Threat from Huawei gear is overblown

All nations spy on each other and they don’t need Huawei equipment to do so.

image; Medium.com

The U.S. has targeted the Chinese telecommunications giant Huawei for potential spy software installed on their equipment called “backdoors.”

This strikes some experts as highly unlikely:

“But security experts say the U.S. government is likely exaggerating that threat. Not only is the U.S. case short on specifics, they say, it glosses over the fact that the Chinese don’t need secret access to Huawei routers to infiltrate global networks that already have notoriously poor security (Globe and Mail, February 28, 2019).”

China doesn’t need Huawei’s gear to spy. Last October the state-owned telecommunications company China Telecom systematically diverted internet traffic in Canada and the United States by shunting it through its own network. The internet access points had been legally set up by China Telecom, ostensibly to improve service for its customers. Not only were the access points legal but so was the diversion of internet traffic: signed accords with the U.S. didn’t prohibit it.

China doesn’t even need the internet. Chinese scientists associated with the military have been collaborating with Canadian universities on projects that could have military applications including: drone aerodynamics at the University of British Columbia, mobile sensing and computer vision at the University of Waterloo, and satellite navigation at the University of Calgary.

Universities don’t see anything wrong with the collaborations which, after all, benefit science. Universities say it is the responsibility of the federal government to decide which foreign researchers can enter the country, not them.

The U.S. government doesn’t need Huawei’s gear to spy. Through the Patriot Act, the government has rights to access information in the cloud: data stored on U.S. servers such as Gmail, Dropbox, Google drive, iCloud drive, OneDrive, -just to name some on my computer. The Patriot Act ostensibly targets terrorist groups but could target anyone, including Canadians who use the cloud. And U.S. cloud providers are prevented from telling you if your data is being accessed. An estimated 90 per cent of Canadian internet traffic is routed via the US.

Canada has responded with privacy laws. British Columbia’s Personal Information Protection Act prevents public bodies from storing data on servers outside of Canada. That includes email servers at Canadian universities. The only email I have that is not through U.S. servers is my Thompson Rivers University account.

Canada doesn’t need doesn’t need Huawei’s gear to spy. University of Ottawa law professor Michael Geist revealed that in 2011 that nine of Canada’s major telecom providers and social media sites received 1.2 million data requests from government agencies. The companies complied in 784,756 of those cases. The total number is likely higher.

Even without the Patriot Act in Canada, the Canadian government has very similar powers to those of the U.S. government. The Communications Security Establishment Canada (CSEC) cooperates closely with its counterparts in other countries and operates with very little government oversight.

The real source of the U.S. government’s attempt to ban Huawei is not security, it’s financial and political. Huawei is successfully crowding U.S. manufacturers out of global markets and the U.S. will play the scare card if it thinks it will win.

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Mexico could ease Canada’s cannabis problem

The plan to drive illegal cannabis growers out of business is going slowly.

The problem is supplying enough legal cannabis to lower retail prices. Eventually illegal sellers will be a quaint memory, something like the bootleggers of alcohol of the past. For that to happen, a plentiful supply of cannabis has to be available and it’s going to take years for that to happen with Canadian growers only.

image: Greenhouse Canada

The cost of legal cannabis remains nearly 50 per cent higher than potleggers according to crowd-sourced data obtained by Statistics Canada. The cannabis store Kamloops seems to fairly well-stocked but in some parts of Canada like Quebec, stores have had to close on some days of the week due to lack of supply.

One way to lower retail prices immediately is to reduce taxes; a solution favoured by the cannabis industry. In addition to provincial sales taxes, the federal government charges one dollar per gram excise tax and an annual cultivation fee of 2.3 per cent of revenue.

Some jurisdictions in the U.S. with legal cannabis markets, such as California, are considering such temporary tax reductions to lure customers away from the illegal market after disappointing early sales.

I don’t think lower taxes are the solution. The whole idea of legalization of cannabis is generate revenue so that other taxes could be reduced. Like other “sin taxes” on recreational drugs such as tobacco and booze, taxes on cannabis provide revenue on a product not currently taxed.

