Month: November 2023

A Trump expert weighs in on his potential return to the Oval Office and what it means for Canada

 

Uncertainty. Change. Growing polarization. Perhaps no election cycle has been more fraught with risk than the run-up to the 2024 United States presidential race. For Canadian businesses, managing the challenges and recognizing opportunities south of the border will be a major focus over the next 12 to 14 months.

Few people understand Canada-U.S. relations better than David MacNaughton. As Canada’s former ambassador to the United States, he was instrumental both in making the case for Canadian investment and trade to the Trump administration and building alliances among American industries and other levels of government. MacNaughton is now president of Palantir Technologies Canada Inc., and continues to serve on numerous boards. Before his time in Washington, D.C., he served as a strategic advisor to governments and companies.

We turned to MacNaughton for help understanding the risks and potential benefits ahead, especially with Donald Trump once again seeking the Republican nomination in a country that’s become increasingly polarized over his candidacy and America’s role in the global marketplace.

While the former ambassador sees huge opportunity for Canada in the year ahead, he says Canada has to move beyond being satisfied with mediocrity.

Chris Hall: As Canada’s former ambassador to Washington, what should Canadian businesses be watching for as the U.S. presidential race heats up?

David MacNaughton: I think the underlying trend in both the Republican and the Democratic parties is increasing isolationism and protectionism. In the United States, we’ve seen the ebb and flow of protectionism and isolationism going back a long way. I think what you have right now, in both parties, is some elements of both. You see a whole group in the Republican Party that is against NATO, against helping Ukraine. And even though Biden has done a reasonably good job of reaching out to allies and pulling together a coalition to support Ukraine, there is still that underlying protectionism within the Democratic Party. Both of those developments have consequences for Canada and for Canadian business.

Chris Hall: Elaborate on that. What are the potential consequences? Because as ambassador during the Trump administration, you dealt with these trade issues and the sense of protectionism.

David MacNaughton: If you look at the so-called Inflation Reduction Act, it was essentially a massive subsidy to U.S.-based industry to adapt to green energy and we had to look at matching or coming up with similar subsidies. You saw it in terms of the money that Canada and Ontario put into batteries and the investment tax credits that [Deputy Prime Minister and Minister of Finance Chrystia] Freeland had in her budget. So at the governmental level, they’re trying to figure out how to remain competitive with the subsidies happening in the U.S.

What I found when I went to Washington is that they will pursue what they think is in their best interests and that’s normal for any country. What they don’t appreciate is that Canada has a really important relationship with the United States, on both security and trade, and unless we remind them of it and enlist supporters, we will end up on the short end of the stick because they just don’t think about us. I mean, it’s just, “Canada, they’re nice people, they say sorry all the time,” and “You know, not a bad place to visit.” But there’s no sense of the integrated economy.

Chris Hall: Donald Trump is running again. While I don’t want to prejudge the outcome of that nomination race, he has proposed at least one thing: that a 10 per cent tariff be imposed on all imports to the United States, regardless of country of origin. What are the implications of a renewed protectionist trade policy for a Canadian business looking for opportunities south of the border?

David MacNaughton: First of all, let’s discuss that proposal. My guess is it will have trouble getting through Congress. But the fact that he’s proposing it is an indication that there is an element in the United States electorate that sees foreign competition as being bad and unfair. I remember the first time we met with Trump and Prime Minister Trudeau raised the softwood lumber issue. [Commerce Secretary] Wilbur Ross was in the meeting and said, “You know the Canadians subsidize their timber.” Of course I challenged him on that. And then Ross said, “Mr. President, we have tariffs on at the present moment but we’re negotiating a quota arrangement.” And Trump’s response was, “I like tariffs. I don’t like quotas. Quotas tend to drive prices up.” And you just kind of shake your head and say, clearly, there’s a kind of gap in understanding of economics there. I think Trump doesn’t have deep policy expertise or views. He is tapping into a sentiment in the United States, and I think it’s that sentiment we have to be concerned about.

Chris Hall: You mentioned that protectionism is part of the ethos now of the United States. So what strategies can Canadian businesses and investors adopt to try and deal with that?

David MacNaughton: It’s kind of a combination of working collaboratively with the people in the United States who understand Canada’s importance and occasionally showing a little bit of toughness.

