Comment on Reddit to an individual considering a move to Ottawa.

I’ve been all over the world, including most major European cities, and have a good basis for comparison. You will find Ottawa very clean, very modern and very safe with excellent schools and health care.

That said, the experience will feel more like living in a rural setting compared to a European city, even in heavily populated areas. Ottawa has numerous parks and forests, and public buildings are also in park-like settings. There is a large experimental farm in the middle of the city, a ‘green belt’ around the older part and the newer part (Kanata is outside the Greenbelt). As a result, public transportation is not up to European standards.

People have commented on the health care. First of all, it’s free (for Canadian citizens and permanent residents; I’m not sure what you’re status will be but check on this) except for prescriptions, dental and optical. There are no deductibles, user fees, or limits to this coverage. It’s good to have a family doctor – when we arrived five years ago (after a long absence) we got one almost right away. But post-covid, your experience may vary. There are clinics, or in emergencies, go directly to the hospital. There will be little to no wait for emergency services. Overall the standard of care is very high and Canadians have some of the longest life expectancies in the world.

Ontario’s education is world class, no matter where you go. That’s not just me saying it; the province scores at the very top of international student rankings. Primary and secondary education are available in English and French, and if you are Catholic, you can attend a separate Catholic school in English or French. Education is again a public service and there are no fees (though some schools will ask parents to contribute for extras). There are private schools in the city, and International Baccalaureate is available, but really, they’re not at all needed here.

It’s safe everywhere in the city. And by ‘safe’ I mean really safe, world-class safe, even in the supposed ‘bad areas’ (those areas, by the way, are in east downtown, though this is changing because of the cost of housing).

Housing is expensive by Canadian standards but not by European standards. Shop around. Although the cost of housing has increased a lot in recent years reasonable housing is not out of reach for most people with decent jobs (especially considering you’re not paying for health care or education).

Some people commented on culture in Ottawa. Culture in Canada is different from culture in Europe. You won’t find (many) corner cafes (but look for them eg. in Manotick and Stittsville, or in higher traffic areas like Westboro). You will find abundant outdoor activities at your doorstep – cycling, sports of all kinds, skiing and more. The city has professional hockey (in Kanata!), football, basketball and baseball teams (the latter two at a lower level) and there are numerous opportunities for children to play any of these. There are numerous museums and galleries. Outside the city (which you can visit because you’ll have a car) are farms, forests, fantastic parks, historical areas, and more. You will never lack a new place to visit with the kids.

Again, by Canadian standards, Ottawa is expensive, but not like Vancouver or Toronto. Public transit is substandard. Winter is cold, but comperable to northern Europe, with a bit more snow. It’s not Prague or Vienna or Berlin, but it doesn’t try to be any of those things. And if it’s accepted on those terms, then with a standard of living that is one of the highest in the world, it is an enviable destination.

Economy Taxation

The Debt

One of the incessant ‘Trudeau must go’ posts includes this feature chart. It pegs Canada’s total debt as $1,163 billion, and each individual debt as $31K. These numbers are supposed to frighten us. But what struck me is how low they are. Compare this, say, with total Canadian consumer debt of $2,200 billion. Average consumer debt is $20K excluding mortgages.

So let’s look at Canada’s federal debt. If I pay $4 tax per day, that stops the growth of the debt in its tracks. If I add, say, a car payment, we could eliminate the debt in four or five years. Redirecting this money would also slow inflation. So why don’t the Conservatives support this?

It’s because they know this level of debt is very manageable. And they know these payments would be even lower if we include things like corporate taxes. That’s the fallacy of “your share of the debt is $x.” It assumes corporations owe nothing, and that billionaires owe (and benefit) the same amount as you. The Conservatives are trying to scare you with a threat that is not real.

The fact is, Conservatives don’t actually want to eliminate the debt. They want to reduce spending on social services and give tax breaks and free money to the rich. But you can’t pay down the debt simply by reducing spending. You have actually pay down the debt. But that’s the part conservative governments never actually get around to.

Here’s another thing: who do we all owe this debt to? Roughly 40% of the total debt, and almost all of the recent debt, is held by the Bank of Canada. About half the remainder is held by Canadians and Canadian institutions. So we owe the majority of our debt to ourselves. It’s not like owning money to the finance company or to a bank, where we never see any value in debt repayment.

