As mentioned the other day, I am on the go this week due to it being half term.
Nonetheless, I wanted to quickly draw readers’ attention to the following Globe and Mail piece by Tim Kiladze, mostly because it quotes me. For those who don’t know, the Globe and Mail is one of Canada’s most widely read daily/weekend newspapers. So it was very nice to be contacted for comment (even tho my husband immediately joked that it’s a red flag when journalists interview other journalists. Fair comment to a degree, I guess. But I think drawing on another journo’s specific expertise is fair.)
I was supposed to talk to Tim in person, but our schedules couldn’t quite make it work. So I sent him an email clarifying my view on some of the points he raised with me. Most of these were focused on his concerns about the rise of an uncontrollable parallel crypto economy.
I think he did a relatively good job of representing my thoughts, so Tim if you’re reading this, this is not intended to be a dig at you at all. I just thought I would add my broader perspective, for the sake of contextualising my comments. As a journalist, I know the constraints that word count have on what’s published.
Below you will find the email that I finally dispatched to Tim (on the third go because of connection issues). Tim replied to the below with the very good counterpoint that Trudeau was only re-elected to power September, 2021, having run on a vaccine mandate ticket, which means as far as he is concerned he has a mandate from the people to do what he is doing.
I agree with Tim to a degree. I think this fact definitely undermines accusations of Trudeau being a dictator. And for what it’s worth, I do think claims that “democracy” is at risk are a little far fetched. This is hardly a Caesar dictator for life situation. It’s more like a precursor – the moment when Pompey/Caesar tried to score domestic popularity by ridding the Romans of the pirate threat.
That said, the Covid situation today (i.e. February 2022) is very different to the situation voters were presented with in September. In the interim, there have been a number of developments that could have changed popular opinion significantly. The biggest of these is obviously the Omicron variant, which has led to rampant transmission and re-infection rates among the vaccinated. The other is the award-winning journalism from Paul Thacker, which came out in November, 2021, regarding data intergity issues with the Pfizer trials. Last of all, there’s the fact there are now a number of jurisdictions (England among them) that prove that mandate/health-passport policy does little to influence overall infection rates or mortality. Indeed, look to the UK in general as an example of a country that has seen support for Covid measures collapse in a very short space of time (aided in large part by revelations that core leadership had a compliance issue from day one).
In a democracy, when the facts change, it’s important to be open to the prospect of policy revision. This is especially the case if the policy in question is as unprecedented and far reaching as Covid mandates. Doubling down, slamming emergency powers on the situation and treating everyone questioning the policies as a potential insurrectionist who follows Qanon is incredibly bad optics for a democratic state. The latest speech from Chrystia Not-so-Freeland, meanwhile, seems nothing more than free advertising for cryptocurrencies. (It’s almost like they want to prove the bitcoiners right — which is bizarre in itself.)
Concerns about capital flight and deposit runs are no doubt overdone. The Canadian banking system is one of the most resilient and best capitalised in the world. It would take more than a deposit run to undermine it. The banking outage statistics which are doing the rounds, meanwhile, are hardly indicative of anything. I wouldn’t pay much attention to them. They may be a valid “stress indicator” for deposit flight in the crypto world, but they’re entirely meaningless in a system underpinned by a central bank that has no qualms about dishing out liquidity. (This is also why now is different to 2008. Back then dishing out liquidity in response to any stress point was not normalised to the degree it is now.)
This reality, of course, is unlikely to stop the Gamestop generation from having a go regardless. They might even look to Soros’ 1992 move on the Bank of England as an example of what can be achieved with the right coordination and motivation. The breaking of the Bank of England is a relevant historical marker, for sure, but it’s also silly to imply a total equivalence. There is clearly no exchange rate mechanism to break Canada away from.
There is, however, a much more destabilising scenario on the horizon if the government continues to poke the crypto dragon. And frankly, I’m surprised Trudeau (True dough? True cash? Not-so-true dough – can I go there?) and Chrystia Not-so-Freeland have not figured this out.
This pertains mostly to the risk their actions trigger an M-pesa moment for bitcoin.
M-pesa, the hugely popular privately-managed parallel currency (in the Tether sense) of Kenya, didn’t gain the popular ground it now holds because of a simple launch campaign by Safaricom. What cemented its mass adoption was the practical utility it offered the population in the aftermath of the post-election chaos of 2008. As the following extract from a report about customer usage and impact from M-pesa by the World-Bank hosted CGAP group explains, it really began to flourish when conventional capital flows (from rural to urban hands) reversed because of system-wide disruptions in the country. My emphasis throughout:
4. M-PESA flows reversed during Kenya’s post-election crisis, with rural users sending money and airtime to urban contacts. Money transfers typically flow from urban centers to rural areas in Kenya. However, flows were reversed during the country’s 2008 post-election crises. During this period, money and airtime cards could not be physically transported across the country. Many of the roads were blocked by rioting youth, and the railway was dismantled. Many urban migrants needed money to escape the threat of ethnic violence and airtime to communicate about their situation. Some migrants received help from friends and relatives in the village, who transferred both money and airtime via M-PESA. Others withdrew cash from M-PESA if they had a balance in their account. Most banks remained closed during the crisis, which made it difficult to access money. Some agents in urban areas affected by violence confirm that demand for services was high during this period and that urban customers were making withdrawals rather than deposits.