We can’t get into a full-scale trade war with the United States. We depend far more on our trade with them than they do on their trade with us. Having said that, there are important elements where they do rely on us. We can remind them of the importance of that two-way trade and keeping it open.

Chris Hall: Something to consider. Can I ask you about politics, too? Looking to the Americans, there is a sense in this country that they are more deeply divided, more polarized politically than perhaps any point in recent history. What’s your assessment of the implications of a country (that) divided along party lines?

David MacNaughton: Well, I think it’s serious and very worrying. But the other thing, the reality, is that I worry about it infecting our own politics in Canada. I think it already has, not to the degree that it has in the United States, but the Americans have a remarkably resilient country. They have a huge economy, the largest economy in the world still. It’s very innovative and productive. I’m not saying they can get away with being stupid about their politics, but they can get away with it a hell of a lot more than we can. And what we were able to do when we faced an existential threat, which was the threat to get rid of the free trade agreement, Canadians pulled together, the federal and provincial governments, the private and public sector unions, Indigenous people. I mean everybody worked together in this country to help us succeed. And I think what’s happened in the last couple of years is that sense of common purpose has broken down and we have become much more fractured in terms of our approach to things. I’m not blaming the right and I’m not blaming the left. I think both sides are to blame for this kind of polarization. As a country of 40 million people with productivity issues and not a big enough domestic market to thrive, we just can’t afford that.

Chris Hall: Let’s get a broader picture from you of U.S. leadership in international affairs. Trump isn’t a huge fan of NATO or global co-operation on climate change. You’ve talked about a global goodwill here. Are you worried that support for these initiatives could dissipate as we look ahead to November 2024?

David MacNaughton: I do worry about the ability for the United States to provide international leadership in a number of those forums. But I think the other thing we’ve got to realize is that some of the international institutions we’ve relied on since the Second World War to maintain peace and prosperity have broken down. They don’t work. I mean the United Nations is, I won’t say useless, but it’s hardly a vibrant organization. The World Trade Organization is a bit of a joke. So we need to think about our alliances as being based on a gathering of the willing … and to work with the Americans on hemispheric challenges, including migration in Central and South America. Canada can’t be a freeloader or a free rider anymore. On things like climate change the discussion is a really, really complex one. Anybody who says you’re going to solve the problem by having a bunch of people go to Paris or wherever and agree on targets, that’s just naïve. I would like to see plans rather than targets in terms of achieving some sort of an energy transition.

We’ve been missing in action on a lot of those fronts. We’ve been heavy on rhetoric and agreeing to targets and weak on practical plans that can help achieve global solutions rather than simply Canadian ones.

Chris Hall: Last question. I get a sense that you see far more risk on the horizon than you see benefits for Canadian business. Is that fair?

David MacNaughton: Step back and look at the globe today. Look at Canada and ask, where is there a country that has our advantages? We’ve got natural resources. We’ve got a positive attitude towards immigration. We’ve got an educated workforce. What else would you want to have to make this a leading economy in the world? Well, we seem to be satisfied with mediocrity and that’s not just a knock against government. I think some of industry is the same way, too.

We don’t encourage, in my view, enough competition within the marketplace. So, on the one hand, I look at it and I see a huge opportunity for Canada. But we can’t achieve great things if we insist on scoring cheap political points on our opponents rather than having a vision where we can work together towards common objectives. If Canadian governments don’t get their act together and work with the private sector, I see lots of threats. If we do, I just see huge opportunities for this country.

How does a rapidly changing industry cover an even more rapidly changing world?

 

In the evolving Canadian media landscape, where over the past number of years everything seems to have changed, one can’t help but wonder: have we entered a new chapter or a new book altogether?

The pages of traditional journalism, once neatly bound in print, have transformed into digital scrolls, while the margins teem with voices that refuse to be confined. It’s a story where ink meets pixels, where the old guard contends with the disruptors of the new media order. In short, it’s more War and Peace than Cat in the Hat.

Who better to shed light on this complex and changing story than three of our nation’s most prominent journalists? From the newsrooms of legacy publications to the uncharted territories of Substack, they are the storytellers shaping our understanding of the world. Relishing the opportunity to ask them the tough questions, we inquired about the most pressing obstacles they face, where they believe journalism stands now, and what’s to come. Together, they offer us a glimpse into the metamorphosis of our national “news-scape” — a transformation marked by immediacy, interactivity and, at times, discord.

