1. Human Rights – Legal Rights
THE ETHICS OF COMMUNITY
Moral human beings are confronted by a dilemma deep and ancient
created by two paths, each way is based on one of two competing
theories of rights; the dilemma is fundamental to the way business and
government is run, the two paths create two forms of ownership
distinct and irreconcilable the two paths impact morality and
rationality and the nature of right and wrong, the division creates
conflict and pits human rights against property rights, forms social
costs and prevents economic rational exchanges from taking place,
the division limits our right and ability to say no to costs we did not
create and defines the nature of power as the ability to impose costs
onto society and future generations; debt, unemployment, poverty and
pollution are social costs that create risk and produce waste; to
eliminate the division and social costs of this split requires a
Reformation similar to that which divided Protestantism from
Catholicism in 1517 and for much the same reason – to build a more
ethical community.
Rational Exchange: ethics for communities
- specializing in helping communities establish ethical standards -
Ethical Leaders wanted … join our team and receive …
1 COMMON SHARE AND 500 PREFERRED SHARES FREE!

2. Common Shares gives shareholders the right to vote and to an equal
share of Dividends
Preferred Shares gives shareholders a claim on the equity of the
organization
By Robert Burk
2

3. Preface
Freedom has been a desire of all persons since the first Stone Age man
began chipping out arrowheads to make a living and wondered how to
protect the fruits of his labour from the claims of community – at the
juncture where property rights separated from human rights a moral
dilemma was born.
In a small town in Muskoka in 2012, The Bracebridge Brand Leadership
Team began the work of developing a new brand for the town. In 2013
they published their conclusions in The Art of Muskoka Living.
The Art Of Muskoka Living promoted a new trend in recreation called
‘experiential tourism’. The study concluded the town ought to teach
tourists the Muskoka Lifestyle. Bracebridge was to be ‘the heart and soul
of Canada’s Cottage Country – steward of the famous Muskoka lifestyle’.
The Bracebridge Brand Leadership Team (BBLT) believed in the free
market and private ownership but the residents believed in a higher
morality and rose up and rallied against the proposals to defeat them.
The BBLT were bemused at the people’s reaction but not surprised – the
uproar was dismissed as a sign of provincialism, a refusal of locals to face
up to the reality that business development comes with a price tag and
sacrifice. The town would have to adjust if it was to attract investments.
Investors do not invest without some assurance of private gain regardless
of the social cost.
Social costs include waste, pollution, unemployment, poverty and debt.
Social costs are costs that the community and future generations pay.
Putting costs onto community to create economic development does not
produce a net positive economic impact. Social costs are not consistent
3

4. with a culture that respects human rights. Social costs are not consistent
with a humanely run workplace. Social costs do not promote community,
or harmony and are not consistent with any reasonable business ethics.
Human rights ought not be sacrificed for market share. Yet this is the path
history has put us on. The desire for the good life has sacrificed what is
local in favour of the global; human rights have taken a back seat to
property rights. Local business interests are pushed towards and into the
global free market supposedly to lower costs and give consumers more
purchasing power. Putting consumers first creates unsustainable costs for
local businesses and communities. Grow or die means Globalize or be
taken over. Social costs may benefit either the rich or the poor but they
always harm community. Community is the place where human rights find
their fullest expression.
Social costs are levied at the expense of local business interest and the
community. Democracy does not function on a Global level; ideally
Democracy is grassroots and local. Democracy is associated with the
local community. If Globalization continues unchecked democracy will end
in tyranny. Tyranny by definition is not pro community and not conducive
to a culture that respects human rights.
The free market and the rights of private property are considered the
engines of commerce. However it is local entrepreneurs who build
community. Freedom exists only within community specifically freedom is
manifested in the activity of local entrepreneurs.
Freedom cannot be bought but it is not free. Freedom is not a product we
get as consumers Demand bread. Freedom as offered by the free market
is an illusion. Freedom is not derived from the possession of property.
Freedom comes with the possession of community.
4

5. Free markets tend to squeeze out local sources of goods and services in
favour of suppliers with the ability to shift costs onto communities. This
can mean unemployment in the consuming market and pollution and
social disruption in the producing community. This is a cost of the
supposedly free market. The free market is not free because it is not free
of social costs.
The choices we have are about whose rights to protect and who’s to
offend. The Right sacrifices human rights in favour of private enterprise
and private enterprise in favour of international conglomerates. The Left
sacrifices human rights to promote order both paths creates social costs
and social costs are violations of our human rights. Social costs make
local businesses less competitive and therefore susceptible to take-over
by International Corporations or the State. These have lower per unit
costs according to the free market. The real cost is higher but absorbed by
local markets and local entrepreneurs who are then accused of being
inefficient. Some of the costs of the free market are visible in the form of
unemployment and other social costs but the greater mass of the socialist
iceberg is submerged in the hidden costs of the Globalism (the erosion of
local culture in favour of mass merchandising). When our human rights
are compromised to gain market share entrepreneurism declines and
community sustainability is lessened. Entrepreneurs produce local culture
and this is made redundant by the mass merchandizing of international
conglomerates. Globalization and the downloading of costs onto local
markets ultimately harm local culture. A cost of the free market is Cultural
Relativism the idea that all culture is relative and susceptible to cultural
homogenization. Cultural homogenization is not consistent with
entrepreneurism not the creation of local culture.
Empires fail because empires create social costs. Social costs eat away at
the initiative of local entrepreneurs; no society is able to sustain the costs
5

6. of empire indefinitely because entrepreneurs cannot pay the exactions of
empire indefinitely. Local business is the engine of culture and community
and when entrepreneurism is marginalized the whole culture is the poorer
for it.
The more a culture is homogenized the more the local is being destroyed
in favour of the global. This may continue until the civilization is an empty
shell and implodes to be replaced by a more dynamic and heterogeneous
society. An empire is a typological cousin to the free market. Empires qua
empire creates a free market for those within the empire. Culture becomes
a mass produced product for a mass market.
Globalization, which is another word for cultural homogenization, erodes
business solvency at the local level. When local businesses are required
to pay costs they did not create the tendency to avoid paying costs
whether legitimate or not increases. Socialism transfers costs onto
community. Bureaucracies are created with a mandate to care for the
victims of ideological enslavement even as those who create these costs
continue to pursue their economic best interests. This divorcement of the
individual from the society in which he or she resides has social costs.
Regardless which sector or social class is favoured and which burdened
the economic consequences of socialism are never positive. Socialism
eventually brings down any civilization too weak to resist the costs
imposed on its communities. Out of control social costs birthed by
rampant Globalization (cultural homogenization) has caused the fall of
every empire. At some point Empires fail to find sufficient resources to
exploit. The cost of empire collapses the economics of local communities.
Costs are shifted to a richer and usually younger economy with stronger
local and social networks. Socialism is costs downloaded onto local
communities. These costs ultimately create cultural homogenization as
local culture is destroyed. The Haves and Have-Nots generated by
6

7. markets is the division between those who are able to shift costs onto
others whether rich or poor and adopt the global culture and local
entrepreneurs who cannot resist the imposition of costs onto themselves
nor successfully undergo the cultural shift.
Governments attempt to combat the social ills created by the free market
and its compromised freedom but all they can do is create bureaucracy
and more social costs. All Social Costs are paid for by society and future
generations and in one guise or another harms human rights. The need
for bureaucracy is a cost of the free market and our willingness to
compromise human rights to promote property rights.
Social Costs are inherently corrosive of culture and breed tyranny simply
because social costs are not consistent with the formation and promotion
of community. Creating debt is never rational, never moral and never
democratic and never pays though many think it does or can.
The Globalization of the economy by the Right requires governments to
adopt the Socialist policies of the Left because Globalization increases
bureaucracy and bureaucracies cannot generate income increasing the
need for taxes Globalization and Socialism (Right and Left) are therefore
by necessity inseparable and feed off one another. Keeping unrest down
to a level where a full-scale revolution does not erupt requires the
provision of social goods; another Social Cost and another levy on local
markets.
At some point the local economy is rendered so destitute that the
provision of social goods becomes impossible on the scale required to
keep the peace and open rebellion happens as is happening in Greece.
The cost of Globalism not only reduces total disposable income and
depresses economic activity it hinders the specialization that is the heart
of all prosperity and productivity. Socialist transfers create unfair
7

8. advantages for those communities globally positioned and penalize others
more restricted by local factors. Bureaucracy favours big business
because big business works on a scale that reflects the scale on which
governments work, thus government in league with big business create a
synergy that is inimical to the existence of local community. Social Costs
always create debt in one form or another and social schisms between
sectors globally positioned and those more sensitive to local needs. Debt
is a measure of Globalization and Cultural Homogenization. Where
Globalization has not made inroads debt is less in evidence. Only a strong
local community can prevent Globalization and keep social costs down.
Only a strong local community can protect itself from the costs created by
Globalism. However everything in this world conspires to weaken the
bonds of community. This is the assault on freedom. It is an assault on
human rights. It is an assault on the ethics of a community.
Liberalizing the financial sector (a euphuism for freeing the financial
markets from social responsibility) allowed a speculative boom we are still
paying for. The costs created by financial speculation are Social Costs. All
evil, crime and injustice are or create Social Costs (costs downloaded
onto society and future generations) and erode the structure and
sustainability of community.
Bureaucracies produce no goods or services. Governments pay for their
social programs by transferring wealth from one sector to another.
Government is inherently Socialist. Public financed programs push nations
towards a society that is dependent on government intervention. This is
not structurally sound; it is not economically rational. The dynamics of
government inexorably push communities lemming-like along the same
Socialist funded path toward cultural homogeneity. This is not freedom it
does not create jobs it is human rights compromised for a bigger share of
the global pie.
8

