In The Weekly Wrap Sean Speer, our editor-at-large, analyses for Hub subscribers the big stories shaping politics, policy, and the economy in the week that was.

Trudeau’s twisted view of capitalism is costing us all

This week, Prime Minister Trudeau participated in a Q&A session at a major trade union event outside of Ottawa where he discussed, among other topics, his personal conception of the market economy. It was a telling conversation that exposed the prime minister’s flawed thinking about the strengths and weaknesses of capitalism. 

What was most striking was his inherently dark view of the market economy itself. He seemingly sees it in Hobbesian terms in which positive-sum exchange is next-to-impossible and predatory arrangements are instead the norm. 

As he put it: “…particularly now where you have the concentration of capital and wealth in smaller and smaller numbers of Canadians’ hands, making sure that the benefits of growth actually accrue to entire communities and to all Canadians, of all generations, that does require a government to step up.”

This understanding of capitalism assumes that power dynamics explain virtually everything in the economy. A large and active state isn’t just responsible therefore for humanizing the market’s outcomes, but for ultimately ensuring that we don’t devolve into a negative-sum, high-conflict society. 

It’s both conceptually and practically wrong. Adam Smith’s The Wealth of Nations showed how capitalism’s form of mutual exchange is about effectively channeling commercial self-interest into positive-sum outcomes. As he famously wrote: “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our diner, but from their regard to their own interest.”

But Smith went beyond a utilitarian case for the market economy and put forward the argument that capitalism actually cultivates virtue. In his less-famous book, The Theory of Moral Sentiments, he convincingly argued that the process of mutual exchange encourages key virtues like civility, prudence, thrift, and trust.

George Will put it to me this way in a 2021 interview: “…capitalism doesn’t just make us better off, which it manifestly does, but also it makes us better. It makes for a polite, cooperative, and trusting society that is respectful of individuals pursuing their private interests and groups of individuals contracting together to collaboratively pursue their interests.”

This more positive understanding of markets is backed up by data and research on trust. Although the direction of causality is somewhat contested, it’s axiomatic that high-trust societies tend to be market democracies. Capitalism’s culture of voluntary exchange supports (and depends on) high levels of interpersonal trust and trust in mediating institutions. 

This textured picture of capitalism stands in stark contrast to the simplistic one painted by the prime minister. The market economy isn’t perfect—it’s only worth “two cheers” as Irving Kristol wrote—but it’s far better than Prime Minister Trudeau’s false characterization. It’s a reminder that bad government and bad policies usually start with bad ideas. 

The Alberta model prevails as B.C. reverses drug decriminalization policies

Last weekend when The Hub’s publisher, Rudyard Griffiths, and I were in Vancouver, he persuaded me to walk to the Downtown Eastside to see firsthand the major concentration of drug use and social disorder that’s been permitted to emerge there over the past several years. 

It was an extraordinary experience—not something, by the way, that I’d encourage after a sushi lunch. I was nearly sick to my stomach several times because of the overwhelming smell. I wish that I could say that my first instinct was one of compassion and empathy but it was principally disgust about how gross and unlivable the conditions were. 

It was merely a coincidence that our walk coincided with news that British Columbia Premier David Eby had officially asked Ottawa to abandon plans to decriminalize drugs in the province. Their “recriminalization” represents a major defeat for the “harm reduction” ideology which has been so dominant in the discourse about drug policy for the past decade or longer. 

Yet, if harm reduction is increasingly the subject of doubt, it’s not merely because of the awful sights that we saw. It’s in large part because a growing number of voices, including writers like Adam Zivo, a former student of mine, have come to carefully scrutinize the harm reduction model and share their troubling findings with Canadians. It’s enabled many to better understand the costs and failings of a radical policy experiment to effectively give drugs to addicts. 

It’s led to a pretty remarkable sea change. I remember back in the Harper era when even though common sense told us that “defining deviancy down” was a bad idea, it had the strong support of a loud and influential group of experts. There was also no credible alternative on offer. Critics of harm reduction were therefore on the defensive even if intuition was on their side. 

I think, for instance, of the Ford government in Ontario, which after it was elected in 2018 was immediately on the defensive about approving more safe injection sites. It proved to be a torturous decision for a newly-elected, ostensibly centre-right government with a big electoral mandate to do things differently. It was a sign of how one-sided the debate was.

Progress really starts with the Kenney government in Alberta which didn’t accept that these issues ought to be defensive ones for conservatives. Jason Kenney and his ministers instead developed a credible and robust alternative to harm reduction rooted in law enforcement and treatment. The “Alberta recovery model” has since been held up as an exemplar for Canada and other jurisdictions around the world.  

