I'm not a fan of mandatory investor education classes. The issue was brought up recently by former chair of FDIC, Sheila Bair, who sees early financial education as ways to stop future FTX-style disasters.

The model of finance I've been using for many years is the fairly dismal dark forest model. The financial industry is a shadowy forest full of sly foxes waiting to prey on retail investors. The list of sly foxes is long: all sorts of Samuel Bankman-Frieds, IRS scammers, internet ponzi schemers, stock con-artists, bankers hocking high-fee products, fly-by-night gold mine promoters, and shady crypto platforms. It's truly horrifying out there.

So why not implement mandatory high school financial literacy classes to upgrade the retail class's defences against this dark forest?

My first concern is that high school students can only absorb so much. Mandatory financial literacy classes will inevitably come at the expense of learning other very important things like math, writing, and science, which are at the base of so many vital disciplines.

Second, while I'm sure financial literacy classes might help a bit to protect us against the dark forest, I don't think they'll do much. The prototypical retail investor's single biggest weakness is that we are all incredibly busy people. As we rush through the dark forest we simply don't have enough time to familiarize ourselves with its many arcana. This incapacity to pay sufficient attention makes us easy pickings, no matter whether we've had a few financial literacy classes or not.  

The dark forest preys not only on our rushed lives, but also our need to keep up with the Joneses, our precarious and stressful financial situations, and our worries for loved ones. I'm just not convinced that a few years of high-school financial literacy classes will release us from these eternal and very-exploitable emotions.

Luckily, we have two other major defences against the dark forest: the competitive market and the government.

The government can make the dark forest safer by flushing out bad actors and pushing fraudsters to the nether regions, then nudging us retail investors towards the parts made safe. It does so by regulation, standard investor protections, licensing requirements, and through law enforcement and the court system.

As for the market, its competitive nature gives rise to a class of trained and experienced financial professionals who are generally equipped to lead retail investors through the dark forest.

If we get these two defences right, then we can afford ourselves a great luxury: a retail investor class that gets to remain relatively ignorant of finance while being safe in its ignorance. This ignorance is a thing of beauty. Instead of folks having to waste time and energy learning about the forest's fox population, its patois, and its dangerous pathways, they can focus on their own very busy lives, families, studies, hobbies, and careers. That's what we want them to do. We don't want a world where the average person needs to give up an hour or two each week slogging through financial literacy 101. We want them to blithely use financial products and take for granted they will be safe, and then get on with more important things.

Alas, if we get these two defences wrong, then we get disasters like Sam Bankman-Fried's FTX, which destroyed the financial lives of thousands of innocent retail investors. 

What happened with FTX? In the case of FTX's offshore exchange, there was a complete absence of government regulation. Not so FTX's US arm. Alas, FTX-US operated under a bare-bones regulatory framework courtesy of state licensing boards, which are simply not appropriate for overseeing a trading venue like FTX, and are more equipped for watching over remittance companies like Western Union. (See my article Let's stop regulating crypto exchanges like Western Union.) This was the dark forest at its darkest.

To see how see this first line of defence can be properly deployed, take a look at what happened in Japan when FTX collapsed. FTX's Japanese customers were made 100% whole a few months after the debacle. (American ones are still waiting). That's because Japan got things right and forced FTX Japan to adopt appropriate regulation, effectively preventing the sly fox Bankman-Fried from preying on Japanese citizens. (See my article Six reasons why FTX Japan survived while the rest of FTX burned.) 

The second defence against predators like Sam Bankman-Fried, a market-supplied legion of trained and experience financial professionals, was lacking, too, since stuff like dogecoin and dogwifhat is outside the ambit of the financial professional class, and deservedly so. Had seasoned institutional investors and other financial professionals been operating in the sector, they would have used their training to suss out the FTX fraud much earlier, guiding folks away to safer exchanges.

The two defences entirely lacking, the result was a wave of innocent retail investors left free to venture into into the dark forest. But mandatory financial literacy classes don't fix this. Government regulation and elite financial professionals do. 

