true for Europe. It's true for the UK.

Speaker 13 And so we'll all move more domestic and more with each other. And the degree to which that happens.

Speaker 13 So this is a world, just to be clear, and I think you intuitively understand what you get this from the start.

Speaker 13 We've got a world where we have higher risk premia, right? Cost of capital is more expensive. And we've got a world where people are doing second best things.
Countries are doing second best things.

Speaker 13 So it's a world that's more expensive.

Speaker 13 And it's more, it's not autarkic, to use a fancy word, like it's not totally in and of yourself, but it's, you're putting much greater emphasis on taking care of yourself.

Speaker 13 We'll do that. And we'll do it with like-minded countries and

Speaker 13 move forward.

Speaker 12 The surveys I've read said that two-thirds of Americans still think of Canada as an ally. We're sort of like, oh, you know, Trump, let boys will be boys.
We still love Canadians.

Speaker 12 But two-thirds plus of Canadians no longer see the U.S. as an ally.
I mean, quite frankly, it feels like Canadians are just pissed off that they feel the term used was betrayed. And that

Speaker 12 even if we're able to establish, go back to normal, hasn't the knife, you know, isn't it the knife gets pulled halfway out of the back, but this injury takes years or decades to fail?

Speaker 12 I mean, what is the vibe, if you will, around

Speaker 12 how Canadians feel about Americans? And how long do you think

Speaker 12 it takes us to repair this relationship?

Speaker 13 I certainly recognize those figures.

Speaker 13 There is a feeling here that

Speaker 13 it's the actions of the U.S. There's several things.
One is the trade actions.

Speaker 13 Secondly, was this long period, and I'm not going to repeat the phrases that were used, but these threats to our sovereignty, our very sovereignty, which, you know, kind of unique.

Speaker 13 There's us in Denmark who've suffered actual threats to sovereignty. I guess Panama, we roll ourselves in with that.

Speaker 13 And that's, you know, on your hierarchy of betrayals, threatening somebody else's sovereignty is pretty much the top.

Speaker 13 I guess the top is acting on that threat.

Speaker 13 So

Speaker 13 that's all mixed in. I think, secondly, what has been striking has been the relatively muted response in the broader

Speaker 13 U.S.

Speaker 13 to these steps, right?

Speaker 13 You know, the CEO class, if I can put it that way, the other major influencers, stakeholders, and the,

Speaker 13 uh, that's changing a bit, but it was pretty quiet for a long period of time.

Speaker 13 Um, so, you know, and when you look at that from this side of the border, you think, oh, okay, well, this is more deeply held or the friendship is less firmly rooted. It's like any relationship.

Speaker 13 I think if it's when you have a lost of trust, it, you know, it can be repaired to a degree. It takes a period of time and it takes action to repair.

Speaker 13 It's more than fine words.

Speaker 13 I think that that action can start with

Speaker 13 in May, the Prime Minister of Canada at that point will meet with President Trump. I want to be the Prime Minister of Canada at that point.
I'm working hard to get there.

Speaker 13 And they will sit down and start a process of redefining that relationship and building trust out from that.

Speaker 13 We'll be right back.

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Speaker 12 We're back with more from Prime Minister Carney.

Speaker 12 So, just as a means of not or taking advantage of the fact that we have

Speaker 12 you on this podcast. We have real problems in the U.S.
around income inequality.

Speaker 12 For the first time in our nation's history, a 30-year-old isn't doing as well as her parents was at 30.

Speaker 12 Tremendous polarization politically. People just don't like each other.
I mean, I would argue that comparatively the nation's actually done quite well. But

Speaker 12 what ails us, the call is coming from inside of the house. We don't like each other within America.

Speaker 12 You're asked to be a journeyman and come be Treasury Secretary or head of the Fed. What policy plans do you think the U.S.
should adopt?

Speaker 12 And then I want to use that as a jumping off point to what are the biggest economic challenges that Canada faces and how you plan to address them.

Speaker 13 Well, I think the okay.

