Who Cares?

With that question PM Carney voiced the frustration that most Canadians are feeling with regard to Donald Trump and his administration. 

Then he followed it up by stating that it was a poor choice of words.

I do wonder if it was as much an off-the-cuff question or whether the whole thing was calculated. 

That sentiment would resonate with most Canadians. The Conservatives, ever predictable, decided to try to make political hay from it and then he walked it back making them look kind of silly and reminding Canadians that when it comes to Donald Trump there is some doubt the CPC can be trusted to fight for Canadian interests.

Or the put it another way the Conservatives failed to read the room yet again. That should come as no surprise. After all there was a poll that came out a few weeks ago that indicated that a large majority of Canadians are very unhappy about what Donald Trump is doing. It indicated that over 80% of non-Conservatives were unhappy but only around 50% of Conservative were unhappy. That is, around 50% of Conservatives are quite happy with what Donald Trump is doing. The Conservatives appealing to their base at the cost of appealing to the broader electorate has become the MO in the last few years. Maybe they believe it will eventually win them an election, and they could be right, but I do know that appealing to a broader audience would almost guarantee them a victory. However, as a Liberal supporter I hope they keep doing what they are doing. It decreases their chances of winning.

The old "elbows up" never meant that the government would fight the Trump administration on everything. It was always going to be about picking their spots. The PM did just that in South Africa this week.

Nicely done. 

Surprising No One Budget 2025 Was Passed

Why does the political class actually believe Canadians really care about the minutiae of what happens in Parliament?

I am one of those who follows politics pretty closely. So here is a brief summary of how the budget was passed:

The Liberals did not give a damn whether it passed or not. They were the only party that was poised to benefit from an election and they also knew that two of their opponents wanted desperately to avoid one.

The Bloc did not want an election either but they were not as desperate so they decided to vote against, knowing it would not come back to bite them on the ass.

Elizabeth May managed to win vague assurances from the PM, providing her with the political cover to vote for the budget.

The Conservatives and the NDP desperately wanted to avoid an election but they did not want to be seen supporting the budget either. So they took the half-assed approach of making certain that not enough of their members voted to ensure their votes did not exceed that of the Liberals and Greens. Hell, the Conservatives literally had two of their senior members hide behind curtains in the House so that they could quickly move into their seats to vote once the outcome was known.

All of this is very interesting and both amateur and professional political commentators have been in a tizzy since it happened.

Monday night, after the vote, I went to my non-political wife to tell her the results. She had seen in the news the week before that there was a confidence vote that could trigger another election. She asked me if we were going to have an election and I said no.

So, when I went to tell her I began giving her the above summary. She stopped me very early and asked "Is there going to be an election?" 

I said "No."

"Good"

"Don't you want to hear the details?"

"No."

And we have not spoken about it since.

For years my wife has reminded me that most Canadians do not care about politics to the point where some do not ever bother to vote. And those that do care tend to have already chosen a side and nothing that happens will probably change that.

So the Conservatives and the NDP twisting themselves into knots Monday night was all for naught. It was a complete waste of time.

The 2025 Canadian Federal Budget

Having read the budget I can say that it did not surprise me. It does not contain any of the poison pills that the opposition was talking about a couple of weeks ago and it is not the progressive budget it would have been if PMJT was still the head of the Canadian government. I stated in this space a few months ago that PMMC would have fit in quite well in the Progressive Conservative cabinet of Joe Clark and this budget proves it. Make no mistake that this is a progressive conservative budget.

As with all progressive conservatives, and all conservatives for that matter, they talk a good game with regard to reducing deficits but when push comes to shove they fail as much as non-conservative governments. This budget did not buck that trend. The actual number given for the deficit this year is an eye catcher but as some have noted if you account for inflation it is no bigger than the average deficit from the last 50 years. At any rate, the usual deficit hawks are loudly condemning the Federal deficit, from a Liberal government, but as usual they are dead silent about the deficits, and some rather egregious mishandling of taxpayers money, from Conservative provincial governments. I am certain that must be a coincidence.

What makes the current deficit a progressive conservative one instead of a conservative one is it is being created by investing in stuff Canada needs. They are borrowing money for big projects and the military instead of just borrowing money to transfer it to the wealthy in the form of tax breaks, which is what the last federal Conservative government did several times in their nine years in power. A progressive budget would have borrowed money to give to ordinary Canadians, who we are told are going through an "affordability crisis".

The amount of money involved is quite impressive and it cannot have anything but a positive impact on overall economic activity. That is not to say that its impact will always be positive but overall it probably will.

