Unpacking the defences of Mark Carney’s US strategy

Posted on July 11, 2025 by bhaggart

New piece from me in the Globe and Mail, in which I raise serious questions about Prime Minister Mark Carney’s overall strategy for dealing with the US. Simply put, if his goal is to bolster Canadian independence, his strategy of seeking a “comprehensive” (that’s the key word here) trade and security agreement with an obviously untrustworthy negotiating partner, representing a state that is, at the very best facing years, if not decades, of instability and at worst already on an irrevocable path to authoritarianism, dictatorship and fascism, makes no sense whatsoever. Comprehensive agreements are pathways to deeper, not less, integration. And in any case, a normal agreement isn’t on the table, because Trump has already shown us that he doesn’t respect any agreements.

It’s basically a reprise of the exact same argument I made back in February, when I argued that it’s no longer possible to negotiate any beneficial, lasting agreement with the United States so long as they’re on the path to authoritarianism. When I published it, I was gently surprised by the relatively unanimous acceptance of its argument, even by the comments section.

It’s not a hard point to grasp: agreements with authoritarians aren’t worth the paper they’re written on; Trump is seeking domination, which is the new foundation of North American governance; any agreement we sign will reflect this new reality and lead to an unacceptable loss of sovereignty; and so, we shouldn’t put our faith in any agreements or negotiations to save from a predatory US.

This time around, however, I’m seeing pushback on two fronts: that we should trust Carney because he’s a smart guy who’s only been on the job for a few months, so we should hold off on our criticism; and the Trump fever will pass so we shouldn’t panic. On top of that there’s also been a bit of “If you’re so smart, what do you think Carney should do?”

The fundamentals of Canada’s situation are exactly the same now as in February, which suggests that there’s more than a little motivated reasoning behind these arguments. But let’s see how they stand up.

Carney’s a smart guy. He knows what he’s doing. We should just trust him.

Intelligence, even brilliance, in one field doesn’t necessarily translate into intelligence or understanding in other areas. The belief that intelligence in one area reflects the ability to understand another area is known as the “halo effect.”

The thinking regarding Carney here is that because he was a central banker, he understands the economy and knows how to deal with politicians. In reality, the world of the politician, let alone prime minister, and the central banker are very different. A central banker’s remit is incredibly narrow: they only have one main job, keeping inflation under control. They don’t have to worry about things like immigration policy, or cultural policy, or public sector reform, or military and security issues. (Or political oversight, since by design they’re isolated from political pressure. If you want to know why Carney’s first instinct was to reduce oversight and consultation on big projects, that might be a useful starting point.)

Central bankers, by training and occupation, will tend to see the economy and society in a particular way. As a result, they will develop a deep understanding of the economy, yes, but a very partial one that excludes as much as it includes.

So, what’s Carney missing here? Basically, as I suggest in the Globe article, the politics of North American relations, and the conditions that have made productive Canada-US relations possible for decades.

One reason I have so many questions about Carney’s strategy and the seeming disconnect between his stated goals and his actions is I’ve seen this movie before. I’ve been studying Canada-US relations for over two decades now. My dissertation examined the conditions under which Canada and Mexico could exert policy autonomy in areas of great interest to the United States. When I see Carney propose a comprehensive trade and security agreement with the US, I note that this is exactly what a lot of right-leaning, pro-US-integration analysts proposed in the aftermath of the 9/11 attacks: Canada needs to sign some sort of trade-and-security grand bargain lest the US decide to crush us.

Such agreements must necessarily lead to deeper integration. That’s what “comprehensive” means: working out how you are going to work together over a vast number policy areas. Now, if this were 2002, we could have a discussion about whether such a move was in Canada’s best long-term interests. But it’s 2025, and the US is no longer a functioning democracy, especially right here and now, under Trump. Not only can Trump not be taken at his word, democracies and authoritarianism don’t mix: the terms of integration in 2025 will be much, much harsher and limiting than what might’ve been on offer in 2002.

If Carney were just talking monetary policy, there’d be more cause for trust (although as a former economist who specialized in monetary and trade policy, I can tell you that it’s much, much more political than you might think). While he’s gone all-in on AI, he hasn’t gone down the crypto rabbit hole like Pierre Poilievre. My guess is that’s Carney’s subject-matter expertise in action.

But Canada-US relations happens to be an area I know deeply, and what I’m seeing is raising a lot of questions, which I’ve been highlighting for months.

All this is why I don’t put any stock in the argument that Carney’s playing a long game. There’s a way to string things along and buy time to do… something? without putting deeper integration on the table. I’ll get to that.

But trying to force an agreement through an arbitrary deadline and offering concessions simply to keep talks going isn’t playing the long game; they’re the actions of someone who wants an agreement. Nor are tax cuts and slashing government the actions of someone serious about confronting the threat of a United States that is eviscerating its regulatory and statistical agencies. These changes will require less cooperation with the US and more program spending to make up for the benefits we used to get from regulatory cooperation.

It’s the old Reagan adage: Trust, but verify. When I hold Carney’s actions against what I know of how Canada-US relations work, and against his professed goals, I see deeds that don’t match words. That’s a problem.

2. The problem is Trump. We just need to get through the next two/four years.

This is exactly the view that world leaders adopted in 2017, and look how well that turned out for everyone. In 2017 it was short-sighted; in 2025 it’s inexcusable. It mistakes a symptom (Trump) for the problem (the collapse of US democracy and its institutions).

Trumpism will outlive Trump. The Republican party is now an authoritarian party that has rejected the rule of law. The courts have been turned into a partisan Republican institution, with different Supreme Court standards for Democrat and Republican presidents. The gerrymandered legislature is biased against Democrats, and Republicans have shown no interest in holding the Republican president to account. The electoral college! Media has bent the knee to Trump. Congress has just provided an insane amount of funding that will allow ICE to become Trump’s secret police. They’re disappearing people and constructing concentration camps, for fuck’s sake.

This is the problem facing Canada. Trump’s tariffs are the symptom of an authoritarian government that seeks domination, not cooperation. It’s a tactic, not the game. The very, very, very best Canada can hope for over the next several decades is extreme instability, as successive Republican and Democratic presidents tear up the agreements signed by their predecessors. A country can’t sign lasting, trustworthy agreements under such conditions, let alone the more-likely situation of continued authoritarianism, likely fascism and maybe even civil war.

