Quotulatiousness

July 26, 2026

The Alchemy of Finance by George Soros

Filed under: Books, Britain, History, Media, Politics — Tags: , , , — Nicholas @ 03:00

Handre discusses the book George Soros wrote (or had written) after he gained a huge sum of money by speculating against the Bank of England in the 1990s:

George Soros made a billion dollars betting against the Bank of England in September 1992, and then he wrote a book explaining that markets are fundamentally irrational. Notice the tension there.

The Alchemy of Finance, published in 1987, gives you Soros’s theory of reflexivity. The idea runs like this: participants in a market do not observe prices from the outside. They shape the reality they are trying to measure. Their biased expectations feed into prices, prices feed back into expectations, and the whole thing spirals away from any “equilibrium”. Soros presents this as a devastating blow to the neoclassical economists who model markets as tidy machines grinding toward a single clearing price.

He is right, but misses one fundamental point. The equilibrium fetish deserves a beating. Ludwig von Mises and Friedrich Hayek spent decades explaining that the market is a process, not a photograph, and that no equation captures the discovery going on inside it. Prices carry dispersed knowledge. Entrepreneurs guess, act, and get corrected by profit and loss. Soros rediscovered a slice of this in his trading room, and called it “alchemy”.

But, Soros treats his “far from equilibrium” boom-bust sequences as proof that free markets are inherently unstable and require an adult (usually a central bank, sometimes Soros himself) to supervise them. He points at the credit bubbles of the 1980s and sees capitalism failing. He never asks who prints the credit.

The Federal Reserve does. Cheap money floods in, entrepreneurs misread the artificially low interest rates as real savings, and they pile into projects that cannot pay off. That is the boom. The bust arrives when reality collects its debt. Soros describes the symptom with real skill and misses the pathogen entirely.

So the man who broke sterling by exploiting a currency that politicians pegged at a lie somehow concludes that governments need more discretion, not less. The 1992 pound was a government price-fix collapsing, exactly as Mises predicted such fixes always do.

The reflexivity part is spot on, but send the bill for the bubbles to the people with the printing press.

July 21, 2026

Making out like a bandit – Christopher Nolan’s sweet deal for The Odyssey

Filed under: Business, Media, USA — Tags: , — Nicholas @ 05:00

Hollywood accounting is always a murky pool to wade into … unlike accounting in the real world, it’s very, very difficult for outsiders to understand how the money is spent and where the profits go. Christopher Nolan’s new film seems to have broken new ground in Hollywood accounting, very much to Nolan’s benefit:

So Nolan is getting 15% off direct revenue, (not profits, gross, and his wife another 5%) from the Odyssey, basically risk free, AFTER his 20 million up front.

That’s a better cut than a lot of mob bosses take off drug dealers (which tend to vary between 5 and 30% depending on how much violence they can command).

And probably core stars (Damon and Hathaway mostly) are getting some smaller percent of the same deal.

This is unheard of. Basically a violation of fiduciary duties to the investors.

Studio execs paid all these people to make this movie this way against their own investors’ interests.

So if another 10-30% of gross is divided across Damon, Hathaway, Holland, Pattinson, and Theron … You know the real stars (Zendaya, Nyong’o, and Page don’t draw crowds and aren’t getting that) …

Then you might have to effectively cut all revenue first by 50% for theaters, then by another 40-50% for the star power.

It other words … The Odyssey would need to make 800 million – 1 billion before it could even hypothetically start to turn a profit for investors.

All the Woke casting etc. Is actually a cover for basically outright money laundering and embezzlement by the entertainment class. And because its “sticking it to the Chuds” business news and institutions are covering for the fact a bunch of studios just defrauded Universal Studios’ parent Comcast, to possibly the tune of hundreds of millions.

Comcast is a publicly traded company. That’s 401Ks and pension funds.

And all the woke stuff is in there so that no studio execs, corporate leaders, media, or corporate watchdogs will call them out for basically transferring hundreds of millions of retiree dollars into their own pockets.

All the discussion of “Will the Odyssey make its money back” is missing the point that there is almost NO WAY for the Odyssey to actually produce a reasonable return to investors … BY DESIGN.

It is a pure, basically fraudulent, wealth transfer from American middle-class investors to Hollywood insiders irrespective of whatever money the film does or does not make … intentionally.

And all the woke window dressing is chaff, or a bonus to prevent any institutions from having the nerve to call them out lest they get called, racist, sexist, and transphobic.

July 20, 2026

Carneynomics in action

Filed under: Business, Cancon, Economics, Government, Media, Politics, USA — Tags: , , , , , — Nicholas @ 05:00

Even though the relic media are all singing from the government’s hymn book — because they might lose their generous subsidies if they don’t — a few dispiriting details about the real state of Canada’s economy still slip through:

This is the Carney economy in one picture.

He sold himself as the adult in the room. The banker. The international dealmaker. The man who could handle Trump and restore confidence.

Instead, Canadian manufacturers are preparing their exit.

According to the KPMG survey, 42% of manufacturers have already moved some production to the United States or are considering doing so. Another 36% are cutting investment, 12% have paused spending and 9% have cancelled projects altogether.

Manufacturing jobs are disappearing. Investment is drying up. Factories are moving south.

Businesses respond to incentives, costs and uncertainty. They do not remain in Canada because Mark Carney gives polished speeches about nation-building. They go where taxes, energy prices, regulation, labour costs and access to markets make production worthwhile.

Carney promised competence. What Canadians are getting is stalled trade talks, falling investment, disappearing jobs and another Liberal government that seems incapable of understanding how private-sector wealth is actually created.

A great many Canadians now see Carney as an incompetent ideologue in a good suit, surrounded by the same Liberal machine that helped create this mess.

And what consequences does he face?

Very few.

Carney is rich. His family is secure. His pension, investments and connections are intact. He will never worry about a mortgage payment, a grocery bill, a lost factory job or whether his children can afford a home.

The people who pay for his failures are workers, families, small-business owners and young Canadians whose futures are being shipped across the border.

