Wednesday, August 12, 2009

Making History and the Myth of Progress

Whiskey & Gunpowder
Gary’s Note: People believe what they must until it destroys them. The myths of politics and the state have already destroyed other nations and now the inevitable results of democracy and ambitious elected officials are about to fall on the U.S. Bill Bonner and Addison Wiggin provide the history and the lesson in this excerpt from Financial Reckoning Day Fallout.

Whiskey & Gunpowder
By Bill Bonner and Addison Wiggin

August 12, 2009
Baltimore, Maryland, U.S.A.

Making History and the Myth of Progress

No history recalls what the 5,000 or so Normans must have felt when they saw the English coastline in 1066, nor what they had for breakfast, or how their wives and daughters missed them at home on that day. Nor does it tell us how the peasants in Toncarville coaxed out a calf whose head was turned the wrong way, or the kind words spoken by a priest to an old woman in the churchyard. Nor does it even record how a merchant noticed that his trade had suddenly diminished when the knights were gone, and how he resolved to make up the difference by moving to Paris and selling fabrics imported from Holland.


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Instead, history turns its attention uniquely to the events on English soil, where the small band of warriors debarked to go into battle. Theirs seemed to be a hopeless enterprise. How could such a small army hope to avoid annihilation, let alone conquer a whole nation? But that is history…a story of such remarkable campaigns, battles, revolutions, uprisings, popular movements — all presumably marching toward the progress of mankind, all, presumably, “good things.” For without them, where would we be? No one knows. What if the Normans had stayed home? What if they had tended their fields, sought better ways to increase crop yields, put up more beautiful buildings, and given another kiss to their wives and children? Would the world be a worse place? We cannot tell.

However, in markets as well as politics, history is not made by the tailor, the baker, or the capitalist going about his work. It is made by mobs of tailors, bakers, and capitalists embarked on some enterprise, which is far beyond what any of them can know or understand, and which is usually absurd and often fatal.

Events in the twentieth century had been kinder to the United States than to their European cousins. Americans had taken part in the major wars, but had suffered far fewer casualties than other combatants. France lost nearly 6 million men in World War I, the United States 116,516. In World War II, the United States had 405,399 casualties, but the Soviet Union had more than 21 million (civilian deaths included). No U.S. cities were leveled.

Nor were there any civilian casualties to speak of. And U.S. industries, instead of being destroyed like those of Germany and Japan, ended the wars in a stronger position than when they had begun them.

It was not, then, reason that had shaped Americans’ belief in progress…but experience. After such a long spell of apparent progress (interrupted only by a few quarters of negative economic growth in the Great Depression), Americans at the end of the twentieth century had begun to think that progress was the nature of things, and that the level of technological and organizational perfection they had achieved had brought on the blessings of progress at a faster rate than ever before. What’s more, many of them thought that the temporary lulls and brief periods of backsliding experienced by the country since the end of World War II had now been eliminated. Thinking Americans attributed this giant leap forward neither to the grace of God nor the beneficence of nature, but to their own genius.

By the time the oldest members of the postwar baby boom generation had reached maturity (late 1990s), progress had begun to look easy, logical, even inevitable. Americans believed themselves to be masters of the business cycle, of technology, of the planet.


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Myths of Progress

In what might have been an equivalent of the four-minute mile, Iaroslav Tchij, on a collective farm in the Lvov region of the Soviet Union in 1959, reduced a hog to 100 kilos of meat in just 5.6 hours. This might seem like a leisurely pace, but it took an hour less than foran American to do the job.

The Communist era began after the invention of the telegraph and was still going strong after radio, telephone, and television had become ubiquitous. But as we will see, information provided no defense against exaggeration and myth. Mr. Tchij, for example, was not alone in believing he could increase productivity in such a remarkable way. In fact, one of the myths of Communism was the idea that productivity would increase without interruption and at spectacular rates. This was not based on any observation. It was derived from theory.

The founding fathers of Communism, like Internet investors, believed that a new era had arrived. It was founded neither on observation nor on hope, but on what they thought were the laws of history. In his funeral oration for Marx, on March 17, 1883, held in Highgate Cemetery, Engels honored Marx as “the Darwin” of economic history. Just as Darwin had discovered the key laws that governed the evolution of natural history, Engels said, Marx had discovered those that governed economic and political history. These laws, such as the concept of “surplus value,” which supported Marx’s critique of capitalism, were not laws at all, just pretentious obiter dicta, as Paul Johnson described them. Yet they formed the basis for the many myths that inhabited the fantasy world of Communist society.