In Industrial Policy in Turkey: Rise, Retreat and Return, Mina Toksoz, Mustafa Kutlay and William Hale analyse Turkey’s industrial policy over the past century, highlighting the interplay of global paradigms, macroeconomic stability and domestic institutional contexts. The book offers a timely analyses of industrial policy’s past and possible future trajectories, though it stops short of interrogating exactly how cultural, social, political and economic factors shape state-business relations and bureaucracy, writes M Kerem Coban.

Industrial Policy in Turkey: Rise, Retreat and Return. Edinburgh University Press. 2023. 

Is industrial policy back? The Biden administration’s Inflation Reduction Act and the CHIPS and Science Act, or the 2016 UK industrial policy are only two contemporary examples. These policies seek to address value chain bottlenecks, as well as the question of how to “take back control” in manufacturing and key sectors, along with concerns about gaining or sustaining economic edge and autonomy

In this context, the Turkish experience is illustrative for making sense of the trajectory of industrial policy in a major developing country. Mina Toksoz, Mustafa Kutlay and William Hale examine the evolution of industrial policy in Turkey. They present an accessible, detailed account of the trajectory and evolution of the policy since the establishment of the Republic, which argues that we had better study “the conditions under which state intervention works, rather than whether the state should intervene in the economy” (26, emphasis in original).

[The authors] suggest that effective industrial policy is the outcome of the interaction between global development policy paradigms, macroeconomic (in)stability, and the domestic institutional context.

The book is divided into five chapters. Chapter One discusses the political economy of industrial policy and sets out an analytical framework. The authors assert that analyses should go beyond dichotomies (eg, horizontal vs. vertical policies; export-led vs. import-substituting industrialisation) and that a broader understanding requires identifying the factors and conditions of effective industrial policy. They suggest that effective industrial policy is the outcome of the interaction between global development policy paradigms, macroeconomic (in)stability, and the domestic institutional context. Global development policy paradigms evolved from étatism of the 1930s, import-substituting industrialisation in the 1960s and the 1970s, neoliberalism of the 1980s, and the return of industrial policy after the 2008 Financial Crisis. Macroeconomic (in)stability drives (un)certainty regarding economic policies and instruments and the trajectory of economy, which, in turn, regulates investment decisions. Finally, the domestic institutional context concerns how state-society, or state-business, relations are structured, whether the state capacity is sufficient to resolve conflicts, discipline and coordinate actor behaviour, and whether bureaucracy has capabilities to formulate and implement policies. Figure 1 seeks to summarise the main argument of the book.

Figure 1: Flow chart summarising the book’s main argument. Source: M Kerem Coban.

Chapter Two focuses on the longue durée between 1923 and 1980. From the ashes of incessant wars that ruined the already unsophisticated infrastructure and demographic challenge, the new Republic had to build a new nation. Yet the rise of the state interventionist era in the 1930s drove policymakers towards the first industrialisation plan and the opening of many industrial sites across the country. When the Democrat Party assumed power, the interventionist, planning-based industrial policy was scrutinised for liberalisation that even included state-owned enterprises to be released to set up their own prices (73).

At the same time, business was encouraged to invest. For example, the fruits of these included Otosan or BOSSA (75). Between 1960 and 1980, the authors underline the second planning period with the establishment of the State Planning Organisation (SPO). SPO boosted bureaucratic and planning capacity and capabilities for disciplined, systematic industrial policy during the era of import-substitution.

Between 1980 and 2000 […] Turkey shifted to export-led growth and liberalised trade and financial flows. These shifts had profound implications for bureaucracy

The third chapter examines demoted industrial policy between 1980 and 2000 when Turkey shifted to export-led growth and liberalised trade and financial flows. These shifts had profound implications for bureaucracy: SPO was sidelined, parallel bureaucratic networks of Ozal were implanted with the opening of new offices or agencies. Consequently, the role of state became less coherent, as political uncertainty driven by unstable coalitions eroded the market-shaping role of the state. The financial sector did not help industrial policy, since banks were dominantly financing chronic budget deficits during a period of high inflation (111). What is more, business, including Islamic conservative SMEs in Anatolia, reduced or ignored investments in manufacturing given the clientelist state-business relations that incentivised construction, real-estate development (115), emphasis in original). Finally, the external conditions were not disciplinary: accession to the Customs Union with the European Union and the World Trade Organization ruled out export support and import restricting measures, among other trade regulatory instruments.

