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- Sharing Peace -
THE NEW PACIFISM
This world is divided by a conflict deep and sustained, a dilemma
never resolved yet fundamental to the way we think about business
and government, morality and rationality and the nature of right and
wrong, it rewards competition, creates social costs and prevents
economic rational exchanges from taking place, it’s a conflict that
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; social costs include things like debt,
unemployment, poverty and pollution, ending social costs and bringing
peace to the world requires a New Pacifism.
The New Pacifists make every peacekeeper a shareholder
Join The New Pacifists and get …
1 COMMON SHARE AND 500 PREFERRED SHARES FREE!
Common Shares allow shareholders to vote at General Meetings and
to an equal share of earnings
Preferred Shares give all shareholders a claim on the equity of the
Exchange and the privilege to buy and sell in a way that promotes
peace
Share Peace, join the Peacekeepers Mission
By Robert Burk
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Preface
Freedom has been the 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 freedom split a man from his social
responsibility a conflict was created that has never been resolved.
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 but the community believed in social responsibility. Residents
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 social costs. The
town had to make sacrifices to attract investments.
Social costs include waste, pollution, unemployment, poverty and debt
these are not a recipe for peace. Putting costs onto community to gain a
market edge does not produce a positive economic impact. Social costs
are not consistent with a culture that respects human rights. Social costs
are not consistent with a humanely run workplace. Social costs do not
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promote harmony and are not consistent with any reasonable business
ethics. Social costs are only consistent with a culture that values property
more than peace.
Peace ought not to be sacrificed to gain market share. Yet this has been
the path history has put us on. The desire for the good life has sacrificed
what is local in favour of the global. Local business interests are pushed
towards and into the global free market supposedly to lower costs and
give us more purchasing power. The policy 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 peace starts.
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. Fascism is the power of a state to impose social costs. Social
costs are levies against peace. Fascism means the destruction of
community specifically the right of entrepreneurs to create a local
economy. The State levies costs on a community’s entrepreneurs to
benefit the global free market. This is not peace.
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 most clearly in the freedom to create a local community. This
is the work done by 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
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is an illusion. Freedom is not derived from the possession of property.
Freedom comes with the possession of community.
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 and in fact is the source of them.
The Right as the mouthpiece of market freedom have sacrificed
community in favour of monolithic organizations. Social costs make local
businesses less competitive and therefore susceptible to take-over by
International Corporations. 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 freedom is compromised to gain market
share there is a steady erosion of local business interests and lowered
community sustainability. 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. Empires fail because empires create social costs that eat
away at the initiative of local entrepreneurs; no society is able to sustain
the costs of empire indefinitely because entrepreneurs cannot pay the
exactions of empire indefinitely. Local business is the engine of culture
and community.
5
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.
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
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.
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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 community. The need for
bureaucracy is a cost of the free market and our willingness to
compromise freedom.
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
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
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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.
Liberalizing the financial sector (a euphuism for freeing the financial
markets from social responsibility – a Right sided paradigm) 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 is
freedom compromised a bigger share of the global pie.
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
8
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 cooperation 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
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
9
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
freedom without responsibility or accountability a freedom with social
costs – it is the freedom of rogues, pirates and sociopaths.
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
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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
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
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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 Freedom
is pushed aside for a moment and the loss of profits forgotten in the desire
to express our humanity in a demand for unconditional freedom.
Debt is the measure of how much business has compromised freedom in
seeking security. 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) and security or exercising economic freedom but at a cost of
being a pariah in the eyes of the international community. Freedom is
made 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
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
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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 we all have knowledge of value and the intrinsic ability to choose
what we value most - peace. Rationalists believe humans know right from
wrong and can discern the difference. Rationalism is a philosophy that
explains the world from a human perspective. Rationalists assume there is
logic to the world and a right and wrong way to live if there was not all
choices would be relative and rational choice would not be possible. In
such a world the free market would make sense. The world would just be
a market where all choices were just market choices.
