Archive for the The Chairman’s Corner Category


January 2018

Before I even start into this piece, let me make one thing clear:  I do not accept the premise that Donald Trump is a “stable genius”.  I would not even accept the notion that he is an unstable genius, or any kind of genius, let alone the Machiavellian mastermind that one might infer from what I am about to argue here.  That being said, my appreciation for the niceties of deterrence theory provided by my outstanding undergraduate education at the University of Toronto compels me to take note of some very interesting dynamics that are developing in the world of global politics and to concede that they are without a doubt attributable to the irrationality of President Trump.

We all know the basics of nuclear deterrence theory.  Mutual assured destruction (“MAD”) as recognized between two states with overwhelming first strike capability assures us all that no rational actor would ever initiate nuclear war for fear that retaliatory annihilation would be launched before the initial strike could destroy that capability.  That, many would argue, is what saved the world in the Cuban Missile Crisis in 1963 and perhaps in many other scenarios of which the broader public has no knowledge.

The application of MAD to the current stand off with North Korea is, however, less clear cut than in the classic Cold War scenario.  Even accepting the most outrageous of Kim Jong-un’s claims with respect to the near term capability of North Korea’s nuclear arsenal, it would not be credible to believe that North Korea could muster an overwhelming strike upon the North American territory of the United States.  Nor is it plausible to believe that the intention of the North Koreans in developing this capability is to dissuade the U.S. from a first strike against the North Korean regime.  South Korea is an ally that the U.S. has sworn to protect militarily.   A nuclear strike to wipe out Kim Jong-un’s regime would necessarily result in a devastating death toll in South Korea.  Mutual assured destruction of North Korea and South Korea in the context of a U.S. nuclear strike provide sufficient deterrent without the expense and complication of North Korea acquiring nuclear capability itself.

What nuclear weapons do deter, however, is a conventional targeted strike upon the regime that could conceivably degrade the conventional forces of North Korea to a level that could reduce the potential for retaliatory losses in South Korea to a level that U.S. strategists might find acceptable as a means of otherwise eliminating ongoing risk to their South Korean ally.  Of course, the acceptability of this strategy would be much different if there was any risk of a retaliatory nuclear strike to the continental U.S.  This is undoubtedly the calculus that underlies North Korea’s dogged, open and provocative attempts to develop intercontinental nuclear first strike capability.

As these attempts have accelerated in the last 20 years, successive U.S. administrations have attempted to use the carrot of increased trade and stick of trade sanctions to at best short term success.  Enter The Donald, and his school-yard style threats of “fire and fury like the world has never seen”.  His consistent refrain of “America First” has put both allies and enemies on notice that no interest has any priority approaching that of U.S. national security.  Targeting of U.S. cities will not be tolerated, even if the price of risk mitigation is the destruction of the entire Korean peninsula.

In the last few weeks, the dynamics on the peninsula have shifted dramatically.  The risk of mutual destruction of the two Koreas has become the impetus of new dialogue.  North Korean skaters will join in the PyeongChang Winter Olympcis.  They are even talking about entering a hockey team made up of players from both Koreas.  Both Seoul and Pyongchang, it seems, have realized that their mutual security might better assured by reduced peninsular tensions than from their respective reliance upon and provocation of an inwardly focussed and increasingly unpredictable America.

The Trump Administration has tweeted its way from crisis to crisis, inflicting a seemingly endless amount of collateral damage.  It would be refreshingly ironic and instructive if it manages to fumble its way to at least one collateral repair.


December 2017

So let me see if I have this straight…it is a commodity made available in limited amounts by its creator.  It serves as a store of value independent of sovereign currencies and is put into circulation by miners who bring labour and resources to bear to extract it.  The amount of both resources and labour that must be deployed to extract it becomes greater as the remaining supply decreases, and it commands a trading value that is extremely volatile but that nonetheless consistently far exceeds any obvious core intrinsic value (i.e., it cannot be consumed for sustenance, used for building shelter, forged into usable tools, etc.).