Regardless, Canada has no intention of following the U.S. lead. A Canadian Finance Department spokesperson said: “There are no planned changes to the existing duties at this time (Globe and Mail, February 4, 2018).”

Another way to reduce legal cannabis prices is to increase supply.

Mexico plans to legalize cannabis. The new interior minister of the Obrador government has introduced draft legislation to regulate cannabis. Mexico has been studying Canada’s model of issuing licences for the cultivation, processing, packaging, sale and possession of cannabis.

Mexico has something going for it that Canada doesn’t -climate.  Cannabis doesn’t need to be grown in greenhouses there. The president of Mexico’s National Association of Cannabis Industries says:

“We’re going to be able to create a new industry based on new regulations, to produce cannabis for the rest of the world – our geographic situation and our labour [pool] gives us a major advantage (Globe and Mail, November 8, 2019)”

Enthusiasm is mutual on this side of the border. Canada’s Canopy Growth Corp. is looking at investing in Mexico. Their co-CEO said:

“We think [Mexico] is a real opportunity. When you’re on both sides of America with really well-positioned products, this could be a very good platform to reflect both sides of the border with the U.S. and enter an economy that is substantial.”

However, Mexico faces hurdles. Much of Mexico is controlled by drug cartels who oversee the growth of illegal marijuana. Seizing control of agricultural land will be a challenge. Also, Columbia is also poised to compete in the legal cannabis market and have a workforce experienced in its growth.

Of course, Canada’s fledgling cannabis industry needs to be protected but controlled importation could help our supply problem.

Can blockchain save Robin Hood?

The Robin Hood Co-op was started by a group of artists at the University of Aalto outside Helsinki in Finland. It’s a hedge fund like no other, formed as a piece of “economic performance art.”

image: Information Age

Problems started when the artists began to raise money and invest in the stock market. The university administration took issue with the concept and forced the co-op to shut down.

Instead of shutting down, the artists left the university to venture out on their own.

Since then they focused on building a global network of countercultural investors from Helsinki to California.

The Robin Hood Co-op doesn’t exactly steal from the rich to give to the poor. The goal is to distribute profits to worthwhile causes globally. “Part of the profit generated by the fund is invested into projects building the commons,” according to their website.

They have no regular offices and meet in different places, often abandoned buildings, to hold workshops in conjunction with a local host group.

Reporter Brett Scott went to one of these places in a graffiti-strewn former slaughterhouse in Milan occupied by a radical arts group called Macao. He writes:

“In the hall is a naked woman painted blue, wearing a gas mask, dancing to the sonic violence of industrial deathmetal music. Next door is a punk street-theatre collective manufacturing artificial vomit in buckets to throw at a protest (CCPA Monitor, Nov/Dec, 2018).” Among the assembled were hackers, coders, designers and artists. The meeting had the feeling of the blend of an intellectual salon, a hackathon and a political campaign meeting.

Not your average corporate boardroom.

Portuguese artist Ana Fradique, who co-manages the fund, describes Robin Hood as “artivism”—a mix of arts and activism.

Robin Hood has its critics like Serbian activist Branko Popovic. “I understand you’re trying to be like a vampire on the market,” he says, “but why be a vampire on vampires? They have nothing to give us.”

That’s an ongoing tension amongst activists: do you work within the system to build a more equitable world or tear down the system and rebuild it from scratch?

I many respects, Robin Hood Co-op is conventional. They invest in the Wall Street stock exchange using an algorithm they invented called “The Parasite.” Assets in the co-op are called Robyns. In the first year of investment, they made double-digit returns.

Some of its first distributions went to the autonomous arts space Casa Nuvem in Rio de Janeiro (€5,000) and the activist broadcaster Radio Schizoanalytique in Greece (€6,000).

However, Robin Hood Co-op members are impatient to grow. They plan to expand the model beyond the Parasite algorithm to implementing blockchain. “Robin Hood 2.0.” will be “even more monstrous” than the first incarnation said one of the co-founders.

