Canada doesn’t really like us
Laurence Pevsner, Ian Curtiss and I are up in Toronto hosting No Man’s Land, our AI and national security Riskgaming scenario that moves inexorably yet ever so slowly to final publication. We had a great time with our hosts at OMERS Ventures and the brilliant crew they assembled. This game is by far our most complex, balancing seven key tradeoffs across a difficult economic, security and labor productivity simulation. I’ll have more notes on the experience later.
For now as I rush to the airport, a more general observation walking around Toronto: Canadian patriotism is at an all-time high. As a cosmopolitan hub, Toronto isn’t traditionally known as a bastion for patriotic sentiment. These days however, the Canadian flag is everywhere, stores have very large “Made in Canada” signs in their windows, and even the drinks have changed. I’ll steal a photo from Laurence from a local coffee shop that I think captures the vibe:
That’s the anecdote. The more empirical data is that polls for Canada’s elections, which are coming up in about two weeks, show that the incumbent Liberal Party has completely turned around its fortunes and is now durably leading. It’s a huge swing from a few months ago, when the Conservative Party was ahead 20 to 30 percent, depending on the specific poll. That’s a swing of roughly 30-40%.
One reason, of course, is that Justin Trudeau has been replaced with Mark Carney, and fresh leadership can resuscitate any campaign. Yet, the obvious answer is that Canadians see Carney as the anti-Trump, and they don’t want to be the 51st state — at all.
At dinner last night, I asked two dozen senior Canadian leaders about the differences they saw between the two countries. One major point of discussion was guns: Canadians overwhelmingly support stricter gun laws, and Parliament voted to freeze the ownership, transfer or sale of handguns in 2022 in a 207-113 party-line vote. It’s almost impossible to conceive of such legislation in the United States, which has tended toward looser gun sales in the past two decades.
Other areas of difference discussed were religion, equitable healthcare services, global defense posture, resource extraction, environmental conservation, and much more. Laurence pointed to the “narcissism of small differences” before dinner but as time went on, we both realized that the differences are anything but small.
The U.S.-Canada relationship is one of the most trusting in the world, and the fundamentals haven’t been broken the past few weeks. Yet, there is a movement underway that is unifying Liberals and Conservatives alike to protect the nation’s sovereignty and ensure that Canada’s uniqueness is not overridden. Just like Riskgaming, America seems to know how to bring different parties together.
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Making shoes isn’t the right strategy
Joining Laurence and I on the podcast this week is Josh Zoffer. Josh was formerly special assistant to President Biden for economic policy, and today, he’s a principal at Clocktower Ventures. He’s penned a number of recent op-eds on trade policy and global interconnectedness (as well as one on the rise of metaverses). We talk about trade, manufacturing, and governments making high-risk venture bets.
🔊 Listen to "Making shoes isn’t the right strategy”
Here’s a cut of our discussion that’s been edited and condensed for clarity:
Danny Crichton: What’s striking to me is, in the first Trump administration, the ire was fairly focused on China. But the tariffs announced this past week are remarkably broad. Why not just continue down a path for which there’s a lot of bipartisan support? Clearly the U.S. trade deficit with China is the largest. It was $1 trillion last year, in 2024.
Josh Zoffer: I don’t really have a good justification for the decision to go after the Europeans. They are our best allies, and I suspect we will come to regret it.
When it comes to China, it is hard not to give the first Trump administration a bit of credit for catalyzing everybody to think a little bit differently about the way the global economy had been running. When Trump said, “We don’t want to do this free trade stuff. I want to put tariffs back on the table,” we really started to think about what’s working, what’s not.
I take away two things from that. One is, to some extent, manufacturing and the ability to make things really does matter. There is a certain set of things that it’s actually important, from a national security perspective, to be able to make domestically, or at least to rely on your partners and allies. And ideally you want to be producing the highest technology, most advanced, most valuable stuff. That’s really where you get the most from controlling the manufacturing base.
