Quotulatiousness

June 29, 2025

Carney’s insane determination to keep the Digital Services Tax

One of the most noted features of Prime Minister Mark Carney’s attitude toward, well, everything is his unwillingness to take the concerns of his opponents into account. He seems to feel that he always knows best and therefore any opposition is therefore, by his definition, wrong. The government had been warned by pretty much every observer that the attempt to impose a protectionist digital service levy had incredibly high chances of triggering blowback … and it has:

Mark Carney’s thought process when he encounters dissent, probably

In other words, you can have many reactions to the current DST battle, but surprise should not be one of them. Canada pushed ahead despite efforts at an international agreement on the issue and later dismissed the increasing friction over the issue with the U.S., which has been signalling its opposition to the DST for many years. Donald Trump has taken action, but his views are not dissimilar from Joe Biden’s on the issue nor Members of Congress from both parties. Further, the companies directly affected by the rules have been similarly responsive. For example, Google began levying a 2.5% DST fee on Canadian advertisers last year in anticipation of the DST taking effect in 2025, thereby passing along much of the DST cost to Canadian businesses and consumers.

To be clear, Canada is free to adopt whatever tax policies it wants and tech companies should pay their fair share of taxes. Ensuring tech companies collect and remit sales taxes on digital sales and services is now well established in Canada. But the government’s policy of “making web giants pay” by going above taxes all companies pay with a percentage of revenues to support Canadian film and television, millions for the news sector, and now the DST was always going to spark a reaction.

Further, the Canadian DST is exceptionally complex, covering a wide range of digital revenues that occur in Canada. The baseline applicability is for companies that generate 750 million euros (about C$1.1 billion) in global revenue of which at least $20 million is digital services revenue in Canada. Digital services revenue can arise from (1) online marketplace services revenue (which would cover an Ebay, Airbnb or Uber), (2) online advertising services revenue (Google or Microsoft), (3) social media services revenue (Facebook or TikTok), and (4) user data revenue (any company that collects and sells user data). Targeting these services means there is a lot stake, estimated by the Parliamentary Budget Officer at $7.2 billion over five years.

Other countries have DSTs, but Canada was the only one to introduce one despite an agreement to institute a moratorium on new DSTs years ago at the OECD. And then it was one of the only countries to reject an extension of that moratorium. The government insisted it would move ahead without delays and indicated it was confident it could avoid retaliation.

Given the trade tensions with the U.S. since the election of Donald Trump, unilaterally dropping the DST in the midst of a trade battle did not make much sense as we needed policy certainty under a broader deal. In other words, the DST was a card we had to play as part of a negotiation. But once we played that card by announcing the tax would take effect next week, it virtually guaranteed the U.S. would respond as it did. The priority should have been a broader deal. The government could have adopted a Trump-style delay for a month to give more time for negotiations. It could have have followed the UK model of weaving it into a broader agreement and committing to a larger digital trade deal. Instead, the government continued years of dismissing the trade risks associated with the DST, potentially creating bigger economic problems in the process.

Dan Knight on how Ottawa deliberately baited Trump, despite all the warnings that this was an incredibly stupid idea:

Donald Trump has officially walked away from the negotiating table. The trigger? Canada’s ill-conceived Digital Services Tax (DST) — a reckless, retroactive grab for revenue targeting U.S. tech firms. Trump isn’t mincing words: he’s calling it a “blatant, discriminatory attack” on American innovation, and now he’s moving to punish Canada economically for it.

So what exactly is this tax?

The Digital Services Tax, passed by the Liberal government and implemented under Mark Carney’s leadership, applies a 3% levy on revenue — not profits — earned by large digital firms operating in Canada. And it’s retroactive. That means it’s being applied to earnings from as far back as January 1, 2022, with companies forced to make lump-sum payments by June 30, 2025.

This tax specifically targets companies with global revenue of at least 750 million and Canadian digital revenue of at least CAD 20 million. Translation: It’s a direct hit on American giants like Google, Amazon, Meta, Airbnb, and Uber, and it spares Canadian firms and EU-based entities from equivalent exposure. It’s not tax fairness — it’s protectionism with a smiley-face sticker.

Trump has responded in kind. As of June 27, all trade negotiations with Canada are suspended. Retaliatory tariffs — already mounting since February — are set to escalate. Trump is drawing a red line, and he’s daring Canada to cross it.

What’s at stake?

Everything. Canada sends over 75% of its exports to the United States. We’re talking about nearly a trillion dollars in annual trade. With Trump now actively leveraging tariffs and ending negotiations, entire sectors — from automotive to agriculture, energy to manufacturing — are in the crosshairs.