Welcome to the future of Canadian media.

Vassy Kapelos

Chief Political Correspondent, CTV News

What gives you hope for the future of the industry? What is Canadian news doing well?

My experience during the pandemic really reminded me of the purpose that news can serve in people’s lives, and the sort of appetite that still exists.

I know a lot of people probably think that’s weird because so much negativity towards and about the media was part and parcel of the pandemic. I’m not dismissing any of the criticisms or the rebuttals of those criticisms. But, from a personal perspective, my experience during the pandemic, professionally speaking, I felt as though I had never had such a direct connection or ability to connect [with the audience].

What the government was doing and how it impacted people’s lives was so immediate. So many people were reaching out all the time saying, “Can you ask this? Can you ask that?” It was not performance-based at all. At night I was truly like, “Okay, what do I need to ask in order to help this group of people or that group of people.”

It sounds very Pollyanna, but it wasn’t. People were nervous and worried, and their livelihoods were at stake. I felt like there was a real purpose [in what] I was doing. I know the purpose existed previously, but it was so acute during the pandemic.

The degree to which people relied on us for information and for help was really a stark reminder for me of what we’re there for in the first place, and the need still exists.

Hopefully, there’s not another pandemic, but there are many things that matter to people in their daily lives that the government has some impact on one way or another. People need information, and they come to the media for that information. I take that very seriously. There’s going to be other stuff that happens in the world where people want accurate information and they come to the news for that.

Do you worry that the industry of journalism still maintains public trust?

It’s a good question to ask. I just don’t know if I have the answer. If I absorb every criticism of the media or industry at large, I wouldn’t want to get up and do my job in the morning. I’m able to separate myself and the work I do from the big picture.

I don’t want to sound as though I’m tuning it out, because I’m not. Some of the criticism is bound in people’s experience and I don’t want to dismiss that at all.

From the start of my career, I’ve thought of it as: I have to do the best job possible, have the least bias. I have to be consumed with being accurate and trying to be helpful. Ultimately, I can’t control what everyone else in the industry does, or the way in which everyone out there perceives the industry, but I can control what I do.

Kelly Cryderman

Reporter and columnist, The Globe and Mail

What do you make of the industry as it stands now? How are Canadians consuming their news?

It’s a challenging time, a time of transition.

It’s a time of figuring out a whirlwind of technology that has been thrust upon us in the last 15 to 20 years, and how journalism as a business exists and how our ideas about objectivity, and the things we learned in journalism school, exist in this new world.

I think everybody is adapting to a really rapid pace of change when it comes to social media and what’s available.

I remember my grandfather saying to me, when he was more than 100 years old, “I don’t know about your job anymore because everybody has access to information at their fingertips.” He made this comment having seen a century of change.

What makes you optimistic about the future of the industry? What worries you?

What makes me optimistic is reading, watching and listening to great journalism.

There still are the stories out there that introduce me to a totally new idea or a new concept or highlight a problem in the world that I didn’t know existed. It opens a window to something good happening in the world that I didn’t know existed.

I feel inspired by stories that people are still telling, and also when I get feedback on what I write. When you’re writing to be read, and get feedback on that, good and bad, it’s important because I know people are paying attention.

What makes me hopeful is that I think human beings are inherently storytellers. How we understand the world is through stories, and we will always need to do that, no matter what.

Do you think there’s a place for governments to support journalism financially?

Like a lot of people, I have a natural aversion to governments supporting journalism or getting involved in journalism. But I do think there could be some kind of system in place for some government role that does work. I do believe that, too. I think it’s complicated.

When I look at local journalism, for which I have a large amount of concern, I see a city like Calgary where the paper I used to work for, the Calgary Herald, has a very small number of staff now compared to what it had. I do worry about local journalism, which does matter.

I see the role of foundations in the United States especially, and also here, playing a role in journalism. I do ask the question, if large foundations can play a role in journalism, could governments?

It’s not an area I’ve spent a lot of time focusing on. My natural answer is that I’d rather [governments] not. But I know things are changing.

Justin Ling

Freelance journalist, author of the ‘Bug-eyed and Shameless’

What do you make of the industry in Canada today? How is it changing?