Speaker 13 You go to the heart of the I mean, that's a big, big question. I guess the way I look at it as follows.

Speaker 13 I'm going to come at this from an odd angle, maybe, but when I look at what's going to drive economic prosperity, productivity, growth for the next 25 years. What are the big drivers of that?

Speaker 13 I put down three big drivers. AI, no insight, I'd put at the top of the list.
Probably the life sciences revolution, where I'm less expert.

Speaker 13 And

Speaker 13 I would put carbon. I would put drive towards lower carbon.
The U.S. has taken a step back from that for the moment, but it's going to come back because the underlying issues around are there.
And so,

Speaker 13 okay, if those are some of the big things that are going to drive economies going forward, and the U.S. can have mastery in all of those.

Speaker 13 But the question is how broadly that's going to be shared within the U.S.

Speaker 13 across various social strata

Speaker 13 and how ready people are going to be to take advantage of it, right? So, you know, is AI going to be

Speaker 13 purely an elite or largely an elite operation or is AI going to be used to train a lot of people to do a number of things? I mean, I know that sounds very Panglossian or

Speaker 13 techno-optimistic, but it is the question is whether it's a deliberate policy that's steered by the federal and local governments in a way that are going to ensure that

Speaker 13 in Appalachia, you're learning skills that are consistent with that.

Speaker 13 And or the energy transition over time, it's not a term that's used anymore in the U.S., as far as I can tell, but it will come back.

Speaker 13 If I can flip it back, Scott, to us, we have the same set of issues or set of drivers. Those are global drivers.
On top of that, we have a series of things such as I mentioned critical minerals.

Speaker 13 We have large conventional energy. So how are we balancing all that in a way that builds the jobs as we move out? One of the things, I'll say two other things, which are related but distinct.

Speaker 13 We got to sort out our housing issues in this country.

Speaker 13 We have a massive economic, we have a absolute social need, but we have a massive economic opportunity to create a new industry, new way of building houses and at scale and driving that.

Speaker 13 And we're going to shoot on that. And I guess the last thing thing I'd say, which

Speaker 13 candidly worries me a bit about the United States

Speaker 13 and gives me greater comfort or strength in Canada, is a word I'm not sure you like to use anymore, which is around diversity.

Speaker 13 We have a huge, huge opportunity here because we're one of the most diverse countries in the world. We value diversity.
We have a very strong sense of equal rights in a broad sense.

Speaker 13 We can be a magnet for talent. And as the U.S.
is pushing out brains, if you will, and you know, it's quite a hostile environment in the academic world in the United States now,

Speaker 13 we can take advantage of that.

Speaker 13 And then that cascades down through the AI revolution, life sciences,

Speaker 13 other

Speaker 13 elements. Podcasters, creative class.
Scott, come up here.

Speaker 13 It's now above zero.

Speaker 12 Creative has done a lot of work in that suttons, Prime Minister.

Speaker 13 So the

Speaker 12 look, you have a housing crisis, we have a housing crisis, and it seems like leaders have agreed that it's a crisis for the last 10 years.

Speaker 12 I read that housing in Vancouver as a percentage of the average salary as the third most expensive city in the world,

Speaker 12 and that so much of it is in zoning and NIMBYism.

Speaker 12 And

Speaker 12 the previous Prime Minister, you know, they wanted to address the housing crisis. What's the friction point? Is it capital? Is it labor? Is it zoning?

Speaker 12 What is different about what you're proposing that is going to register any more progress than previous administrations?

Speaker 13 So it's all of the above.

Speaker 13 And so you attack it in a comprehensive way.

Speaker 13 I'm going to simplify in terms of restriction, zoning, development charges. And we work at multiple levels of government.
It's part of the reason why those costs are there.

Speaker 13 They come from the municipal side. And so, in effect, we put up a bunch of money, just put up a bunch of money to commit to cut the development charges in half.
Okay.

Speaker 13 So that, and that's subject to a series of other restrictions being removed. But we will, we, at the federal level will pay for that to be cut in half.