9. Robbing Peter to pay Paul is neither democratic, just or an effective way
of creating economic development especially when Peter is a local
merchant and Paul a bureaucrat or global conglomerate. Creating debt
regardless of how or why it is done or the form it takes eliminates choice
as surely as the most tyrannical dictator’s political dictates. Both actions
take wealth from local markets to favour the Global free market; this does
not create wealth it generates bureaucracy and destroys the roots of
democracy. Tyrannies and social agencies pushing a global agenda
create Social Costs and debt. Both harm the economy and weaken the
local market for goods and services. Fascism is not compatible with
cultural autonomy or entrepreneurism. Fascism is Globalist, expansive
and centralizing and parasitic. Fascism ultimately means the collapse of
freedom for it spells the death of human rights and with this a loss of
community.
The free market favours Globalization and the mass-merchandizing of
culture because a homogenized consumer can better be served. Because
the free market is directed towards the elimination of all restrictions on
trade and commerce and by default all restrictions against the creation of
a single, global market the process demands Big Government.
Globalization does not favour democracy or community because
democracy requires locality.
The free market penalizes small local commerce and favours
Multinationals. The worst and most destructive tendencies of the most
ruthless men and woman cannot and will not lead to a Free Community
nor lower costs. Globalization of the economy creates a bureaucracy that
is more sensitive to global issues than local needs – arms before schools.
The Invisible Hand allocates goods and services according to who has the
most disposable income but it does not listen to what ought to be – it has
no vision, no morality no sense of locality. Local businesses create local
9

10. communities but the free market favours Globalization. Governments
represent the greatest Demand and constitute the largest pool of
disposable income. This at least partly explains the Arms Race and the
market for arms generally (at the expense of schools and hospitals). Nor
can the free market be tweaked so as to not produce debt and waste.
These are the consequence of the free market that trades freedom for
property. Free markets promote economic freedom but economic freedom
favours Globalization and Globalization does not generate freedom.
The last thing we need is an abstraction deciding who shall eat and who
will starve. The free market cannot serve as the source of human values
and the arbitrator of public policy. The free market cannot replace human
minds and rational choice. Free Markets are not capable of appreciating
what ought to be. Free markets are not sensitive to the needs of local
entrepreneurs. Free markets are not free not for those subject to its social
costs.
Moral choice is possible only in a community. Moral choice is meaningful
only in community. The fundamentals of moral choice are not compatible
with Globalization or the free market. Free markets are not compatible
with the needs of moral human beings for moral human beings make their
own choices not choices dictated to them by the mass culture of
multinationals. Organizations are not built by random events nor do
invisible engineers build bridges and stable civilizations cannot be formed
by chance. A free market governed by an invisible hand does not
recognize human values or moral virtues. Social issues are best dealt with
on the level of a local community. We cannot rationally expect a market
that is geared to ensuring the security of property to respect or promote
human values. The free market cannot provide the world with democracy
or human rights only products and services. Community cannot be
produced as a market item. The free market trumpets freedom but it is a
10

11. freedom without responsibility or accountability a freedom with social
costs – it is the freedom of rogues, pirates and sociopaths that is those
who do not play well with others.
According to the precepts of the free market no social obligation or human
consideration ought to stand between businesses and its ability to turn a
profit using the resources/capital of the business. The free market says
freedom is a reward of economic success – the acquisition of assets. This
is a corruption of entrepreneurism. Can a business geared to making a
profit be compatible with the diverse needs of human beings? Does
profitability create the most freedom? If a human being were to tell you
that he or she has no other interests and no other purpose than to earn
money would you think this person free? The free market is not human
scaled and businesses that compromise freedom for the security they
think that comes from operating within it are not orientated toward
providing what a community needs. Human values cannot be weighted
against the cost of a battleship. Hunger cannot be given a price tag and
marketed. To make profits more significant than human dignity cannot be
rationally or economically justified yet millions of business people daily
forget their humanity and act as if the only concern they have is to
generate profits. That is a high price for a solid Bottom Line.
Community is about the inherent worth of human beings. Who we are is
not encompassed by our identity as a consumer. An economic system
focused on the cost of goods and services cannot be made consistent
with democracy or human rights and values. The free market will never be
made compatible with the needs of a community – the needs of mankind
and community are not reconcilable with what is considered important by
the free market model. Community needs an economic system that
understands values as well as costs. Globalism has made workers appear
to be a liability and social concerns at best a luxury. Yet, the worker is the
11

12. consumer this fact seems to have been lost on our economic and
business models.
Business values ought to reflect the importance of human and social
values. This is not possible on a global level the scale is wrong. Globalism
requires businesses focus on costs for it is in the control of costs that
profits come about, but costs are not relevant when human values are
considered as for example in a search for a lost child. Human concerns
may wake people up and at some point make them realize free market
ideology has to be put aside if they are to retain their humanity. At some
point the profit motive needs be rejected in favour of human values.
During times of trial and hardship a human face emerges from behind the
mask of even the most dedicated market apologist. The Fear Of Others is
pushed aside for a moment and the individual cost forgotten in the desire
to express our humanity. It’s a time when we do what is right in the eyes
of the community.
Debt is the measure of how much business has compromised ethical
principles in seeking money. Today Greece the birthplace of our
Democratic Freedoms may go bankrupt. The financial sector may well cut
off its access to capital. If the nation escapes bankruptcy by giving into the
demands of the Financial Free Market it will mean the end of democracy
in that country. Greece has been given the choice of accepting
international servitude to a Global Bureaucracy (represented by the IMF
and EU) or exercising its democratic freedoms at a cost of being a pariah
in the eyes of the international community. Freedom has become an
unaffordable luxury.
Why is feeding hungry people believed to create debt, why does creating
jobs for the unemployed create costs that the free market cannot justify;
why is the promotion of human rights dependent on charity and
volunteers? Why is society embedded in a system that treats human
12

13. needs as luxury items? Why is health care unaffordable for so many?
What are we living and working for if we cannot afford to live a healthy
life? Nations that cannot provide adequate health care to its citizens
routinely send money to assist in medical emergencies elsewhere. What
agenda is being pursued here? Can we not in an economic sense, walk to
the store to buy groceries; must we be Olympian athletes able to outrun
the rest of the world to put food on the table? Ought not the creation of
jobs be a natural part of any local economy? Can only volunteers and
charity be used to feed those who cannot keep up the pace set by the
Global Rat Race? What is the Global Market that it has no contingency for
feeding the starving? The struggle for profits in the melee of free
enterprise precludes human sentiment. There is no place for compassion
in the operation of business. This is supposed to be a good thing.
Competition it is said makes business efficient, efficient at what?
Rationalism is the belief mankind has inherent wisdom. Rationalists
believe all people have an understanding of value and the intrinsic ability
to choose. Humans think in terms of what we value and what we will give
up to gain what we value more. We all know right from wrong and can
discern the difference. When we act in the right way we gain what we
value at the cost of what we value less. This is rationality applied.
Rationalism is a philosophy that explains the world from a human
perspective. Rationalists believe there is logic to the world and a right and
wrong way to live if this was not true all choices would be relative and it
would not be possible to make a rational choice. In such a world the free
market would make sense. Everything could be given a price and sold to
the highest bidder. The world would be a market where all choices were
just market choices.
Rationalists believe there is a way of life that makes sense. We believe
human values make sense because they produce the results we want.
13

14. Rational Exchange believes in community values and that peace can be
achieved in an objective, measurable and universal way. We must each
choose right by choosing what is ethically valid. Ethics require we each
must pay the cost of our choices. There is a right way to do business.
There is a right way to live; there is a right way that builds community and
nurtures creativity. Rationalists believe reason is an activity that can be
measured and defined in economic terms. We each must choose what
has value. We need to choose what makes sense to us in a consistent
way. If we do not choose what has value we compromise our ability to
choose. To choose what does not have value for us cannot make sense to
an ethical human being. The only choice for an ethical human being is to
live in an ethically rational way. Rationality is best expressed in
community. The building of community is not consistent with the waste of
the resources on which communities depend. This means that to live
rationally we need to live in a community that understands human rights.
Rejecting the rights of man cannot be justified by a desire to get rich.
Human rights give us a sovereign claim to where we live and the
resources on which we are all dependent. Our choices cannot be limited
or dictated by others. Subjugation does not produce good results. Being
subjugated to the will of others even the state creates social costs and this
means a loss of what we value and this is the definition of waste. The
state of the world is an objective measure of rationality and freedom for
the state of the planet is a direct reflection of the ethical validity of our
choices. The greatest barrier to peace and human rights is a way of doing
business that does not respect the ethics on which businesses operate.
The State exists because of an outdated and indeed primitive conception of
ownership based on fear. Debt exists because of this conception of ownership.
The fear and sense of risk created by a mistrust of others led to the creation of
Double Entry Bookkeeping. Legal Rights are descended from the Divine Right of
Kings and not consistent with human rights or the ethics of community. Legal
14