As Yannick Beaudoin and Mark Anielski write, “Canada’s debt is not like household debt. The persistent use of the household debt analogy by politicians and media is not only grossly inappropriate; it also harms Canadians’ ability to make informed decisions around ensuring the government spends appropriately, wisely and with accountability.”

Economy Health

Inflation and The Deal

I heard a pernicious argument from a Conservative commentator on Rosemary Barton’s morning show yesterday. In between condescending remarks (“now look, Rosie”) the argument ran as follows:

We are in a time of inflation so we should not pass measures that increase consumer spending. So we should oppose pharmacare and dental care. By contrast, though, large expenditures like the purchase of F-35 fighters are good because so little of the money remains in Canada. So goes the argument, which is currently being broadcast on all the usual channels.

This is all a part of the Conservative broad front against the agreement made by the NDP and the Liberals whereby the former would support the latter in confidence motions until 2025 so long as key NDP priorities were passed, and specifically, pharmacare and dental care. The budget this week will be the first test of that.

I also read in passing of a plan to offer high speed internet at $20 per month to low income seniors, as well as a tax on the banks, and this too seems to be part of a realization on the part of the Liberals post-pandemic that we need to take care of people who are not in a position to care for themselves. No doubt the Conservatives would oppose this too on the grounds of being ‘inflationary’.

But there is a price to the Conservative argument that they’re not prepared to admit. And it is this: there is a direct correlation between being poor and death. We saw this clearly when poor people died at a much higher rate during the pandemic than the wealthy. The less we help poor people, the more they die. That would be the cost of the Conservative’s anti-inflationary stance.

Of course, that stance is unreasonable in the first place. The poor contribute very little to inflation. The drive to higher prices, when it results from consumer demand, comes from spending by people with money. I mean, d’uh. Creating a more equitable society doesn’t cause inflation. Quite the opposite: the less equitable the society, the more vulnerable it is to inflation.

That said, in the current circumstance, inflation isn’t being caused by high consumer spending at all. Rather, the problem is at the other end of the spectrum: supply. We are, because of the pandemic, and now because of the war, facing shortages. The price of oil is especially at fault here, as it always is during wartime. And the labour shortages are another cause; it’s not only the deaths, but also the people with long Covid, and the people who decided minimum wage isn’t worth risking their lives.

For in the battle against Covid, just as in the battle against inflation, it is poor people who take the brunt. Higher prices don’t really hurt the wealthy; they can just spend their way through it, and perhaps salt a little less in their overseas nest egg. The poor are expected to work, to suffer higher prices and lower wages, and to take the risks. They become desperate, which is music to a Conservative’s ears.

That’s why the deal between the Liberals and the NDP is important. It is a recognition on the both parties that, at least for now, it’s time to put the needs of those most at risk ahead of those with greater means. And the way things have been going, that means more and more of us every day.


The Jump

Based on research carried out by academics at Leeds University a study asks people people to make The Jump and sign up to six pledges that “could account for a quarter of the emissions reductions required to keep the global heating down to 1.5C.”

The six pledges are as follows:

  • Eat a largely plant-based diet, with healthy portions and no waste
  • Buy no more than three new items of clothing per year
  • Keep electrical products for at least seven years
  • Take no more than one short haul flight every three years and one long haul flight every eight years
  • Get rid of personal motor vehicles if you can – and if not keep hold of your existing vehicle for longer
  • Make at least one life shift to nudge the system, like moving to a green energy, insulating your home or changing pension supplier

It’s worth noting that the request was made of “relatively well off people”. That’s because the pledge would be utterly impossible for low-income people to comply. And that points to the main problem with the pledge: it assigns responsibility to consumers for decisions that are being made in corporate boardrooms.

Let’s analyze:


It is rare to find a grocery store that offers an affordable means to to achieve a plant-based diet with healthy portions and no waste. And it is almost impossible to find one in the restaurant and fast food industry. Moreover, most of the waste in food production (not to mention the energy costs of transportation and processing) happens long before it ever reaches the shelves. The food industry is rationalized for one thing: profit. That’s why people living in prime potato-producing regions here in Canada see a selection of potatoes mostly imported internationally. Changing our diet won’t change this. To really address climate change we need to change the incentives in the food industry, making it cost more, not less, to sell unhealthy processed foods using ingredients transported over long distances. Addressing some of the significant labour inequities worldwide would go a long way toward addressing this.


