Business
With our economy becalmed, Good Ship Canada needs a new captain
From the MacDonald Laurier Institute
Output has been stagnant for five years now. Canada is ‘as idle as a painted ship upon a painted ocean’
One of my favourite poems is Samuel Coleridge’s “The Rime of the Ancient Mariner.” It describes a ship driven by storms towards the South Pole. An albatross saves the ship and crew but the Ancient Mariner kills it, an act of cruelty for which he is later punished, including by having to repeat the story to strangers for the rest of his life.
It is the verse “Day after day, day after day,/ We stuck, nor breath nor motion;/ As idle as a painted ship/ Upon a painted ocean” that became one of my favourites. It comes back to me periodically when life seems stalled.
Which is the case with Canada these days. Our economy is at a standstill. Interest rates are up and inflation, though trending down, remains stubbornly high. Real GDP growth these past four quarters (August 2022 to August 2023) was a feeble 0.9 per cent. Any growth we do have is from a policy-driven population expansion of close to three per cent. But per capita GDP actually fell 2.1 per cent over that period, which means Canadians are poorer today than they were a year ago.
And it’s not just this year. Canada has been a “painted ship on a painted ocean” for some time. From January 2018 to June of this year, our GDP per capita was flat, according to OECD data released this week. Add in July and August and Canada’s per capita real GDP has declined slightly — from $52,300 in January 2018 to $51,900 in August (in 2012 dollars).
With the pandemic and surging inflation after 2020, you might think other countries’ economies are also becalmed. But they aren’t. U.S. per capita real GDP is up 2.4 per cent over the past year and up 9.3 per cent since January 2018, from US$61,500 to US$67,200 (again in 2012 dollars). At today’s exchange rate, Canada’s per capita GDP is now just 56 per cent of America’s — ouch!
Nor is it just the U.S. we’re slipping behind. Compared to our own slight decline in real per capita GDP since 2018, the OECD average is up 5.6 per cent, though there’s considerable variation across countries. For example, resource-rich Australia’s real per capita GDP was up only 4.8 per cent — which was still better than here — but superstar Ireland’s was up fully 31.0 per cent.
Let’s face it: Sir Wilfrid Laurier’s famous 1904 prediction that “For the next 100 years, Canada shall be the star towards which all men who love progress and freedom shall come” seems hollow these days. It is not that we don’t have the potential to shine; it’s that we so often fail to. We do still attract immigrants, but they often leave — as much as 20 per cent of a cohort over 25 years according to the Conference Board. And if salaries here keep falling behind those in the U.S., will we still be able to attract the best and brightest?
Canada has always been a trading nation but exports as a share of GDP have been relatively flat this past decade. The oil and gas sector has been our most important source of export earnings, surpassing even motor vehicles and parts, but since 2015 the Trudeau government has actively discouraged its growth.
We have had our share of innovations over the years but R&D spending has slipped back to the same share of GDP as it was in 1998. It seems the only way for Canada to develop new things is to subsidize them to the hilt with multi-billion grants like the ones given this past year to three different battery manufacturers.
Our health-care system is a shambles, with long waiting lines and not enough doctors and health professionals. One index ranks Canada’s health system as only 32nd best among 166 countries (with Singapore, Japan, South Korea, Taiwan and Israel ranking highest). We know what the problems are, but we seemingly don’t have the will to fix them.
Our tax system is a mess, with high rates and far too many ineffective incentives. Canada now has one of the highest top personal income tax rates in the world but applies it at much lower incomes than elsewhere, beginning at only twice the average wage. One important driver of U.S. growth was the Tax Cuts and Jobs Act of 2017, which bolstered investment by 20 per cent, as shown in important research released last month.
We are a free rider in defence and security spending, at only 1.29 per cent of GDP, well below the minimum two per cent needed to fulfil our NATO obligations. Our financial contribution to modernize NORAD is lacking despite the growing importance of the Arctic to Russia and China. We have contributed little in the way of advanced weaponry or tanks to our allies in Eastern Europe or the Middle East. Europe is desperate for natural gas but instead of buying it from us it is having to import it from Qatar.
