Is Canada a dangerous bastion of socialism? According to Trump, maybe: Don Pittis

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So what exactly is socialism, anyway, and why is U.S. President Donald Trump so alarmed about it?

In what some are calling the start of a new Red Scare of the kind that divided U.S. politics and economics in the previous century, the president used last week’s state of the union address to stoke partisan anxiety. 

« Here in the United States, we are alarmed by the new calls to adopt socialism in our country, » Trump declared in his speech to Congress. « America was founded on liberty and independence — and not government coercion, domination and control. »

As he spoke, network cameras panned to self-declared supporter of socialism Sen. Bernie Sanders and, by U.S. standards, the left-leaning Rep. Alexandria Ocasio-Cortez.

‘Socialist’ like Canada?  

But, of course, to most Canadians — and to most of the world’s other liberal democracies — the socialism of Sanders and Ocasio-Cortez that advocates things like universal health care and moderating the extremes of U.S. wealth and poverty does not seem very alarming. 

To most Canadians, raised in what has been called a mixed economy for its combination of the public and private sector, that kind of socialism holds little terror.

Left-leaning member of Congress Alexandria Ocasio-Cortez looks down at a button with a picture of a child, as Trump talks about immigration during his state of the union address. (Jonathan Ernst/Reuters)

The discussion of who owns the means of production is one of the places where politics and economics come together in the subject area known as political economy.

When I studied economics decades ago, most of the courses analyzed the pure mechanics of capitalism. 

Political economy only raised its head in a final-year course on the history of economic thought, which came as a revelation, and in which anyone who did not follow mainstream capitalist thinking was described scathingly as « heterodox. » That included socialism.

Socialism defined 

In a short telephone call, Laura Macdonald, a Carleton University professor and former director of the school’s Institute of Political Economy, offered the following:

« Socialism is a broad ideology that has different variants, but in general is associated with greater faith in the role of the state versus the market, and a skepticism about the capacity of the market, on its own, to deliver both growth and social equity. »

As a term, she said, socialism is contextual, which means to say it depends on how you use it.

A sculpture of Karl Marx, author of The Communist Manifesto, in Chemnitz, Germany. (Hannibal Hanschke/Reuters) 

« I don’t think Donald Trump would call us socialist, but probably he thinks we’re dangerously close to that and that may be one of the reasons he doesn’t like Canada very much, » Macdonald said.

Stella Gaon was thrilled for a journalist to actually ask her questions on her specialty as a theorist at Saint Mary’s University in Halifax, where she studies the economic and intellectual origins of political thought.

« This is just anti-commie rhetoric from the 1950s, » Gaon said of Trump’s remarks. « Nobody even knows what socialism is. »

Liberalism vs. socialism

Socialism and liberalism are both rooted in the Enlightenment values of freedom, rationality and equality, she said.

The difference between socialism and liberalism is that socialists don’t believe equality is real unless you include economic equality.

In its purest theoretical form, socialism required people to be equally rich, an ideal that Gaon said has never been attained in practice. In its original form, it also required the state to be in control of everything. No private businesses allowed.

A memorial to Karl Marx in London’s Highgate Cemetery was damaged by a vandal earlier this month. (Peter Nicholls/Reuters)

Socialism has come a long way since the days when socialism and communism meant roughly the same thing, said Tom Flanagan, a political theorist and professor emeritus at the University of Calgary.

Socialism meant the state control of all industry and « the replacement of the markets by an administrative economy, » said Flanagan, a conservative political activist who was an adviser to former Canadian prime minister Stephen Harper.

But since then, and especially after the creation of the Soviet top-down communist system in the 20th century, social democracy became the mainstream form of socialism outside communist countries, a kind of watered-down version we see in northern Europe and elsewhere that attempts to share the wealth and equalize opportunity without requiring economic equality.