That is the ugliest part of modern government. The people making the decisions are often insulated from the consequences. They can damage an economy, lose jobs, drive away investment and still retire wealthy, respected and welcomed back into corporate boardrooms.

A résumé is not an economic policy. A banker’s vocabulary cannot hide factories closing and investment leaving.

Canada is not being built. It is being hollowed out, while the people responsible remain comfortable.

This is why I thought the announcement on Friday that a Republican senator is calling for Carney’s assets in the US to be seized and to refuse him a visa … it’s beyond weird that a Canadian Prime Minister would have over 90% of his personal assets invested in the United States rather than in Canada. This gives Trump another handle on Carney, if he chooses to use it.

On her Substack, Melanie in Saskatchewan envisions how this may play out:

AI image from Melanie in Saskatchewan

So let me make a prediction: Any day now, your government will solemnly discover the importance of proper forest management.

There could be a task force, or a federal strategy, a minister standing solemnly in front of some trees. Perhaps an announcement that Ottawa has been “working around the clock” on a comprehensive plan that, by a miraculous coincidence, became urgent only after the American president threatened tariffs and a U.S. senator started talking about sanctions.

Should that happen, Canadians will be entitled to ask a very simple question: What finally changed Ottawa’s mind?

Was it concern for Canadians living through evacuations, destroyed communities and weeks of choking smoke? Was it the economic damage caused by recurring fire seasons? Was it pleas from provinces, northern communities and forestry workers for better prevention, mitigation and emergency capacity?

Or did the urgency arrive only when Washington threatened to slap another charge on Canadian exports and Senators possibly sanctioning Canadian officials like yourself? You personally have A LOT at stake if you are sanctioned since the majority of your wealth investment portfolio is in America.

The timing on this matters a great deal. It matters whenever a government suddenly treats a long-standing domestic problem like a national emergency only after somebody powerful outside the country attaches a financial consequence to it.

Trump has accused Canada of “wilful negligence” in maintaining its forests and says he intends to ask you what Canada plans to do. Your emergency management minister responded that governments have invested billions in fire prevention and forest sustainability since 2020. That defence deserves to be examined very closely and very carefully, because Canadians can reasonably ask what those billions purchased, where they went and why so many communities remain frighteningly vulnerable. To say it plainly … Canadians simply do not see any value for the dollars spent.

You announced spending of $317 million to lease 10 water bombers and heavy helicopters for rapid deployment to provinces because the wait time for them to be built is too long. So, here’s a fun little arithmetic exercise for Ottawa: water bombers are built right here in Canada — jobs, sovereignty, the whole patriotic package you’ve been selling — yet the federal shopping list remains stubbornly empty.

With $317 million, you could buy three heavy scoopers and have pocket change left for spotter planes or a helicopter, or — and this is where it gets embarrassing — you could roll out 45 to 55 single-engine Fire Boss aircraft, scattering an actual national fleet across every province that needs one. But apparently the government prefers its firefighting budgets theoretical. It is here that I will remind you, Fort Mac, Jasper and Lytton should have already provoked this response to act years ago.

The United States is hardly in a position to lecture anyone without hypocrisy. It is enduring its own brutal wildfire season, and fires do not stop at customs booths to declare their country of origin. Climate, drought, lightning, forestry practices and emergency capacity all play a role. There is plenty of responsibility, contradiction and political theatre to go around here. America has somehow managed to turn airborne smoke into an international trade dispute, because apparently even oxygen now requires a customs declaration. But that doesn’t absolve Ottawa. Again … Fort Mac. Jasper. Lytton. The warnings were already there. The time to act was then, but Ottawa chose navel gazing instead. In my books, that means today’s consequences lie with the governing Liberals.

June 26, 2026

No “capital formation”, please: we’re Canadian

Filed under: Business, Cancon, Economics, Government, Politics — Tags: , , , , — Nicholas @ 03:00

On the social media site formerly known as Twitter, L. Wayne Mathison identifies one of the biggest reasons the Canadian economy is falling ever further behind other industrialized nations:

AI-generated image from L. Wayne Mathison

Canada does not have a talent shortage.

It has a capital formation shortage.

In Q1 2026, Canada managed one growth-stage VC deal. One. Worth $1M.

That is lemonade-stand money in a global tech race.

The U.S. pulled in $267.2B in VC investment. Capital is not confused. It goes where risk is rewarded, scale is possible, and success is not treated like a moral offence.

Carney and the Liberals keep talking about “building the economy” while presiding over a country where founders raise seed money here, then scale somewhere else.

That is the real brain drain.

Not just doctors. Not just engineers. Builders. Founders. Investors. People who can turn ideas into payrolls.

They look at Canada and see taxes, red tape, weak productivity, political favouritism, and a government more interested in managing decline than getting out of the way.

Carney was sold as the adult in the room. OK. Then explain this: why is Canada producing press releases while the Americans are producing companies?

Because capital can smell fear.

And right now, Canada smells like a country that punishes ambition, subsidizes failure, and calls it fairness.

June 21, 2026

Gad Saad discovers that Canada has an “exit tax” … and it’s insane

Filed under: Bureaucracy, Cancon, Government — Tags: , — Nicholas @ 05:00

The other day, I shared a post from Gad Saad that alerted me to something I’d never heard of before: a steep tax the federal and provincial governments levy when a Canadian emigrates to another country:

On the social media site formerly known as Twitter, Vesper provides more information:

The Great Scam

After what @GadSaad posted yesterday, something I had no idea existed … an “Exit Tax” I did some digging. This is what I found.

Canada’s departure tax is one of the biggest scam taxes on the books. Apparently when you leave the country, the government treats you as if you sold every investment you own, even if you sold nothing.

You get hit with a tax bill on money you never touched, never withdrew, never spent. They literally invented a fake sale to justify taking your money.

Here’s what makes it even worse. The stocks they’re taxing? Those are foreign companies. Apple, Samsung, whatever you hold, those grew because of what those businesses did in their own countries, their own markets, with their own workers.

Canada had absolutely nothing to do with it. Zero. But they still want a cut just because you happened to live here while you owned them. They did nothing and still want to be paid like they did.