While regional tensions have always been a major part of Canadian history, we seem to have lost all sight of nation-building. National infrastructure projects are absent. Provincial trade barriers undermine internal growth but are hard to remove. Alberta, angry with a federal government intent on shackling its energy industry, is ready to pull out of the national social security system. Quebec is drastically hiking tuition fees on students from the rest of Canada who attend its anglophone universities.
To fulfill its remarkable potential, this country cannot remain a painted ship upon a painted ocean. Someone needs to move the ship forward.
From LifeSiteNews
Elon Musk said that ‘the sheer amount of waste and fraud’ in federal agencies, is ‘astonishing’ and that DOGE is cutting ‘$4 billion a day’ in misused taxpayer funds.
In a remarkable Fox News interview, Department of Government Efficiency (DOGE) founder Elon Musk and top officials of the DOGE team offered stunning, often infuriating, insights into how the federal government functions.
The interview, which has garnered well over 10 million online views on X in less than 24 hours, provided one extreme example after another of government mismanagement, excess, waste, and fraud while simultaneously promising a future where the D.C. Leviathan is tamed and restored to its proper, efficient role.
The new Deputy Director of the Office of Management and Budget (OMB), former U.S. House Rep. Dan Bishop, averred that the DOGE A-Team interview was the “most amazing and significant half-hour in TV history.”
Musk was joined by DOGE team members Steve Davis, Joe Gebbia, Aram Moghaddassi, Brad Smith, Anthony Armstrong, Tom Krause, and Tyler Hassen – all successful businessmen and entrepreneurs in their own rights – to describe the widespread systemic weaknesses and failures at the Internal Revenue Service (IRS), the National Institutes of Health (NIH), the Department of Health and Human Services (HHS), the Social Security Administration (SSA), and more.
Fox host Bret Baier described the group as “Silicon Valley colliding with government.”
“This is a revolution. And I think it might be the biggest revolution in government since the original revolution,” said Musk during the discussion.
“But at the end of the day, America’s going to be in much better shape,” he promised.
“America will be solvent. The critical programs that people depend upon will work, and it’s going to be a fantastic future.”
My interview with the @elonmusk and the @DOGE team tonight on #SpecialReport pic.twitter.com/KKpxEPtu1Z
— Bret Baier (@BretBaier) March 27, 2025
“The government is not efficient, and there’s a lot of waste and fraud. So we feel confident that a 15% reduction can be done without affecting any of the critical government services,” began Musk, founder and CEO of both Tesla and SpaceX and owner of X.
Musk said that the most stunning thing he’s discovered during the early phases of DOGE is “the sheer amount of waste and fraud in government. It is astonishing. It’s mind-blowing.”
Musk cited the example of a simple 10-question National Park online survey for which the government was charged nearly $1 billion and which in the end served no purpose.
“I think we will accomplish most of the work required to reduce the deficit by a trillion dollars within [130 days],” he predicted. “Our goal is to reduce the waste and fraud by $4 billion a day, every day, seven days a week. And so far, we are succeeding.”
Billionaire Airbnb co-founder Joe Gebbia, is working to digitize the retirement process for government employees, which is currently stuck using 1950s technology, housed in a Pennsylvania cave.
“It’s an injustice to civil servants who are subjected to these processes that are older than the age of half the people watching the show tonight,” said Gebbia. “We really believe that the government can have an Apple store-like experience, beautifully designed, great user experience, modern systems.”
“The retirement process is all by paper, literally, with people carrying paper and manila envelopes into this gigantic mine,” added Musk, limiting the number of federal employees who can retire to no more than 8,000 per month.
Gebbia expects to have the antiquated system updated and overhauled in a matter of months.
“The two improvements that we’re trying to make to Social Security are helping people that legitimately get benefits protect them from fraud that they experience every day on a routine basis and also make the experience better,” said DOGE software engineer Aram Moghaddassi.