I’m not sure how the author has counted clothing but taking two years to buy three pairs of socks seems daunting at best. As does dressing for a real four seasons, such as we have in Canada. Though perhaps we could do that – if clothes lasted ten years. Alas, they do not. They rip, they tear, they fade, they get lost (especially the aforementioned socks). We humans change too – we grow, we get wider, we get thinner. Is it our fault for buying clothes to replace them? Or even because we want both a green and a blue shirt? No. What would make a difference? Manufacturing clothing sustainably, and making them more durable. Right now, that would make clothing very expensive, because most of the industry is geared toward low-cost production using low-cost labour. Why do we import clothing from China and India? Because that’s where they allow clothing to be manufactured in sweatshop conditions.


Yes, it is theoretically possible to keep and use electrical products for ten years. We just retired our ten-year old microwave after something burned out somewhere deep inside. But generally, our products fail sooner than that (some, like computers, are designed for a lifespan of less than ten years). You can buy more robust products – our commercial-grade coffee maker seems likely to make it ten years. But that costs five times as much. But very few people can afford this grade of product, and in any case, industry makes more money selling cheap products that break quickly and can’t be repaired. And – oh year – are made in sweatshops half way around the world. Is it our fault that this is the only way to but products? Or – once again – are the economic incentives misaligned?


Most people aren’t taking any flights over three years. Frequent flyers are almost never people flying for personal reasons; they’re flying for business or commercial reasons. These flights are subsidized by taxation laws. That’s why business class exists (I call it ‘subsidy class’ because our taxes subsidize business travelers). But even if we all made sensible flight decisions, it wouldn’t change much. During the pandemic, airlines continued to fly empty aircraft in order to hand on to boarding gate privileges. Airlines are not set up to care about climate change. This again could be changed through government or corporate policy, but is never going to change on the basis of consumer choice alone.


In this era of high gas prices I’m feeling pretty smug about working from home and driving a plug-in hybrid electric vehicle. But our government removed all incentives for electric vehicles (and for renewable electricity generally) not too long ago. Meanwhile, though we chose where we live to be close to public transit, trains (which still run on diesel here, and will for the next 30 years) are infrequent and expensive. Internet access – on which I depend for telecommuting – is far from what it could be. And the bus line closed entirely. So I’m not looking at a lot of freedom of choice here. The only transportation I can but is what’s on offer for sale. And what’s on offer for sale is far from climate-friendly.


My pension is run through my union, and my union is very sensitive to climate change issues. If more people had unions, we’d have more impact over what our pensions support. Sadly, most people leave it to financial institutions, who have no real incentive to do anything but make money. This is bad for both pensions and the climate. Similarly with energy. In Ontario, almost all electricity is generated through zero-carbon processes (hydro, wind, solar, nuclear). But our production capacity is still far from where it needs to be to use electricity to heat homes, and governments and industry continue to subsidize fossil fuels much more heavily than alternative sources. We live in a well-insulated house, but many many people rent, and have zero control over home insulation.

You see the theme here, right? This article is a thinly veiled attempt to make it seem like we can make significant change in climate impact through personal lifestyle choices. But we have far less choice in these choices than the authors seem to think. We cannot – as individuals – change our global government and corporate infrastructure. And it is that – not we the consumers – that needs to change to protect the planet.

This article, instead of focusing on changes we make as consumers, should be focusing on changes we should be making in the workplace. It should be most directly at those who have an influence over corporate incentives and how those incentives are supported and fulfilled. It should be a demand that workers be able to push back on environmentally irresponsible corporate decisions. But this requires vesting control of the economy in the hands of people who actually care about climate change, rather than a handful of rich old men who could care less.


The Wild Fields

I watched a lovely bit of propaganda from Russian television on prime recently, the first two seasons of Ekaterina, the story of Catherine the Great, who ruled Russia in the mid 1700s. Though the second season paled in comparison with the first, it was still entertaining, and I’m looking forward to more. And I don’t really mind the propaganda; I’m watching Atlas Shrugged right now, which is even more heavy-handed. It’s all about perspective.

