Blockchain could revolutionize global banking

The era of globalization is drawing to a close. Evidence of that has been made clear by President Trump’s withdrawal from global affairs, his attempt to build an economic and physical wall around the United States. It’s a clumsy attempt to express the genuine concerns of Americans who have been left out of the prosperity reaped by a few.

     image: Urban Forex

Two billion people around the world have no access banking. They are unable to make loans to start small businesses; they have no credit, and no means of sending or receiving money.

And the rest of us have is rigged banking system. We are nickeled and dimed in every banking transaction and pay exorbitant interest rates on credit cards.

We are told that a healthy banking system is fundamental to a healthy economy. Yeah, right. Banking funnels money into the pockets of the rich who have so much that it just lays around in piles, uninvested, while worthwhile social programs and enterprises go threadbare.

When U.S. banks failed during the Great Recession of 2008 -because of bad business practices- they were bailed out with taxpayer’s dollars. They were rewarded for bad investments while homeowners who couldn’t pay bank-approved mortgages were thrown out on the street.

Not only is there an asymmetrical relationship between banks and clients in terms of wealth distribution, there is also an imbalance of transparency. While banks know exquisite details about us, we know practically nothing about them. Social scientist Shoshana Zuboff calls this one-sided, extractive interaction “surveillance capitalism.”

The technology of blockchain holds promise to restore balance and eliminate excessive fees through use of a universal digital currency, or cryptocurrency.

The first digital currency, Bitcoin, leaves people wondering. It has a reputation of being highly speculative.  But there are many versions of cryptocurrencies that would work and many possible versions of blockchains –the digital ledger which records transactions.

The advantages of cryptocurrencies over banking are that your money is held in a digital wallet and easily accessed; credit card payments are quicker and less expensive; you remain relatively anonymous (pseudonymous) with minimal information shared; you are the master of your money, there are no banks or boundaries to the flow of money.

If it all seems to be too good to be true, there are hurdles. One is just who controls access to your digital money. If banks control applications that access cryptocurrency wallets, we can expect business as usual. Cultural anthropologist Natalie Smolenski explains:

“This is the crux of blockchain’s catch-22: the public won’t use blockchains without user-friendly applications. But user-friendly applications often achieve that ease through centralization, which replicates the conditions of control that blockchains sought to circumvent (Scientific American, January, 2018)”

A new era would bring public control of cryptocurrencies. As Bitcoins have demonstrated, we already have a blockchain that is open-source and maintained by a global network of volunteer core developers. We have a network of individually-owned computers that process the indelible transactions –a process called “bitcoin mining.”

“Creating digital identities whose existence is independent from governments and corporations is the next grand challenge that blockchains both pose and could help solve,” says Smolenski.

With the dawn of the era of a “Universal New Deal,” cryptocurrencies could redistribute wealth and put money in the hands of those who will spend it.


The titans of technology have feet of clay

Technology seems unstoppable. The accumulated wealth of the Big Five: Apple, Alphabet (Google’s parent company), Microsoft, Facebook and Amazon, have a combined value of $4 trillion. That’s more than twice Canada’s annual GDP.

     image: Minneapolis/St.Paul Business Journal

Wall Street also looked unstoppable before the crash of 2008. Cryptic investments made amazing returns but finance wizardry also has feet of clay. Conor Sen, business columnist for Bloomberg Views, summarizes that vulnerability:

“Markets became irrational about how profitable the financial sector could become relative to the underlying economy, and in response to these market pressures, finance came up with increasingly elaborate schemes to make money that weren’t sustainable (Globe and Mail).”

Facebook and Google have the advertising world wrapped up. The clever duo don’t have to hire reporters to dig up news because users generate their own content.  Facebook and Google and benefit in three ways: by encouraging users to generate content, collecting detailed profiles of users, and then selling advertisements to those very users. Users happily post pictures of adorable kittens, videos, inflammatory and sometimes interesting comments (but not much actual news).

