Liberal Entropy: The Challenge of Doing Nothing

Conservative, Liberal, Socialist:  The Basics

I used to baseline the three dominant political positions this way:  a conservative wants the country to stay more or less the way it is or has been, a socialist wants society to change and a liberal believes that everything will turn out fine if we do nothing.  Logically, the Conservative Party tends to attract the well-to-do who are enjoying the status quo.   A left-leaning party like the NDP (the only party I've ever been a member of) will find its numbers in the working and lower middle class.  The Liberal Party enjoys the advantage of the middle-class, middle ground while appearing socialist in public and being conservative in private.  The problem of the Liberal Party isn't so much hypocrisy (though some might rightly call it such) as coherence.  (See Truth and Coherence.)

Me a Liberal?!!  Okay, Maybe Sometimes.

My lefty friends have occasionally accused me of being a liberal.  My conservative friends think I'm a lefty liberal.  I have to admit that, in politics, I often think "nothing" is the right thing to do.  I'm rarely disturbed by what goes on (or doesn't go on) in Parliament, because I understand that "doing something" in politics means forming a committee, or writing a letter, making a phone call, or, in most cases, publicly expressing disagreement, disappointment, and even outrage to the point that a phone call, or a letter or a new committee might be required.  It is easy to forget that the principal reason we elect our parliamentarians is for them to vote, and most of the time their votes have absolutely no effect on outcomes because the issues are always decided in advance of a parliamentary vote.

Doing Nothing Isn't Easy

When the Liberal Party wins 39.5% of the popular vote and therefore 100% of the power in our lopsided democracy (see Are Canadian Elections Democratic?), as they did in our last election, we might imagine we can all relax because nothing is going to happen for the next four years.  However, "nothing" isn't as easy to do as you might imagine.  To begin with, there are those nagging little promises made during the election campaign in 2015.

The Liberal Waltz:  One Step Forward, Two Steps Back

Having promised "that 2015 will be the last federal election conducted under the first-past-the-post voting system," the Liberals had the challenge of pretending they were interested in reforming the electoral process while insuring that nothing actually changed.  The Liberals quite rightly and righteously expressed outraged at the imprisonment and torture of Raif Badawi  in Saudi Arabia, then ratified the contract to sell that same Saudi government 15 billion in armoured military vehicles. Liberals never quite being able to pass on a photo op, Chrystia Freeland was there at the airport to welcome a young Saudi woman claiming refugee status.  (Who knew that there was only one young woman in Saudi Arabia who wanted to claim refugee status? Or was this photo op about distracting us from the Meng house arrest?)  On another front, after pledging to "phase out subsidies for the fossil fuel industry over the medium-term," it appears that the plan is to hope that no one notices that we are in the end-term and the subsidies are still in place.  Additionally, there is a semantic argument that buying the Trans Mountain pipeline from Kinder Morgan, the Texas oil and gas infrastructure company, for five billion dollars isn't really subsidizing "the fossil fuel industry"--it's more like a gift.

Here I Go Again

Yet, when the perfect opportunity arose to do nothing and doing nothing would serve the interests of Canada and Canadians, the Liberal Government failed to follow through with its own most basic tenant and mantra.  Imagine the scene when Prime Minister Justin Trudeau was informed, three days in advance, that  Sabrina Meng Wanzhou, Huawei CFO, was going to be arrested on a warrant from the US Attorney for the Eastern District of New York.

Minion:  Mr. Prime Minister the Americans have issued a warrant for the arrest of the Huawei CFO in Vancouver.

PMJT:  Uhhh. Wow.  Uhhh. Holy cow. Uhhh.

Minion:  Don't worry, Mr. Prime Minister, this extradition request is not political.  [Wink, wink].  If it was political we would have to refuse the request.  It's definitely not political so you don't have to worry about it.

PMJT:  If it's uhhh not political, why uhhh are you uhhh telling me about it?

Minion:  Well, we like to notify the PM about these things that are non-political.  When it's political we just call the cops . . . ha, ha, ha!

PMJT:  So Trump wants this Huawei executive arrested.

Minion:  God no.  Trump doesn't want her arrested, or maybe he does.  Actually we don't know what Trump wants, but the extradition request was from Richard Donoghue.

PMJT:  Who's Richard Donoghue?

Minion:  He was the Chief Litigator for CA Technologies.

PMJT:  You mean we are going to uhhh arrest one uhhh tech company exec on a warrant from another tech company exec?

Minion: Donoghue just became a US Attorney, so the warrant should be legit.

PMJT:  So uhh what did this Huawei executive do?

Minion:  That's a bit complicated, but basically she is accused of moving money in Iran.

PMJT:  Is that against the law?

Minion:  Not any more, but it was against the law in 2014 when she is accused of doing it.  The Americans are calling it "bank fraud."

PMJT:  "Bank fraud!"  Shit, Minion, why didn't you say so?  Sort of like that uhh Bernie Madoff guy, eh?

Minion:  The Americans are talking about similar sentencing guidelines.  Thirty years in prison for each count.

PMJT:  Wow wee!  Have a lot of people been doing this uhh illegal money thing in Iran?

Minion:  A ton.  A half dozen major banks have already been convicted.

PMJT:  Geez.  So all these bank execs have been sentenced to multiple thirty-year prison terms.

Minion:  Oh no, Prime Minister. [Stiffing a laugh.]  No one has ever been sent to jail for this.  The banks pay a fine.

PMJT:  So we'll extradite her to pay a fine?

Minion:  No, the Extradition Act requires that it be for at least a two-year prison sentence.

PMJT:  If uhh no-one has gone to prison for this before, why are they talking uhh about prison this time?

Minion:  Uhh, Prime Minister [wink, wink], she's Chinese.  Huawei is a Chinese company.

PMJT:  Can we arrest and extradite someone for being Chinese?

Minion:  Not since the Head Tax.  Today it would be against the law, against the Canadian Extradition Act, to extradite someone because of her ethnicity or nationality or for political or purely commercial reasons or if we thought she was going to spend less than two years in prison.