Bitcoin?  Well, maybe, but I was talking about gold.  But the fundamental similarities between the two sure seem to put to rest any notion that the current Bitcoin phenomenon is something novel in the annals of global commerce.  In fact, the only aspect of the story that differentiates these two “commodities” is the veneer of legitimacy claimed by gold by its historical connection as the value base for sovereign currencies and the current inclination of sovereign nations to continue to maintain a portion of their Treasury reserves in gold.  If at any point in this current mania the Treasury of a major nation stepped up to establish a floor demand by deciding to maintain a Treasury balance in Bitcoin, these two alternate value stores would be virtually identical in their relationship to global finance.

In fact, one could easily argue that, notwithstanding that it cannot be melted down and molded into jewellery, Bitcoin represents a superior alternative to sovereign currencies given the ease and verifiability of Bitcoin-based transaction settlement that goes with its status as a virtual currency maintained on a decentralized blockchain ledger.  And sure, the anonymity of Bitcoin makes it an ideal medium of exchange for the proceeds of criminal enterprise, but the lure of gold has forever been the inspiration for larceny.  Neither of the two nor fiat money itself can claim that it has no close connection to vice.

What we all see and many loathe in the phenomenon of Bitcoin is not anything inherent in Bitcoin per se, but rather the obvious irrationality of a market that places an ever higher value upon anything that has no intrinsic value beyond that which we believe a greater fool will attribute to it.  It is only when and if the mania becomes so complete that we cease to see that value of Bitcoin, like that of all currencies, is always and only what we believe the person with whom we wish to transact thinks it is.

Who knows – fifty years from now the modern retelling of the Christmas story might see the traditional frankincense and myrrh accompanied by a gift of Bitcoin borne, un-ironically, by a Wise Man.  But for now…



November 2017

As I was reading the weekend paper last week, I noticed a short piece summarizing the most impactful life choices that individuals could make to reduce their carbon footprint.  Intrigued by the conclusions, I tracked down the study from the Centre for Sustainability Studies in Sweden from which it was quoting.  The study, co-authored by UBC researcher Seth Wynes and Kimberley Nicholas, undertook a comprehensive review of the carbon impact of lifestyle choices made by individuals in developed countries and compared the results against the environmentally-positive choices that are most commonly advocated by high school science textbooks.  High school textbooks were selected as the counterpoint on the theory that it is the choices of this emerging generation that are still sufficiently malleable to make a difference in the effort to reduce carbon emissions.

The results reflect a truth that is perhaps even more inconvenient that that first exposed by Al Gore.  By far the most significant lifestyle choice that one can make to reduce the growth of atmospheric carbon is to have no children, or at least to have no more than two children per woman.  This decision alone, cascaded through multiple generations with conservative assumptions about the reproductive behaviour of any one child, results in a carbon reduction that is almost 25x greater than living car free, more than 35x greater than eliminating transatlantic air travel and more than 70x greater than shifting to an entirely plant-based diet.  And those are the next four largest carbon-sparing personal choices!

What about shifting to an electric car, recycling and using energy efficient light bulbs?  The shift to an electric car only reduces by half the carbon burden that a car imposes on the environment, and is accordingly only 1/50th as effective as having one less child.  Consistent recycling would make 1/300th the impact of one fewer child.  And the upgrade to energy efficient light bulbs; 1/600th.

Despite this reality, Wynes and Nicholas found that high school text books were far more consistent in advocating electric cars, recycling and energy efficient bulbs as environmentally responsible behaviours, and NEVER referred to smaller families as a relevant strategy at all.  It is no wonder that letters to the editor in newspapers scolding oil companies so often begin with “as a mother of five wonderful children, no one is more committed to putting a halt to our addiction to carbon than I”.  Come to think of it, those letters also often begin, “as one who has regularly traveled to the most remote places on earth, I have seen first hand the devastating changes that our carbon addiction is bringing to the most vulnerable corners of the planet”.  Wynes and Nicholas must roll their eyes.

The inconvenient truth is that the next generation is far more likely to be Tesla driving, dutifully recycling families of four that eat their steak dinners under LED light as they review the photos from their most recent jaunt to Europe than childless, transit-riding stay-cationing vegans.  And it is that reality, not unbridled corporate capitalism, that presents the most daunting challenge to any effort to find effective solutions to mitigate anthropogenic climate change.