And before 1996 this didn’t even exist the way it does now. Chrétien’s government expanded it that year and buried it in section 128.1(4)(b) of the Income Tax Act like they hoped nobody would notice. Italy doesn’t do this. Portugal doesn’t. Belgium, Switzerland, the UK, none of them pull this shit.

You paid income tax every year. You paid sales tax. Property tax. You held up your end of the deal the whole damn time. And when you decide to go live somewhere else, they hit you with a bill for money that was never real to begin with.

Canada under any Liberal is a Scam!

And followed up with:

FYI- Just to make clear why I posted that image instead of Clause 17 it was meant to make an additional point, that I’m not sure Gad was informed about. The system is one-directional and rigged.

That image explains that The exit tax locks in your gains the day you leave at whatever the market says that day. You have no choice, no timing, no flexibility.

If your portfolio drops 30% the week after you leave, too bad. Canada already took their cut on the higher number. The gain was real to them the moment you packed your bags. The loss that came after is entirely your problem.

If you want to see the stocks section it’s this

You can read it for yourself:

https://publications.gc.ca/collections/Co

Update: After some online mockery, Gad Saad explains that he’s not just upset on his own behalf.

People are astoundingly stupid. My comments about the departure tax is not that I should be treated differently from anyone else. I am making a point about the extent to which taxes are confiscatory. As I have previously explained, there was a time when ZERO cents of income tax were levied in Canada and the US. Then bit by bit, that “temporary” measure, to be applied to only a few, and at a very low percentage rate of your income, becomes a mammoth monster that takes more than 50% of your earnings. It can occur because there are no repercussions if governments do not balance their budgets (other than voting them out). Hence, what starts off as a small temporary tax on a few becomes an existential theft that is orders of magnitude larger than the so-called illegal extortion tax of the Mafia. It can exist only because the great majority of people BENEFIT from this form of parasitic taxation. But someone has to pay for everyone else, and when you are that someone, you are not necessarily pleased to be funding the ultimate Ponzi scheme. I’m making a moral, philosophical, and ethical argument. It’s not just about me.

May 20, 2026

QotD: “Gilded Age” Robber Barons didn’t have access to what even working-class Americans have now

Filed under: Business, Economics, History, Quotations, USA — Tags: , , , , , , , — Nicholas @ 01:00

Where Marx really went wrong was — and I know this sounds flip, but I’m as serious as cancer — being born in 1818. He lived his entire miserable life in a world where “labor” really was a physical thing. The richest robber baron of the Gilded Age lived a far different life, materially, than the poorest serf-in-all-but-name working in his factories …

… but the robber baron knew he needed the serfs. Their relationship was purely dialectical. Without his factory hands, no robber baron. And in a strange but very real way, the higher up the food chain your Gilded Age robber baron went, the more he was dependent on his serfs for his lifestyle. J.P. Morgan is usually credited as being the first guy to become a Robber Baron purely through finance. Carnegie, Rockefeller, all those guys had most of their wealth in financial instruments, of course, but those financial instruments rested on control of a physical product — Carnegie Steel, Standard Oil.

I’m probably being unfair to Jay Cooke, the Michael Milken of his day, but since more people have heard of J.P. Morgan let’s roll with it. Even though Morgan’s wealth was entirely on paper — he was nothing but a securities trader — his lifestyle utterly depended on a battalion of servants. In a very real way, you yourself, right now, live much better than J.P. Morgan did in his heyday. And not just because you have aspirin, antibiotics, and air conditioning, three taken-for-granted things ol’ J.P. would’ve given half his kingdom for. But because you have more time. If you’re hungry, you can open the fridge or the microwave and have all the food you need in a matter of minutes.

J.P. couldn’t. J.P. had to deploy an army of servants every time he wanted a snack, and those servants were constrained by things like “availability of ice” and “when is the fishmonger at his stall”. You’re hungry at 2am, you jump in your car and get some Taco Bell. It takes ten minutes. J.P.’s hungry at 2am and it’s tough titty, J.P., your ass is going hungry. Because even though you’re the richest man in the world and have legions of manservants at your beck and call, Taco Bell just isn’t there. Even if someone had had the brilliant idea to create a Gilded Age Taco Bell, it still would’ve taken hours:

Wake up the manservant. Wake up the groom and stableboy. Hell, wake up the horse, then saddle the horse, ride to the drive thru window … which in this case means “the house of the guy who runs Gilded Age Taco Bell”. At which point he has to fire up the oven, start pounding the tortillas, send his own legion of valets and stableboys and whatnot out to get the refried beans …

And that’s the other thing, J.P. — you’d best not pull that shit too often, because those people know where you live. Not only do they know where you live, they live with you. Literally under the same roof. You want to sleep easy? You’d best not beat the servants too often, buddy.

There’s only so much “class consciousness” one can develop in that world. Oh yeah, J.P. thought of himself as one of the Masters of the Universe, there’s no denying that. But J.P. lived in what was still a brutally physical world, in a way we PoMo people really can’t grasp. If you can’t imagine what it would take to get some Gilded Age Taco Bell, maybe geography will do the trick. Ever seen Gangs of New York? Even if you haven’t, you’ve probably heard the name “Five Points”. The worst slum in America in the 19th century, and 19th century American slums were world class …

That was right down the street from Wall Street. Literally. I am not in any way joking, and if I’m exaggerating a little for effect when I say “J.P. could’ve hit Five Points with a five iron from his swanky digs on Central Park West”, I promise you I’m not exaggerating much. You can look it up for yourself. The main reason the Union rushed troops straight from the Gettysburg battlefield, and no-shit shelled parts of the city with gunboats, during the Draft Riots was because Five Points (et al) was right fucking there, and they might’ve gotten it into their heads to lynch a few Masters of the Universe. Rich man’s war, poor man’s fight, right? Let’s see how you like it, you bankster bastards …

The PoMo “information economy” removes all that. The other day I joked about colleges like Bennington and Goucher. I cracked some jokes, yeah, but I wasn’t really joking. Those places aren’t for us. Wall Street is still a physical location, but it might as well be on the dark side of the moon for all any of us have access to it. J.P. couldn’t beat the servants too hard, or too often. The modern equivalent of J.P. isn’t even aware that he has servants. He just clicks on a website, and stuff appears at his door. Like magic. Hell, it IS magic for all he knows, and he surely doesn’t care, because all that shit is his by right. He went to Bennington, after all. He has achieved full class consciousness.