PMJT:  But we are going to arrest her because she is Chinese, from China, a Communist country, and because Huawei is stealing business from the big tech companies, and even though we know she is never going to spend two years in jail.

Minion:  Yes, but you know, the Chinese, the whole "dangerous" and "national security" thing.  Need to worry about "censorship," "backdoors" and that sort of stuff.

PMJT:  So who's in charge of extradition?

Minion:  Jody.

PMJT:  Our Jody?  Why?

Minion:  Because she's the Minister of Justice.

PMJT:  Still?

Minion:  What do you want her to do, Sir?

PMJT:  Nothing.

Minion:  That sounds like a sound policy, Mr. Prime Minister.

Epilogue

"Doing nothing" would have been the perfect policy in this instance if the message had been passed on to the Minister of Justice and the Minister of Public Safety and the RCMP.  The warrant would not have been served with ample justification for not serving the warrant in the overall circumstances and the Canadian Extradition Act.  Sabrina Meng Wanzhou would have continued her itinerary to Mexico and France.  Neither country, I'm willing to bet, would have served her with the American warrant and, most importantly, Canada would not be in the mess our Liberal government's actions have put us in, when we specifically elected them to do nothing.

A Dozen Reasons Why the Canadian Minister of Justice Should Release the Huawei CFO, Sabrina Meng Wanzhou

The "Canadian Extradition Act" Gives the Minister of Justice the Right and Obligation to Release Meng

It's becoming more and more obvious in the media (social, anti-social and other) that the  request for Sabrina Meng Wanzhou's extradition is bogus. Contrary to what you may have read or heard from Canadian politicians about extradition proceedings being out of the hands of the political leadership, the Canadian Extradition Act clearly states that:  "The Minister [of Justice] is responsible for the implementation of extradition agreements, the administration of this Act and dealing with requests for extradition made under them." (For more see Was Freeland Lying?  and How Canada Arrested a Chinese Exec.)

According to The Act, the Canadian Minister of Justice, Jody Wilson-Raybould, can and should intervene in an extradition if she considers it "unjust" after reviewing "all the relevant circumstances."  She can "at any time withdraw the authority to proceed and, if the Minister does so, the court shall discharge the person." The "circumstances" provide ample reasons and The Act provides specific injunctions requiring the Minister to intervene in the case of Sabrina Meng Wanzhou; including the "political" nature of the extradition request, that the request is based on Meng's "nationality and ethnicity," that her alleged crimes would not be prosecuted in Canada, that her alleged white-collar crimes would not warrant two years of imprisonment as required by The Act, that the character and legitimacy of the warrant for Meng's arrest, detention and extradition are highly questionable, and that while the legitimacy of Meng's detention and the extradition proceedings are in serious doubt, they pose a threat to public safety and are counter to Canadian interests.

1. The charges against Meng are not substantive enough to warrant extradition.  

Various media outlets have repeated the claim that each of the charges against Meng is punishable by 30 years of imprisonment.  Stop and consider:  why are we being fed this piece of information?  The exact details of her alleged crimes have remained sketchy, so why has this precise detail of 30 years of imprisonment been so widely and precisely promulgated?  Who is spreading this claim?  For what purpose?  More to the point, even based on the most exaggerated rumours of the seriousness of Meng's alleged crimes, does anybody really believe that an American court is going to throw her in jail for the next 30 or 60 or 90 or 120 years?  So why this emphasis on the maximum sentence?  Because, according to the Extradition Act, in order for the extradition process to proceed, it must be clear that Meng's crimes would be punishable by at least two years of imprisonment.  We don't extradite people for minor crimes; we don't extradite people to pay fines, or be put on probation or be imprisoned for less than two years.  In the aftermath of the financial collapse of 2008 and extensive evidence of wrongdoing, no American was convicted of a crime, but the punishment for white-collar crime in the USA has become a much debated topic.  Based on the information leaked to the public so far, Meng's alleged white-collar crimes fall well below the two-years-of-imprisonment threshold required for extradition.

2.  The accusations against Meng would not constitute a criminal offence in Canada.   

According to media reports, Meng is accused of contravening trade sanctions against Iran; Huawei, of which she is CFO, is accused of selling technology in Iran which contained US components and/or patents, and Meng is accused of bank fraud.  Of these three accusations only "bank fraud" would be a criminal offence in Canada.  To keep it simple, "bank fraud" is stealing money from a bank--but without pointing a gun at anyone.  (You might want to have a look at Should Bank Robbery Be Deregulated?) However, the "bank fraud" in this case is related to sanctions against Iran in that she is accused of failing to inform or hiding from bankers that Huawei owned a shell company which owned a company called Skycom which was doing business with Iran.  (For more detail see:  The Chaos Theory of International Trade.) How much money did she steal?  There is no hint of an answer to this question in the media.  I suspect the answer will be zero.  How much the banks lost determines how long the prison sentence could possibly be.  The claims of a 30-year prison sentence imply that the banks (or a bank) lost billions.  I have seen no claims concerning the amounts that the banks lost despite the repeated claims of multiple 30-year prison sentences. As reporters for the New York Times point out:  HSBC (the bank Meng is accused of defrauding) has repeatedly been convicted of money laundering.  In order to avoid another conviction in the USA for moving money in Iran, they threw Huawei CFO Meng under the bus, claiming that she tricked them into doing it.

Patent Infringement would be a civil and not a criminal case, therefore not grounds for extradition.  Moreover, patent infringement is such a common occurrence in large American companies that the practice has spawned a new expression: infringement efficiency, which means, in short, that stealing patents is good business as long as the amount of money you end up paying if you are found guilty in court is less than the profit made from the stolen patents.