The fourth chapter claims that industrial policy retreated between 2001 and 2009. The first years of this period was marked by political instability and a local systemic banking crisis and its resolution, and Justice and Development Party (AKP in Turkish) assumed power. During this period, industrial policy was dominated by institutionalisation of the regulatory state and  the privatisation of state-owned enterprises, the establishment of autonomous regulatory agencies and are structured banking sector. While the regulatory capacity of the state increased, privatisation and the regulation of the market were highly politicised. For example, “a major cycle of gas privatisation saw ‘politically connected persons’ winning fifteen out of nineteen metropolitan centres and serving 76 percent of the population” (161). In such a politically compromised setting, which was accompanied by the institutionalisation of the capital inflow-dependent credit-led growth model that prioritised “rent-thick” sectors, industrial policy could not flourish.

While the regulatory capacity of the state increased, privatisation and the regulation of the market were highly politicised.

The fifth chapter locates the policy within the global ideational and political economic context that marks the return of industrial policy in various forms. In line with policy documents such as the 11th Development Plan, horizontal measures, private and public R&D spending on high-tech initiatives, electric vehicle manufacturing attempt, and most notably the advancements in defence sector have constituted the revival of industrial policy. At the same time, the authors point to several challenges such as eroded academic research and quality and a lack of investment in ICT skills. Additionally, R&D subsidies or other industrial policy measures require thorough performance criteria and measurement to discipline actor behaviour and regulate the incentive structures.

Industrial Policy in Turkey is a timely contribution to the current debate. Its historical account and analysis of current policies, instruments, and the potential trajectory of industrial policy are its main strengths. Still, there are several caveats. First, the book’s framework is not systematic, which causes some confusion. For example, the book does not demonstrate a convincing link between the role and impact of autonomous agencies on industrial policy. Second, the book leaves the reader with more questions than answers, one of which relates to the effect of bureaucratic fragmentation in shaping industrial policy. Another is around the implications of state-business for bureaucracy, and consequently, industrial policy.

The book leaves the reader with more questions than answers, one of which relates to the effect of bureaucratic fragmentation in shaping industrial policy.

Third, the trajectory of industrial policy cannot be considered independently from the shifts in growth models. Yet the fact these shifts occur because the country depends on hard currency earnings for capital accumulation and to finance consumption and investments: Turkey either relies on capital flows or export earnings, in addition to tourism and (un)recorded (illicit) flows. Pendulums between these channels imply that the country cannot design and implement disciplined, systematic industrial policy. Put differently, there are macroeconomic and financial structural impediments against generating hard currency earnings. Industrial policy is one of the remedies, however, the macroeconomic and structural transformative consequences of the latest episode of emphasis on industrial policy and the export-driven growth experiment in Turkey are yet to be seen.

Finally, and perhaps most importantly, the book tends to relegate a core problem of coordination, long-term policy design and implementation to “governance issues”. Deeper cultural, social, political and economic factors determine the clientelist state-business relations and their effect on bureaucracy and bureaucratic autonomy. Such deeper ties have been masked by instrumentalised “democratisation reforms” or higher economic growth rates in the previous years. In this context, is the more critical problem the purposefully immobilised or challenged infrastructural power to coordinate societal actors? If that is true, then should we make interdisciplinary attempts to identify this problem’s core determinants?

Note: This interview gives the views of the author, and not the position of the LSE Review of Books blog, or of the London School of Economics and Political Science.

Image credit: Chongsiri Chaitongngam on Shutterstock.

In Locked Out of Development: Insiders and Outsiders in Arab Capitalism, Steffen Hertog critiques mainstream development models in the Middle East, focusing on state intervention and segmented market economies. Although Yusuf Murteza suggests the book under-examines neoliberalism’s prevalence, he finds its analysis on the state’s role in establishing the insider-outsider division in the economy nuanced and valuable.

Locked Out of Development: Insiders and Outsiders in Arab Capitalism. Steffen Hertog. Cambridge University Press. 2022.