15. entitlements conflict with ethical rights for ultimately they devalue labour and our
ability to build community. This incompatibility cannot be resolved.
The only way for governments to reduce social costs is by creating other Social
Costs. For example increasing unemployment lowers inflation; debt is countered
with business retrenchment and economic downturns with lowered interest rates.
Governments can only change the mix of Social Costs they cannot eliminate
them. This process of implementing social programs and changing the mix of
social costs increases the need for bureaucracy and this increases the social
costs communities must pay.
Capitalism and Socialism are different pools of social costs promoting two paths
defined by two forms of entitlement, and a fear that is two faced. Socialist
tyranny and free markets are two ends or extremes of the same political
spectrum. There is no separation between Left and Right the division is an legal
fiction and illusion.
The sort of government one gets depends on the mix of Social Costs we pay.
The kind of Social Costs we pay depends on the kind of entitlements the
community subsidizes. Peace is not possible so long as the world is burdened
with Social Costs. A Globalist Democracy is not possible there is only global
tyranny. Democracy is always local and based on community. Cooperation does
not happen in an environment of economic dependency or moral degeneracy.
The moral ought cannot be fully realized in a society that compromises human
rights because of an erroneous conception of ownership.
This book is explains a new way to think about ethics. Morality is ultimately about
having the capacity to make rational economic choices. Morality requires we
eliminate conflicts and social division. Rationality requires an end to the fear that
divides us from one another. Rationality is about ending a way of thinking that
consistently values profits over people and property rights over human rights and
things over souls. Ethical Rationalists need to reaffirm the value of place and
people and the moral ought in a new way to do business. Ethical Communities
15

16. must adopt a new form of ownership not based on legal entitlements and the
concept of Legal Rights. The Law cannot create ethical ownership because The
Law is ultimately based on fear and the presence of a perceived risk. The State
cannot replace reason or eliminate waste or risk. The Law cannot build
community on which a reasonable ethics is based. Property Rights are not a
sustainable platform on which to build or sustain the ethics of a community.
5th edition July 2015
16

17. ISBN 978-0-9812129-1-3
Published by Rational Exchange Publishing
© All rights reserved March 2014
© All Rights Reserved November 2015
17

18. Contents:
Preface......................................................................................................................3
Preamble: ..............................................................................................................20
Introduction:...........................................................................................................23
A Short History..................................................................................................27
Need For Change...............................................................................................39
Rebranding exercise is misguided and undemocratic Huntsville Forester; April
04, 2012 Bruce C. Kruger is the franchisee of Swiss Chalet/Harvey’s and the owner of
Kruger’s Muskoka River B&B. He can be reached at kruger@muskoka.com or 705-706-
2834....................................................................................................................................44
Price...................................................................................................................54
Debt....................................................................................................................60
Environmentalism..................................................................................................71
Environmentalism And The Market..................................................................73
Democracy.............................................................................................................75
Libertarians..........................................................................................................104
Social Goods....................................................................................................106
Private Enterprise.............................................................................................130
The Market.......................................................................................................139
Social Capital.......................................................................................................144
Rationality And Morality.................................................................................161
Ends And Means..............................................................................................164
Risk......................................................................................................................167
Control of the money supply:..........................................................................171
Bonds...............................................................................................................178
Vanguards:.......................................................................................................179
Economy..............................................................................................................182
Efficiency.........................................................................................................189
Alternative Currencies.....................................................................................190
Communism ........................................................................................................192
Money..................................................................................................................212
Management.........................................................................................................217
Choices.............................................................................................................220
Local Economics .................................................................................................226
Moral Living........................................................................................................233
Democratization...................................................................................................239
Government Services.......................................................................................253
Dominion.............................................................................................................263
Tragedy Of The Commons..............................................................................269
Legitimacy ..........................................................................................................278
Motivation............................................................................................................288
Friedman on Freedom..........................................................................................296
Adam Smith.........................................................................................................300
Freedom and Order..............................................................................................304
Cultural Relativity............................................................................................315
Absolute Reason..................................................................................................320
18

19. Money And Gold.............................................................................................324
Real And Nominal Costs.................................................................................332
Is King Canute misunderstood? By Kathryn Westcott BBC News Magazine26
May 2011 ........................................................................................................................333
The Bible..........................................................................................................339
Debt..................................................................................................................340
Fascism................................................................................................................347
Positive And Negative Morality......................................................................350
Capitalism............................................................................................................356
Freedom Of Choice..........................................................................................363
An Ethical Peace..................................................................................................364
Barter Updated.................................................................................................366
Social Costs......................................................................................................369
Justice ..................................................................................................................373
Labour Rights...................................................................................................378
The Labour Theory Of Value..................................................................380
Appendix..............................................................................................................392
Consolidating The Community Accounts........................................................393
Preferred Shares.......................................................................................399
Scenario One....................................................................................................401
Starting An Exchange......................................................................................403
Investing.......................................................................................................409
Making Money.........................................................................................410
Participation.................................................................................................415
Scenario Two...............................................................................................416
Bookkeeping................................................................................................422
Efficiency.....................................................................................................423
Debt As Equity.............................................................................................429
Prares............................................................................................................432
The 2008 Crash............................................................................................435
The Freedom/Control Schematic.....................................................................442
The Bracebridge Exchange..............................................................................443
Conclusion...................................................................................................446
19

20. Preamble:
Economic development comes hard to many places. Bracebridge, a small town in
Muskoka has been hard hit by outsourcing, offshore manufactures and consolidation. In
an effort to revive local business a study ‘The Art Of Muskoka Living’ was
commissioned. It sought to provide Bracebridge a New Brand – a new image.
From the perspective of private capital Bracebridge is a town with limited options. The
BBLT saw tourism, as the sector in which an investor would most likely invest. The
Triumvirate of taxation, profiteering and debt has pushed Bracebridge and many other
small towns down an economic cul de sac in which there seems to many only one way
out. We have become reliant on The State and the economics it supports but this
system has not been kind to small towns.
Bracebridge was once a major manufacturing centre and remains the District Capital.
Big Box Stores carrying a cornucopia of cheap goods and discardable merchandise
shipped in from distant sources now offer part time low paying service sector, seasonal
jobs, which grow and shrink along with the wax and wane of the tourist trade.
The ecology of the natural world knows nothing about leveraging capital or compound
interest or debt and risk. Liabilities are the invention and convention of a competition-
obsessed market. A fox does not incur a debt when it hunts a rabbit. A deer does not
create liabilities when it forages. Investment is not a zero sum game. Goods produced in
Bracebridge do not need to compete with those produced elsewhere nor must our
artisans compete with unskilled cheaper labour based overseas. The industrial might of
China and the attractiveness of low wage havens does not mean Bracebridge must
abandon the ability to feed and clothe itself. Our economic development need not reflect
the costs and needs of the Canadian banking establishment or the regulatory controls
that encourage global investment.
20

21. The experts and the pundits and those with the wherewithal to leverage economic
means into political policy want to see Bracebridge become a “premiere tourist
destination”. Local response has been less than enthusiastic. Most residents do not
want their income tied to the whims of a visiting clientele.
If economic development is about the costs and needs of the global financial system,
the reason for development seems to have been lost. Some may look with chagrin at
the rise in NIMBYism; at the repetitious chants of naïve protesters but there is a
message in the waving placards; communities believe in the primacy of human rights.
Where we live means something more to us than a place to invest surplus capital.
Economic development means more than responding to global trends, life is about
building a place to live and a home in which our children will raise their families free of
the constraints of the market and of globally sensitive politicians. Economic
Development is about human values not what suits an abstraction called the free
market.
Economic development is about the kind of life our economic activity produces and the
quality of life our money buys. Economic development is not about how efficient our
industries are compared to international conglomerates. What matters is what is being
produced and why. Money itself has no value if the cost of borrowing dictates the
choices we have. The demands of investors ought not to have veto power over the
needs and priorities of the town.
Life is not about competing for investment dollars it is about what has value for us. No
matter how much money an investment generates if it destroys what is important to us
the investment made no sense. Production can move elsewhere lives are less easily
uprooted.
If the Rebranding Initiative is about rebuilding the town then the Initiative ought to have
looked at what is important to those who make up the town, the residents. Bracebridge
is its people and their values, not a pool of assets to be exploited then abandoned.
If the Rebranding Initiative requires us to embroil our children and ourselves in a global
free-for-all where cost governs the direction of development and profitability determines
if we shall eat or starve we are better off if Chartered Bank debt goes elsewhere. If
21

22. tourism makes us dependent on a market that is unstable, unmanageable and prone to
periodic collapse then better global investors pass us by.
It is not the financial sector or the free market and not an invisible hand that ought to
dictate what has value to us. Mankind ought not be enslaved to a monetary system run
by bankers or a business system designed solely to justify unfettered greed. Human
beings have always striven towards economic and political freedom and have found its
greatest expression in entrepreneurial activity that is work done to create community.
Human beings have an innate capacity to be entrepreneurs. No one is wired to develop
international organizations. Working together in small groups for the benefit of the group
happens without supervision with lower costs and risks. All we need to do is find a way
to eliminate the fear that divides and creates a need for The Law. People can work
together when they learn to trust one another. We can build a real and reason based
community. It is possible to create a local sustainable community if we focus on building
an ethical community.
“The political problem of mankind is to combine three things: economic efficiency, social
justice and individual liberty.”
― John Maynard Keynes
22

