We should celebrate Canada’s British influence, not denounce it

A monument of Adam Smith in Edinburgh, Scotland (iPhoto)

Five years ago, when I visited Hong Kong on think tank business, almost every politician, civil servant and business person I met emphasized two priorities vis-à-vis the regime in Beijing: How they in Hong Kong wished to retain capitalism and the rule of law.

The comments stood out because I’d never heard a Canadian civil servant or politician express such sentiments. But I recall them now for another reason: Because British influence mattered and positively so, not only in Hong Kong but, I would assert, in Canada.

For Hong Kong, the desire to retain the rule of law and free enterprise are utterly understandable today to anyone who looks across the territories’ border to the crony capitalism and politicized courts in China proper.

But the mostly beneficial British presence between 1841 and 1997 is also worth recalling given what Hong Kong escaped under British governance: China’s turmoil, civil war, communist insurrection and then murderous Mao-Tse Tung policies. In short, the population of Hong Kong was spared the worst excesses of what twentieth-century China endured while the United Kingdom governed the territory and until July 1, 1997.

By coincidence, July 1 was not only the 20th anniversary of the British handover of Hong Kong to China but was, of course, the 150^th anniversary of Confederation in Canada. Regrettably, there was a plethora of hand-wringing commentary that doubted and outright damned Canada’s birthday as not worth celebrating. I take a very different view: That Canada and her British heritage are infinitely valuable and worth every birthday candle that can be lit.

Be it Hong Kong or Canada, three British influences should be recalled and celebrated: The emphasis on free economies, free peoples and intellectual freedom.

Free economies

Let’s start with economics as it relates to Canada: Pre-1867, when the Fathers of Confederation worked to create a free trading dynamo on the northern half of the North American continent (one key reason for Confederation) John A. MacDonald, George Brown and the others breathed the assumptions of Scottish economist Adam Smith. As historian Arthur Herman has argued, once you get past the clichés about Smith (“laissez faire,” a term he never used), it is clear that Smith saw a role for government in what might be termed basic functions—“essential public works, such as roads, bridges, canals, and harbors” writes Herman, and also education and national defence among other defensible expenditures.

Beyond that, the stereotype of Smith as skeptical of interventionist government—was correct. It came from his understanding of how state power and special interests interact. They combine to serve each other and not the public good: Government-business collusion raises costs and produces inferior goods and services. That negative outcome is why Smith favoured open, free markets: because choice and competition force business to attend to the needs of consumers and their pocketbook rather than the reverse.

Smith’s idea, and Great Britain’s initial practice of it, thus provided a critical intellectual and practical foundation for free economies the world over. Cast a glance back to Hong Kong in the 20^th century where its relatively free market contrasted with China in opportunities and wealth creation. In 1975 for example, one year before Mao died, per capita income in Hong Kong at $6,991 was eight times the $891 figure in China. (Both figures are in 1990 international Geary-Khamis dollars, a currency used by economists to compare the purchasing power on money across countries.) Hong Kong’s success was to Great Britain’s credit.

Smith’s preference was also evident in early pre-Confederation history in Canada. One example:  In 1865 and 1866, as New Brunswick parliamentarians debated the possibility of Confederation, one of them, John McMillan, looked to Great Britain and its practice of free trade as an example. McMillan thus favoured a free trading confederation of the provinces. “To enter into an alliance that will enable us to have free trade with our neighbours” he remarked, “would be commercially the best step we could take.”

Free peoples

On liberty, one does short shrift to other accomplishments by mentioning only one example, but consider Britain’s greatest accomplishment in the field of freedom: Abolishing slavery at home, then in its empire (as of 1833) and battling slavery elsewhere.

Given British sentiment, it was thus no accident that abolitionist assumptions from the late eighteenth century onward made British North America the destination point for slaves fleeing American shackles. Perhaps the best example: The Underground Railroad which transported between 30,000 and 40,000 escaped black slaves to British North America.

But there are other examples of British abolitionist attitude in practice. Unpopular as it is in some circles today to note historical facts which conflict with romanticized history, the British also abolished slavery in the Pacific Northwest among Aboriginal communities. Anthropologist Donald Leland in his 1997 book, Aboriginal Slavery on the Northwest Coast of North America, wrote of how “Slavery was a permanent status in all Northwest Coast societies”—that is, until the pre-Confederation British and later Canadian officials (along with Americans on the Alaska side) put an end to the practice. (For the record, slavery in the Pacific Northwest developed at some point between 500 B.C. and A.D. 500, long before European contact, and it took the British until the end of the nineteenth century to completely stamp it out.)

Free thinkers

That British notion of personal liberty, key to its battle against slavery, also diluted the-then importance of creed and colour in other areas. On citizenship, for example, we possess British assumptions. They result from a long tradition of practical thinkers and then advocates and politicians who expanded the scope of what was possible on matters of conscience, practice, voting, citizenship and then representation. Recall that in 18^th century Britain, and still in many nations today, the possibility of full citizenship was restricted due to one’s faith—if one was Catholic or Jewish, for example.

But that did not last forever and expanding freedom here resulted from British writers and parliamentarians who argued against historic prejudices. Thus Catholic emancipation decisively occurred in 1829 when Catholics were finally allowed to sit in parliament at Westminster. (In Canada, Catholic emancipation occurred six years earlier. Laurence Kavanagh, a Catholic, was the first such representative to sit in Nova Scotia’s legislature, the House of Assembly, in 1823.) British Jews were emancipated in 1858 with the first Jewish Member of Parliament taking his own seat in parliament that year.

One Englishman, John Stuart Mill, pushed ahead such freedom-expanding assumptions and actions in the ensuing decades courtesy of his 1859 book, On Liberty. It is still worth reading for its defense of intellectual freedom, including the right to question beliefs one might assume should never be debated again: “The beliefs which we have most warrant for, have no safeguard to rest on, but a standing invitation to the whole world to prove them unfounded,” wrote Mill, in defense of the need to criticize established opinion.

On Liberty he also helped along women’s equality and thus suffrage—“wives should have the same rights, and should receive the protection of law in the same manner” wrote Mill, who labeled the denial of such rights as “evil”.

A caveat but in perspective

There is a caveat in all this and it should be stated frankly: Not all that Great Britain did or represents was without blemish. That point is often overstated today and in black-and-white assumptions, accusations and language—plenty of examples cropped up on July 1.

But there were indeed wrongs and grave sins. For example in China and Hong Kong the addictive, destructive opium trade was protected by British policy;  the ongoing denial of political liberties in Hong Kong until near the end of British rule was a blemish on an otherwise excellent record for individual and economic liberties.

Similarly, the bigotries of an initially British-run and later British-influenced early Canada harmed those not of the majority faith and ancestry. Aboriginal Canadians, while arguably less harmed under British rule when compared with American policy—one damns with faint praise here—were still the target of prejudiced legislation. One example: the right to vote was only restored to Aboriginal Canadians in 1960 by Prime Minister John Diefenbaker’s government.

Don’t send laudable British influence down the “memory hole”

But the easy criticism often expressed today in demands for apologies, or the re-naming of buildings with British (or French) heritage, or any number of additional attempts to damn the past through Orwellian “memory hole” actions, miss two useful points about British influence:

First, when looking back, one should always compare to local alternatives available at the time and not perfection. Compared with the tyranny of Chinese communism or even on its own merits, Hong Kong was a beacon of freedom and prosperity. One should consider the entirety of British imperial rule and avoid the twin extremes of either unrealistic romanticization or wholesale condemnation.

READ MORE: The case for keeping ‘Langevin Block’ 

Avoid the extremes then and a second point becomes clearer: what Great Britain began is of greater importance than whether it fully, perfectly practiced an ideal.

Perfection is not given to men and women and the “working out” of British ideals on liberty mattered: The right to property courtesy of the 1215 Magna Carta; the limits on monarchical sovereignty and thus on tyranny best exemplified in England’s Glorious Revolution in 1689; Great Britain’s embrace of freer markets over French mercantilism and Spanish and Portuguese colonial “extraction” economics; the long British tradition of the rule of law; the battles against slavery including in Aboriginal societies; and finally, Britain’s centuries-long expansion of the notion of rights which allowed for progressive emancipation of Catholics, Jews, women and eventually Aboriginal Canadians: Recall the actions of the 20^th century’s most devoted anglophile prime minister, John Diefenbaker.