Canadian media was in a tough spot even before the advertising economy sort of tanked. We had gone through mass consolidation of a whole bunch of not super liquid outlets. It made a ton of sense at the time, but in hindsight set us up for a sort of too-big-to-fail situation, right? A small number of players, many of which were ladened with debt without any particular interest, or even in some cases expertise in publishing.

Then there was a real transitional moment where I think everybody kind of thought we would be saved by online media. But just like everywhere else, it boomed and then bust.

I spent four years working for VICE. Thanks to huge investment from Rogers Media, we thought, many thought, we were the future. I was at BuzzFeed for a while. All of these outlets spent big and collapsed spectacularly.

Through all that, we haven’t learned anything. We went through all that and we came out the other end and we still don’t have a plan. We made mistake after mistake. There’s really no country you can point to that’s doing this really well, but I think we’re in a particularly bad spot. We’re right next to a massive media market and we’ve made a whole bunch of mistakes setting up our domestic industry. We have distribution problems. It just leaves us in a spot where we really have no runway left.

What gives you hope?

We still have a ton of great journalists, which is great. The fact that there are thousands of people subscribed to Paul Wells’ Substack is great. The fact that being on the At Issue panel (at CBC News) still makes you a household name is great. We want an industry where people recognize outlets, names and so on, especially as you go to an online economy where everything becomes kind of flat.

The fact that the CBC still manages to maintain its cultural relevance in Canada, the fact that people still trust it, still listen to it, still turn on the television and radio, is really good news.

What worries you?

We’re facing a deeper problem here. There is a revenue problem that’s killing everybody. It’s why Maclean’s no longer does news. The revenue problem is really acute, it’s there. But we also don’t talk about the distribution problem. It’s not just that our outlets are making less money, it’s that fewer people are reading and watching them.

We don’t want to recognize this as a problem because it suggests that Canadians aren’t interested in news, but it’s actually the opposite. More people are reading news more than they ever have. The issue is they’re not going to get that news in the place where we want them to.

We’re in a crisis right now and we don’t know how to solve it.

I’m not sure we’re trying hard enough to solve it, to be really honest.

Do you think there’s a place for a public broadcaster?

My take is that the CBC probably needs more money, not less, but we need to talk seriously about what the CBC’s mandate is.

Is the CBC’s mandate to run Family Feud Canada? I don’t think so. My take is that we’re wasting a lot of money pursuing projects at the CBC that seem more designed to pick up advertising revenue, and, frankly, it’s hard to blame them.

Is this the BBC, or are we trying to push the CBC towards eventual privatization? We have to make that decision at some point. We’re still like all things Canadian: we’re trying to pursue a middle road that gives us the worst of both worlds.

I’d love to see a CBC that recognizes that the client, and local news coverage is acute and therefore we need to put more money into it.

I think if we can elucidate what the CBC’s role is more effectively, it will be a lot harder for people to call for it to be abolished. But at the same time, we also have to recognize that the CBC is not the voice of God to all people. We need other outlets.

From billable hours to AI efficiency: A double-edged sword

 

Advancements in artificial intelligence have been polarizing, to say the least. A quick scan through editorials of the past year reveals a range of opinions on the topic: AI will save the world, kill everyone, or do everything in between. For lawyers, consultants and other professional service providers, the more immediate question is: am I going to have a job in five years?

This publication (spoiler alert) isn’t exactly neutral on this question. As high-stakes public affairs advisors, we believe in the resilience of our business model, with large language models augmenting, rather than competing with our approach to problem solving. But we don’t yet know the extent to which our practice, and the practices of our legal colleagues, will change in the next year, or over the next two to five years.

As we prepare for multiple scenarios, we asked two colleagues to stress test our positioning by writing competing perspectives on the following statement: professional services, as we know them, are dead.

Professional services, as we know them, ARE dead.

By Mitchell Stein

When OpenAI released an early version of ChatGPT on Nov. 30, 2022, our eyes were opened not just to AI chatbots, but to the promise of the technology that these chatbots are built on: generative AI.

Professional services, such as law, accounting, communications and management consulting, were called out as particularly ripe for disruption. Legal opinions, news releases, accounting spreadsheets and business models would all be developed by generative AI technologies. It was inevitable, and it would happen sooner than any of us could imagine.