23. Introduction:
Bracebridge is not a natural structure birthed along with the granite
outcrops that made it famous. It is a human fabrication, a product of human
hands and minds focused on accumulating material wealth. The men who built
factories and paid starvation wages then shut up the doors and moved away
when times were no longer good were not evil. They were merely acting in their
own selfish best interests according to the best thinking of the time. They were
practical men not moral philosophers. They were guided by the rules of business.
If anything they were accidents of history men of their time not visionaries and
they knew little about community and less about the inherent problems of the free
market.
Capitalism has been the philosophy of business throughout the eons and
that capital markets are inherently flawed. This work will also demonstrate that
Globalism is a continuation and outgrowth of free market economics but
combines both Left and Right components.
The experts and professionals who generated the Rebranding Initiative
were economists and business leaders trained to think in terms of the free
market and property rights and were in this sense but one step away from their
Right thinking Stone Age ancestor. The result of their work was a monstrosity of
groupthink.
1
This work will look at the Rebranding Initiative and at the larger issue of
economic development as a problem of one group trying to download costs onto
society and future generations. In this case the Right attempted to shift costs
onto the community. In a larger context one side of a duality tries to achieve
peace by pushing the costs of the peace onto the opposition.
This work argues the free market always produces Social Costs. The free
market lowers costs by shifting them onto local markets meaning entrepreneurs.
Entrepreneurism is local and small scale and focused on building community.
Entrepreneurs create fewer social costs simply because of the scale and location
1
“Bracebridge: The Learning Capital of Muskoka for the Arts, Cottage Country Cuisine and
Muskoka Lifestyle”
23

24. of their operations but this puts them at a disadvantage compared with those who
operate through the global free market.
Free markets require the support of a bureaucracy and bureaucracies
generate no income. By definition bureaucracy is a source of social costs. Rising
social costs are responsible for the impoverished state of our communities. The
social costs of the Left/Right divide do not just include debt, unemployment and
poverty but the cost of war, empires and the decline of civilization. Social costs
are the costs of no one wishing to take responsibility for peace.
The free market is an irresolvable paradox that is patched up by the
inefficient workings of the state. Together they create a system that cannot be
fixed. The free market is the economic equivalent of a Perpetual Motion Machine.
It has to get its energy elsewhere or stop working. Bureaucracy is similarly
parasitic. Both feed off the economic energy of local entrepreneurs.
Adam Smith more than most realized the free market he helped conceive
was an illusion and the invisible hand simply an abstraction. Yet, the concept of
the free market remains central to the philosophy of economists. Free market
ideology makes the most abhorrent events seem almost natural because they
are the result of an invisible hand. Unemployment is packaged as a natural
phenomenon. However it is a wilful choice made by wilful persons. Pointing to
the Invisible Hand makes poverty seem less like a deliberate choice of deliberate
men. There is less cause to rebel if social costs are considered to be the
implacable workings of natural economic law rather than the deliberate act of
hard-nosed business people implementing a specific agenda for Right-Wing
ends. The ideology of the market makes protests against job losses appear as
futile as Don Quixote battling the wind.
Yet the etherealness of the free market creates as many problems as it
solves. It diverts attention from the real issue and sanctifies anything done in its
name but those who would will it into existence look increasingly like the Emperor
With No Clothes. Without government regulation (the antithesis of the free
market) the Invisible Hand would blow away as the conceptual vapour it is.
24

25. Libertarians dislike regulation because they do not want restriction put on
business activity but they cannot figure out how to eliminate government
interference without also removing the regulatory apparatus that allows free
enterprise to function. Without government support the free market is not even a
myth. The free market needs the force of arms on its side if capitalists are to be
free to amass capital.
To encourage delayed gratification and the accumulation of capital
governments need to reduce the risk that accumulated capital will be lost. For
Far Right capital this means governments ought to remove as much regulatory
controls on how capital is deployed and accumulated as is feasible. But at the
same time governments must protect private property from depredation by the
masses and unruly elements.
The Right sees governments as a tool of the Left but their fear of the Left
compels them to demand the protection of government.
The demand for governments to reduce their oversight on the market is
self-defeating. Without government regulatory powers there is no market and
there are no investments. It is government that make markets exist.
Governments define the market and give it shape and substance. Eliminate all
legislation and the free market wafts away into oblivion.
But this creates a dilemma for the market. Governments can at best only
reduce risk within their boarders; reducing global risk requires a global regulatory
body. This resurrects the original dilemma of Right and Left who hate each other
but cannot live without one another. The free market cannot exist without the
regulatory framework created by national governments, but there is no free
market at the international level except insofar as national governments create
an international framework for it to exist within.
Ownership is simply a legal fiction invented by governments. International
ownership requires a global agent to maintain the global fiction of global
ownership. Capitalism is a house of cards maintained by the very agent free
market proponents despise the most, bureaucrats.
25

26. Free enterprise cannot go to nature and find a precedent. The free market
is an invention of powerful men and given existence by their collective will in a
structure called government. The free market is an abstraction and legal
fabrication. It people with money and property using every device and tactic they
can to gain market share. If the Right were to wake up and realize the free
market is an abstraction and free enterprise a legal fabrication they would need
to explain why poverty exists and so many people have no jobs as it is they can
shrug off these things as due to the workings of the market.
The world has come to believe that the only way a region can develop is
to further embed itself into the Global Economy. Deregulation creates an
economic cocoon in which investors are not held accountable for the collateral
damage their investments produce locally. Deregulation is tantamount to
government agreement that the local community (the local economy) will cover
the costs created by Globalization. This is the reality of the free market; it is a
conscious decision by governments to allow costs to be downloaded onto local
markets. Deregulation is akin to the State putting its citizens in bondage to free
enterprise. Deregulation is a key element in the Globalist Agenda. Why are
business values more important than human values? Oughtn’t we all to pay costs
we create? It seems the morally right thing to do and the very least that ought to
be done. At the same time we ought to be protected from costs created by
someone else. But to prevent costs from being imposed onto society by the
market conscious and rational and indeed moral oversight needs to be present. If
businesses are not accountable for they costs they create they will prosper at the
global level but local communities will not do well.
What is society but a system of accountability that makes or ought to
make people accountable to each other? Without this accountability society
descends into economic and political chaos the anarchy that is unfettered
competition and the anarchy that makes capital accumulation impossible without
armed intervention and the rise of fascism.
The free market cannot exist in a free market environment, because the
ensuing chaos would make business and private ownership impossible.
26

27. The Rebranding Initiative was Globalism applied to one local town. The
town’s assets were looked at from the perspective of what we had that was
valuable within the context of the Global Economy. The Rebranding Initiative
assumed the town had to compete globally if it was to be economically
successful. The study considered hard assets, the town’s tangible assets.
Intangibles such as good will are difficult to analyze. The value of the place and
the density of the town’s social networks important in a local context are
unimportant Globally. Good will cannot be exported.
The Initiative was then a well-intentioned effort by well-intentioned men
and woman to fit the town into the Global Economy – as system of entitlements.
It was an attempt to rationalize our tangible assets and make the town globally
competitive. Bracebridge to compete needs so went the thinking an exportable
product something people can come in and take away. Citizens were expected to
be or become part of the town’s tangible assets and the delivery vehicle by which
a product called “Muskoka Living” could be packaged and distributed to the
Global Consumer. If anything the initiative became not a blueprint for the future
but a demonstration of the bankruptcy of free market economics.
A Short History
The beauty of Muskoka is famous the world over but scenery does not
grow an economy. Despite its popularity as a tourist destination – or perhaps
because of it – Muskoka is in 2012 an economically depressed area.
The cod fishery brought the first Europeans offshore. The need to dry their
catch required the salt-poor north Europeans to land and set up camp. The south
Europeans had access to cheap salt and remained to their detriment, offshore.
The on-shore camps with their steel pots, knives and cotton goods attracted
natives who began to trade furs with the new arrivals. The dangers and
competitiveness of fishing the Grand Banks was soon phased out, as trade for
native furs became an increasingly lucrative option. But the north European
traders, the French and British, were soon forced to leave the comfort of their
shore-based camps and push further inland. The local supplies of furs had been
27

28. consumed by the growing demand for the trinkets bought by the white traders.
Eventually the search for more and better grades of fur brought them into the
region now called Muskoka.
By 1830 the demand had peaked and the volume of furs traded had
begun to decline. By 1870 furs were no longer of economic significance. The
once ubiquitous beaver, over-harvested and nearly driven to extinction by the
introduction of modern firearms, was being replaced. European men had come to
prefer the lighter and cooler silk hat. The loss of the market for felted beaver pelts
is the earliest recorded case of a ‘Made in Canada’ product being replaced by a
cheaper version made in China.
Napoleon’s Blockade in 1806 hindered Britain’s access to European
sources of timber. Subsequently, Britain’s demand for Canadian timber
increased. Logging was the regions major industry by 1830. Lumber licences
began to be issued in 1866 partly to increase settlement in Muskoka. Logging
brought people to the area and the cleared land could be settled and used for
agriculture.
The Muskoka Colonization Road was begun in 1858. Surfaced by logs, it
linked Washago, which at that time was the northern most settlement, to the
interior of Muskoka. Settlement in Muskoka began soon after.
The earliest resident at North Falls was John Beal in 1859 and the first
tourists visited a year later, in 1860. Bracebridge was reached by this corduroy
road in 1861. By1862 a stagecoach was running along the route. The building of
Rosseau House in 1870 was the first major attempt to encourage tourism.
Windemere House was built in 1869 to house visiting sportsmen. By 1890 it
could accommodate 200 guests at $1.50 a day. By the 1880s these and other
developments had made tourism into a major source of income.
The Free Grants and Homesteading Act of 1868 promoted both
homesteading and logging. Free land was provided to those committed to
clearing 8-15 acres of land and build a cabin.
By 1882, the best of the hardwood had been logged. The area was still
harvested for white oak, black and white ash, red pine, spruce, tamarack and
28