All of which suggests, of course, that while Marx was wrong about the end state — the State will not, in fact, wither away — he might well have been right about the solution to the “contradictions of capitalism”, if you follow me. And if that makes me some kind of godless pinko Commie subversive, well … I’ve been called worse by better.

Anybody got the lyrics to La Marseillaise in English?

Severian, “On Losing the Cold War”, Founding Questions, 2022-07-02.

Update, 21 May: Welcome, Instapundit readers! Have a look around at some of my other posts you may find of interest. I send out a daily summary of posts here through my Substack – https://substack.com/@nicholasrusson that you can subscribe to if you’d like to be informed of new posts in the future.

May 19, 2026

“That is not diplomacy. That is national self-harm wearing a lanyard.”

Filed under: Cancon, China, Economics, Europe, Government, Media, Politics — Tags: , , , , — Nicholas @ 04:00

On the social media site formerly known as Twitter, L. Wayne Mathison responds to a post about the Canadian government’s amazing nonchalance about protecting Canada’s sovereignty:

Canadians voted in a federal election, not in a referendum to turn the country into a Davos policy lab with a maple leaf sticker slapped on the front.

The line “we will never be the 51st state” is easy politics. Most Canadians agree. But then the same elbozos turns around and flirts with every other form of sovereignty dilution they can find.

Join the EU? Canada is not in Europe. Geography still matters, apparently. Joining the EU would mean importing another layer of bureaucracy, regulation, courts, trade rules, and political obligations from people Canadians cannot remove from office. That is not independence. That is outsourcing control with better stationery.

Give China influence over resources? That is even worse. A serious country protects strategic assets: energy, minerals, food, ports, telecom, data, and critical infrastructure. You do not hand leverage over your future to an authoritarian state and then call yourself sophisticated. That is not diplomacy. That is national self-harm wearing a lanyard.

The real issue is this:

Canada’s elites love sovereignty when it means rejecting America.

They seem much less interested in sovereignty when it means resisting Brussels, Beijing, the UN, global finance, or climate bureaucrats.

So the question is fair:

Who voted for Canada to stop acting like a country?

Not Canadians. Not directly.

This is elite mission creep. They run on patriotism, then govern like national borders are an administrative inconvenience.

Other items that popped up in the news over the weekend included the United States Department of War announcing that they will be “pausing” their participation in the Permanent Joint Board on Defence, a US-Canadian body that has been continuously operating since 1940 when US President Franklin Delano Roosevelt and Canadian Prime Minister William Lyon Mackenzie King established it in a meeting in Ogdensburg, New York. Is this a big deal? Some people certainly think so:

In a bit of a sudden, surprise move, Under Secretary of War Elbridge “The Biggest Cheese” Colby has announced on X of all places that the Unites States would be pausing participation in the Permanent Joint Board on Defence, the Oldest and most Foundational node of the Canada-US security partnership.

[…]

As we all know, on August 17, 1940, U.S. President Franklin D. Roosevelt and Canadian Prime Minister William Lyon Mackenzie King met in a railway car in Ogdensburg, New York. They issued the Ogdensburg Declaration, an agreement to create a joint board to study sea, land, and air defense problems.

For over 80 years the PJBD has serves as one of the major intersects of the Canada-US relationship. It has been the forum where we have been able to engage and work collaboratively on matters of National Security, Continental Defence, and Critical Infrastructure.

Obviously, given how late it is for me, I sadly can’t dive head first into things. However, I did wanna get something out there. It’s no doubt a very petty move to make, part of a long line of petty moves between everyone in the last year. The pressure is obviously there to push Canada along, and the inclusion of the Prime Ministers Davos speech by Colby should go as a sign to one of the areas that is troubling the current administration.

Trying to apply pressure through such acts though isn’t something that I think will be successful. Granted, being a bit of a dick and doing petty shit in hopes of manipulating opinions, only for it to backfire due to a general miscalculation, is something this Administration does on the regular, and so I can’t be surprised to see it done here.

Nor is it surprising for the performative PM and his government to be utterly blindsided when one of their petty performances triggers a strong negative reaction from the United States.

Another issue that the Liberals in Ottawa seem to think both uncontroversial and straightforward is one of their batch of anti-civil-liberties bills before Parliament, in this case Bill C-22, which the US Congress considers to be a dangerous attempt to control US companies who do business in Canada:

The government’s plans for lawful access have gone off the rails. In recent days, Signal has warned it would pull out of the Canadian market rather than comply with Bill C-22. Windscribe, the Toronto-headquartered VPN provider, has said it would relocate its headquarters out of Canada and NordVPN has warned it would consider following suit. Apple and Meta have both raised public concerns about the bill’s effect on encryption and cybersecurity. The Canadian Chamber of Commerce, the Cybersecurity Advisors Network, civil liberties groups, and a long line of legal and security experts have all called for changes. The chairs of the U.S. House Judiciary and Foreign Affairs Committees have written to Public Safety Minister Gary Anandasangaree warning that the bill threatens U.S. national security and the integrity of cross-border data flows. Even the bill’s own oversight body, the National Security and Intelligence Review Agency, has told the SECU committee it does not have the access it needs for effective oversight. If the government thought it could push through the bill largely unnoticed, it has been proven painfully wrong as there are now trade frictions with the U.S., the prospect of leading companies exiting the Canadian market, and weaker cybersecurity protections for ordinary users.