So, no. This problem isn’t going away. I would dearly love to be wrong. I don’t think that I am.

Well, what do you suggest, Mr. Smart Guy?

It’s almost impossible to overstate exactly how much danger the United States poses to Canada’s democracy and autonomy. My problem with Carney’s approach is that it will lead to a loss of autonomy, but I don’t disagree with anyone who argues that we’re in a nearly impossible situation and that there are no easy answers. Kim Richard Nossal’s prescient 2023 book, Canada Alone: Navigating the Post-American World, will give you a good idea about exactly how bad things actually are.

The first step, though, is to recognize that dealing with a hostile authoritarian regime is different than dealing with a democracy. When you recognize this point, it takes certain options, such as a negotiated comprehensive trade and security agreement, off the table. Once you’ve made that mental move, it allows you to get a clearer, if deeply upsetting, picture of the actual stakes and sacrifices that may be needed.

We can’t get the tariffs down for a guaranteed amount of time that would allow deeper integration to proceed as before. Which means that we have to get used to the lack of guaranteed access to the US market. This doesn’t mean there won’t be any trade; it means that Canada-US trade will continue but be diminished under conditions of deep, unresolvable uncertainty. Deeper integration becomes a no-go. The auto industry, the foundation of Canadian economic development for decades, may no longer be viable, if we want to maintain our independence.

This raises the urgency of diversifying our markets and strengthening our internal economy. However, we should be under no illusions that this can be done either easily or completely. Canada’s been signing trade agreements willy-nilly for decades. The problem has been business follow-through. The loss of guaranteed US market access will make other markets relatively more attractive, but they will still need significant government support to make this work. It will require more government program spending, not less. Same with supporting the internal market.

Canada also has to strengthen its regulatory apparatuses and reduce regulatory and security cooperation with a hostile, MAGA US. This will also require more government regulation and spending, not less. Similarly, we need to start securing our information ecosystem from US misinformation and Meta-like news shutdowns.

We also can’t leave the question of what counts as a nation-building project to the private sector or the provinces, or you’ll end up with inertia-driven pet projects, the same-old, same-old. If we leave it to the market to plan the future, the future will look a lot like the past. We need actual leadership.

That’s all pretty dour, but there are other, more positive, things the government needs to do. Most importantly, Canadians need to be invited into the conversation about the future of the country.

That’s not happening. Where is the youth civic corps? The Elbows Up Savings Bonds? The defences of Canadian culture? The moonshots? Not to mention the attempts to build a more inclusive Canadian nationalism, including regarding Indigenous peoples?

Right now, the plan is: ram a few pipelines through, sprinkle AI on everything, buy all the guns, and voilà! Independence! All while eviscerating government programs and cutting taxes. For a plan that’s supposed to save Canada, Canadians are remarkably absent. If we’re facing an existential threat, you have to pay attention to Canadian culture and identity. That’s completely absent right now, and I think that’s Carney’s central banker blinders at play.

As for Canada-US relations, trading security or policy autonomy off against trade will only lead to disaster. Instead, Canada should treat US issues with the respect they deserve, but on their own terms. No trading off one issue against another. The line should be: “Canada has a long history of working with the United States to address issues of shared importance. We look forward to discussing this issue on its merits, and to exploring possible mutually beneficial solutions.”

At all costs avoid linking issues. That’s a form of extortion. It will only infect the rest of the relationship.

That’s how you string out a negotiation, not by offering concessions in advance.

Significant risks abound

That’s the plan. However, we should also be clear about its risks. US trade supports about a third of our economy. Losing even a bit of that will be an enormous hit to Canadians’ standard of living – try thinking through what the Canadian economy looks like without the US-integrated auto sector. None of this is good.

Similarly, US hostility to Canadian democracy will only increase, making us more insecure.

This all truly sucks, but that’s what we’re dealing with. Massive government investment in the Canadian economy and society is the best way to blunt these negative effects, but they will be negative, and they will be severe. That’s what sacrifice would look like.

Carney’s insistence that his approach will deliver greater Canadian independence obfuscates our actual choices. These are:

Deeper integration will blunt the short-term economic effects of Trump’s tariffs on the Canadian economy, but at the cost of a loss (potentially irrevocable) of Canadian sovereignty, independence, and likely democracy. But you’ll get tax cuts, and it’s compatible with market-led infrastructure projects to take a bit of the edge off. There are also no long-term guarantees that Canada will be treated “fairly” by an authoritarian US regime. We may sacrifice our autonomy to save the auto industry, only to lose it to the next round of crazy demands from a president who will always see Canada and Canadians as “them,” never “us.”

Greater independence, meanwhile, will require massive increases in Canadian government spending, higher taxes and more actual planning than we’ve seen in generations. It will create the foundations for a more secure, independent Canada, but we’ll also take a significant hit in lost GDP due to the unresolvable uncertainty around US market access.

And you can be sure that it will make US interests very angry. In a world in which US overall influence is declining, the importance of Canada to their economic and physical security will increase. We have to be ready for that.

Needed: More government, not less

Carney’s plan to cut taxes, shrink government (except the military) while trying to resurrect some form of free trade and integration with the US is a relic of a time that’s passed us by. It’s the orthodoxy that’s dominated since the 1980s. The Global Financial Crisis in 2008 should’ve killed off the idea that leaving things to the market is always best, but ideologies die hard.

In 2025, it’s positively dangerous, a poisonous vestigial tail. We need a new approach for our new world. What we’re getting is same old, same old. We need more government, not less; less US integration, not more; greater public involvement in the discussion, not their sidelining. We need a Canada that is materially and mentally capable of standing up to an authoritarian power.

That’s how you build a more resilient Canada. Nothing’s guaranteed, but it has a better chance of succeeding that the government’s current strategy.

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It’s far past time Canadians assessed Carney’s US strategy

Posted on June 30, 2025 by bhaggart

The Liberal decision to axe the digital services tax (DST) on large tech companies, set to go into effect today (June 30), is important not so much on its own terms, but what its elimination tells us about Prime Minister Mark Carney’s US strategy.

In a nutshell: Nothing good, if you’re interested in preserving Canadian independence.