He offered an amazing statistic: “When you want to change your (direct deposit) bank account, you can call Social Security. We learned 40% of the phone calls that they get are from fraudsters” who are attempting to commandeer retired seniors’ benefit payments.
“What we’re doing will help their benefits,” assured Musk. “As a result of the work of DOGE, legitimate recipients of social security will receive more money, not less money.”
“There are over 15 million people that are over the age of 120 that are marked as alive in the Social Security system,” said Steve Davis, who has previously worked alongside Musk at SpaceX, the Boring Company, and X
He explained that despite this being discovered by hardworking personnel at the SSA back in 2008, nothing was done. As a result, 15-20 million social security numbers that were clearly fraudulent were just floating around, susceptible to being used for “bad intentions.”
Health care entrepreneur Brad Smith, who has taken charge of auditing HHS and NIH, also cited stunning, troubling statistics displaying the extreme inefficiencies of the nation’s top federal health organizations.
Smith said that at NIH, “Today they have 27 different centers” created by Congress over the years and there are “700 different IT systems,” each using their own IT software.
“They have 27 different CIOs (Chief Information Officers),” added Smith, “so when you think about making great medical discoveries, you have to connect the data.”
Those discoveries are likely severely hampered by NIH’s communications disconnect.
Anthony Armstrong, a Morgan Stanley banker now working for DOGE at the Office of Personnel Management (OPM) talked about “duplicative functions” and “overstaffing” at government agencies. He said that money is “sloshing out the door.”
As an example, he cited the IRS, which has 1,400 employees whose only job is to provision laptops and cell phones to IRS workers.
“As an ex-CFO of a big public tech company, really what we’re doing is, we’re applying public company standards to the federal government, and it is alarming how the financial operations and financial management is set up today,” said Tom Krause, CEO of Cloud Software Group.
He explained that there is virtually no accountability or verification protections when it comes to the Treasury Department disbursing funds to various government agencies.
A 94-year-old grandmother is no longer “going to be robbed by forces like she’s getting robbed today, and the solvency of the federal government will ensure that she continues to receive those social security checks,” added Musk.
“The reason we’re doing this is because if we don’t do it, America is going to go insolvent and go bankrupt, and nobody’s going to get anything,” said Musk.
Tyler Hassen, a former oil executive working at the Interior Department for DOGE alleged that there was no departmental oversight at the Interior Department “whatsoever” under the Biden administration.
Steve Davis talked about the out-of-control issuance and use of federal credit cards.
“There are in the federal government around 4.6 million credit cards for around 2.3 to 2.4 million employees. This doesn’t make sense. So, one of the things all of the teams have worked on is we’ve worked for the agencies and said, ‘Do you need all of these credit cards? Are they being used? Can you tell us physically where they are?’” recounted Davis.
“Clearly there should not be more credit cards than there are people,” interjected Musk.
Musk later described how the Small Business Administration (SBA) has given out $300 million in loans to people “under the age of 11.” An additional $300 million in loans has been handed out to people “over the age of 120.”
Musk said that these government loans are clearly “fraudulent.”
“Terrible things are being done,” he exclaimed. “We’re stopping it.”
The Trump administration’s new tariffs are working:
The European Union will delay tariffs on U.S. exports into the trading bloc in response to the imposition of tariffs on European aluminum and steal, a measure announced in February by the White House as a part of an overhaul of the U.S. trade policies.
Instead of taking effect March 12, these tariffs will not apply until “mid-April”, according to a European official interviewed by The Hill.
This is not the first time the EU has responded this way to U.S. tariff measures. It happened already last time Trump was in office. One of the reasons why Brussels is so accommodative is that the European Parliament emphasized negotiations already back in February. Furthermore, as Forbes notes,
The U.S. economy is the largest in the world, and many countries rely on American consumers to buy their goods. By import tariffs, the U.S. can pressure trading partners into more favorable deals and protect domestic industries from unfair competition.