Speaker 13 The second thing, I mean, we believe very strongly that

Speaker 13 productivity in the Canadian housing sector, construction sector, basically has flatlined for the last 20 years. We're still building houses like we did before.

Speaker 13 And given the scale of what we need to do, we got to move much more rapidly, particularly in urban density and other things.

Speaker 13 So, you know, modular prefab housing, mass timber, other innovations that are there, they exist.

Speaker 13 And so one of the things we're going to do to kickstart that industry, and this is Canada's not the United States, we have a different attitude toward these things.

Speaker 13 We have a problem with deeply affordable housing, right? Social, certain countries you might call social housing.

Speaker 13 We just have not built that for decades, basically, in effect. And so

Speaker 13 we need to catch up. And so what we're doing, part of what we're doing is we're going to build a huge amount at that level and set the the the the specs, if you will, for that.

Speaker 13 We're going to build and we're going to build

Speaker 13 on our balance sheet as a developer, and we'll set the specs for that, which drive the industry upstream in prefab, mass timber, et cetera, which gets the economies to scale there.

Speaker 13 But by and large, we will rely on private sector build.

Speaker 13 We'll make a bunch of land available, we'll make cheap capital, 25 billion for developers in this case, which is bigger money up here, cut those development charges in half, drive that, and then we will give tax breaks to people buying their first-time home.

Speaker 13 So basically, they're getting 5% off their first-time home, which, you know, from a down payment perspective,

Speaker 13 starts to add up. So we're attacking it both on the supply-demand side.
The way we look at it is

Speaker 13 this is generational. Like the scale of the problem is generational, such that we are building out a huge pipeline of apprentices in the skilled trades.

Speaker 13 And one of the core core messages I give virtually every time I speak, so I'm going to do it now, is this is going to be a great time for a career in the skilled trades in Canada because we're going to build for the next 25, 30 years.

Speaker 13 Like we are going to add, if we get this right and we intend to, three to four points of GDP of investment. That's a huge number, right? It's possible.

Speaker 13 We used to invest at that scale relative to GDP in the early 70s. We can do it again.
You know, we can finance it.

Speaker 13 We got all the pension funds. We've got lots of money to finance it, but

Speaker 13 we need to kickstart it. And of course, it's not, it's housing.
We start with housing. It's not just housing.
It's energy. It's other elements.
But that's what we're going to do.

Speaker 13 So we want to get young people into the skilled trades at scale. We're going to pay for all their apprenticeships.
We're going to work with the unions to pull them through.

Speaker 13 We're adding a bunch of capacity at post-secondary education so they can get these trades at a scale. So we're getting hundreds of thousands, which again, In the U.S.

Speaker 13 doesn't seem like a lot, but in Canada, these are big numbers.

Speaker 12 Let's talk a little bit about climate and energy. You've evolved from being a climate finance advocate to scrapping the consumer carbon tax and calling for Canada to be an energy superpower.

Speaker 12 How have your views changed on this?

Speaker 13 I wouldn't say my views have changed, to be honest. So, I mean,

Speaker 13 it's very results-oriented. So, the consumer carbon tax in Canada was responsible for about 6% of our emissions reductions.
So, 94% of the work was being done elsewhere.

Speaker 13 Now it sent a signal to households, but it just wasn't

Speaker 13 that important.

Speaker 13 But it was quite divisive because people

Speaker 13 viewed it as a tax and they saw the tax with the tax. They didn't all give credit to the rebates that they were getting.
So politically, it was unhelpful, was undercutting the overall message.

Speaker 13 So we got rid of that

Speaker 13 a few months ago. It was the first thing I did, actually, when I got into office.

Speaker 13 But

Speaker 13 what we are doing is making sure that the carbon market for large emitters works well.

Speaker 13 So, and that

Speaker 13 and we're large emitters work well.

Speaker 13 And as a consequence of that, we're getting them in effect to pay people for, this is what will happen if we're elected, to pay people for driving EVs, retrofitting their homes,

Speaker 13 the other climate-smart choices. And then, on top of that, there is a big element,

Speaker 13 a big IRA-type element to our climate strategy, investment tax credits and others.