Rationalists believe if the right choices are made peace is the result;
Rationalists believe there is a way of life that makes sense in an objective,
measurable and universal way. There is a right way to live that can be
measured and defined and an unlimited number of wrong ways. We have
to choose what is consistent with freedom otherwise we compromise our
ability to choose and this cannot make sense. Irrational acts cannot
produce good results. Irrationality creates social costs and this means a
loss of freedom. The state of the community is an objective measure of
rationality and freedom for the state of the community is a direct reflection
of the rationality of our choices.
Rationalists believe sacrificing peace to gain market share generates social
costs and these costs are not consistent with any possible peacekeeping
initiative. The desire for wealth creates conflicts that cannot be resolved. Social
13
agendas create their own costs for communities. Governments are a social costs
created by the Left as a reaction against social costs created by the Right.
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 we must pay.
Rationalists believe Capitalism and Socialism are different kinds of social costs.
Both produce social costs and both make peace difficult though in different ways.
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
illusion.
Every political party and ideology has social costs. The sort of government one
gets depends on the mix of Social Costs the nation pays. The kind of Social
Costs we pay depends on the kind of socialism offered. 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. Peace is not possible in an environment of economic dependency or
moral degeneracy. The moral ought cannot be fully realized in a society that
compromises peace to gain property.
This book is not just about finding peace it is about ending a way of thinking that
consistently values profits over people and property rights over human rights and
things over souls. Rationalists reaffirm the value of place and people and the
moral ought in a new way to share peace and a new way to do peacekeeping.
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15
5th edition July 2015
ISBN 978-0-9812129-1-3
Published by Rational Exchange Publishing
© All rights reserved March 2014
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© All Rights Reserved November 2015
17
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...................................................................................................................55
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..............................................................................................163
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 .................................................................................................227
Moral Living........................................................................................................233
Democratization...................................................................................................239
Government Services.......................................................................................253
Dominion.............................................................................................................263
Tragedy Of The Commons..............................................................................268
Legitimacy ..........................................................................................................277
Motivation............................................................................................................287
Friedman on Freedom..........................................................................................295
Adam Smith.........................................................................................................299
Freedom and Order..............................................................................................303
Cultural Relativity............................................................................................314
Rational Choices..................................................................................................319
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Money And Gold.............................................................................................322
Real And Nominal Costs.................................................................................330
Is King Canute misunderstood? By Kathryn Westcott BBC News Magazine26
May 2011 ........................................................................................................................331
The Bible..........................................................................................................336
Debt..................................................................................................................338
Fascism................................................................................................................345
Positive And Negative Morality......................................................................347
Capitalism............................................................................................................353
Freedom Of Choice..........................................................................................360
Ethical Centralism................................................................................................361
Barter Updated.................................................................................................363
Social Costs......................................................................................................366
Justice ..................................................................................................................369
Entrepreneurism...............................................................................................374
Appendix..............................................................................................................379
Commercial Accounts......................................................................................379
Scenario One....................................................................................................384
Starting An Exchange......................................................................................386
Investing.......................................................................................................392
Participation.................................................................................................397
Scenario Two...............................................................................................398
Efficiency.....................................................................................................404
Debt As Equity.............................................................................................409
Prares............................................................................................................412
The 2008 Crash............................................................................................415
The Liberal Schematic.....................................................................................421
The Bracebridge Exchange..............................................................................422
Conclusion...................................................................................................426
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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 few economic
prospects. In the eyes of those who did the study the town had no other option but to
sell its freedom for increased investment. The Triumvirate of taxation, profiteering and
debt was thought to have left the town with no other option. The town would have to turn
Right it was thought the only solution.
Yet, Bracebridge was once a major manufacturing centre and it 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
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 want peace.
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
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 and democracy. Rationalists believe
human beings have an innate capacity and desire for peace and seek out that which
gives us peace but the desire for peace is usurped by greed and those who are willing
to exploit every advantage to gain more property and what they think are the good
things of live. No one is wired to develop international organizations. Avarice is behind
the Globalization of local markets. Working together in small groups for the benefit of the
group can happen without supervision with lower costs and risks. We can afford to build
the City of Peace.
“The political problem of mankind is to combine three things: economic efficiency, social
justice and individual liberty.”
― John Maynard Keynes
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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 the Right attempting to download costs
onto society and future generations through the workings of the free market and
the legitimization process as tied up in the doctrine of the Negative Rights of
property. The solution is not to shift Left.