The many British contributions to Canada are perhaps best encapsulated by then opposition Liberal leader, Wilfrid Laurier in an 1894 speech in Winnipeg. Laurier was attacking an economically protectionist Tory policy. In so doing, he referenced and praised the contributions of the Anglo-Saxons which he summed up as a preference for freedom: “The good Saxon word, freedom; freedom in every sense of the term, freedom of speech, freedom of action, freedom in religious life and civil life and last but not least, freedom in commercial life.”

Five years ago, my political, business and civil service acquaintances in Hong Kong emphasized two classic British influences, free enterprise the rule of law.

But whether those or others, the legacy of Great Britain was critical to Hong Kong’s prosperity and now its liberty-assuming norms in a variety of areas.

Great Britain’s even deeper legacy on this continent and the “germ” of extensive checks on power and self-replicating expansion of core liberties is what allowed for a full flowering Canada to become Canada. Contra the critics, that British influence should be celebrated this summer and for the next 150 years.

 

Mark Milke is an author, columnist and president of the Sir Winston Churchill Society of Calgary

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The shady business of paying Omar Khadr

Omar Khadr leaves court after a judge ruled to relax bail conditions in Edmonton on Sept. 18, 2015. (Amber Bracken/CP)

Well. That was quick.

Only five days into a national bedlam of opprobrium and sanctimony that began with rumours that Ottawa intended to say sorry and shell out $10.5 million to make amends for ignoring the constitutional rights of the famous Gitmo boy-terrorist Omar Khadr, and all of a sudden, the deal is already done, the cheque’s already been cut, and Khadr’s already cashed it.

Public Safety Minister Minister Ralph Goodale expended a great deal of effort on Friday to the purpose of appearing righteous and proper, and went so far as to lay blame on the former Conservative government of Stephen Harper: “The Harper government could have repatriated Mr. Khadr or otherwise resolved the matter,” Goodale said. “They didn’t.”

That is going to leave a mark. But not on the Conservatives.

RELATED: ‘The money has been paid’ to Omar Khadr

The misdeeds Goodale was insisting we should all atone for—the specific trespasses upon Khadr’s constitutional rights that Goodale cited to justify the government’s sudden sorry-saying and cash payout—were committed in 2002 and 2003, before Harper’s government was in power. At the time, Goodale himself was a member of Paul Martin’s Liberal cabinet.

If the intention of the deal was as Goodale said—to cut Canada’s losses in the $20 million civil litigation Khadr’s lawyers initiated in 2004, and help Khadr escape his notoriety and get on with his life at last, which he does deserve—this is not how it’s done.

In his lawsuit, Khadr contended that Canada conspired with the American military 14 years ago by allowing Canadian intelligence officials to elicit statements from him about the terrorism charges he was facing at Guantanamo Bay, without allowing him any access to a lawyer. Canada effectively collaborated with U.S. military authorities in Khadr’s brutal mistreatment. In sum, he was abused in a way that “offends the most basic Canadian standards about the treatment of detained youth suspects,”as the Supreme Court of Canada described it, in a 2010 decision.

RELATED: Omar Khadr remains a prisoner of partisan politics

A loss-cutting settlement might make eminent sense, but the whirlwind was allowed to clatter along all week without so much as a proper media briefing, an official statement, a formal explanation or even a single honest and candid answer—not even when the question was put directly to Prime Minister Justin Trudeau during a press conference in Ireland. Absurdly, neither the payout amount nor the wording of the apology were mentioned Friday, owing to the deal’s confidentiality provisos.

Donald Trump’s White House had been “pre-informed” about the settlement, but all week Canadians have been obliged to rely on assumptions, unnamed sources and conjecture, drawing from all the usual reservoirs of prejudice and partisan bias in speculation about the political considerations that went into the deal and the political embarrassments it was intended to avoid.

After 13 years, suddenly a deal is cut, only three weeks after a faint-hope U.S. Anti-Terrorism Act injunction application to block any payout to Khadr was filed in Ontario Superior Court on behalf of Tabitha Speer, the widow of Delta Force Sergeant Christopher Speer, who was killed in Afghanistan in 2002 by a hand grenade that Khadr may or may not have thrown.

Khadr was only 15 when he was taken into custody after being horribly wounded in a Taliban firefight with U.S. Special Forces. He pleaded guilty to the charge of murdering Speer, then later claimed he’d copped a plea only to get transferred to a Canadian prison, and has since claimed he does not trust his own memory of throwing the grenade. Now 30, Khadr was released on bail two years ago, pending his appeal of his several dubious military-court convictions in Guantanamo, and lives in Edmonton.

Tabitha Speer and Layne Morris, a since-retired U.S. Special Forces officer wounded in the 2002 firefight when Khadr was captured, were seeking to block any federal payout to Khadr. They were relying on the strength of a 2006 Utah District Court default award of $134 million for Sergeant’s Speer’s wrongful death and Morris’ loss of the sight in his right eye.

On Friday, lawyers acting for Speer and Morris were in Ontario Superior Court seeking a date for an “urgent” hearing. The whole effort looks moot now, but lawyer David Winer told reporters he may seek an interim preservation order, which would have the effect of freezing Khadr’s assets.

The strange rush to settle has left the Trudeau government facing the prospect of having to explain why Omar Khadr deserves justice, but the widow of an American soldier who died in a battle when Omar Khadr was a fighter on the other side, does not.

It is also worse than awkward that we’ve all been left to surmise that the Khadr deal takes its precedent from the 2007 settlement in the quite dissimilar case of Maher Arar.

RELATED: Maher Arar’s mind cannot forget

Arar was awarded $10 million and a fulsome apology in 2007 after a judicial inquiry determined that misleading information from the RCMP may have played a part in a decision by American authorities to trundle Arar off to Bashar al-Assad’s torture dungeons in Syria. The inquiry concluded that Arar was in no way linked to terrorism.

At the time, Prime Minister Stephen Harper described the Arar affair as “a tremendous injustice.” The apology to Arar came by way of a both an official government statement and a unanimous House of Commons resolution.

In contrast, Omar Khadr was raised in an infamous Egyptian-Palestinian “al Qaeda family” whose many members spent years in Osama bin Laden’s inner circle in Taliban-held regions of Afghanistan and in Pakistan’s jihadist badlands. Omar’s teenage skill set included proficiency in the assembly of sophisticated improvised explosive devices.

RELATED: Widow of U.S. soldier goes after Khadr payout

An all-party apology would seem unlikely in Khadr’s case, especially in the way developments have unfolded this week. Opposition leader Andrew Scheer’s Conservatives are not in a very forgiving or apologetic mood. Not every MP in the Liberal caucus is happy about the way this has come together, either.

This is not the sort of thing that just blows over and fades away.

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The Liberals are spending far more than they said they would

Canada’s Prime Minister Justin Trudeau (L) and Finance Minister Bill Morneau walk to the House of Commons to deliver the budget on Parliament Hill in Ottawa, March 22, 2016. (Patrick Doyle/Reuters)

The Liberals campaigned on a platform that promised a short-lived period in which their government would run ‘modest’ deficits. After incurring an accumulated deficit of $25 billion over 2016-19, the Liberals promised to return the budget to balance by 2019-20, the fourth year of their mandate. Instead of balancing the budget throughout their mandate—as both the Conservatives and NDP were promising—the Liberals would hold fast to two ‘fiscal anchors’ of their choosing, as they stated in their “costing plan” in 2015:

(Liberal.ca)

Yeah, well, not so much:



Neither of those promises is going to be delivered by 2019-20. According to the latest long-term projection provided by the Department of Finance, these objectives are scheduled to be achieved sometime between 2040 and 2050, which means approximately never. Fortunately for the cause of responsible governance, the federal Liberals have accepted responsibility for their failure to keep their word and are sufficiently shamefaced about the whole mess that there’s not much point in investigating the matter any further.

Just kidding! The Liberals are blaming everything and everyone else—including their Conservative predecessors—for the current state of public finances. So in this post, I’m going to try and figure out what happened.