For Kenya this was a pivotal economic moment, as it represented the point when the core banking system became beholden to a private telecoms group. Via these dynamics Safaricom soon became a de facto monopoly agent of digital money in the country. Indeed, one of the reasons it’s been hard for other nations to replicate the M-pesa phenomenon to the same degree is because governments have got wise to the power transfer that occurred in Kenya. They aren’t going to sit back and allow a similar monopoly take hold of their systems. As a result, most of the digital money efforts coming to market since then have been cultivated in the framework of “competition”. All well and good, but the competition in itself — and the fragmentation that comes with it — has proven a major friction point for wider adoption. If everyone’s not on the same page, there is no network effect, and thus not the same scale of utility.
My position on crypto has evolved over time to appreciate this factor. Crypto may not be an optimal system. It’s clunky. It’s energy intensive. It’s confusing. But as a back-up system for when the shit really hits the fan, it’s an incredibly worthwhile system to have in place and I increasingly think we should be grateful that some deep-pocketed individuals with concerns for freedom and privacy took the risks they did to make it become a thing.
I have in the past compared crypto to a monetary equivalent of the right to bear arms, whose main purpose, many argue, is to act as a deterrent to rising authoritarianism. Its optimal deployment is as a right that it is never actually exercised.
Crypto should be treated the same way. On a day to day basis, it’s much better for us all to trust in a centralised and properly supervised system. But having crypto there as a challenger or backup system is no bad thing. It should in theory enhance the core system by helping to keep it honest and working in our interests.
Those, anyhow, are a few points to keep in mind for now.
Here’s the full email I dispatched to Tim (and apologies for typos, rubbish turns of phrase, etc, it was drafted while trying to supervise a four year old):
Basically just to reply to your points I am still very sceptical of crypto. It is a suboptimal money management system in a functional economy. Indeed, in a functional economy, It is always better IMHO to have a trust based centralised system with good supervision. But my extremely cynical view for many years was supported by my trust in democracy and a functional government. I thought it was absurd when bitcoiners would suggest the government would one day confiscate your assets. The concession I have made in recent post Covid years is that I can’t be sure any more that western governments are immune to that sort of authoritarian overreach anymore. For me the implementation of vaccine mandates and health passports in an executive manner without democratic confirmation is an extremely concerning sign of that. Not so much because of Covid, but because once they are installed they will be very hard to wind back.
Underground economies are a function of free societies sadly -but the underground economy is held in check via broader social inclusion and wealth distribution so there doesn’t need to be an underclass that feels disenfranchised, pissed off and thus desperate enough to engage in illegal activities. The perfect free society gives you the right to err, but that right is rarely exercised because trust is high. If shadow economies get large that’s not a failing of the people as much as the low trust authorities.
Trust seems to be being lost because concerns are rarely addressed by authority figures. Stigma has been weaponised and concerns laughed off as crazy regardless of how much evidence or contrarian expert opinion is out there to support them.
Mandates for emergency approved experimental vaccines that rely on gene therapy (and don’ prevent transmission) feels to me like an extremely heavy handed ruling.
The fact you can’t even say these vaccines are gene therapy (which they are) is a sign of the problem.
The ruling is particularly unfair for younger demographics. I don’t think questioning this policy is an absurd or illogical view. It is not comparable to questioning a mandate for a vaccine with 10 years worth of clinical data, or a delivery technology that is proven.You may or may not agree with the truckers, and I’m obviously not on the ground so I can only comment on things from the perspective of a foreign observer, but it seems incredibly poor politics to resort to heavy handed measures like emergency acts rather than to engage with the truckers and their key concerns.
I think much of this could have been avoided if politicians had treated those raising concerns as equals rather than as demented nutters. I’m sure some portion of the truckers are extremist. But this is true of any broad protest movement and is an easy tactic to deploy to derail any legitimate questioning of authority these days from BLM to Extinction Rebellion.
Finally, as someone who has investigated the lab leak theory for the FT first hand, I am aware of how much pressure there is on top tier scientists to not speak out against authority. I am aware of how easy it is to bury bad news too. I am not confident that the usual whistleblower channels that are supposed to keep bad practice in check in democracies are fully functioning.
I am pro vaccine, but I am also pro choice, and I am pro empathy with those who have lost trust in authority. You can’t win that trust back by deploying heavy handed measures. You need to listen. Not necessarily act. But listen at the very least.
Also, while civil disobedience is annoying and disruptive, it is not equivalent to terrorism. And preemptively judging everyone as guilty and subject to potential financial defunding or clawbacks is against the spirit of habeas corpus.
Crypto is a terrible system. And I would seriously rather not operate via its channels. But with great centralisation comes great authority, and having a pesky challenger in the mix is probably a good thing. It keeps the core system honest. It’s the reason we have a shadow government in politics too. A challenger system keeps things in balance, and prevents the forces of corruption taking root in the core system. The best scenario is one where bitcoin is there as an option but very rarely used.
The fiat world should compete with bitcoin etc and win because it is more honourable and more efficient, not because it is mandated.