My biggest beef with the budget is its measures to shrink the public service. It does not make sense to plan to invest billions but also get rid of the people who will be required to make certain the money is being spent as intended. After all, when this kind of money is being talked about it is inevitable that some will wind up where is should not be. You need people to keep that to a minimum but that is harder to do if you are giving the people charged with doing that pink slips.

As well, these periodic reductions in the size of the public service have always been shell games. Certainly they reduce the size of the public service, for about a month, maybe six. Then the government departments go back to hiring more staff because they realize that they need them. Oftentimes the staff they hire back are those that left during the workforce reduction. When you add that most staff reductions take place as a result of people taking incentive packages to volunteer to leave what really happens is the government gives many employees months long paid vacations.

Really these workforce reductions are just a publicity stunt and it is disappointing that the current government is doing this. I would have thought that a former Bank Governor would be able to figure this out and approach workforce reduction if a different and sustainable way.

I cannot speak about the budget without talking about how it has discombobulated the Conservative Party. It is probably not the reason for their current troubles but it seems to have been a catalyst for the unrest in the party that was inevitable after their election loss in April and Pierre Poilievre' s refusal to step down as leader of the CPC. These things do not go way quickly so it will be interesting to see how this all finally shakes out.

For a first budget I cannot say I am surprised by it. It is certainly ambitious and if they achieve even half of what it sets out to do then it could very well be the transformative budget the Liberals are selling it as. However, there is alot of time and politics to go before we will begin to see this transformation so I would not get too excited about it yet.

I would be very surprised if this budget caused the government to fall and trigger an election. If I am the opposition parties I do not want to piss off the electorate by triggering an early election and fight said election against this budget. Stranger thing have happened so we will have to wait and see but I believe you do not need to worry about campaigning in the snow.

Will There Be An Election in the Fall of 2025?

Short answer: No.

Not so short answer: Anything is possible when it comes to politics but no.

I resolved to stop commenting on the day-to-day silliness of politics in this country awhile ago but the current speculation about a Fall election is just too ridiculous for me to ignore.

The budget will be released on November 4 and the idea it will be defeated and a snap election will occur as a result is getting some media play. This is not surprising of course. Such speculation is worth more than a few eyeballs staring at screens and newsprint and a few clicks on the internet. Or to put it another way it is good for the news business.

The crux of the speculation is the media stating the government is indicating they do not have the votes to pass the budget and the opposition has not stated whether they will support it. Very serious stuff until you apply just a little critical thinking. We have a minority government so, by definition, it does not have the votes to pass the budget on its own. As well, since the budget has not yet been released the opposition parties are not going to decide how they will vote just yet. They will posture and try to maneuver for short-term political advantage but that is to be expected and nothing extraordinary.

So when the budget is released does it mean they will decide to vote against budget and trigger an election?

Well let's look at it from the perspective of all of the parties.

The honeymoon for the Liberals is over, but only by a few weeks, but the honeymoon for Mark Carney continues. He is still the most popular and trusted politicians at the federal level. In our increasingly Americanized politics, where party leaders are the main focus over party and policy, that gives the Liberals a huge advantage. To put it another way, the Liberals do not want an election but they are not afraid of having one. None of the other parties can say the same.

The Conservative Party is lead by a leader who has been severely damaged by the events of the last 6 months. That is something that Conservatives and the media just do not seem to want to admit. Pierre Poilievre lost an election everybody believed he was going to win less than a year ago, losing his own seat in the process. Yes, his party picked up seats but they were unable to prevent the Liberals from gaining seats too, almost to the point of achieving majority government status. Mr. Poilievre is going to need time to rehabilitate his image, if he can and assuming he comes through the leadership review in January, before he challenges for the PM's chair again. He will only get one more chance to do just that so he will want much more favourable conditions before taking that chance.

The NDP is in an existential crisis. They are leaderless, beyond broke and have no party identity to speak of. An election now would result in two outcomes. They would lose what remaining seats they have and be wiped out as a political force at the federal level. Or they would pick up a few more seats, maybe getting back to official party status, but they would be so deep in debt that they would need to declare bankruptcy leading to their elimination as a political force at the federal level in a year or two. Either way, an election now would lead to their destruction. They need time to choose a leader, renew their party and make some money. An election now would prevent all three.

The Bloc cannot gain anymore seats in Quebec. They are at their high water mark. However, the Spring election showed them that they can lose seats in Quebec. So they find themselves in a position where an election will not benefit them with a larger seat count and where an election right now runs the risk of them losing seats. For the Bloc the status quo is in their best interest, at least for now.