[…]

The bill nominally protects against the worst outcome through a systemic vulnerability safeguard, which says that core providers are not required to comply with a regulation if compliance would require the introduction or maintenance of a systemic vulnerability. But the safeguard falls apart on careful reading. First, the term “systemic vulnerability” lacks specificity in the statute, which means the government could define encryption and vulnerability narrowly enough to hollow out the protection. Second, Sections 5(5) and 7(5) state that providers are not required to comply where doing so would result in a systemic vulnerability, but Sections 12 and 13 unconditionally require compliance with orders and provide that orders prevail over inconsistent regulations. The net effect is that providers are stuck with contradictory provisions in a system shrouded in secrecy and which could lead to the weakening of security systems. That is why Signal, Windscribe, NordVPN, Apple, Meta, the Canadian Chamber of Commerce, the Cybersecurity Advisors Network, and the U.S. Congress are raising the alarm.

The best approach to address these risks is to go back to the drawing board on Part 2 of the bill. Committee hearings should be extended to ensure that the long list of expert witnesses, industry voices, and international counterparts who have asked for changes receive a full hearing. Further, real amendments should be on the table that better balance law enforcement needs with Canadians’ privacy rights. Failure to do so will result in some of the world’s most privacy-protective services exiting the market, leaving behind a law that is vulnerable to constitutional challenge with millions of Canadians facing genuine privacy and cybersecurity risks.

March 13, 2026

Argentina shedding decades of mal-investment in uncompetitive industries

Filed under: Americas, Business, Economics, Government — Tags: , , , , — Nicholas @ 05:00

Argentine President Javier Milei didn’t promise an economic revival for all of Argentina, because significant chunks of the Argentine economy were invested in low-profit or even loss-making industries as the country followed “traditional” South American economic advice. Tim Worstall celebrates some of the belated losses in those deadweight areas of the economy:

Argentina has, for decades now, been making itself poorer by following — effectively — fascist economic policy. That whole process of trying to make everything at home, not importing, being self-reliant in manufactures and so on. The effect being that everything is made by companies of sub-optimal size and therefore consumers can only gain access to expensive shite.

So along comes a liberal — Milei — who lets consumers buy what they wish to buy from whoever, whereever. The result is that those inefficient, expensive, manufacturing firms close down as people buy the better, cheaper, stuff from abroad. The people are better off because they get better, cheaper, stuff. Not that expensive shite from the domestic producers.

Now, true, those jobs go. But those workers can go and do something else. Which they will too. In fact, they are — the unemployment rate is falling.

So, who loses out here? Obviously, the domestic capitalists, the people who own the now bust factories. Which, well, the correct reaction is probably Har Har. If your wealth is based upon producing expensive shite your customers are forced to buy then why shouldn’t we celebrate when you lose the lot?

We can — and should — take our analysis that one step further too. If the absence of the trade restrictions harms the domestic capitalists then who benefitted from the trade restrictions? The domestic capitalists, obviously. Which is how that infant industry protection, that insistence upon self-reliance, how fascist economics always does work out — the people who benefit are the domestic capitalists. And why in buggery would we want to protect them from the effects of free trade?

January 15, 2026

QotD: Process knowledge

Filed under: Asia, Books, Business, Quotations, USA — Tags: , , — Nicholas @ 01:00

Dan Wang, in his wonderful essay on how technology grows, describes process knowledge as the sine qua non of industrial capitalism, more fundamental than the machines and factories that everybody sees:

    The tools and IP held by these firms are easy to observe. I think that the process knowledge they possess is even more important. The process knowledge can also be referred to as technical and industrial expertise; in the case of semiconductors, that includes knowledge of how to store wafers, how to enter a clean room, how much electric current should be used at different stages of the fab process, and countless other things. This kind of knowledge is won by experience. Anyone with detailed instructions but no experience actually fabricating chips is likely to make a mess.

    I believe that technology ultimately progresses because of people and the deepening of the process knowledge they possess. I see the creation of new tools and IP as certifications that we’ve accumulated process knowledge. Instead of seeing tools and IP as the ultimate ends of technological progress, I’d like to view them as milestones in the training of better scientists, engineers, and technicians.

    The accumulated process knowledge plus capital allows the semiconductor companies to continue to produce ever-more sophisticated chips. […] It’s not just about the tools, which any sufficiently-capitalized firm can buy; or the blueprints, which are hard to follow without experience of what went into codifying them.

Process knowledge lives in people, grows when people interact with other people, and spreads around when skilled individuals relocate between cities or companies. But this also means it can wither and die, can be lost forever, either when old workers shuffle off to the Big Open Plan Office in the Sky, or when an ecosystem no longer has the energy or complexity to sustain a critical mass of skilled workers in a particular vocation. Some East Asian societies have gone to extreme lengths to retain process knowledge, for instance by deliberately demolishing and rebuilding a temple every 20 years.

In fact this is far from the most extreme thing East Asian societies have done to retain the process knowledge that lives within their workers! There are some components of an ecosystem, whether natural or technological, that are especially important keystone species. In the technological case, these species can be unprofitable at the current scale of an ecosystem, or inefficient, or they might not make economic sense until one or more of their customers exist, but those customers might not be able to exist until the keystone species does. Venture capital is very practiced at solving this kind of Catch-22, but in the East Asian economic boom it was national governments that actively sheltered keystone industries until they could get their footing, thus making entire ecosystems possible. A wonderful book about this is Joe Studwell’s How Asia Works, but if you can’t read it, read Byrne Hobart’s thorough review instead.

Process knowledge is so powerful, the ecosystem it enables so vital, it can break the assumptions of Ricardo’s theory of trade. Steve Keen has a perceptive essay about how the naive Ricardian analysis treats all capital stock as fungible and neglects the existence of specialized machinery and infrastructure. But naive defenders1 of trade liberalization often make an exactly analogous error with respect to the other factor of production — labor. Workers are not an undifferentiated lump, they are people with skills, connections, and expertise locked up in their heads. When a high-skill industry moves offshore, the community of experts around it begins to break up, which can cripple adjacent industries, stymie insights and breakthroughs, and make it almost impossible to bring that industry back.

John Psmith, “REVIEW: Flying Blind by Peter Robison”, Mr. and Mrs. Psmith’s Bookshelf, 2023-02-06.