Already this year, Trump has slapped 25% tariffs on Canadian imports, with specific hits to steel, aluminum, vehicles, and auto parts, and 10% tariffs on Canadian oil, gas, and potash. These moves have already disrupted markets. Ending trade negotiations is a body blow to an already wobbly Canadian economy — still reeling from Trudeau-era mismanagement and Carney’s corporate globalist agenda.

So who could have seen this coming?

Almost everyone.

The oddity of Donald Trump’s personal “golden share” in US Steel

Filed under: Business, Government, Japan, USA — Tags: , , — Nicholas @ 04:00

In the National Post, Colby Cosh points out the weirdest element of President Trump’s deal with Nippon Steel for the takeover of venerable US Steel:

A “golden share” is a special kind of equity that gives its holder veto power over specified corporate decisions. It is often used in privatizations to give governments some vestige of control over corporate entities originally created by the state (or, in Canada, the Crown) for public purposes. In this unusual case, the U.S. government is magically gaining a golden share in exchange for permitting the sale of one private company to another. The government will be given the right to choose some U.S. Steel board directors, to forbid any name change, and to veto factory closures, offshoring, acquisitions and other moves.

As the Cato Institute immediately pointed out, this is a de facto nationalization of U.S. Steel — the sort of thing that would have had Cold War conservatives climbing the walls and hooting about socialism. But at least socialism professes to be social! Yesterday a lefty energy reporter named Robinson Meyer was nosing around in the revised corporate charter for the newly-acquired U.S. Steel, and he discovered a remarkable detail that the Cato folks had missed: the decision powers of the golden share have been legally assigned to Donald Trump in person and by name for the duration of his presidency. Only after Trump has left the White House do those golden-share powers revert to actual U.S. government departments (Treasury and Commerce).

The stench of banana-republicanism here is truly overwhelming. Again, any species of government foreign-investment review is bound to have a personal character, but such decisions are not supposed to involve the legally explicit assignment of a valuable corporate asset to the decision-maker in his own person. Can this be described as anything but legalized, open bribery — assuming that U.S. courts will find it legal if the terms of sale are challenged? Where in the U.S. Constitution, or in the history of the United States, can any warrant for this extraordinary behaviour conceivably be found? And will unholy bargains of this nature soon become routine?

A parent reviews “Alpha School”

Filed under: Education, Technology, USA — Tags: , , — Nicholas @ 03:00

At Astral Codex Ten, an anonymous reviewer offers his views on a new “AI-powered” school that claims radically better results for children than traditional schooling methods:

Unbound Academy website screencap

In January 2025, the charter school application of “Unbound Academy“, a subsidiary of “2 Hour Learning, Inc“, lit up the education press: two hours of “AI-powered” academics, 2.6x learning velocity, and zero teachers. Sympathetic reporters repeated the slogans; union leaders reached for pitchforks; Reddit muttered “another rich-kid scam“. More sophisticated critics dismissed the pitch as “selective data from expensive private schools”.

But there is nowhere on the internet that provides a detailed, non-partisan, description of what the “2 hour learning” program actually is, let alone an objective third party analysis to back up its claims.

[…]

Unfortunately, the public evidence base on whether this is “real” is thin in both directions. Alpha’s own material is glossy and elliptical; mainstream coverage either repeats Alpha’s talking points, or attacks the premise that kids should even be allowed to learn faster than their peers. Until Raj Chetty installs himself in the hallway with a clipboard counting MAP percentiles it is hard to get real information on what exactly Alpha is doing, whether it is actually working beyond selection effects, and if there is anyway it could scale in a way that all the other education initiatives seemed to fail to do.

I first heard about Alpha in May 2024, and in the absence of randomized-controlled clarity, I did what any moderately obsessive parent with three elementary-aged kids and an itch for data would do: I moved the family across the country to Austin for a year and ran the experiment myself (unfortunately, despite trying my best we never managed to have identical twins, so I stopped short of running a proper control group. My wife was less disappointed than I was).