Without getting into the tax itself too much, it was very much a mainstream policy, and a sound idea: make transnational tech companies that have a nasty habit of avoiding taxes in the jurisdictions in which they operate actually pay their way. It’s been the subject of negotiations at the Organization of Economic Cooperation and Development (OECD). Versions of it have been adopted in countries such as the United Kingdom, Spain and Italy.

It was also caught up in global politics, with the US playing a decidedly two-faced role in stymieing its adoption. Before Trump, the US was highly unlikely to ratify any agreement, which requires a two-thirds majority in the Senate, making opponents’ arguments that Canada should’ve waited for a global compromise more than a little self-serving. Trump’s re-election sealed the (non-)deal. But Canada moved forward. US tech companies despised the DST and were planning to attack it via the United States Mexico Canada Agreement (USMCA) renegotiations scheduled for 2026.

Then on June 19 the Liberal government made a big show that they were going to implement it on schedule, Trump walked away from talks between Canada and the US on a comprehensive trade and security agreement because of it, and here we are.

What matters most isn’t the policy itself – though you’d think a government that wants to increase defence spending by anywhere from $50 to $90 billion would be interested in securing every revenue source it could – but what it tells us about Carney’s overall US strategy.

Mark Carney has been personally negotiating a “comprehensive” trade and security deal with the US; only in late June did he hand off this responsibility to Canada’s ambassador to the US. According to a press release issued Sunday night(!), the Carney government cancelled the DST “to advance broader trade negotiations with the United States.”

Normally, such a move might not be a big deal; in normal negotiations, countries give and take. And it sure seemed like the government was setting up the DST to be a sacrificial lamb. (My working assumption for months has been that Carney, drawn to the rough physicality of pipelines and militaries, sees Canadian digital policy, outside of a fixation on AI, as wholly expendable. I fully expect future online harms legislation and the Online News Act to meet a fate similar to that of the DST.)

But these are not normal negotiations, and Trump is not a normal trading partner.

Start with Carney’s long-stated goal, from the Sunday press release announcing the end of the DST: “a new economic and security partnership with the United States.”

He’s not proposing a UK-style lightweight tariff deal, but a reworking of the entire Canada-US relationship, including security. If words uttered by Carney have any meaning, comprehensive means comprehensive. It requires deeper integration.

And he’s set a deadline of July 21 to do so. Already, he’s sacrificed a domestic policy simply to keep the talks going. And he’s done so while also claiming that Trump no longer wants to annex Canada, only to be contradicted by Trump himself days later.

These are not the actions of someone who is simply stringing the US alone. They’re the actions of someone seeking to address the problems in Canada-US relations through deeper integration.

The unilateral setting of an arbitrary deadline to conclude the talks is particularly odd. Deadlines only work to spur negotiations if both parties share the urgency (they don’t) or if one has the ability to impose its will on the other (Canada doesn’t). So why the deadline?

Then there’s the most-obvious problem. Donald Trump is an unreliable negotiating partner who has proven time and again, in politics and business, that he will renege on any agreement if he feels that doing so will work to his advantage. The greatest irony of Carney’s talks is that they’re in response to Trump’s tariffs, tariffs that are illegal under the actual agreement governing North American economic relations, which was negotiated by Trump himself. A treaty that is up for re-negotiation next year. Is Carney’s new agreement, being done as far as I can tell on the fly, supposed to replace the USMCA? Or are we going to simply do this all again next year?

It all comes down to: we have no reason to trust the word of the United States, and yet Carney is acting as if we can.

Mark Carney is negotiating a far-reaching economic and security agreement outside of the current treaty framework, with a president who cannot be trusted to keep his word, and thus who cannot deliver the certainty that Carney wants. In pursuit of this unachievable goal, Carney has demonstrated that he is willing to limit Canadian policy autonomy without any indication of where he would stop or what policies are off limits.

Deeper integration is the plan

A lot of people who voted for Carney want to believe that he’s playing some kind of long game, that he’s stringing the United States along until… something?

It’s time we started analyzing Carney’s plans as they are, not as we wish they were.

Carney is spending a lot of time and hard-earned political capital keeping alive the possibility of a comprehensive trade and security agreement with the US. He’s remained stone-cold silent on Canadians being harassed at the border and detained by ICE. The US military is in talks with Canadian miners for key minerals. He’s said nothing about how Canada will respond to the evisceration of US standards and regulatory setting, processes upon which all Canadians, and Canadian businesses depend. It would require more, not less, government regulatory capacity. Instead, Carney is cutting taxes and wants to cap the size of the civil service.

Carney has been utterly consistent in his desire for a comprehensive trade and security agreement with the United States. Even at the height of his elbows-up rhetoric, it was always part of his platform, pitched as part of his diversification plan, of needing a new arrangement for Canada. Maybe we should start taking him at his word.

These negotiations never made any sense as a diversification strategy. By definition any comprehensive agreement would entail creating many more new connections and dependencies. And again, almost by definition, these new dependencies, including in security and defence, will make it that much more difficult to meaningfully distance Canada from the United States.

Understanding Carney: Economic blinders, ignoring authoritarianism

All signs suggest that Carney has badly misread the nature of the US threat, and that Canadians in turn have misread Carney on this central issue.

Carney has repeatedly said that Canada will never be the 51st state, but there’s more than one way to hollow out a country’s sovereignty. Sacrificing domestic policies in pursuit of a treaty that binds only one partner is one way to that goal.

Everything Carney has done indicates that he sees the Trump threat in purely economic terms. Trump, in this view, is dangerous because he’s erratic and has glommed on to an absurd, dangerous economic policy that threatens the viability of the Canadian economy. In such a scenario, the goal is to reduce or eliminate the tariff barriers while seeking to diversify as much as possible the domestic Canadian economy.

From this perspective, Carney’s actions make perfect sense. He’s trying to minimize the erratic Trump problem in the hope that economic sanity will one day return to the US, while implementing bog-standard conservative domestic economic policies (lower taxes! Less government! Pipelines! Defence spending! Natural resources!). It’s the kind of analysis you’d expect from someone who had spent their entire lives existing at the very centre of mainstream economic thought and focused only on maximizing or minimizing a few economic variables – inflation, portfolio returns, GDP.

It’s true that Trump is erratic and his tariff policies are bananas. But Carney’s mistaken the symptoms for the disease.