While we may not be there yet, we’re not far off. AI has already had a tremendous impact on the nature of professional services as we know them and will continue to do so as it advances over time.

AI has bolstered efficiency by relieving accountants, lawyers and all types of consultants from conducting tasks such as entering data, summarizing documents, distributing news releases, conducting research and more. In fact, according to a study conducted by the USC Annenberg Center for Public Relations, 88 per cent of PR leaders say AI will have a positive impact on the speed and efficiency of certain tasks, and 72 per cent say it will help reduce workloads.

For professional services firms, increased efficiency is a double-edged sword. In one sense, it allows employees to focus on work that is more strategic and relationship-based and less administrative. In another, it poses a threat to firms that rely on billable hours to make money. Some firms have started moving from a billable-hour model to a project or value-based model, where clients pay for the output of the hours versus the hours themselves. AI will likely accelerate this trend.

Another way AI is changing professional services is by balancing the scales between firms and independent consultants. Historically, independent consultants lacked the resources and scale of larger firms, putting them at a competitive disadvantage. While this remains true, AI offers independent consultants greater access to many of the capabilities historically offered by firms, such as research, back-end support and analytics, allowing them to focus on high-value work that requires more critical thinking, client management and relationship building. As employees at professional services firms witness their colleagues go out on their own and succeed with the help of AI, more and more will ask themselves, why not me?

That said, the current and eventual impact of AI on professional services is widely debated. Skeptics point to mistakes AI technologies have made as evidence they are not ready for prime time.

We should not be so quick to judge. Remember, Facebook was a “hot or not” knock-off for Harvard students in 2003 before receiving millions in investments from venture capital firms and private backers (thus growing to the global behemoth it became). Recent improvements to GPT-4 over its predecessor, ChatGPT, show that the platform may be following a similar trajectory, adding user photos, storyboarding and game creation to its capabilities while dramatically improving its capabilities on professional and academic tests.

But even if OpenAI and its competitors defy the odds and never make the advancements that have been projected, artificial intelligence is changing the workforce today. According to a survey from McKinsey & Company, nearly one-quarter of C-suite executives are personally using AI, with more than three-quarters of respondents in the business, legal and professional services reporting having used AI tools at least once.

In other words, the train has already left the station. We just don’t know how far it’s going.

Professional services, as we know them, ARE not dead.

By Clare Michaels

The idea of an AI doctor, lawyer or management consultant is a quaint notion — and only that, a notion. In spite of a global pandemic, human interaction and relationship building remain crucial to the success of professions in every society. Such human qualities are necessary for everything from business deals to patient-doctor consultations, from solicitor-client privilege to lobbying governments. Put simply, it’s about trust and it’s hard for an AI bot to fabricate something as elusive as trust.

AI will only ever be as smart as its humans. The human brain is more advanced and efficient than the average computer by orders of magnitude. Even now, it’s hard for professionals to trust a technology that cannot distinguish between a school bus and a snow plow, details how to take the train from New York to London, and generates images of buttered salmon in a river when you wanted the live fish. If anything, the bozo eruptions of AI in these early days only prove that AI needs us as much as we need it.

Like email and mobile apps, AI should be viewed as another tool that enhances the ability of professionals to do their work. Think how much faster a company could respond to reporters and customers with an AI engine drawing on its database of public press releases and press conferences to produce a first draft of messaging. Think of a portfolio manager’s use of AI analysis of live and historic market data and economic indicators to make better investment decisions, and therefore better returns, for the families or seniors she advises. Think of the accuracy of a doctor’s diagnosis when he is able to rely on an AI database of extensive medical records to assess a patient’s symptoms.

AI becomes especially valuable in situations where there is a high degree of uncertainty and unpredictability, such as picking stocks or predicting election outcomes. As they say, past performance is not an indicator of future success. Renowned psychologist and economist Daniel Kahneman showed in his book Thinking, Fast and Slow that when it comes to decision-making, algorithms beat people at predictions every time. Professionals can make better predictions with the help of AI. But whatever the algorithm generates is meaningless without an interpreter. An AI press release may be better than what Steve in accounting could write, but it is the professional who knows how to truly refine what the AI engine generates to make sense in the real human world.