The second piece is that the trading system has not done a great job preventing unfair practices. There are cases where a trade imbalance develops because there is meaningful comparative advantage and the system is working the way it should. There are also cases where trade deficits develop because one country has cheaper labor. Fine. We can’t control that. We can’t make everyone pay American wages. But in cases where the lower cost results from lower labor standards, worse conditions, or weaker environmental standards, that’s not really fair.
The international trading system had become a kind of get out of jail free card for a lot of that stuff. This is why you saw the continuation of Trump’s tariff policies against China during the Biden administration. That was a really targeted strategy, though. As someone who worked on the 301 tariffs that the Biden administration announced in May of 2024, we studied that stuff really closely. And there were people in the White House before me who worked on it even before that, going line-by-line through the tariff code, good-by-good, and saying, “Does this really need a tariff? Does this make sense? What’s the right level?” If you get it wrong, it imposes real costs on companies that have their supply chains disrupted and on people.
Read the full Q&A on our Riskgaming Substack
The OB: John Hendrix on “The Mythmakers”
On The Orthogonal Bet, our scientist-in-residence Sam Arbesman interviews John Hendrix about his recent graphic novel on the relationship formed between C.S. Lewis and J.R.R. Tolkien. Hendrix is a long-time illustrator who sketches a marvelous picture of these two titans of children’s and adult fiction.
Lux Recommends
- Our editor Katie Salam points to Ethan Mollick’s research on the use of AI at Procter & Gamble, and the multiple positive benefits they discovered in the process. “People using AI reported significantly higher levels of positive emotions (excitement, energy, and enthusiasm) compared to those working without AI. They also reported lower levels of negative emotions like anxiety and frustration. Individuals working with AI had emotional experiences comparable to or better than those working in human teams.”
- Sam Arbesman recommends Ada Palmer’s new book, “Inventing the Renaissance: The Myth of a Golden Age.”
- I’m frightened about the diminishing ability to critically think in the age of AI, and essays like Nico Dekens’s “The Slow Collapse of Critical Thinking in OSINT due to AI” do little to salve those concerns. “Here’s the truth: GenAI is here to stay. It’s not going away. And for OSINT, it’s not the enemy. But it is a liability, if you don’t treat it like one. The analyst’s job has changed. Or rather, it needs to. You’re no longer just a researcher, a data miner, a pattern spotter. You’re now an AI overseer. A challenger. A verifier. A filter. If you treat ChatGPT, Claude, Gemini, or Copilot as reliable assistants, they’ll eventually lead you to errors, because they’re not assistants. They’re high-speed, high-confidence content engines with zero lived experience and no sense of consequence. Your role is to make sure they don’t get away with anything.”
- Laurence Pevsner enjoyed Manvir Singh’s deep dive in The New Yorker on “Medical Benchmarks and the Myth of the Universal Patient.” “So charts meant to protect children’s health may be failing them across the globe, missing growth disorders in tall populations while pathologizing normal development in shorter ones. Parents in Mumbai, Manila, and Minneapolis alike must navigate a medical system built on standards that don’t reflect their children’s physiological realities. Some children who need care may be overlooked; others are subjected to unnecessary and potentially harmful interventions.”
- A Riskgaming reader offered a deep dive into “Russia’s secret war in UK waters” in The Times. “The 60 internet cables that connect Britain to the rest of the world are coated in plastic polyethylene and only a few inches thick. They are easily cut and most of their locations are recorded publicly. However, navy sources said the private companies operating them have laid so many that there is enough ‘redundancy’ in the system to recover quickly from all but the most severe attacks. The ones that trouble the UK government most are used to transfer banking data across the Atlantic and are integral to the functioning of western financial markets. Satellite back-ups would not be able to handle the huge volume of information that flows through them every second of every day.”
- Finally as we enter Passover, Sam offers David Zvi Kalman’s essay on “The sad man on the Manischewitz box.” “As in many other sectors, the industrialization of matzah put most hand-made matzah producers out of business. Whereas matzah had previously been produced as a sort of fundraiser for the needy (not unlike Girl Scout cookies), most Americans now got their matzah in little square boxes from the grocery store.”
That’s it, folks. Have questions, comments, or ideas? This newsletter is sent from my email, so you can just click reply.