Anyhow, the point of the second season of Ekaterina is to depict the eastern region of Ukraine as ‘the Wild Fields’. To be sure, there was no Ukraine at the time; western Ukraine was at various times part of Poland or Poland-Lithuania, while the south and eastern parts, historically the lands of the Golden Horde, were occupied by the Crimean Khanate and Circassia (the conquest of which was the longest war in Russian history. Over the years Russia expanded into the region, first under the direction of Ivan the Terrible, then later under Catherine the Great.

In the television show, the lands are depicted as basically unoccupied, outside the domain of civilization and of Europe generally, and where Russian settlers were attacked by marauding outlaw Turks, to be bravely defended when solders like Grigory Orlov and Grigory Potemkin would come riding in to the rescue. After prevailing in her wars against the Ottomans, Catherine eventually occupied and defined the region as Novorossiya – New Russia.

So yeah, there’s some history there. But it should be clear that it’s a history of conquest and colonialism. The land lies beyond the furthest reaches of Kievan Rus and parts of it were resisting Moscow into the mid-1800s. It is no more Russian than it is Bulgarian, Turk, Mongol or Khazar. What makes it Ukrainian – now – is the fact that it lies within Ukraine’s internationally recognized borders. There isn’t some magical historical or demographic fact that makes it Russian, no matter what the doctrine of the Wild Fields or Novorossiya may say.

I am the first to say that national borders are stupid, that they are a legacy of Europe’s colonial past, and that they don’t sufficiently respect history or culture. I personally would welcome a world in which people of regions of a certain (small) size can determine for themselves how they would like to be affiliated. But that is not grounds for the reassertion of colonialism. Nor is it grounds for the forceful redefinition of borders.

The world quite rightly protested when the United States unilaterally invaded Iraq on a trumped-up pretext, and many people presciently warned of the consequences of diplomacy based on invasion and regime change. We are seeing more of the same here, and the same objections apply. Whatever Russia may feel its right may be, or where its interests lie, it does not have the right to invade another country in an effort either to alter borders or change governments.

The willingness of major powers to intervene militarily into smaller nations’ affairs is precisely why nations like North Korea and Iran seek the protection of nuclear arms. Ukraine, when it split with the U.S.S.R. in 1991, made the decision that it would give up its nuclear arsenal and join the nuclear Non-Proliferation treaty. The present Russian incursions and potential for invasion should rightly cause other smaller nations to consider that a mistake.

Nobody in Russia is going to listen to me tell them not to invade. I have no illusions. And we in the western world have not been angels. We’re scarcely in a position to argue against their militarism or their propaganda. But that still doesn’t make it right, and we should be clear that tales of the historic Russian claim to the region are nothing more than fanciful rationalization. At some point, all colonizers must give up their colonies. The only question is how steep the cost will be in blood and treasure.

It would be nice if Russia, which has suffered so much from invasion from the west and the east, could offer a better example for the rest of us, and let its neighbours live in peace.

Health Transportation

The Anti-Vaxxers

As I write there is a caravan of ‘truckers’ nearing Ottawa at the conclusion of a cross-country trek to protest vaccination laws.

I put ‘truckers’ in quotations because they are not, for the most part, truckers, and those who are truckers represent a very small percentage of the people actually doing that work in Canada. The Canadian Trucking Alliance has condemned the protests.

They are nominally protesting a requirement that truckers be vaccinated in order to cross the border into Canada without taking a 10-day quarantine.

I say ‘nominally’ because it’s a ridiculous point: they already need to be vaccinated in order to enter the United States, so nobody is actually in the position of having to quarantine on return to Canada.

They call themselves the ‘freedom convoy’. In their own words: “Freedom Convoy is a rolling protest through town to draw attention to the violation of our rights and freedoms granted under the Charter.”

None of their Charter rights are being violated. There is no Charter right to refuse quarantine if you are a potential carrier of a deadly disease.

But none of this is about truckers, vaccines, freedoms or rights. That’s not why this protest has been organized. Look at pretty much every statement, every word, and you can see it’s a facade.

From where I sit, it’s yet another in a series of attempts by the far right in this country (with plenty of help from south of the border) to divide and disrupt the broader community. This makes us less able to respond to the real challenges we face today.