3.  Contravening trade sanctions against Iran is not a crime in Canada.  

(See the Canadian Government's Guide for Doing Business in Iran.) In order to continue to push for extradition, the US Attorney will have to keep pushing the idea of "bank fraud," despite the shadowy, sketchy chain of events which will need to be proven.  The necessary sequence of accusations depends on trade sanctions against Iran.  Canada does restrict trade with Iran, but those restrictions only apply to materials for the construction of nuclear weapons and ballistic missiles.  The accusations against Meng refer to statements she made (or failed to make) in 2013 or 2014 (depending on which news report you believe).  The year or years are crucial because in 2016 the Obama administration negotiated an anti-nuclear deal with Iran and trade sanctions were lifted.  In 2018 the Trump administration reneged on and cancelled that agreement and unilaterally imposed new sanctions.  Here's a legal question:  Would we prosecute someone for committing a crime which is no longer a crime in Canada?  Need some context?  We just legalized possession of marijuana.  Will we prosecute people if we find proof that they possessed pot before it was legalized?  Still not convinced?  In 1968, homosexuality and various forms of recreational sex were legalized in Canada.  Do you imagine that we might have continued to convict people for acts of homosexuality and oral sex in the 1970s?  We would not prosecute Meng in Canada because the underlying basis of her alleged crimes is currently not criminal in Canada.

4.  There is an underlying conflict of interest in the request for Meng's extradition.  

As I outlined in an earlier post (The Chaos Theory of International Trade), Richard Donoghue is the US Attorney for the Eastern District of New York.  In a matter of months, Donoghue went from being an employee of CA Technologies (their Chief Litigator, in fact) to spearheading the request for Meng's arrest, detention and extradition.  The mere fact that he was so recently employed by a Huawei competitor strongly suggests that he might still be acting as an agent for the benefit of CA Technologies, which puts him in an apparent, if not actual, conflict of interest.

5.  The extradition request is based on Meng's nationality and ethnicity.  

The Canadian Extradition Act explicitly instructs that the Minister of Justice "shall refuse to make a surrender order if the Minister is satisfied that  . . . .  the request for extradition is made for the purpose of prosecuting or punishing the person by reason of their race, religion, nationality, ethnic origin language, colour, political opinion, sex, sexual orientation, age, mental or physical disability or status or that the person’s position may be prejudiced for any of those reasons.  German banks continue to do business in Iran.  The USA has an extradition treaty with Germany, but there have been no reported moves to extradite executives of German banks.  Skycom, the German company at the centre of the accusations against Meng, continues to operate, and there have been no moves to extradite German executives.  When the Standard Chartered Bank of Britain was convicted, in 2012, of doing hundreds of billions of dollars of business with Iran through its New York office, they were required to pay a fine.  No criminal charges have been laid.  Banks found to be in noncompliance and fined with operations in the United States include Barclays, ING, Credit Suisse, Lloyds, and ABN Amro.  No bank executive has faced criminal charges for doing business in Iran.  There is little doubt that the only reason Meng is being singled out for criminal prosecution is because she is Chinese and her company is Chinese.

6.  The extradition request is political.  

The Act specifies that the extradition will be refused if "the conduct in respect of which extradition is sought is a political offence or an offence of a political character."  The political nature of the request is so obvious, it seems redundant to comment.  However, the moment that President Donald Trump tweeted that he was prepared to intervene in the case, he made the case political (if there was any doubt that it already was).  If this case is about "national security" as is being constantly and slyly implied by US politicians and others, then the extradition request is by definition political.  To date, no one has claimed that Meng, as an individual, has done something to jeopardize American or, more importantly in this case, Canadian national security.  [By firing the Canadian Ambassador to China, John McCallum, for stating the obvious--that Meng had a strong case against being extradited--PM Justin Trudeau reinforced the "political" nature of the case.  Worse still, the PM has prejudiced the case against Meng.  The new Justice Minister, David Lametti, will be hard pressed to refuse the extradition after his boss, the PM, fired the Ambassador just for saying Meng had a case.]

7.  Canada is being played.  

For all intents and purposes the extradition request looks like a move by American tech giants to undermine a Chinese technology company which has been taking over a huge swath of the global market share.  Far from attempting to further justice and punish the crimes of an individual, what we are witnessing is one group of business interests blocking the development of a competitor by arranging the arrest of the company's CFO.  My prognosis is that Meng will never be convicted of a crime worthy of imprisonment.  It is unlikely that she will ever stand trial.  However, if the naivety and Dudly-Do-Rightism of Canadian leadership allow the extradition hearings and detainment of Meng to continue for years, then the corporate objective of slowing down the competition will have been achieved--and the Government of Canada will have colluded in that corrupt undertaking.

8.  Public safety.  

The arrests of two Canadians by Chinese authorities, ostensibly in retaliation for the Meng detention, have made the optics of releasing Meng more difficult.  Nonetheless, the Minister of Justice, the Minister of Public Safety (Ralph Goodale) and the Minister of External Affairs (Chrystia Freeland) have the obligation to confer with one another and recognize that they have to prioritize the safety of Canadians over dubious demands for the extradition of one Chinese citizen.

9.  Canadian self-interest.  

Every kid in the schoolyard knows that if some bigger kid asks you to punch yourself in the head, you are being bullied--and if you submit to this bullying, you are encouraging more bullying in the future.  It is in Canada's interests to diversify its trading partners.  It is, in particular, in Canada's interests to increase trade and friendly relations with China.  Canada will greatly benefit from Huawei's 5G technology, and the research funding and business development which Huawei Canada offers.  Of course, we need to maintain our trading partnership, friendly relations and military alliances with the USA, but the occasional demonstration that we are willing to act in our own best interests should strengthen the mutual respect that makes these relationships work.

10.  Canadian sovereignty.  

Historically, when Canada has asserted its independence from American military and foreign policies, our independence has served us well.  Prime Minister Jean Chretien's refusal to enter George W. Bush's Iraq war in 2003 is a good example.  Similarly, PM Lester B. Pearson kept Canada out of the Vietnam War in the 60s.  On June 1, 2018, the Trump administration's imposition of a 25% tariff on Canadian steel on the grounds of "US national security" together with Trump's alienated nationalism has provided a conspicuous opportunity for Canadians to recognize the importance of Canadian independence from American hegemony.  Unfortunately, Canada accepted the inclusion of the "China clause" in the recent US-Canada-Mexico trade agreement which, according to some analysts, has given the USA rights of veto over future Canadian trade deals--in particular, over our trade with China.  The American warrant for the extradition of Sabrina Meng Wanzhou trapped us into the embarrassing situation of arresting Huawei's CFO at the same time that we are courting and receiving Huawei investment in Canada.  Worse still, the arrest of Meng puts a halt to our developing relationship and plans for increased trade with China--once again surrendering our sovereignty to American interests.  Pathetically, in the arrest of Meng we are not even serving explicit American national or security interests, just the corporate interests of American technology companies.