29. hemlock. By 1900 logging reached its peak in Muskoka and by 1920 Muskoka
had been stripped of the best trees. At its peak the mill at Rousseau point turned
out 1.5 million board feet of lumber per annum but was closed by 1930.
Settlers soon discovered Muskoka’s heavy clay and Precambrian rock
was not suitable for farming. The difficult conditions at first discouraged
settlement but the beauty of the area continued to encourage visitors. Farmers
began to convert their struggling farms into boarding houses.
Muskoka grew from 190 in 1860 to 743 in 1862, and then rapidly to over
5,000 in 1871 and over 20,000 by 1901. The increase at least partially due to
fanciful descriptions of its investment potential: “The proportion of good land is
said to be sixty per cent of the whole; the soil for the most part being a sandy
loam with clay subsoil; and in extensive tracts lying back of the lakes, generally
free from stone. The root crops are unusually large; … Potatoes yield some three
hundred bushels to the acre, and turnips from six to nine hundred bushels. Oats,
rye, barley, and Indian corn are the chief cereals.”
2
Leather tanning developed from but did not outlast, the logging boom.
Tannin obtained from the bark of hemlock trees, was purchased from the settlers
and barged to riverside tanneries. Tanning was established in Bracebridge in
1877. By the 1930’s the last tannery had closed.
The railroad arrived in Muskoka in 1875 mostly to serve the needs of the
logging companies. The Canadian National Line started in Gravenhurst, reached
Bracebridge in 1885 and Huntsville in 1886. Where the tracks stopped at the
water’s edge steamships took over to connect the businesses and hamlets to the
west and north.
The Canadian Pacific Railroad constructed a line through west Muskoka in
1906.
The first steamship to sail the lakes of Muskoka was the Wenonah. Built in
1886 by Alexander Cockburn. He convinced the provincial government to build a
2
Grant, G.M. ed.1882. Picturesque Canada – The Country As It Is And Was.
Belden Bros, Toronto
29

30. lock at Port Carling and a canal at Port Sanfield. The Muskoka Navigation
Company became the largest fleet of its kind in Canada. ‘By 1900, 10 passenger
and freight steamships plied the Huntsville chain of lakes. On the Muskoka
Lakes, a steamship fleet operated with about 15 ships in service at the peak of
business. A unique narrow gauge railroad traversed the steep divide between
Peninsula Lake and Lake of Bays, connecting the steamship service of both lake
communities.’
3
The Muskoka Navigation Company morphed into the Muskoka Lakes
Navigation and Hotel Company Limited when in 1903 the Royal Muskoka Hotel
was built. By the 40-50’s business was in decline. When the hotel burned down
in 1958 the company dissolved and steamship travel came to an end. The
Muskoka Heritage Society revived the name in 1891 when it began to operate
the Segwin.
North Falls prevented steamships from going further up the Muskoka
River and served as a natural source of power for mill owners. In 1872 Henry
Bird harnessed the power of the falls and opened the first woollen mill. In 1894
Bracebridge became the first municipality to operate its own hydroelectric
generating station. In 2004, Bracebridge Generation upgraded the High Falls
plant to increase generation capacity and in 2010 $21 million in upgrades were
made at Wilson's Falls and Bracebridge Falls.
An independent bank was set up in the 1880s. Robbed in 1897 after 6
years in operation the financial burdens following the act forced its closure the
following year (1898). Its proprietor, Alfred Hunt had come to Bracebridge in
1871 and built up a retail business the operation of which had taken him into
banking.
The coming of the car and paved roads brought an end to steamship
travel. But the arrival of reliable personal transport was a boon to the tourism for
which Muskoka remains famous.
Between 1958 and 1970 several manufacturers selected Bracebridge as a
place to produce goods. These companies included Corning Glass, Alcan Wire
3
http://www.muskokaheritage.org/mwc/files/2012/09/MuskokaBiodiversity-September2012.pdf
30

31. and Cable, Alcan Foil and Canadian Motorlamps. It is reported that these
companies were offered tax-free incentives through the Federal Government.
In the mid-80's Alcan Foil closed their plant on Keith Road. The building is
now the home of the Bracebridge division of Fanotech. Alcan Wire and Cable
closed the plant in 2002 and the building now houses a number of businesses
including Gravenhurst Plastics, Muskoka Brewery and the Habitat for Humanity
Re-store. The Dura Automotive business that operated in the original Canadian
Motorlamps building ceased operations in 2007. The building is now the home of
Premiere Office and Storage Solutions with car rental firms and a number of
small professional offices occupying space.
The Bird Mill Mews, which was one of the storage buildings used by Birds
Mill was renovated in the mid-1990s and now houses Riverwalk Restaurant, the
town's Visitor Information Centre and the Chamber of Commerce office.
In a free market businesses start up and close down all the time. This is
natural to the economics of the Right but for the community in which the closure
takes place, for the worker’s who lose their jobs and for the owner forced into
bankruptcy, the event can be devastating.
Tourism has created an economy in Muskoka that is seasonal and
dependent on the prosperity of Ontario, the U.S. and to some extent the world.
Economic downturns cascade into Muskoka more than other municipalities with
broader based economies. As disposable income decreases tourists increasingly
choose to stay home. Without the income generated by tourism stores in
Muskoka close and do not always open again. The Federal government provides
assistance to corporations to set up shop in Muskoka but a region dependent on
subsidies and the good graces of international corporations remains as exposed
to economic shock as when dependent on tourists. Economic conditions
elsewhere prompt corporations to close their doors here. Reduced demand for
auto parts in the States resulted in the bankruptcy of Dura Automotive. Built in
1957 by Canadian Motolamps the plant was expanded to 100,000 sq feet in
1996, was purchased by Dura in 1999 and closed in 2007.
31

32. A people cannot depend on foreign or distant regions and develop a
resilient economy. Sustainability is built by and for communities. Britain, by virtue
of its navy and Canadian colony was able to weather Napoleon’s barricade.
Canada is relatively self-sufficient in oil but tied itself to the world price of oil. By
so doing it exposed itself to the oil shocks of 1973 and the 1980’s
4
. Muskoka tied
to the vagaries of tourism is even more impacted by the price of oil than other
regions, a fact neither the advocates for the Knowledge Network or the
supporters of Santa’s Village seem to appreciate.
Rebranding Bracebridge has been an issue and topic of discussion for
some years now. However, arguments about the kind of town Bracebridge
should be have always existed. In 1895 Bracebridge issued a bylaw prohibiting
the riding of bicycles on sidewalks and in the same year determined it was no
longer in the public interest to have cows running free. These laws did not
dramatically impact most residents but they changed the character of
Bracebridge. Priority was given to shoppers and pedestrians. Cows and people
who choose to ride bicycles were made less welcome. Many believe we need to
make the town more attractive to visitors. But change always favours some
established elements of a community over others.
The advent of steamships, rail travel and later the car must have been a
welcome innovation for many but these inventions dislocated the lives of many
others. They made travel to Muskoka less onerous but at the expense of those
who had invested in earlier systems. Even at this late date (2012) the widening of
Highway 11 has benefited travellers along the North/South corridor but the
reduction in access points has made reaching some businesses difficult. The
road widening was a decision made provincially. It represents the government’s
commitment to make the North more accessible. Not everyone shares this goal
but many do.
Increasing the number of lanes on Highway 11 also betrays a deep and
unresolved conflict in our long-term planning. Even as the price of oil climbs, real
4
In 2008 the cost of a barrel of Brent crude soared to $147, enfeebling global growth even before
the financial crisis killed it. A year ago (2011) supply disruptions from Libya sent the price to $127, …
http://www.economist.com/node/21549941
32

33. wages decrease and the cost of living makes it harder to afford a vehicle to get
one to work, never mind afford weekend trips to the cottage; even as the cries to
conserve energy, reduce pollution and save oil grow louder we continue to widen
roads and make travel by car easier.
At the same time bus and rail travel to and through Bracebridge is reduced
or eliminated altogether.
In 1971, a chapter of Bracebridge's history ended when the train station was torn down.
For more than 20 years - between the early '80s and 2004 - trains continued to travel
between Toronto and Cochrane, but they no longer stopped in Bracebridge.
On the eve of Ontario Northland's 100th anniversary of passenger rail service in 2005,
the company decided the train should stop again in this historic area. On Aug. 9, 2004,
the Northlander stopped at a temporary train station in Bracebridge. The station, built by
town council volunteers, sits close to the site of the original stop.
5
On average each ticket requires a $400 subsidy from the Federal
government. Funding for the Northlander train was $28 million in 2003-4 but
increased to $103 million 2012. 320,000 rides are taken yearly.
6
In 2012 passenger rail service to Bracebridge ended once again.
It is possible that the next change to the future of Bracebridge is being
conceived of ten thousand miles away. Events in which we have no interest and
as yet no awareness may yet impact us, governments make and change
programs; corporations make and change investment decisions; people change
their travel destinations; communities rise and fall as a consequence of choices
made elsewhere.
The ghost towns of Ontario were created by a seemingly insatiable
demand for newsprint. The demand for soft wood came primarily from American
paper mills. Before that logging had focused on providing masts and squared
timber for Her Majesty’s ships. The growing demand for pulpwood increased the
5
Cathy Thom http://www.tourismbracebridge.com/seasons/heritage.php
6
What’s Up Muskoka March 28, 2012 Chris Occhiuzzi & Sandy Lockhart
33