It’s the tactic being used by the right in the United States, where any attempt to discuss or debate, let alone govern, is met with blanket resistance. If the right can’t get its way, they seem to be saying, then nobody can get their way.

And in so doing they have appropriated the most ridiculous conspiracy theories, including the idea that the vaccine is somehow harmful or ineffective. Then they wrap themselves in a blanket of religion or patriotism and disrupt the social order.

To be clear: they are perfectly free to do so. It’s ethically questionable, but it’s within the rules, and the reason why our society and democracy are structured the way they are is so that they can make their point.

But we don’t have to agree with it, and we don’t have to take their words at face value, and I don’t.

Meanwhile, I stand with the vast majority of Canadians (and the vast majority of truckers) who have had enough of the anti-vax movement, and feel no obligation to stand quietly while they sow disinformation to the wind.

I have expressed my disappointment that the news media are giving so much time to the anti-vaxxer fringe movement. This misrepresents the true state of affairs and is broadly harmful. The media should have learned through past instances of false balance. But it has not.

We should be hearing much more in the media from the vast majority of us who are losing patience with the anti-vaxxer movement. This continuing resistance is only prolonging the pandemic and making lives more difficult for everyone.

Except, of course, the wealthy, who are making out like bandits.


Not Quite The Last Word

It’s not quite the last word in my Ethics, Analytics and the Duty of Care course, but it’s the beginning of what the last word will probably look like.

I mean, it, it’s not even whether they are a majority or a minority. I think, you know, the essential question is, are they disadvantaged? Are they oppressed, are they in some way less able to participate in the culture that defines? What is ethical? What is right? What is good?

And maybe that’s the hopeful note that we can end on. You know. Ethics is something that by its nature belongs to all of us. There’s no subgroup, majority or minority, that has a privileged position over it.

And we recognize that when we ask those who have the least opportunity to make their views known, when we ask them first, what they would perceive as ethical understanding. That somebody who lives in a shack in Malawi with an annual income of $42 has as much a stake in the discussion of ethics as you or I or anyone on the planet and therefore needs to be involved in the decision of what counts as ethical and what doesn’t.

It’s not a John Rawls social contract kind of thing, because that inherently does favor the already wealthy, because, you know, it’s all about negotiations and legalisms and things like that. It’s a much more messy thing. You know, this 60,000 parameters thing.

But we don’t get to that point unless we make sure that this person in the shack in Malawi is the first person we ask. And I think if I had to summarize my ethical position, it would be something like that. And that very much reflects the influence of the duty of care philosophy. But it also reflects, perhaps, the aspirations of the other ethical theories to maybe raise us up to be something more than what the evidence on the ground says we actually are.

See the whole discussion here:

Ethics Leadership

Our Leaders and the New Morality

Today we were witness in Canada to the sight of government and church leaders half-apologizing or non-apologizing for the mass unmarked graves of children who died at their institutes of learning.

These institutes, known as ‘residential schools’, were created with the explicit purpose of erasing the cultural identify of indigenous children by separating them from their families and strictly regulating their learning and behaviour.

Despite being told of the mass graves by witnesses during the Truth and Reconciliation hearings neither government nor religious leaders felt it would be important to search for the children’s remains and acknowledge their deaths.

Now everybody is shocked, but they shouldn’t be. It’s the same pattern of abuse that we’ve come to expect from today’s self-professed guardians of morality.

Police, for example, were first told of the decades of abuse of boys by the Christian Brothers at Mt. Cashel orphanage in 1975, but it was years before anyone heard about it and not until 1989 that some newspapers first began documenting the story.

The abuse by religious leaders was not one of a kind. The story of abusive hockey coaches is well known in Canada and one that continues to surface even this year. There’s missing and murdered Indigenous women. There’s a long list of excessive force incidents by Canadian police. Canadian military leaders have resigned in disgrace after presiding over a culture of sexual abuse.

None of this is meant to diminish the offensiveness of the mass graves and the residential school system. These are in a category of their own (at least in Canada) and are a complete and utter disgrace. It is only to point to a pattern.

It is long past time we stopped looking to government, corporate and religious leaders for any guidance on morality. They have shown us time and again how deeply immoral they have become.

