Bocar Dia 🇨🇦

New rule: as long as a government is in a fiscal deficit, the media has to substitute the word with "taxpayers" for any spending program announcement. Headlines read very differently once you make this one small adjustment.

Democracy in #Canada: in the last federal election 8,595,488 Canadians voted Liberal and 8,113,484 voted Conservative: a difference of 482,004 votes or 2.45%. A few floor-crossers and a couple bi-elections in April and Carney is likely to get 172 seats vs. 141 conservative seats. A  majority government with a 31 seat advantage that gets to govern uncontested. In the 2021 elections 190,781 more Canadians voted Conservative than voted Liberal before Trudeau cut a deal with the NDP. If you don’t understand why conservative voters are frustrated, ask yourself what 11 years of Liberal rule has objectively accomplished, and how you would feel if you were on the other side of this.

If you want to listen to an insightful conversation on US-Canada trade and #USMCA negotiations, Listen to this podcast from @TheHubCanada with @Sean_Speer and @oren_cass You will learn more in 45mn than 100 hours of Trump-obsessed content from @CBCNews youtu.be/qWFH40mzqFE?si=Hv1m…

Unpopular opinion: While Mark Carney’s #Davos speech this week was very good and well articulated, it may not have been a smart speech to give in the middle of a #USMCA trade deal negotiation given the July 1st review and built-in sunset clause. The fact of the matter is that the US still represents ~75% of #Canada’s trade. Antagonizing the US president and indicating a rupture in relations may lead to a very negative USMCA outcome - this following an EV deal with China and other moves on the international stage that were not seen favourably by the current US administration. I fear we may look back on this moment and realize that #Carney traded years of further economic pain for Canadians for ten seconds of intentional fame. We should tend to our garden first. It’s been a year of what was supposed to be a “changed” Liberal Party and from where I am sitting I have yet to see tangible actions and/or results that are a departure from the past 10 years. This may play well with the boomer base but Canadians (especially young Canadians) are in “show me” mode - more speeches, more big spending programs and flashy announcements are just more of the same unless they break their habit of consistently failing on execution and outcomes.

The role of the media in a democracy should be to 1) inform citizens and 2) hold power accountable. Canadian media (and I read almost all of it) generally fails on both fronts imo. The worst offender being the @CBCNews but @CTVNews, @globeandmail don't do much better: too many opinion pieces and surface level reporting with very little depth or insight and serious institutional bias that consistently plays opposition to opposition parties themselves. Then they wonder why readership is plummeting and @X is the top news app in the country. Take a page from @TheHubCanada - by far the most useful news site out there with consistently interesting pieces from @Sean_Speer @davidfrum @Pagmenzies and others. Yes, they tend to lean right from an economic policy standpoint but they back up their arguments with true analysis. I am not opposed to reading arguments on the other side but I simply just don't see it from mainstream networks.

🇨🇦 Thoughts on Carney’s big bold budget now that I had time to read up on it. I am encouraged to see a refocus on economic challenges that we face as a country, addressing productivity, incentivizing private sector investments, building infrastructure. The Liberals under Trudeau caused significant damage to the Canadian economy by de-prioritizing this and focusing instead on “income redistribution”, and “growing the economy from the heart out.” It makes for great campaign speeches but the practical reality is that without a thriving economy, there is no money to spend on new social programs. The economy remained stagnant, hanging on mainly through population increases and government spending rather than productive investment. The net result ironically was that income inequality, affordability, standards of living and access to services all got worse. Buried in Carney’s budget is an admission that if Canada’s economic productivity had matched the U.S., the median income of families would have been $11,000 higher. While the stated goal to attract private capital investment and boost productivity is the right one, my criticism of the Federal Liberals remains on their approach: using spending - instead of legislation - as their main solution to solving problems and thereby putting themselves at the centre of everything. There are promising programs included in the budget - e.g. the “productivity super-deduction”, enhancements to the SR&ED program - but they are a poor substitutes for what could have been transformational and truly “generational” imo. Instead we are layering incremental tax complexity, while leaving the general corporate and personal tax system unchanged. We are layering additional bureaucracy, while mostly leaving red tape and regulations where they are. It doesn’t have to be this way. Spending is but one tool Ottawa can use. I am still waiting to see Carney lean heavily into legislation to create the conditions for success - that’s the main job of governments after all, not capital allocation. Capital and labour move faster now than any other time in history. In my line of work I see businesses, people and capital go where they can thrive and that place increasingly is not here. The US used to produced 10x the number of high-potential tech startups than Canada - which was healthy given they are approximately 10x the population - now they produce 45x. 70% of Canadian-founded high potential tech companies used to be built here, now that number is down to 30%. When I tell people outside of tech that companies like OpenAI, Uber, Slack, Instacart, Databricks - just to name a few - were all founded or cofounded by Canadians they are always surprised. And that’s just a handful of examples in one sector - think of all the capital, jobs and tax revenue that could have been if more companies were built here. Being a neighbor to the US is a blessing and a curse: we are each other’s biggest customers yes, but they are also our fiercest competition. We need to create the economic conditions to be significantly MORE competitive, not less. Enough to offset the massive gravitational pull of US capital and the uncertainty caused by tariffs. Carney’s first budget is a big macro budget that economists (including himself) project will take years to have a significant impact on the day-to-day lives of Canadians. It's a start but in the meantime, larger deficits will be added to our growing debt in the long term, and in the short term borrowing costs will likely go up and the CAD will likely weaken making things less affordable for Canadians. And that’s the best case scenario: there are a number of baked-in assumptions in the budget around the economic outlook. The debt increase is due to new spending, not less revenue - so any economic shock will require more borrowing. You may not know this but not only are we borrowing from our children with our mounting debt, but we are now borrowing against our seniors pensions as well: the net debt calculation includes ~$500B in assets from the CPP and QPP. This is uniquely structured compared to other G7 countries and doesn’t even factor in provincial debt - which is also different from most G7 countries due to our decentralized fiscal structure. Take the pension assets out and Canada’s gross debt-to-GDP is at 113%. For reference, France is at 116% - ask them how that’s going.