34. number and size of mills in the region. Demand for lumber and pulp and the glut
of mills built as a result caused the exhaustion of what was theoretically a
renewable resource. As cheap sources of lumber declined prices rose
encouraging a more determined reaping until there was no more trees within
reach of the mills. If prices had remained low perhaps fewer trees would have
been cut and the mills could have remained in operation and more towns would
have survived. As it was without sufficient trees to feed their insatiable appetite
the mills closed. When the business on which their existence depended expired
the towns had no reason to exist.
The investment was lost and the social equity built up was left to rot where
it stood a testament to greed and short sightedness. It also bespeaks of
communities that had no sense of themselves or their future except as agents of
a distant demand for timber. Lumbering has returned once more to the north
woods but the economics of the business makes it feasible to truck logs to giant
mills often many miles from where the logging takes place.
Will Muskoka die if the price of oil increases to the level where tourists can
no longer afford to travel the rebuilt North/South corridor? What will sustain our
communities if logs can no longer be moved economically to the mills and from
the mills to the users of dimensional lumber and pulp wood? Will we who live in
Muskoka be forced to move en masse to Toronto and other major metropolitan
areas? Already our young people move away because the choices available to
them in their hometowns are not attractive.
Tourism is not able to absorb economic shocks and is more likely to
exacerbate them. Any town dependent on a single industry is victimized by
anything that sends shocks through the industry. When the rifled barrel was
invented in early 1800’s it spelled disaster for beaver colonies and non-
industrialized peoples alike, but European and North American nations rapidly
adopted the new technology. The invention of steam power ‘Far from “striking a
fatal blow at the naval supremacy of the Empire” as some feared … allowed
Britain to exercise power effectively at unprecedented distances.’
7
A well-
7
The Cash Nexus, Niall Ferguson Basic Books 2001 p39
34

35. developed economy can absorb shocks that overwhelm communities based on a
single industry. The collapse of steel in the U.S. turned the Midwest States into
what is known as the Rust Belt.
The Americans, as well suited for arms production as they are, have also
become a victim of their own success. World peace could spell disaster for the
U.S. economy. The elimination of the arms trade would usher in years of forced
restructuring. But what does the continued reliance of the U.S. on arms sales
mean to the world?
The Allies used ‘Shock and Awe’ in Desert Storm to overwhelm the
enemy. France, Poland and other European nations prepared to fight a
conventional war – the war they had previously fought on horseback. The
technical advances of the German Wehrmacht overwhelmed them. The Germans
had a different vision of war. Hydrogen explosions energize stellar bodies and
generate unimaginable amounts of power but the mass that forms the basis of
the atomic reaction also contains the force of the reaction. The earth absorbs the
energy that reaches it as sunlight and uses it to power all life on earth. When St
Helens exploded in 1980 large canyons were carved in the sides of the mountain
and large areas of forest were destroyed. Ultimately this devastation is what
served to absorb, localize and contain the blast.
Economic shocks can stem from simple and from the perspective of when
and where they originate rational self-interest. It seemed to make sense to exploit
the cod fisheries, the Canadian Rodent, the abundant stores of pulp wood timber
and our abundant supplies of oil but perhaps a more restrained and less
exploitive use would have made even more sense. Years of logging the best
timber allowed sub-standard species and varieties to proliferate. Over-fishing the
Grand Banks has rendered what was once unequalled abundance into an
ecology so shocked it may never recover. How much tourism can Bracebridge
specifically and Muskoka generally absorb before it ruins the very things that
attract people to the area?
The Tragedy of the Commons is a story concerning a common piece of
land, a commons, on which the villagers graze their cattle. Its carrying capacity
35

36. permitted each villager to graze one animal. However, one villager adds another
animal to the herd so he has two cows. The land becomes stressed by the
addition of the one animal. None of the animals fare as well as before but the
villager with two cows still gets double the output of the villagers with just one
cow. Market theory says that if the land had been privately owned the carrying
capacity of the land would not have been stressed.
The history of the fur trade and logging in Muskoka and the existence of
deserts and dust bowls the world over demonstrates that market mechanisms do
not prevent the exploitation of resources. The market allows short-term gain even
at the expense of long-term loss. It benefited logging companies to exploit the
old-growth forest and move on. It was cheaper to exploit other areas than pay the
costs of replanting trees. It was more profitable for Alcan to close its plants in
Bracebridge than to keep them open. In economic terms the company
experienced a loss but for Bracebridge the loss is harder to absorb or recover
from.
Alcan had a legal right to negatively impact Muskoka by closing down its
business here. The large number of people to whom it paid wages represented a
liability it no longer wish to carry. However, the liability did not disappear when
Alcan divested itself of this responsibility. The cost was transferred to
Bracebridge and to society.
This same scenario is played out the world over. In the Rust Belt (the mid-
western states) cheaper Japanese imports and a recalcitrant labour force
destroyed the steel industry. It is often cheaper for a company to cut its losses
and close down than to restructure, retool and reinvent itself.
Big is not always better. Two teenagers working out of their respective
parents home eclipsed IBM. Bill Gates operating system fed off but eventually
outgrew IBM. Dell in 1984, the brainchild of a 19 year old with $1,000 of capital
working in his parent’s garage, became in 13 years the worlds leading provider of
PCs. IBM eventually sold its operations to a Chinese company.
36

37. Of the 100 largest companies in the U.S. in 1917, 61 had ceased to exist;
only 18 were still in the top 100 and of these only 2 outperformed the market as
of 1987.
8
If Dura Automotive Systems could not justify keeping its doors open does
this mean the only or best option was to close the plant and fire 400 workers (258
in 2006, 175 Oct 2007)? Muskoka estimated that the company was the source of
some $60 millions of dollars of economic activity per year.
9
Figures released by
the Town of Bracebridge indicate that in 2007, 245 people were laid off and 30
found work. In Ontario 160,000 high paying manufacturing jobs have been lost
since 2002 – 8. High-energy costs and the climbing value of the dollar are listed
as causes. These are only valid reasons when we consider the problem from the
perspective of private enterprise. It makes sense for a corporation to shut up
doors and move elsewhere when a commons is no longer needed to feed its cow
or when the grass becomes less plentiful in one location compared to another.
This is less true of individuals and not true at all of communities. The commons is
where we live.
People must still eat and be housed when inflation is high and regardless
of the cost of energy. If energy costs have doubled and the dollar has lost half its
value from a year ago do we give up trying to create jobs? People must still live
no matter what macroeconomic indicators say or is life a privilege to be
possessed only by those who have the means to meet the current price? Does
the history of Bracebridge not suggest that self-interest does not always serve
the public interest? That the perspective of business does not always encompass
the perspective of the rest of us or in other words what is good for GM is not
always the same as what is good for the nation.
If Bracebridge had owned Dura Automotive perhaps the plant would not
have closed down. Council might have decided to have shoes made at the plant.
These shoes of course might have been of poor quality or too expensive to sell –
council not knowing anything about the shoe business. Shoes might have been
8
The Origin Of Wealth, Eric D. Beinhocker. Harvard Business School Press, 2006 p 330
9
Figures from Cottage Country Now.
http://media.cottagecountrynow.ca/special/huntsville/data/supplements/7/page03.pdf
37

38. produced that no one wanted and this might have happened at the expense of
the taxpayer. The changeover from making automotive seats to shoes may have
and probably would have resulted in higher property taxes and losses all around.
Nationalization centralizes power in the hands of a few people but in the end this
serves only to take power from a few private hands to put it into a few
bureaucratic hands and the bureaucracy cannot be relied on to make better
choices than those made by private individuals.
If bureaucrats cannot be relied on to make the best use of our resources,
private owners make mistakes similar to those made by Communists. The effects
however are usually on a more limited scale. Losing the number of jobs
Bracebridge has lost recently reduces the amount spent on products and
services. This may cause other businesses to close. Fields, in business since
1948, closed its Bracebridge store in 2012. This may not have been a direct
result of the Dura closure but it suggests Bracebridge is not the only town that
does not or cannot support its local businesses.
Upon hearing that the last independent bookseller in Bracebridge was
closing its doors a bookstore owner writes: ‘What I think is interesting is that both
Huntsville and Bracebridge are much bigger towns than Parry Sound and yet
they could not support their independent bookstores. Those towns must have the
same sort of summer business from tourists and summer residents that we have
here. What they must not have is the customers I have – Parry Sounders!’
10
Many towns including Bracebridge have a buy local program. How well
these programs work is hard to tell. People on a limited income buy the cheaper
product regardless of country of origin. Only when the prices are comparable do
other factors come into play.
The buy local program also requires local business to participate. If local
businesses do not invest in the local economy the buy local program serves no
purpose. A dynamic economy is a closed economy in the sense that the planet is
a closed biosphere, inputs equal outputs. The output of one sector or organism
10
http://www.cottagecountrynow.ca/opinion/article/1531505--a-sign-of-the-times-not-in-parry-
sound Charlotte Stein
38