Speaker 13 So we're looking basically and having reasonable success with this, where we're putting out a dollar federally and we're getting $4 to $5 of private investment on top of that.

Speaker 13 And

Speaker 13 what's really relevant to us, aside from caring about the climate, and people up here do care about the climate as a whole,

Speaker 13 is that we think that this is going to be a fundamental driver of competitiveness. And if you look at who we're going to be trading with more over time, Europeans, the Brits, others, guess what?

Speaker 13 They care about this. In fact, as you know, a carbon border adjustment mechanism is coming in Europe.

Speaker 13 And so we take a view that, okay, we've got to do this medium, long term for competitiveness because that's where the world's going. Secondly, the Europeans and others are going to want us to do this.

Speaker 13 Thirdly, actually, we've got a lot of the technology. So part of being an energy superpower is around small modular reactors.

Speaker 13 I mean, we're a big hydropower. We're decent on hydrogen.
We could get better carbon capture and storage. All these things we can do.
And I guess the last point, which goes back to the U.S.,

Speaker 13 is, you know, right now, and I'm going to grossly generalize, the U.S. doesn't care about climate.
Six months ago, it cared about climate. Guess what?

Speaker 13 You're going to care about climate again down the road.

Speaker 13 And when you care about climate down the road again, we want to be in a position where we're much more competitive and maybe have leapfrogged a number of U.S. companies.

Speaker 12 So I just want to do a quick lightning round. Advice to your 25-year-old self.
You had 10, 15 seconds with your 25-year-old self. What would you say to yourself?

Speaker 13 You know, relax

Speaker 13 and stay focused on what you like. I mean, I've probably spent more time doing things I didn't really love than I should have.

Speaker 12 You got a chance to go back and meet with someone who you've lost or who's no longer around. Who would that person be? And what would you say to them?

Speaker 13 Well, I think with, you know,

Speaker 13 be my father. I'd say love him

Speaker 12 you're at the end of your life not going to walk on the beach again not going to get to hang out with your wife your kids what does success look like for you when you when you look back what is the box you want to have checked

Speaker 13 i think strongly the answer to that is

Speaker 13 that you're

Speaker 13 you're proud of the values of of your children and people who worked with you.

Speaker 13 I mean, I think that is the only real legacy, the extent to which you have influenced how others treat others in the world and

Speaker 13 how they react in the world.

Speaker 13 I wrote a book, and

Speaker 13 that was the conclusion of.

Speaker 12 Mark Carney is Canada's 24th Prime Minister and leader of the Liberal Party, sworn in this March.

Speaker 12 As an economist, Prime Minister Carney steered the Bank of Canada through the financial crisis and later became the first non-Brit to run the Bank of England.

Speaker 12 Between those roles, he served as UN Special Envoy to Climate Action Finance and as Vice Chair of Brookfield Asset Management. I trust a lot of Canadians are listening.

Speaker 12 And I feel comfortable speaking for a lot of people, and that is,

Speaker 12 Americans understand the largest undefended border in the world is the U.S.-Canadian border. That's for a reason.

Speaker 12 I love that question that Warren Buffett's friend, who's a Holocaust survivor, said, the way I judge my friends is, I asked one question, who would hide me?

Speaker 12 A lot of Americans remember that Canadians hit Americans in the Iran hostage crisis.

Speaker 12 And I hope that your listeners and your voters recognize there is a huge swath of Americans that think of you not as not even as a friend, but as siblings. And that

Speaker 12 we hope

Speaker 12 and are committed to maintaining what is arguably one of the strongest alliances in history.

Speaker 12 That I don't want to say don't take what's going on seriously, you have to, but there are a lot of Americans down here

Speaker 12 who are brothers and sisters in arms in Canada. We really do think of you as

Speaker 12 a sibling.

Speaker 13 Thank you, Scott.

Speaker 12 Algebra of happiness, porn.