READ MORE: The unmasking of Bill Morneau, caped budget crusader

The Liberals’ standard talking point is that the larger-than-expected deficit is a result of slower-than projected economic growth. But as far as I can tell, this is only a partial explanation, accounting for roughly one quarter of the deterioration in the federal budget balance. Roughly three quarters of the increase in the federal deficit can be explained by the fact that the Liberals are spending much more than what they said they would during the election.

The idea that poor economic performance is to blame for the deficit is difficult to reconcile with near-record-low unemployment rates, but there is still something to it. The 2015 LPC platform used the economic baseline set out in the Conservatives’ 2015 budget. As new data have come in, these projections—based on an average of private-sector forecasts—have been revised steadily downwards. But it’s important to understand how and why this has happened, and it comes down to making the distinction between nominal and real GDP.

READ MORE: A budget for make benefit glorious economy of Canada

When it comes to forecasting the revenue numbers that show up in the budget, nominal GDP is what matters: economic activity measured in current dollars. But an increase or a decrease in nominal GDP doesn’t necessarily reflect an increase or decrease in real economic activity—things like output, employment and household purchasing power. If the only thing that happened in the economy was that the prices of all goods and services went up, nominal GDP would increase, even if real economic activity stayed constant. Of course, the mirror scenario can also happen: an increase in real economic activity will increase nominal GDP, even if prices stay the same.

It’s useful to break down nominal GDP into its real and price components:

Nominal GDP = Real GDP x Price Level

When referring the GDP, the price level is often referred to as the ‘deflator’: to obtain real GDP, you ‘deflate’ nominal GDP by dividing by the price level—the ‘deflator’. If you take the growth rates of both sides of this equation, this relationship becomes

Growth in Nominal GDP = Real GDP Growth + Inflation

So there’s a two-part explanation to lower-than-projected growth in nominal GDP:

• Lower-than-expected growth in real GDP


• Lower-than-expected growth in the price level (or deflator)

It turns out that the price level story is actually more important than the one involving real economic activity. According to the most recent projections in the 2017 budget, most of the shortfall in nominal GDP is due to lower-than-projected inflation. Real GDP over 2016-20 is projected to come in 2.1 per cent lower than projected in 2015, while the GDP deflator is expected to be on average 2.4 per cent less than projected. The average shortfall in nominal GDP is the sum of these two components: 2.1 + 2.4 = 4.5 per cent.



(My excel file going through the various projections – with risk adjustments stripped out – is available here.)

There’s no great mystery about the effects of lower-than-expected real GDP growth on the budget balance: it leads to lower revenues and a deteriorating budget balance. But what about lower-than-expected inflation rates in the GDP deflator?

I think it’s easier to explain and understand if we ask the opposite question: what if inflation had come in higher than expected? If this were the case, then the government would be well within its rights to say something like this:

“We committed ourselves to purchasing a certain quantity of goods and services. The price of respecting this commitment has gone up more than we expected, and so we will be spending more than we projected—in nominal terms—to carry out our obligations. Higher inflation has also increased revenues above what had been projected, so this increase in nominal spending will not affect the budget balance in real terms or expressed as a percentage of GDP.”

There is nothing wrong with this sort of statement: what matters is real economic activity, and adjusting nominal expenditures in response to a pure price change is the proper thing to do.

But of course, that’s not what has happened: prices are coming in lower than expected. If you think—as I do—that the above statement makes sense in a context of higher-than-expected prices, then this is what you’d expect a government to say when prices come in below projection:

“We committed ourselves to purchasing a certain quantity of goods and services. The price of respecting this commitment has gone up less than we expected, and so we will be spending less than we projected—in nominal terms—to carry out our obligations. Lower inflation has also reduced revenues below what had been projected, so this reduction in nominal spending will not affect the budget balance in real terms or expressed as a percentage of GDP.”

Here is where the Liberals have tripped up. Instead of adjusting nominal spending down as inflation came in below projection, the path of nominal expenditures has been revised upwards in the first two Liberal budgets. Real levels of spending are higher than what the Liberals had promised.

READ MORE: 21 ways the federal budget will hit Canadians’ wallets

We now have to make a detour to note that the Liberals never actually set out what their revenue and spending commitments were in the last election. Their costing was set out in terms of the 2015 budget balance baseline (with adjustments), where items were added and subtracted to obtain a projection for the budget balance over 2016-20: no numbers for revenues or spending were provided that could be used as a basis for comparison with what came later.

In this excel file, I’ve tried to fill that gap, using the original 2015 budget baseline as a starting point, adding the Liberals’ risk adjustments, and then classifying the various proposals in the Liberal platform as either revenue or expenditure measures. For example, the canceling of the Universal Child Care Benefit is a revenue increase (the UCCB was a tax credit), the introduction of the Canada Child Benefit is a revenue decrease (the CCB is also a tax credit), the ‘Middle Class Tax Cut’ is a revenue reduction, and so on. The final budget balances reproduce the projections in the Liberals’ platform. (Some of these revenue/spending classifications are judgment calls, so if you see an item that I’ve misclassified, I’ll be pleased to make the necessary changes.)

This table summarizes nominal revenue and spending projections in the Liberal platform and in their two budgets:



Although I’ve broken the numbers down for each year, I’ll try to keep things as simple as possible by talking only about the four-year totals for 2016-2020. Total nominal spending as projected in the 2017 budget ($1 240.1 billion) is four per cent less than the total projected in the platform ($1 292.4 billion)—a gap slightly less than 4.5 per cent average shortfall in nominal GDP. On the spending side, the projected total of $1 229.8 billion is 2.5 per cent higher than projected in the platform.

Let’s look at the primary balance, which is the difference between revenues and spending—that is, the balance with debt service payments excluded. Revenues in the 2017 budget are $52.3 billion lower than in the platform, and spending is $30.3 billion higher, for a total reduction in the primary balance of $82.6 billion over 2016-20. The Liberal government would presumably argue that since most of this reduction—52.3 out of 82.6, or 63 per cent—comes from revenue side, revenues are the principal culprit in the deterioration of the federal budget balance.

But this story leaves out the part where prices undershot the projection. If the Liberals wanted to maintain their spending commitments in real terms—which is what matters—they should have reduced nominal spending below the targets set out in their platform. Because prices came in under projection, and because nominal spending has actually increased over the platform commitments, real federal government spending is running 5.1 per cent higher on average than what the Liberals promised during the election.

By the same token, lower-than-projected prices also means that the shortfall in real revenues is less than the shortfall of nominal revenues. Real revenues are running 1.6 per cent on average below projection, compared to 4 per cent in nominal terms.



In constant 2007 dollar terms, the 2016-20 primary balance is $68.7 billion below what was projected in the Liberal platform. Of that, some $51.2 billion, or about three-quarters, is due to real expenditures running above projection. Translated back to nominal terms, the Liberals are spending about $15 billion dollars a year more than they had promised to spend during the election campaign. Put another way, the Liberals would have to cut spending by about five per cent a year to bring real expenditures down to the commitments in their platform. And put yet another way, the 2016-20 federal deficit would be reduced by two-thirds if the Liberals had stuck to their spending commitments in real terms.

It should be noted that the conclusion here is not that spending has increased under the Liberals: the obvious retort to that claim is that increased spending is a campaign commitment that the Liberals have a mandate to carry out. The point is that real federal spending has increased to levels significantly greater than what the Liberals had promised in 2015.

MORE ABOUT THE FEDERAL BUDGET:

• What Trudeau says his government has achieved in 2017 so far, annotated


• Proposing amendments isn’t Senate activism. It’s the Senate’s job.


• The problem with involving the PBO in elections


• A budget for make benefit glorious economy of Canada


• Bill Morneau’s budget speech for two Canadas


• An ode to the Canada Savings Bond


• The unmasking of Bill Morneau, caped budget crusader


• The control freak budget

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The hype about a Donald Trump bump for the U. S. economy is over

(Yuri Gripas/Reuters)

Who’s afraid of Donald Trump? Not the International Monetary Fund, at least not anymore.