  1. Like all coastal-Americans, I am generally in favor of trade liberalization, but I’m consummate and sophisticated about it, unlike Noah Smith.

November 26, 2025

The importance of “a bicycle shop in Bermuda” to Mark Carney’s financial affairs

Filed under: Cancon, Government, Law, Media, Politics — Tags: , , , , , , — Nicholas @ 03:00

It’s no secret that Prime Minister Mark Carney is a rich man. When he entered politics, he put his financial holdings into a blind trust to satisfy the federal government’s ethical and conflict of interest rules. But through this arrangement, he still owns significant positions in companies whose fortunes can (and are) affected by the actions of his government. On Monday, this was discussed at some length by a Parliamentary committee in Ottawa, as reported on his Substack by Dan Knight:

On November 24, in a basement room of West Block, MPs spent two hours asking a very simple question that everyone in Ottawa is suddenly pretending is complicated:

If Mark Carney gets richer when Brookfield does better, and Brookfield is running big climate and infrastructure funds out of what one MP described as a bicycle shop in Bermuda, how on earth is that not a problem for the Prime Minister of Canada?

The man in the hot seat was Justin Beber, Chief Operating Officer of Brookfield Corporation. His job was to calm everyone down. Instead, under oath, he calmly confirmed just about everything the government would rather you didn’t think about too hard.

He started with the corporate biography. Brookfield, he reminded the committee, is a massive global investor headquartered in Toronto. It has more than 600 direct employees in Canada, more than 15,000 workers in its operating businesses, and it paid over $750 million in federal tax last year, not counting provincial and local taxes. All of that is true. None of it changes the basic conflict: the sitting Prime Minister still has long-term compensation that rises when Brookfield, and certain Brookfield funds, succeed.

Conservative MP Michael Barrett went straight there. He asked Beber whether, when Brookfield’s value increases, the value of stock options and deferred share units also increases. Beber said yes. Then Barrett asked whether that changes if those options and units are placed in a blind trust. Beber said no. It does not. The economic reality is exactly the same: if Brookfield’s share price goes up, those instruments are worth more, whether they are in Mark Carney’s brokerage account or parked with a trustee behind frosted glass.

[…]

Cooper spelled out why it matters. Carney, he said, knows what kind of public policy could improve the success of the fund. The fund’s success determines his future bonus pay. Without knowing who the investors are or all of the fund’s positions, Canadians have no way to see where those incentives may line up — or collide — with the national interest. These are not theoretical conflicts. They are simply invisible ones.

Eventually, after some confusion over terminology, Beber did confirm that Transition Fund I has invested in 20 companies and that their names are listed in the ethics annex. Only one of those firms, Entropy, is in Canada. The rest of the portfolio, and the roster of big-money investors behind it, sits offshore, beyond any serious public scrutiny, while the Prime Minister’s upside rides on how well those bets pay off.

The tax side of the story is just as revealing. Bloc MP Luc Thériault put it bluntly: tax avoidance is not a conspiracy theory, it is a business model so widespread that the OECD and G20 built an entire 15 percent global minimum tax regime to deal with it. He cited Canada Revenue Agency estimates of tens of billions of dollars in lost federal revenue each year, including billions attributable specifically to tax avoidance. He asked Beber whether Brookfield engages in tax avoidance. Beber refused to use the term. “We practice tax planning”, he said, like “any other company”. He repeated that Brookfield pays all taxes that are “due and payable” in the jurisdictions where it operates.

That phrase sounds reassuring until you remember who writes the rules that decide what is “due and payable”, and who benefits when the system can be routed through Bermuda via something that, on paper, looks like a bicycle shop.

[…]

At some point, the pattern becomes impossible to ignore. The Prime Minister of Canada left a giant global investor with standard executive incentives, kept his vested long-term instruments, retained a carried interest in a $15 billion Bermuda-run climate fund that will operate into the 2030s, and knows exactly which sectors that firm is betting on. His government is now pouring public money and regulatory support into many of those same sectors. The firm uses structures justified as “tax transparent” that just happen to run through low-tax jurisdictions, including one address a Conservative MP described as a bicycle shop in Bermuda. The man running the firm’s operations will not say the Prime Minister’s potential upside is small. He will not say the global minimum tax is being met in practice. He will not disclose who the fund’s other investors are.

You do not need to be an expert in securities law to see the conflict. You do not need to be an expert in global taxation to see why a bicycle-shop registration in Bermuda is not about cycling. You just need to watch what they are desperate not to talk about directly: the hard link between public power in Ottawa and private profit offshore, wrapped in legal jargon, buried in annexes, and shielded from sunlight by a blind trust and a lot of very careful answers.

November 18, 2025

Canada’s major projects announcements are an economic “hostage release” program

Filed under: Bureaucracy, Cancon, Government, Media, Politics — Tags: , , , , , , — Nicholas @ 03:00

On the social media site formerly known as Twitter, David Knight Legg vents about Dear Leader Carney’s penchant for even-more-Trudeauesque-than-Justin performative governing. Far more emphasis is put on the PR value of an announcement than on the common sense practicality of the thing being announced. And Carney is also starting to re-announce already announced “projects” as if speaking it aloud will magically manifest it into reality:

Canada’s major projects announcements are a national embarrassment — an economic “hostage release” program — that tells the world just how uninvestible Canada has become under the Liberal party.

1970s central planning Liberal govt arrogance is at an all time GDP destroying high.

Try naming another OECD nation (we’re at the bottom now) where the press waits with bated breath for a “dear leader” politician who has never built anything in his life to fly in to grant a bureaucratic benediction on a few projects his bureaucrats will allow past the gate of the caps, taxes, green rules and red tape his govt imposes on everything.

Idea: set up the Major Dumb Redtape office in Calgary instead and get rid of the 10 anti-business rules written into law by the Montreal green alarmist fringe that’s holding Canadian energy, ag, forestry, and manufacturing back while other nations grow …

But PM Carney seems to like his bureaucratic power over what used to be a leading free market economy. Even while our GDP grinds down to the worst in the OECD.

The arrogance is breathtaking.