This work argues the free market always produces Social Costs because
this is what free markets are all about – lowering 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
1
“Bracebridge: The Learning Capital of Muskoka for the Arts, Cottage Country Cuisine and
Muskoka Lifestyle”
23
because of the scale and location of their operations but this puts them at a
disadvantage with those focused on the global free market.
This work demonstrates that the free market imposes social costs on the
entrepreneurs of local communities because ultimately the free market requires
bureaucracy and bureaucracies generate no income. By definition bureaucracy is
a source of social costs. We shall also demonstrate how rising social costs are
responsible for the impoverished state of our communities. The social costs of
the great Left/Right divide do not just include debt, unemployment and poverty
but the cost of war, empires and the decline of civilization.
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. The one thing the free market
is not is free. 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
24
With No Clothes. Without government regulation (the antithesis of the free
market) the Hand would blow away as the conceptual vapour it is.
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
25
ownership. Capitalism is a house of cards maintained by the very agent free
market proponents despise the most, bureaucrats.
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.
26
The free market cannot exist in a free market environment, because the
ensuing chaos would make business and private ownership impossible.
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. It was an attempt to
rationalize our tangible assets and make the town globally competitive.
Bracebridge to compete needs an exportable product that can be marketed to a
global consumer. Citizens were expected to be or become part of the town’s
tangible assets and the delivery vehicle by which a product called Muskoka could
be packaged and distributed on the global level. 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
27
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
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.
28
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
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.
2
Grant, G.M. ed.1882. Picturesque Canada – The Country As It Is And Was.
Belden Bros, Toronto
29
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
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.
3
http://www.muskokaheritage.org/mwc/files/2012/09/MuskokaBiodiversity-September2012.pdf
30
Between 1958 and 1970 several manufacturers selected Bracebridge as a
place to produce goods. These companies included Corning Glass, Alcan Wire
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
31
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.
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.
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
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
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
5
Cathy Thom http://www.tourismbracebridge.com/seasons/heritage.php
6
What’s Up Muskoka March 28, 2012 Chris Occhiuzzi & Sandy Lockhart
33
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
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
34
Britain to exercise power effectively at unprecedented distances.’
7
A well-
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?
7
The Cash Nexus, Niall Ferguson Basic Books 2001 p39
35
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
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
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
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
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.
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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
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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.
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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
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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 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
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
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
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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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
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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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 is 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
area. There may be billions of dollars tied up in cottage properties lakeside but
this capital is only worth to Bracebridge what it contributes to Bracebridge’s
economic viability. There may be a billions of dollars worth of gold or uranium
locked away in the rock of the Precambrian Shield but if no one is extracting it
the wealth is more conjectural than real. Assets have to be transformed into
equity. This needs to be managed and management must reflect the values and
priorities that determine equity formation. Equity does not grow if assets are so
poorly managed that the liability portion grows faster than the equity.
Even if half the property owners in Bracebridge are millionaires the
contribution they make to Bracebridge is low if their assets do not contribute to
the economy of Bracebridge. Indeed, if they vacated their property and sold out
to someone who participated in the town’s economic life they would do the town
a favour. Even if the asset price declined the economic value or equity would
increase so far as the towns economic life is concerned.
It is economic activity or rational exchanges that define a community. This
requires transforming assets into working capital or equity. Branding is an effort
to define what our economy is built on or is able to produce but it approaches the
problem of economic development from the wrong perspective and comes to the
wrong conclusions. The town needs to be able to distinguish liabilities from
equity.
Bracebridge does not exist to pander to visitors. They may be or become
more of a liability than a generator of equity. Our priority is not to make
Bracebridge a nice place to visit. Visitors do not constitute equity. Expecting
residents to live in a specific Muskoka way expects too much. If visitors do not
want to know us as we are then what are we selling? Tourists do not build
community. To make Bracebridge a destination for tourists does not address the
reason for why tourists come to Bracebridge it also fails to address the reason
residents stay.