Since last autumn I’ve collected the sort of on-the-ground detail that doesn’t surface in press releases, or is available anywhere online: long chats with founders, curriculum leads, “guides” (not teachers), Brazilian Zoom coaches, sceptical parents, ecstatic parents, and the kids who live inside the Alpha dashboard – including my own. I hope this seven-part review can help share what the program actually is and that this review is more open minded than the critics, but is something that would never get past an Alpha public relations gatekeeper:

  1. Starting Point: My Assumptions: how my views on elite private schools, tutoring and acceleration shaped the experiment (and this essay). WHAT is the existing education environment.
  2. A Short History of Alpha: from billionaire-funded microschool to charter aspirations. HOW Alpha came to be.
  3. How Alpha Works Part 1: Under the Hood: What does “2-hour learning” actually look like – what is the product and the science behind the product? HOW is Alpha getting kids to learn faster (Spoiler: “Two hour learning AI learning” closer to three hours, with a 5:1 teacher:student ratio and zero “generative AI”).
  4. How Alpha Works Part 2: Incentives & Motivation: The secret sauce that doesn’t get mentioned in the PR copy, but I have discovered is at least as important as the fancy technology. The “other HOW” that no one is talking about.
  5. How Alpha is Measured: Effectiveness: The science says it should work, but how do you measure if it is working? How is the vaunted “2.6x” number calculated? WHAT data is Alpha using to make its claims and what does that data actually say?
  6. Why this time might be different: Most promising educational initiatives fail to have impact when expanded beyond their initial studies. Bryan Caplan might argue this is because most education education is just signaling anyway (“The Case Against Education“). He also argues that most parental interventions have no impact (“Selfish Reasons to Have More Kids“) – He claims that how kids turn out is a combination of genetics and non-shared environment (randomness; nothing to do with parenting choices). How can we reconcile Caplan’s buttoned-up data with the idea that the “parenting choice” to educate your kids differently (like with Alpha) might result in different outcomes than would be expected from genetics alone? WHY could Alpha work?
  7. What Comes Next? The Scaling Problem: The Alpha founders have a vision of completely re-inventing the way the world serves education. But even if Alpha works, it is up against a history of education programs that were never able to scale. It is also going to face resistance for being “weird”. WHAT comes next?

After twelve months I’m persuaded that Alpha is doing something remarkable — but that almost everyone, including Alpha’s own copywriting team, is describing it wrong:

  • It isn’t genuine two-hour learning: most kids start school at 8:30am, start working on the “two-hour platform” sometime between 9am-930am and are occupied with academics until noon-1230pm. They also blend in “surges” from time to time to squeeze in more hours on the platform.
  • It isn’t AI in the way we have been thinking about it since the “Attention is all you need” paper. There is no “generative AI” powered by OpenAI, Gemini or Claude in the platform the kids use – it is closer to “turbocharged spreadsheet checklist with a spaced-repetition algorithm”
  • It definitely isn’t teacher-free: Teachers have been rebranded “guides”, and while their workload is different than a traditional school, they are very important – and both the quantity and quality are much higher than traditional schools.
  • The bundle matters: it’s not just the learning platform on its own. A big part of the product’s success is how the school has set up student incentives and the culture they have built to make everything work together

… Yet the core claim survives: Since they started in October my children have been marching through and mastering material roughly three times faster than their age-matched peers (and their own speed prior to the program). I am NOT convinced that an Alpha-like program would work for every child, but I expect, for roughly 30-70% of children it could radically change how fast they learn, and dramatically change their lives and potential.

Does Russia Always Win Its Wars?

Real Time History
Published 17 Jan 2025

The Russian Federation is at war with Ukraine, and some of its supporters insist it will win because Russia doesn’t lose wars. They point to its vast territory, its cold climate, its manpower reserves, or its peoples’ ability to endure hardship and accept death – and they point to great Russian victories of the past. So let’s put this claim to the test and see what history has to say about Russia’s record on the battlefield.

Chapters:
00:00 Intro
02:03 Mongol Invasion of Kyivan Rus’
03:29 Livonian War
04:52 Time of Troubles
06:13 3rd and 4th Coalition Wars
08:12 Crimean War
09:31 Russo-Japanese War
11:44 First World War & Russian Civil War
14:07 Polish-Soviet War
15:25 Winter War
16:48 Soviet-Afghan War
18:34 First Chechen War
19:33 Conclusion
(more…)

QotD: People in the past believed their own religion

What I think this show [Game of Thrones] has fallen into is the assumption – almost always made by someone outside a society looking in – that the local religion is so silly that no one of true intelligence (which always seems to mean “the ruling class” – I am amazed how even blue-collar students will swiftly self-identify with knights and nobles over commoners when reading history) could believe it. This is the mistake my students make – they don’t believe medieval Catholicism or Roman paganism, and so they weakly assume that no one (or at least, none of the “really smart” people) at the time really did either. Of course this is wrong: People in the past believed their own religion.