11. Canadian "peace, order and good government."  

Clearly, Canada and China have ideological differences, although I suspect those differences are not well understood in either country.  Canada's ideological tendencies are quite different from those of the USA, and the difference has become pronounced in recent years.  In contrast to the American Declaration of Independence's valourization of "life, liberty and the pursuit of happiness," the Canadian constitution sets out the objectives of the Federal Government as "peace, order and good government."    The American pursuit of life, liberty and happiness has resulted in a state of near-constant warfare throughout the USA's history. The question which our Minister of Justice needs to ask in the Meng extradition case is:  "what decision will best promote and exemplify 'peace, order and good government' in Canada?"  As sparsely and sporadically as I have been informed of the details of the case through the media--and I trust the Minister has been more thoroughly informed--I have become convinced that Canada would be best served by Meng's immediate release.

12.  Canadian respect for the Chinese.  

The Chinese response to the Meng arrest has been to describe it as a gesture of disrespect toward China and the Chinese people.  Canadian apathy toward the Meng arrest has led me to fear that Canadians have been conditioned to accept the melodramatic myth of "The American 'good guys' versus the Chinese [and Asian in general] 'bad guys'."  Distance makes it easy for Canadians to ignore the empirical facts that while the Americans have been spending trillions of dollars on wars in Iraq and elsewhere, resulting in hundreds of thousands of deaths, the Chinese have raised 800 million of their fellow citizens out of poverty, and China has not been engaged in a war since the 1970s.  Canada must also respect the Chinese because they have been part of its history since Canada's earliest development in the 18th century.  There are 1.78 million Canadians of Chinese ancestry currently living here.  They have contributed to every aspect of life and culture in Canada, perhaps most iconically represented by our former Governor General Adrienne Clarkson.  Sabrina Meng Wanzhou has herself been a long-term resident of Canada. Attitudes of mistrust and suspicion are unwarranted and insulting to the Chinese of China and to our fellow citizens.  No doubt, apologies will be forthcoming--because we're good at that--but the Government of Canada should act quickly and not allow this insult to linger.

PS Since I first published this post on January 5, 2019, Jody Wilson-Raybould was demoted from Justice to Veterans Affairs.  The middle of a crisis requiring action from the Minister of Justice seems a very strange time (or was it deliberate obfuscation?) to be changing the Minister, but that is what the Government of Canada has chosen to do. David Lametti became the new Minister of Justice. On Feb. 7, 2019, despite denials from the PM and the Minister of External Affairs, the new Justice Minister, David Lametti, finally admitted that the extradition of Sabrina Meng Wanzhou is "political." https://www.thestar.com/…/decision-whether-to-extradite-hua…

PS2 On February 12, 2019, Jody Wilson-Raybould resigned her position as Minister of Veterans Affairs in the Trudeau cabinet. The prevailing assumption is that Wilson-Raybould resigned because of reports she was under pressure from the PM's office to allow the engineering firm, SNC-Lavalin, to pay a remediation agreement rather than face further criminal proceedings for bribes they were alleged to have paid in Libya in 2002 to 2011.  In the wake of the Meng arrest, two Canadians remain in jail and a third is facing the death penalty.  In terms of significance and potential consequences, the SNC-Lavalin affair doesn't even compare to the Meng extradition, but SNC-Lavalin has disappeared the Meng extradition from media coverage.

PS3 In a feature article in the February edition, Maclean's magazine reported that "29 percent of Canadians align with Beijing’s views, believing the arrest [of Meng] was politically and economically motivated."  In other words, almost 1 in 3 Canadians believe that the Meng arrest was contrary to Canadian law--the Canadian Extradition Act.  Imagine what the numbers would be if the Canadian media told the whole story, instead of the fable they think Canadians want to hear about our being law-abiding, transparent and honest in this case.  Imagine what the numbers would be if our Canadian representatives, like John McCallum, were allowed to tell the obvious truth--that Meng has a strong case against extradition--without being fired.

PS4 On January 28, 2019, the US Justice Department released its 13-count indictment against Huawei.  If you read the Justice Department announcement carefully, you will note that there is nothing new in the accusations against Meng.   The only direct accusation against Meng is that she misinformed executives of HSBC, as described above.  There are four (4) defendants named in the indictment.  It is worth noting that Meng is the only individual, the only executive, named as a defendant.  The other three defendants are companies, reinforcing the fact as noted above, that there is no precedent for criminal charges against an individual executive in this type of case.

When Chrystia Freeland Said that the Extradition of Huawei CFO, Sabrina Meng Wanzhou, Was Strictly a Judicial Affair, Was She Lying? Or Just Avoiding the Truth?

Generally, I have been a Freeland admirer (see Saint Mathew Pray for Us).  I sympathized as she stood beside Mike Pompeo at a Washington press conference and had to come up with six different ways of saying that the arrest, detention and possible extradition of Huawei CFO, Sabrina Meng Wanzhou, was strictly a judicial affair--and in a "rule of law" country like Canada, the process was immune from political interference.

I believed her. I had already read the same claim in half a dozen news reports.  I repeated the claim myself. When a claim gets repeated that often, it's hard to resist the idea that it must be true.  Then, I had a look at the Canadian Extradition Act.  Here is what the Extradition Act actually says:

Withdrawal of the authority to proceed 

(3) The Minister may at any time withdraw the authority to proceed and, if the Minister does so, the court shall discharge the person and set aside any order made respecting their judicial interim release or detention.