America, the already socialist

Whereas Gaon insists Canada is purely a liberal democracy — after all, even the country’s left-leaning New Democratic Party has dropped the word socialism from its constitution — Flanagan sees many elements of socialism and administrative planning not just in Canada but in the U.S. as well.

According to that way of thinking, Trump may be too late. Socialism has already arrived.

« It’s a matter of degree, » Flanagan said. « All contemporary countries have some elements of socialism, you know, public schools are socialist, owned and operated by the state and there’s no price to get into them. »

While Flanagan doesn’t see a full-fledged socialist takeover on the horizon, he says using the term within the Democratic Party represents a major change.

« Suddenly it’s gone mainstream, » he said. « It’s an important development, because once you start using the vocabulary, it indicates receptivity to more sweeping programs of state intervention. »

Follow Don on twitter @don_pittis

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Canadian case is another warning about the murky world of cryptocurrency: Don Pittis

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So much for living the libertarian dream.

Canadians who have lost about $200 million escaping the control of « fiat currency, » backed by governments, and market regulation are now asking for help from the authorities to try to get their money back.

The B.C.-based Quadriga is going to court today in Halifax to claim protection from its creditors under Canadian bankruptcy law.

And according to documents prepared for the court hearing, suddenly it turns out that a company widely seen as Canada’s biggest cryptocurrency trader, a company that described itself as a « leading bitcoin exchange » was really just a guy with a computer.


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Government should be freaking

And now the guy in question, Gerald Cotten, the company’s CEO and sole director, has been reported by his widow to be dead, taking his passwords with him into the great beyond. And the nearly $200 million in the QuadrigaCX « bank » has gone missing or is inaccessible, locked away in encrypted wallets.

« You know if any other group of Canadians lost $300M from a bank or other finance company, the govt would be freaking, responding and bailing them out but they just don’t care when crypto people lose vast sums of money, » tweeted Canadian lawyer Christine Duhaime. « It’s not right. »

But that kind of sympathetic view is not widespread.

A t-shirt on displayed at the Consensus 2018 blockchain technology conference last year. For many, crypto has been seen as a cash cow.

(Mike Segar/Reuters)

Early evidence says it may be too late for the people in this case to get their money back, ever. But it stands as a warning to the rest of us tempted to try to make a fortune in a highly unregulated sector.

Among the features of crypto, as it is often called for short, is that its anonymity puts it beyond the reach of normal regulation. According to its advocates, unlike regular money, imagined into life by governments and controlled for their own purposes, cryptocurrency is founded on libertarian and mathematical principles that assure its value by limiting supply.

But a lack of government oversight means that in many ways the business of cryptocurrency has been less than transparent.

‘Super murky’

« It’s super murky, » said David Gerard, author of the book Attack of the 50 Foot Blockchain. The term blockchain refers to the complex system of encryption used by currencies such as bitcoin, ethereum and litecoin to simultaneously record the value of the virtual money, keep its owner secret and prevent anyone from stealing it.

One of the problems with asking regulators to step in and solve this digital cash conundrum is that almost no one is qualified to do it, said Gerard from his home in London.

« At the moment, literally the best investigative source we have is the QuadrigaCX2 forum in Reddit, » he said. Reddit is an open forum where people with expertise or interest in a subject area can post their findings and speculation.

The problem is that unlike an investigation by an authoritative group such as the RCMP or the Ontario Securities Commission, it is hard to gauge the quality of the evidence being presented.

One Reddit post claims that accounts that are supposed to be inaccessible due to lost passwords are actually being drained, but it is impossible to separate rumour from fact.

We know that real cash is hard enough to keep track of when people want to keep it secret. But with bitcoin and its ilk, hidden behind walls of encryption, it is even more difficult to follow the money. And if digital coin encryption could be cracked to get at that money, the entire crypto house of cards would collapse.

On the Quadriga sub-Reddit, rumour mixes with fact. One post claims that accounts of Quadriga’s litecoin, for which passwords were supposed to be lost, are showing activity. Others insist the millions never really were there and the trading platform was being used as a Ponzi scheme, where people were being paid out from new investors’ deposits.