The last reason AI will never kill professional services is perhaps the saddest of all. We humans are our own worst enemy. Venture capital whiz Marc Andreessen points out that regulators and modern Luddites are already working to stifle and limit AI innovation. Governments making rules about a technology they hardly understand could become a recipe for disaster. Fear-mongering and doomsday warnings could deter whole societies from mass adoption. Productivity could stagnate. AI could become just a blip in the history of humanity, a fad that went the way of Furbies and Tamagotchis.

Whether or not AI survives, professional services will remain. But it is up to us to decide whether we want to take that historic step on the moon of possibilities with an AI partner by our side.

Canada’s window of opportunity to strengthen and reinvent our economy will slam shut unless we fix a political culture averse to taking the risks necessary to propel us ahead

 

Net zero by 2050.

Zero plastic waste by 2030.

100 million people by 2100 with zero economic strain, service backlogs or civil strife.

Zero chance.

Canadians are growing accustomed to hearing lofty, long-term policy aspirations from political leaders. But, at an alarming rate, Canadians are also growing accustomed to being let down. Worse still for our political climate, they’re beginning to understand these pronouncements not as concrete targets or even worthwhile aspirations, but as nothing more than cynical, empty rhetoric.

Targets notwithstanding, Canada remains a top-10 emitter in the world per capita, and only nine per cent of our plastic waste is recycled. Immigration, which should be a monumental natural strength for our economy, is limited by shortages in housing, transit and health-care capacity.

These issues share a common “horizon risk” problem: they require fresh, long-term thinking to fix. Unfortunately, many of our leaders have demonstrated a distinct capacity for setting soaring targets. But let’s be clear: it is in marshalling resources, rallying public support and actually getting the job done that leadership is tested and revealed. Setting the target and issuing the press release is not the real work.

This problem is exacerbated by our small-ball politics. It’s been more than 20 years since a federal party has captured more than 40 per cent of the popular vote. In a first-past-the-post system with a fragmented information landscape, political parties aren’t inclined to swing for the fences, intent as they are on stitching together the smallest possible winning coalition. As a result, long-term policy ambition is ignored in favour of the quick (partisan) win.

Today, there is no greater example of this than the affordability crisis facing Canadians. Poll after poll confirms that people’s top priorities all relate to the immediate challenges of the rising cost of living. In response, our politicians have predictably narrowed their horizons. To their mind, the political calculus suggests one solution: respond only to those issues that can be addressed with short-term fixes.

They could not be more wrong.

It’s in times of great upheaval and change that developing and advocating for both short- and long-term political visions that carry considerable risk are actually most important and most palatable. The reason why is simple: it is precisely when the country’s back is up against the wall that the public is most open to giving policy-makers the latitude necessary to make things right.
In other words, the window of opportunity to take informed risks is right here, right now.

In her insightful new book, Mission Economy: A Moonshot Guide to Changing Capitalism, University College London Prof. Mariana Mazzucato asserts, “Policy is not just about ‘intervening’. It is about shaping a different future: co-creating markets and value, not just ‘fixing’ markets or redistributing value. It’s about taking risks, not only ‘de-risking’. And it must not be about levelling the playing field but about tilting it towards the kind of economy we want.”

This might be counterintuitive for a political class that has learned the wrong lessons from policy failures of the past: trying new things gets you in trouble, so the safer option is to not try new things. But it must be understood that the most immediate and potentially costliest risk facing Canada today is that we are not taking any policy risks at all.

Not in R&D, where we rank a pitiful 26th of OECD countries on R&D intensity, or in infrastructure, in which independent reporting estimates we have a deficit of somewhere between $110 and $270 billion. Not in tackling climate change and investing in green innovation, where we consistently fail to meet our international policy targets and have yet to fully articulate the aggressive policies needed to secure long-term environmental and economic benefits.

And not, overall, in the vision of any of our main political parties, which have failed to provide a coherent long-term plan for the future of our economy and the sustained well-being of our fellow citizens. None of these existential challenges will be fixed with new spending alone. All of them will require new thinking, and a willingness to take risks.

It’s time we recognize that myopia and risk aversion got us here in the first place, and that we will not meet the moment by tinkering at the margins of policy and programs. Our future prosperity demands that we embrace and reward risk in our policy debates, and that we do so now, before the window shuts for good.