Speaker 12 It's something there's not a lot of research on because no one wants to be known as the porn professor. I spoke with Dr.
Anna Lemke,

Speaker 12 I believe, on this podcast. And it strikes me I'm I'm meeting more and more people who are struggling with an addiction to porn.

Speaker 12 And what I would suggest is to tell people not to engage in porn is a little bit unrealistic.

Speaker 12 That's like telling someone to go stop drinking, which my doctor told me when I had high blood pressure a few months ago. And I'm like, yeah, that's going to happen.
I'll reduce my drinking.

Speaker 12 Why do we stop there? Anyways, it's not about my high blood pressure, which, by the way, is under control now. That's good news.
Hard to imagine me with high blood pressure at the age of 40, 60.

Speaker 12 Anyways,

Speaker 12 I think sexual desire and that want and that hunger, if channeled correctly, can make you a much better man. And the last thing you want to do is reduce that fire and that hunger.

Speaker 12 And that is wanting to mate, wanting to be attractive such that you can find a partner to have a relationship and ultimately possibly have sex with.

Speaker 12 I think if channeled correctly, and it usually, in my opinion, usually is channeled correctly, can make you want to be and become a better man.

Speaker 12 And so anything that dampens those fires, whether it's additional porn consumption or depression, that's just a bad idea because life is about taking risks.

Speaker 12 And because women pay a much greater downside or have much greater downside risk from sex, specifically pregnancy than men,

Speaker 12 I mean, they're in it for 25 years if they get pregnant. We're in it for at least seven seconds, right?

Speaker 12 And I'm not suggesting anyone engage in male abandonment, but the downside risks from women are just much greater. So as a result, they have a much finer filter, meaning they are choosier than men.

Speaker 12 Okay, fine. But there's an upside to that.
And that is if you want to have a relationship with somebody, it forces you or inspires you to be a better man. Maybe you work out a little bit more.

Speaker 12 Maybe you have a plan. You articulate a plan around economic viability.
Maybe you learn how to open. You learn how to take risks.

Speaker 12 The most frightening piece of data I've seen recently is that 51% of men, 18 to 24, have never asked a woman out in person.

Speaker 13 That is so upsetting for me.

Speaker 12 I just, I think a lot of the skills you develop and the characteristics you develop around trying to find a mate make you a better man across a number of dimensions. You develop a sense of resilience.

Speaker 12 If you want to ask a lot of women out, get used to rejection. And if you want to be successful in the world of mating, much less professionally, get used to rejection.
That is a skill.

Speaker 12 Learn how to talk to strangers. Learn how to open.
Learn how to smell nice. Learn how to not have bad breath.
Learn how to groom yourself.

Speaker 12 Be able to articulate a plan for why you might someday be able to take care of children. Show that you're disciplined and you work out, which means you show up.
These things make you a better man.

Speaker 12 And anything that reduces the hunger, the desire, the drive, the fire to make you a better man, you want to modulate it.

Speaker 12 In sum, I'm not going to tell you not to consume porn, but My brothers, you want that fire to stay alive.

Speaker 12 I think a big part of the reason I graduated from college, quite frankly, is I used to go on campus every day because I wanted to see my friends at North Campus at UCLA.

Speaker 12 And also, there was a non-zero probability that I might meet someone that ultimately I might have a romantic relationship with. And that was very motivating.

Speaker 12 And had I had on-demand porn on my phone and my computer, I don't know if I would have gone on campus as much.

Speaker 12 And with a 2.27 GPA, it wouldn't have taken a lot of less campus presence for me not to have graduated from college. So, what's the bottom line? Porn, okay,

Speaker 12 but modulate. That fire, that desire can be channeled and should be channeled into making you a better man.

Speaker 12 This episode was produced by Jennifer Sanchez. Our intern is Dan Shallon.
Drew Burroughs is our technical director. Thank you for listening to the Profit Pod from the Box Media Podcast Network.

Speaker 12 We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn. And please follow our Profit Markets pod wherever you get your pods for new episodes every Monday and Thursday.

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