The real danger to Canada is that Trump is an autocrat, a fascist, who is dragging the United States into despotism. He has shattered North American governance’s underlying foundation. The rule of law no longer holds. Instead, power carries the day. The tariffs are the symptom. That Trump would impose them in the first place: that’s the important change.

The United States, and by extension, North America, are no longer what they were, and they’re not coming back. Even 20 years ago, integrationists could credibly argue that we’d be getting closer to a liberal-democratic US that (mostly) respected the rule of the law and (mostly) shared our values. That is no longer the case. The United States under Republican rule seeks not cooperation but domination. Any comprehensive agreements would reflect this changed status. The absolute best we can hope for is severe instability, as successive Republic and Democratic presidents void their predecessors’ policies; the worst is despotism and civil war. Again, this is the fundamental sea change.

Mark Carney, in surrendering the DSA, has jeopardized Canadian policy autonomy, all in the pursuit of the fantasy of a binding agreement.

Mark Carney may want secure access to the US market and for tariffs to go away. But neither of these are on the table because you can’t have certainty when dealing with a country that doesn’t respect the rule of law or other countries’ sovereignty.

And until he realizes this, he will continue to puff and posture and give away the store in pursuit of a fantasy.

Responding to this crisis requires a wartime-level effort, not just to buy more guns, but to wean our military from US influence, our networks from US software vulnerabilities. It requires governance changes. None of which Carney has shown the slightest interest in.

It requires the exact opposite of what Carney is doing in Canada-US relations. Without domestic policy autonomy, sovereignty is meaningless.

Canada will continue to have relations with the United States. We will still have to deal with issues as they come up. That’s always been part of the job. But we need to do so with the full understanding of who we’re dealing with, and what’s possible, should we want to maintain our independence.

That starts with ending comprehensive trade negotiations and getting serious about policies that will actually promote Canadian sovereignty.

A black cat in a box
A cat in a box: Metaphor for the claustrophobic nature of Canada-US relations? Or simply a super-cute cat?
Posted in Canada-US relations, Digital Regulaton, Trump | Tagged , , , , , , | Comments Off on It’s far past time Canadians assessed Carney’s US strategy

The Department of National Defence buys a Sky Tractor

Posted on March 8, 2025 by bhaggart

The part of The New Knowledge (buy it, or download a free pdf here!), co-authored with Natasha Tusikov, that always seems to blow people’s minds has to do with tractors. Specifically, software-enabled, networked tractors, which we discuss in Chapter 7. Almost without fail, they’re shocked to realize that the combination of software (protected by copyright, contracts and terms of service) and network connectivity means that farmers, who often pay half a million dollars for them, don’t actually control “their” machinery.

F-35 fighter jet and a John Deere tractor
Whether it’s an F-35 fighter jet or a tractor, if it runs on software, you don’t control it. F-35A photo: Master Sgt. Donald R. Allen. Tractor photo: Gnangarra…commons.wikimedia.org

Instead, control rests with the vendor, the manufacturer, who controls the software that allows the physical machine to function. Such “post-purchase control” can be useful. For example, in the case of theft, the company can simply cut off functionality, as John Deere has done with tractors stolen in Ukraine.

But implicit in this control is that the vendor will make decisions about how the tractor will function that fit its own interests, not the farmer’s. If the vendor wants to maintain control over repair (a lucrative revenue stream), it can set restrictions in the contract/terms of service and—more importantly—set digital locks in code that prevent repair. Farmers then are prevented from repairing their tractors or even diagnosing problems with the machines, something they’ve done for decades. Point is, even if you own and are physically holding or touching a software-enabled, networked device, you don’t control it. It’s not yours.

The realization that you might not control what you own hits particularly hard because there are few things that seem more physical, more offline, than agriculture, and tractors. Except perhaps guns and fighter jets.

Understanding the full implications of software-enabled physical goods – the Internet of Things – requires a wholesale mindset change. Explaining and exploring the implications of this point was really the main reason we wrote The New Knowledge in the first place.

Whether it’s agriculture, or smart cities, or military procurement, the physical thing is now secondary to the intangible software that makes it go. This change transforms the nature of ownership, challenges fundamental definitions of property, and reshapes relationships of power and control. And, as our readers’ reactions suggest, most people still don’t fully understand how dramatically the incorporation of software in physical goods changes things.

All your jets is belong to us

At this moment, Canada is getting a crash course in the power dynamics of the Internet of Things, thanks to the Department of National Defence’s purchase of the US company Lockheed Martin’s F-35 fighter jet.

 Michael Byers has criticized the purchase here. Kim Richard Nossal contextualizes our potential choices here, while David Pugilese provides some solid news coverage. As it happens, back in June Natasha wrote about the F-35 in the context of right to repair, raising many of the concerns that are currently being discussed in the context of Canadian vulnerability to US coercion.

In Natasha’s June article, she highlights how Lockheed Martin has been able to frustrate the US military’s ability to repair its equipment. To give you a sense of how tightly Lockheed Martin controls this software, Natasha notes that “the US Government Accountability Office concluded in 2023 that, without access to manufacturers’ manuals and software, military repairers ‘not only cannot fix the part, but they cannot learn and understand how to fix the part’.”

Add to this corporate power what Natasha discussed in her 2016 book Chokepoints: Global Private Regulation on the Internet: that powerful countries – like the United States – can and do coerce private companies to do their bidding to exert structural and coercive power. The whole point of the much-discussed military-industrial complex is the tight relationship between government and the military, and military contractors like Lockheed Martin. In our current moment, the problem is not just private companies price gouging militaries; it’s a hostile power that is in a position to use a company that is ultimately beholden to it as a vector of structural and coercive power.

The problem

It comes down to this: Canada is purchasing fighter jets that we will not control. Their operation will be subject to the whims and fancies of Lockheed Martin and the US government. As Byers notes, the jets will only be able to function fully via connectivity with “specialized computing facilities in the United States.” That gives the United States eyes and hands on every single thing these jets will be tasked to do.

Meanwhile, while Nossal raises concerns (correctly) about how the US might push software updates (wanted or not) that could brick the planes, that’s only part of the problem. There may be no formal “kill switch,” as DND argues in the Pugilese article, but we have to assume that the millions of lines of proprietary source code that allow the plane to function will include “backdoors” and hidden functionalities that could potentially compromise the jet’s functioning, including effectively killing it.