The rebranding effort looked for Bracebridge’s most significant value in
terms of the market. The market was the court of final appeal. The expert and a
few consultants did not as if residents considered tourism a source of equity or a
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Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015
Sharing Peace 11 19 2015

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Sharing Peace 11 19 2015

  • 1. - Sharing Peace - THE NEW PACIFISM This world is divided by a conflict deep and sustained, a dilemma never resolved yet fundamental to the way we think about business and government, morality and rationality and the nature of right and wrong, it rewards competition, creates social costs and prevents economic rational exchanges from taking place, it’s a conflict that 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; social costs include things like debt, unemployment, poverty and pollution, ending social costs and bringing peace to the world requires a New Pacifism. The New Pacifists make every peacekeeper a shareholder Join The New Pacifists and get … 1 COMMON SHARE AND 500 PREFERRED SHARES FREE! Common Shares allow shareholders to vote at General Meetings and to an equal share of earnings Preferred Shares give all shareholders a claim on the equity of the Exchange and the privilege to buy and sell in a way that promotes peace
  • 2. Share Peace, join the Peacekeepers Mission By Robert Burk 2
  • 3. Preface Freedom has been the 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 freedom split a man from his social responsibility a conflict was created that has never been resolved. 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 but the community believed in social responsibility. Residents 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 social costs. The town had to make sacrifices to attract investments. Social costs include waste, pollution, unemployment, poverty and debt these are not a recipe for peace. Putting costs onto community to gain a market edge does not produce a positive economic impact. Social costs are not consistent with a culture that respects human rights. Social costs are not consistent with a humanely run workplace. Social costs do not 3
  • 4. promote harmony and are not consistent with any reasonable business ethics. Social costs are only consistent with a culture that values property more than peace. Peace ought not to be sacrificed to gain market share. Yet this has been the path history has put us on. The desire for the good life has sacrificed what is local in favour of the global. Local business interests are pushed towards and into the global free market supposedly to lower costs and give us more purchasing power. The policy 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 peace starts. 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. Fascism is the power of a state to impose social costs. Social costs are levies against peace. Fascism means the destruction of community specifically the right of entrepreneurs to create a local economy. The State levies costs on a community’s entrepreneurs to benefit the global free market. This is not peace. 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 most clearly in the freedom to create a local community. This is the work done by 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 4
  • 5. is an illusion. Freedom is not derived from the possession of property. Freedom comes with the possession of community. 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 and in fact is the source of them. The Right as the mouthpiece of market freedom have sacrificed community in favour of monolithic organizations. Social costs make local businesses less competitive and therefore susceptible to take-over by International Corporations. 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 freedom is compromised to gain market share there is a steady erosion of local business interests and lowered community sustainability. 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. Empires fail because empires create social costs that eat away at the initiative of local entrepreneurs; no society is able to sustain the costs of empire indefinitely because entrepreneurs cannot pay the exactions of empire indefinitely. Local business is the engine of culture and community. 5
  • 6. 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. 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 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. 6
  • 7. 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 community. The need for bureaucracy is a cost of the free market and our willingness to compromise freedom. 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 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 7
  • 8. 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. Liberalizing the financial sector (a euphuism for freeing the financial markets from social responsibility – a Right sided paradigm) 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 is freedom compromised a bigger share of the global pie. 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 8
  • 9. 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 cooperation 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 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 9
  • 10. 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 freedom without responsibility or accountability a freedom with social costs – it is the freedom of rogues, pirates and sociopaths. 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 10
  • 11. 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 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 11
  • 12. 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 Freedom is pushed aside for a moment and the loss of profits forgotten in the desire to express our humanity in a demand for unconditional freedom. Debt is the measure of how much business has compromised freedom in seeking security. 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) and security or exercising economic freedom but at a cost of being a pariah in the eyes of the international community. Freedom is made 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 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 12
  • 13. 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 we all have knowledge of value and the intrinsic ability to choose what we value most - peace. Rationalists believe humans know right from wrong and can discern the difference. Rationalism is a philosophy that explains the world from a human perspective. Rationalists assume there is logic to the world and a right and wrong way to live if there was not all choices would be relative and rational choice would not be possible. In such a world the free market would make sense. The world would just be a market where all choices were just market choices. Rationalists believe if the right choices are made peace is the result; Rationalists believe there is a way of life that makes sense in an objective, measurable and universal way. There is a right way to live that can be measured and defined and an unlimited number of wrong ways. We have to choose what is consistent with freedom otherwise we compromise our ability to choose and this cannot make sense. Irrational acts cannot produce good results. Irrationality creates social costs and this means a loss of freedom. The state of the community is an objective measure of rationality and freedom for the state of the community is a direct reflection of the rationality of our choices. Rationalists believe sacrificing peace to gain market share generates social costs and these costs are not consistent with any possible peacekeeping initiative. The desire for wealth creates conflicts that cannot be resolved. Social 13