It is an old mistake – Polybius makes it of the Romans, writing in c. 150 BC. Polybius notes that Roman religion was “distinctly superior” for maintaining the cohesion of the Roman state, but that “they (= the ruling class) have adopted this course for the sake of the common people” (Plb. 6.56.6-8), by which he means for the sake of the “fickle multitude” which must be “held in invisible terrors and pageantry”. Polybius, I should note, immediately contradicts himself – one benefit of this religion, he says, is that Roman magistrates (read: elite Senators) do not steal from the public treasury even when they are not watched, which would seem to imply that even many very elite Romans believed their own religion (also, irony alert: those famously incorruptible Romans …). Poor men, after all, are not elected to watch the treasury.

Fortunately, Polybius is not our only source on Roman culture, so it is possible to say – and I want to be clear here – Polybius is wrong (on this point at least). Roman elites took their religion very seriously. There are exceptions, of course – Julius Caesar was an Epicurean philosophically, although this does not seem to have altogether disrupted his performance of the duties of Rome’s highest priesthood (he was Pontifex Maximus). Nevertheless, such philosophically minded men were generally regarded with scorn by even the Roman elites (Cicero heaps such scorn on Cato in the Pro Murena in what were clearly intended as friendly “ribbing” before a mostly elite audience), who nevertheless greatly valued religious character (in contrast, Cicero is quick to accuse his hated enemy Catiline of irreligion before the Senate). Roman leaders vowed temples and sacrifices in duress, and built and gave them in victory. Lavish dedications to the gods from all levels of Roman society confirm the overall picture: the Romans believed their religion. Yes, even the elite Romans (there is, I should note, some complicated in that elites tended to separate what they viewed as religion from common “superstition”, but that’s a topic for another day.) And, if anything, the evidence for elite “buy-in” to Medieval religion is far more voluminous.

Yet none of the main characters of Game of Thrones, apart from perhaps Catelyn Stark, is devoted to their region’s traditional religion in any private sense. I cannot recall at any point any character protesting an action on account of religion – no marches held up by high holy days (a regular occurrence in ancient and medieval literature), no groups, individuals or places religiously exempt from violence. The Faith has certain rules about sexuality, but they’re rules that are not only flouted privately by individuals in the show, but also quite publicly by the last ruling dynasty for centuries.

Moreover, none of the ruling characters seem to have any religious functions – or if they do, they simply ignore them most of the time. Keep in mind, these people believe that their gods – be it the Seven or the Old Gods – are powerful divine beings who are directly and immediately interested in the world and who act on that interest. Keeping such beings happy is vitally important – it is not an afterthought. No society, so far as I can tell, has ever believed there is enough gold or enough armies to save you if you have enraged the gods. There is simply no off-setting an angry divinity (and before the smart guy asks, “what about a favorable divinity?” the Greeks had an answer for that – go read Euripides’ Hippolytus. It ends badly for the mortals).

The lack of religious duties or functions for characters who are kings is particularly surprising. Kingship has three core roles in almost all human cultures where the institution appears: kings are 1) chief judge, 2) chief general, and 3) chief priest. That third role appears more or less prominently in almost all societies. In ancient Egypt and (at times) in Mesopotamia, kings were held to literally be either earthly incarnations of major gods or minor gods in their own right. Roman Emperors held the office of Pontifex Maximus, and took over as the chief priest of the state, before becoming gods on their deaths. The Chinese emperor was the “Son of Heaven” and was tasked with maintaining the right relationship with the divine (the “mandate of heaven”). The emperors of Japan are purported to be direct descendants of the goddess Amaterasu (and they have a family tree to back it up).

The relationship between medieval kings and the Church was more complicated, because of the existence of a clear religious head (the Pope) outside of secular authority, but medieval kingship retained a strong sense of religious purpose. Coronation rituals often involved the clergy and were essentially religious rituals, because kingly power was still thought to be bestowed by God. Kings, in turn, had a special role in keeping their kingdom in right relationship with the divine, both through just rule (which included protecting the Church) and through the performance of religious rituals. Those rituals, of course, worked both ways: both believed to be religious efficacious (as in they helped bring about God’s good favor), but also valuable tools of building royal legitimacy (hat tip to my colleague Elizabeth Hassler’s excellent dissertation on the topic of holy kingship). In some places (England and France most notably), kings were thought holy enough to be able to heal certain diseases miraculously by touch – a king who couldn’t was clearly insufficiently pious.

Bret Devereaux, “New Acquisitions: How It Wasn’t: Game of Thrones and the Middle Ages, Part II”, A Collection of Unmitigated Pedantry, 2019-06-04.

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