Libel Is Alright Because Everyone Does It??

At https://www.mondaq.com/canada/income-tax/833802/gordon-et-al-v-the-queen-canadian-tax-lawyer39s-analysis-and-comments are comments on a court case decided last year, which was fought over the issue of whether a CRA Investigation into an SRED practitioner’s routine of creating back-dated documents to make it appear that transactions and circumstances had occurred when they had not. The court’s findings make sense to me, with the exception of the determination that government reports labeling one of the individuals connected with the plaintiff as a “troublemaker” were not damaging to the subject’s name. The reason given by the Court to support the finding that the individual’s reputation was not damaged by the remarks is that such labeling practices are common within government! So, holding up a convenience store (easier now that masks are routinely worn) is alright because hold-ups are common? Yikes! It is a sad state into which a Just-Us system has fallen when such reasoning passes scrutiny. 

It is interesting though that the Court seems to have acknowledged that where poorly documented transactions or relationships had existed, it is a satisfactory accounting tactic to post hoc create missing documentary evidence.

Todd Dufresne and The Democracy of Suffering

Recently CBC aired an Ideas episode in which the engaging philosopher Todd Dufresne was being interviewed about the ideas in his book The Democracy of Suffering. Part of his thesis, as I understand it, is that capitalism is leading to the destruction of our world. Capitalism has rendered Earth hostile to life.

His reasoning runs something like this. Capitalism requires continuing growth and expansion. The expansion thus induced is changing the earth and has brought about the Anthropocene geologic era, in which the whole earth is affected by a single species. It’s hard to say when that started, but Professor Dufresne reckons it was about 1968. That may be a valid starting point. It was in 1968 that Ambassador College, in its publication Our Polluted Planet, alerted the public to problems to the perils of environmental pollution.

Dr. Dufresne’s hope is that the inevitable wide-scale suffering that is sure to ensue from capitalism’s rape of the planet will prompt soul searching that will lead to the wisdom to embrace values other than three TV sets on the ground floor. He believes that automation has progressively thrown the middle class out of work and will now do the same for the upper middle class as A.I. takes over the work of lawyers, accountants and other professions. Wide sectors of the population will be dispensable. What we need to do is embrace uses for our time and attention that do not serve an economic purpose. Play the lute. Paint a portrait. A universal income plan will enable us to do that if governments have any sense.

All very logical, but I question whether it’s right. First, I do not agree that capitalism requires unceasing expansion. Because capitalism is basically the private control of assets for a profit, there is a propensity to get bigger, but it is because we do not have a free market that industries and companies attached to them flourish in their rapacity. It is big government, which would be necessary in a society of universal income, that has kept behemoths alive long after they have served their purpose. Look, if a company needs a government bailout to stay alive, the company is probably not efficiently putting its resources to their best use. Such a company is wasting resources --- depleting the commonwealth of the earth --- and should not be given help to get their hands on more resources. If the company was operating in a free market where consumers signal through the price system what products and services are valuable to them, and if the company efficiently responded to the signals and produced what consumers express as their needs, the company would make a profit and thrive. If it didn’t, it has failed as a guardian of the capital it has and should be allowed to fail altogether. For example, the airlines are in trouble now and no doubt will be bailed out by government. What for? So they can continue to waste resources? Let them go under. Nothing is lost. The airplanes will still be here, and so will the airports. There will be new owners though and maybe they will do things better.

It is possible for a business to thrive without constant expansion. We see many small and medium size businesses like that --- viable businesses that fill needs at their current levels of economic activity. Capitalism does not need continued growth to thrive. A free market requires that the holders of the capital use it for social good to thrive. Government interference in the free market causes economic dislocations through false price signals, aberrations in the profit system, hindrance of voluntary exchanges, and erosion of property rights. The result is massive waste of resources.

You do not want to become part of a dispensable population. If AI takes over your work, develop a new skill. There will always be services provided by professionals who understand the nuances machines do not and who can bring to their profession an art that eludes AI. Further, as traditional jobs disappear, there will be new occupations created and expansion of surviving ones. The AI industry will require additional workers. I can see that one day there will even be machine psychologists whose job it is to help AI units integrate their feelings and to find purpose.