While Facebook and Google couldn’t care less about the loss of newspapers and other news sources, they should be worried about the financial health of their advertisers. Companies can afford to advertise only because they are viable. Amazon is profitable because third-party vendors choose to sell on Amazon.

“In other words,” says Sen, “for the most part, the big five tech companies exist at their current size and scale only because they serve a larger underlying economy of profitable companies.”

Tech giants exist in an economic ecosystem. There has to be a balance between the top predators and the health of the ecosystem which they feed. There’s going to be trouble for the big fish once the little fish stop feeding them.

Tech giants don’t just suck only advertising revenue from traditional sources. They also provide services that didn’t exist when newspapers ruled; like the cloud computing services provided by Amazon, Google and Microsoft. Cloud computing also depends on a viable economy.

The titans of technology could harm the very businesses they depend on. For example, Blue Apron, a meal-delivery company, has been a prolific online advertiser. What if Amazon were to establish a company and put Blue Apron out of business? It’s not inconceivable. Last year, Amazon bought Whole Foods for $17 billion and even the world’s biggest retailer Walmart took notice. Target is cutting advertising to stay in the game.

Fossil Group has been struggling lately. Sales of their watch have been dropping, perhaps because of the popularity of Apple Watch. If Fossil Group starts to cut back on advertising, Facebook and Google would lose ad revenue. Amazon would lose sales of the Fossil watch as well.

Owning a newspaper used to be a licence to print money. The marriage of news and advertising seemed solid. Now readers get “news” from the internet. Selling advertising on a medium where the content is generated by the target audience seems like a sure thing.

Amazon, Google and Facebook have a parasitic relationship to the economy. Other than advertising and marketing the products of others, their contribution to the economy is minimal.

The future of blockchain mining in B.C.

Blockchain mines look nothing like copper mines. They are banks of computer that toil away at solving complex calculations. Blockchain is the digital ledger used by many cryptocurrencies such as Bitcoin. Because the computers generate heat, they could be used to warm the greenhouses to grow the tonnes of marijuana needed for Canada’s budding legal market.


Blockchain is a revolutionary way of tracking secure, indelible transactions of any sort not just cryptocurrencies. Experts say it will revolutionize businesses in every field. Manav Gupta, chief technology officer of IBM Cloud Canada, is enthusiastic:

“We view blockchain as having the potential to change all of technological interactions the same way that the internet changed communication in the nineties (Walrus magazine, Jan/Feb, 2018).”

Where the value of Bitcoins is highly speculative, the value of blockchain is solid. Unfortunately, that doesn’t stop blockchain from being caught up in a goldrush mentality. Irrational investors are madly rushing into some dodgy speculations. Convinced that anything with “blockchain” in the title is “the next big thing,” investors threw $2 billion into blockchain startups worldwide. One company saw shares rise 394 per cent by just adding “blockchain” to its name.

Blockchain can be used to secure any vital records such as medical files, business deals, legal agreements, tracing shipping containers, farm-to-market food security; even professional and academic records which are now open to fraud. Walmart and Nestle have already invested in blockchain.

Bitcoin miners loan their computers to solve the complex blockchain calculations required for each transaction. Miners are paid in Bitcoins in return. Drew Taylor has a Bitcoin mining operation in his Montreal house. He earns about $3,000 a month and pays additional costs of $200 for electricity. The computers generate a lot of heat. “But essentially it is free heat for at least one room,” he told CBC Radio’s The Current.

The amount of power used for each Bitcoin transaction is shocking high. Alex de Vries monitors the power used in Bitcoin mining. Just one transaction uses as much energy as the average B.C. household uses in 13 days. That’s 300 kilowatt-hours for each transaction. Researchers are looking for ways to reduce the power consumption.

The best place to locate Bitcoin mines is in places where the electricity is cheap. Montreal has relatively cheap hydroelectricity. Iceland has a large mine because the majority of their energy comes from geothermal and steam. Unfortunately, not all cheap energy is as green. China and India do most of the mining where the electricity is cheap but produced by burning dirty coal.