"The Minister" in this instance is the Minister of Justice: Jody Wilson-Raybould.  Far from restricting elected officials from interfering in the case, the Act specifically empowers the Minister of Justice to refuse the extradition:

Reasons for Refusal

Marginal note:When order not to be made 

44 (1) The Minister shall refuse to make a surrender order if the Minister is satisfied that 

(a) the surrender would be unjust or oppressive having regard to all the relevant circumstances; or

 (b) the request for extradition is made for the purpose of prosecuting or punishing the person by reason of their race, religion, nationality, ethnic origin, language, colour, political opinion, sex, sexual orientation, age, mental or physical disability or status or that the person’s position may be prejudiced for any of those reasons.Marginal note:

The Act clearly and repeatedly specifies that the Minister has the power and even the obligation to take action.  She has the power to consider "all the relevant circumstances" and "may at any time withdraw" the judiciary's authority to proceed with the extradition.  She has the power to set aside the order for Meng's detention.  Perhaps it's time for our political leadership to end the pretence of powerlessness and begin acting as if Canada were a sovereign nation.  Let's stop acting like a branch plant of corporate America.  Let's resolve this messy situation in the best interests of Canada and Canadians before it gets even worse.

Addendum

On January 14, 2019, (11 days after I first published this post), Jody Wilson-Raybould was replaced as Minister of Justice by Dave Lametti.

https://www.billboard.com/articles/business/8493858/appointment-canada-new-minister-justice-copyright-reform-concerns

Addendum 2

On Feb. 7, 2019, after 9 weeks of denial from the PM and the Minister of External Affairs , the new Justice Minister, David Lametti, finally admitted that the extradition of Sabrina Meng Wanzhou is "political."  https://www.thestar.com/politics/federal/2019/02/07/decision-whether-to-extradite-huaweis-meng-wanzhou-will-ultimately-take-political-factors-into-account-new-justice-minister.html

However, this admission has passed virtually without comment in the Canadian media.

The Chaos Theory of International Trade, or How Canada Arrested a Chinese Executive on a US Warrant in Order to Protect Israel from Iran

I heard it from every economics professor I ever had, at both Oregon and Stanford, and everything I saw and read thereafter backed it up. International trade always, always benefits both trading nations. Another thing I often heard from those same professors was the old maxim: “When goods don’t pass international borders, soldiers will.” Though I’ve been known to call business war without bullets, it’s actually a wonderful bulwark against war. Trade is the path of coexistence, cooperation. Peace feeds on prosperity.

 Phil Knight. Shoe Dog: A Memoir by the Creator of Nike (p. 374). Scribner. Kindle Edition. 

A Few Facts

Huawei holds 4% of the cellphone market in Israel. In the UK, which is a member of the Five Eyes intelligence alliance, Huawei has 14% of the market.  Huawei Canada is a major contributor to Canadian business and research.  These facts matter. 

Why Conspiracy Theories Exist

Reading about the arrest of Huawei’s CFO Sabrina Meng Wanzhou, who is also the daughter of the company’s founder, at the Vancouver airport, I had the same question everyone was asking:  why?  Attempts to answer the question have spawned a number of conspiracy theories.  Conspiracy theories flourish when the information available in the public domain never quite makes sense or at least never comes close to explaining who did what, how, with what motives and intended outcomes.  The explanations for why and how never satisfy the parameters of what has happened, and we live in suspense,  forced to speculate about behind-the-scenes, cloak-and-dagger black ops in search of explicable motives for unexplained or inexplicable events.   

Just Because It's a Conspiracy Theory . . .

Once established, conspiracy theories take on a life of their own.  They thrive and spread and become better known than the mundane facts because they tell a better, more dramatic and coherent story.  All this being said, to cannibalize a better-known expression:  just because it’s a conspiracy theory doesn’t mean that it isn't true.

Chaos Theory Is the Opposite of a Conspiracy Theory

The opposite of a conspiracy theory is “chaos theory”—the theory that explains how very small causes can precipitate very large effects.  Science tells us that if we want to know the answers to big questions like  “how did we get here?” or “where did that hurricane come from?”  the answer requires “chaos theory.”  No one caused it; a lot of small things happened and as a result that big thing happened.  The butterfly in Brazil may have intended something but she did not intend to set off a tornado in Texas.  Unlike conspiracy theories, chaos theory is no fun at all. Reviewing the explanations, analysis, speculation and theories emerging from Sabrina Meng Wanzhou’s detainment in Vancouver, chaos may be the only answer.

What We've Been Told

Based on media reports, sometime in 2014 (and/or earlier) Sabrina Meng Wanzhou did a presentation in front of HSBC executives in New York (HSBC is the Hong Kong and Shanghai Banking Corporation) in which she is alleged to have misrepresented the ownership of a company called Skycom which was doing business in Iran in contravention of US and United Nations sanctions.  The physical evidence against her as an individual is, allegedly, a powerpoint presentation and a paper trail showing that Skycom is owned by a Huawei shell company. As a result, a warrant for her arrest was issued (22 August 2018) by the Eastern District Court of New York.  After various people had been informed, including Prime Minister Justin Trudeau and John Bolton, National Security Advisor to the White House, the RCMP exercised the American warrant and detained Sabrina Meng Wanzhou as she was changing planes at Vancouver airport en route from Hong Kong to Mexico.  She was jailed on December 1 pending a bail hearing.   She was released on bail on December 5.  Friends and family posted the 10-million-dollar bail, and she remains under house arrest in Vancouver, pending an extradition hearing in which American authorities must present evidence that her extradition is justified, meaning that there is compelling evidence that she has committed a crime which would be recognized as a crime according to Canadian as well as American law, and that the motives of her extradition are justified.

Mr. Chaos and the Conspiracy Theories

Not surprisingly, the immediate conspiracy theories make Mr. Chaos himself, President Donald Trump, the central antagonist.  Theory number one is that Meng’s arrest was a Trump gambit to gain leverage in trade talks with China, attempting to bully and cower China by showing how far he is willing to go playing hardball.  Theory number two is the exact opposite.  Meng’s arrest on December 1, the same day Trump was having one-on-one trade talks with China’s President Xi, was a deliberate attempt by an anti-Trump Washington faction to embarrass and undermine the American President. 