Rather than being based in Finland, they wants to transform Robin Hood into a decentralized global cryptofund using blockchain -the underlying technology of cryptocurrencies such as Bitcoin and Ethereum.

While Bitcoins are turning out to be a bit of a dud, the technology of blockchain is promising. It’s an indelible ledger in which anything can be permanently recorded, including shares in an activist hedge fund. The advantage of blockchain is that it’s decentralized and global.

It’s a big leap. Implementation of blockchain will require a change in the culture of the co-op and paid staff.

Time will tell whether this chimera of art and capitalism will prosper.

 

BC Liberals suppressed Hydro rate hikes

For decades, B.C. governments have hidden the true cost of Hydro rates -especially the BC Liberals.

image: Common Ground

Under the direction of the BC Liberals, the Crown utility used “inappropriate” accounting to pile $5.5-billion in what are known as deferral accounts says B.C.’s auditor-general.

“That debt amounts to $1,300 for every residential customer, more than $10,000 for each commercial and light industrial ratepayer, and almost $5-million for each large industrial consumer,” according to the Globe and Mail, February 7, 2019.

Deferral accounts are not improper when correctly accounted for. They can be used as a temporary measure to avoid the shock of sudden rate hikes. After rates are gradually increased, the deferral account can be paid off.

But that’s not what happened. To keep voters happy and to make governments popular, BC Hydro rates were kept artificially low leaving future governments to deal with the problem of billions hidden in deferral accounts.

“BC Hydro was not allowed to charge its customers enough to cover its operating costs each year,” Auditor-General Carol Bellringer wrote.

The current minister responsible for BC Hydro, Bruce Ralston, said his government is committed to fixing the problem but it will take time given the size of the debt. “We are going to keep rates affordable. No one’s rates are going up by $1,300 in a year.” His government has already reduced the deferral accounts by $950-million by bringing that debt onto government books.

The NDP government also intends to prevent misuse of deferral accounts by future governments by restoring the role of the independent regulator, the BC Utilities Commission (BCUC) and ensuring that BC Hydro adopts ordinary accounting practices.

Industries who are used to cheap hydro are not happy with the prospect of paying the real cost of producing electricity. Industry representative Richard Stout says industrial customers shouldn’t absorb the shock of getting Hydro back on sound financial footing. Since the government is responsible for the mess, they should pay:

“I think most would agree the appropriate source of paying down the debt should be from government, rather than the ratepayer.”

Huh? He wants taxpayers (the government) to pay for the meddling of former governments rather than ratepayers? Last time I looked Hydro users and taxpayers were one and the same.

Critics of BC Hydro will point to the debt incurred in building the massive hydro dam at Site C as an additional source of the problem. The project was started by the BC Liberals and given green light by the NDP who said the project had gone too far to abandon.

The government is faced with a hard choice, says Bellringer: “You can either have a rate increase or you can end up with a deficit that ends up getting covered by the government at some point.”

Hiding Hydro debt, which in reality is our debt, is not an option.

Transferring BC Hydro’s debt to the government’s books is the right thing to do but government debt is not popular with voters because it’s visible. Turning control of BC Hydro over to an independent regulator is the right thing do but hydro rates will go up.

We’ll see if doing the right thing pays off for the NDP in the next election.

Immigration is shaping up to be an election issue

Immigration could be a toxic issue in the upcoming October federal election.

image: realtimetrump.com

Just the talk of anti-immigration by politicians is enough to trigger attacks on some of society’s most vulnerable members.

When presidential candidate Donald Trump campaigned against immigration, the effect was immediate. Thugs took to the streets. Hate crimes went up 20 per cent in Chicago, 50 per cent in Philadelphia, and 62 per cent in Washington DC. After Trump’s election, the hate crimes continued (hate crimes include attacks against all identifiable groups, not just immigrants.) According to a study from the Center for the Study of Hate and Extremism from California State University, the effect persisted after the election with a 13 per cent increase in hate crimes across America’s ten largest cities.