39. creates inputs for some other sector or creature. In reality accounts always tend
towards zero.
Merchants may source foreign suppliers for goods to sell. Many stores
import goods that could be made in Bracebridge. Foreign made goods are
usually cheaper than those made in Canada, let alone Muskoka. The consumer
is trying to save money and the merchant is trying to please the consumer. But if
importing goods means a loss of local jobs and higher taxes how much money is
saved?
If a store opens in Bracebridge that sells imported goods cheaper than
can be made in Canada the residents of Bracebridge may benefit especially if
none of these products can be produced in Bracebridge. But if this scenario is
played out all over Ontario and employment declines Ontarians may not be able
to take holidays in Muskoka, then Bracebridge will be adversely affected.
Need For Change
Change can be gradual or cataclysmic. Most of us prefer change to be
gradual and positive restricted to a few select niches. Most of us want to get
richer, healthier and happier. We want the environment to become more pleasant
and clean; we would like shops to carry more of the stuff we like at prices we can
pay. We do not like change when it upsets our routine. We object to potholes and
the hindrance caused by their repair.
Most of us are against large housing developments and mega projects
because they have potentially large impacts. The world needs change but more
importantly it needs a way to manage the change.
Increased tourism is change that is unlikely to be managed. Roads will be
clogged and the pace frantic, some low-paying and seasonal jobs will be created
but the economy of Bracebridge will not change in its fundamentals. Indeed the
accent on seasonal employment only makes it harder for businesses that offer
full time jobs to find and retain workers. The fluctuations in demand created by
the extensive seasonal employment will create fluctuations in their ability to
employ people full time.
39

40. Cataclysms create sudden change. A flood is a cataclysm that leaves
behind a lot of destruction. A tide is a flood of a more ordered kind. Because
tides are predictable they create less damage. Electricity has been harvested
from the ebb and flow of tides because they are a predictable event and source
of power.
Explosions also create disorder but the explosions that happen within an
internal combustion engine are contained and able to produce work. Technology
has created engines that make these explosions produce a predictable event.
Explosions that demolish buildings make way for new structures to emerge. They
are destructive but still predictable in their destructiveness and can be harnessed
to creative ends. Cataclysms always release large amounts of energy. Untapped
this energy creates disorder but cataclysms may also usher in a new and higher
order.
Innovations are economic cataclysms. Entrepreneurs are people who
harness the energy contained within an idea. Like all cataclysms economic
revolutions are ignited with a spark – an idea. But ideas never come from out of
nowhere. Innovations are innovative ways to reorganize ideas that already exist.
Reality cannot be invented only reorganized. The greatest of earthquakes are
produced by gradual pressure within the earth’s crust. One plate pushes against
another until the pressure is released with a sudden upheaval. The question is
whether Bracebridge can contain and absorb the change it is subject to or if it will
collapse?
The Industrial Revolution was predated by many small and scattered
events. But the event itself was ignited by Sir Richard Arkwright’s water frame
invented 1769. The sudden explosive growth of the cotton industry was based on
the cheap calicos birthed in Arkwright’s mills. The Protestant Reformation had
many preludes also but it was Martin Luther’s 95 Theses nailed to the Cathedral
door of Wittenberg, 1517 that brought all the pressure for change together and
ignited the Reformation. Despite all the signs that predated these events no one
could predict them. They were perturbations in the unfolding of world history
immanent but not imminent until the great wave actually hit and rolled over
40

41. established practices. Even then few understood what was happening. It was not
until people looked back they began to understand what had taken place. It is
when we look back at what happened; at the changed landscape that we
understand the significance of the history we were perhaps unwilling witnesses
to.
It was Adam Smith’s 1775 work, The Wealth Of Nations that prompted the
worldwide adoption of Capitalism. The Wealth Of Nation did not originate the
ideas it so neatly described. Nor was Smiths ideas adopted slavishly. Many of
Smiths concerns and qualifications have largely been ignored by his peers in the
West while Marxism, Communism and the communist revolutions of Russia,
China and elsewhere served as an outright rejection of Smiths arguments or at
least in the way the West adopted them.
Adam Smith was primarily a moral philosopher who thought the inherent
goodness of man would modify the greed required by his market model. But it
proved easier to open the Pandora’s Box of unfettered greed than close it again
with the doctrine of social obligation. This misjudgement on his part has for the
most part been studiously overlooked. Indeed Libertarians have consistently
rejected Smiths belief in the need for Capitalists to have a social conscience.
The Hegelian dialectic assumes a progression of antithetical ideas. Thesis
is made compatible with its antithesis by a higher synthesis. Unfettered greed is
not compatible with democracy but there is no higher synthesis. The conflict
between greed and the centralization of wealth that the free market produces and
Democracy and the devolution of power that is integral to Democracy cannot be
resolved. The greed of some requires the exploitation of others and this produces
a power relationship incompatible with the ideals of freedom and equality and as
such the formation of teams.
The ownership of the means of production cannot be reconciled with
freedom from regulation any more than can the power of the State be reconciled
with the idea of an unfettered Free Market. This is the dilemma of the R/L
dichotomy.
41

42. Capitalism is composed of a free market, free enterprise and money and
by implication the state. Capitalism is often juxtaposed to tyranny as if Capitalists
were all grandmotherly types and the Left composed of antisocial misfits. In fact
the Right and Left both exist on the same political continuum as fascism and
neither are far from adopting this political form. We will look at why this is so
further on.
The collapse of tyranny is usually due to the failure of the ruler to learn the
basic rules of economics. A government that no longer has the support of the
people soon finds it is unable pay its bills. Tyrannies collapse because they failed
to satisfy their creditors.
More absolutist governments have fallen because of bankruptcy than any
other cause. Wars are won by the nation that can find the money to wage it. The
survival of a government requires the cost of government not exceed the cost of
revolution. Funding war with debt may ease cash flow problems but the benefits
are short lived and illusory.
Yet, money is not the ultimate source of power. All the money in the world
cannot overcome a good idea and an unworkable idea cannot be made to work
regardless of the amount of money spent on it. The amount of money spent on
developing Artificial Intelligence is enormous but not even ten times or a hundred
times the amount would make the idea work. Innovation forms the ultimate basis
of all empires – not access to credit. Ideas are the foundation of all wealth.
Without the idea to harness fire, cooking, heating and the internal combustion
engine would not have also been discovered.
Conquerors understand the value of a new idea. When Genghis Khan,
Napoleon, Alexander the Great and Hitler dreamed their conquests their dreams
were not based solely on the application of brute force or even on military skill.
They realized the value of new weapons and tactics. Empires are founded on
better ways of killing competitors. The Zulu empire rose on Shaka’s development
of the short spear used for infighting whereas others retained the traditional
throwing spear. It was the technology that produced the dream. It was the
42

43. invention that made the dream believable otherwise the dream would have died
with the dreamer.
But even the most farsighted men, the most audacious dreamer, cannot
predict the unpredictable or foresee the unforeseeable.
Genghis Khan did not foresee his herds of horses on which his advance
depended becoming depleted and exhausted. Napoleon did not plan for the
Duke of Wellington or for the way his tactics and lines of communication would
fail him at the Battle of Waterloo. Alexander the Great did not plan a fatal illness
at the age of 32. Hitler did not fully appreciate how vulnerable a mobile army
short of fuel was. The blitzkrieg worked against armies waging conventional war
but war machines are just masses of scrap metal without fuel. Wars are won
because one army is able to sustain their losses and lost because the other
cannot sustain the attrition. War is about the best management of resources.
When Bill Gates began Microsoft he had no idea IBM would settle on DOS
as an operating system. The use of Windows exploded because IBM produced
the standard business machine for many years and populated it with Windows.
Without IBM would Microsoft exist today? The success of Microsoft, deserved or
not, has swept away the competition and made moot any speculation as to what
the industry would look like had Gary Kildall not decided to go hot-air ballooning
rather than meet with IBM executives.
When Santa Claus Village was established in 1954 there was no
guarantee it would last or grow into an international attraction. It has created
many spin-offs and hundreds of jobs. But has it created the future of
Bracebridge? Is it in the best interests of the town to promote a private business
that exists for private ends? Is it enough to promote its central location as: The
Heart Of Muskoka.
The Santa Claus village is a successful business venture. As Bruce C.
Kruger remarked ‘For 56 years, Bracebridge has been “Santa’s Summer Home”
43