Clusters of economic and political theorists have long been discussing how different actors prioritise and frame their understanding of “development”. Post-development and degrowth scholars such as Arturo Escobar, Gustavo Escobar, Wolfgang Sachs, and Jason Hickel announced the death of the mainstream development model as a project. They argued “the project of development” may not be equally beneficial to all societies, since the project carries ethnocentric and universalist dimensions which contribute to the hegemony of the West.

The ‘one size fits all’ idea of neoliberal development, which utilises finance and corporate capital, has gradually been replaced by alternative forms of development

The “one size fits all” idea of neoliberal development, which utilises finance and corporate capital, has gradually been replaced by alternative forms of development. Growing disillusionment with the Anglo-Saxon economic model increased the importance of examining alternative political and economic configurations both inside and beyond developed Western states. Varieties of Capitalism (VoC) theory’s significance can be grasped with its emphasis on existing similarities and differences within the institutions of developed economies. Recently, scholars have taken these insights seriously and benefited from the VoC framework to explain the reasons why political and economic institutions differ across societies. Discourse on the MENA region in terms of democracy and development may suffer from orientalist explanations that directly link religion and culture to the region’s political and economic stagnation. Steffen Hertog’s Locked Out of Development takes issue with what mainstream development scholars consider the political and economic inability of societies in the Middle East to take the Western route and realise neoliberal reforms in order to ensure economic development, productivity and innovation.

Neoliberal narratives suffer from a partial outlook. They trace the failures of development attempts by focusing on policymakers’ level of adherence to marketisation and privatisation.

Hertog’s main arguments throughout the book are threefold. First, neoliberal narratives suffer from a partial outlook. They trace the failures of development attempts by focusing on policymakers’ level of adherence to marketisation and privatisation. They consider ensuring faith in the market mechanisms of production and distribution systems as paramount. However, non-economic, country-specific problems matter. In the case of the Arab world, the deep dividing line of insider-outsider segmentation across societies has more explanatory power than classical narratives of having too much or too little market (81). Second, Hertog believes a comparative perspective situated within a global context carries crucial insights. The selected countries cannot be examined solely by focusing on within-region differences but should be considered within the global development trajectory and compared with developed countries (7). Third, the role of the state has a somewhat ambiguous position in development theory. The concept of a “developmental state” has added a further twist. The characteristics of the state and its symbiotic relationship with labour and the private sector need to be addressed when explaining factors contributing to the persistence of the Arab world’s development problem (8).

The role of the state has a somewhat ambiguous position in development theory

Hertog begins with a detailed examination of academic literature on the political economy of the Middle East, the varieties of capitalism approaches, and his conceptualisation of segmented market economies (SEME). The second chapter adopts a historical perspective and presents the case selected countries’ political and economic transformations after World War II. In the third chapter, Hertog reveals his argumentation of the SEME framework by bringing the state, labour market, business sector and skill composition to light. Detailed analysis of the country case studies follows, accompanied by SEME and future research directions. Lastly, Hertog sums up the reasons for the political and economic inability of the region to take the Western route.

Hertog argues that the VoC approach, with its emphasis on the heterogeneity of existing capitalisms, is useful to explain the unique characteristics of Arab capitalism. Different compositions of firms, the finance sector, networks, and the skill system create ideal-type interactions (those which typify certain characteristics of a phenomena) and lead to diversification within capitalism. The original VoC approach analysed several OECD countries from the developed world. In time, scholars used the explanatory power of VoC to explain the development performances of non-Western countries with specific modifications. Taking insights from recent accounts of VoC literature, Hertog believes the approach fits the Arab world well (8).

In broad terms, the state [in the Arab world] functions as the voice of insiders’ interests to quash any outsider’s attempt to reconfigure access to key resources.

There are two key dynamics in the region. As the second chapter discusses, the state has been a key actor in structuring the playing field between different interests to operate in the region (9). The interventionist and distributive characteristics of the state go hand in hand with the other dynamic, namely the persistence of insider-outsider division in the economy. In broad terms, the state functions as the voice of insiders’ interests to quash any outsider’s attempt to reconfigure access to key resources. Hertog warns that the nuanced structure of the SEME model applies only to the core members of the region, such as Algeria, Egypt, Jordan, Morocco, Tunisia, Syria, and Yemen. The key filter behind this selection of countries is their state-building projects between 1950 and 1970 (4-5).