The Conservatives are gearing up the anti-immigration issue. After the Parliamentary Budget Officer warned that asylum-seekers walking across the Canadian-U.S. border at “unauthorized points” could cost the federal government more than $1-billion over three years, Conservative leader Andrew Scheer immediately tweeted: “Parliamentary Budget Officer: Illegal border crossings cost Canadian taxpayers up to $34,000 per person.”

Scheer ramped up the talk further by saying he strongly opposed Mr. Trudeau’s intention to sign a UN agreement on a multinational approach to migration, saying – ominously but incorrectly – “it gives influence over Canada’s immigration to foreign entities.”

Frank Graves of EKOS and Michael Valpy from the University of Toronto wonder who’s buying this talk: “So why is this happening? For whom is Mr. Scheer beating the drum? (Globe and Mail, December 18, 2018).”

There has been a shift in public opinion on immigration, perhaps fuelled by anti-immigration anger in Europe and the U.S. and rage-about-everything on social media.

Frank and Valpy are puzzled: “On the suddenly inflammatory topic of immigration, Canada has become a paradox.”

In ordinary times, Canadians support immigration. But peel away the anti-immigration rhetoric and you find racism at its core. EKOS research indicates that on the surface, rationales are sensible. Canadians favour immigrants that arrive in an orderly fashion, as opposed to those who arrive unannounced at borders or walk across the border, by ten percent. Not a great difference when you consider the attention that border-crossers get. However, when researchers asked whether they’d prefer to live beside a white newcomer from Europe or brown or black newcomers from somewhere else, “the differences balloon to 200 to 300 percentage points.”

Conservatives tapped into this irrational fear of the other when they ran an ad depicting a black man walking toward the border with his suitcase on little wheels from the U.S. They withdrew the ad but the message lingers: dark-skinned immigrants are scary.

Will racism disguised as anti-immigration bring the Conservatives to power? They will have to tap into fear in supporters from other parties. As it now stands, 40 per cent of Canadians think there are too many visible minorities being admitted to Canada. Of those, 65 per cent identify as Conservative supporters, 20 per cent as New Democrats, and 13 per cent as Liberals.

Perhaps the Conservatives can recruit the fear-mongers organized on Facebook under the banner of “Yellow Vests Canada” which has 107,000 members.

 

Netflix confuses entertainment with culture

The video-streaming giant Netflix recently told a panel reviewing Canada’s Broadcast Act that “market forces” should determine the programs that Canadians watch, not pooled resources like the Canadian Media Fund.

image: Lifewire

In making this claim, Netflix is essentially saying that they will determine how to spend our money –the fees they collect from Canadians- and not be dictated by what Canadians want to see.

Netflix’s arrogance is offensive, not just because it’s paternalistic, not just because it treats programs as entertainment, but because it pretends that it’s not a Canadian broadcaster.

Netflix claim that it’s not a broadcaster is suspect. It’s a disingenuous argument considering that millions of Canadians now watch shows and movies through video-streaming. Surely, that makes them a broadcaster.

OK, maybe Netflix is not a broadcaster in the traditional sense that their broadcasts are not over-the-air. That’s a technicality. But TV stations don’t stop being broadcasters because they transmit over cable. Our Broadcasting Act and Telecommunications Act, currently under review, should be updated to include video-streaming as broadcasting.

The reason Netflix doesn’t want to be defined as a broadcaster is because they would have to pay into the Canadian Media Fund like every other broadcaster. The Canadian Media Fund produces programming that reflects who we are. It’s a modest fund run by a not-for-profit corporation to deliver funding for Canadian TV and digital media.

If your eyes glaze over at the talk of culture, digital media and regulations, it’s because there are so many distractions in the Netflix debate that it’s hard to keep track of them. Last year it was the so-called “Netflix tax” which has nothing to do with Netflix specifically. Rather, it’s a proposed tax on the entire internet. That’s obviously a bad idea because the internet has become essential in accessing education and government, not just video-streaming. The internet has insinuated itself into our lives that’s necessary for a functioning democracy.