Like many world leaders, Christine Lagarde, the IMF’s managing director, approached the new U.S. president carefully at first. The fund gave the Trump administration an early boost by forecasting that his policies would be good for economic growth in the short term. Lagarde stood back as the U.S. forced the Group of 20 to water down its commitment to fight trade protectionism. She even invited Trump’s treasury secretary, Steve Mnuchin, to join her on stage in Washington for a public talk when the IMF’s members last assembled in April.

But late last month, the IMF turned on Trump. It had raised its outlook for U.S. economic growth because it assumed Republican control of the legislative process guaranteed enactment of the big tax cuts Trump promised during the campaign. But the Republicans can’t even agree on how to replace Obamacare, a policy they say they loathe. With no tax cuts in sight, the IMF decided to reset its outlook for U.S. gross domestic product. What’s more, the fund was a little mean about it.

“All in all, in our judgement, the U.S. economic model is not working as well as it could in generating broadly shared income growth,” Alejandro Werner, director of the IMF’s Western Hemisphere Department, said at a press conference held to mark the release of institution’s annual review of the U.S. economy. Werner’s group removed fiscal stimulus from its forecast, dropping the outlook for this year and next to 2.1 percent from from previous estimates of 2.3 percent and 2.5 percent respectively. The review characterized the numbers on which the White House based its budget proposal as fantasy. Trump and Mnuchin insist they will orchestrate annual economic growth of at least three per cent, although they say they are gunning for four per cent. “Unlikely,” the IMF said, citing “international experience and U.S. history.” The fund reckons U.S. growth will level off at around 1.8 percent after 2018.

READ MORE: Christine Lagarde and the new world disorder

In other words, Trump is leading the U.S. to slower economic growth than he inherited from Barack Obama, not faster. That must sting.

The shift at the IMF is emblematic of the end of the “Trump trade,” the “Trump bump,” the “Trump effect,” or whatever you want to call the excitement with which the money traders greeted the results of the U.S. presidential election. Executives who had been stockpiling profits, as if they were awaiting a famine, said Trump made them feel like investing again. Stock markets jumped, and the value of the dollar soared.

For all the negativity that followed Trump to the White House, even ardent critics (like me) had to admit that his policies likely would juice the economy in the short run. The tax cuts would encourage spending, and the spending would increase economic output. The only question was by how much? Outfits like the IMF and the Organization for Economic Cooperation and Development weren’t as bullish as the White House, but they agreed economic growth would be stronger. By January, even the Bank of Canada was on board. Governor Stephen Poloz initially refused to base anything on stump speeches. But when the central bank issued its first quarterly outlook of 2017, it raised its forecast for U.S. growth, citing “initial assumptions about the anticipated shift in fiscal policy.”

There were many prophecies that the Trump trade would die. Few, if any, foretold it happening quite like this. The standard prediction was that some combination of a trade wars, a stock-market crash, and general chaos would bring everything crashing down.  Any or all of those things may yet come. But what appears to be happening is far less dramatic: the world simply is adjusting to life with a president who is guided by the last thing he watched on Fox News. “Life goes on and decisions must be made in the meantime,” Carolyn Wilkins, senior deputy governor at the Bank of Canada, said June 12 on the subject of Trump’s trade rhetoric.

An index that measures the value of the U.S. dollar against other major currencies is about seven percent lower than its post-election peak in January, a sign that international investors have lost confidence in Trump’s ability to fundamentally change the course of the economy. The S&P 500 Index, the main U.S. stock market, fell 0.9 percent on July 6, dropping to a level below its 50-day moving average for the first time in seven weeks. That is what you would expect to happen as traders adjust to the realization that central banks in the U.S., Europe, and Canada are serious about raising interest rates for the first time in years. Central banks have credibility on Wall Street: when they speak, traders listen.

The president of the United States? His credibility has been shot by a disastrous first six months in office. He may yet provide a boost to economic growth, however; just not in his own country. Trump’s unpopularity has emboldened leaders elsewhere to do things Trump would oppose. The European Union and Japan this week announced that they had agreed a free-trade agreement. Trump walked away from trade talks involving both economies.

The response from Europe and Japan: Life goes on.

MORE ABOUT DONALD TRUMP:

• Trump talks to Putin. What could go wrong?


• Trump: Nobody ‘knows for sure’ if Russia interfered in U.S. election


• Trump considering ‘pretty severe things’ in response to North Korea


• Donald Trump is making America consider what greatness really means


• The rise of the internet’s ‘dirtbag left’


• Why we should pay attention to Donald Trump’s Facebook page


• In Europe, Trump gets second chance to make a first impression


• Trump criticized by media organizations over tweeted video

The post The hype about a Donald Trump bump for the U.S. economy is over appeared first on Macleans.ca.

What I learned about courage and heartbreak in Mosul

Avery Haines in Mosul (Avery Haines)

For some reason I only cried twice in two weeks. Once was after trying to comfort a man whose leg had been crushed by an airstrike. I was holding up his mangled limb so a volunteer doctor could work on it. My other hand gripped his hand tightly, in the hopes it would distract him from his excruciating pain. In between moans, he pulled his hand away to show me a photo on his cellphone. I stared at that picture for so long and so hard; my brain simply could not register what my eyes were seeing: an elderly man lying in the middle of a dusty road. I think I remember crowds of people, not in a circle, but lining the street on either side of him. I know he was there all alone, lying on his stomach, his wrists bound behind his back. His ankles, too, were tied with the same dirty white bandages. He looked like a contortionist. How could he possibly get his head into that position? “My father, my father,” the man on the stretcher told me, stabbing at the picture with his finger. I took the phone from him and looked up close, still holding his bloodied leg with my other hand. His father’s head had been severed at the neck. It was placed in the middle of his back. His hair, flopped over his forehead, wasn’t long enough to hide an expression on his face that I remember seeing, but one I thankfully can’t recall. I was grateful, too, that I didn’t have the language to ask what ISIS “crime” his father had committed to deserve a public beheading.

The only other time I cried was earlier on that same day, when I sat in the home of a 35-year-old father of four, listening for hours to his story of what it was like to spend two years and eight months under ISIS occupation. Stories of women forced to be sex slaves, of eardrums being poked out with sticks as punishment for listening to music, of children being banned from playing with toys or anything with a face, of executions for having a SIM card, of living second by second in a hellish limbo between a death-like life and death itself.

I didn’t cry in front of either of these men but, when I was alone, wracking sobs escaped from a place in my heart that had been pierced only once before with the sudden death of my own father many years earlier.

RELATED: Read Avery Haines’s blog about her journey to Mosul at CityNews 

I spent two weeks at the end of May living in an abandoned mosque in West Mosul, Iraq. It has been converted into a Trauma Stabilization Point by Iraqi military medics and a handful of International volunteers. We were just two kilometres from the front line in the final days of a massive, unprecedented offensive to end a three-year occupation by the most depraved terror organization on the planet. I saw their victims. I held them. I filmed them: the children shot in the back trying to flee with their families; the teen with a bullet between his eyes, an ISIS sniper’s victory shot; the starving babies; the skeletal mothers; the amputations; the soldiers with blown-off body parts.

Avery Haines in Mosul. (Avery Haines)

I saw the victims of the punishing Coalition airstrikes as well. The family who told of seven missiles hitting their neighbour’s home, wiping out 28 extended-family members. The four tiny, dust-covered siblings, with crush injuries, who hauntingly screamed in unison “mama, mama, mama,” a sound so piercing I could almost see the words ricocheting off the mosque walls and ceilings and floors.

I went to west Mosul as a volunteer for an NGO called Global Response Management. I wrote up medical reports on the patients who were brought in from the front lines, usually by Humvee: their ages, their injuries, their status—red for critical, yellow for stable. We didn’t have many greens. I held malnourished babies while their mothers were being treated. I set up IV lines. I stroked hands. I gave love. And when I wasn’t doing that I was filming—nine hours of footage.

The mosque was, until a couple of months ago, an ISIS mosque. I slept in a small room on a mat, side-by-side with Iraqi Special Operations soldiers who fell asleep entwined with their assault rifles. It was hard to reconcile that this was the same space where Jihadists would gather to plot their depravity, an evil that is still being carried out on innocent civilians just two kilometres away. The rooftop remains littered with their cast-off clothing, ISIS propaganda, bedding and bullets.