  • 14. agendas create their own costs for communities. Governments are a social costs created by the Left as a reaction against social costs created by the Right. 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 we must pay. Rationalists believe Capitalism and Socialism are different kinds of social costs. Both produce social costs and both make peace difficult though in different ways. 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 illusion. Every political party and ideology has social costs. The sort of government one gets depends on the mix of Social Costs the nation pays. The kind of Social Costs we pay depends on the kind of socialism offered. 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. Peace is not possible in an environment of economic dependency or moral degeneracy. The moral ought cannot be fully realized in a society that compromises peace to gain property. This book is not just about finding peace it is about ending a way of thinking that consistently values profits over people and property rights over human rights and things over souls. Rationalists reaffirm the value of place and people and the moral ought in a new way to share peace and a new way to do peacekeeping. 14
  • 15. 15
  • 16. 5th edition July 2015 ISBN 978-0-9812129-1-3 Published by Rational Exchange Publishing © All rights reserved March 2014 16
  • 17. © 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...................................................................................................................55 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..............................................................................................163 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 .................................................................................................227 Moral Living........................................................................................................233 Democratization...................................................................................................239 Government Services.......................................................................................253 Dominion.............................................................................................................263 Tragedy Of The Commons..............................................................................268 Legitimacy ..........................................................................................................277 Motivation............................................................................................................287 Friedman on Freedom..........................................................................................295 Adam Smith.........................................................................................................299 Freedom and Order..............................................................................................303 Cultural Relativity............................................................................................314 Rational Choices..................................................................................................319 18
  • 19. Money And Gold.............................................................................................322 Real And Nominal Costs.................................................................................330 Is King Canute misunderstood? By Kathryn Westcott BBC News Magazine26 May 2011 ........................................................................................................................331 The Bible..........................................................................................................336 Debt..................................................................................................................338 Fascism................................................................................................................345 Positive And Negative Morality......................................................................347 Capitalism............................................................................................................353 Freedom Of Choice..........................................................................................360 Ethical Centralism................................................................................................361 Barter Updated.................................................................................................363 Social Costs......................................................................................................366 Justice ..................................................................................................................369 Entrepreneurism...............................................................................................374 Appendix..............................................................................................................379 Commercial Accounts......................................................................................379 Scenario One....................................................................................................384 Starting An Exchange......................................................................................386 Investing.......................................................................................................392 Participation.................................................................................................397 Scenario Two...............................................................................................398 Efficiency.....................................................................................................404 Debt As Equity.............................................................................................409 Prares............................................................................................................412 The 2008 Crash............................................................................................415 The Liberal Schematic.....................................................................................421 The Bracebridge Exchange..............................................................................422 Conclusion...................................................................................................426 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 few economic prospects. In the eyes of those who did the study the town had no other option but to sell its freedom for increased investment. The Triumvirate of taxation, profiteering and debt was thought to have left the town with no other option. The town would have to turn Right it was thought the only solution. Yet, Bracebridge was once a major manufacturing centre and it 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 want peace. 