Each time you think there is a line they couldn’t cross, they seem to find a way to sink to new depths of depravity. You would think that scenes of dozens of dead children would have deterred gun rights advocates in the U.S., but they didn’t even slow down. Similarly, the revelation of mass graves has done nothing to deter those who celebrate their authors today.

To be frank, I think the people complaining about ‘cancel culture’ and ‘political correctness’ and saying ‘history is history’ should just shut up.

I, for one, have had it with their fake moralizing. Go peddle your hypocrisy elsewhere. We know who the immoral people are, and it’s not the people calling for diversity, inclusion, equity and reconciliation.

It’s not worth much in the face of such tragedy, but to my Indigenous friends and colleagues, I would like to apologize on behalf of myself and any of my ancestors or compatriots who played any part in this outrage. I’m sorry. Sincerely, genuinely, deeply sorry.

I am committed to genuine truth and reconciliation. At the very least, we can begin with a full and proper investigation, and at the very least, we can stop celebrating the memory and morality of those who perpetuated these crimes. That, at least, would be a start.

Cancel Culture Ethics


Their accusations are their confessions.

Remember that. It’s how we need to consider the many and varied arguments we hear daily from conservative critics. It’s a common tactic. It’s what Freud called “projection”, where you identify your own faults, and ‘project’ them on to others, accusing them of the things you yourself are guilty of.

It was used to devastating effect by the previous U.S. president. Any time he was suspected (usually justifiably) of some form of corruption or malpractice, he would wrap up the suspicion in some new terminology (which Scott Adams called a “linguistic killshot“) and fling it back against the opposition as a direct accusation.

And we need to be clear that this is exactly what the term ‘cancel culture’ is. It’s an attempt by the people most likely to censor and silent opponents to accuse their opponents of exactly that sort of behaviour. It’s effective because it’s targeted at the audience least likely to stifle opposition, and therefore most sensitive to the criticism.

But remember: their accusations are their confessions.

The people accusing us of ‘cancel culture’ because we have decided to call an end to hateful and abusive behaviour are themselves the most likely to belittle, censor and silence opponents. That’s how they keep their power.

Despite their constant cries of censorship, conservatives dominate social media. Despite their accusations of left-leaning bias in newsrooms and on college campuses, conservatives exert a disproportional influence on both. Their cries of censorship in social media are baseless. And lets not forget the preponderance of conservative thought in organizations as varied as religious institutions, the police, military, schools of business and corporate boardrooms.

They would like us to believe that “we’re just the same, you and I.” They would like us to believe that if we were in the same position, we would do the same thing, that we would preserve our privilege, that we would take advantage of the weak, that we despise the poor and the marginalized just as much as they do. And their ‘proof’, they say, is cancel culture.

Except – no. The very same action, taken in the defense of the marginalized, is not the same as that action taken with the intent to oppress one. And this can be seen in the nature and character of the defense, how it is directed toward the action, and not the person, how it leaves even the attacker no weaker than when he started.

Their acts of silencing and oppression have no beginning and, it seems, no end…

  • like when the state of Mississippi banned Sesame Street, calling it “too controversial” because it had black actors
  • like when @ForAmerica attacked the Macy’s Day Parade for “blindsiding parents” because it dared to show two girls kiss
  • like when conservative ‘free speech’ website Parler starts banning accounts for posting left wing ideas
  • like when a conservative government bans universities from teaching gender studies
  • like when Republicans in Georgia pass laws promoting voter suppression

You know and I know I could make this list longer and longer without much effort (but with more effort than it might seem, because conservatives has also flooded Google search with these accusations, making their own transgressions harder to find).

Every time a conservative complains about censorship or ‘cancel culture’ we need to remind ourselves, and to say to them,

“You are the one complaining about cancel culture because you are the one who uses silencing and suppression as political tools to advance your own interests and maintain your own power.

“You are complaining about cancel culture because the people you have always silenced are beginning to have a voice, and they are beginning to say, we won’t be silent any more.

“And when you say the people working against racism and misogyny and oppression are silencing you, that tells us exactly who – and what – you are.”

“Your accusations are your confessions.”



Tyler Cowan offers what he calls are the “the four basic truths of macroeconomics” in a recent column in Bloomberg. It may be paywalled, so I’ll quote liberally here.