So none of the opposition parties are really in a position to fight an election. Their risk of losing more is higher than their chances of making gains. As well, if you add the displeasure voters would have with having to go to the polls less than a year after doing so in the Spring it increases the risk. The election would be fought on who triggered the election and if they vote against the budget it would be a hard sell to say anybody else besides the opposition parties would be responsible. That would provide the Liberals the opportunity to secure the majority they just missed in April.

So in the end the government will table their budget, the opposition parties will shit on it, because that is what opposition parties do, but they will find a way not to defeat the budget in the end. The budget will probably not have any poison pills. It will be different from budgets the Trudeau Liberals used to table but not egregiously so. In the end one of the other parties will say they can support it and that will be that. My guess is it will be the Bloc.

Of course, this assumes that the opposition parties have remotely competent political strategists working for them. If not, then all bets are off.

   

Book Review: The Next Age of Uncertainty

This is a book by Stephen Poloz, the former Governor of the Bank of Canada, that was first published in 2022.

As the title indicates the author argues that the interaction of the five "tectonic forces" of an aging population, technological innovation, increasing personal debt, income inequality and climate change are going to lead to greater economic volatility and uncertainty in the coming decades. He argues that average economic growth with decrease from the current average, that interest rates will be low and that inflation will be more volatile, increasing and retreating much more regularly than it has in the last 30 years.

In the book he describes each of the tectonic forces and he describes how they will impact inflation, jobs, housing and government fiscal policies. He then goes on to suggest ways to reduce risk and mitigate the impacts of the interaction of the five forces.

Some of his suggestions are rather intriguing. Arguing that the current model for buying and mortgaging houses has its roots in the Great Depression he suggests that a new model could be implemented. Instead of the borrower paying off a mortgage alone over the usual 30 years he suggests that mortgages could be structured so that the mortgage is not paid off, the bank will be a partner in the mortgage, accruing some of the equity for the bank while the mortgage holder would receive the bulk of the equity for themselves. In essence the bank would be a co-owner of the house, where the mortgage owner essentially pays rent to the bank, but accrues equity for the future. When the borrower decides to sell the house they will take their share of the equity and the bank will take their share. The author argues that such an arrangement would lead to lower monthly payments, less foreclosures and the ability for more people to be able to afford to buy a home, since they would not be paying off a set amount of money during a set mortgage duration but would be paying the bank for as long as they own the house, whether that would be 5 years or 50 years. It is an intriguing idea and it could very well mitigate the current situation where young people are more and more finding it difficult of afford to buy a home.

One of his other ideas is also intriguing, namely that companies will play a role in assisting their workers in mitigating the risks of the interaction of the five forces. Arguing that the aging population will make it more difficult for companies to hire and retain staff they will have to invest more in keeping them. He further states that companies are more and more adopting the environmental, social and governance (ESG) model as they move to meet the demands of an increasing number of investors who make investment decisions with it in mind. It is interesting that he seems to agree with Mark Carney who essentially argued the same thing in his book Value(s). I am not convinced that this will happen but his argument to support his assertion is a good one. We will have to see.

The most disappointing part of the book is he argues that companies will have to take on the role of helping their employees handle the risk of future volatility and uncertainty because central banks and governments will not have the capacity to do so. He argues that interest rates will be well below the current historical average average so room to maneuver of central banks in cushioning the impacts of that uncertainty will be limited. Since the main lever central banks have is changing interest rates that is consistent with his argument. However, while highlighting the impacts of income and wealth inequality he completely dismisses the idea that governments should raise taxes on the wealthiest. He argues the economic dogma that doing so discourages innovation and is actually counter-productive in raising revenue. Interestingly that assertion has never been tested so it is disappointing that he argues it without providing any real evidence or data to back it up. It is just a matter of faith.

He argues that one way to reduce inequality is a universal basic income (UBI). However, he again doubts its feasibility because of the limited fiscal capacity of governments. Again, higher taxes on the wealthy could be the solution to that.

One thing this book did was help me resolve an issue that I have had with free trade for some time. Anybody who has read this blog before knows that I am not a fan of free trade agreements because their negative impacts on the losers from those agreements. However, I have to acknowledge that free trade does have some positive benefits. I had issues trying to square that circle and this book helps with that. In essence, free trade does lead to great economic benefits but it takes decades for them to be felt throughout the economy. However, it also has great negative impacts on those who work in industries that cannot compete with the same industries in lower cost jurisdictions. That often leads to job losses and economic upheaval for many almost immediately or at least a very short time after free trade takes effect. Further because programs to assist those losers are often token jokes that do not actually help those who lose their jobs it can lead to generational poverty for them. If a parent loses his job, cannot find another with the same wages and benefits of the one he lost, he will have a hard time helping his children in getting out of the poverty trap he finds himself in. In other words, if you are having a hard time making ends meet, for an extended period of time, you are not going to be able to send your kids off to college or trade school to give the opportunity to get out of poverty.