Imagine a “Canadian” F-35 flying a mission over Ukraine, only to find that its weapons don’t work, or all of a sudden it’s flying blind.

Geolocation’s a bitch.

In short, the problem isn’t that the US might compromise the jets at some future point. The problem is that the jets will be fundamentally compromised from the moment we take delivery.

That’s the problem. Canada may have thought it was buying cool tech or a form of interoperability with the US. That was certainly the mood in the mid-2010s among government types. In reality, as with all internet of things devices, we were setting ourselves up not to be junior partners, but for subservience. Because power rests with the vendor, not the buyer.

That’s the hard reality.

No easy answers

We have purchased fighter jets that will remain under the effective control of the United States for as long as they are in service. Which effectively gives the US a veto over our military missions, while also ensuring that our air force exists at their whim. No need to bomb an airfield to compromise a country’s air power when you can simply activate a few lines of code. Welcome to the world of the Internet of Things (read our book).

If that sounds bad, it’s because it is. So, what can we do about it?

Unfortunately, there are no easy answers. Kim Richard Nossal’s post does a good job at thinking through possible responses. He argues against cancellation, or at least full cancellation, for now. That immediately raises the question of, how bad would things have to get for Nossal to change his mind on full cancellation? My worry is: by the time things have gotten that bad, it will be too late to do anything about anything.

Unconvincing economic rationale

In the meantime, he makes a partially economic, partially pragmatic argument for keeping the F-35 (for now). Of these, the least convincing is his argument that we’ve already sunk so much into these planes that we might as well keep going. This is the sunk-cost fallacy: When you’re in a hole, keep digging.

Equally unconvincing is that we would face stiff cancellation penalties. We can think of this as an Internet of Things idiot’s tax. This is simply a variation on the sunk-cost fallacy: it fails to consider whether, just maybe, we should bite the bullet and stop digging this software-enhanced hole.

Economically, Nossal’s strongest argument is that cancelling the agreement “would bring to an end Canadian participation in the production of the F-35, with considerable costs to the defence industry in Canada, which is estimated to be worth $425 million annually and to generate 3,300 jobs annually over the next twenty-five years.”

Three things. First, Trump is already pushing Lockheed Martin to move these maintenance jobs back to the US. I would be surprised if he didn’t get his way on this one, not least because it’s good business for Lockheed Martin. Natasha’s father worked as a machinist for a US lumber company in Canada, and one of the things he learned was that it doesn’t matter how efficient your branch is, if the choice is between closing a US or a Canadian mill, the Americans will close the Canadian branch every time.

All this to say that while these numbers sound impressive, I wouldn’t count on them even if we bought the whole fleet. The economic boost for Canada will almost certainly be smaller, perhaps substantially so.

Second, these jobs will be to support a fighter jet that even its Canadian proponents (I think) realize must be retired at the earliest opportunity. In other words, they will be producing nothing of long-term value (beyond, yes, tacit knowledge, but of a proprietary nature that will not transfer perfectly to other industries). Since it’ll be tax dollars paying their salaries anyway, why not pay them to do something socially useful?

Third, if the United States is going to act as an adversary going forward, then it makes zero sense to continue to participate in the production of US military equipment that, by their very nature, can be turned against us even if we own it. This is what reducing dependency on the US looks like. What are we even talking about here?

Pragmatism and security?

So I’m not at all convinced by the economic argument for the jets. Better, but still problematic, is the pragmatic and security argument.

Which basically boils down to: we need jets, so how can we mitigate the damage caused by the fact that they will effectively be under the control of a country that wants us gone?

Nossal here has two suggestions. First, that we should cut our order in half and pivot to buying more-reliable jets from more-reliable partners. Makes sense. This changes the policy question to whether we should scrap part or all of the order? If we scrap only part of it, the security problems remain, as we’ll see.

Second, if things get really, really, really bad (what does that look like, if not Trump cutting satellite image-sharing with Ukraine?), Canada should get together with the other F-35 junior-partner countries and come up with a plan, like rewrite the plane’s source code.

An interesting idea, and I’m open to being convinced about it. But I don’t know how realistic it is. First, it would require the expertise to make such a thing viable. As Natasha’s article points out, even in the best of times, military contractors hold knowledge of how their software and machinery works close, including how to repair and mod it. They don’t share it with anyone, which puts them in a position of power, even over their own military. And that’s without mentioning the legal protections. If we’re worried about paying cancellation fees, we should also be worried about, effectively, voiding the warranty. And if it ever gets to the point where we’re no longer worried about contracts and cancellation fees, chances are the US will have already taken steps to disable or effectively destroy (in-cockpit fire, anyone?) the aircraft.

In any case, I’d want to hear from computer scientists about how challenging this would be to do in real life.

Stuck with hostile planes

As interesting as that idea is, the reality is that if we take delivery of them, we’re stuck with them, as is, software, maintenance contract, networking vulnerabilities and all. Is there a way to make that work?

There is, but we have to be realistic about what it entails. Basically, the jets would have to be confined to flying only missions that meet with the approval of the United States. This would mean they would be effectively useless in Europe, or in any area where the United States thinks Canada should not be active. We would have to accept a US veto over any international military deployments involving Canadian air power for as long as we are using these aircraft. If we buy other planes at the same time, that mitigates the problem, but we’re still stuck with half a fleet of compromised planes.

These compromised planes would have to be limited to missions the US wants us to fly. Canada’s North is an obvious candidate, as part of our NORAD obligations. One of the unspoken threads in the Canada-US relationship has always been that Canada takes care of northern North American security, such as at the border. US complaints notwithstanding, we’ve done a pretty good job of securing their northern border. This mission could be seen as part of our general North American security obligations.

It only gets worse from there. US control over our fighter jets will also give them leverage to bend us to their will in other areas – use your imagination and you’ll probably just scratch the surface – lest they monkey with our air power. In other words, giving them de facto control over our F-35s will allow them to continue extorting us in other areas of our economic, security and political relationship. If a future prime minister were given the choice between attacking Ukraine as part of a combined Russia-US force, and losing our F-35s altogether, which would they choose?

Again, it’s the modern-day equivalent of saying, give us your minerals or we’ll bomb your airfields.

The trade-off: Which bad deal do you want?