READ MORE: What went wrong in Mosul

I also witnessed volunteer medics save the lives of suspected ISIS fighters. In one case, I hopped in the back of a beat-up ambulance with my camera, filming as we bounced through bombed-out streets. I’m still processing why I felt the need to press my foot against the gurney to protect him from being jostled by the bumpy drive. In retrospect, I take pleasure in knowing that his head was being cradled by a Jewish lesbian doctor, that the man getting him to the hospital was an ex-U.S. marine with the word “infidel” tattooed on his arm, and that a dual Canadian/American journalist was at his feet, filming the entire thing. If he was an ISIS fighter, this moment would surely have been his hell on Earth.

We went to sleep and woke to the constant sounds of war. Air strikes, mortar attacks, suicide bombs, artillery fire. It’s odd how noises so foreign can quickly morph into a normal soundtrack. Even sounds that I knew were too loud and had come too close triggered in me, at most, a minor flinch. One night on the rooftop, a bullet whizzed past me. I’m not an especially brave person, but I didn’t feel fear. I’m glad for that—my fear would have felt self-indulgent in the presence of so many who had been terrorized for so long yet were unable to pack up and return to Canada when it got to be too much.

It all sounds very heavy. And it was. But my two weeks were also filled with extreme joy and laughter. The warmth and love of the Iraqi people I met was breathtaking. People who have lived for generations under one war or another, but who still smile easily and possess a generosity I’ve never before experienced. I learned not to compliment a soldier’s belt, or a stranger’s watch. Before the words were even out of my mouth, they would try to stuff their belongings in my hands. Evenings, between patients, were spent sharing soldier’s rations and playing backgammon. They loved that I learned the Arabic word for “cheater,” which I would shout out when I caught them fiddling with the dice.

READ MORE: The terrifying last days of ISIS in Mosul

The family next door took pity on me for not being able to shower and invited me into their home to bathe, insisting I eat their food and drink their tea, even as they were abstaining during Ramadan. We played Frisbee on the mosque lawn with two little brothers who lived nearby and who were a constant presence in the lives of the soldiers and volunteers. Sometimes they would sneak into our room, snuggling in for a sleepover. These boys, soldiers and survivors were able to give love and receive it despite bearing witnesses to prolonged and profound acts of savagery.

Avery Haines in Mosul (Avery Haines)

I saw the best and I saw the very worst of what humans are capable of.

I’ve cried twice since I’ve been back in Canada. Once, while out for dinner alone on a patio: I was eavesdropping on a family at the table next to me and overheard English being translated. It wasn’t even Arabic. The tears sprung out of nowhere, and came out faster than I could wipe them away.

The second time I cried since leaving Iraq was after watching the final edit of , the one-hour documentary I’ve put together about the people I met. These were tears of relief, knowing that some of what I saw, and the stories I was told, you will see and hear, too. They were tears for a promise I had made, and tears for a promise I was able to keep. Youinis Ibdillaha, the father who survived two years and eight months under ISIS occupation begged me to share the story of what his people have been through: “Canada, the world, needs to know.” About ISIS and their perverted take on Islam, he says: “Lies, lies, lies. They are savages. They think they are ruling by the name of God but they [aren’t]. They are not Muslims. They are not Muslims.”

 

Avery Haines’ documentary Two Kilometres to Terror: Life and Death Under ISIS will air nationally on CityNews stations on Sun., July 9, at 10 p.m. EST.

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What Quebec wants: To be a little closer to Canada

Quebec’s Minister for Canadian Relations and La Francophonie Jean-Marc Fournier (Photograph by Roger LeMoyne)

Some fugitive instinct buried in long-dark corners of my pundit brain made me get on a train to Montreal on Monday to interview Quebec’s Minister for Canadian Relations and La Francophonie, Jean-Marc Fournier. The subject, of course, was the discussion paper on Quebec’s place in Canada that Fournier’s boss, Premier Philippe Couillard, released last week. (Here’s a story on the release; here’s the document itself, 192 pages in English.)

The paper itself is an odd duck. Its title is Quebecers, Our Way of Being Canadians, which is more easily comprehensible in French. It’s really long, goes back to long before Confederation, and—one can verify this sort of thing using electronic document searches—mentions the word “constitution” 298 times.

There’s an opening note from Couillard that is studiously anodyne (“We are the sum of everything we have received from our predecessors: the only predominantly French-speaking state in America, our culture and a civil-law based tradition, but also the talents and strengths of all the people who have chosen to settle in Québec.”)

The foreword from Fournier, a Quebec Liberal lifer who has at different points been Quebec’s minister of education and of municipal affairs, contains a bit more grit. “We clearly announce our goal of breaking down the taboo surrounding discussions about our future relations within Canada,” he writes. “We must resume the discussion about the future of the Federation, including its constitutional aspects.”

Upon its release, this was enough to provoke the traditional cries of No Way from some English-Canadian commentators, joined quickly by the traditional pleas for tolerance and flexibility by others. My own thoughts on the matter are complex; don’t much matter; and aren’t worth dumping on you unless the Couillard-Fournier project gets a fair bit further down the runway. Offhand, based on my odd discussion with Fournier, I now doubt it will.

I had asked for an interview with Couillard. It wouldn’t have been the first. I was told Fournier is leading on the file, so I met him at a Quebec government office on Sherbrooke St. in Montreal.

I began by saying old guys like me, who remember the Meech Lake Accord, have very clear memories of constitutional negotiations. Why does Fournier want more of those?

He replied by noting it’s the 150th anniversary of Confederation. “It seems to us very important, as every celebration, to look to the past—where we come from, where are we now, and where do we want to go?” he said. “And so the result is Quebecers, Our Way of Being Canadian. I think it’s a way to say that there’s a strong allegiance to Quebec, but also a sense of belonging to Canada. Something that maybe is not very often said in Quebec to the rest of the country. But I think that’s a point we’ve got to explain a lot. This paper is about where we come from and how we can be closer together. How we can prepare the future together. This is what the paper is talking about.”

Perhaps by now you are wondering where the constitution went. I was too. “I think it’s larger than just the constitution,” Fournier said. “It’s surprising, everyone was saying, ‘It’s not time to open the constitutional table. [i.e. a round of constitutional negotiation]’. We never asked for that. If you read the [discussion] paper you’ll notice that it’s not what we’re talking about. What we’re talking about is the fact that we should know each other more, so that we can recognize each other. That we can understand that we’ve got many things in common.”

All righty then. So the government of Quebec has launched a 192-page document that mentions the constitution 298 times that’s really about getting to know each other more?

“We’ve got a new [interprovincial] trade agreement in Canada in force for two months, or one month,” Fournier said. “It’s a new way of doing things in the country. It’s about that that we’ve got to talk and look, how we can do things together to create jobs. It’s relations. Canadian relations is not just constitution. That is the way to see it in the past. We propose, for the future, to see it another way.”

Uh-huh.

“One way of saying it is: Stop asking, ‘What does Quebec want,’ and just look at who Quebec is,” he clarified. “And see what we dream for the future. And you might share the same dreams. I’m pretty sure.” Here he chuckled lightly. “So that’s what we are looking for.”

I decided to bounce three political reactions off Fournier to get his reaction. Justin Trudeau first. “You know my position on the constitution,” the Prime Minister said last week when first asked about the Couillard document. “We’re not re-opening the constitution.”

What did Couillard say to that?

“We didn’t ask. So please read the paper. The paper is about how Quebec wants to have more presence in Canada so we can define together a common future. So if the question is, ‘Do you think, Mr. Trudeau, that it’s a good thing that Quebec and the rest of the country should consider trying to define a common future?’ Still no?”

I asked about Brad Wall, who’s the premier of Saskatchewan, and Jason Kenney, who would like to be the premier of Alberta. Both replied to news reports about the Couillard document by saying, If we’re going to discuss the constitution we should also change what Wall called the “terribly flawed” equalization system, which benefits Quebec.

“When you enter into a conversation, you allow everybody to say whatever they want,” Fournier said. “So they can say whatever. But as I was saying, we’re not considering a constitutional negotiation or real discussion now.” So there is no imminent discussion either of Quebec’s Meech Lake conditions or of Wall’s equalization overhaul.