These developments have granted license to others—including previously silenced medical experts—to step up and criticize the human tragedy unfolding in British Columbia and elsewhere across the country. One cannot help but think that the result of the rise of the Alberta model, Zivo’s work, and the accumulating failures of the status quo is that the pendulum is shifting such that harm reduction proponents are now the ones on the defensive. 

Last week’s decriminalization announcement (which must be understood as a fundamental reversal for the Eby government) is a sign that things are finally moving in a more humane and ultimately effective direction. The harm reduction experiment may be fortunately coming to an end. 

The market—not government—is our best bet for solving climate change

An underreported development this week was the announcement that Capital Power is abandoning a major carbon capture and storage project outside of Edmonton. Comments from the company were pretty direct: the technology isn’t “economically feasible” even with large-scale public subsidies. 

It reflects an inherent challenge for climate policy advocates. So much of Canada’s emissions-reduction plan—particularly as we approach the 2050 target of net-zero emissions—amounts to the old economist line about “assuming a ladder.” We’ve increasingly organized our economy around new technologies to lower emissions, including electric vehicles and carbon capture, that represent suboptimal or uncertain bets.

The government is massively subsidizing these technologies because they’re not really responses to market signals. They’re a function of government climate mandates, including the controversial emissions cap on the oil and gas sector. Having imposed stringent mandates, the government is now compelled to help individuals and businesses respond to them. 

It’s an example of how poorly designed climate policies can invariably lead to a bigger role for government in allocating and managing resources in the private economy. The state effectively manufactures demand through regulation and then subsidizes supply through tax credits and direct spending programs. 

This not only leads to inefficiencies, but it turns the government into a taxpayer-supported venture fund. It shouldn’t be lost on people that one of the reasons why the project was scuppered is because Capital Power couldn’t access more subsidies from Ottawa’s euphemistically named Canada Growth Fund. 

A more productive approach would be to adopt more neutral policies that decentralize decisions about best how to respond to private actors or less stringent policies altogether that don’t force industry and government into non-economical technologies for which the costs may outweigh the emission-reduction benefits. 

The latter notion is contentious of course. But it’s hardly a fringe position. It may even be the optimal approach for Canada to contribute to global emissions reductions. 

One thing is clear: if it produces outcomes rooted in practical reality rather than idealized assumptions, it will be better for Canada’s economy and ultimately the environment. 

Justice Marie-Josee Hogue’s just-released foreign interference report provides more transparency and details beyond the opaque conclusions offered by “independent” special rapporteur David Johnston almost precisely a year ago.

Earlier this afternoon, the first report of the Public Inquiry into Foreign Interference in Federal Electoral Processes and Democratic Institutions (PIFI) was released, landing on the desks of journalists and analysts with a quieter thud than many would have expected.

I had the advantage of being in the tense Ottawa media lockup, at the National Archives building, to review the report in the morning hours prior to its lunchtime release. There were few signs of shock or surprise in the room of journalists, as the pages containing the commission’s first round of findings were anxiously turned. 

Both the Johnston and PIFI reports confirm many of the generalities that Canadians have long suspected. 

There is in fact “ample evidence” that foreign interference occurred in the 2019 and 2021 elections, potentially impacting some votes and even possibly results in a handful of ridings, but without impacting the overall election outcome. China is seen as the main actor seeking to affect our electoral outcomes by helping preferred candidates obtain office. It is, as Commissioner Justice Hogue puts it, the “most persistent and sophisticated foreign interference threat to Canada”. The People’s Republic of China’s interference tools of choice are illegal campaign donations, bribery, blackmail, threats, cyber-attacks, and mis- and disinformation campaigns. 

Some of these tools, describes the report, were used against Conservative MP Kenny Chiu during the 2021 election, when Chinese Canadians were encouraged by state proxies not to vote for the Vancouver politician. Chiu would ultimately lose his seat. The report says “false narratives”  possibly contributed to his loss.

India and Iran are considered secondary but increasingly threatening players but seem more concerned with monitoring and stifling criticism and dissent among their diasporas in Canada than seeing the election of sympathetic candidates to Canada’s Parliament. Meanwhile, overt Russian election meddling could not be found. 