His first point is that “a strong negative shock to demand — a sudden decline, in other words — usually leads to a loss of output and employment.” This is just the law of supply and demand, reworded to spin it a bit, and with some riders attached.

Put more clearly, the principle is this: in a market economy, a reduction in demand leads to a reduction in supply. It doesn’t matter whether the result is a ‘negative shock’ or simply a global disinterest in the product.

The rider in this proposition the the further assertion that this leads to unemployment. Let’s hear Cowan explain: “Nominal wages are sticky, for a complex mix of sociological reasons, and so employers do not always respond to lower demand with lower wages for workers. Instead they lay some people off, and that can lead to a recession.”

OK, first, lower wages can also lead to a recession, so the choice between ‘lower wages or lay people off’ is a false choice. Additionally, when people are laid off, it is not usually a result of high wages for other people, but because there is nothing for them to do.

Cowan calls this “one of the most important discoveries in history”. This may be true of the law of supply and demand, but not of his restatement. And the other half of this ‘most important discovery’ is that it applies only to market economies.

Market economies governed by the law of supply and demand are subject to market failures. One such failure is a drop in demand for a given product. All else being equal, this leads to a collapse of the economy. What saves the economy is intervention from outside the market. In a large company, for example, financial reserves may be brought in to develop a new product line. In a national or global economy, financial reserves may be brought in to build infrastructure, fight a war, or explore and discover.

Let’s move on to Cowan’s second point. It is this: “well-functioning central banks can offset such demand shocks to a considerable degree — or even prevent them from arising in the first place.

This is Cowan’s version of the point I just made, but Cowan limits the sort of intervention needed to one conducted by central banks. It should be obvious, just on reflection of the point, that any intervention that replaces the loss of demand will apply equally well. Wealth does not exist only in central banks.

Cowan continues by narrowing the range of possibilities even further: “The bank can engage in complex financial transactions or simply print more currency to stabilize nominal demand and restore some measure of order.” Again, it should be clear by simple observation that there are many options in addition to ‘complex transactions’ or ‘printing money’.

This limited range of options is essential the set of constraints imposed in a set of responses known as ‘monetary policy’. The core idea of monetary policy is that economic fluctuations are addressed primarily by adjusting the money supply. But governments are more than merely central banks, and there is a range of options over and above monetary policy.

The obvious additional option, and the one we have actually taken, is to borrow money. Borrowing money isn’t the same as printing money, because the money still comes from somewhere – usually from places where it wasn’t being used to create demand, whether hidden in mattresses or stashed away in savings accounts. Another option is to tax this money – admittedly hard to do with cash stashed in the house somewhere, but much easier with unproductive wealth in futures markets or hidden in the Cayman Islands.

The other part of that strategy is, as I suggested above, giving people something else to do. During the pandemic, for example, no amount of money pumped into the economy is going to increase the demand for sit-down restaurants and seats in movie theatres. But there is an urgent and pressing need – one for which the market is not in a good position to address – in basic (but unprofitable) research in vaccines and personal protective equipment.

The second point was only one paragraph in Cowan’s article, not because there wasn’t a lot to say, but because there was a lot to keep hidden.

Let’s move on to his third point: “if central banks go crazy increasing the money supply, the result will be high price inflation. This is the law of supply and demand applied to money. Increase the supply of money, and its value decreases, meaning you need more to obtain the same goods and services. This phenomenon is called ‘inflation’.

This is a ceteris paribus clause, which means, ‘all else being equal’. But all else is never equal, and is is important, because there is an important corollary: if the demand for goods and services is greatly increased, the value of money decreases. This is the cause of some classic market failures. If, say, electricity becomes scarce, but demand is stable, the price will shoot through the roof, resulting (again) in inflation.

This is all the theoretical basis for monetary policy: keeping the value of money more or less in accord with variations in demand, growing the money supply as the economy grows, and shrinking it as the economy shrinks. This approach might work well on the upswing, but it has devastating consequences on the downswing. Just when the economy needs more investment to produce more jobs and more demand, money becomes tight, sending the economy into a downward spiral.