“The constitutional aspect is a little one-time mention [UPDATE: Fournier’s office says what he actually said was that the constitution is “one dimension” — pw] of all the paper,” Fournier said, growing impatient. “And it comes at a point where we’ll be ready to talk about that. And I’m pretty sure that when we’ve got the first reaction about it it’s because we’re not ready to talk about that. And we all know that.”

Onward. Jean-François Lisée is Quebec’s opposition Parti Québécois leader. His job, of course, is to discover every day that Canada is a disaster. He earned his keep upon the release of the Couillard document by congratulating the Liberals for realizing Canada is broken.

Was Lisée not celebrating an anticipated failure? “I don’t see how we can fail,” Fournier said. “It’s a policy about being closer. So I’m very happy if you think that’s a good thing to be closer to the rest of the country. Mr. Lisée will do politics with it. Of course. It’s normal. He’s got a right to do that. But we were clear: it’s not a question of deadlines, it’s a question of will. We’ve got to develop the will to work together, to know each other, to understand there are different models, like the one we talk about: plurinational federalism. It’s a new concept. We were not talking about that during the years of Meech.”

I’m not sure what to do with all of this. If the minister’s response to a prime minister who doesn’t want talks, and to a premier who wants to add his own agenda items, is to say he has no plans for constitutional talks, then I’m prepared to go back on hold until further notice. If you want to read about plurinational federalism and, well, relations, the Quebec government’s discussion paper is yours to enjoy.

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Prime Minister Ella-Grace Trudeau?

Canadian Prime Minister Justin Trudeau, Hadrien, Ella-Grace and his wife Sophie Gregoire-Trudeau board a government plane Saturday, November 28, 2015. (Adrian Wyld/CP)

Who’s up for a third-generation Trudeau prime minister? Anyone? Bueller?

Always one to think ahead, the current Prime Minister Trudeau, Justin, was on the TV this morning from Niagara Falls, where two visiting American daytime TV hosts, Kelly and Ryan—or as I still call them, Regis and Kathy Lee—asked him which of his three children he’d like to see as PM.

Suppressing the urge to say “All of ’em,” Trudeau named Ella-Grace, his middle child, who’s 8, and therefore younger than some of Trudeau’s cabinet ministers. “I have one daughter and there is something very special about imagining a woman Prime Minister,” he said. The live audience, which was prone to whooping no matter what he said, roared its approval. “I think it’s long overdue,” Trudeau added. Perhaps Kim Campbell has thoughts.

Now, of course the PM was simply playing along with a lob on a daytime show, and no particular weight need be put on his prognostication. He’s not Macbeth’s witches, after all; just because he says something will happen doesn’t make it so. And as recently as January, Trudeau was telling a crowd in Fredericton that Ella-Grace “doesn’t seem to want to be a prime minister.” (FLIP-FLOPPING ALREADY?!?!)

With that, let’s leave the kid to her childhood, but consider more broadly the question of politics as a family business. In the United States, “founded in rebellion against nobility and inherited status,” there’s long been nervousness about the durability of your Kennedys, Bushes, Roosevelts and maybe Clintons. Sometimes the nervousness gusts to outrage, usually when the candidate of the party one dislikes is a member of a political family.

In Canada, where we’re kind of OK with hereditary aristocracies, or at least with one, there’s usually less angst over political dynasties. There’ve been a few: Ernest C. and Preston Manning, Paul Martins Sr. and Jr., Elmer and Peter MacKay, some Laytons, some Notleys.

But the question came up a few times when I was doing radio interviews during the 2015 election: is it healthy for political office to be inherited?

The obvious answer, no less true because it’s obvious, is that it really isn’t inherited. Voters get a say, and sometimes their enthusiasm for the family project is perilously limited, as Al Gore, Jeb Bush and, in a way, Hillary Clinton learned. Children get a say too, which is why there are way more cases of political children pursuing another field than of children following an older family member onto the campaign trail.

But these things are also conditioned by supply, not demand, and in the end is it really surprising that politicians sometimes breed politicians? It happens in other fields too. I know of few really good musicians whose parents weren’t interested in music. Real estate developers sometimes have children who are real estate developers. The New York Times and the Toronto Star have been family businesses for generations.

Politics is more of a skilled trade than an art or science, after all: to do it well, you need to accumulate a body of lore on questions that don’t occur to, or even interest, most people: Where do the important people sit for a lunch speech? How do you ask for money? When does a campaign really begin? How do you inspire a crowd or brush off a petitioner? The earlier you start learning these things, the more of an edge you have. Not a guarantee, just an edge.

And then there are the names, big names, resonant names that inspire followers and make adversaries nervous, derisive, edgy—all states of mind that any politician would feel grateful to provoke in an adversary. It’s said that Caroline Mulroney is tempted to run. One is getting used to seeing Ben Harper at political events. They’re free to do what they want. Electorates remain free to judge, if any of them takes a run. But who should be surprised if members of political families see the life as something noble and alluring? The wonder is that anyone else still does.

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Amarjeet Sohi defends the Liberals’ infrastructure bank

Infrastructure and Communities Minister Amarjeet Sohi takes part in an interview at his office in Ottawa on Thursday, June 23, 2016. (Sean Kilpatrick/CP)

On Thursday, the House of Commons is debating the Trudeau government’s controversial proposal for an Infrastructure Bank to attract private investment for large new infrastructure projects. The NDP wants the provisions for the bank split out of the main budget bill so Parliament can study the bank separately. On Wednesday, Amarjeet Sohi, the minister of infrastructure and communities, discussed the bill with Maclean’s senior writer Paul Wells. Below are excerpts from the interview.

Q: There’ve been a lot of questions in the House of Commons over the last several days about this Infrastructure Bank, which I think a lot of Canadians don’t understand very well. Could you give me the elevator pitch for the Infrastructure Bank? What are we trying to do here?

A: The overarching goal of our Infrastructure Bank is to build new infrastructure and properly maintain the existing infrastructure. We believe that despite having a very ambitious plan—to invest $180 billion over the next 12 years—there still will remain a considerable infrastructure deficit in our country. And we feel that by mobilizing private capital, through the creation of the Infrastructure Bank, we can build more new infrastructure that our communities need. Infrastructure that otherwise will not be built. I think that is the lens that we apply when we talk about the projects we can potentially fund, such as major interprovincial rail lines. Interprovincial energy transmission infrastructure. Trade and transportation infrastructure. We’re talking about large projects that could potentially transform our economy and our communities, the way people move, the way goods move.

READ MORE: The Liberals’ infrastructure bank takes shape

This is not to replace our existing commitments. We will continue to deliver infrastructure through traditional grants funding. But by having the bank engage with private sector, we can actually do more—not only build new infrastructure, but also free up money for traditional infrastructure, such as housing, shelters, recreational or cultural infrastructure.

Q: This depends on attracting private investment—banks, pension funds, sovereign wealth funds. The interest for them has to be that they’re going to get an attractive rate of return. And some people, the NDP in particular, are saying: Why do you need to bring in these private investors who are going to be looking for a return of eight or nine per cent? Why can’t the government just borrow more, at one per cent or less, and finance the projects that way?

A: Well, if you’re building traditional infrastructure that has no revenue attached to it, or a very limited revenue attached to it, then you build that through traditional ways, which is, you borrow, you finance, you work with your provincial or municipal government partners. So housing will fit into that. But what we’re talking about here is infrastructure that has a potential to generate revenue. That could pay a rate of return for the private sector’s investment of capital. And infrastructure that is too risky for the private sector to take on its own, but too expensive for the public sector to finance on its own. So we feel that if we can leverage public dollars and create incentives for the private sector to invest in those, that’s where we can make the huge difference.

Q: Will there be enough of an overlap between the public interest—the things that the government thinks are a good idea—and the private interest, the things that the investors think they can get a return on? Especially because a lot of these wealth funds, the capital they have is in the hundreds of billions of dollars and they don’t write small cheques. Are their projects in the large numbers of billions of dollars that are being contemplated?