The "Let's Put Canada in Its Place" Conspiracy

Conspiracy theory number three is distinctly Canadian.  On June 1, 2018, the USA imposed a 25% tariff on Canadian steel on the grounds that Canadian steel imports were “a threat to US national security.”  Suddenly all the rhetoric about Canada and the USA being the greatest of trading partners, the best of friends and the closest of allies evaporated, and we were just another potential enemy.  Nonetheless the USA still didn’t want us to go around acting like a sovereign nation.  As part of the recent trade deal replacing NAFTA, the US-Canada-Mexico trade agreement, the American’s insisted on what is known as the “China clause” requiring three-months notice before Canada could sign a trade agreement with  “non-market countries.”  (The list of “non-market countries” includes China, Vietnam, North Korea and 11 others.)  In other words, if Canada approaches a trade agreement with China, we will be putting at risk our trade with the USA to whom we export nearly 70% of our goods and services, accounting for 20% of our Gross Domestic Product.  Having Meng arrested in Canada had the effect, which would be desirable from an American perspective, of blocking friendly relations and future trade between China and Canada.  

The Paradox of China's Getting Tough with Canada

Ostensibly as a consequence of the Meng detention, two Canadians—Michael Kovrig and Michael Spavor—were arrested in China.  As I try to imagine the strategic value of these arrests from a Chinese perspective, my conclusion is that they must be a gesture for domestic consumption in China.  In other words, Chinese politicians needed to show their Chinese compatriots that they are doing something about Meng’s arrest.  However, I would surmise that these Chinese politicians are more than sophisticated enough to realize that Canada, in contradiction to its own best interests, has been trapped in the middle of this affair by the American warrant.  The Chinese leadership have made Canada the target of their ire rather than focussing on the USA.  The rational conclusion is that Canada just doesn’t matter enough to either China or the USA.  Both countries are at ease making Canada a patsy and the detained Canadians collateral damage, but the real game—where the big money and power are at stake—is China-US trade.  Paradoxically, the more China puts pressure on Canada to release Meng, the more it will be in Canada’s interest to extradite her to the USA, thereby forcing the Chinese to address their true antagonist the USA, leaving Canada out of the US-China trade war. 

The Chinese Global Domination Conspiracy

In casual conversation with my fellow Canadians, this is the conspiracy theory that is least understood but is the most readily and stubbornly accepted.  Arresting Meng has nothing to do with protecting Israel.  From this point of view, the claim that she was arrested for contravening trade sanctions with Iran becomes a bogus pretext, smoke and mirrors.  From this point of view even the allegations that Meng committed bank fraud by failing to reveal a Huawei/Skycom/ Iran connection, are a pretext, accusations that are not intended to pursue justice and discourage crime, but simply to undermine a large and successful Chinese technology company.  If this is the case, the crime being perpetrated against Meng seems much more significant than the crime she is being accused of.

What exactly is this conspiracy theory?  Huawei is in the process of developing 5G technology in Canada and around the world which will provide the next generation of wifi and internet applications.    Huawei is believed to have close ties to the Chinese government and the MSS (Ministry of State Security).  Huawei's presence in and even control of cyberspace in other nations will give them the potential to access state secrets and the possibility of disrupting any industry connected to the internet (aka The Internet of Things).

As evidence of this conspiracy my fellow Canadians point out that three--USA, Australia, New Zealand--of the five members of the Five Eyes have "banned" Huawei's 5G technology.  The USA's decision to go with an American company for its 5G technology is hardly surprising.  We might wonder why Australia and New Zealand have decided not to go with Huawei.  The counter to this conspiracy theory is that so far two Five Eyes members--Canada and the UK--have not banned Huawei, but we can imagine that they are both under enormous American pressure to do so. 

The Chinese counter to this conspiracy theory is that if Huawei's 5G technology is a gateway to global domination, then any of its three major competitors in 5G development--Verizon, IBM, AT&T--also threaten global domination.  The USA's use of its secret services and intelligence networks in conjunction with private contractors and businesses to promote American economic interests has a long and publicly acknowledged history.  "What's good for General Bullmoose is good for the USA" may once have been considered somewhat ironic, but history has shown that the slogan can be taken literally as representative of American attitudes and practices.

Once again, the great paradoxical, Chinese miscalculation is that the arrest of two Canadians in retaliation for the Meng arrest is the strongest evidence that the choice of Chinese 5G technology might prove dangerous for foreign nations.

The "Business as Usual" Conspiracy

In 1953 the CIA orchestrated the overthrow of Iran's democratically elected President, Mohammad Mosaddegh, in order to support BP and prevent the nationalization of the Iranian oil fields.  The USA installed and maintained the Shah of Iran as dictator, for the benefit of Anglo-American oil companies, until he was overthrown in 1979.  In 1954, the CIA arranged a coup in Guatemala, overthrowing the democratically elected President, Jacobo Arbenz, thereby preserving the monopoly of the United Fruit Company.  In 1973 a US-backed military coup overthrew the government of Salvador Allende and installed Augusto Pinochet as dictator thereby protecting the assets of the Anaconda Copper Company and Kennecott Utah Copper from Allende's plans to nationalize the copper industry.  These covert operations may strike you as distant in time (which is why we now know about them) but they establish a pattern of collusion between American business and American intelligence and secret services that has grown stronger not weaker over the years.  Of all the things we have heard about Edward Snowden over the years, the one I find most striking that usually goes by without comment was that he was working for a private company, Booz Allen Hamilton, when he copied and leaked classified NSA (National Security Agency) files. Snowden's previous employers were Dell technologies and the CIA. 

The warrant for Meng's extradition issued by the Eastern District Court of New York was a collaboration among the US Attorney, the secret service and American business interests on the grounds of national security.  "National security" in the USA means "for the perseverance and profit of American businesses."  From this perspective Meng's arrest was just "business as usual" as the various American agencies collaborated in undermining a Chinese company.