In the end, it comes down to this. If we purchased these jets, and we’re actually serious about reducing our long-term vulnerability to the United States, we would need to start working to replace them immediately. So we’re talking about a medium-term solution, at the very best.

In terms of the threat from the US, the only thing that could guarantee an invasion, even in good times, is if Canada did not keep up its side of the bargain to maintain US security at its northern border. That remains true, complicated by the fact that Trump is looking for a pretext to annex Canada, real or imagined. So, can we continue providing this air security with our current jets? And would it matter one iota if Trump decides to (continue to) take hostile actions against us? I’ll leave the first part to defence experts to judge, but we also need to consider that buying all the planes may not protect us from US ill-will.

The hard truth is, if we take delivery of these fighter jets, we will be buying jets that are under US control. This will give them a veto over what missions Canada can fly. Even more dangerously, the US will be able to use them to extort the country in other areas, military or otherwise.

I wish it were otherwise, but we have to face reality. And the reality is, with internet of things devices, power remains with the vendor. Whether it’s a tractor or an F-35, it’s all the same. If it were me, so long as Canada could fly some existing jets and fulfill Canada’s NORAD obligations, I’d cancel this agreement in a heartbeat. The downside is simply too damaging.

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Deeper integration or independence: Choosing a side

Posted on March 2, 2025 by bhaggart

Like a lot of (most?) Canadians, I’ve been heartened by the outpouring of Canadian patriotism in response to US President Donald Trump’s ongoing tariff threats. Nationalism can often lead to terrible things. But it this situation, it matters that it’s being deployed to stand up to tyranny. It’s a healthy reaction.

Yet I’ve also been perplexed by how the urgency reflected in Canadians’ almost-instinctive reaction to the US threat has not been matched by the federal government and our other elected leaders. While they’ve mostly mouthed the right words, their actions have not risen to the occasion.

I wasn’t sure if they understood the nature of the crisis: a needless provincial election, a leadership race. No unity cabinet or any other extraordinary measure that would signal to the rest of us that yes, this is an emergency. And certainly, neither Justin Trudeau nor any other member of his cabinet have thought it useful to actually tell Canadians what the plan is, beyond, “We’ll tariff you if you tariff us.” Which, great, but that’s not a long-term strategy.

That said, we all have eyes. We can read the news. And what I’ve seen to date is not at all comforting. Quite the opposite.

At the same time that Trudeau says that Canada as a 51st state is a “non-starter,” that newly re-elected Ontario Premier Doug Ford is sporting ball caps reading “Canada is not for sale,” at the same time that there is an emerging consensus that Canada needs to reinforce our domestic economy, strengthen our military and diversify our trade, Canadian governments are taking steps that will accomplish the exact opposite, that will lead directly to the vassalization of the country.

 The strategy: Keep Trump happy, minimal diversification

I have no special inside sources. But from where I sit, it sure seems that since November, Canada has undertaken a consistent strategy to deal with Donald Trump: Do whatever it takes to keep him happy and the border open. This has resulted in a $1.5 billion border package to deal with a (non-existent) illegal cross-border fentanyl trade. This was so clearly a move made simply to appease Trump that it’s been painful to watch his government try to justify it as a sound policy response to an actual problem. (As an aside: this is not just a harmless giveaway. It reinvigourates the failed war on drugs. It conflates criminal activity with terrorism, something that was at one point at least incredibly controversial. And its Joint Strike Force idea will almost certainly expose Canadian personnel to the commission of human rights abuses by lawless US officials.)

Most recently, the Globe and Mail reports that:

Foreign Affairs Minister Melanie Joly said Friday Ottawa is willing to discuss a new request from Washington that Canada match any U.S. tariffs imposed on China to create what U.S. Treasury Secretary Scott Bessent is calling “fortress North America.”

For the kids reading this, the Fortress North America idea (which echoes Doug Ford’s Fortress Am-Cam) dates to the post-9/11 period (here’s something I wrote on it in 2001 when I was an economist with the Library of Parliament). The idea, then as now, is that in order to safeguard our economy, we have to give the US whatever it wants. Then, security; now, whatever idea wanders through Trump’s degenerate mind. What Joly’s talking about with respect to China is what’s called in the trade a common external tariff (CET). It’s a deeper form of economic integration beyond free trade: countries bind themselves not only to rules amongst themselves, but agree to treat other countries in the same way.

Most importantly for our purposes, both the border-security deal and a CET are forms of deeper integration with the United States. And while it was perhaps possible in 2001 to imagine that Canada would be treated as a junior partner in any friendly agreement, but still a partner, only the most delusional person could still think such a relationship is still possible after watching Trump berate Ukrainian President Volodymyr Zelenskyy like an ungrateful vassal in the Oval Office, on top of literally every single thing Trump has done since assuming office.

This seems to be the strategy: try to figure out what Trump wants, give it to him, and pray he doesn’t hurt us. I might not like it, and it won’t work, but them’s the facts as I see them.

Sleepwalking into annexation

I’ve also been struck by the lack of serious attention to strengthening the domestic economy. The only ideas that have gained any traction are internal free trade and building a new east-west pipeline, both of which have been under discussion forever. One could put this down to a lack of imagination, but slow-rolling any meaningful change allows Ottawa to avoid the biggest problem.

The uncomfortable reality is that Canadian diversification away from the United States is not in the US interest. As the US declines in global power, Canada will become increasingly important to its economic and physical security. Taking steps to diversify substantively away from the US will make Trump angry. The United States will take steps to stop it.

This isn’t speculation; it’s US policy. Article 32.10 of the USMCA effectively gives the United States a veto over Canada negotiating a trade agreement with “non-market” countries; i.e., China. It serves the same purpose as the proposed common external tariff: to prevent Canada from diversifying our economy and to tie is ever-more tightly to the United States.

And I guarantee you that the United States will take steps to thwart any substantive action that Canada takes to bolster its domestic economy. Preferential government procurement contracts for Canadian businesses (an absolute necessity)? Moves to reinforce public broadcasting or to encourage a domestic cultural sector? That’s already under fire in their attacks on Bill C-11. You name it: if it has a chance of succeeding in building up Canada’s economy, they will try to smash it.

Any substantive move we make, in other words, will risk Washington’s wrath. That’s always been the case, in a sense. What matters is how our leaders – how Canada – reacts.

My biggest concern regarding Canada’s approach to the United States is that I don’t know where our red line is. At what point do we say, No farther?