So is the ineptitude. This same central planning genius just punched a record new $78billiom hole through our public finances because he can’t manage basic public service delivery without more crushing debt.

The budget is a train wreck solidifying the final year of a Liberal decade steeply eroding purchasing power, national wealth, personal security and living standards and public services.

The irony is that this has driven Canada to ever-greater 51st state economic dependency. Donald Trump didn’t do that. They did.

But he’s been a too-convenient way to con the elderly with “elbows up” PR.

But should the next generation really be forced to lend this govt another $78bn in addition to the 1 trillion they’ve already taken to fund their failed decade of central planning, green slush funds and EV mandates while real infrastructure projects wait years for the Liberal party to bless them?

It’s not going to last.

Fitch just questioned the sustainability of all this. Unlike our lacklustre press they aren’t buying “net debt” or “operating/investment” Liberal financial illiteracy.

I had high hopes PM Carney would return fiscal sanity to Canada after openly borrowing Conservative policies to get elected by cutting the carbon and cap gains taxes.

But this budget, this major projects farce and his inability to kill a dozen economy killing rules of his own govt is showing the work how uninvestible Canada has become — and it’s accelerating national economic decline.

2026 is the end of the Liberal lost decade. First recession. Then debt downgrade. Then an election. And Carney can go back offshore to his assets and all the other global investors who like him don’t invest in Canada under Liberal mismanagement.

@SteveSaretsky thx for the brilliant line chart as usual.

A day later, after his post got significant attention on the social media site formerly known as Twitter, he posted this follow-up:

This angry post I wrote a day ago got 300,000 views.

Canadians are tired of the fake “major projects” PR by the same people who prevented those projects for a decade with their green taxes and prohibitions.

Announcing the release of 7 hostage projects is a joke. Some of these projects aren’t major and most aren’t new. None needed the govt to do anything but get out of the way from the beginning.

All the several hundred major projects still in purgatory need is for this govt to reverse their anti-job and anti-infrastructure tanker ban, industrial carbon tax, emissions cap, and electricity regs.

Oh — and also clarify by law that in Canada property rights are not overridden by leftist judges and UN wishful thinking.

Then get out of the way so a couple trillion dollars can flow in, major projects can get built and the govt revenue will flow to better public services — and to pay down that debt they just added $78bn to.

August 31, 2025

Didn’t we once have “conflict of interest” rules for politicians?

Filed under: Business, Government, Media, Politics, USA — Tags: , , , , — Nicholas @ 03:00

It’s become a commonplace that politicians leave office vastly wealthier than they went in, far in excess of their official salaries. Once upon a time, even though it probably still happened, the fat cats managed to stay below the event horizon with their ill-gotten gains. Today, they no longer care if you find out that this or that senator has consistently beaten the market on their investments during their entire time in office. After all, what are you going to do about it, punks? Maybe something like this:

Paul and Nancy Pelosi, 16 February, 2022.
Detail of a photo by Amos Ben Gershom via Wikimedia Commons.

The original research was on how Senators seem to make 12% annually. That’s, erm, a lot.

Markets — something that always comes as a surprise to politicians — react:

    American lawmakers are so consistently successful that a flurry of new platforms and apps now compile filing data from US politicians as a key input in strategies for retail investors and even hedge funds.

    The number of people using these so-called “copy trading” strategies has exploded. Tens of thousands of Americans now follow and imitate trades made by members of Congress, and they are making millions of dollars in the process.

OK, what fun, eh?

Even more fun would be Megan McArdle’s suggestion, that the CongressThieves must announce that they intend to trade an hour before they do so that everyone else can front run them.

Because, you know, Ms. Pelosi:

    She beat every single hedge fund last year.

But there’s something even more fun:

    Dub launched in March 2024 as America’s first regulated brokerage to offer copy trading accounts to mimic politicians and star traders.

    “It’s been absolutely insane in terms of growth,” says Steven Wang, the founder and chief executive who dropped out of his freshman year at Harvard to build the platform. Today, it has 1.5 million users across America.

    Of the $100m or so invested across Dub, nearly $23m is in its Pelosi tracker account. Since its launch in early 2024, its paper gains are 172pc.

Stock prices do not move “because”. Interest rates change, profits go up, or down, or tariffs or … stock prices change because people buy and or sell more of them. That may be in reaction to those other things but the actual price movement is that buy and sell stuff.

Which means that if we copy Nancy’s trades — after she’s done them — then we’re making money for Nancy. Because we are piling in our weight of money into a position she already holds.

Which, when you think about it, is really pretty shitty. Sure, it’s nice to make money ourselves by trading upon that congressional information. But there is that very, very, heavy cost of making Ms. Pelosi even richer as a consequence.

August 30, 2025

Canada’s economy is going the wrong way

Filed under: Cancon, Economics, Government, Media, Politics, USA — Tags: , , , — Nicholas @ 03:00

The latest figures show the US economy growing by 3.3% while Canada’s shrank by 1.6% in the same period. It’s bad news for Canadians, except those like Prime Minister Mark Carney who have the bulk of their investments in the United States (91% for Carney, according to various sources). On X, Dan Knight explains what is happening:

Canada’s economy just shrank. That’s the headline. In the second quarter of 2025, real GDP fell 0.4%. On a per-person basis, it was the same. Canadians are poorer than they were three months ago. That’s not speculation. That’s Statistics Canada’s official number.

So, here’s what happened. The government and its media allies spent the spring bragging that the Canadian economy “grew” in the first quarter of 2025. Real GDP was up half a percent. Sounds good, right? But if you read the fine print, if you look at the numbers it wasn’t real growth at all. It was panic.

Exporters rushed to push product into the United States before tariffs came down. Automakers. Machinery producers. Parts suppliers. They all jammed as much across the border as they could, knowing the window was closing. That sugar high showed up in the Q1 GDP number. It made the economy look like it was humming along.

Then the tariffs hit. And in the second quarter, the bottom fell out. Exports collapsed down 7.5% overall. Passenger cars and light trucks? Down nearly 25%. Machinery and equipment? Down 18.5%. Travel services? Down 11%. The result: GDP fell 0.4%. On a per-capita basis, it was exactly the same. Canadians are literally poorer than they were three months ago.