Once B.C.’s Site C dam is completed we will have lots of cheap, surplus electricity that could be put to use in blockchain mining.

Blockchain mining is comparable to copper mining because both use a lot of electricity. Highland Valley mine near Kamloops uses as much electricity as 60,000 homes, about twice what Kamloops uses.

An advantage of blockchain mining is that a secondary industry could use the waste heat. Marijuana greenhouses could use the computers as heaters so that not one kilowatt hour would be wasted. In addition, blockchain mines could be located near the dam to avoid the cost of transmitting electricity.

The digital mine would employ workers close to home in small towns in B.C. Instead of using our dam power to run LNG compressors, we could put people to work mining digital dollars and growing marijuana for Canadian’s burgeoning market.

Minimum wage hike is boon to economy

Higher minimum wages are good for the economy but you would never know it from Ontario’s experience. Their hike to $14 dollars per hour has taken an ugly turn. Seattle’s experience was quite different.

image: Toronto Star

The upset in Ontario is centered on Tim Horton franchises. Cuts to benefits have triggered public outcry in support of employees. Demonstrations took place across Canada at Tim Horton shops last Friday organized by

The franchisees, themselves, have been abused by their owners: Brazil-based Restaurant Brands International Inc. RBI has been squeezing franchisees for more profits.

Franchisees in Canada have joined their American counterparts in suing the parent company. The Canadians formed the Great White North Franchisee Association and in their statement of claim, they complained:

“Since the time of the corporate takeover of Tim Hortons, the relationship between Tim Hortons and its franchisees has become more adversarial than amicable.”

It’s a toxic business plan that has left franchisees, employees, and customers with a bad taste in their mouth that a double-double won’t sweeten. The flap is damaging the iconic Tim Hortons brand.

Seattle’s experience was quite different. Employers took the wage increase to $15 dollars an hour as a challenge. Toronto-based Lending Loop surveyed of Seattle businesses. Their CEO Cato Pastoll explained: “It kind of forced people to make some just general good business decisions (Globe and Mail, October, 2017).”

Low wages discourage productivity because cheap labour can make inefficient businesses profitable. Higher productivity involves streamlining operations and introducing technology. It’s notable that these measures are changes that employers make -low productivity is not the result of “lazy” employees.

One Seattle furniture store eliminated low-wage entry level positions and empowered employees to become more productive. One employee was so motivated that he contacted condo owners and offered deals on furniture for new tenants. The store owner was pleased with the boost in morale: “Find out what makes your staff excited and empower them to be part of it with you,”

“It’s really easy to become angry and start acting in injudicious ways,” said an owner of a nail salon in Port Angeles, Washington. He and his wife could have cut back on staff, or turned them into commissioned workers, but they streamlined operations instead. The time taken for each procedure was standardized which meant that more clients could be booked. An automated time-keeping system eliminated the time to manually fill out time sheets. Under different circumstances, staff might have resented seeing more clients a day but with an increase in wages, they were more willing to focus on work.

Contrary to the calamity predicted by some doubtful business owners, higher minimum wages don’t result in more unemployment. Studies done by the Organization for Economic Co-operation and Development show those countries with higher wages shift employment from formerly low wage sectors such restaurants to higher wage areas such as technology.

The owners of Tim Hortons could improve profits though the introduction of technology.  I notice that McDonalds has automated kiosks where you can both order and pay for your meal.

Higher minimum wages are a boon to the economy because businesses save costs by keeping experienced workers and reducing training costs; productivity and profit margins are improved; and local economies are enhanced with worker’s new spending power.