The Dufresne interview is at https://cbc.mc.tritondigital.com/CBC_IDEAS_P/media/ideas-O4tuagqC-20200408.mp3

Covid 19, Spending, and the PM's Hair

Our Prime Minister has been talking about social distancing being necessary for months to come. He’s probably right. The objective is to keep people from getting what has been called the Chinese Flu*, but it seems to me that without getting it, we will be at risk for it until a vaccine is developed. And when is that?  Maybe early next year we are told. So even when we think we have the virus beat because social distancing is preventing new cases from developing, how long before it comes around again after we start getting close to people?  Realistically, we need to maintain the distance until a vaccine is developed and distributed.

That’s a long time. My hair, unlike the PM’s and Bill Morneau’s, is still growing, and I do not like the look that is developing. I could ask a household member to do something with it, but I have to decide for what look I am aiming --- Larry, Moe, or Curly? 

Hair aside, let’s consider the economy. If this lockdown is over in 3 or 4 months, a lot of businesses will have been hurt, but mainly they will still be intact and able to resume activities. Many of them would ramp up to make up for the lost production. Their essential energy would still be alive.  But let’s say it is several months, maybe 6 or 8 months before the doors can be thrown open. A lot of businesses would no longer be around, and many who still are would find that consumption habits have changed: people have found out they really can do without a lot of stuff and still be happy, or at least no unhappier than they were with the stuff. Now let’s say that we are locked down until the elusive vaccine is actuated. It’s hard to envision anything pretty about that economy.

The longer the disruption of the economy occurs, the more likely it is that supply chains will break. Many inventories are low by design (just-in-time inventory management), so the system is easily disrupted. We all depend on vendors for something, and they make it from stuff they got from other suppliers (or they resell). And those suppliers also depend on yet other components. Purchases have ancestors. You have two parents, four grandparents, eight great-grandparents, and so on until you go back enough generations and you have descended from a very wide portion of the population.  So, to give one example, Peru, Chile, and Argentina have all shut down their silver mines. That's 25% of the world's production. And in other silver producing nations, some of the mines will be closed. What will remain open are the mines that are very remote and not easily accessible so that the companies running them can control who gets in and out. There will be severe disruption in the supply of silver, a metal essential to many processes. That is just one mineral. Others will also be in short supply. Products made with and from the missing minerals are used in the production of still others, and so on.  It's very complex.

The government knows the problem is grave. Their answer? Throw money into the system. The trouble is that money is not wealth. Real property, goods, and services constitute wealth.  When people are not working they are not producing wealth, but they are consuming it. The overall wealth reduces. The new money, which is not wealth, is a claim on wealth, and we have more and more money laying claim to the ever-shrinking wealth. So prices are bid up, and we have price inflation to match the monetary inflation. That’s what a lot of people expect.

There is a problem with the foregoing view. Money is not a claim on wealth if it is sitting idle, and it does not bid prices up. The velocity of money --- the frequency with which money changes hands --- is every bit as important as the amount of money there is. We are in a time of fear, and I expect velocity to slow down in a big way as people decide against spending. I expect prices will fall and that we will be in a deflationary depression similar to North America in the 1930s. Cash will be king as people elect not to spend, choosing instead to keep their powder dry. Eventually, they will resume spending, as they gain confidence, and then cash will be trash as money velocity increases markedly. 

Governments traditionally have lowered interest rates to urge the economy along. That won’t work this time. Interest rates are practically at zero. That bullet was fired in response to the 2008 crisis, and rates did not climb appreciably after that. Now some are urging negative interest rates, the belief being that if it costs you to hang onto your money, you will spend it to buy something of lasting value. I doubt it. I think you’ll simply stash your cash somewhere in your home. No wonder governments seem bent on outlawing banknotes. With many businesses now not accepting cash, contrary to legal tender legislation it seems to me, governments may want to keep it that way after the crisis is over. With money being only electronic, negative interest rates could be forced on you, not to mention the surveillance of your activities and spending habits that could take place as a result of watching your cashflow.

We sure are in a mess.

* It looks to me as though the Corona 19 virus is descended from a bat virus that was altered in a laboratory in Wuhan. I understand that a portion of the gene sequence is not found in nature, and that Wuhan is where the Chinese have their biological weapons lab.