Strategies of keeping public sector employment high with military jobs, large redistribution policies, food subsidies, and price controls are still prevalent in the region, demonstrating its nationalist and statist legacy.

Hertog finds the roots of his SEME model in Arab nationalism in the post-independence era. The state-building projects of the selected countries fused with nationalist and statist ideologies at the time. Discussion on the region’s long history brings up the question of path-dependence, which is used to describe the limiting power of past decisions over later trajectories. Hertog avoids engaging with these long-term theories, believing them unsuitable for a short book, and the key characteristics of the SEME model originated recently. Nationalisation policies and active intervention in the economy were characteristics of Arab nationalism (15). In state-building projects, Egypt and Syria set the parameters, which were later copied by other states. Strategies of keeping public sector employment high with military jobs, large redistribution policies, food subsidies, and price controls are still prevalent in the region, demonstrating its nationalist and statist legacy (28).

The detailed empirical discussion of the SEME is at the heart of the book. The framework is constituted by the state, labour market, business sector and skill system (9). The distributive character of a state can be located by examining the share of public employment, which remains high from a global perspective. Also, the state extensively regulates labour markets, holding key strongholds to access land and credit (29-30). Hertog argues these factors lead to segmented labour and private sectors, while keeping the skill level low. The presence of the state in the labour market ensures insider-outside division. Since there is little mobility, insiders rarely lose their position. Outsiders cannot reach to the welfare protection schemes by the state. This leads to social exclusion and an unproductive environment (32-48).

Hertog claims state intervention in the private sector creates unique opportunities for crony networks, whereby politically connected companies benefit from credits and licences.

Similar dynamics take place in the business sector, where large firms and clusters of small firms coexist (55). Hertog claims state intervention in the private sector creates unique opportunities for crony networks, whereby politically connected companies benefit from credits and licences. Business actors with outsider status engage in unproductive small-scale activities (58-60). The skill system needs to be thought of in relation to the segmented labour and business sectors. Low skill levels prevent mobility and limit innovation and technological development (69).

Overall, Hertog argues that state intervention in the region establishes the insider-outsider division in the economy. Hertog’s emphasis on bringing the state back into the analysis is beneficial. In the field of comparative politics, the idea of the state as an autonomous actor remained on the margins until the 1980s. The book’s limitations come in two forms. First, it doesn’t mention how global capitalist relations fit into the SEME. Hertog’s defence with the limitation of economic globalisation in the region may not offer a solution, since the dynamics of global capitalist accumulation depend on drawing materials from peripheral countries without contributing to them. Second, Hertog’s claim of neoliberalism’s low presence in the Arab world is dubious. Several scholars (Jason Hickel, Philip Mirowski) argue that states with strong capacity can implement the necessary reforms for deregulation and privatisation. Thus, the presence of neoliberalism and strong state capacity is not mutually exclusive. In the Middle East, we see a unique mixture of neoliberal policy reforms with strong state capacity. Even though Hertog constructs his own case, adapting earlier approaches to VoC and development topics and to explain the MENA region, policymakers, development specialists, and academics will find dry economic analysis alone is not enough. More nuanced analyses that consider the symbiotic interactions between the state, the business sector, and labour force are necessary. Only by doing this is it possible to acknowledge how politics mingle with economics, and to design alternative development programmes in response.

This post gives the views of the author, and not the position of the LSE Review of Books blog, or of the London School of Economics and Political Science.

Image Credit: AlexAnton on Shutterstock.

A Federal judge ruled last week that the emergency banking measures taken to end the Ottawa convoy protest in 2022 contravened the protestor's rights. In this post I want to provide my reading of this particular ruling and what is at stake for Canadians and their bank accounts. 

To be clear, Justice Mosley's ruling touched on far more than the banking measures, and extended to the broader legality of the government's invocation of the Emergencies Act on February 14, 2022, subsequently revoked on February 23. However, since this is a blog on money, I'm going to limit my focus to the banking bits of the court ruling.