Indigenous labour is an untapped resource

Canadians opened their hearts and homes to Syrian refugees last year. It was a warm humanitarian gesture as well as an economic imperative: Canada relies on immigrants to sustain our work force.

    image: Government of Canada

Treatment of our Indigenous people is puzzling in both regards. Refugees from Indian Reserves do not receive a warm welcome. Communities don’t sponsor Indigenous families and put them up in homes. They are not being bombed but they are fleeing abominable conditions: mouldy housing, undrinkable water, poor education, appalling health care and little hope for employment. Instead of being helped, First Nations refugees often end up on city streets with few options for integration into society.

Not only are Indigenous Canadians uninvited in cities but the labour resource they represent is wasted.

The Centre for the Study of Living Standards released a report earlier this month entitled “The Contribution of Aboriginal People to Future Labour Force Growth in Canada.” The 36 page report outlines the wasted labour resource of Indigenous Canadians.

Indigenous citizens are the youngest, fastest growing demographic in Canada.

To start with, all Indigenous people are underemployed. More critically, participation of the 15-24 age group is 12 per cent lower than average. Only one-half of Indigenous youth are employed. That untapped resource could contribute to future labour force growth. It’s worse in the North where participation in the labour force is one-fifth the average.

If Canada’s Indigenous work force were developed, they would contribute to one-fifth of the future national labour growth. That contribution could be in the North, where they are most needed. As the global climate change warms and the climate of the North warms disproportionately, opportunities will open for jobs in resource extraction, infrastructure, housing and tourism. The expansion of the Indigenous work force In the North could comprise 83 per cent of total northern growth.

What would it take? The report states rather dryly:

“Indigenous people also face deficiencies in hours worked, employment, income by level of education and health among others. Progress must be based on Indigenous autonomy and this in turn will require strengthening administrative and managerial capacities, most likely under new institutional arrangements.”

In more vital words, it will take a reversal of our colonial past which was designed to dominate and assimilate Indigenous peoples. The Trudeau government made a good start when it divided the Indigenous portfolio in two with Jane Philpott becoming minister of Indigenous services and Carolyn Bennett becoming minister of Crown-Indigenous relations and Northern Affairs.

Some criticise the move as increased bureaucracy but the split was recommended in 1996 by the Royal Commission on Aboriginal Peoples. Both ministers are capable I can only hope they will succeed in ending the anachronistic Indian Act.

National Chief Perry Bellegarde of the Assembly of First Nations is optimistic:

“First Nations are working to move beyond the Indian Act and re-asserting our jurisdiction and sovereignty over our own lands, title and rights.”

Let’s bring our Indigenous brothers and sisters in from the cold. And if compassion doesn’t motivate Canadians, maybe a bleak economic future without them will.

Good riddance to B.C. LNG

There were lots of things wrong with former Premier Christy Clark’s plan to produce liquefied natural gas but let me start with the good.

image: the Tyee

At least it was a plan that labour and business could agree to. It was a provincial strategy that had workers and industry pulling together in the same direction.

It was an ambitious plan but unrealistic from the start. Markets for were weak and no one wanted to develop the plants. Now one of the last players, Petronas, has pulled the plug.

I can only speculate why they bailed out only one week after the BC Liberals were defeated. Was there some deal with the Clark government to provide concessions such that the LNG plant would be built regardless of whether it was viable? It’s not inconceivable considering how much political capital Clark had invested in the project.

Or was it because of Canada’s so-called anti-business climate, including high taxes, environmental reviews, and Indigenous land claims? Instead of recriminations, let’s celebrate the passage of Petronas says economist Jim Stanford.

Stanford has a unique perspective of LNG projects in B.C. and Australia. He’s a professor at McMaster University in Hamilton, Ontario, and lives in Sydney, Australia.

“In fact,” says Stanford, “far from blaming government red tape for the collapse of this misguided project, we should be collectively grateful. Those rules likely saved us from wasting tens of billions of dollars on the biggest white elephant in Canadian history.”

Stanford’s analysis shoots down an impression I had. I wrote that Australia was a LNG success story and that Australia’s early entry into the market was why B.C.’s plants were doomed. I now realize that Australia’s experience was not as rosy as I thought.