The Chaos Theory of International Trade

While none of these conspiracy theories tells the whole story, each has some degree of truth, which is why I think that chaos rather than conspiracy offers the better answer to the question "why?".  One particular butterfly has been flapping his wings vociferously enough to cause turbulence in Canada and around the world.  His name is Richard P. Donoghue.  He is a US Attorney for the Eastern District of New York.  His name is on the letter released to the public asking that Meng not be given bail, and presumably, he is the attorney who signed the original warrant for her arrest.  Remarkably little attention has been paid to who exactly Richard P. Donoghue is.

Richard Donoghue, until recently (I.e. 4 January 2018), was an employee of CA Technologies.  Does it matter that the man who caused Meng's arrest and detention was, until less than a year ago, the Chief Litigator of CA Technologies, a competitor of Huawei in the Internet of Things?  Logically, this is at least a question that should be asked.  Why isn't the Canadian media asking this question? 

Did someone from CA Technologies suggest, last January, that it would be useful if one of their litigators became a US Attorney?  I'm going to guess that Donoghue took a pay cut to become a US Attorney.  Does he maintain contact with colleagues in CA Technologies?  Have any of his buddies from CA suggested that it would be really helpful if "someone" went after Huawei?  Is Donoghue receiving any kind of compensation from CA?  Did Donoghue receive financial compensation from CA in 2018--after he became US Attorney and before he issued the warrant for Meng's arrest in August?  Does Donoghue have close friends and family employed by or receiving benefit from CA Technologies which would put him in a conflict of interest in demanding the arrest of Huawei's CFO?

Let's be clear:  I have no inside knowledge of Richard Donoghue's motivations, but his situation and the circumstances are obviously something that the Canadian media should be investigating in the first instance and the Canadian judiciary considering Meng's extradition and continued detention must thoroughly consider.  If the request for Meng's extradition is just a ploy to undermine a business competitor, then the detention of Huawei's CFO for years of extradition hearings will accomplish that goal and a travesty will have been perpetrated on and by the Canadian judiciary.

I consider the Donoghue warrant more chaos than conspiracy because I cannot imagine that Richard P. is a singular agent in this case or that he sat down and said to himself, "I think today I will embarrass Canada, cause a trade war between the USA and China, provoke the arrests of innocent bystanders in China, destabilize the global economy, and broach the possibility of a war which could drag every country in the world into the conflict."  Oh, I know this has to sound farfetched, but Meng's arrest and all of its potential ramifications could not have happened or be happening without Donoghue.  These days whenever I think about Richard P. Donoghue and the mess he's unleashed, I can't help thinking, at the same time, about a 19-year-old named Gavrilo Princip.

"Beauty is truth, truth beauty." What's Not to Understand?

Writers and Company

Listening to Anne Carson and Eleanor Wachtel on Writers & Company discussing Keats's famous aphorism, "Beauty is truth, truth beauty," I was taken aback to hear both women reveal how little they appreciated what it might mean.

Wachtel: And you quote a passage from Keats before each tango or section, and it was Keats of course who wrote famously, “Beauty is truth, truth beauty.” How does beauty speak of truth?

Carson: I don’t think it does. I think that’s all a big mistake, but there’s so much power in believing it, and so many of the decisions of life, especially early life—with the adolescent emotions—identify those two, and think that the person who’s beautiful is also true and the feelings that come from beauty lead you to truth. I don’t believe it works out usually.

What's not to understand?

Wachtel and Carson are, of course, two of the most well-read, articulate people on the planet.  Nonetheless, this was an expression I typically taught to first-year undergrads in "Introduction to Literature"  and I struggled to understand how Carson/Wachtel's exchange could go so far astray from Keats's meaning.

Opposition to "beauty is truth"

As I re-researched the expression, I came across quite a phalanx of opposition to Keats, including T.S Eliot's claim that the lines were "meaningless" and "a serious blemish on a beautiful poem." (This from the poet who left us wondering what tahell does "Between the motion/And the act/Falls the Shadow" mean?)

What does "Beauty is truth, truth beauty" mean?

So, what does "Beauty is truth, truth beauty" mean? Beneath this aphorism is the unspoken, sub-textual question, "What is truth?" The search for an answer has gone on for as long as Sapiens have had the wherewithal to ask questions and no agreed-upon, final answer has ever been reached. The knee-jerk response to the question is the "correspondence theory." Something is true if it corresponds to reality. The problem is that there is no agreement on what constitutes "reality." We are left with the coherence theory. Something is true because it is coherent with what we already know. (For further elaboration see Does Knowledge Require Truth?) Descriptions of this theory tend to reduce it to statements which are coherent in relation to other statements; however, I adhere to an expanded notion of coherence which subsumes correspondence. For example: "John loves Mary." This statement is true if it is coherent with other statements (like John saying so) but also if it is coherent with how John behaves (he sacrifices himself for Mary's benefit, etc).

The Truth about truth

What is coherent today isn't necessarily coherent tomorrow. Truth, like beauty, is temporal, temporary, even ephemeral. We only judge as true (or false) those things that have meaning. We judge as true whatever fits with what we know. Our knowledge of truth is always limited and fragile. When we see something that has a meaning, and that meaning connects coherently with other meanings, we see it as true. We will also see it as beautiful. In this moment, beauty and truth are one, just as Keats concluded.

"Ode on a Grecian Urn"

The line is a conclusion in Keat's poem, Ode on a Grecian Urn. (Once upon a time, every junior high-school student was expected to know this poem.  Hence, the pubescent joke/pun:  Q: "What's a Greek urn?"  A: "About a buck, fifty an hour.")  

"Beauty is truth, truth beauty, — that is all 

Ye know on earth, and all ye need to know."

If you read the poem, about the urn's telling of an ancient story of love, faith, and art, against the idea of coherent truth, you will discover the logic of Keats's claim that, given our limitations, beauty is a good--maybe even the best--way to judge truth.