(By the way, I've written about emergency banking measures a few times before.)

To remind you, there were two emergency banking measures enacted in February 2022 that affected regular Canadians. The most well-known measure was the freezing of bank accounts. The RCMP collected the names of protestors, and forwarded these to banks and credit unions, which used this information to locate protestors' accounts and immobilize their funds. In the end, 280 bank accounts were frozen.

The second and less well-known banking measure was the requirement that banks share protestors' personal banking information with the RCMP and the Canadian Security Intelligence Service (CSIS), including how much money the protestor had in their account and what sorts of transactions they made.

Justice Mosley has ruled that these banking measures – both the freezing and the sharing – violated the Canadian Charter of Rights and Freedoms. Specifically, they contravened Section 8 of the Charter, which specifies that everyone has the "right to be secure against unreasonable search or seizure."

The best way to think about Section 8 is that all Canadians have privacy rights. These rights cannot be trodden on by the government. The police can't conduct unjustified personal searches of your body or home, say by snooping on your credit card transactions. Nor can they seize your bank statements or your computer in order to gather potentially incriminating information on you.

This doesn't mean that a Canadian can never be subject to searches and seizures. Section 8 doesn't apply when the person who is subject to a search or seizure has no privacy rights to be violated. So for example, if I leave my old bank statements in the trash on the curb, it's likely that I've forfeited my privacy rights to them, and the police can seize and search them without violating Section 8 of the Charter.

An interesting side point here is that Canadians don't forfeit their privacy rights by giving up their personal information to third-parties, like banks. We have a reasonable expectation of privacy with respect to the information we give to our bank, and thus our bank account information is afforded a degree of protection under Section 8 of the Charter.

My American readers may find this latter feature odd, given that U.S. law stipulates the opposite, that Americans have no reasonable expectation of privacy in the information they provide to third parties, including banks, and thus one's personal bank account information isn't extended the U.S. Constitution's search and seizure protections. This is known as the third-party doctrine, and it doesn't extend north of the border.

Canadians can also be lawfully subject to searches and seizure by the police if these actions are reasonable, as stipulated in Section 8 of the Charter. There are a number of criteria for establishing reasonableness, including that a search or seizure needs to be authorized by law, say by a judge granting a warrant. In addition, the law authorizing the warrant has to be a good one. (Here is a simple explainer.)

Before we dive into why Justice Mosley ruled that the government's bank account freezes and information sharing scheme violated Canadians' rights, we need to understand the government's side of argument.

On the eve of invoking the emergency measures, Prime Minister Justin Trudeau promised that the government was "not suspending fundamental rights or overriding the Charter of Rights and Freedoms." He reiterated this a week later after the Emergencies Act had been revoked:

When we invoked the Emergencies Act on Monday of last week, we had three principles in mind: restoring peace and order, making sure the measures were proportionate and compliant with the Charter of Rights and Freedoms, and making sure it was time-limited.

— Justin Trudeau (@JustinTrudeau) February 24, 2022

But what about the legal specifics of the banking measures? Were they compliant with the Charter, and how? Government lawyers argued from the outset that the requirement for banks to share personal banking information with the RCMP and CSIS did not violate Section 8 of the Charter. While the sharing order constituted a search under Section 8, it was a reasonable search, they said, and reasonable search is legitimate.

As for the freezes, and here things get more complicated, the government maintained that they did not constitute seizures at all, and thus weren't protected under Section 8. The government begins with a literal argument. The funds in the 280 frozen bank accounts were not taken or seized; rather, banks were simply asked to "cease dealing" with some of their customers in such a way that these customers never lost ownership of their funds. This was a mere freeze, the government claims, rather than a harsher sort of government "taking" of funds , say like a Mareva injunction, warrant of seizure, or restraint order, all of which are seizures under Section 8 of the Charter.