Then there is the sales tax that Quebec and Saskatchewan have imposed on subscriptions to Netflix. While Netflix is not technically obliged to collect the tax and pass it on to provinces (they are not a Canadian corporation), they have agreed to do so.

Why is Netflix so agreeable in the matter of collecting sales tax and so disagreeable when it comes to contributing to the Canadian Media Fund?

It’s because they persist in claiming that what they sell is a product. But what they see as entertainment, the rest of the world sees as culture.

It’s a blind spot that all big American media giants have. They see the exportation of American culture as subject to the forces of the marketplace. They studiously ignore the fact that exported American culture is intended to swamp local, more poorly funded, productions.

Don’t get me wrong. Netflix produces some very good programs and is rivaling Hollywood in quality. It also produces some mundane and derivative schlop.

As much as Netflix wishes, programs don’t compete in a marketplace where the most popular ones win. The stories we tell ourselves capture our identity. While those markets are as small, they are as important as a tile in our cultural mosaic.

China “understands” the developing world

China is taking a page out of the American playbook in their massive global investment called the Belt and Road Initiative (BRI).

Image: Wikipedia

“Belt,” is short for the Silk Road Economic Belt and refers to the overland routes for road and rail transportation; “road,” is the 21st Century Maritime Silk Road referring to sea routes.

In America’s version, the Marshall Plan, they invested $100 billion in the war-torn regions of Europe after the Second World War. The stated goals were to remove trade barriers, modernize industry, and improve European prosperity.

The unstated goals of the Marshall Plan were to establish an economic presence in Europe. The Soviets understood this. Soviet Foreign Minister Vyacheslav Molotov, in opposition to the plan in 1946, said: “If American capital was given a free hand in the small states ruined and enfeebled by the war [it] would buy up the local industries, appropriate the more attractive Rumanian, Yugoslav … enterprises and would become the master in these small states.”

According to China’s official newspaper, the People’s Daily, the goals of the Belt and Road Initiative are: “To construct a unified large market and make full use of both international and domestic markets, through cultural exchange and integration, to enhance mutual understanding and trust of member nations, ending up in an innovative pattern with capital inflows, talent pool, and technology database.”

It’s the largest infrastructure project ever with $1 trillion designated for South-east Asia, Eastern Europe and Africa. The plan is expansive. It includes 71 countries that account for half the world’s population and a quarter of global GDP.

Western countries worry about ulterior motives. Jonathan Hillman at the Center for Strategic and International Studies in Washington says: “It’s a reminder BRI is about more than roads, railways, and other hard infrastructure. It’s also a vehicle for China to write new rules, establish institutions that reflect Chinese interests, and reshape ‘soft’ infrastructure.”

Martin Jacques, former editor of Marxism Today is less suspicious. He thinks China is developing sources of commodities in Africa so developing nations can improve their economies and be less dependent on Western demand.

“Secondly,” says Jacques, “and this is why I deeply resent the argument that China is the new colonial power in Africa, China understands the problem of developing countries. One of the big problems is developing infrastructure that delivers transportation, energy and the necessary building blocks of a more developed economy (New Internationalist, July/August, 2018).”

Maybe China can do global supremacy better than the Western world. Resource extraction by Canadian mining giants in Africa has been less than stellar. At a tantalum mine in central Mozambique owned by Pacific Wildcat Resources based in Vancouver a man was shot and killed, inciting community members to set some equipment ablaze. At the Montréal-based Kiniero mine in Guinea, the military killed three in a bid to drive away small-scale miners away. Soldiers also shot a woman and burned her baby

While American foreign policy amounts to bluster and bravado, China is climbing to superpower status by integrating itself into local economies. China will inevitably make mistakes but the Belt and Road Initiative is more systematic than the Western World’s haphazard corporate colonialism.

The U.S. talks tough about China but they can no more stop China’s ascendancy than they can stop the sun from rising.