This is the story you’re not hearing: Q1 wasn’t proof of a healthy economy. It was proof of a desperate one. Businesses scrambling to get ahead of trade barriers, because they knew Ottawa wasn’t going to stop them. Q1 was fake growth, and Q2 was the crash.

Meanwhile, households are spending more, saving less, and wages are barely moving up just 0.2%, the slowest since 2016 outside of COVID. Corporate profits are falling. Government revenues are down since the carbon tax was lifted. And Ottawa’s answer? Spend more. Borrow more. Pretend it’s all fine.

So the question is simple: if this is what “growth” looks like under Mark Carney’s Liberal government front-loaded exports, collapsing investment, rising debt what does the next quarter look like?

On her Substack, Melissa Lantsman says that the economic situation in Canada is discouraging investors from putting money into Canadian companies:

You don’t need to be a foreign investor to see that putting your money into Canada is not a winning move.

Recently, Statistics Canada reported “strong foreign divestment in Canadian shares” across many sectors, including energy, mining, and manufacturing. At the same time, Canadian buyers also moved their money stateside, purchasing $13.4 billion of foreign securities in just one month.

If this were a small, short-term blip, it would be easy to dismiss it as market noise or an aberration. But that’s not the case: Statistics Canada found four consecutive months of net divestment from the Canadian economy, adding up to $62 billion in lost capital.

And that’s not to mention that every year since 2015 has seen more Canadian investment going abroad than foreign investment coming here. For those keeping track, this is the fastest rate of divestment in Canada since the Great Recession.

What does this all mean?

From an investor’s point of view, there’s no sugar-coating it. Canada is, simply put, an unattractive place to invest hard-earned cash. People making financial decisions for the future don’t have confidence in the Canadian economy to make them money.

From a government’s point of view, it should mean alarm bells ringing left, right, and centre. Lower investment in Canada translates into lower productivity, fewer employment opportunities, less government revenue, and a weaker Canadian dollar, leaving us all worse off.

But why is this happening in the first place?

According to the C.D. Howe Institute, the culprits are familiar: high taxes, regulatory barriers, policy uncertainty, and anti-growth mindsets that penalize success and demonize the private sector.

Anyone who has been paying attention for the last ten years knows that’s exactly what’s been happening. Nothing says “Welcome to Canada” to investors quite like a hike in the capital gains tax at the last minute, chaos at the CRA, multi-year project approval processes, and the highest deficits on record.

And anyone serious about fixing the problem would do the exact opposite of what the last government did. But when your new government is the same as the old one, it’s hard to believe Canadians will get the bold economic transformation this country desperately needs.

July 23, 2025

Javier Milei is delivering “a man-made miracle” for Argentina

Filed under: Americas, Economics, Government, Liberty — Tags: , , , , , , , — Nicholas @ 03:00

Niall Ferguson‘s thread on the social media site formerly known as Twitter, thanks to the Thread Reader App:

While the world fixates on Donald Trump’s populist cocktail of reciprocal tariffs and big, beautiful deficits, @JMilei is delivering a man-made miracle that should gladden the heart of every classical economist and quicken the pulse of all political libertarians.

@JMilei has brought monthly inflation down from 13% to 2%. The economy is now growing at an annual rate of 7%. Investors no longer shun Argentine bonds and stocks — indeed, they were among the best investments you could have made over the past two years. After a brief upward jump, the poverty rate has fallen from 42%, when Milei was elected, to 31%

These are astonishing feats. And they have ramifications that go far beyond South America. Free-market economics and political libertarianism are sometimes dismissed as a fad of the “neoliberal” 1980s, long ago superseded by the new populisms of the left and the right. Not so. The world has never seen a government more radically libertarian than @JMilei. But the amazing thing is not that it is working economically. The true miracle is that Milei’s shock therapy is working politically.

With his leather jacket and late ’60s mop top, @JMilei is part–rock star, part–mad professor, dancing, singing, and screaming his catch phrase: ¡Viva la libertad, carajo! — “Long live liberty, damn it!” It’s as if Joe Cocker had gone onstage at Woodstock and sung “I’ll Get By with a Little Help from My Friedman”. Never in the history of democracy has a tribune of the people won power this way.

July 5, 2025

“This is what happens when a major label morphs into a copyright and IP management business”

Filed under: Business, History, Media, USA — Tags: , , , — Nicholas @ 04:00

Ted Gioia reads the tea leaves of the big music labels and says that the future does not look good. At all:

I follow music industry news the way other people read obituaries.

Those two kinds of articles have a lot in common — both death notices and music biz news deal mostly with the past. The only new thing in the story is that something was living, and now it ain’t.

Here’s an example from yesterday:

This sounds like a happy story, no? These smart people are investing in music.

But it isn’t a happy story. They are investing in the rights to old music. They won’t spend any of that money on new music.

If you have any doubts about Warner’s priorities, here’s another headline — also from yesterday.

If you’re looking for a clear signal from a major record label, it won’t get any clearer than this.

This is exactly what a record label does when it no longer views music as a vital creative force in the current day. This is what happens when a major label morphs into a copyright and IP management business — which can be run by a small team of lawyers and accountants.

Yes, you can make money living off the past — but not for long.

I keep waiting to read a news story about a major label investing a billion dollars in developing new artists. But I never see that story.

I’ve written in the past about fans who prefer old music. But big record labels are even more obsessed with vintage and retro songs.

And it’s not just Warner Music. Universal Music is doing the same thing. So is Sony and Concord and other big labels.

That’s disturbing.

These are the same companies who should be creating the future of music. They should be convincing the public to listen to new songs and new artists. After all, if record labels don’t invest in the future of music, who will?

Maybe nobody.

A few years ago, investment firms started viewing old songs as investments. That didn’t work out very well. The most prominent song investment fund crashed and burned — as I predicted long in advance.

At that point, the smart money headed for the exits.

In the aftermath, the only enthusiastic buyers of old songs were the big record labels. They are the buyers of last resort.

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