That is my issue with free trade and its proponents. They can truthfully claim that it eventually helps the economy but not before disrupting lives in the short-term, often leading to generational poverty. Their indifference to the losers of free trade is one of the reasons why the backlash towards it, in the last few years, has taken hold. The losers of free trade have found champions and they are systematically dismantling the free trade system that took decades to build.

The Next Age of Uncertainty is a fascinating book. Its central argument is sound and some of its proposed solutions are fascinating and deserve more study. However, it is disappointing that the author does not seem willing to consider all of the potential solutions, including more government intervention in reducing income and wealth inequality.

Extremism Breeds Extremism

Charlie Kirk was an asshole but he did not deserve to die. On the other hand, I am not going to lament his death and I will admit a part of me believes the world is a better place now that he is gone. By the way I thought the same way when Rush Limbaugh finally decided to leave our presence.

What Mr. Kirk, and many like him, did not understand is that his extremism and the rhetoric that grows out of it always leads to increased extremism where political violence becomes much more commonplace.

I have said it before in this space that the political extremism we are currently seeing from the right will produce a similar movement on the left. It is only a matter of time.

Yes it would appear that Mr. Kirk's murderer is not a "lefty" but is instead another right wing nut job, which is something else these right wing extremists seem not to understand. Extremism does not just breed extremism on the other side of the political spectrum it also breeds it on their side. You see, the rhetoric being spouted by the like of Mr. Kirk creates those who begin to believe that the likes of Mr. Kirk are too moderate and therefore have to be removed so that their views can take over as the "mainstream" of their movement. Because you see, extremism does not tolerate "debate". There is no middle ground to be agreed upon so the only solution is to eliminate your opponent, whether they have views diametrically opposed or whether their views are similar to the extremist but they just do not meet a given purity test.

So buckle up, Mr. Kirk was probably only the first one to fall unless the US can somehow step back, which they will not be able to do. Others, on both sides of the spectrum, will suffer the same fate as Mr. Kirk soon enough.

Some might say that I am describing the beginning of a civil war but that is not really the case. Yes, extremists on both sides of the political spectrum will probably target each other and those who they consider not to be true believers but I doubt it will degenerate into general violence. 

My "optimism" on the civil war front stems from two factors. The number of extremists at the edges of the spectrum are not that many. Yes, they are loud, motivated and have social media available to give the impression that they have more power and influence than they have but the vast majority of Americans do not believe what they do and when the violence hits a critical mass the wave of revulsion from those non-believers will destroy the extremists' causes. We are not there yet but that time is coming. The second factor is the geographical location of the two extremes. Right-wing extremists are in rural America while the left-wing extremists are going to come from deeply urban America. If the rural folk try to "invade" the urban strongholds of the urban folk they will be crushed and vice versa. 

So in the end, we can probably expect more events like the murder of Charlie Kirk, with increasing frequency, but a general war between the two extremes in the US is highly unlikely. As well, we can also expect that the violence between the extremes will not abate for quite some time. We are probably just seeing the beginning. Maybe, just maybe, by the end of this decade, we will begin to see the extremism fade into history.

The US's Decent to 2nd World Status is Almost Complete

Let's go through the check list for the US:

• The US is a rich country but its wealth is concentrated in the hands of a very small elite while the rest of its citizens are poor, often desperately poor - CHECK
• The government almost exclusively makes policies for its own benefits and those of the very small elite - CHECK
• The judiciary has lost its independence - CHECK, although lower courts in the US still seem to have some independence all of their decisions eventually make it to SCOTUS, which is firmly in the pocket of the President
• The leader of the government is concentrating power in his own hands while those who are supposed to prevent that either ignore it or are being coopted in that effort - CHECK
• The media has been capture by the government and is no longer completely free - CHECK, this is not completely true for all media but all main stream media has been. There are other media which are free but they are just voices in the wilderness.
• The government has an in-house propaganda organization - CHECK, Fox would probably push back on that characterization of their relationship with the government but let's be real.
• The leader of the government is becoming more authoritarian - CHECK
• The leader of the government is using his office to enrich himself, his family and selected supporters - CHECK
• The leader of the government calls in the military to quell dissent - CHECK
• The country has little influence on international relations and is dependent on much bigger players for what influence it does have - HALF CHECK, the US is still the richest country in the world with the most powerful military but there is no doubt the trend is for countries to insulate themselves from what power it has left
• Elections, if they take place, are not free and fair - NOT YET CHECKED, we will have to wait until 2026 to see whether we can check this one off.