When Asian gas prices started to surge in 2009, Australia decided to chase after those markets. Unlike Canada, Australian developers faced few environmental hurdles and Australia’s Indigenous people had little negotiating power.

What followed was a spectacular construction boom in which $200 billion Australian was spent on LNG plants.

The boom had a dramatic effect on Australia’s economy. Their dollar, now at par with Canada, spiked up to $1.30, resulting in what economists call the “Dutch disease.” When Australia’s currency rose dramatically, the price other countries paid for Australia’s products rose. As well, imports were cheaper. Exports fell, imports rose and Australian factories could no longer compete. Australia became deindustrialized including the shutdown of their auto industry.

With the drop in gas prices, Australia’s LNG online plants are marginal. Boom towns that sprung up during the construction years are becoming ghost towns. Housing prices have collapsed.

Gas plants are selling into markets at discounted prices. Unlike Canada, Australian plants don’t have to supply the country first and so, ironically, there is a shortage of gas in Australia and a glut of gas on world markets. Domestic prices have doubled because of diversion to export markets.

B.C. has no economic strategy. Only one per cent of our GDP comes from mining, oil and gas and most from finance and real estate.

Our new NDP government faces a challenge. In our polarized political climate, unifying strategies are rare. Just ask former Premier Clark.

Stop treating B.C.’s interior like a colony

Premier Clark’s plan for job growth in B.C.’s interior is a failure. Her plan to extract Liquefied Natural Gas from the interior evaporated. She is sending more raw logs out of the interior than any other government according to the Canadian Centre for Policy Alternatives.

Clark treats B.C.’s interior like a colony of Victoria: drill for natural gas and sell it overseas with no regard to the contamination of water or earthquakes that fracking causes; send raw logs, and the jobs that go with them, elsewhere instead of restoring those jobs in the interior.

The interior-as-colony mentality didn’t always exist. Before 2003, the government made sure that jobs stayed in the communities where trees were logged. That meant that sawmill workers could earn good wages where they lived. Once logging companies were free of that obligation, they shut down mills. Since 1997, 100 mills have closed and 22,400 jobs were lost.

That loss of jobs means a transfer of wealth out of the interior. By my calculation, the loss of the above jobs amounts to $1.5 billion.

Since 2013, when Premier Clark was elected, nearly 26 million cubic metres of raw logs worth more than $3 billion were shipped out of BC. No previous BC government has sanctioned such a high level of raw log exports. Last year, about 6.3 million cubic metres of raw logs left the province. Had those logs been turned into forest products in the interior, 3,600 workers could have been employed.

We can do better. B.C. does a poor job of extracting value from our publicly-owned forests compared to other provinces. Ontario’s value-added wood industry was almost three times that of B.C.

B.C. should be a leader in extracting value from our forests, not a laggard. Waste wood can be used for more than paper mills and as fuel to generate electricity. That’s a good start says The Forest Products Association of Canada. They suggest other uses for waste wood -make wood pellets to heat homes, manufacture alcohol for vehicles, and make solvents for industry.

In addition to these bio-products, engineered wood products add more value. Such building systems include wall panels and roof trusses that are made from lumber in factory settings. The completed pieces are then moved to construction sites where they are secured into place, forming the walls, floors and roofs of finished houses or multiple-dwelling buildings.

In one demonstration, two identical triplexes were constructed in Edmonton.  The pre-fabricated building went up faster, with less on-site waste than the building next door.

Victoria can afford to be blasé. Vancouver Island gained 9,000 jobs last year; two-thirds of them went to Victoria. The Lower Mainland did OK as well, gaining 94 per cent of all B.C. jobs.

All other regions outside of Victoria and the Lower Mainland lost jobs last year compared to 2008 before the Great Recession (CCPA Monitor, March 2017).

Rather than treating the interior as a colony the government should create jobs and wealth where people live. The forestry sector is an obvious place to start since forestry has been a proven record as a job creator.