The myth of determinism, for example, meant that everything had already been worked out according to the principles Marx described. The myth of progress, whereby conditions improved year in year out, was a myth disproved by Communism itself. The myth of the Marxist New Era held that the entire world would be re-created, not by God or nature, but by man, following the scientific and rational concepts of historical determinism. Finally, there was the myth of the New Man. This new Marxist man, not having the same hard wiring as other men, would be an entirely new being. He would not need a profit motive, for example. Nor would he wish to accumulate wealth or worry about his own family, as all his material and service-based needs would be supplied by the collective.

As irrational as these notions were, they were nevertheless taken up and endorsed enthusiastically throughout the twentieth century by various despots and crackpots. Not only were they argued over endlessly in the cafés of Paris, but they provided the foundation of an entirely imaginary world.

Soviet policy makers for example (again, like Internet investors) saw no reason why they should be constrained by the growth rates observed in the past. Without private property and private business, they thought that there would no longer be a business cycle to worry about. Communist growth projections became the measure of reported (though imaginary) growth: The Soviet Union’s economy was thought to have multiplied itself 36 times between 1913 and 1959. The economy of the United States, by contrast, only increased by a factor of four. Soviet leaders predicted that the size of their economy would surpass that of the United States in a dozen years.

But even this rate was sluggish to the North Korean dictator, Kim Il Sung. If you could determine economic growth by decree, he reasoned in 1969, why be satisfied with 15 percent? In his text titled On Some Theoretical Problems of Socialist Economies, he declared that there was no reason for communist economies ever to slow down, and that growth rates of 30 percent to 40 percent per year could be maintained. Three decades later in his “socialist economy,” millions of people were starving.

Kim should have paid attention when his fellow delusionary, Ceaucescu of Romania, addressed the agricultural issue. Ceaucescu decided to put his country in “the forefront of world agriculture.” This he accomplished in the most straightforward and expedient fashion: He simply multiplied per acre production figures by four. Marxist myth held that collective farms would be vastly more productive than old-fashioned independent farms. Thus, Ceaucescu merely brought the myth to life, realizing it in the spirit it deserved — mythically.


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Even the Communist leaders themselves were myths: Mr. Djugashvili, a rather untalented former seminarian and New Era aficionado, became “man of steel,” Josef Stalin. Meanwhile, Kim Il Sung turned himself into a virtual deity, a mythical god, who became an object of worship for his impoverished people.

The astounding thing was how ready people were to believe such myths. American economists calculated that the Soviet economy must be 50 percent or 60 percent the size of the U.S. economy, and gaining ground. For decades, the Soviet Union was listed as the world’s second biggest economic power. But it was not true. The Soviet Union and North Korea were not getting richer, but poorer. Their people were not becoming more productive, but less productive.

Bill Bonner and Addison Wiggin

Parting Shot...
Someone steps to defend my lament concerning the sort of women available.

Once again your response to the non-dating/settled-4-less/easily-insulted crowd of loyal readers summed up everything.  “So…you single?”

He was right about one thing “Until you change, you will never find a woman ON THIS PLANET…”

Change your zip code and stop dating women who were educated in the American public schrewall system, especially higher ed.

I used to live in Englewood (Chicago). I made up part of the .019% white population in the foreclosure capital of America (3 years running back then). If you are looking to date a “sister”, good luck.  You are fighting several negative entrenched educational forces:  Hip-Hop culture, Victim-Theology churches, and if your prospective baby-mama has a college degree, add to it the mix an additional 14-22 years of brain-mashing.  My advice remains the same; date women with a differing country of origin if you were born in the USA.

Yeah, but just don’t bring ‘em back here where they’ll get all U.S.-ified and difficult to live with. The entire world is a farm system of socialist nation-states that want their inhabitants to think of themselves as cattle to be put to productive use. Yet it’s the folks in the “land of the free” who are most ready to moo.

You’d think that a woman from the U.S. would be most likely to enjoy shooting some Whiskey with you, but you’d be wrong. Maybe the rest of the world’s inhabitants are a little further along in their frustration with the state, like the people in Russia, the former East Germany and Peru.