Right now, the federal government’s policy of wrath-avoiding – let’s call it what it is: appeasement – is short-sighted and against Canadian interests. If Trudeau really believes in diversifying and strengthening the Canadian economy, it’s also incoherent. It’s a policy of deeper integration, not diversification. It’s a policy that will end with the de facto annexation of Canada.

To repeat: The reality is, if Canada does anything significant to strengthen our own market, or diversify in ways the US doesn’t like, they will (again) threaten our market access. Or worse.

Instead of acknowledging this reality, the Liberal party under Trudeau is trying to have it both ways: to stand up for Canada while giving Trump what he wants. In doing so, they’re sleepwalking Canada into vassal state status.

This strategy assumes that we can buy peace in our time. We can’t. Not with the US as it is, and as it’s likely to be in the foreseeable. Appeasement will only invite more extortion attempts.

Time to choose

The problem with the Fortress North America and subsequent proposals wasn’t really that Canada couldn’t satisfy the United States, on security or whatever. As I noted in this missive back in 2011 (as I said, I’ve been at this a while), it’s that we’re different countries, with different values and interests. There is a border between us. The United States will always look out for itself first. So long as Canada remains independent, this is not a problem that can be solved, only managed. No agreement can buy certainty, and certainly no agreement with an authoritarian/fascist regime.

Canada’s current policy of appeasement and minimal effort at strengthening our economy is bound to fail to protect our independence. If we’re serious about remaining an independent country, we need a long-term strategy that reflects the reality that, at some point, Canada will have to do things that Trump won’t like. There will always be something for the US to complain about. At some point, if we dare speak up for ourselves, they’ll treat us like they treat Zelenskyy.

To be blunt, you can’t can’t both wrap yourself in the flag and simultaneously say you’re thinking about letting an authoritarian government tell us who we can and can’t trade with. It’s either Canada or the US. Time for the government, for our leaders, to choose their side.

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Playing like it’s 1936

Posted on February 19, 2025 by bhaggart
Centre ice faceoff, Ottawa Senators vs Buffalo Sabres, Nov. 5, 2024.
How I spent election night: Ottawa Senators vs Buffalo Sabres, Nov. 5, 2024.

Like many other Canadians, I watched last Saturday’s Canada-US 4 Nations game and was looking forward to tomorrow’s rematch. (FWIW, I think the outcome will probably come down to Hellebuyck.)

And then former Edmonton Oiler and US general manager Bill Guerin started talking. From the Toronto Star:

After Fox’s Bill Hemmer suggested that Trump should attend the game in Boston, Minnesota Wild GM Bill Guerin agreed, saying that the team would “love it if President Trump was in attendance.”  

“We got a room full of proud American players and coaches and staff, and we’re just trying to represent our country in the best way that we can,” Guerin said.  

Fans in Montreal loudly booed the American national anthem prior to Saturday’s game, which drew the ire of American players and fans alike. Guerin called the booing “inspiration” for his team, who ended up edging out the Canadians in a skillful — and fight-laden — contest. 

“If you let it get the better of you, then you’re in trouble, but I really do think the players used it as inspiration,” he said.

Matthew Tkachuk, who anchors the American attack alongside his younger brother, Brady, visited the White House as a member of the Florida Panthers earlier this month, which he called “an incredible day.”

“Canada-U.S. is a huge rivalry in hockey,” Guerin said. “You know, I think there was a little bit of a political flare to it, it’s just the time that we’re in.”

After Guerin’s comments, I’ve lost all interest in watching Thursday’s game. And I want to explain why, not least to myself. Because there’s a lot to unpack in Guerin’s comments that go far beyond the usual international sports rivalries.

Corporate nationalism

I’ve been a hockey fan for decades. I’ve seen games in Mexico City, in Berlin, in Buffalo. I braved last Sunday’s snowstorm to take in some juniour hockey. I’ve designed and taught a course on politics and sports. So I’m not naïve as to the role nationalism, plays in hockey. Or fighting, for that matter.

Professional sports leagues in North America have encouraged this conflation of their business and nationalism for decades. It’s a mutually beneficial bargain for the state and for professional leagues, most of the time. Nationalism sells, and countries are always looking for ways to reinforce their citizens’ sense of attachment to the nation-state.

Equating hockey, in this case, with nationalism makes hockey something that people identify with. It becomes part of who they are. In Canada, thanks to a laissez faire attitude toward culture, hockey is pretty much the only vehicle regular Canadians have to express overt feelings of a shared identity. Which makes it the only tool in the tool box to deploy when that identity is perceived to come under attack.

Across the border, Americans have never been shy about expressing their nationalist pride. They call their national baseball championship the World Series, as if the United States is the entirety of the world. And in a sense, to many Americans, it is. The idea of American exceptionalism is mother’s milk. The shining city upon the hill. The belief that, given the choice, everyone would choose to be an American. The idea that they are a chosen nation, with a Manifest Destiny to rule the continent, if not the world.

Until very recently – let’s say November 5? – these US nationalist feelings were, if not completely harmless, mostly harmless, at least within the contours of professional hockey. We cheer for our country’s team, they cheer for theirs, one wins, the other says next time, and we all go for beers and talk about next Saturday’s Rangers-Sabres game.

We might even boo the other team’s national anthem, in the same way we’d boo a hometown hero who’d left for greener pastures.

There might even be fights (heaven forefend!) during the game, as one team seeks an edge, or wants to settle a score.

What all of these things have in common is that they take place within the context of the game itself. Nationalism here is little more than a pro sports team identity.

The real thing can burn you

But of course, nationalism is more than that. Nationalism is the single most potent force in politics and society. In the past two centuries, it has sparked more wars and led to more death than religions. Class identity – the obsession of Marxists – pales in strength compared to nationalism. If given a choice between fighting for their material class interests and their nation, nation wins every time.

To play with nationalism is to play with fire. It can warm, but it can also leave you with third-degree burns.

As we’re seeing right now in the 4 Nations Face Off.

I don’t have to explain this to Canadians, but for any Americans reading this, it is impossible to overstate how offensive and threatening US President Donald Trump’s threats are to Canadians. Completely unprovoked and justified by false (fentanyl and illegal immigration) and ever-shifting (trade imbalances) reasons, they are being interpreted – correctly, I’d argue – as a direct assault on Canada’s sovereignty. Constant talk of annexation, Canada as a 51st state, and using coercive economic power make this threat appear very real to Canadians, even as it’s dismissed or treated lightly by far too many US academics and pundits.