44. on the 45th parallel, …’.
11
Santa Claus Village was started as a private enterprise
and remains in private hands but many residents and visitors have come to view
the village as the iconic symbol of Bracebridge. Despite claims that the adoption
of the Santa Claus brand will stimulate economic activity it is unlikely sizable
investments will be made based on images of a jolly elf. Tourists come with many
undesirable elements such as increased traffic, policing costs, environmental
damage and unreliability. Tourism does not produce sustainable and resilient
economies.
The Heart of Muskoka theme was a broader based initiative. But the
natural beauty of Muskoka as iconic and unrivalled as it is does not seem a
strong basis on which to build a community. Its success also relies the ability of
Muskoka generally and Bracebridge specifically to attract tourists.
“Bracebridge: The Learning Capital of Muskoka for the Arts, Cottage
Country Cuisine and Muskoka Lifestyle” is the latest offering. The slogan is
cumbersome, unimaginative and probably targets a type of tourist who does not
even exist. Indeed the slogan may present a negative image to a tourist not
looking to consume anything more than sights, leisure and some beer - goals not
necessarily consistent with a learning experience. The Learning Capital is not a
phrase that would excite someone seeking a vacation away from the stresses of
life.
It is not a phrase that is likely to become a catch phrase in the way
“Where’s The Beef” captured people’s imaginations.
Why did Barrie grow though Orillia, once a major transhipment point,
lapsed moribund into a community for retirees? Why has the image of
Bracebridge as the summer home of Santa Claus excited the popular
imagination but Bracebridge as the learning capital of Muskoka thought
uninspired even insipid?
11
Rebranding exercise is misguided and undemocratic Huntsville Forester; April 04, 2012 Bruce C.
Kruger is the franchisee of Swiss Chalet/Harvey’s and the owner of Kruger’s Muskoka River B&B.
He can be reached at kruger@muskoka.com or 705-706-2834.
44

45. Would an image that evolves out of individual initiatives such as those that
produced Tembec and Muskoka Breweries produce better results? Does
Bracebridge need more government initiatives such as Northern Lights? The
latest rebranding effort relied on an expert hired from our southern neighbour in
consultation with a handful of picked local opinion makers. But would have a
more open forum produced better results? What is the best way to change
community and indeed to create community?
According to one observer: “This rebranding process has been appalling.
The marketing guru Roger Brooks, a consultant from Seattle, Washington, led a
committee that consisted of four town representatives, four downtown BIA
members, one chamber member, (whom we, as members, never heard from),
two additional businesses and one representative from the Ministry of Tourism.
The three mall regions were not represented, nor was any tourism or
hospitality businesses. Did the organizers not realize that 57 per cent of the GDP
dollars coming into Muskoka is from tourism? We were allegedly represented by
a Ministry of Tourism representative from Toronto. Disgraceful!
Insultingly, the guru advised that “naysayers” should be disregarded
regardless of their opposition; the rebranding committee is to forge ahead at all
costs. Nonsense!”
12
The citizens of Muskoka have demanded to be heard. The issue has not
died out as yet. A general meeting could still be called in which everyone would
be given the chance to provide input into how Bracebridge should be marketed.
But would this produce a consensus?
The news media attempts to create a dialogue in published letters and
Opinion pieces. They keep the issue alive. They help give voice to a community
who otherwise has felt excluded from the process.
The Rebranding was faulted for being a top-down process. But would a
bottom-up consensus making process have achieved better results? Does the
town even need a consensus to achieve the goals of the Rebranding Initiative?
12
ibid
45

46. The town simply needs an economic development program that works this may
not be dependent on everyone supporting the idea.
By starting from a base of like minds the process was better assured of
achieving an agreement but it also tended to limit the solutions that might be
tabled. This was perhaps the objective behind the creation of a crafted panel of
experts but then was it reasonable to expect everyone else to applaud the result?
Council has considered giving grants or tax incentives to those willing to
invest in the town. The hope is that private investment will produce economic
growth. This belief also energized the panel of experts behind the Rebranding
strategy. John Maynard Keynes has said, “Capitalism is the astounding belief
that the most wickedest of men will do the most wickedest of things for the
greatest good of everyone”. We need not agree with this assessment to realize
investors are not likely to want the same things a resident wants. Raising families
requires earning a decent income this is not compatible with increasing ROI.
Few people seem to fully appreciate that the Rebranding Initiative was
principally about making the economy of Bracebridge fit in with the Global free
market. Bracebridge is from the perspective of the free market a business asset
that must be marketed to the world.
This world believes in the power of money. Most communities are of the
opinion that if sufficient money is invested in the local economy it will grow. The
reality is that money has little or nothing to do with either poverty or prosperity
and almost nothing to do with job creation. Anyone who has been through the
United States, one of the richest nations in the world knows that gross earnings
do not translate into high levels of personal income. Ultimately what matters is
the way the resources of a location are used.
The problem is the fixation and mental dependence on money prevents
people from seeing solutions that are not linked with financial investments.
Perhaps this tendency to equate prosperity with money is a holdover from the
mercantile era. However the evidence is not encouraging. A flood of species
pilfered from the New World did not drive economic development in 17
th
Century
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47. Spain (quite the opposite)
13
and a large influx of investment dollars is not likely to
generate the economic activity Bracebridge needs. Las Vegas attracts a great
deal of money but produces little that has lasting value. There is in fact enough
money and assets in every nation and town in the world to create prosperity
however the market has or is an agenda governed by those who create and
control the nations money supply.
The financial markets exist to make money for those with money. If a
proposal does not appear to make money for those with money the proposal will
not be backed.
Bracebridge, like so many other places, is a small community with limited
resources. The Rebranding Initiative thought it was necessary to do whatever
would attract investment but simply removing barriers to investment may not
produce the results desired. Opening the town up to investment may result in a
casino instead of a camping ground for families or more prostitution or more
scam artists. Attracting investment may mean making concessions and these
may not be in our long-term best interests. Why go to the expense of attracting
investment if the investment destroys what we value?
Tourists based investments would increase if the town eliminated all
restrictions on tourists and tourist based businesses. For example development
fees could be eliminated for all tourism-based businesses. Tourists could be
made exempt from the town’s by-laws. This would give Bracebridge a tourist
friendly image. Cuba used be a place friendly to gamblers and those in the sex
trade. It was open to many kinds of investment Bracebridge is closed to, some
would say for good reason.
The town could allow tourists to herd cows along Main Street if they so
desired. Bracebridge could remove restrictions on skateboarders and ATVs so
tourists might skate board on Manitoba Street and drive their ATV’s up to High
Falls. These and similar steps would bring tourists to the area. But would we still
13
Shipments from Potosi (the Mountain of Silver) created inflation and dependency on British
goods whilst Britain created wealth the hard way and prospered partly by shipping goods to Spain.
47

48. wish to live here? If the tourists drive out the residents how is the investment
justified?
This raises the question as to what Bracebridge is to us – its residents? Is
the town a resource or asset that can be sold to the highest bidder, townsfolk
included, as was the case with the towns in ancient Britain? Many villages though
not the villagers are still the property of large landowners in Britain to this day.
Bracebridge is not its residents. These change from year to year. We are
all passing through. No one has a permanent claim on the future of Bracebridge
just as no one has any claim on its past.
Ownership is always ephemeral. It comes and goes with the wind.
Bracebridge is not its hard assets.
Bracebridge is not the businesses that have set up shop within the town’s
limits, nor is Bracebridge the public bodies that run the infrastructure and public
facilities. Bracebridge possesses a pool of assets but the assets, the houses and
businesses and infrastructure are not Bracebridge anymore than people are the
physical body. Bracebridge is its capital, or equity or the value that we residents
place on it.
A house can be sold and owner’s change but the equity remains.
Marketing Bracebridge is a question as to what we value or in fact what
our values are. Our values determine our priorities and how we manage what we
have and determine how they should be used but our values cannot be
determined by looking at our assets. A house for example is worth what
someone is willing to pay for it. A house does not have intrinsic value neither
does Bracebridge. Values are something people assign to assets and it is this
volitional act that gives things value.
The assets of Bracebridge minus its liabilities form the capital of
Bracebridge. This gives us values we can work with. Bracebridge is an economy
within the world economy. It has a value in the purpose of those who own the
wealth of Bracebridge. It is up to the residents of Bracebridge to discern how best
to utilize the capital at our disposal.
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49. A tool is an asset because it has value and can be sold. But it also has
equity in that it represents value to those who use it or would like to use it. An
asset is a thing with value and this value may or may not be realized. Assets
have market value and are things with market value equity can be thought of as
value given to an asset by the owner but this can be given a monetary value but
this is not necessarily the same as its market value. There are things we value
more than their market value.
A tool has value but this value is only realized in its use or in it’s selling. It
has equity when this value is given a monetary value. This valuation shaves off
any liabilities owing. The equity in a house is the balance remaining after the
mortgage is liquidated. The asset may be worth $230,000 but the equity only
$80,000 the rest being a liability.
Bracebridge is assets managed by residents to produce equity. Equity
management or the management of values serves as the basis of economic
activity. Increasing tourism may increase the town’s assets (its tourist
businesses) but create so many liabilities that the town ceases to have any value
as a place to live.
In this sense the town’s existence may owe more to a devoted visitor who
comes and supports the town on a regular basis than a hermit who lives within
the limits of Bracebridge but contributes nothing to its support. The town owes
something to those who have created the assets from which it is composed and
which forms the basis of its equity.
A property may be valued at $5 million but if the owner will not pay his
taxes, does not work or shop in the town the owner and his property produce no
equity i.e. no value the town can use. The town has the asset, it has market
value but the equity the usable capital is close to zero it is to all intents and
purposes a liability on the town.
If a community can be viewed as a local economy based on the resources
that tie residents together as a team then poverty and a lack of team building
activity goes hand in hand in the sense where there is no equity there is no
economic activity no matter how many assets are owned by individuals in the
49