Afterthought

If you've read this far and are still not getting it.  Here's the argument in the form of a straightforward syllogism.  Bearing in mind that we are talking about things that have meaning:

1. We judge as beautiful those things that fit together.

2. We judge as true those things that fit together.

3. What is beautiful is true, and vice versa.

Addendum

Among the opponents of "beauty is truth" we must now include the theoretical physicist Sabine Hossenfelder.  See, for example, "Physics Isn't Pretty."

Why Are the Poor Always with Us? "Moral Hazard."

The Poor Are Always with Us

“The poor are always with us.”  What a discouraging declaration!  More disturbing still, it is attributed to Jesus Christ.  Although the details vary from one gospel to another, Mary of Bethany (some say Mary Magdalene) was pouring expensive oil on Jesus’s feet (in some versions on his head) when his disciples complained  (some say Judas specifically) that the money could have been used to feed the poor.  (The Gospel of Matthew suggests that this incident is what caused Judas to betray Jesus.)

Moral Hazard

Why are the poor always with us?  Consider  “moral hazard.”  “Moral hazard,” according to Alan Blinder in After the Music Stopped:  The Financial Crisis, the Response, and the Work Ahead, “has nothing to do with morality.”  The concept originated in the 18th century in the insurance industry and suggests that having insurance might encourage risky (and therefore immoral?) behaviour.  

Today the concept is very much with us as insurers worry aloud  that house insurance will encourage us to smoke in bed, car insurance will promote real-life Gand Theft Auto, and medical insurance will cause all of the above.   In fact, “moral hazard” is pervasive because it underpins all the “self reliance,” “free market” arguments of, in particular, American capitalism.

The concept arose in Blinder’s book because “moral hazard” also applies to making risky investments.  In 2008, super wealthy financiers and bankers, who were typically the defenders and upholders of “moral hazard,” found themselves in a situation where they needed hundreds of billions of dollars in bailouts because they had made risky, losing investments.  To accept government money instead of facing the consequences of their behaviour was to repudiate “moral hazard”—which is what they ended up doing.  However, “moral hazard” when applied to the holders of underwater sub-prime mortgages was kept in tact when TARP (the bailout program) was implemented.

Ron Paul on "moral hazard" and "too big to fail" in 2008.

Social Spending and Moral Hazard

Though you may never before have heard of “moral hazard,” you have undoubtedly heard one or more of the “common sense” claims based on “moral hazard.”  “Moral hazard” is the idea behind arguments against the guaranteed income, free day care, tuition-free university education, family planning, and the decriminalization of drugs, to name but a few.  Despite arguing the case in favour of “enlightenment,” in  Enlightenment Now: The Case for Reason, Science, Humanism, and Progress, Steve Pinker claims that “Social spending, like everything, has downsides. As with all insurance, it can create a 'moral hazard' in which the insured slack off or take foolish risks, counting on the insurer to bail them out if they fail.”

Poverty Versus Wealth Inequality

If not through social spending how can poverty be addressed? Pinker argues, quite rightly I would say, that it is a  mistake to confuse poverty and wealth inequality.  Some Americans may be disgruntled, may even think of themselves as poor, not because they are poor in any real sense but because they are struggling to "keep up with the Joneses."

"The confusion of inequality with poverty comes straight out of the lump fallacy— the mindset in which wealth is a finite resource, like an antelope carcass, which has to be divvied up in zero-sum fashion, so that if some people end up with more, others must have less. As we just saw, wealth is not like that: since the Industrial Revolution, it has expanded exponentially."

True enough, but it takes a lot of poor people to create one billionaire.  Pinker's use of J.K. Rowling as his example of a billionaire is disingenuous.  Sure, it's hard to get a hate on for the welfare mom whose Harry Potter stories have made her the wealthiest writer on the planet, but even in her case if we consider the copy editors, bookstore clerks, theme-park employees and printers at the bottom of the pyramid we can begin to see signs of the poverty which supports her wealth.  Pinker's graph correlating wealth inequality with everyone getting richer is cutesy and confusing, but his conclusion that "the world’s poor have gotten richer in part at the expense of the American lower middle class" who would in turn elect Donald Trump President seems clear enough.

Does Wealth Inequality Make Us Richer or Poorer?

Much of the world may have been pulled out of dire poverty over the last 200 years, as Pinker claims, but extreme wealth inequality is a destabilizing force in any society.  Pinker's graph notwithstanding, wealth inequality also produces an inefficient and wasteful economy.  The purchasing power of the haves puts pressure on both the have-nots and those who have less. For example, London, England has some of the most expensive real estate in the world, but it is also known for the number of homes and mansions which are left empty by the super wealthy. Take note the next time you are watching a a premiere sports event on television:  how many of the best seats are left empty because someone is wealthy enough to buy them and then not bother to attend?  Is the economy really being served by one man owning a dozen houses or fifty cars or paying tens of millions of dollars for a painting?

The Financial System Depends on Moral Hazard ...

Money, as we have seen, is just a measuring system for debt (see What Is Money?) or what  Yuval Noah Harari, in Sapiens:  A Brief History of Humankind, calls "imaginary" and "a psychological construct." Money is created every time someone signs a mortgage, takes out a loan or uses a credit card.  It is therefore limitless and infinite--definitely not a a zero-sum game.  Since money is "imaginary," nothing real or tangible, why can't we put Santa Claus and Tinker Bell in charge and just give poor people the money they need?

And Moral Hazard Depends on Poverty

The answer is, of course, "moral hazard,"  . . . and I'l bet you're thinking "and the whole financial system would collapse."  Conclusion:  the whole financial system is based on moral hazard.  Why are the poor always with us?  Because without them "moral hazard" would disappear.

A billionaire asking for millions of dollars in subsidies, grants and tax breaks is so common that we hardly notice.  An indigent standing on a street corner asking for twenties would have to be out of his mind.  The richer you are the less moral hazard applies.  The burden of moral hazard falls most heavily on the poor; in fact, poverty and moral hazard are inseparable.  The threat of poverty is what keeps the rest of us from stepping out of line.