Others on Reddit and Twitter try to poke holes in the Cotten death story, criticizing the quality of the death certificate in India —where an affidavit says he died — skepticism over the cause of death and its timing.

Amateur hour

But with crypto, says Gerard, this is the world we are in.

« Cyrpto is amateur hour, it really is, » said Gerard, who in his day job is a Unix systems administrator studying software to keep the bad stuff out of his network.

He says it is possible to build reliable financial systems. Banks do it, but it is complicated and expensive with data backups in different geographic areas. Banks are supported by central banks. Governments insure deposits to discourage runs. Quadriga didn’t have those advantages.

Some crypto exchanges are better than others, but for many young or inexperienced people hoping to make a fortune in the sector, it is really hard to tell if a seemingly credible operator is really just a guy in his basement with a pretty web site.

« People assume these are active institutions that operate under rules and regulations, and they operate under very few, » says Gerard. « I wish it was as regulated as gambling. »

But just because companies are dealing in cryptocurrency doesn’t let governments off the hook. If fraud was committed the RCMP must investigate. If rules weren’t followed, how did the company get away with it?

« I’ll bet the relevant regulators are scrambling right now to see whose jurisdiction they are under, » says Gerard.

Follow Don on twitter @don_pittis

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Zero-emission rules mean fewer electric car choices for most Canadians: Don Pittis

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Canadians trying to buy the electric vehicle of their choice in many parts of the country are finding it almost impossible — and a provincial strategy intended to get more green cars onto dealers’ lots may actually make the problem worse.

The strategy — called a zero-emission vehicle standard, or « ZEV mandate » — has already been imposed in Quebec.

There are now widespread rumours that British Columbia could announce a similar scheme within days as part of a promise to help balance out the greenhouse gas deficit produced by the province’s planned $40-billion liquefied natural gas plant in Kitimat.

That sucking sound

Unless the federal government moves ahead with a promised national ZEV mandate of its own quickly — something critics think is unlikely — green car advocates fear the provincial schemes will merely suck electric vehicles out of other parts of the Canadian market in order to beef up sales in B.C. and Quebec — without increasing the total national supply.

That doesn’t mean ZEV mandates aren’t potent policy tools within the jurisdictions that impose them, says Dan Woynillowicz, policy director with Clean Energy Canada, a think-tank at Simon Fraser University.

« California has been the pioneer with a zero-emission vehicle mandate, » said Woynillowicz. « It’s been very successful, and as a result more than a dozen other states, plus Quebec here in Canada, have adopted similar policies. »

California has been a leader in the ZEV market, and you can find electric cars available there that are never even seen in Canada. (Robert Galbraith/Reuters)

Meant to influence the market without distorting it too much, ZEV rules differ from jurisdiction to jurisdiction. But in principle, ZEV standards have a single intent.

« The standard seeks to spur the supply of zero-emission vehicles (ZEVs) and low-emission vehicles (LEVs) to afford … consumers access to greater numbers and a broader range of plug-in motor vehicles, which are the cleanest and the most technically advanced on the market, » reads a Quebec government website.

Despite a handy explanatory leaflet, ordinary car-buyers may find the complexities of the rules heavy. 

But in essence, ZEV systems are put in place as an attempt to counterbalance market forces that have made selling internal combustion engine (ICE) cars more profitable for automakers than selling electrics. ​

Please don’t buy our cars

The late Fiat Chrysler boss Sergio Marchionne once notoriously asked customers not to buy the company’s battery-powered Fiat 500e because the business lost money on every one sold, although he reversed that view shortly before his death.

While electrics are cheaper for consumers over the life of the car, automakers have been able to make more money selling cars manufactured in old plants using established technology. Dealer repair shops make more from combustion-engine vehicle maintenance since, by comparison, electrics have so few moving parts.