More on unfair competition in a moment. First, it is important to note that Trump did not start this trade skirmish. Please note what IndustryWeek reported back in 2018:
Trump points to U.S. auto exports to Europe, saying they are taxed at a higher rate than European exports to the United States. Here, facts do offer Trump some support: U.S. autos face duties of 10% while European cars are subject to dugies of only 2.5% in the United States.
They also noted some nuances, e.g., that the United States applies a higher tariff on light trucks, presumably to defend the most profitable vehicles rolling out of U.S. based manufacturing plants. Nevertheless, the story that most media outlets do not tell is that Europe has a history of putting tariffs on U.S. exports to a greater extent than tariffs are applied in the opposite direction.
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Facts notwithstanding, this trade war has caught media attention and is reaching ridiculous proportions. According to CNBC,
Auto stocks are digesting President Donald Trump’s annoncement that he would place 25% tariffs on “all cars that are not made in the United Sates,” as well as certain automobile parts. … Shares of the “Detroit Three” all fell.
They also explain that GM took a particularly hard beating, and that Ferrari is going to use the tariffs as a reason to raise prices by ten percent. This sounds dramatic, but keep in mind that stocks fly up and down with impressive amplitude; what was lost yesterday can come back with a bonus tomorrow. As for Ferrari, a ten-percent price hike is basically meaningless since these cars are often sold in highly customized, individual negotiations before they are even produced.
Despite the media hype, these tariffs will not last the year. One reason is the retaliatory nature in President Trump’s tariffs, which—again—has already caught the attention of the Europeans and brought them to the negotiation table. We can debate whether or not his tactics are the best in order to create more fair trade terms between the United States and our trading partners, but there is no question that Trump’s methods have caught the attention of the powers that be (which include Mexico and Canada).
There is another reason why I do not see this tariffs tit-for-tat continuing for much longer. The European economy is in bad shape, especially compared to the U.S. economy. With European corporations already signaling increased direct investment in the U.S. economy, Europe is holding the short end of this stick.
But the bad news for the Europeans does not stop there. They are at an intrinsic disadvantage going into a tariffs-based trade war. The EU has a “tariff” of sorts that we do not have, namely the value-added tax, VAT. Shiphub.co has a succinct summary of how the VAT affects trade:
When importing (into the European Union), VAT should be taken into account. … VAT is calculated based on the customs value (the good’s value and transport costs … ) plus the due duty amount.
The term “duty” here, of course, refers to trade tariffs. This means that when tariffs go up, the VAT surcharge goes up as well. Aside from creating a tax-on-tax problem, this also means that the inflationary effect from U.S. imports is significantly stronger than it is on EU imports to the United States—even when tariffs are equal.
If the U.S. government wanted to, they could include the tax-on-tax effect of the VAT when assessing the effective EU tariffs on imports from the United States. This would quickly expand the tit-for-tat tariff war, with Europe at an escalating disadvantage.
For these reasons, I do not see how this “trade war” will continue beyond the summer, but even that is a pessimistic outlook.
Before I close this tariff topic and declare it a weekend, let me also mention that the use of tariffs in trade war is neither a new nor an unusual tactic. Check out this little brochure from the Directorate-General for Trade under the European Commission’:
Trade defence instruments, such as anti-dumping or anti-subsidy duties, are ways of protecting European production against international trade distortions.
What they refer to as “defence instruments” are primarily tariffs on imports. In a separate report the Directorate lists no fewer than 63 trade-war cases where the EU imposes tariffs to punish a country for unfair trade tactics.
Trade what, and what countries, you wonder? Sweet corn from Thailand, fused alumina from China, biodiesel from Argentina and Indonesia, malleable tube fittings from China and Thailand, epoxy resins from China, South Korea, Taiwan, and Thailand… and lots and lots of tableware from China.
Like most people, I would prefer a world without taxes and tariffs, and the closer we can get to zero on either of those, the better. But until we get there, we should take a deep breath in the face of the media hype and trust our president on this one.
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