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 and democracy. Rationalists believe human beings have an innate capacity and desire for peace and seek out that which gives us peace but the desire for peace is usurped by greed and those who are willing to exploit every advantage to gain more property and what they think are the good things of live. No one is wired to develop international organizations. Avarice is behind the Globalization of local markets. Working together in small groups for the benefit of the group can happen without supervision with lower costs and risks. We can afford to build the City of Peace. “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 the Right attempting to download costs onto society and future generations through the workings of the free market and the legitimization process as tied up in the doctrine of the Negative Rights of property. The solution is not to shift Left. This work argues the free market always produces Social Costs because this is what free markets are all about – lowering 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 1 “Bracebridge: The Learning Capital of Muskoka for the Arts, Cottage Country Cuisine and Muskoka Lifestyle” 23
  • 24. because of the scale and location of their operations but this puts them at a disadvantage with those focused on the global free market. This work demonstrates that the free market imposes social costs on the entrepreneurs of local communities because ultimately the free market requires bureaucracy and bureaucracies generate no income. By definition bureaucracy is a source of social costs. We shall also demonstrate how rising social costs are responsible for the impoverished state of our communities. The social costs of the great Left/Right divide do not just include debt, unemployment and poverty but the cost of war, empires and the decline of civilization. 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. The one thing the free market is not is free. 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 24
  • 25. With No Clothes. Without government regulation (the antithesis of the free market) the Hand would blow away as the conceptual vapour it is. 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 25
  • 26. ownership. Capitalism is a house of cards maintained by the very agent free market proponents despise the most, bureaucrats. 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. 26
  • 27. The free market cannot exist in a free market environment, because the ensuing chaos would make business and private ownership impossible. 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. It was an attempt to rationalize our tangible assets and make the town globally competitive. Bracebridge to compete needs an exportable product that can be marketed to a global consumer. Citizens were expected to be or become part of the town’s tangible assets and the delivery vehicle by which a product called Muskoka could be packaged and distributed on the global level. 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 27
  • 28. 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 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. 28
  • 29. 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 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. 2 Grant, G.M. ed.1882. Picturesque Canada – The Country As It Is And Was. Belden Bros, Toronto 29
  • 30. 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 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. 3 http://www.muskokaheritage.org/mwc/files/2012/09/MuskokaBiodiversity-September2012.pdf 30
  • 31. Between 1958 and 1970 several manufacturers selected Bracebridge as a place to produce goods. These companies included Corning Glass, Alcan Wire 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 31
  • 32. 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. 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. 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. 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 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 5 Cathy Thom http://www.tourismbracebridge.com/seasons/heritage.php 6 What’s Up Muskoka March 28, 2012 Chris Occhiuzzi & Sandy Lockhart 33
  • 34. 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 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 34
  • 35. Britain to exercise power effectively at unprecedented distances.’ 7 A well- 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? 7 The Cash Nexus, Niall Ferguson Basic Books 2001 p39 35
  • 36. 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 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 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 46
  • 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. 48
  • 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 is 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
  • 50. area. There may be billions of dollars tied up in cottage properties lakeside but this capital is only worth to Bracebridge what it contributes to Bracebridge’s economic viability. There may be a billions of dollars worth of gold or uranium locked away in the rock of the Precambrian Shield but if no one is extracting it the wealth is more conjectural than real. Assets have to be transformed into equity. This needs to be managed and management must reflect the values and priorities that determine equity formation. Equity does not grow if assets are so poorly managed that the liability portion grows faster than the equity. Even if half the property owners in Bracebridge are millionaires the contribution they make to Bracebridge is low if their assets do not contribute to the economy of Bracebridge. Indeed, if they vacated their property and sold out to someone who participated in the town’s economic life they would do the town a favour. Even if the asset price declined the economic value or equity would increase so far as the towns economic life is concerned. It is economic activity or rational exchanges that define a community. This requires transforming assets into working capital or equity. Branding is an effort to define what our economy is built on or is able to produce but it approaches the problem of economic development from the wrong perspective and comes to the wrong conclusions. The town needs to be able to distinguish liabilities from equity. Bracebridge does not exist to pander to visitors. They may be or become more of a liability than a generator of equity. Our priority is not to make Bracebridge a nice place to visit. Visitors do not constitute equity. Expecting residents to live in a specific Muskoka way expects too much. If visitors do not want to know us as we are then what are we selling? Tourists do not build community. To make Bracebridge a destination for tourists does not address the reason for why tourists come to Bracebridge it also fails to address the reason residents stay. The rebranding effort looked for Bracebridge’s most significant value in terms of the market. The market was the court of final appeal. The expert and a few consultants did not as if residents considered tourism a source of equity or a 50