As back up, the government offered a more technical argument. According to Canadian legal precedent, it is only certain types of government searches and seizures that trigger Section 8 protections. These are laid out in a case called Laroche v Quebec (Attorney General). Specifically, only those seizures occurring in the process of an investigation and prosecution of a criminal offence are protected. The government maintains that the freezes it placed in February 2022 were not related to a criminal offence – they were merely designed to "discourage" participation in the protest – and so they were not the sorts of seizures protected by the Charter. (The government's full argument that it laid out for Justice Mosley here.)

The invocation of the Emergencies Act required the independent inquiry be launched, the results of which were released in February 2023. The commissioner of that inquiry, Justice Rouleau, ended up siding with the government's assessment of the legality of the bank account freezes. The freezing of accounts was "not an infringement" of section 8 of the Charter, wrote Rouleau, because they were not a seizure.

Here I'm going to briefly inject my own personal thoughts as a citizen blogger.

Look, I think it's a good thing that the government has various financial buttons at its disposal that it can press to lock or restrict my funds, like restraint orders. But I also think its a good thing that these buttons are subject to certain controls, one of which is that they must respect my basic rights, even in an emergency situation. I find it somewhat worrying that in this particular case the government seems to be arguing that it has at its disposal a new type of "immobilize funds" button that is completely exempt from charter oversight due to the fact that it, somewhat arbitrarily, escapes definition as a seizure. This seems like a distinction without a difference to me.
 
Disagreeing with both Justice Rouleau and the government's logic, Justice Mosley in his judicial review ends up siding with the counter-arguments deployed by two civil liberties organizations that opposed the government in the case. (Their respective arguments are laid out here and here).

First, regarding the sharing of information with the RCMP and CSIS, Mosley rules this constituted a search covered by Section 8. Contra the government, these searches were not reasonable, and thus they violated the protestors' Charter rights.

While the government had argued that the searches were reasonable due to their limited duration and targeted focus, the judge finds that they lacked an "objective standard." Banks only needed a "reason to believe" that they had the property of a protestor before reporting the information to the RCMP or CSIS, but according to Mosley this criteria was too wide and ad hoc to qualify as reasonable. Would a hunch or a rumour qualify as a "reason to believe"? Perhaps.

The searches were also unreasonable, according to Justice Mosley, because they had none of the other well-defined standards for reasonable search, including a lack of prior authorization for each search by a neutral third party like a judge. In February 2022 it was bankers, not judges, that carried out the searches, assembly line-like.   

As for the freezes, Justice Mosley disagrees with the government's arguments, finding that the freezing of bank accounts did indeed constitute a seizure of the sort protected by Section 8. Adopting the viewpoint of a regular Canadian, he first argues that a "bank account being unavailable to the owner of the said account would be understood by most members of the public to be a 'seizure'."

Mosley proposes an alternative opinion that it was the forced disclosure of the financial information by banks to the RCMP and CSIS that constituted a seizure. In this reading, what was being seized was personal payments and ownership data. The protestors had a "strong expectation of privacy" in these financial records, and thus Section 8 is applicable.

So to sum up, a Federal court has deemed that the bank accounts freezes placed on protestors in February 2022 were indeed seizures, and not some other strange sort of freeze-not-a-seizure, and therefore they were subject to the Charter. As for the searches, they were unreasonable (as were the seizures). The government will be appealing to the Federal Court of Appeal, so these arguments will be re-litigated. Stay tuned.

My take is that Justice Mosley's rulings are reasonable and helpful guidelines for future governments seeking to levy banking measures in subsequent emergencies. The ruling doesn't expressly ban the levying of bank freezes, and that's probably a good thing. Let's not forget that the requirement for banks to cease dealings with protestors, albeit illegal in this particular case as per Justice Mosley, was a fairly effective measure. The threat of having their money immobilized helped get the protestors to leave, right? And not a single person was injured. Think of bank account freezes as the domestic version of foreign sanctions, a way to bloodlessly defuse an emergency situation and avoid sending in the more deadly cavalry. This seems like a good tool, no?

The catch, as Mosley suggests, is that the government needs to tighten up the the process of freezing bank accounts come next emergency so that they are constitutional. How tight? One might argue that the standard for freezes shouldn't be as high as a regular restraint order on funds during a non-emergency. On the other hand, freezes shouldn't become some sort of dark tool for circumventing the Charter.