Not surprisingly, this is the policy Cowan suggests will be most effective. “If central banks simultaneously act to decrease the velocity of money,” he writes, “that is, if they take measures to reduce borrowing and lending, then price inflation will be limited accordingly.” Yes it would. At the cost of sending the economy into a tailspin.

But there’s room for a more positive message: inflation happens only if the supply of goods and services remains static. But if that supply increases, especially for new sorts of goods and services (to, say, build fibre networks, develop vaccine programs, explore space, develop alternative energy sources) then increased money supply does not increase inflation.

This is important because the greatest danger of inflation doesn’t come from governments printing money. For the most part, governments don’t print money; they borrow. No, the greatest danger lies in the fact that something like half of all global wealth is concentrated and hidden away in banks in Panama and the Caymans and Switzerland by the globally wealthy, and if this money is unleashed on the economy, the value of money will drop.

Finally, let’s look at Cowan’s fourth point: “non-monetary shocks, if they are large enough, can also create recessions or depressions.” For examples he gives us “the oil price shock of 1973, the current pandemic, or bad harvests in earlier agrarian societies.” What he should have said, in my opinion, is that “shocks can produce market failures”.

That is because the market generally, and monetary policy in particular, are not well-equipped to adjust to sudden systemic changes or disruptions to central aspects of the economy. Each of the three examples he gives impacted the market in a different way, but what they all have in common was that there was no market-based means to respond to them.

If we look at the pandemic, then what we saw was that, in addition to killing half a million Americans, the pandemic sharply reduced demand for public activities, thus eliminating the incomes of a wide swath of the population, including especially some of the most vulnerable and, at the same time, the most essential. If we did not address this by borrowing money and replacing that income, and also by developing alternative essential services, and also spending to combat the vaccine, then the economy would collapse.

If we look at the oil price shock of the 1970s, a completely different calculus was at play. The high cost of oil and gas resulted in widespread disruption because so much of the economy – from car production to drive-in theatres – depended on cheap and available fuel. The cost of a wide range of goods and services rose sharply. The short-term cause was the Arab oil embargo, and the crisis was effectively ended with the end of the embargo, which was the result of political agreements with the Arab states and an Israeli withdrawal in Egypt and disengagement with Syria. Longer term, the crisis resulted in increased (and often subsidized) exploration for oil elsewhere.

If we look at the collapse of harvests in agrarian economies, the cause and effect are pretty obvious, since the loss of food results in a loss of demand for pretty much everything else. The term ‘economic collapse’ becomes somewhat meaningless when everyone is starving. The response is found in one of the first of many accounts of socialism in the Bible (Genesis 42): store grain during the seven years of good times, and dispense it during the seven years of hard times. Today we know this as Keynesian economics.

So what sort of conclusions do we draw from all of this?

Well, the first thing I noticed about the article was that it mentioned Clubhouse right at the top, making it part of the non-market interventions being used by wealthier interests in order to stimulate demand for a product. I don’t know whether Cowan was paid for this, or for his appearance there, but I’m sure this reciprocity would not go unnoticed. The wealthy know all about non-market intervention, as use it liberally to tip the scales, drawing on their previously mention half of all wealth in the world.

Another is that in the discussion of economics and monetary policy, we never touch on the actual motivation for any of this, which is to increase human society and to alleviate suffering and hardship. When Cowan talks about, say, “the expected return of public investments,” he elides the point that a lot of government investment is made with no expectation of return – it is, indeed, the antithesis of market policy – because governments are addressing these very human needs. When you lose half a million people in a society, this is far more than an economic issue; it is a human tragedy.

That leads us to our final observation. Cowan says, as a result of these discoveries, that “the only thing worse than living with macroeconomics would be to try to live without it.”

I won’t deny the utility of macroeconomic theory (though I certainly have my doubts about unfettered market capitalism and the utility of monetary policy in a crisis). But it is also abundantly clear that tracking the flow of money, goods and services in an economy is only one small part of a much larger and more complex domain.

It’s like saying “the only thing worse for a human than living with the blood circulation system would be to try to live without it.” This is true – but it is far from the whole story. Focusing only on the blood supply leads to things like blood-letting as a part of medical theory. We need to look at many other things. We need to understand the human condition as a whole, not just as a set of numbers on a balance sheet.

Image: Macroeconomics.