A: Yup. We feel that there are projects that should be solely funded by private capital, where the government has no role to play. And there are projects that should be solely funded by the public sector, where the private sector has no role to play because they can’t earn a return on it. But there are a number of projects where partnership can facilitate the construction of those projects. So we will not be undertaking projects that are not going to serve a public interest. This is about building infrastructure that has a public good attached to it, meets public expectations, and meets the public’s needs.

RELATED: Why Canada’s new infrastructure bank should be built in Calgary

Q: Could this Infrastructure Bank be the vehicle for privatizing, selling off the airports in Toronto and Vancouver?

A: The mandate of the Infrastructure Bank is to focus on building new infrastructure. Not engage in selling existing assets and then use that money to pay for building new infrastructure. That is not the mandate of this bank.

Q: While I’m on the subject, though, is this something the government might consider doing apart from the Infrastructure Bank? Privatizing those two big airports?

A: I understand there are discussions going on, or studies being conducted, on asset recycling, as they call it, but there’s no decision made on this at all. And this is not something my department is engaged in, and this is not something the Infrastructure Bank will engage in.

Q: The other opposition party, the Conservatives, are awfully curious about how it came to be that before that investors’ meeting in Toronto, at the Shangri-La Hotel last November, your office worked with BlackRock on developing your presentation. That’s an unusually close level of collaboration between a government office and a potential private investor.

A: BlackRock has worked with other governments to facilitate engagement with private-sector pension funds. They played that role and they assisted us in that as well. The presentation that you’re referring to is public. It’s on the website. People can see it. There’s nothing secretive about it. The purpose of the presentation was to actually make a case. Make a case to the private sector, why you would need to invest in Canada. Our own pension funds will invest in foreign countries, but they will not invest in Canadian infrastructure, right? That was the purpose of the presentation: to lay out the conditions that exist in Canada that will attract private capital. We’re a very stable country, our financial situation is very strong, and we have the stable market for infrastructure. So why would we not make that pitch and sell Canada to international foreign investors?

READ MORE: What is BlackRock, and why does it matter now in Ottawa?

Q: Part of the reason for that pitch, for that slide deck, for that whole meeting, is another risk here: that investors will take a good look at Canada and say, “It’s too complex, it’s too hypothetical. No thanks. I’m just going to go to Bahrain and build a port for $50 billion.” Is that a real concern? Doing things in Canada is hard. Doing things in authoritarian countries is a lot easier.

A: That’s why we wanted to engage a wide range of stakeholders for the creation of the bank. We had extensive conversations with pension funds, institutional investors, business councils, we talked to unions, we talked to the building trades, chambers of commerce throughout the country. We engaged the World Bank on this, [and the] International Monetary Fund. To understand what we need to do in order to remove some of those barriers that you talk about. Because at the end of the day, if our own pension funds feel more comfortable investing in foreign countries, not in our own country, then there’s something missing.

Q: On the other hand, when the government’s interest and the investors’ interests are very large, in the large number of billions of dollars, and are indistinguishable, sometimes that leads to trouble—corruption, money going where it shouldn’t. I’ve covered a lot of stories in this country where the government got too tight with the construction industry and with big money, and people wound up going to jail. Are there going to be safeguards to make sure that doesn’t happen?

A: I think this is a very good point you’re making. And I think we need to understand how infrastructure is built in other countries, and what role the federal government plays. The infrastructure that will be supported by the infrastructure bank is not federally owned. It will be procured by the provinces or municipalities, not by the federal government. So there’s different layers of accountability built into the system and different processes that are scrutinized by, whether it’s local councils or provincial governments. And further to that, those governments lacked capacity to actually do proper due diligence when they engaged the public sector. So the role of the bank will be to safeguard the public interest by making sure that the deals are structured in a way that the public interest is predominant and always considered.

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Why the Conservative Party should remain optimistic

(Cole Burston/Bloomberg/Getty Images)

In the last week of April, 13 people took turns on a stage in the Bluma Appel Theatre, in Toronto’s St. Lawrence Centre for the Arts, to talk about the future of the country. The participants were candidates to lead the Conservative Party of Canada. This would be the last time they would meet for a debate organized by the party before members would begin voting by mail-in ballot to pick a new leader, whose name will be announced on May 27.

The Bluma Appel boasts a seating capacity of 868. It’s a cozy room. The Conservative party had spent the week warning members that the event was sold out. This was optimistic. Most of the upstairs balcony seats were empty. By comparison, in 2006, the Liberal Party of Canada, then freshly out of power, had their last debate in Roy Thomson Hall, a few blocks farther uptown. That hall was not full to capacity either, but it was also three times as large.

So here were maybe 600 people on hand to hear 13 candidates describe how they would govern. As their debate began, a small girl in the audience, perhaps three years old, kept shouting “YAAAAAAAAY,” until her parents finally extricated her from the venue. The toddler’s brief outburst marked the evening’s high-water mark for conspicuous enthusiasm.

“Friends,” said Erin O’Toole, a round-faced and grey-haired former RCAF captain who was briefly Veterans Affairs minister in Stephen Harper’s last government, “this race just got real. Elvis has left the building.”

Everyone knew who was wearing the sequinned jumpsuit in this analogy. On this very day, hours before this debate began, Kevin O’Leary, a huckster and pitchman on assorted U.S. cable television shows, had announced he was quitting the leadership race. It made sense that O’Leary was early to get out. He had been late to get in, joining the race in January, fully eight months after his most prominent rival, Maxime Bernier, had launched his own campaign. And O’Leary had at times seemed barely to be running for anything, skipping debates if their timing or format displeased him, popping up in New York City or Florida more often than in most Canadian venues.

Yet O’Leary was, by some of his own opponents’ best reckoning, the race’s front-runner, right up to the day he quit. This state of affairs hints at deeper pathologies. That a distracted resident of TV-land could wander into the race, attend listlessly to it in only one of the country’s official languages and still manage to dominate what was already the largest field of candidates in any national leadership race in the past century of Canadian politics suggests it was an easy field to outshine.

Still, the party is well shut of O’Leary. Lord knows what fate would have befallen the party if O’Leary had stayed in and won. He would not have been likelier to get his act together after an accidental victory than he had been earlier. His departure is good news for a party that could use some.

Conservative Party leadership candiidate Maxime Bernier (left) looks on as Kevin O’Leary addresses a news conference in Toronto, Wednesday, April 26, 2017, after it was announced that O’Leary had quit the leadership race and thrown his support behind Bernier. (Nathan Denette/CP)

As the rest of the field gathered on the Bluma Appel Theatre stage, it was clear that each candidate was still taking the measure of a race without O’Leary. If they had anything in common, it was that almost all of them were running, each in a different direction, away from the memory of Stephen Harper. This campaign resembles nothing so much as an aerial shot of a little-league soccer team racing away from the kid who farted.

Brad Trost, from Saskatoon, and Pierre Lemieux, from small-town eastern Ontario, served for a decade in poorly lit corners of Harper’s governing Conservative caucus. Both chafed at his refusal to allow debate over abortion. They are running as unapologetic social conservatives. Trost has said he wouldn’t march in gay Pride parades as the party’s leader. Lemieux told the Toronto crowd he wanted to be the candidate of Conservatives with “faith values, social conservative values, and with life values.”

Kellie Leitch was Harper’s minister of Labour. She worries that he was not suspicious enough of immigrants. Her promise to “interview” every newcomer or visitor to Canada to check their allegiance to “Canadian values” landed her a cover story last fall in this magazine. At first it seemed she might use the notion as part of a full-throated cultural nationalist candidacy, along the lines of Donald Trump’s campaign or the populist anti-immigrant parties of Europe. Instead, she’s been in a holding pattern, repeating her screening pledge without explaining it or adding others of comparable shock value. She’s stuck, campaigning on her guts without seeming able to follow or even find them.

Erin O’Toole, Lisa Raitt and Andrew Scheer are running closest to the Harper legacy—none proposes a major shift away from him on policy—but all are eager to let you know they would be more cheerful than the former boss.