Odds are, however, that if you marry a U.S. native, like your browbeaten editor as he reads his inbox, you’ll never hear the end of arguments for more intervention, forced resource redistribution and the basic human right of having other people provide you their medical expertise.

I read the August 06 comment from the gentlemen from England about the NHS. His idea that his public healthcare costs are, “mostly free from cradle to grave” is likely the prime reason that most people are so misguided about public healthcare. There seems to be a great disconnect when it comes to what public healthcare costs really are. Does he really believe his statement? Does he not realize that public healthcare costs are part of the government’s budget? And, where does the government get its revenues? From the taxes that it collects from its citizens!

I attended the recent Agora symposium in Vancouver, and the subject of the proposed changes to the US healthcare system was often mentioned. Having lived with Canada’s socialized medicine for all of my adult life, all I can say is that I hope saner minds prevail and the US re-thinks it proposal before it is too late. I do believe that healthcare, probably globally, needs to be restructured and, perhaps, Mr. Smith’s idea of returning to simpler times is the answer.
Yes, paying a market rate for everything you use — housing, food, medicine: Crazy, I know, but maybe we can get back to that.

Of all the things that are bad, and you think getting worse. If you were President, what would YOU do???
Well, that’s the thing isn’t it? What to do?
We here in the Whiskey Bar wouldn’t do anything. Well, that’s not exactly right. We’d undo a lot of things that have already been done.

We just don’t trust governments to do the one thing they’re supposed to do (keep people from touching you and your stuff without your permission).

But we do expect them to do more and more things that they’re not supposed to do.

Yes, and social security will be the death of us and universal car insurance will be the death of us, and universal education will be the death of us, and central sewer systems will be the death of us, and on and on.  Why don't you realize for better or worse, we need govt. to do the things that we selfish individuals can't or don't want to pay for that results usually in the better good for all.  After all you were a govt. employee and your income is the result of the govt., not capitalism.
That’s the thing about Ponzi schemes. They work well for the first adopters, but the costs and risks mount for later investors. In the case of the expanding state, the later investors are your descendants. They’re the ones who’ll have the diminished returns on their investment (taxes) and who’ll be paying the deficits incurred for “the good of all.”

And I was never a government employee myself. But the income governments pay their workers comes from the capitalist market activity upon which they prey. I hate to toss off clichés, but government doesn’t give anybody anything — including the salaries of their worker bees — that they didn’t first take from somebody else.

Governments first and foremost are monopolies on force. Initially their great benefit is that they actually allow peaceful trade to take place. They’re the biggest, baddest gang and they keep other gangs from taking your stuff…and once you move from the hunter-gather stage to the permanent settlement stage, start farming, accruing wealth and building cities, there will always be somebody looking to pillage and loot what you got.

I like governments when they are small…so small that I can’t even see them. I like to claim an anarchist streak, but my version of anarchy really only works for relatively small isolated societies of individuals who are probably closely related, i.e. families, tribes and clans. Trading with the outside world — a cute little activity that tends to create wealth — requires protection from brigands. So one of the bands of brigands has to establish that monopoly on outright violence in order to keep the trade lines open and to keep the parasites out of the corn.

But governments themselves have a tendency to go beyond their basic positive function of preventing violence and enforcing contracts. There are myriad reasons why this is especially bad when the mobs get the vote in an industrial capitalist setting. And we’ll be going into those reasons a lot more at  

But cometh a protest!

I can't believe that you would be so foolish as to encourage people who understand the problem not to vote.  That leaves only the people who want the government to give them "free" stuff voting.  It doesn't matter how low the vote count became, it would still be listed as a legitimate vote.  It leaves the people stealing more money from "the rich" and giving it to others as the only people who get elected and make the laws.
Right, because the freeloaders, meddlers and redistributionistas aren’t winning now.

Democracy devolves into welfare, parasitism and ultimately it just goes away. You can continue to vote and hope that the incentive to live on the fruits of others doesn’t eventually corrupt the majority…but you may as well try to stop the sun from rising by yelling at it.

Bill Bonner and Addison Wiggin opened the second chapter of Financial Reckoning Day Fallout (from which the preceding article was excerpted) with this bit of Latin: Mundus vult decipi, ergo decipiatur.

The world wants to be deceived, Shooters, so let it be deceived.

Gary Gibson
Managing Editor,
Whiskey & Gunpowder

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