"Fake It Til You Take It"
by Bill Bonner
YOUGHAL, IRELAND – "Picking up from yesterday… Ms. Rana Foroohar, writing in the prestigious Financial Times, proposed… 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).
It is easy to lament… and fun to mock… the shallow “thinking” of the thinking classes. Capitalism created almost all the wealth we enjoy. The only alternative is some form of political control over capital, business, markets, and people.
As we explained in our "Win-Win or Lose" book, there are only two ways to get what you want. Either you bargain, trade, and persuade for it – that is, providing goods and services to others in exchange for goods and services from them… Or you take it by force… otherwise known as theft, burglary, corruption, payoffs, giveaways, income redistribution, socialism, communism, facism, etc. You either make it… or you take it. There is no other way. And there is no example in all of history where a politically controlled, centrally planned economy (taking it) was more fruitful than a free economy (making it). But heck… we’ll try to keep an open mind.
Unknowable Future: The first problem with central planning is that it relies on the aforementioned force… and is therefore doomed from the get-go. As we will see, the planning is as fake as the dollar. The world improvers pretend that they are preparing for the future. What they are really up to is trying to change the future… which inevitably leads to taking things that don’t belong to them.
The second problem is that the plans all depend on the part of the time spectrum that is unknowable – the future. The planners are always trying to make better tomorrows, without knowing what tomorrow would have been like if they had left it alone. In one tomorrow, long ago, the automobile was invented. Suddenly, plans for more horse-watering troughs were obsolete. In another, along came the internet. World War I surprised all the future-facing thinkers of the early 20th century. COVID-19 seems to have gotten the drop on those of the 21st.
Ms. Foroohar seems to admire the “state-run giants,” who plan for 50 years ahead. But what is the likelihood that their plans actually work out? There are zillions of possible tomorrows. But the planners cannot plan for an infinite number of futures. They can only plan for one. So the odds are, approximately, a zillion to one that they will get it right. The future… as they have imagined it… will never exist. And their plans will not only be unwelcome… but unwise, untimely, and unprepared for the future that actually comes.
Wrong Direction: We can get a hint of how the plans might go awry by wondering what kind of strategic plans the Nixon Administration might have come up with 50 years ago. For example, it might have tried to steal a march in the battle against climate change. But it probably would have been marching in the wrong direction. That is, it might have spent billions trying to make the planet warmer; global cooling was the bugaboo back then. “Another Ice Age?” asked TIME magazine in 1974, worrying about the spread of arctic temperatures.
Or perhaps Nixon would have begun making plans for strategic competition with China. But wait… China was not considered a rival back then; Mao’s central planning had just starved 20-30 million of his own citizens in the Great Leap Forward.
Back then, the “state-run giant” with a swell economy that seemed to threaten the U.S. was the Soviet Union. “We need more central planning in the U.S.,” said the Paul Krugmans of the 1960s. “We need it to keep up with the Soviets. They’re pulling ahead.” In the 1960s, the Soviets were definitely ahead in the “Space Race.” They had put their man, Yuri Gagarin, into orbit in 1961. It wasn’t until eight years later that the U.S. was able to definitively win the race by putting men on the moon. And by then, Gagarin was already dead at 34… in a plane crash. Even as late as the 1980s, the U.S. elite still thought it was in a dogfight with the Soviet Union. The Reagan Administration added $1.7 trillion to U.S. debt, largely to counter the threat.
Eastern Threat: But by the early 1990s, the Soviet economy – weighted down by five decades of central planning – was no longer airworthy. The Russians dragged it off the runway themselves in 1993, and went back to a basically capitalistic system. By then, the planners manques in the U.S. had turned their attention farther east. Japan Inc. was the bubble of the 1980s. And it had an “industrial policy.” “We need strategic planning to keep up with Japan Inc.” said America’s elite. But the Japanese economy blew up in 1989. Its stock market has never recovered.
Peak Oil: Strategic planning back then might have also included a big handout to the oil industry. Oil was essential to the U.S. economy. And the U.S. was running out. At least, that was the theory of American geologist M. King Hubbert, who believed the peak in U.S. oil production had been reached in the early 1970s. The U.S. created a Strategic Petroleum Reserve (SPR) in anticipation of running out. By the 1980s, the U.S. was awash in oil. Then, the fracking revolution of the 2000s made the U.S. energy-independent again. And in the COVID-19 crisis and lockdowns of 2020, the price of oil went negative. Producers had to pay to get rid of it. Instead of filling their SPR, the planners should have left it empty!
What else? The planners of the Nixon era might have wanted more freeways right through the inner cities to make it easier for commuters to get to work… and more gas stations, where they could fill their tanks… and more cigarette machines to make it easier for them to enjoy a smoke.
Grotesque Future: Of course, when you’re trying to prepare a whole nation for the future, you’re going to make mistakes. But what does it matter? The elites will do the planning. They will reward their favored clients, allies, and cronies. They will subsidize industries they like and punish those they don’t – with other people’s money, of course. They will give funding to universities to study the future they imagine… and cancel alternative opinions. Professors who describe the future as the elites would like to see it will get tenure.
Companies that enable their plans will get contracts. Planners will get sinecures. Busybodies will find lifelong employment implementing their plans. And day by day, little by little, the future will take shape. Not the future as it should be – full of surprises, growth, and innovation… nor even the future that the elites tried to create (you can’t really force the future to do what you want)…but a grotesque future – like the Soviet Union in 1989 – full of failed plans… bankrupt programs… and sour people."