A Nissan Leaf and a Chevy Bolt are shown at Toronto’s Electric Vehicle Discovery Centre, run by non-profit Plug’n Drive. A national ZEV program could attract more electric cars to Canada. (Don Pittis/CBC)

What ZEV mandates do is force carmakers to increase the percentage of ZEVs and LEVs sold year after year. And if they fail to meet those rising quotas, it forces them to pay what the rules describe as a « royalty. »

That means the most profitable thing car companies can do in the short term is to hold steady the total supply of Canadian electric cars — and merely sell more of them in ZEV jurisdictions. In other words, in Quebec and in B.C.

« Most electric vehicles that are earmarked for the Canadian market are likely be going to be going to those two provinces, » said Woynillowicz.

The federal government has considered a national plan, with a Transport Canada announcement last year going so far as to promise to develop a Canada-wide strategy to increase the number of ZEVs on Canadian roads « by 2018. »

But according to insiders, an advisory group that included carmakers and environmentalists became deadlocked and the group’s report has not been released.

Global shortage

Industry representatives make it clear they don’t like pressure from the sudden imposition of ZEV rules.

David Adams, the president of the industry group Global Automakers of Canada, called the possibility of a ZEV scheme in B.C. « disconcerting, » partly because there just aren’t enough cars to go around.

« The supply issue is a global issue that is going to be with us for two or three more years, » he said in a recent interview.

Ontario electric car expert Cara Clairman has a certain sympathy for an industry that has been surprised and overwhelmed by the demand for battery-powered vehicles.

« To be honest, it’s just so much cheaper, » said Clairman, the CEO of Plug’n Drive, a non-profit organization sponsored by the electric and automotive industries that promotes electric cars. 

The Toronto resident has driven her own Chevy Bolt to Montreal, Ottawa and Windsor.

Mitsubishi brought in plenty of its best-selling Outlander PHEV SUV. But other companies may need a nudge from a ZEV program to provide enough electric cars. (Mitsubishi Canada)

Clairman said she has noticed more cars being shipped to Quebec since the province adopted of a ZEV mandate, but she also notes that places like California have electric cars she’s never seen available in Canada.

« Those jurisdictions with a ZEV mandate tend to get the supply when there’s a limited number, » she said.

People shopping for an electric outside Quebec have found some cars — including the Volkswagen e-Golf and any of the Ford electrics — hard to come by. But some car companies — including Mitsubishi, whose Outlander plug-in-hybrid is billed as the world’s best-selling electric SUV — planned ahead and currently has a plentiful supply on dealer lots.

Companies that lead the way on producing enough electrics will win in the long run, Clairman said. But for others, it’s possible the ZEV mandate is necessary to twist a few arms.

« I think, for quite awhile, most of the automakers didn’t want it because they said, ‘We’ll make sure the supply is there.’ But if the supply isn’t there, I think there becomes more and more public pressure to have a ZEV mandate. »

Follow Don on Twitter @don_pittis


The ‘ZEV mandate’ versus the ‘CAFE standard’

Those with a passing familiarity with the rules to make cars less polluting may be confused between the ZEV mandate and the existing CAFE standard, which stands for « corporate average fuel economy, » that U.S. President Donald Trump has moved to abolish. While the two sets of rules overlap in encouraging greater fuel efficiency, some experts, including those advising the State of California, say the ZEV does not replace the need for the CAFE. While the ZEV mandate gradually increases the percentage of zero and low-emission cars on the road, the CAFE standard requires greater efficiency in the entire fleet. « When we talk about a zero-emission mandate requiring one in three cars sold 12 years from now be electric, that means that even 12 years from now, two out of three being sold will have a gasoline engine, » said Dan Woynillowicz. If that occurred, the majority of cars sold could include the highest polluting vehicles — so long as automakers find them profitable. In theory, said Cara Clairman, after many more years, you will have enough electric cars on the road that the effect would be the same. « But I don’t think California would ever go for that, » she said.

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