MORE: Farewell to Kevin O’Leary, a man who didn’t come back for you

Scheer had to stay out of partisan politics for years as Speaker of the House of Commons, but he’s thought to be well to the right of the other two—a young disciple of Margaret Thatcher and Ronald Reagan. That sits well with Conservatives, and by the end of 2016 he had more endorsements from fellow MPs than any other candidate. But Scheer’s campaign has been cautious, even timid. This spring, O’Toole overtook Scheer on MP endorsements with a more focused campaign, even attracting endorsements from a few MPs who once supported Scheer.

At least from 2008 on, Harper governed with pure scorn for anyone who would limit the exploitation of Alberta’s oil sands in the name of meeting Canada’s carbon-emission targets. So much of Harperism was bound up in that set of policies: skepticism about climate change, laissez-faire dogma, a revolt against the policy-generating East on behalf of the wealth-generating West.

Michael Chong is running against all of that, which marks him as a brave man if nothing else.

Chong wants a carbon tax to get Canada on the right side of history with regard to climate change. He’d use the revenues to pay for big income-tax cuts, making him, in his eyes, the only “real conservative” in this race. None of his opponents agrees. In Toronto, they lined up to disavow his carbon-tax pledge, using their scorn for Chong as a totem of their own credibility as resource boosters. He was like home base in a schoolyard game: take a whack at Chong’s carbon tax, talk about something else. His stubbornness, at least, was something to behold.

The final disavowal of Harper comes from Bernier, and in some ways it’s the most personal. The loping divorcee from the Beauce was dumped from Harper’s Cabinet in 2008 over security indiscretions. But his real crime in the boss’s eyes was indiscipline, and Harper never really pardoned him. In a caucus perilously thin on Quebec talent after 2011, Harper still refused to give him a senior Cabinet post.

Now Bernier is running as the candidate who writes off Harper’s entire economic legacy as weak sauce. He’d end the supply-management scheme that props up the dairy and poultry cartel in his own province. He’d end corporate welfare, and explicitly decries bailouts for Bombardier that the Conservatives delivered in power. He’d cut taxes far beyond anything Harper contemplated.

It’s when he hints at a strategic sense or a willingness to do things in stages that Bernier is least credible. At the Toronto debate, he said he’d offer to eliminate supply management if U.S. President Donald Trump opened the U.S. market to Canadian softwood lumber. Perhaps he wanted to sound like a canny bargainer. But his tit-for-tat isn’t credible: as prime minister, Bernier would dismantle supply management by sundown on his first day in office, just for the economic orthodoxy of it.

Candidate Kellie Leitch addresses a Conservative Party leadership debate Monday, February 13, 2017 in Montreal. (Paul Chiasson/CP)

Chong, for one, finds it all horrifying. Bernier would cut spending by five times as much as Paul Martin cut it at the height of the mid-’90s deficit crisis. He’d end the “federal role in health care” by replacing cash transfers to the provinces with the delegated taxing power to raise their own health care money.

“That will hand the next government to the Liberal Party of Canada,” Chong said. On other occasions, he’s said the same thing about Leitch’s immigration policy. Which is what most of the others have said about Chong’s carbon-tax policy.

So here’s a party that only recently ended a decade in power, but whose candidates to replace its only leader are disavowing, in word or manner, the way he led them. Each is persuaded the others would lead the party to ruin. Among them, it’s hard to find anyone with the stature to become a prime minister. It’s much easier to find standard-bearers for your choice of extremism: smaller government, a revived abortion debate, suspicion of immigrants.

But that’s looking on the dark side of it.

If I had one bit of counsel to offer Conservatives this season, it would be: be of good cheer. Judging by the recent standards of governing parties that get tossed out after a decade, this one’s in passable shape. Its temptations toward extremism seem to be mostly self-correcting. And though its leadership field may resemble 13 dwarfs for now, that’ll change.

Compare the post-Harper Conservatives with the Liberals after the fall of Paul Martin and the Progressive Conservatives after Kim Campbell. In the latter case, it’s no contest: by 1993, the PCs had already won the last election they ever would and were still a decade away from amalgamation with the Canadian Alliance. The party had two seats in the Commons and would peak at 20 in the 1997 election before drooping to 12 in 2000.

Martin won a few more seats in 2006 than Harper in 2015, but his internecine battle with Jean Chrétien left a factionally divided party that wouldn’t really recover for almost a decade. Weary of insider battles, the Liberals let themselves be tempted for years by newcomers and outsiders—Bob Rae, Michael Ignatieff. Sick of players, they fell for a man to whom any thought of strategy was alien, Stéphane Dion.

MORE: Scott Gilmore’s confessions of a self-loathing Tory

We are sometimes told today’s Conservatives are too far outside the political mainstream to be competitive. We are, in fact, sometimes told that by my colleague Scott Gilmore, who has lately been wandering the land looking for signs of a Red Tory revival. But the relative electability of the Harperite and Red Tory strains of Canadian conservatism is not a hypothetical question. It was tested for a decade, and the more moderate strain lost every time.

In 1993, Preston Manning’s Reform Party won 2.9 points of the popular vote more than the Campbell Conservatives. In 1997, Jean Charest came to within a point of Reform, but by 2000 it was a rout: Stockwell Day’s Canadian Alliance, running on a platform that was probably closest to where Brad Trost is today, won more than twice as many votes as Joe Clark’s reincarnated cult of no-personality.

Given the limited fertility of the arc of the political spectrum lying between Stephen Harper and Justin Trudeau, fans of a middle path reply that their patch of earth is at least more aesthetically pleasing. Sure, Harper won three consecutive elections, but he did it in ways that were distasteful. The Conservative Party of Canada is xenophobic, we’re told, even though under Jason Kenney it made major inroads among immigrant communities. It’s anti-gay, we’re told, although Bernier, Raitt, Chong and Steven Blaney have all voted for trans rights, and even Pierre Lemieux has said he would not revisit same-sex marriage if, in some unimaginable designated-survivor scenario, he managed to become the party’s leader.

Anyway. This debate is fun to prosecute, but the “self-loathing Tory” side seems lately rather undersubscribed: Elections Canada returns show that in the first quarter of 2017, the Conservative Party of Canada managed to raise $5.3 million, almost twice the $2.8 million raised by the Trudeau Liberals. Is that the result of all the leadership fundraising? Nope. Donations to leadership candidates are counted separately, and among them the Conservative candidates raised another $4.6 million.

None of this is a guarantee that the Conservatives are on track to win the 2019 election. In fact, ample precedent suggests the Liberals should be hard to beat next time out. The Liberals just won a majority in 2015. Since Confederation, only two governments were swept in with a majority and then swept right out of power at the next election: Alexander Mackenzie’s in 1873-78 and R.B. Bennett’s in 1930-35. It’s much more common for voters, having installed a government with a mandate that strong, to let it stick around for a while: Wilfrid Laurier, Robert Borden, Pierre Trudeau, Brian Mulroney, Jean Chrétien.

MORE: How a new Tory leader can beat Trudeau

Justin Trudeau may lose his second election, but a party that plans to matter for a long time to come would do well to pick a leader who can survive a defeat. The Conservatives would never admit that’s what they’re doing, but the youngish and optimistic field of front-runners in this race seems well suited to the task.

What’s striking, in conversation with Conservatives, is how varied their allegiances are. I’ve met party members who were hesitating between Chong and Trost, or between Bernier and Scheer—between candidates whose philosophies seem to put them at opposite ends of some ideological divide. But that’s healthy, because it suggests the party isn’t broadly split along any single factional line.

The Chrétien-Martin and Mulroney-Clark feuds have no equivalent in today’s Conservative party, and unless the new leader is Kellie Leitch, who seems to have durably alienated all of her rivals, the field should have little trouble coalescing behind a new leader.

So, yeah, the party looks like hell in this leadership campaign, but which party looks great in a leadership campaign? Some of the candidates are of modest intellectual and moral stature, but in a 13-person race, it’d be a surprise if that weren’t the case.

The next leader will be unknown to most Canadians and lead a party full of people who’ve spent weeks badmouthing him or her. But that is the natural way of things in politics. In every Canadian election since Confederation except one—the 2015 election, when Justin Trudeau’s Liberals came from third place to win—the leader of Her Majesty’s Official Opposition has been the only person who defeated the incumbent. After May 27, that person will be the Conservative leader. After a couple of lousy years, Conservatives can be forgiven for permitting themselves a little optimism.

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