CSIS is told to sharpen up its delivery of intelligence to government—getting into the details that catch governments’ attention—and should likely be empowered to share more broadly with other players, such as opposition parties. Government and the civil service is told to learn, digest and share intelligence between its branches. And on Hogue went, reviewing the often repeated messages of the failings of the Canadian national security apparatus. She’ll leave the majority and details of her recommendations for later this year when she issues her second report.

The difference between the work of Johnston and Hogue comes down to the latter having a far more transparent process, one that yielded more details for the public to consider on the pathway back to rebuilding trust in our democratic institutions. And Hogue will tell you she is worried about that trust, writing that hostile states succeeded in their interference because some Canadians now have “reduced trust in Canada’s democratic process.” She calls this the “greatest harm” this country has suffered from foreign interference.

While Johnston spoke vaguely about threats to Canadian democracy and the need to confront the growing danger of foreign interference, Hogue is more forceful, concluding that interference “likely impacted some votes” and that the covert actions of foreign states “undermined the right of voters to have an electoral ecosystem free from coercion or covert influence.” She calls this a “stain on our electoral process.” 

Johnston’s poring over classified documents at his desk enabled him to muster such insightful observations as that there were “irregularities” surrounding the nomination of then soon-to-be Liberal MP Han Dong in the Toronto riding of Don Valley North. The former governor general then coupled this with statements absolving Dong, Prime Minister Trudeau, and other Liberal party heavy-hitters from wilful wrong-doing. Beyond the fact that he never even sat down to speak with Dong, the trouble of course is that we have no clue what documents were on his desk, or what other information he had on hand that enabled him to make such reassuring statements. Such a “just trust me” story—whether it’s told by a respected objective figure or a former ski companion of the prime minister in power—is simply not a pathway to the restoration of public trust and political engagement in a modern world where an infuriated public increasingly distrusts the words leaving the lips of the elite governing classes. The public is hungry for the unedited truth they deserve.

As Tom Korski, managing editor of Blacklock’s Reporter, commented at the time of Johnston’s report, “The day has passed when the archbishop or the bank president or the royal family gets to stand there and say, ‘There’s nothing to see here, I’m not taking any more questions.” “We are in an age that is so far past that. People don’t buy it anymore. It’s not because they’re cynical. It’s because they’re informed,” he said.

Commissioner Hogue, on the other hand, insisted Dong and other players give official public and private testimony to lawyers. The benefit to Canadians was that they could hear what went on at his nomination for themselves. Testimony described several busloads of teenage Chinese national students armed with false credentials, who didn’t even live in Dong’s riding, arriving at his nomination. CSIS said they believed they had been pressured by the PRC’s Toronto consulate to vote for Dong. Hogue describes a “well-grounded suspicion” that these international students were “tied to the PRC.” “Given that DVN [Don Valley North] was considered a ‘safe’ Liberal seat, this would likely not have impacted which party won the seat. It could, however, have impacted who was elected to Parliament,” she writes. She stresses that “this is significant”.

Like Johnston, Hogue found no evidence to conclude Dong was a witting benefactor of this PRC boosting. Nor does Hogue suggest that the prime minister and his team were negligent or deceitful in how they managed information coming to them about these nomination concerns—though she does challenge whether the prime minister did enough to circle back to the issue after the election. 

However, testimony from Prime Minister Trudeau and his key party election organizers revealed to Canadians that the arrival of busloads of unidentified groups is par for the course of our nominations processes. 

As such, beyond Johnston’s “trust me” story of irregularities, Hogue has now exposed to the public the weaknesses in party nominations. She concludes nomination contests can amount to “gateways for foreign states who wish to interfere in our democratic process.” She promises recommendations to come to tighten things up. 

The pattern of additional detail and more forceful statements beyond rapporteur Johnston is repeated throughout Hogue’s work. She rightly points out that “foreign interference is like crime.” Both are “always present,” “evolve,” and are “impossible to eradicate.” However, she insists, it must be  “managed” and “discouraged.” Like runaway crime, foreign interference shakes citizens’ faith in their state. It requires frank public discussion and swift policy action. 

“The cat is now out of the proverbial bag,” says Hogue about Canadians now being made aware of the foreign interference their country is currently facing. The result, she says, has meant hostile ideological states have been successful when it comes to one of their primary goals. Our confidence in our electoral process has been shaken. It will take time to rebuild.   

It is an absolute shame that so much time was wasted at Johnston’s desk of secret documents before getting to Hogue’s public hearings. The second report on foreign interference will focus on how we respond to this foreign interference in our elections. But it leaves Canadians a scant few months to do much with the recommendations, before we head back to the polls in 2025.