No, Canada’s economy will not collapse if Trudeau stands up to Trump

Trudeau met Trump on Monday but voiced no criticism. He stayed mum on Trump’s racist travel bans for Muslims and refugees—silent even about Canadian Muslims being arbitrarily denied entry at the US border. Many commentators in the media were quick to jump to Trudeau’s defense, excusing his total lack of spine with considerations of real economik: Canada’s trading relationship with the US is too valuable for us to go even mildly criticizing Trump.

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Of course, Canada’s economy does rely heavily on the United States. But while over 75% of Canada’s exports go to the US, our trade relationship looks different than what many imagine it to be. And, in fact, the economy is much less of an excuse for Trudeau’s cowardice than it seems at first glance.

Here’s how Canada’s exports to the US break down:

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Trudeau’s economic model is clear and it is not good

Last week gave us a good idea of the economic model that Trudeau’s Liberals are gradually putting forward and it is business-friendly to the core. The infrastructure bank privatization scheme was the big news item in the fall fiscal upate (see my post from last week), but there are far more goodies to make business happy tucked away in the update and in news from recent weeks. The Liberals plans for the economy are not just about being business-friendly today but about integrating government with business ever further, in ways harder for future governments to unwind. Theirs is a tweaked neoliberalism for an age of stagnation. The mantra remains the market and the state is there to support it.

Here’s the broad strokes of how the Liberals’ plans are shaping up on economics.

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The great rentier give-away

With today’s fiscal update, the Trudeau government has really shown itself to be at the forefront of global left neoliberalism. Taking nearly all his cues from his business-dominated Advisory Council on Economic Growth, the Finance Minister announced a new Canada Infrastructure Bank as the centerpiece of the fiscal update and the Liberals’ economic strategy. Don’t believe the fanfare that is bound to come from the Canadian and international press, this isn’t anything progressive. It’s a new elite consensus that might become one of our main exports, pumped via virtual pipelines across the globe.

Here’s how Dominic Barton, the managing director of McKinsey Global, one of the world’s largest business consulting firms and head of the Advisory Council, framed the impetus behind the new bank:

Barton said infrastructure aimed at improving productivity will be of huge interest to foreign investors in search of steady returns with record low or negative interest rates in many parts of the world. “Infrastructure is the new fixed income,” Barton said in a speech over dinner at the conference. The mix of public and private capital has the potential to “jolt the system.”

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