Canadians see how Trump and Musk are systematically dismantling the US government itself, facing little opposition. The lesson here is that what seems impossible today – the complete collapse of US democracy – could happen tomorrow – the subjugation of a truculent northern neighbour who won’t play ball on resources, or platform governance, or whatever. And in the midst of this we see supposedly serious news outlets analyzing the effect the annexation of Canada would have on the balance of power in Congress.

It’s delusional, both a coping mechanism that allows Americans to avoid acknowledging that they may already have lost their own democracy while also indulging in age-old American exceptionalism, that of course everyone would just love to join their country, if only they could be so lucky.

All this to say, pretty much nobody in Canada sees any of this as a game. Almost to a person – from the First Nations in Canada to Québécois nationalists – everyone sees this moment as an existential crisis, and the United States as the threat to Canada’s continued existence. That is, to Canadian nationalism.

Thanks to decades of nurturing by the NHL, media outlets and the Canadian government, hockey is currently the most powerful, perhaps the only, way ordinary Canadians have of expressing both their national pride and their absolute fury at the US government and those who are enabling its anti-democratic, anti-Canada policies.

Are Canadians going to boo the US national anthem at hockey games? You’re goddamn right we are.

US exceptionalism and fascism rear their ugly heads

On the US side, meanwhile, overt nationalism and American exceptionalism are the order of the day. Of every day. And they combine two things that, as I said, are usually merely annoying to non-Americans but when chained to an authoritarian government like the one that’s currently in place in the US can lead to some very, world-historically ugly, places.

It might be helpful to contrast our current ugly moment with happier times. Remember South Park’s (Oscar-nominated) Blame Canada song?

I will speak for all Canadians when I say that we loved every single glorious second of this song, from its utter ridiculousness to someone finally having the guts to take Anne Murray down a notch. (I kid. Anne Murray is a national treasure.)

One of the reasons we loved it is because it combined the absurd – what American would be stupid enough to think that Canada posed a threat in any way to the US? – with what every Canadian knows every American, in their red, white and blue hearts believes: “They’re not even a real country anyway.”

It’s a line that has the thrill of breaking a taboo, of joking-not-joking.

It scanned as a joke because Americans knew that Canada did not pose a threat to them in any way, shape or form. And Canadians knew that Americans may not really consider other countries to be as real as theirs, but it’s not like they’d actually act on it. And certainly not toward their northern, white neighbour.

All this made Blame Canada a sharp satire of US nationalism. But right now, when Trump seems intent using Blame Canada as a policy guide, it reads differently.

Which brings us to the past week.

Again, in normal times, Guerin’s non-Trump comments could be seen in the context of a that good-for-marketing, self-contained corporate nationalism. But the reality is that Canadians’ booing was very, overtly and explicitly political. It was aimed at the United States as a political entity and Donald Trump in particular, not the players. It had nothing to do with hockey.

To paraphrase Arrested Development, Canadians don’t hate Americans; we kind of like them. (If you want to extend the analogy further, Lucille is Trump, trying to turn Canadians and Americans against each other.) Every single US player plays on some Canadian’s favourite team.

Guerin, as well as Brady and Matthew Tkachuk, are grown-ass men and should be treated as such. The fact that they’re hockey players does not give them a pass for anything they say. It matters that Brady Tkachuk both shook hands with Trump and praised him effusively. He didn’t have to do that. Neither he, nor his brother, nor Guerin can claim not to know what Trump is doing to their country, and how he is threatening Canada. Explicitly linking Trump to Team USA’s strategy and performance – using the Trump-motivated booing as inspiration for his team to play a stupid game – is the act of someone who is mixing politics and sports.

Like it’s 1936

Guerin leaned into US nationalism and US exceptionalism in their response to Canadians booing the US national anthem. US exceptionalism in that they probably don’t see what the big deal is about the 51st state talk: who wouldn’t want to be an American?

As for the nationalism, the motivational speech practically writes itself:

They’re booing your song, your country! Are you going to stand for that? We’re the greatest country in the world! The president – your president – is in the crowd tonight! We’re going to teach the Canadians a lesson!

And in normal times, when the other side’s fans were booing you just because you’re the other team, that would be the end of it. Every good story needs a bad guy.

But sometimes, like now, the boos mean more. Sometimes politics matters.

Imagine the same speech coming from the head coach of the German national ice hockey team in the 1936 Olympics, playing against France:

They’re booing your song, your country! Are you going to stand for that? The Führer – your Führer – is in the crowd tonight! We’re the greatest country in the world! We’re going to teach the French a lesson!

Context matters.

Some might say (and some have said) that Guerin is an idiot, that most hockey players don’t have two brain cells to rub together, and that we certainly shouldn’t look to pro athletes for political or moral guidance. All of which may be true.

But idiots are fascism’s foot soldiers. Unthinking patriotism, mostly benign or even beneficial in normal times, can easily be weaponized when the object of that patriotism is unworthy or malign. Patriotic support for an authoritarian leader is support for an authoritarian. Nationalistic support for a Nazi regime is support for a Nazi regime.

The US players, and even Guerin, may not fully understand what they are attacking when they drop their gloves against their opponents. These grown-ass men might not even fully understand the implications of directly linking Trump to all of this.

It doesn’t matter. For whatever reason, the US hockey team’s nationalism, in treating politics as a game, as just another thing to get the team going, in tacitly endorsing Trump’s eradicationist view of Canada, sends a message to Canadians: they don’t really care what happens to our country, or by extension anyone in it. That they haven’t thought deeply about any of this doesn’t really matter. If your country is authoritarian, then standing up for your country means standing up for authoritarianism.

On one level, of course, this is still just a hockey game. But symbols matter, and hockey players aren’t the only ones who embrace an unreflexive nationalism or sense of US exceptionalism. (Nor are Canadians when it comes to nationalism, but that’s an issue for another day.)

They’re Americans, and they’re going to stand up for the flag and their president, no matter who he is or what he’s doing, to Canada or even to their own country. They’re going to skate out there and play, for the flag, and for the Führer. And that’s something that I don’t care to watch.

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