YOUGHAL, IRELAND – Today, we’re still thinking about thinking, and how little of it the thinkers do.
Later in the week, we’ll look at how they prevent others from coming to conclusions of their own.
The Financial Times, like The Economist and The Wall Street Journal, is a must-read for the economically literate elite. Princes and policymakers all over the planet have it on their desks. From it, they get much of their information and many of their opinions.
Here in little Youghal, Ireland… the local gas station has a single copy of the FT, which it puts aside for us. The only other place in town that carries the paper is the card shop, where the lonely copy stays on the shelf.
Many of the opinions in the FT show some real thinking, especially on matters of markets, investments, and personal finance. Our friend, Merryn Somerset Webb, for example, a regular columnist, is always a source of good advice and practical thinking.
But when the “pink paper” turns to economic policy, the thinking stops. As we will see, people come to think what they need to think when they need to think it.
And today’s elite must think that:
They are doing the right thing, and
Many of today’s problems would go away if they were allowed to do more of it.
The reward for this kind of lite-thinking is huge.
The most elite of the world’s elite are probably America’s top 400 families – less than 1% of 1% of 1% (0.00025%) of the U.S. population.
Forty years ago, they had wealth equal to about 2% of GDP. Now, they have 10 times as much – nearly 20%, a gain of about $4 trillion.
But we don’t trust any statistics unless we make them up ourselves. And our own estimate is that the top 10% of the population – roughly, those who own most of the capital assets – gained about $30 trillion over the same four decades.
We get the figure by comparing the value of household assets (stocks, bonds, real estate, savings) to GDP. Grosso modo, household assets were equal to about four times GDP… from the end of World War II to the beginning of the 1980s.
After that, assets shot upwards. Now, they total seven times GDP. That difference is about $60 trillion, of which more than half went to the top 10% – for a gain of at least $30 trillion.
So, where did all that new wealth come from? Not from selling more goods and services to the common man. GDP just chugged along as usual.
And during that period, guess how much the typical working man’s wages rose in real terms. Zero. His inflation-adjusted earnings are about the same today as they were when people were listening to Rod Stewart on the radio, singing “Do ya think I’m sexy?”
So, how come the rich today are so much richer than the rich then?
That is the sort of question you’d think the thinkers ought to think about. Here at the Diary, we’ve answered it, at least to our own satisfaction: the Federal Reserve pushed up asset prices. The rich own assets. Ergo, the rich got richer.
But that answer draws “a” (above) into question, leading people to wonder if there weren’t something underhanded about the fake money system.
Instead, without ever really understanding the problem, the elite propose “b”… solutions that involve more manipulation by the elite themselves.
Past Is Past
More evidence of this phenomenon came last weekend, with a column by Rana Foroohar in the FT. Ms. Foroohar celebrates the latest move by the forward-looking Biden administration with this headline:
America (finally) gets an industrial strategy
[An industrial policy] isn’t about picking winners but simply bringing a smidgen of strategic and long-term foresight to the way America’s economy is run. In a world in which we have to compete with state-run giants like in China, that think on 50-year time horizons, quarterly capitalism simply doesn’t cut it any more (not that it really ever did).
Good thinking, right? Prepare, plan, plot for the future… even 50 years ahead.
Improving life on Planet Earth seems like a worthy goal. But it depends on the most uncertain part of the time spectrum. There is nothing the improvers can do about the past. It has already happened.
Wars… deadhead policies and programs… mass murders, government-enforced famines, deportations, ethnic cleansings, depressions (all of them caused by the elite)…
…all are history. Nothing can be done about them now.
So let’s move on.
In our private lives, we are always planning for the future. We plant trees; we write wills; we buy insurance. The future is the only part of our lives we can do anything about.
In private policy, planning for our own futures, we at least know what we want. We have a fair idea where we’re going and what means we have to get there.
And if we end up somewhere else, it’s our own damned fault for not planning better.
But planning for others… for a nation of 330 million others? It’s a whole different thing.
What does the unemployed steelworker want? What about his wife? What will they want in 50 years? And the immigrant from Bangladesh… what’s he after?
And what will the price of oil be tomorrow? A year from now? Ten years from now? What about the birthrate? How many people will get COVID-19? COVID-20? How many will still use email? Will Amazon still exist? Will it deliver via drone?
Who knows? Not Ms. Foroohar. Or anybody else who says this strategic planning will help “forward climate and equity goals.”
But whose goals are those?
What a surprise… they’re the goals of today’s elite! Thus does the bamboozle come into clearer focus. The planning has nothing to do with adapting to the future (the planners have no way of knowing what it will bring).
Instead, it is intended to bend the future in their direction… to create the kind of world the planners want, now.
Tomorrow… we’ll look at the sad world the elite of 50 years ago might have planned for us… had they thought about it.
P.S. Thanks to all the dear readers who ordered some of our special wine from Gualfin on Monday. I’m told there are still a few bottles of the Tacana malbec left, so if you want to stock up on this high-altitude wine from our vineyard in Argentina, just click here.
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